As filed with the Securities and Exchange Commission on January 10, 2014
Registration No. 333-192252
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 2
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Intrawest Resorts Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 7990 | 46-3681098 |
(State or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification No.) |
(I.R.S. Employer Identification No.) |
1621 18th Street, Suite 300
Denver, Colorado 80202
(303) 749-8200
(Address, Including Zip Code, of Registrants Principal Executive Offices)
Joshua B. Goldstein, Esq.
Chief General Counsel
Intrawest Resorts Holdings, Inc.
1621 18th Street, Suite 300
Denver, Colorado 80202
(303) 749-8200
(Name, Address and Telephone Number, Including Area Code, of Agent For Service)
Copies to:
Gregory A. Fernicola, Esq. Joseph A. Coco, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-3000 (212) 735-2000 (facsimile) |
Richard D. Truesdell, Jr., Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 (212) 450-4000 (212) 701-5800 (facsimile) |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. £
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 under the Exchange Act. (check one)
Large accelerated filer £ | Accelerated filer £ | Non-accelerated
filer S (Do not check if a smaller reporting company) |
Smaller reporting company £ |
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities To Be Registered |
Proposed
Maximum Aggregate Offering Price(1) |
Amount
Of Registration Fee(2) | ||||
Common Stock, $0.01 par value per share | $100,000,000 | $12,880 |
(1) | Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. |
(2) | Previously paid. |
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE AN AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholder may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 10, 2014
PRELIMINARY PROSPECTUS
Shares
Intrawest Resorts Holdings, Inc.
Common Stock
$ per share
This is an initial public offering of common stock of Intrawest Resorts Holdings, Inc. We are offering shares of our common stock and the selling stockholder, an entity controlled by certain private equity funds managed by an affiliate of Fortress Investment Group LLC, is offering an additional shares of our common stock. We will not receive any proceeds from the sale of our common stock by the selling stockholder. After this offering, the selling stockholder and its affiliates will beneficially own approximately % of our common stock.
We expect the public offering price to be between $ and $ per share. Currently, no public market exists for the shares. We intend to apply to list our shares of common stock on the New York Stock Exchange (NYSE) under the symbol “SNOW.
We are an emerging growth company under applicable U.S. securities laws and are eligible for certain reduced public company reporting requirements.
Investing in our common stock involves risks. See Risk Factors beginning on page 20 to read about certain factors you should consider before buying our common stock.
Neither the Securities and Exchange Commission (the SEC) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Per share | Total | |||||||
Public offering price | $ | $ | ||||||
Underwriting discount(1) | $ | $ | ||||||
Proceeds to us before expenses | $ | $ | ||||||
Proceeds to the selling stockholder before expenses | $ | $ |
(1) | We have agreed to reimburse the underwriters for certain FINRA-related expenses. See “Underwriting. |
We have granted the underwriters the right to purchase up to additional shares of common stock, and the selling stockholder has granted the underwriters the right to purchase up to additional shares of common stock, in each case at the public offering price, less the underwriting discount. Any shares sold pursuant to the option to purchase additional shares will be apportioned between us and the selling stockholder pro rata in accordance with the number of shares initially sold by us and the selling stockholder.
The underwriters expect to deliver the shares of common stock against payment on or about , 2014.
Goldman, Sachs & Co. | Deutsche Bank Securities | BofA Merrill Lynch |
The date of this prospectus is , 2014.
You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on our behalf that we have referred you to. We, the selling stockholder and the underwriters have not authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We and the selling stockholder are not making an offer of these securities in any state, country or other jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any free writing prospectus is accurate as of any date other than the date of the applicable document regardless of its time of delivery or the time of any sales of our common stock. Our business, financial condition, results of operations or cash flows may have changed since the date of the applicable document.
We have proprietary rights to our trademarks and tradenames used in this prospectus, many of which are registered under applicable intellectual property laws. Solely for convenience, trademarks and tradenames referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks and tradenames. We do not intend our use or display of other companies tradenames, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other company. Each trademark, tradename or service mark of any other company appearing in this prospectus is the property of its respective holder.
Until , 2014 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to each dealers obligation to deliver a prospectus when acting as underwriter and with respect to its unsold allotments or subscriptions.
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This summary highlights information contained elsewhere in this prospectus. It may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations and Unaudited Pro Forma Condensed Consolidated Financial Information and the financial statements and related notes included elsewhere in this prospectus, before making a decision to purchase our common stock. Some information in this prospectus contains forward-looking statements. See “Forward-Looking Statements.
Intrawest Resorts Holdings, Inc. (New Intrawest) is a newly formed Delaware corporation that had not, prior to the Restructuring (as defined below), conducted any activities other than those incident to its formation and the preparation of the registration statement of which this prospectus forms a part. Unless the context suggests otherwise, references in this prospectus to Intrawest, the Company, we, us and our refer to Intrawest Cayman L.P. (Cayman L.P.) and its consolidated subsidiaries prior to the consummation of the Restructuring, and to New Intrawest and its consolidated subsidiaries after the consummation of the Restructuring. All amounts in this prospectus are expressed in U.S. dollars, except where noted. Our fiscal year ends on June 30 and references in this prospectus to a fiscal year refer to the year ended June 30 of the corresponding year. References in this prospectus to Fortress refer to the private equity funds managed by an affiliate of Fortress Investment Group LLC that currently control the Initial Stockholders (as defined on page 8 of this prospectus).
Overview
We are a North American mountain resort and adventure company, delivering distinctive vacation and travel experiences to our customers for over three decades. We own interests in seven four-season mountain resorts with more than 11,000 skiable acres and more than 1,150 acres of land available for real estate development. Our mountain resorts are geographically diversified across North Americas major ski regions, including the Eastern United States, the Rocky Mountains, the Pacific Southwest and Canada, which we believe helps reduce our financial exposure to any single geographic area as weather patterns and economic conditions vary across these regions. Our mountain resorts are located within an average of approximately 160 miles of major metropolitan markets with high concentrations of affluent skiers and major airports, including New York City, Boston, Washington D.C., Pittsburgh, Denver, Los Angeles, Montreal and Toronto. During fiscal 2013, our portfolio of resorts received more than six million visitors from all 50 states and more than 100 countries. We also operate an adventure travel business, the cornerstone of which is Canadian Mountain Holidays (“CMH), the leading heli-skiing adventure company in North America. CMH provides helicopter accessed skiing, mountaineering and hiking to more skiable terrain than all lift accessed mountain resorts in North America combined. Additionally, we operate a comprehensive real estate business through which we manage, market and sell vacation club properties; manage condominium hotel properties; and sell and market residential real estate.
We operate within the leisure industry, with a business that benefits from improvements in the economy and associated increases in consumer discretionary spending. Numerous economic trends support the notion that the health of the general economy is continuing to improve. As the economy continues to improve, we believe that consumers will have more disposable income and a greater inclination to engage in and spend on leisure activities. We also expect recreational adventure and experiential travel to continue to gain in popularity as individuals, including the important “baby boomer generation, live longer, healthier lives. We intend to capitalize on these favorable trends within the leisure industry to drive growth within our business by increasing visitation at our resorts and at CMH, increasing product pricing and growing the scale of our businesses through targeted growth capital investments and acquisitions. We evaluate acquisition opportunities both domestically and internationally where the opportunity would provide a strategic fit within our existing portfolio of businesses. No material acquisitions are probable at this time.
We generated revenues of $524.4 million and $80.6 million in fiscal 2013 and the three months ended September 30, 2013, respectively. In December 2013 we consummated a series of transactions, through which we reduced our total long-term debt on a pro forma basis to $584.5 million from $2.0 billion as of September 30, 2013. After giving pro forma effect to these transactions, our net income (loss) improved to $6.0 million and $(48.8) million in fiscal 2013 and three months ended September 30, 2013 from $(296.7) million and $(121.6) million, respectively. See “Unaudited Pro Forma Condensed Consolidated Financial Information.”
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Our Business
We manage our business through three reportable segments:
• | Mountain ($339.0 million, or 65.5%, of fiscal 2013 reportable segment revenue): Our Mountain segment includes our mountain resort and lodging operations at Steamboat Ski & Resort, Winter Park Resort, Mont Tremblant Resort, Stratton Mountain Resort and Snowshoe Mountain Resort, as well as our 50% interest in Blue Mountain Ski Resort. |
• | Adventure ($113.6 million, or 22.0%, of fiscal 2013 reportable segment revenue): The cornerstone of our Adventure segment is CMH. Within our Adventure segment, we also own and operate aviation businesses that support CMH and provide services to third parties. |
• | Real Estate ($64.7 million, or 12.5%, of fiscal 2013 reportable segment revenue): Our Real Estate segment includes our real estate development activities, as well as our real estate management, marketing and sales businesses, including Intrawest Resort Club Group (IRCG), Intrawest Hospitality Management (IHM) and Playground. We currently own core entitled land surrounding the base of our resorts totaling more than 1,150 acres, much of which is located adjacent or proximate to the ski trails at our resorts, including ski-in and ski-out parcels. As of November 30, 2013, this land had an appraised value of $154.0 million. |
Our mountain resorts offer a breadth of activities for individuals of all ages that combine outdoor adventure and fitness with a wide variety of resort-based services and amenities, including retail, equipment rental, dining, lodging, ski school, spa services, golf, mountain biking and other summer activities. We own or manage many of these services and amenities, which allows us to capture a larger proportion of customer spending as well as ensure product and service quality at our resorts. Our resorts also receive more snowfall than the applicable regional average and have comprehensive snowmaking coverage. The following table summarizes key statistics relating to each of our resorts as of September 30, 2013.
Resort | Location | Year Opened | Average Snowfall(1) | Maximum Vertical Drop | Skiable Terrain | Snowmaking Coverage | # of Trails | # of Lifts | Lodging Units Under Mgmt. | Food & Beverage Outlets Operated | Retail & Rental Outlets Operated | |||||||||||||||||||||||||||||||
(inches) | (feet) | (acres) | (acres) | |||||||||||||||||||||||||||||||||||||||
Steamboat | Colorado | 1963 | 363 | 3,668 | 2,965 | 375 | 165 | 18 | 317 | 18 | 16 | |||||||||||||||||||||||||||||||
Winter Park | Colorado | 1939 | 322 | 3,060 | 3,081 | 313 | 143 | 25 | 348 | 14 | 11 | |||||||||||||||||||||||||||||||
Tremblant | Quebec | 1939 | 163 | 2,116 | 654 | 465 | 95 | 14 | 896 | 11 | 20 | |||||||||||||||||||||||||||||||
Stratton | Vermont | 1961 | 151 | 2,003 | 624 | 474 | 94 | 11 | 415 | 11 | 10 | |||||||||||||||||||||||||||||||
Snowshoe | West Virginia | 1974 | 166 | 1,500 | 251 | 251 | 57 | 14 | 1,149 | 16 | 13 | |||||||||||||||||||||||||||||||
Blue Mountain (50%) | Ontario | 1941 | 78 | 720 | 281 | 236 | 36 | 14 | 1,027 | 9 | 9 | |||||||||||||||||||||||||||||||
Mammoth Mountain (15%) | California | 1955 | 418 | 3,100 | 3,500 | 700 | 164 | 28 | 608 | 22 | 18 |
(1) | Based on the eight-year historical average of snowfall during the 2005/2006 ski season through the 2012/2013 ski season. Blue Mountain data is based on the seven-year historical average of snowfall during the 2006/2007 ski season through the 2012/2013 ski season (comparable data is not available for the 2005/2006 ski season). |
Steamboat Ski & Resort (operating since 1963) is located in the Colorado Rocky Mountains, 157 miles northwest of Denver, with access via direct flights from New York, Los Angeles, Chicago, Houston, Atlanta, Minneapolis, Seattle, Dallas and Denver. The town of Steamboat Springs, Colorado, where Steamboat is located, has a strong heritage of winter sports, as evidenced by the 79 winter Olympians that have trained in the town. With the potential to add an additional 430 acres of skiable terrain, the resort features a combination of high-end customer services (such as a full service spa and fine dining restaurants), an 1880s western atmosphere and some of the most consistent snowfall in the Rocky Mountain region. The resort receives an average of approximately 363 inches of light, dry powder snow each ski season, which we refer to in our marketing materials as Champagne Powder® snow. Average snowfall at Steamboat is 25% more than the historical Rocky Mountain regional resort average of 290 inches. For the 2013/2014 ski season, Steamboat has added night skiing and has opened a new on-mountain lodge with a seating capacity of over 250 in the main dining area.
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Winter Park Resort (operating since 1939) is located in the Colorado Rocky Mountains, 67 miles west of Denver, and is one of the closest resorts to the Denver metropolitan areas nearly three million residents. The resort, which is comprised of Winter Park Mountain, Mary Jane Mountain, Vasquez Cirque and Vasquez Ridge, is the longest operating mountain resort in Colorado and has long been referred to in our marketing materials as Colorados Favorite®. The resort receives an average snowfall during the ski season of approximately 322 inches and features six terrain parks and “world-class mogul skiing, as described by Powder Magazine. Winter Park has the option to add an additional 837 acres, which would expand our skiable terrain by approximately 27%. Each summer, Winter Park transforms into a mountain biking destination, with one of the largest bike parks in the United States. Winter Park has recently expanded its mountain biking terrain and has added tubing to its slate of winter activities.
Mont Tremblant Resort (operating since 1939) is located in Quebec, within a two hour drive from the Montreal metropolitan areas nearly four million residents and the Ottawa metropolitan areas nearly 1.2 million residents. The resort is consistently ranked as one of the top ski resorts in Eastern North America by Ski Magazine. With 2,116 feet of vertical drop and snowmaking on 77% of trails, Tremblant offers customers the opportunity to ski down one of the biggest vertical drops in eastern Canada. In the summer, customers can play golf on two 18-hole golf courses, mountain bike, enjoy the pedestrian village and attractions or take in Tremblants free outdoor concerts.
Stratton Mountain Resort (operating since 1961) is located in Southern Vermont, approximately 220 miles north of New York City and approximately 150 miles northwest of Boston, whose metropolitan areas have a combined population of more than 23 million residents. Situated on one of the tallest peaks in New England, Stratton is widely considered the birthplace of snowboarding. Stratton features a vertical drop of 2,003 feet and snowmaking on 93% of trails. Strattons summer amenities feature 27 holes of golf, a 22-acre golf school and a sports and tennis complex. Winter and summer customers are also able to enjoy Strattons pedestrian village. Recent capital improvements at Stratton include a remodeled hotel and additional food and beverage outlets.
Snowshoe Mountain Resort (operating since 1974) is located in West Virginia and is one of the largest ski resorts in the Southeast region of the United States. Snowshoe primarily draws customers from the Baltimore-Washington D.C. and Pittsburgh metropolitan areas combined 11.7 million residents, as well as the Southeastern United States. The 251 acre resort has the biggest vertical drop in the region (1,500 feet) and receives an average snowfall during the ski season of approximately 166 inches while also enjoying 100% snowmaking coverage. The resorts mountaintop village offers a variety of nightlife, dining and retail options. Snowshoe was named #1 Overall Ski Resort and #1 for Nightlife in the Mid-Atlantic by OnTheSnow.com, a popular skiing website, in 2012. Recent capital improvements at Snowshoe include upgraded snowmaking capabilities as well as a spa and a zipline located in the village. 640 additional acres of land are available at Snowshoe for terrain expansion.
Blue Mountain Ski Resort (operating since 1941), of which we own a 50% equity interest, is located in Ontario, approximately 90 miles northwest of Toronto’s approximately 5.6 million residents. With 281 skiable acres and snowmaking on 93% of trails, Blue Mountain is both the largest and most popular resort in Ontario. Blue Mountain also operates a year round conference center and offers a suite of
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summer amenities, including an 18-hole golf course, an open-air gondola, a mountain biking facility and a waterfront park. Recent capital improvements include a conference center, a mountain roller coaster and terrain expansion, including six new trails with snowmaking coverage.
We are party to a shareholders’ agreement with Blue Mountain Resorts Holdings Inc. (“Blue Mountain Holdings), the owner of the other 50% interest in Blue Mountain Resorts Limited, the entity that owns Blue Mountain. The agreement provides for a call option in our favor on the equity interest held by Blue Mountain Holdings at 110% of fair market value and a put option in favor of Blue Mountain Holdings which would require us to purchase up to all of the equity interests held by Blue Mountain Holdings at 90% of fair market value. See “Our Business—Business Operations—Mountain.
Mammoth Mountain (operating since 1955), of which we own a 15% equity interest, is located south of Yosemite National Park in California and primarily draws customers from Southern Californias approximately 22.0 million residents. With the highest summit of any California resort, an average snowfall during the ski season of approximately 418 inches and 3,500 skiable acres, Mammoth Mountain is the fourth most popular mountain resort in North America and has one of the longest ski seasons in North America. We also own a 50% equity interest in Mammoth Hospitality Management, LLC, which runs the hospitality and lodging operations at Mammoth. Our other business interests at Mammoth include managing the commercial village as well as the Westin Monache Resort at Mammoth Lakes, California.
We also operate an adventure travel business, the cornerstone of which is CMH. Through our CMH operations, we have developed expertise in marketing adventure travel to the affluent as well as expertise in coordinating complex adventure travel experiences and hospitality. We believe that we will be able to leverage our core expertise to grow our adventure travel offerings both within heli-skiing and in other adventure travel areas.
Canadian Mountain Holidays is North America’s premier heli-skiing adventure company and has been providing heli-skiing trips for the past 50 years. CMH currently provides helicopter-accessed skiing, mountaineering and hiking on 3.1 million powder-filled acres of terrain in British Columbia, which amounts to more skiable terrain than all lift accessed mountain resorts in North America combined. In addition to providing what we believe is an unparalleled skiing and backcountry experience in North America, CMH provides accommodation, service and dining at its 11 lodges, nine of which are owned by us. During fiscal 2013, CMH earned approximately $1,700 of revenue per customer night, with repeat visitors accounting for the majority of CMHs customers. In support of CMHs skiing, guiding and hospitality operations, we own 40 helicopters and operate a helicopter maintenance, repair and overhaul (“MRO) business. Each ski season, we lease our fleet of helicopters to Alpine Helicopters, Inc. (“Alpine Helicopters), which acts as the exclusive provider of flight services to CMH. CMHs integrated operating model enables us to scale the business and increase customer visits with limited reliance on third party providers. In addition, to more efficiently utilize our aircraft and CMH pilots year round, we provide heli-hiking, fire suppression and utility services during the summer months. By utilizing the same pilots each ski season who have an average of over 7,000 hours of experience flying in the high alpine and who possess extensive knowledge of the terrain, we believe CMH is able to provide a more consistent customer experience.
Certain of our mountain resorts and CMH operate on federal or Crown land or land owned by other governmental entities pursuant to the terms of governmental permits, leases or other agreements. See “Our Business—Properties. Alpine Helicopters employs all of the pilots who fly the helicopters in the CMH land tenures. We own a 20% equity interest in Alpine Helicopters, but consolidate Alpine Helicopters in our financial statements because Alpine Helicopters is substantially dependent on us as a result of leasing its entire helicopter fleet from us. See “Our Business—Business Operations—Adventure.
We also have a portfolio of more than 1,150 acres of development parcels surrounding the bases of our Steamboat, Winter Park, Tremblant, Stratton and Snowshoe resorts, much of which is located adjacent or proximate to the ski trails, including ski-in ski-out parcels. As of November 30, 2013, this land had an appraised value of $154.0 million. We refer to this land throughout this prospectus as our core entitled land or core development parcels. See “Our Business—Business Operations—Real Estate. We believe that our real estate platform and expertise will enable us to capitalize on improving economic conditions related to commercial and residential real estate through the potential future development of our core entitled land. We are currently working with consultants and architects to develop strategies for future development of this land in concert with planning for on-mountain and base village
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improvements. In addition to our core land holdings and development planning, we maintain the capability to manage, market and sell real estate through our vacation club business, our condominium hotel property management company with operations in Maui, Hawaii and in Mammoth Lakes, California and our residential real estate sales and marketing business. See “Risk Factors—Risks Related to Our Business—Our real estate development strategy may not be successful.
Our Strengths
Geographically Diversified Market Leading Mountain Resort Company. We are one of the largest mountain resort companies in North America based on skier visits. Our portfolio of mountain resorts offers what we believe are distinctive experiences at some of North Americas most popular destinations. We have invested heavily in the development of lifts, trails, snowmaking capabilities and pedestrian villages with a large bed base and a variety of retail and dining options at our mountain resorts. We believe that these investments have established our resorts, in each of our markets, as having some of the best skiing, amenities and experiences. Our mountain resorts are dispersed throughout North America, with locations in the Eastern United States, the Rocky Mountains, the Pacific Southwest and Canada. During fiscal 2013, no single resort accounted for more than 16% of our total revenue. In addition, our resorts are located within an average of approximately 160 miles of large metropolitan areas with high concentrations of affluent skiers and major airports, such as New York City, Boston, Washington D.C., Pittsburgh, Denver, Los Angeles, Montreal and Toronto. This provides us a strong base of regional and destination visitors, which we believe helps reduce our financial exposure to any single geographic region as weather patterns and economic conditions can vary across regions. We believe that this is a differentiating factor from our competitors, many of which have more geographically concentrated businesses.
North Americas Premier Mountain Adventure Company. The cornerstone of our adventure business is CMH, the largest heli-skiing business in North America. CMHs operating area encompasses 3.1 million acres of high alpine terrain across British Columbia, which we believe offers an unparalleled skiing and backcountry experience. Repeat visitors accounted for the majority of CMHs customers during fiscal 2013. With its global brand, portfolio of terrain, collection of 11 lodges and integrated aviation support, CMH is North Americas leading heli-skiing platform and is positioned to further grow within the adventure travel industry. Through our CMH operations, we have also developed expertise in marketing adventure travel to the affluent as well as expertise in coordinating complex adventure travel experiences and hospitality. We believe that we will be able to leverage these core competencies to grow our adventure travel offerings both within heli-skiing and in other areas.
Strong Competitive Position with High Barriers to Entry. We operate or have an ownership interest in three of the top 10 mountain resorts in the United States as measured by skier visits. We also operate or have an ownership interest in what we believe are two of the top three mountain resorts in Canada as measured by skier visits. There are significant barriers to entry to new ski resort development in North America resulting from the limited number of remaining suitable sites, the difficulty in obtaining necessary government permits and the significant capital required for development and construction. As a result, no major ski resorts have been developed in the past 30 years. We believe these competitive dynamics have supported the ski industry’s ability to raise Effective Ticket Price (“ETP”) by a 2.7% compound annual growth rate (“CAGR”) over the past five years, despite high unemployment and fragile economic conditions.
Customer Base with Significant Discretionary Income. We generally attract a more affluent customer than many other leisure activities. In fiscal 2013, the average household income of customers at our mountain resorts was more than $135,000. Given the quality of our assets and our affluent customer base, we believe that there is a long-term opportunity to increase revenues through cross-selling and upselling our customers. We maintain a database of more than 2.2 million past resort customers and are able to use this database to cross-sell and upsell new experiences within our portfolio of resorts and at CMH to our customers, season pass holders, second home owners and vacation club members.
Significant and Expanding Base of Season Pass Holders. We have loyal customers who visit our resorts frequently every year. Many of these customers purchase season passes or frequency products and either own real estate at our resorts or are potential future buyers of vacation real estate. Season pass and frequency product revenue contributed $42.5 million, $45.2 million and $48.0 million to lift revenues for fiscal 2011, 2012 and 2013, respectively, and represented 30.7%, 34.4% and 33.2% of our lift revenues during these respective years. While there can be no assurance that the number of season pass holders at our mountain resorts will remain constant or increase in future years, season pass and frequency product revenue has grown at a CAGR of 6.3% over the three year period
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ended June 30, 2013. Moreover, 69.8% of our fiscal 2013 season pass holders owned season passes at our resorts during prior ski seasons, representing a strong source of recurring cash flow. This source of recurring and stable revenue reduces our sensitivity to economic conditions and weather, and provides a base line of predictability that allows us to focus on pursuing growth and value creating opportunities for our businesses.
Experienced Management Team. Our management team, which is comprised of professionals with wide ranging experience in resort, real estate and leisure operations, has significant experience managing mountain resorts. We believe our management team has demonstrated its ability to adapt and adjust the business during economic
downturns and to grow the business. In addition, our management team has extensive experience in identifying and evaluating businesses for acquisition, performing in-depth due diligence, negotiating with owners and management, and structuring, financing and closing acquisition transactions. We have also attracted qualified and dedicated resort chiefs who have an average of 11 years of service with us and 26 years of experience in the ski industry. We believe that the experience of our management team and resort chiefs is a significant contributor to our operating performance.
Growth Strategies
Consumer discretionary spending has increased as the economy has improved and, as the economy continues to improve, we believe that consumers will have more disposable income and a greater inclination to increase spending on leisure activities, such as skiing and adventure travel. We also expect recreational adventure and experiential travel to continue to gain in popularity as individuals, including the important “baby boomer” generation, live longer, healthier lives. In light of these trends, we intend to employ the following strategies to drive growth within our businesses:
Increase Revenues.
· | Increase prices at our mountain resorts and CMH. During the past five years, despite high unemployment and fragile economic conditions over much of that period, the mountain resort industry has increased Effective Ticket Price at a CAGR of 2.7%, outpacing core inflation of 1.6%. As the economy continues to improve, we believe that consumers will have more disposable income and a greater inclination to increase spending on leisure activities, such as skiing and adventure travel. We believe that these trends, combined with growth capital investments to improve the customer experience, will provide us with the opportunity to increase prices without impacting our customers’ perception of the value of our products. |
· | Grow visitation at our mountain resorts and CMH. There are four components of our strategy to grow visitor volume. First, we intend to leverage our existing customer database of 2.2 million skiers and adventure travelers to cross-sell existing customers on new experiences within our portfolio of properties. Second, we are investing in new websites, e-commerce platforms and customer relationship management systems. In combination, these tools provide our sales and marketing team with greater insight into the preferences and purchasing patterns of existing and prospective customers, enabling us to make customized vacation offers and increase the likelihood of purchase. Third, we are developing new products that target previously underserved market segments. Examples include a new season pass product available for young professionals and the addition of new small group and private trip options at CMH to meet demand from affluent CMH customers. Fourth, we are investing in revenue management systems to optimize our variable pricing strategy. These systems provide us with real-time demand data, enabling us to effectively raise prices for vacations and ticket products during periods of peak demand and lower prices to increase visitor volume during periods of off-peak demand. |
· | Targeted growth capital investments. We believe there is a significant opportunity to further increase revenues, visitation as well as utilization of our assets during off-peak periods by developing new activities and improved amenities at our mountain resorts and CMH. Examples of recent growth capital projects include investments in lifts, snow-making capabilities and terrain expansion at Blue Mountain, a new on-mountain dining facility and night skiing at Steamboat, a snow tubing hill and expanded mountain biking terrain at Winter Park, a spa facility at Snowshoe, and renovated lodging facilities at Stratton and our CMH operations. We expect that our resort improvements will attract new customers and increase the average amount of money that customers spend per day at our properties. We believe we have the opportunity to profitably execute similar resort improvement projects in the future. |
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Continue to Improve Operating Efficiency and Margins. We continue to focus on driving financial improvement and operational synergies. We believe that, as a multi-resort operator, we have significant opportunities to benefit from our scale of operations through centralization of key functions such as sales and marketing, human resources, accounting, finance, legal, procurement, insurance and technology. Our Denver headquarters provides a platform for further centralization of these key areas where there is an opportunity to benefit from economies of scale and leverage the skills of our senior management team. We believe that these operating efficiencies, combined with price and volume increases, will enable us to grow our margins. In addition, a significant portion of the operating costs at our mountain resorts is variable and can be rapidly adjusted in response to fluctuations in our business. For example, during the 2011/2012 ski season, our management team was able to adjust operating costs at our resorts by reducing seasonal personnel in response to the lowest amount of natural snowfall in North America in 20 years.
Pursue Strategic Acquisitions and Operating Relationships. The North American ski industry is highly fragmented, with approximately 753 ski areas in North America, of which fewer than 10% are owned by operators that operate four or more ski resorts. As a result of the advantages that we enjoy as a multi-resort operator, we believe we will have the opportunity to acquire complementary resorts in the future at attractive valuations, although there can be no assurance that we will be able to effect such acquisitions. Such acquisitions could involve expansion outside of North America. We evaluate the strategic fit of potential acquisitions based on the opportunity to enhance product offerings, such as multi-resort pass products, achieve operational synergies and expand our operating footprint. As a multi-resort operator, we believe we can generate substantial revenue and cost synergies through strategic acquisitions by leveraging our existing customer database of 2.2 million contacts for cross-resort marketing, by offering customers multi-resort products and by taking advantage of economies of scale in administration and pooled purchasing.
Through our CMH operations, we have developed expertise in marketing adventure travel to the affluent as well as expertise in coordinating complex adventure travel experiences and hospitality. We expect adventure travel to gain in popularity and believe that we will be able to leverage our core competencies to improve the revenues and operating efficiency of strategic acquisitions within the adventure travel industry.
We also intend to evaluate “capital light” opportunities such as managing third-party resort assets and entering into real estate development partnerships.
Monetization of Real Estate. We own more than 1,150 acres of land available for development at our mountain resorts, much of which is adjacent or proximate to the ski trails at the resorts, including ski-in and ski-out parcels. As the “home team” operator in our resort communities, we have a competitive advantage relative to other developers at our resorts because we are uniquely able to add additional value to real estate by bundling it with amenities and products at our resorts that we control. We also own or lease commercial properties within the villages at our resorts, which provides us with the opportunity to control the mix of activities and food, beverage and retail outlets in order to create an atmosphere that makes our resort communities more attractive to potential home buyers. With improvement in the second home and vacation home markets, we believe that we can generate significant profits from the future development of our core entitled land at our resorts. Additionally, although we cannot guarantee that incremental visitor growth at our resorts will occur, to the extent that future development increases the number of units and beds at our resorts, we believe that the extra lodging capacity will support incremental visitor growth and profits.
Our Restructuring and Refinancing
The Restructuring
We conduct our U.S. operations through Intrawest U.S. Holdings Inc., a Delaware corporation (Intrawest U.S.), and our Canadian operations through Intrawest ULC, an unlimited liability company organized under the laws of the Province of Alberta (Intrawest Canada). In December 2013, through a series of restructuring transactions, Cayman L.P. caused its indirect subsidiaries to contribute 100% of the equity interests in both Intrawest U.S. and Intrawest Canada to an indirect subsidiary of Intrawest Resorts Holdings, Inc., the issuer of the common stock offered hereby. In connection with these restructuring transactions, we issued an aggregate of 42,999,900 shares of our common stock to the Initial Stockholders and we were released as an obligor with respect to all of our debt owed to affiliates (approximately $1.4 billion as of September 30, 2013). The transactions described in this paragraph form part of the Restructuring described under Unaudited Pro Forma Condensed Consolidated Financial Information. See also Description of Certain Indebtedness—Notes Payable to Affiliates.
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The chart below summarizes our corporate structure after giving effect to the consummation of the Restructuring and this offering.
Intrawest Resorts Holdings, Inc. was incorporated in Delaware on August 30, 2013 for the purpose of effecting this offering.
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The Refinancing
As of September 30, 2013, we had outstanding $446.6 million of borrowings under a first lien credit agreement with a syndicate of lenders. As of September 30, 2013, we also had outstanding $125.0 million of borrowings under a second lien credit agreement with a syndicate of lenders.
On December 9, 2013, we entered into a new first lien credit agreement (the New Credit Agreement) and an affiliate of Fortress contributed $48.3 million to us. Borrowings under the New Credit Agreement, together with cash on hand and the funds contributed to us by an affiliate of Fortress, were used to refinance and replace the borrowings under the first lien credit agreement and the second lien credit agreement (the Refinancing). For a description of the New Credit Agreement, see Description of Certain IndebtednessThird-Party Long-Term DebtNew Credit Agreement.
As of September 30, 2013, our total indebtedness on an actual and a pro forma basis after giving effect to the Restructuring and the Refinancing (we refer to these transactions, as described under “Unaudited Pro Forma Condensed Consolidated Financial Information,” as the Pro Forma Transactions) was $2,033.9 million and $584.5 million, respectively. See Unaudited Pro Forma Condensed Consolidated Financial Information and Description of Certain Indebtedness—Third-Party Long-Term Debt.
Recent Financial and Operating Results
Preliminary Financial and Operating Information
The following information reflects our preliminary results based on currently available information. We have provided ranges, rather than specific amounts, for certain of the financial and operating information below, primarily because our closing procedures for the related applicable periods are not yet complete and, as a result, we expect that our final results upon completion of our closing procedures may vary from the currently available preliminary results. In addition, financial and operating information for the six months ended December 31, 2013 and for the season-to-date is not necessarily indicative of performance trends for the full ski season, which may be unfavorably impacted by adverse events, including unfavorable changes in weather conditions or the economic environment.
Preliminary Financial Results for the Six Months Ended December 31, 2013
Although our financial results for the six months ended December 31, 2013 are not yet finalized, we estimate that our financial results will fall within the following ranges, as compared to the six months ended December 31, 2012:
Six Months Ended December 31, | |||||||||||||
2012 | 2013 | ||||||||||||
Actual | Low | High | |||||||||||
(in thousands) | |||||||||||||
Revenues | $ | $ | $ | ||||||||||
Net loss | $ | $ | $ | ||||||||||
Mountain revenues | $ | $ | $ | ||||||||||
Adventure revenues | $ | $ | $ | ||||||||||
Real Estate revenues | $ | $ | $ | ||||||||||
Mountain Adjusted EBITDA | $ | $ | $ | ||||||||||
Adventure Adjusted EBITDA | $ | $ | $ | ||||||||||
Real Estate Adjusted EBITDA | $ | $ | $ |
Revenues . We expect to report revenues between $ and $ for the six months ended December 31, 2013, compared to $ for the six months ended December 31, 2012, representing a of $ , or %, calculated using the midpoint of the range. The in revenues is primarily due to .
Net loss . We expect to report a net loss between $ and $ for the six months ended December 31, 2013, compared to a net loss of $ for the six months ended December 31, 2012. The net loss for the six months ended December 31, 2012 and 2013 includes interest expense on notes payable to affiliates of $ and between $ and $ , respectively. Our interest expense will be significantly reduced in future periods as a result of the Refinancing and the Restructuring that were consummated in December 2013. See “—Our Restructuring and Refinancing.”
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Mountain revenues . We expect to report Mountain revenues between $ and $ for the six months ended December 31, 2013, compared to $ for the six months ended December 31, 2012, representing a of $ , or %, calculated using the midpoint of the range. The in Mountain revenues is primarily due to .
Mountain Adjusted EBITDA . We expect to report Mountain Adjusted EBITDA between $ and $ for the six months ended December 31, 2013, compared to $ for the six months ended December 31, 2012, representing a of $ , or %, calculated using the midpoint of the range. The in Mountain Adjusted EBITDA is primarily due to .
Adventure revenues . We expect to report Adventure revenues between $ and $ for the six months ended December 31, 2013, compared to $ for the six months ended December 31, 2012, representing a of $ , or %, calculated using the midpoint of the range. The in Adventure revenues is primarily due to .
Adventure Adjusted EBITDA . We expect to report Adventure Adjusted EBITDA between $ and $ for the six months ended December 31, 2013, compared to $ for the six months ended December 31, 2012, representing a of $ , or %, calculated using the midpoint of the range. The in Adventure Adjusted EBITDA is primarily due to .
Real Estate revenues . We expect to report Real Estate revenues between $ and $ for the six months ended December 31, 2013, compared to $ for the six months ended December 31, 2012, representing a of $ , or %, calculated using the midpoint of the range. The in Real Estate revenues is primarily due to .
Real Estate Adjusted EBITDA . We expect to report Real Estate Adjusted EBITDA between $ and $ for the six months ended December 31, 2013, compared to $ for the six months ended December 31, 2012, representing a of $ , or %, calculated using the midpoint of the range. The in Real Estate Adjusted EBITDA is primarily due to .
Preliminary Operating Results for the Six Months Ended December 31, 2013
Although our operating results for the six months ended December 31, 2013 are not yet finalized, we estimate that our operating results will fall within the following ranges, as compared to the six months ended December 31, 2012:
Six Months Ended December 31, | ||||||||||||
2012 | 2013 | |||||||||||
Actual | Low | High | ||||||||||
(in thousands) | ||||||||||||
Mountain | ||||||||||||
Skier Visits(a) | ||||||||||||
Mountain Segment Revenue Per Visit(b) | $ | $ | $ | |||||||||
ETP(c) | $ | $ | $ | |||||||||
Adventure | ||||||||||||
CMH Guest Nights(d) | ||||||||||||
CMH RevPGN(e) | $ | $ | $ |
(a) | A Skier Visit represents an individual’s use of a paid or complimentary ticket, frequency card or season pass to ski or snowboard at our Steamboat, Winter Park, Tremblant, Stratton and Snowshoe resorts for any part of one day. |
(b) | Mountain Segment Revenue Per Visit is defined as total revenue of our Mountain segment for a given period divided by total Skier Visits during such period. |
(c) | Effective ticket price, or ETP, is calculated by dividing lift revenue for a given period by total Skier Visits during such period. |
(d) | CMH Guest Nights represents the number of paid nights skiing or hiking customers spend at our CMH lodges for a given period. |
(e) | CMH RevPGN is total CMH revenue for a given period divided by the total number of CMH Guest Nights during such period. |
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Preliminary Ski Season Metrics for the Season-to-Date Period Ended January , 2014
The following table presents ski season metrics for each season-to-date presented. For purposes of this table, each season-to-date period runs through January of the respective ski season. The season-to-date periods begin on the date that our first mountain resort opened for skiing in the respective ski season, which is typically in mid-November.
Increase (Decrease) From Prior Ski Season-to-Date | ||||||||||||
2011/12 | 2012/13 | 2013/14 | ||||||||||
Skier Visits | % | % | % | |||||||||
Mountain revenues | ||||||||||||
Lift revenues | % | % | % | |||||||||
Ancillary revenues | % | % | % |
Inclusion of Preliminary Financial and Operating Information
The preliminary financial and operating information included in this prospectus reflects management’s estimates based solely upon information available to us as of the date of this prospectus and is the responsibility of management. The preliminary financial information presented above is not a comprehensive statement of our financial results for the six months ended December 31, 2013 and has not been audited, reviewed or compiled by our independent registered public accounting firm, KPMG LLP. Accordingly, KPMG LLP does not express an opinion or any other form of assurance with respect thereto. The preliminary information presented above is subject to the completion of our financial closing procedures, which have not yet been completed.
Our actual results for the six months ended December 31, 2013 and the season-to-date period ended January , 2014 will not be finalized until after this offering is completed and may differ materially from the above estimates. Accordingly, you should not place undue reliance upon these preliminary results. For example, during the course of the preparation of the applicable financial statements and related notes, additional items that would require material adjustments to be made to the preliminary estimated information presented above may be identified. There can be no assurance that these estimates will be realized, and estimates are subject to risks and uncertainties, many of which are not within our control. See “Risk Factors” and “Forward-Looking Statements.”
Our Principal Stockholders
Immediately following the completion of this offering, the Initial Stockholders will beneficially own approximately % of our outstanding common stock, or % if the underwriters option to purchase additional shares is fully exercised. This level of share ownership is sufficient to control the vote on matters and transactions requiring stockholder approval. The Initial Stockholders are controlled by Fortress. See Risk Factors—Risks Related to Our Organization and Structure and Principal and Selling Stockholders. Pursuant to the Stockholders Agreement (as defined below), Fortress may designate directors for nomination and election to our board of directors. Pursuant to these provisions, Fortress has the ability to appoint up to a majority of the members of our board of directors, plus two directors, for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 30% of our issued and outstanding common stock and certain other conditions are met.
Risk Factors
There are a number of risks that you should carefully consider before making an investment decision regarding this offering. These risks are discussed more fully in the section entitled Risk Factors following this prospectus summary. These risks include, but are not limited to:
• | a prolonged weakness in general economic conditions; |
• | the failure of recreational adventure and experiential travel to gain in popularity; |
• | lack of adequate snowfall and unfavorable weather conditions; |
• | adverse events that occur during our peak operating periods combined with the seasonality of our business; |
• | the occurrence of natural disasters; |
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• | the high fixed cost structure of our business; |
• | risks associated with not owning all of the land on which we conduct our operations, including the loss of, or inability to renew, our governmental permits and leases; |
• | risks related to the fact that we are not the sole property manager at certain of our real estate developments and risks related to the fact that fewer condominium owners have been using our rental management services in recent years; |
• | our inability to complete real estate development projects and achieve the anticipated financial benefits from such projects; |
• | our inability to successfully remediate material weaknesses in our internal control over financial reporting and the expected costs associated with doing so; |
• | competition with similar businesses owned by Fortress and its affiliates; and |
• | risks related to the corporate opportunity provisions in our restated certificate of incorporation, which do not require Fortress or its affiliates, including the Initial Stockholders, or any of their officers, directors or employees, to offer us potential transactions or corporate opportunities of which they are aware. |
As a result of these risks and the other risks discussed in the section entitled Risk Factors, there is no guarantee that we will experience growth and improving profitability in the future. Similarly, there can be no assurance that the number of visitors to our mountain resorts and CMH, including season pass holders at our mountain resorts, will remain constant or increase in future years.
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an emerging growth company pursuant to the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These provisions include:
• | reduced compensation disclosure requirements; |
• | an exemption to include in an initial public offering registration statement less than five years of selected financial data; and |
• | an exemption from the auditor attestation requirement in the assessment of the emerging growth companys internal control over financial reporting. |
The JOBS Act also permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies, and exempts an emerging growth company such as us from Section 14A(a) and (b) of the Securities Exchange Act of 1934 (the Exchange Act), which require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
We will remain an emerging growth company until the earliest of:
• | the last day of our fiscal year during which we have total annual gross revenues of at least $1.0 billion; |
• | the last day of our fiscal year following the fifth anniversary of the completion of this offering; |
• | the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or |
• | the date on which we are deemed to be a large accelerated filer under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. |
We have availed ourselves in this prospectus of the reduced reporting requirements described above with respect to compensation disclosure requirements and selected financial data. As a result, the information that we provide stockholders may be less comprehensive than what you might receive from other public companies. When we are no
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longer deemed to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We have not elected to avail ourselves of the exemption that allows emerging growth companies to extend the transition period for complying with new or revised financial accounting standards. This election is irrevocable.
Corporate Information
Our executive offices are located at 1621 18th Street, Suite 300, Denver, Colorado 80202, and our telephone number is (303) 749-8200. Our website address is www.intrawest.com. The information on our website is not a part of this prospectus.
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Summary Historical and Unaudited Pro Forma Condensed
Consolidated Financial and Operating Information
The following summary historical consolidated financial information for the years ended June 30, 2011, 2012 and 2013 and as of June 30, 2012 and 2013 has been derived from the audited consolidated financial statements of Cayman L.P. included elsewhere in this prospectus.
The following summary historical consolidated financial information for the three months ended September 30, 2012 and 2013 and as of September 30, 2013 has been derived from the unaudited interim consolidated financial statements of Cayman L.P. included elsewhere in this prospectus. In our opinion, such unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements of Cayman L.P. and reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of operations and financial position of Cayman L.P. Results as of and for the three months ended September 30, 2013 are not necessarily indicative of results that may be expected for the entire year.
The following unaudited pro forma condensed consolidated financial information for the year ended June 30, 2013 and as of and for the three months ended September 30, 2013 gives effect to the Pro Forma Transactions. The unaudited pro forma condensed consolidated financial information is based on available information and assumptions that we believe are reasonable, is for illustrative and informational purposes only and should not be considered representative of our future financial condition or results of operations. See Unaudited Pro Forma Condensed Consolidated Financial Information for a description of the adjustments reflected in the pro forma condensed consolidated financial information.
Prior to the collapse in the housing markets in late 2007 and the global financial crisis that followed, we were actively engaged in large scale development and sales of resort real estate, primarily in North America. In light of the then prevailing market conditions, we ceased new development activities in late 2009. As a result, we were left with a portfolio of real estate assets, high leverage levels and litigation initiated by purchasers of resort real estate seeking to rescind their purchase obligations or otherwise mitigate their losses. This confluence of factors had a material impact on our consolidated financial results for the fiscal periods presented below. Through a series of debt refinancings, cost saving initiatives and divestitures of non-core assets, we believe we have streamlined our operations. As of September 30, 2013, we have divested substantially all of our legacy real estate assets and have settled the majority of litigation claims stemming from our pre-2010 development and sales activities. Although the effects of our pre-2010 legacy real estate development and sales activities on our consolidated financial results will continue in future periods, we expect that these effects will continue to diminish over time. After giving effect to the Refinancing and the Restructuring, we believe our financial results in future periods will be materially different from those reflected in the historical consolidated financial information of Cayman L.P. appearing in this prospectus.
You should read the following summary historical and unaudited pro forma condensed consolidated financial and operating information in conjunction with the information appearing under Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations and Unaudited Pro Forma Condensed Consolidated Financial Information in this prospectus, and in conjunction with the consolidated financial statements of Cayman L.P. and the related notes appearing elsewhere in this prospectus.
Historical | Pro Forma | Historical | Pro Forma | |||||||||||||||||||||||||
Year Ended June 30, | Year Ended June 30, 2013 | Three Months Ended September 30, | Three Months Ended September 30, 2013 | |||||||||||||||||||||||||
2011(1) | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Mountain | $ | 322,194 | $ | 310,765 | $ | 339,003 | $ | 33,259 | $ | 33,305 | ||||||||||||||||||
Adventure | 96,693 | 109,496 | 113,622 | 29,047 | 22,617 | |||||||||||||||||||||||
Real Estate | 61,165 | 61,439 | 64,726 | 15,148 | 13,250 | |||||||||||||||||||||||
Total reportable segment revenues | 480,052 | 481,700 | 517,351 | 77,454 | 69,172 | |||||||||||||||||||||||
Legacy, non-core and other(2) | 79,471 | 31,747 | 7,056 | 1,741 | 11,389 | |||||||||||||||||||||||
Total revenues | 559,523 | 513,447 | 524,407 | $ | 523,979 | 79,195 | 80,561 | $ | 80,561 | |||||||||||||||||||
Operating expenses(2) | 504,005 | 453,187 | 448,944 | 446,848 | 101,179 | 104,196 | 103,563 | |||||||||||||||||||||
Depreciation and amortization | 76,371 | 57,655 | 58,342 | 58,340 | 14,653 | 13,145 | 13,145 |
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Historical | Pro Forma | Historical | Pro Forma | |||||||||||||||||||||||||
Year Ended June 30, | Year
Ended June 30, 2013 | Three Months
Ended September 30, | Three Months Ended September 30, 2013 | |||||||||||||||||||||||||
2011(1) | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||||||||||
(in thousands, except operating statistics) | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Loss (gain) on disposal of assets(1) | $ | 26,196 | $ | 9,443 | $ | 12,448 | $ | 10,525 | $ | 1,210 | $ | (236 | ) | $ | (337 | ) | ||||||||||||
Impairment of long-lived assets | 12,140 | 782 | 143 | 143 | — | — | — | |||||||||||||||||||||
Impairment of real estate | 73,230 | 8,137 | 1,052 | 403 | 62 | 633 | 633 | |||||||||||||||||||||
Goodwill impairment | 64,097 | 3,575 | — | — | — | — | — | |||||||||||||||||||||
Income (loss) from operations | (196,516 | ) | (19,332 | ) | 3,478 | 7,720 | (37,909 | ) | (37,177 | ) | (36,443 | ) | ||||||||||||||||
Interest income | 9,162 | 7,467 | 6,630 | 6,583 | 1,637 | 1,632 | 1,606 | |||||||||||||||||||||
Interest expense on third party debt | (143,463 | ) | (135,929 | ) | (98,437 | ) | (47,662 | ) | (35,006 | ) | (16,464 | ) | (11,532 | ) | ||||||||||||||
Interest expense on notes payable to affiliates | (160,943 | ) | (195,842 | ) | (236,598 | ) | — | (55,371 | ) | (67,105 | ) | — | ||||||||||||||||
Earnings (loss) from equity method investments(3) | 8,299 | 538 | (5,147 | ) | (5,147 | ) | (91 | ) | (1,591 | ) | (1,591 | ) | ||||||||||||||||
Gain on disposal of equity method investments(1) | — | — | 18,923 | 18,923 | — | — | — | |||||||||||||||||||||
Loss on extinguishment of debt(4) | — | — | (11,152 | ) | — | — | — | — | ||||||||||||||||||||
Other income (expense), net(5) | (2,021 | ) | 1,199 | 1,973 | 1,935 | 402 | (172 | ) | (151 | ) | ||||||||||||||||||
Loss from continuing operations before income taxes | (485,482 | ) | (341,899 | ) | (320,330 | ) | (17,648 | ) | (126,338 | ) | (120,877 | ) | (48,111 | ) | ||||||||||||||
Income tax (benefit) expense | 6,555 | (5,836 | ) | (23,616 | ) | (23,616 | ) | 972 | 701 | 701 | ||||||||||||||||||
Income (loss) from continuing operations | (492,037 | ) | (336,063 | ) | (296,714 | ) | $ | 5,968 | (127,310 | ) | (121,578 | ) | $ | (48,812 | ) | |||||||||||||
Loss from discontinued operations, net of tax | (6,469 | ) | — | — | — | — | ||||||||||||||||||||||
Net loss | (498,506 | ) | (336,063 | ) | (296,714 | ) | (127,310 | ) | (121,578 | ) | ||||||||||||||||||
Loss (earnings) attributable to noncontrolling interest | (361 | ) | — | 757 | 34 | (436 | ) | |||||||||||||||||||||
Net loss attributable to Cayman L.P. | $ | (498,867 | ) | $ | (336,063 | ) | $ | (295,957 | ) | $ | (127,276 | ) | $ | (122,014 | ) | |||||||||||||
Adjusted EBITDA(6) | $ | 94,370 | $ | 92,057 | $ | 105,260 | $ | (10,366 | ) | $ | (17,457 | ) | ||||||||||||||||
Key Business Metrics Evaluated by Management: | ||||||||||||||||||||||||||||
Mountain | ||||||||||||||||||||||||||||
Skier Visits(7) | 3,192,388 | 2,758,970 | 3,146,119 | — | — | |||||||||||||||||||||||
Mountain Segment Revenue Per Visit(8) | $ | 100.93 | $ | 112.64 | $ | 107.75 | — | — | ||||||||||||||||||||
ETP(9) | $ | 43.34 | $ | 47.65 | $ | 45.92 | — | — | ||||||||||||||||||||
Adventure | ||||||||||||||||||||||||||||
CMH Guest Nights(10) | 34,479 | 37,829 | 36,237 | 2,605 | 2,956 | |||||||||||||||||||||||
CMH RevPGN(11) | $ | 1,670 | $ | 1,650 | $ | 1,693 | $ | 1,426 | $ | 1,253 | ||||||||||||||||||
Cash Flow Data: | ||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 21,140 | $ | 43,390 | $ | 41,765 | $ | (5,296 | ) | $ | 384 | |||||||||||||||||
Net cash provided by (used in) investing activities | $ | 514,497 | $ | (21,286 | ) | $ | 105,407 | $ | (4,344 | ) | $ | (14,543 | ) | |||||||||||||||
Net cash used in financing activities | $ | (572,797 | ) | $ | (41,518 | ) | $ | (133,683 | ) | $ | (395 | ) | $ | (1,679 | ) |
Historical | Historical | Pro Forma | Pro Forma As Adjusted(12) |
|||||||||||||||||||||||
As of June 30, | As of September 30, |
As of September 30, |
As of September 30, |
|||||||||||||||||||||||
2012 | 2013 |
2013 |
2013 | 2013 | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | 46,908 | $ | 59,775 | $ | 44,860 | $ | 59,098 | ||||||||||||||||||
Real estate held for development(13) | $ | 193,806 | $ | 164,916 | $ | 154,645 | $ | 154,645 | ||||||||||||||||||
Total assets | $ | 1,342,793 | $ | 1,121,600 | $ | 1,132,357 | $ | 1,126,957 | ||||||||||||||||||
Third party long-term debt (including current portion)(14) | $ | 736,081 | $ | 588,863 | $ | 607,553 | $ | 584,526 | ||||||||||||||||||
Notes payable to affiliates (including current portion) | 1,109,005 | 1,358,695 | 1,426,350 | — | ||||||||||||||||||||||
Total long-term debt (including current portion) | $ | 1,845,086 | $ | 1,947,558 | $ | 2,033,903 | $ | 584,526 |
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(1) | Includes the operations of Whistler Blackcomb prior to their divestiture in November 2010. We sold our interests in the assets of Whistler Blackcomb to Whistler Blackcomb Holdings, Inc. (Whistler Holdings) in November 2010 and recognized a loss of $24.4 million. As part of the sale proceeds, we received an equity investment of approximately 24% in Whistler Holdings. Fiscal 2011 includes legacy, non-core and other revenues, operating expenses and depreciation and amortization of $38.6 million, $51.1 million and $10.7 million, respectively, related to Whistler Blackcomb. In December 2012, we sold our investment in Whistler Holdings and recorded a $17.9 million gain related to this disposition. |
(2) | See notes 6(f) and 6(g). See also Managements Discussion and Analysis of Financial Condition and Results of Operations—Legacy, Non-Core and Other Items. |
(3) | See note 6(b). |
(4) | Fiscal 2013 represents the loss recognized on the extinguishment of our senior debt facilities in December 2012. |
(5) | Other income (expense), net, primarily includes gains or losses on currency rate fluctuations and other non-operating expenses that management does not believe are representative of the underlying performance of our ongoing operations. |
(6) | Adjusted EBITDA is a non-GAAP performance measure. Our board of directors and management team focus on Adjusted EBITDA as a key performance and compensation measure. Adjusted EBITDA assists us in comparing our performance over various reporting periods because it removes from our operating results the impact of items that our management believes do not reflect our core operating performance. The compensation committee of our board of directors will determine the annual variable compensation for certain members of our management team based, in part, on Adjusted EBITDA. In addition, Adjusted EBITDA is a material component of certain financial covenants in the New Credit Agreement and is an important metric for investors to assess our ability to comply with those covenants. |
Adjusted EBITDA is not a substitute for net income (loss), income from continuing operations, cash flows from operating activities or any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA. Although we believe that Adjusted EBITDA can make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA to compare the performance of those companies to our performance. Adjusted EBITDA should not be considered as a measure of the income generated by our business or discretionary cash available to us to invest in the growth of our business. Our management compensates for these limitations by reference to our GAAP results and using Adjusted EBITDA as a supplemental measure.
We remove the following items from net loss attributable to Cayman L.P. to get to Adjusted EBITDA:
• | interest expense, net; |
• | income tax expense or benefit; |
• | depreciation and amortization; |
• | impairments of goodwill, real estate and long-lived assets; |
• | gains and losses on disposal of assets; |
• | earnings and losses from equity method investments; |
• | gains and losses on disposal of equity method investments; |
• | gains and losses on extinguishment of debt; |
• | other expense, net; |
• | discontinued operations, net of tax; |
• | legacy and other non-core expenses, net; and |
• | other operating expenses, which include restructuring charges and associated severance expenses, non-cash compensation and other items, including gains, losses, fees, revenues and expenses of transactions which management believes are not representative of the underlying performance of our ongoing operations and which we will be permitted to exclude from the calculation of Adjusted EBITDA under the New Credit Agreement. |
For purposes of calculating Adjusted EBITDA, we also add to net loss attributable to Cayman L.P. our pro rata share of Adjusted EBITDA related to equity method investments included within our reportable segments, which include Blue Mountain Resorts Limited (Mountain), Chateau M.T. Inc. (Real Estate) and Mammoth Hospitality Management, LLC (Real Estate). We believe the Adjusted EBITDA from these investments is representative of the underlying performance of our ongoing operations. Our pro rata share of Adjusted EBITDA is calculated based on our economic ownership percentage of the applicable equity method investee.
Finally, in calculating Adjusted EBITDA, we adjust net loss attributable to Cayman L.P. to include net income and losses attributable to noncontrolling interests within our reportable segments, and then remove Adjusted EBITDA attributable to the noncontrolling interest so that only our share of Adjusted EBITDA is captured within Adjusted EBIDTA. Alpine Helicopters (Adventure) was the only consolidated entity within our reportable segments with a noncontrolling interest during the periods presented. All revenues and expenses of noncontrolling interests not within our reportable segments are removed from net loss attributable to Cayman L.P. to get to Adjusted EBITDA.
The following table reconciles net loss attributable to Cayman L.P. to Adjusted EBITDA for the periods presented. Adjusted EBITDA for fiscal 2013 and the three months ended September 30, 2013 does not include an add back for $0.9 million and $0.5 million, respectively, of lease payments pursuant to the lease agreement at Winter Park, which are considered operating expenses under GAAP. We are entitled to include these payments as an add back to Adjusted EBITDA under the New Credit Agreement. We expect to include these payments as an add back to Adjusted EBITDA in future periods.
Year Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2011 | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net loss attributable to Cayman L.P. | $ | (498,867 | ) | $ | (336,063 | ) | $ | (295,957 | ) | $ | (127,276 | ) | $ | (122,014 | ) | |||||
Interest expense, net(a) | 300,016 | 328,957 | 333,208 | 89,896 | 83,120 | |||||||||||||||
Income tax expense (benefit) | 6,555 | (5,836 | ) | (23,616 | ) | 972 | 701 | |||||||||||||
Depreciation and amortization | 76,371 | 57,655 | 58,342 | 14,653 | 13,145 |
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Year Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2011 | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Impairments of goodwill, real estate and long-lived assets | $ | 149,467 | $ | 12,494 | $ | 1,195 | $ | 62 | $ | 633 | ||||||||||
Loss (gain) on disposal of assets | 26,196 | 9,443 | 12,448 | 1,210 | (236 | ) | ||||||||||||||
(Earnings) loss from equity method investments(b) | (8,299 | ) | (538 | ) | 5,147 | 91 | 1,591 | |||||||||||||
Gain on disposal of equity method investments(c) | — | — | (18,923 | ) | — | — | ||||||||||||||
Loss on extinguishment of debt | — | — | 11,152 | — | — | |||||||||||||||
Other (income) expense, net(d) | 2,021 | (1,199 | ) | (1,973 | ) | (402 | ) | 172 | ||||||||||||
(Loss) earnings attributable to noncontrolling interest(e) | 361 | — | (757 | ) | (34 | ) | 436 | |||||||||||||
Discontinued operations, net of tax | 6,469 | — | — | — | — | |||||||||||||||
Legacy and other non-core expenses, net(f) | 19,707 | 13,762 | 12,878 | 8,869 | 3,536 | |||||||||||||||
Other operating expenses(g) | 4,039 | 4,989 | 4,416 | 454 | 1,027 | |||||||||||||||
Pro rata share of EBITDA related to equity method investments(h) | 10,334 | 8,393 | 8,932 | 1,139 | 1,067 | |||||||||||||||
Adjusted EBITDA attributable to noncontrolling interest(i) | — | — | (1,232 | ) | — | (635 | ) | |||||||||||||
Adjusted EBITDA | $ | 94,370 | $ | 92,057 | $ | 105,260 | $ | (10,366 | ) | $ | (17,457 | ) |
(a) | Includes interest expense on third party debt and on notes payable to affiliates, net of interest income (other than interest income earned from receivables related to our IRCG operations). |
(b) | Includes (earnings) loss from our equity method investments, including Blue Mountain Resorts Limited ($(2.7) million, $(1.7) million and $(2.3) million in fiscal 2011, 2012 and 2013, respectively, and $0.4 million and $0.5 million in the three months ended September 30, 2012 and 2013, respectively), Chateau M.T. Inc. ($(0.1) million, $(0.4) million and $0.1 million in fiscal 2011, 2012 and 2013, respectively, and $(0.1) million and $(0.1) million in the three months ended September 30, 2012 and 2013, respectively), Mammoth Hospitality Management, LLC ($0.5 million, $0.1 million and $0.4 million in fiscal 2011, 2012 and 2013, respectively, and $nil and $(0.1) million in the three months ended September 30, 2012 and 2013, respectively) and MMSA Holdings, Inc., Whistler Holdings and other non-core equity method investments ($(6.0) million, $1.5 million and $6.9 million in fiscal 2011, 2012 and 2013, respectively, and $(0.2) million and $1.3 million in the three months ended September 30, 2012 and 2013, respectively). |
(c) | Fiscal 2013 includes a $17.9 million gain on disposal of our equity method investment in Whistler Holdings in December 2012, and a $1.0 million gain on the sale of our partnership interest in Maui Beach Resort, L.P. in November 2012. |
(d) | Other (income) expense, net, primarily includes gains or losses on currency rate fluctuations and other non-operating expenses that management does not believe are representative of the underlying performance of our ongoing operations. |
(e) | Fiscal 2011 and the three months ended September 30, 2012 includes net income attributable to noncontrolling interest in Tower Ranch Developments Partnership (Tower Ranch). For purposes of calculating Adjusted EBITDA, we include the net income attributable to noncontrolling interest in Tower Ranch and then remove all income and expenses relating to Tower Ranch from our calculation of Adjusted EBITDA. This adjustment is made in legacy and other non-core, expenses, net. As a result, we have removed all revenues and expenses relating to Tower Ranch from Adjusted EBITDA.
Fiscal 2013 and the three months ended September 30, 2013 includes $(0.8) million and $0.4 million, respectively, of net (loss) earnings attributable to noncontrolling interest in Alpine Helicopters. We hold a 20% equity interest in Alpine Helicopters (prior to January 2013, we held 100% of Alpine Helicopters). For purposes of calculating Adjusted EBITDA, we adjust net loss attributable to Cayman L.P. to include the net loss attributable to noncontrolling interest in Alpine Helicopters and then remove the Adjusted EBITDA attributable to noncontrolling interest in Alpine Helicopters. Adjusted EBITDA attributable to noncontrolling interest in Alpine Helicopters was $(1.2) million and $(0.6) million in fiscal 2013 and the three months ended September 30, 2013, respectively. See note (i) below. With this adjustment, only 20% of the Adjusted EBITDA in Alpine Helicopters is captured within Adjusted EBITDA. |
(f) | The table below provides a breakdown of items included in legacy and other non-core, expenses, net, for fiscal 2011, 2012 and 2013 and for the three months ended September 30, 2012 and 2013. See Managements Discussion and Analysis of Financial Condition and Results of Operations—Legacy, Non-Core and Other Items. |
Year Ended June 30, | Three months ended September 30, | |||||||||||||||||||
2011 | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Legacy real estate carrying costs and litigation | $ | (11,193 | ) | $ | (9,976 | ) | $ | (8,378 | ) | $ | (6,998 | ) | $ | (2,525 | ) | |||||
Divested non-core operations | (8,035 | ) | (3,664 | ) | (3,168 | ) | (1,291 | ) | (366 | ) | ||||||||||
Remaining non-core operations | (479 | ) | (122 | ) | (1,332 | ) | (580 | ) | (645 | ) | ||||||||||
Legacy and other non-core expenses, net | $ | (19,707 | ) | $ | (13,762 | ) | $ | (12,878 | ) | $ | (8,869 | ) | $ | (3,536 | ) |
(g) | Reflects adjustments for other items that are included in operating expenses in our GAAP financial statements. Fiscal 2011 includes $1.9 million of non-cash compensation and $1.6 million of severance charges attributable to the relocation of our corporate headquarters. Fiscal 2012 includes $0.6 million of non-cash compensation, $2.7 million of severance charges attributable to the relocation of our corporate headquarters and $0.9 million of restructuring charges relating to the restructuring of Alpine Helicopters. Fiscal 2013 includes restructuring charges of $2.2 million relating to the restructuring of Alpine Helicopters, $1.1 million of severance charges and $0.2 million of non-cash compensation. The three months ended September 30, 2012 includes $0.2 million of non-cash compensation and $0.2 million of severance charges. The three months ended September 30, 2013 includes $0.3 million of restruc- |
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turing and severance charges. Fiscal 2011, 2012 and 2013 and the three months ended September 30, 2012 and 2013 also includes $0.5 million, $0.8 million, $0.8 million, $0.1 million and $0.7 million, respectively, of other operating expenses that management does not believe are representative of the underlying performance of our ongoing operations. See Managements Discussion and Analysis of Financial Condition and Results of OperationsLegacy, Non-Core and Other Items. |
(h) | Includes Blue Mountain Resorts Limited ($7.7 million, $5.9 million and $6.9 million in fiscal 2011, 2012 and 2013, respectively, and $0.4 million and $0.3 million in the three months ended September 30, 2012 and 2013, respectively), Mammoth Hospitality Management, LLC ($0.9 million, $0.4 million and $0.3 million in fiscal 2011, 2012 and 2013, respectively, and $0.1 million and $0.2 million in the three months ended September 30, 2012 and 2013, respectively) and Chateau M.T. Inc. ($1.7 million, $2.1 million and $1.7 million in fiscal 2011, 2012 and 2013, respectively, and $0.6 million and $0.6 million in the three months ended September 30, 2012 and 2013, respectively). Represents our pro rata share of EBITDA from these equity method investments based on our economic ownership percentage during the relevant period. The pro rata share of revenue that corresponds to the pro rata share of EBITDA from equity method investments was as follows: Blue Mountain Resorts Limited ($33.3 million, $32.2 million and $36.3 million in fiscal 2011, 2012 and 2013, respectively, and $7.0 million and $6.9 million in the three months ended September 30, 2012 and 2013, respectively), Mammoth Hospitality Management, LLC ($3.7 million, $3.3 million and $4.4 million in fiscal 2011, 2012 and 2013, respectively, and $0.7 million and $0.8 million in the three months ended September 30, 2012 and 2013, respectively) and Chateau M.T. Inc. ($12.5 million, $13.3 million and $13.2 million in fiscal 2011, 2012 and 2013, respectively, and $3.4 million and $3.4 million in the three months ended September 30, 2012 and 2013, respectively). These revenues are not included within our consolidated revenues. |
(i) | Represents Adjusted EBITDA attributable to the noncontrolling interest in Alpine Helicopters. Our consolidated revenue includes 100% of Alpine Helicopters revenue. The pro rata share of revenue that corresponds to the Adjusted EBITDA attributable to the noncontrolling interest in Alpine Helicopters was $13.8 million in fiscal 2013 and $7.6 million in the three months ended September 30, 2013. |
(7) | A Skier Visit represents an individuals use of a paid or complimentary ticket, frequency card or season pass to ski or snowboard at our Steamboat, Winter Park, Tremblant, Stratton and Snowshoe resorts for any part of one day. |
(8) | Mountain Segment Revenue Per Visit is defined as total revenue of our Mountain segment for a given period divided by total Skier Visits during such period. |
(9) | Effective ticket price, or ETP, is calculated by dividing lift revenue for a given period by total Skier Visits during such period. |
(10) | CMH Guest Nights represents the number of paid nights skiing or hiking customers spend at our CMH lodges for a given period. |
(11) | CMH RevPGN is total CMH revenue for a given period divided by the total number of CMH Guest Nights during such period. |
(12) | Gives effect to the Pro Forma Transactions as set forth under Unaudited Pro Forma Condensed Consolidated Financial Information as well as this offering. Assumes net proceeds to us from the offering of $ million. See Use of Proceeds. Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus) would increase (decrease) cash and cash equivalents by $ million, assuming the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated offering expenses payable by us. |
(13) | Real estate held for development includes land and infrastructure assets, net of impairments to fair value, intended to be used in the future development of real estate assets for sale and amenity enhancement at our resorts. |
(14) | Effective September 30, 2013, we and the Winter Park Recreational Association agreed to amend the lease under which we operate Winter Park Resort. Pursuant to the amendment, a contingency clause in which total rental payments could not exceed cash flow for annual payment was removed. The elimination of the contingency requires us to make annual rental payments of a minimum of $2.0 million until the end of the initial lease term, July 1, 2052, regardless of future cash flows, thus changing the future minimum lease payments. The amendment required a modification of the lease asset and lease obligation as the present value of the future minimum lease payments under the amendment is different from the minimum lease payments under the original agreement. The total increase in the lease obligation, based on a net present value of future payments, was $19.6 million. |
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The Offering
Common stock we are offering | shares |
Common stock the selling stockholder is offering | shares |
Common stock to be issued and outstanding after this offering | shares ( shares if the underwriters exercise their option to purchase additional shares in full). |
Common stock to be beneficially owned by the Initial Stockholders after this offering | shares ( shares if the underwriters exercise their option to purchase additional shares in full). |
Use of proceeds | We estimate that the net proceeds to us from the sale of shares in this offering, after deducting underwriting discounts and offering expenses payable by us, will be approximately $ million. Our net proceeds will increase by approximately $ million if the underwriters option to purchase additional shares is exercised in full. We have no specific plan for the net proceeds to us from this offering and intend to use such proceeds for working capital and other general corporate purposes, which may include potential investments and acquisitions. See Use of Proceeds. We will not receive any proceeds from the sale of our common stock by the selling stockholder, including any shares sold by the selling stockholder pursuant to the underwriters option to purchase additional shares. |
Dividend policy | We do not currently anticipate paying dividends on our common stock. Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors in accordance with applicable law after taking into account various factors, including our financial condition, our operating results, our current and anticipated cash needs, the impact on our effective tax rate, our indebtedness, legal requirements and other factors that our board of directors deems relevant. Because we are a holding company and have no direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our subsidiaries. Certain of our debt agreements limit our ability to pay dividends. See Dividend Policy. |
Risk factors | See Risk Factors for a discussion of factors you should carefully consider before deciding to invest in our common stock. |
Stock exchange symbol | We intend to apply to have our common stock listed on the NYSE under the symbol SNOW. |
Except as otherwise indicated, all of the information in this prospectus:
• | gives retroactive effect to a -for-1 stock split to be effected immediately prior to the pricing of the offering; |
• | assumes no exercise of the underwriters option to purchase up to additional shares of common stock; and |
• | assumes an initial offering price of $ per share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus. |
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Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as other information contained in this prospectus, before deciding to invest in our common stock. The occurrence of any of the following risks could materially and adversely affect our business, prospects, financial condition, results of operations and cash flows, in which case the trading price of our common stock could decline and you could lose all or part of your investment.
Risks Related to Our Business
Our industry is sensitive to weakness in the economy and we are subject to risks associated with the overall leisure industry.
Weak economic conditions in the United States and Canada or elsewhere in the world, including high unemployment and erosion of consumer confidence, could have a material adverse effect on our industry. We provide skiing and mountain adventure experiences with a relatively high cost of participation. An economic downturn could reduce consumer spending on recreational activities, resulting in declines in visits to, and spending at, our mountain resorts and CMH, which could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows. For example, as a result of economic weakness in Europe in recent years, we saw a decline in European customers at CMH, which have historically comprised more than 40% of our total CMH winter customers. In addition, we may be unable to increase the price of our lift products or other offerings during an economic downturn despite our history of being successful in raising such prices under a variety of economic conditions.
Furthermore, our industry is sensitive to the willingness and ability of individuals to travel. Global or regional events, such as acts of terrorism, the spread of contagious diseases, political events or military conflicts, or increases in commercial airfare or gasoline prices could adversely impact an individuals willingness or ability to travel to our properties, which could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Our industry is vulnerable to lack of adequate snowfall or unseasonable weather conditions.
The ability to attract winter customers to mountain resorts is influenced by adequate snowfall and weather conditions. Warm weather may result in rain, snow melt and inadequate natural snowfall and may render snowmaking wholly or partially ineffective in maintaining skiing conditions. For example, the North American 2011/2012 ski season was marked by some of the lowest natural snowfall amounts in 20 years and we saw a decline in skier visits during the 2011/2012 ski season compared to prior years. Conversely, extreme weather conditions may adversely affect the customer experience or result in lift closures and may also make it difficult for customers to access mountain resorts. The early season snow conditions and skier perceptions of early season snow conditions influence the momentum and success of the overall ski season, including pre-season sales of season passes and frequency cards at our mountain resorts. Although heli-skiing is less susceptible to customer fluctuations due to weather conditions than our mountain resorts, as most heli-skiing customers book their visits significantly in advance of the ski season, CMH remains susceptible to risks related to inclement weather because we provide customers with credits, which may be used during future seasons, if weather conditions prevent customers from reaching the guaranteed amount of vertical feet of skiing. As a result, inclement weather at our CMH sites during one ski season may materially adversely affect our CMH results of operations in future years when the credits are used. In addition, unseasonable weather or rain can adversely affect summer visits to our mountain resorts and heli-hiking sites.
Our business is highly seasonal and the occurrence of adverse events during our peak periods could have a material adverse effect on our results of operations and cash flows.
Although each of our mountain resorts and CMH operates as a four-season business, we generate the highest revenues during our second and third fiscal quarters, which is the peak ski season. As a result of the seasonality of our business, our mountain resorts and CMH typically experience operating losses during the first and fourth fiscal quarters of each fiscal year. In addition, throughout our peak quarters, we generate the highest daily revenues on weekends, during the Christmas/New Years and Presidents Day holiday periods and, in the case of our mountain resorts, during school spring breaks. Furthermore, we sell a significant portion of our season pass products, pre-sold destination packages and CMH trips during our first fiscal quarter. The seasonality of our revenues and our depen-
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dence on peak operating and selling periods increases the impact of certain events on our results of operations. The occurrence of any of the other risk factors discussed herein during these peak operating or selling periods could have a disproportionate and material adverse effect on our results of operations and cash flows.
Variations in the timing of peak periods, holidays and weekends may affect the comparability of our results of operations.
Depending on how peak periods, holidays and weekends fall on the calendar, in any given year we may have more or less peak periods, holidays and weekends in our second fiscal quarter compared to prior years, with a corresponding difference in our third fiscal quarter. These differences can result in material differences in our quarterly results of operations and affect the comparability of our results of operations.
We are vulnerable to the risk of natural disasters, including forest fires, avalanches, landslides, drought and hurricanes.
A severe natural disaster, such as a forest fire, avalanche, landslide, drought or hurricane, may not be fully covered by our insurance policies and may interrupt our operations, require evacuations, severely damage our properties and impede access to our properties in affected areas, any of which could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows. In addition, our ability to attract customers to our properties is influenced by the aesthetics and natural beauty of the outdoor environment where our properties are located. A severe forest fire or other natural disaster could damage our properties or surrounding areas and have a long-term negative impact on customer visitation, as it would take several years for the environment to recover. Our insurance policies may not cover lost revenues due to a decline in visitation caused by damage to our properties or surrounding areas. In recent years, the combination of drought conditions and a pine-beetle epidemic has led to an increase in forest fires in the Western United States, including Colorado.
The high fixed cost structure of our businesses can result in significantly lower margins if visitation to our resorts declines.
Our profitability is highly dependent on visitation. However, the cost structure of our business has significant components that cannot be eliminated when skier visits decline, including costs related to utilities, information technology, insurance, year-round employees and equipment. The occurrence of other risk factors discussed herein could adversely affect visitation at our resorts and we may not be able to reduce fixed costs at the same rate as declining revenues. If cost-cutting efforts are insufficient to offset declines in revenues or are impracticable, we could experience a material decrease in our margins. Accordingly, our profits may be disproportionately reduced during periods of declining revenues.
A disruption in our water supply would impact our snowmaking capabilities and impact our operations.
Our operations are heavily dependent upon our access to adequate supplies of water to make snow and otherwise conduct our operations. Our mountain resorts are subject to federal, state, provincial and local laws and regulations relating to water rights. Changes in these laws and regulations may adversely affect our operations. In addition, drought conditions may adversely affect our water supply. At our mountain resorts in Colorado, we own or have ownership or leasehold interests in water rights individually or through stock ownership in ditch and reservoir companies, groundwater wells and other sources, and the availability of water through these sources is subject to change. In addition, in recent years the United States Forest Service (the U.S. Forest Service) has sought to obtain ownership of certain water rights owned by ski resorts located on U.S. Forest Service land. While the U.S. Forest Service has indicated that it no longer intends to seek ownership of such water rights, it may seek to impose limitations on the quantity of water used by a ski area and/or uses to which the water may be put. Our inability to access adequate supplies of water to support our current operations or an expansion of our operations would have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We face significant competition.
Our mountain resorts directly compete with other resorts in their respective local and regional markets, as well as with other major destination resorts. We also compete with other large resort operators for the sale of multi-mountain passes. Competition within the ski resort industry is based on multiple factors, including location, price, weather conditions, the uniqueness and perceived quality of the terrain for various levels of skill and ability, the atmosphere of the base village, the quality of food and entertainment and ease of travel to the resort (including direct flights by major airlines). In our Adventure segment, we face competition from heli-skiing and snowcat operators in
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Canada and the United States. Within our Real Estate segment, our managed properties compete with rental management companies, locally-owned independent hotels, as well as facilities and timeshare companies that are owned or managed by national and international chains. These properties also compete for convention and conference business across the North American market. Competition within the hotel and lodging industry is generally based on quality and consistency of rooms, restaurants and meeting facilities and services, attractiveness of locations, availability of a global distribution system, price and other factors. Our competitors may have access to greater financial, marketing and other resources and may have access to financing on more attractive terms than us. As a result, they may be able to devote more resources to improving and marketing their offerings or more readily take advantage of acquisitions or other opportunities. If we are unable to compete successfully, our business, prospects, financial condition, results of operations and cash flows will be materially adversely affected.
We are not the sole property manager at our real estate developments.
We manage a significant portion of the bed base at our resorts and manage rental properties through our Real Estate segment. An individual that has purchased a condominium in one of our developments is not obligated to use our rental management services and, in recent years, third-party services that assist condominium owners in leasing their units without our involvement have become more prevalent. As a result, we have experienced a decline in the number of condominium owners using our rental management services.
In addition, since we are uninvolved in transactions where the condominium owner uses a third-party manager, we are unable to control the quality of the leased units or the customer experience. If customers are unsatisfied, the reputation of the entire development, including units we manage, may be harmed, as most customers do not distinguish between units managed by us and units managed by third parties. If a developments reputation for a positive customer experience deteriorates, it may become more challenging for us to attract customers to these developments. A decline in customers at a development located at one of our mountain resorts may also lead to a decline in revenues throughout the resorts business.
Changes in consumer tastes and preferences may affect skier visits at our mountain resorts.
Our success depends on our ability to attract skiers to our mountain resorts. Changes in consumer tastes and preferences, particularly those affecting the popularity of skiing, and other social and demographic trends could adversely affect visitation at our mountain resorts. Furthermore, a reduction in average household income in some of the areas near our resorts, compared to historic levels, combined with the increasing cost of skiing, may make skiing unaffordable for a large percentage of that population. A significant decline in skier visits compared to historical levels would have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We operate on government land pursuant to the terms of governmental permits that may be revoked or not renewed.
We do not own all of the land on which we conduct our operations. Certain of our mountain resorts and CMH operate on federal or Crown land or land owned by other governmental entities pursuant to the terms of governmental permits, leases or other agreements. In many cases, the permits, leases or other agreements give the applicable agency, including the U.S. Forest Service, the right to review and comment on the construction of improvements in the applicable area and on certain other operational matters. Certain permits, leases or other agreements may also be terminated or modified by the applicable agency for specific reasons or in the event we fail to perform our obligations under the applicable permits, leases or other agreements. In addition, the permits, leases or other agreements may not be renewed. A termination or modification of any of our permits, leases or other agreements could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows. Finally, British Columbia may issue additional permits or licenses to third parties related to the land on which CMH operates, and such additional permits and licenses may deteriorate the heli-skiing experience at CMH and increase competition.
Our operations are subject to extensive laws, rules, regulations and policies administered by various federal, state, provincial and other governmental authorities.
Our operations are subject to a variety of federal, state, provincial and local laws and regulations, including those relating to lift operations, emissions to the air, discharges to water, storage, treatment and disposal of fuel, water and wastes, land use, remediation of contaminated sites and protection of the environment, natural resources and wildlife. We are also subject to worker health and safety laws and regulations. From time to time our operations are subject to inspections by environmental regulators or other regulatory agencies and we may be required to undertake certain
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remediation activities, including in connection with the onsite use and storage of chemicals and petroleum products that may result in spills or releases. Although to date the costs associated with remediation activities have been immaterial, we may be required to incur material remediation costs in the future. Our efforts to comply with applicable laws and regulations do not eliminate the risk that we may be held liable for breaches of these laws and regulations, which may result in fines and penalties or subject us to claims for damages. Liability for any fines, penalties, damages or remediation costs, or changes in applicable laws or regulations, could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Our business is capital intensive.
We must regularly expend capital to construct, maintain and renovate our properties in order to remain competitive, maintain the value and brand standards of our properties and comply with applicable laws and regulations. We cannot always predict where capital will need to be expended in any fiscal year and capital expenditures can increase due to forces beyond our control. Further, we cannot be certain that we will have enough capital or that we will be able to raise capital by issuing equity or debt securities or through other financing methods on reasonable terms, if at all, to execute our business plan. A lack of available funds for capital expenditures could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
In addition, our ability to construct, maintain and renovate our properties is subject to a number of risks, including:
• | construction delays or cost overruns, including those related to labor and materials; |
• | the requirement to obtain zoning, occupancy and other required permits or authorizations; |
• | governmental restrictions on the size or kind of development; |
• | force majeure events, including forest fires, avalanches, landslides, drought or hurricanes; |
• | design defects; and |
• | environmental concerns. |
If we are not able to complete capital projects on schedule, or if our investments fail to improve the properties in the manner that we expect, our ability to compete effectively would be diminished and our business, prospects, financial condition, results of operations and cash flows could be materially adversely affected.
We are dependent on significant infrastructure and equipment.
Our infrastructure and equipment, including lifts and helicopters, is costly to maintain, repair and replace and is susceptible to unscheduled maintenance. Much of our infrastructure and equipment will eventually need to be replaced or significantly repaired or modernized, which could result in interruptions to our business, particularly if a key lift at one of our mountain resorts were to require repair during a peak period. The potential interruptions and costs associated with lift replacements may be compounded by the fact there are a limited number of lift manufacturers and a significant portion of the lifts at North American mountain resorts were installed at approximately the same time, and thus may be due for replacement at approximately the same time. In certain cases, the cost of infrastructure or equipment repair or replacement may not be justified by the revenues at the applicable property. As a result, we may close a property, or reduce its offerings, if we determine that it is not cost efficient to replace, maintain or repair our infrastructure and equipment at the property.
Our future acquisitions or other growth opportunities may not be successful.
We actively evaluate potential acquisitions of, and investments in, businesses, properties or assets and we may actively pursue such opportunities from time to time, some of which could be significant. In addition, we intend to evaluate capital light opportunities such as managing third-party resort assets and entering into real estate development partnerships. The success of these strategies will depend, in part, on our ability to:
• | identify suitable businesses, properties and assets; |
• | negotiate acquisition or other agreements on acceptable terms; |
• | complete the transactions within our expected time frame and budget; |
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• | improve the results of operations of the acquired businesses and properties and successfully integrate their operations into our own; and |
• | respond to any concerns expressed by regulators, including antitrust or competition law concerns. |
We may fail to properly complete any or all of these steps. In many cases, we will be competing for these opportunities with third parties that may have substantially greater financial resources than we do.
In addition to facing competition in identifying and consummating successful transactions, acquisitions and other transactions could involve significant risks, including:
• | our over-valuation of acquired companies, properties or assets; |
• | delays in realizing or a failure to realize the benefits, revenues, cost savings and synergies that we anticipate; |
• | failure to retain key personnel or business relationships and maintain the reputation of the acquired company, property or asset; |
• | the potential impairment of acquired assets; |
• | insufficient, or no, indemnification for legal liabilities; |
• | the assumption of known or unknown liabilities and additional risks of the acquired businesses or properties, including environmental liabilities; and |
• | operating difficulties that require significant financial and managerial resources that would otherwise be available for the ongoing development or expansion of our existing operations. |
We may not be able to obtain financing for acquisitions or other transactions on attractive terms, or at all, and the ability to obtain financing may be restricted by the terms of our outstanding indebtedness or other indebtedness we may incur. In addition, our competitors may be able to obtain financing on more attractive terms than us.
Steamboat is highly dependent on subsidized direct air service from major hub airports.
Most of Steamboats customers fly directly from large hub airports to the Yampa Valley Regional Airport, which is 25 miles from the resort. Each ski season, we enter into agreements with major airlines to fly these routes and provide the airlines with subsidies if passenger volume falls below certain pre-established levels. If the routes prove unprofitable to the airlines and any of these airlines decides to stop service to this airport, Steamboats skier visits would be materially adversely affected.
We rely on information technology to operate our businesses and maintain our competitiveness, and any failure to adapt to technological developments or industry trends could harm our business.
We depend on the use of information technology and systems, including technology and systems used for reservations, point of sale, e-commerce, accounting, procurement, administration and technologies we make available to our customers. We are currently in the process of updating or replacing many of these systems. Delays or difficulties in implementing these new or enhanced systems may keep us from achieving the desired results in a timely manner or at all. Any interruptions, outages or delays in our systems, or deterioration in their performance, could impair our ability to process transactions and could decrease the quality of service that we offer to our customers.
Our future success depends on our ability to adapt our infrastructure to meet rapidly evolving consumer trends and demands and to respond to competitive service and product offerings. The failure to adopt new technologies and systems in the future may have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Non-compliance with Payment Card Industry Data Security Standards (PCI DSS) may subject us to fines, penalties and civil liability.
We are subject to compliance with PCI DSS, an information security standard for organizations that handle cardholder information from major debit and credit card companies. Currently, we are not fully compliant with PCI DSS. We are currently taking steps to achieve compliance, but our efforts to comply with PCI DSS may result in significant expenses and our ongoing failure to fully comply with PCI DSS may subject us to fines, penalties and civil
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liability, and may result in the loss of our ability to accept debit and credit card payments or prohibit us from processing transactions through American Express, MasterCard, VISA and other card and payment networks. Even if we become compliant with PCI DSS or other applicable standards, we still may not be able to prevent security breaches involving customer transaction data.
Failure to maintain the integrity of customer or employee data could result in damage to our reputation and subject us to fines, penalties and civil liability.
We collect and store personally identifiable information from customers and employees in the course of doing business and use it for a variety of business purposes, including marketing to our customers through various forms of media. State, provincial and federal governments have enacted laws and regulations to protect consumers and employees against identity theft, including laws governing treatment of personally identifiable information. The regulatory environment and increased threats to the data we store has increased our costs of doing business. Any failure on our part to implement appropriate safeguards or to detect and provide prompt notice of breaches or unauthorized access as required by applicable laws could result in damage to our reputation and subject us to fines, penalties and civil liabilities. If we are required to pay any significant amounts in satisfaction of claims under these laws, or if we are forced to cease our business operations for any length of time as a result of our inability to comply fully with any such law, our business, prospects, financial condition, results of operations and cash flows may be materially adversely affected.
Our business depends on the quality and reputation of our brands, and any deterioration in the quality or reputation of our brands could have an adverse impact on our business.
A negative public image or other adverse events could affect the reputation of one or more of our mountain resorts and other businesses or more generally impact the reputation of our company. If the reputation or perceived quality of our brands declines, our business, prospects, financial condition, results of operations and cash flows could be materially adversely affected. The unauthorized use of our trademarks could also diminish the value of our brands and their market acceptance, competitive advantages or goodwill, which could adversely affect us. In addition, a negative public image or other adverse event occurring in an industry where we operate or a related industry may harm our reputation even if such image or event does directly relate to our brands or business.
We are subject to risks related to currency fluctuations.
We present our financial statements in United States dollars. Our operating results are sensitive to fluctuations in foreign currency exchange rates, as a significant portion of our revenues and operating expenses are transacted in Canadian dollars, principally at Tremblant and within our Adventure segment. During fiscal 2013, approximately 41.6% of our total revenues and 41.3% of our total operating expenses were denominated in Canadian dollars. A significant fluctuation in the Canada/U.S. exchange rate could therefore have a significant impact on our results of operations after translating our Canadian operations into United States dollars. See Managements Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Discussion About Market Risk—Foreign Currency Fluctuations.
Currency variations can also contribute to variations in sales at our mountain resorts and CMH because volatility in foreign exchange rates can impact our customers willingness to purchase lift passes or CMH packages. For example, an increase in the value of the Canadian dollar compared to the United States dollar or euro may make our CMH packages less attractive to American and European skiers, respectively.
Certain circumstances may exist whereby our insurance coverage may not cover all possible losses and we may not be able to renew our insurance policies on favorable terms, or at all.
Although we maintain various property and casualty insurance policies and undertake safety and loss prevention programs to address certain risks, our insurance policies do not cover all types of losses and liabilities and in some cases may not be sufficient to cover the ultimate cost of claims which exceed policy limits. If we are held liable for amounts exceeding the limits of our insurance coverage or for claims outside the scope of our coverage, our business, prospects, financial condition, results of operations and cash flows could be materially adversely affected.
In addition, we may not be able to renew our current insurance policies on favorable terms, or at all. Our ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected if we or other companies within or outside our industry sustain significant losses or make significant insurance claims.
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We are subject to litigation in the ordinary course of business and related to our legacy real estate development activities.
We are involved in various lawsuits and claims that may include, among other things, claims or litigation relating to personal injury and wrongful death, allegations of violations of laws and regulations relating to our real estate activities, labor and employment, intellectual property and environmental matters, and commercial contract disputes. For example, we are, from time to time, subject to various lawsuits and claims related to injuries occurring at our properties, including due to the use, operation or maintenance of our trails, lifts, aircraft and other facilities.
In addition, we are a defendant in lawsuits related to our pre-2010 legacy real estate construction- and sales-phase development activities, including claims related to alleged construction defects and alleged violations of state and federal laws that require providing purchasers with certain mandated disclosures. Any such claims, regardless of merit, are time consuming and expensive to defend and could divert managements attention and resources and may materially adversely affect our reputation, even if resolved in our favor. Accordingly, the outcome or existence of current or future litigation may have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We depend on a seasonal workforce.
We recruit year-round to fill thousands of seasonal positions. Because much of this hiring is done months in advance of the start of the applicable season, we may not be able to accurately predict our staffing needs. In addition, we may not be able to recruit and hire adequate seasonal personnel or hire such personnel at costs consistent with our costs in prior years. This risk is heightened in periods of economic strength, as the market for seasonal labor may become more competitive.
If we do not retain our key personnel or maintain adequate succession plans, our business may suffer.
The success of our business depends, in part, on our senior management, including our chief executive officer, William Jensen, and the development of adequate succession plans. The departure of any key member of the management team and the failure to maintain an adequate succession plan could adversely affect our business and the trading price of our common stock.
We are subject to risks associated with our workforce.
We are subject to various federal, state and provincial laws governing matters such as minimum wage requirements, overtime compensation and other working conditions, citizenship requirements, discrimination and family and medical leave. Our operations in Canada are also subject to laws that may require us to make severance or other payments to employees upon their termination. In addition, we are continuing to assess the impact of U.S. federal healthcare reform law and regulations on our healthcare benefit costs, which will likely increase the amount of healthcare expenses paid by us. Immigration law reform could also impact our workforce because we recruit and hire foreign nationals as part of our seasonal workforce. If our labor-related expenses increase, our operating expenses could increase and our business, financial condition and results of operations could be harmed.
From time to time, we have also experienced non-union employees attempting to unionize. While only a small portion of our employees are unionized at present, we may experience additional union activity in the future. In addition, future legislation could make it easier for unions to organize and obtain collectively bargained benefits, which could increase our operating expenses and negatively affect our business, prospects, financial condition, results of operations and cash flows.
Our real estate development strategy may not be successful.
Our real estate development activities are focused on designing strategies for the development of the land surrounding the base areas of our mountain resorts. Prior to 2010, we were actively engaged in the development of residential real estate, primarily in the United States and Canada. Since 2010, our real estate development activities have been limited to the preservation of core development parcels located at our resorts and, more recently, designing strategies for the future development of this land. Our ability to implement any of these strategies and realize the anticipated benefits of future real estate development projects is subject to a number of risks, including:
• | lack of improvement, or deterioration, in real estate markets; |
• | difficulty in selling units or the ability of buyers to obtain necessary funds to close on units; |
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• | escalation in construction costs due to price increases in commodities, unforeseen conditions, inadequate designs or other causes; |
• | work stoppages and inadequate internal resources to manage projects; |
• | shortages in building materials; |
• | difficulty in financing real estate development projects; and |
• | difficulty in receiving necessary regulatory approvals. |
If these projects are not implemented, in addition to not realizing intended profits from the real estate developments and sales from ancillary products, our customers may choose to go to other resorts that they perceive to have better residential offerings, which could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows. In addition, even if we increase the number of units or beds at our mountain resorts, the projects may not be successful and we may be unable to realize incremental visitor growth or profits.
CMH is dependent on Alpine Helicopters.
In January 2013, we restructured our Alpine Helicopters business to comply with Canadian foreign ownership regulations governing aviation flight services in Canada. The restructuring involved the formation of a new flight services company, Alpine Helicopters. We own a 20% equity interest in Alpine Helicopters and the remaining 80% is held in trust for the benefit of the management and employees of Alpine Helicopters, including the pilots and crew members that support our helicopter operations. We consolidate Alpine Helicopters for GAAP purposes because we are the primary beneficiary.
Alpine Helicopters employs all the pilots who fly the helicopters in the CMH land tenures. As a result of its reliance on Alpine Helicopters, CMHs business and operations would be negatively affected if Alpine Helicopters were to experience significant disruption affecting its ability to provide helicopter services to CMH. The partial or complete loss of Alpine Helicopters services, or a significant adverse change in our relationship with Alpine Helicopters, could result in lost revenue and added costs and harm the image and reputation of CMH as well as negatively impact the CMH customer experience.
Pursuant to a shareholders agreement, we may be required to purchase Blue Mountain Resorts Holdings Inc.s equity interest in Blue Mountain Resorts Limited.
We and Blue Mountain Holdings each own a 50% equity interest in Blue Mountain Resorts Limited. Pursuant to a shareholders agreement, we have granted Blue Mountain Holdings a put option pursuant to which Blue Mountain Holdings may, subject to certain limitations, sell to us (i) all of its equity interest in Blue Mountain Resorts Limited or (ii) between 10% and 25% of the total amount of the outstanding equity of Blue Mountain Resorts Limited. In both cases, we would be required to purchase the equity interest at 90% of its fair market value. We may not have sufficient cash available to purchase the equity interest if the put option is exercised and we may be required to obtain financing to fund the purchase. Such financing may be unavailable, or only available on unattractive terms. Accordingly, the exercise of the put right by Blue Mountain Holdings may have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Climate change may adversely impact our results of operations.
There is a growing political and scientific consensus that emissions of greenhouse gases continue to alter the composition of the global atmosphere in ways that are affecting and are expected to continue affecting the global climate. The effects of climate change, including any impact of global warming, could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Warmer overall temperatures and other effects of climate change may adversely affect skier visits and our revenue and profits. In addition, a steady increase in global temperatures could shorten the ski season. Changes to the amount of snowfall and differences in weather patterns may increase our snowmaking expense, inhibit our snowmaking capabilities and negatively impact skier perceptions of the ski season.
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We may be required to further write down our assets.
Under GAAP, if we determine goodwill, intangible assets or real estate held for development are impaired, we are required to write down these assets and record a non-cash impairment charge. As of September 30, 2013, we had goodwill of $94.6 million, intangible assets of $64.5 million and real estate held for development of $154.6 million. Intangible assets consist primarily of permits and licenses, trademarks and tradenames and customer relationships.
We had impairment charges on goodwill, intangible assets and real estate held for development of $149.5 million, $12.5 million and $1.2 million in fiscal 2011, 2012 and 2013, respectively, and $0.1 million and $0.6 million in the three months ended September 30, 2012 and 2013, respectively. Determining whether an impairment exists and the amount of the potential impairment involves quantitative data and qualitative criteria that are based on estimates and assumptions requiring significant management judgment. Future events or new information may change managements valuation of goodwill, intangible assets or real estate held for development in a short amount of time. The timing and amount of impairment charges recorded in our consolidated statements of operations and write-downs recorded in our consolidated balance sheets could vary if managements conclusions change. Any impairment of goodwill, intangible assets or real estate held for development could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We have underfunded pension obligations.
As of September 30, 2013, we had underfunded pension plan liabilities in frozen pension plans in the amount of $35.6 million. Significant changes in the market values of the investments held to fund the pension obligations or a change in the discount rate used to measure these pension obligations may result in a significant increase or decrease in the valuation of these pension obligations, and these changes may affect the net periodic pension cost in the year the change is made and in subsequent years. We may not generate sufficient cash flow to satisfy these obligations. Any inability to satisfy these pension obligations could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We may not be able to fully utilize our net operating loss carryforwards.
We have recorded a full valuation allowance against these net operating loss carryforwards because we believe that uncertainty exists with respect to the future realization of the loss carryforwards as well as with respect to the amount of the loss carryforwards that will be available in future periods. In addition, these loss carryforwards may be reduced as a result of the Restructuring. To the extent available, we intend to use these net operating loss carryforwards to offset future taxable income associated with our operations. There can be no assurance that we will generate sufficient taxable income in the carryforward period to utilize any remaining loss carryforwards before they expire.
In addition, Section 382 and related provisions of the Internal Revenue Code of 1986, as amended (the Code), contains rules that limit for U.S. federal income tax purposes the ability of a company that undergoes an ownership change to utilize its net operating losses and certain other tax attributes existing as of the date of such ownership change. Under these rules, such an ownership change is generally an increase in ownership by one or more five percent shareholders, within the meaning of Section 382 of the Code, of more than 50% of a companys stock, directly or indirectly, within a rolling three-year period. If we undergo one or more ownership changes within the meaning of Section 382 of the Code, or if one has already occurred, our net operating losses and certain other tax attributes existing as of the date of each ownership change may be unavailable, in whole or in part, to offset our income and/or reduce or defer our future taxable income associated with our operations, which could have a negative effect on our financial results. While we believe that we have not undergone such an ownership change as of the date hereof, because such an event is outside of our control, no assurance can be given that an ownership change has not already occurred or that this offering (or subsequent transactions) will not result in an ownership change. Any future offerings of equity securities by us or sales of common stock by the Initial Stockholders would increase the likelihood that we undergo an ownership change within the meaning of Section 382 of the Code. If an ownership change occurs, the annual utilization of our net operating loss carryforwards and certain other tax attributes may be materially and adversely affected. Upon completion of this offering, our ability to raise future capital by issuing common stock without causing an ownership change may be materially limited.
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The Restructuring will reduce our tax attributes.
As a result of the Restructuring, we expect to realize a significant amount of cancellation of debt (“COD”) income. While we do not believe this COD income will result in an immediate tax liability, we will be required to reduce certain of our tax attributes, including, potentially, our net operating loss carryforwards and the tax basis of our assets. These reductions could result in fewer of our net operating losses being available to offset future taxable income associated with our operations, and could increase the gain (or decrease the loss) that we realize on future dispositions of our assets. Accordingly, such reductions could increase our taxable income, or decrease our taxable loss, in future years.
If we are unable to successfully remediate material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
In connection with the audit of the fiscal 2013 consolidated financial statements of Cayman L.P., our auditors noted several significant deficiencies in our controls, principally as a result of our financial reporting system and accounting resources not being adequate for a public reporting company of our size and complexity. Due to the aggregate amount of significant deficiencies noted across our information technology systems and the risk of unauthorized access to financial reporting systems, as well as the lack of resources that existed within our financing and accounting function required to record complex and non-routine transactions in a timely manner, our management believes that the combination of significant deficiencies constitute a material weakness in internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
We have incurred, and expect to continue to incur, significant costs to remediate the deficiencies identified in connection with the audit of the fiscal 2013 consolidated financial statements of Cayman L.P. To date, we have hired several senior information technology professionals and additional personnel with public company financial reporting expertise. We have also begun evaluating and implementing system upgrades as well as further developing and documenting our accounting policies and financial reporting procedures. We cannot assure you, however, that these or other measures will fully remediate the deficiencies or material weakness described above. We also cannot assure you that we have identified all of our existing significant deficiencies and material weaknesses, or that we will not in the future have additional significant deficiencies or material weaknesses.
Neither we nor our independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act. Commencing with our annual report on Form 10-K for fiscal 2015, we will be required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement. It is possible that, had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act in connection with the audit of the fiscal 2013 consolidated financial statements of Cayman L.P., additional significant deficiencies and material weaknesses may have been identified.
Our compliance with Section 404 of the Sarbanes-Oxley Act will require that we incur substantial accounting expense and expend significant management efforts. If we fail to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, we may be subject to sanctions or investigations by regulatory authorities, including the SEC and the NYSE. Furthermore, if we are unable to conclude that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by regulatory authorities, including the SEC and the NYSE. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
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Risks Related to Our Organization and Structure
If the ownership of our common stock continues to be highly concentrated and certain stockholders maintain a right to nominate up to a majority, plus two, of our directors, it may prevent you and other minority stockholders from influencing significant corporate decisions and may result in conflicts of interest.
Immediately following the completion of this offering, the Initial Stockholders will beneficially own approximately % of our outstanding common stock or % if the underwriters option to purchase additional shares is fully exercised. As a result, the Initial Stockholders will beneficially own shares sufficient for the majority vote over all matters requiring a stockholder vote, including:
• | the election of directors; |
• | mergers, consolidations and acquisitions; |
• | the sale of all or substantially all of our assets and other decisions affecting our capital structure; |
• | the amendment of our certificate of incorporation and our bylaws; and |
• | our winding up and dissolution. |
In addition, pursuant to the Stockholders Agreement, Fortress may designate directors for nomination and election to our board of directors. Pursuant to these provisions, Fortress has the ability to appoint up to a majority of the members of our board of directors, plus two directors, for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 30% of our issued and outstanding common stock and certain other conditions are met.
This concentration of ownership may delay, deter or prevent acts that would be favored by our other stockholders. The interests of the Initial Stockholders may not always coincide with our interests or the interests of our other stockholders. This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of us. Also, the Initial Stockholders may seek to cause us to take courses of action that, in their judgment, could enhance their investment in us, but which might involve risks to our other stockholders or adversely affect us or our other stockholders, including investors in this offering. As a result, the market price of our common stock could decline or stockholders might not receive a premium over the then-current market price of our common stock upon a change in control. In addition, this concentration of share ownership and the ability of Fortress to appoint up to a majority of the members of our board of directors, plus two directors, may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant stockholders. See Principal and Selling Stockholders and Description of Capital Stock—Anti-Takeover Effects of Delaware Law, Our Restated Certificate of Incorporation and Our Amended and Restated Bylaws.
We do not anticipate paying dividends on our common stock.
Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors in accordance with applicable law after taking into account various factors, including our financial condition, our operating results, our current and anticipated cash needs, the impact on our effective tax rate, our indebtedness, legal requirements and other factors that our board of directors deems relevant. Our debt agreements limit our ability to pay dividends.
Because we are a holding company, our ability to pay cash dividends on our common stock will depend on the receipt of dividends or other distributions from our subsidiaries. Under Delaware law, dividends may be payable only out of surplus, which is calculated as our net assets less our liabilities and our capital, or, if we have no surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Until such time that we pay a dividend, our investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
Future offerings of equity securities by us or sales of our common stock by our Initial Stockholders may adversely affect us.
In the future, we may issue additional shares of our common stock or other equity securities in connection with financing transactions or acquisitions. Issuing additional shares of our common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders or reduce the market price of our common stock or both. Preferred shares, if issued, could have a preference with respect to
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liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their stockholdings in us. See Description of Capital Stock.
In addition, any issuances of stock by us or sales of stock by the Initial Stockholders would increase the likelihood that we undergo, or may cause, an ownership change within the meaning of Section 382 of the Code. If we undergo one or more ownership changes within the meaning of Section 382 of the Code, our net operating losses and certain other tax attributes existing as of the date of each ownership change may be unavailable, in whole or in part, to offset our income and/or reduce or defer our future taxable income associated with our operations, which could have a negative effect on our liquidity. No assurance can be given that any such stock issuance or sale will not cause us to undergo an ownership change within the meaning of Section 382 of the Code. The Initial Stockholders interests may differ from our interests or the interests of our other stockholders and the Initial Stockholders may decide to sell shares of stock following this offering, even if such sale would not be favorable to us or our other stockholders or would result in us undergoing an ownership change within the meaning of Section 382 of the Code.
Certain provisions of the Stockholders Agreement, our restated certificate of incorporation and our amended and restated bylaws could hinder, delay or prevent a change in control of us, which could adversely affect the price of our common stock.
The Stockholders Agreement, our restated certificate of incorporation and our amended and restated bylaws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors or Fortress. These provisions provide for:
• | a classified board of directors with staggered three-year terms; |
• | removal of directors only for cause and only with the affirmative vote of at least 80% of the voting interest of stockholders entitled to vote (provided, however, that for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 30% of our issued and outstanding common stock, directors may be removed with or without cause with the affirmative vote of a majority of the voting interest of stockholders entitled to vote); |
• | provisions in our restated certificate of incorporation and amended and restated bylaws prevent stockholders from calling special meetings of our stockholders (provided, however, that for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 20% of our issued and outstanding common stock, any stockholders that collectively beneficially own at least 20% of our issued and outstanding common stock may call special meetings of our stockholders); |
• | advance notice requirements by stockholders with respect to director nominations and actions to be taken at annual meetings; |
• | certain rights to Fortress with respect to the designation of directors for nomination and election to our board of directors, including the ability to appoint up to a majority of the members of our board of directors, plus two directors, for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 30% of our issued and outstanding common stock and certain other conditions are met. See “Certain Relationships and Related Party Transactions— Stockholders Agreement;” |
• | no provision in our restated certificate of incorporation or amended and restated bylaws for cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of our common stock can elect all the directors standing for election; |
• | our restated certificate of incorporation and our amended and restated bylaws only permit action by our stockholders outside a meeting by unanimous written consent, provided, however, that for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 20% of our issued and outstanding common stock, our stockholders may act without a meeting by written consent of a majority of our stockholders; and |
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• | under our restated certificate of incorporation, our board of directors has the authority to cause the issuance of preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of our stockholders. Nothing in our restated certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our common stock. |
In addition, these provisions may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt that is opposed by Fortress, our management or our board of directors. Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even
if the transaction is favorable to stockholders. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium. See Description of Capital Stock—Anti-Takeover Effects of Delaware Law, Our Amended and Restated Certificate of Incorporation and Our Amended and Restated Bylaws.
Fortress and its affiliates have the right to engage or invest in the same or similar businesses as us and the corporate opportunity provisions in our restated certificate of incorporation could enable Fortress and certain stockholders to benefit from corporate opportunities that might otherwise be available to us.
Fortress has other investments and business activities in addition to their ownership of us, including in the industries in which we operate. Fortress or its affiliates, including the Initial Stockholders, have the right, and have no duty to abstain from exercising such right, to engage or invest in the same or similar businesses as us, do business with any of our customers or vendors or employ or otherwise engage any of our officers, directors or employees.
Under our restated certificate of incorporation, if Fortress or its affiliates, including the Initial Stockholders, or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty to offer such corporate opportunity to us, our stockholders or affiliates. In addition, we have renounced any interest or expectancy in, or in being offered an opportunity to participate in, such corporate opportunities and in the event that any of our directors and officers who is also a director, officer or employee of any of Fortress or its affiliates, including the Initial Stockholders, acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such persons capacity as our director or officer and such person acted in good faith, then such person is deemed to have fully satisfied such persons fiduciary duty and is not liable to us if any of Fortress or its affiliates, including the Initial Stockholders, pursues or acquires such corporate opportunity or if such person did not present the corporate opportunity to us.
Our restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders ability to obtain a favorable judicial forum for disputes with us.
Pursuant to our restated certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or (iv) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants. In the event that the Court of Chancery lacks jurisdiction over any such action or proceeding, our restated certificate of incorporation will provide that the sole and exclusive forum for such action or proceeding will be another state or federal court located within the State of Delaware. Our restated certificate of incorporation will further provide that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provision. The forum selection clause in our amended and restated certificate of incorporation may limit our stockholders ability to obtain a favorable judicial forum for disputes with us.
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Risks Related to our Indebtedness
The New Credit Agreement contains, and future debt agreements may contain, restrictions that may limit our flexibility in operating our business.
The New Credit Agreement contains, and documents governing our future indebtedness may contain, numerous covenants that limit the discretion of management with respect to certain business matters. These covenants place restrictions on, among other things, our ability and the ability of our subsidiaries to incur or guarantee additional indebtedness, pay dividends and make other distributions and restricted payments, make certain loans, acquisitions and other investments, enter into agreements restricting our subsidiaries ability to pay dividends, engage in certain transactions with stockholders or affiliates, sell certain assets or engage in mergers, acquisitions and other business combinations, amend or otherwise alter the terms of our subordinated indebtedness and create liens. The New Credit Agreement also requires, and documents governing our future indebtedness may require, us or our subsidiaries to meet certain financial ratios and tests in order to incur certain additional debt, make certain loans, acquisitions or other investments, or pay dividends or make other distributions or restricted payments. Our ability and the ability of our subsidiaries to comply with these and other provisions of our debt agreements is dependent on our future performance, which will be subject to many factors, some of which are beyond our control. The breach of any of these covenants or noncompliance with any of these financial ratios and tests could result in an event of default under the applicable debt agreement, which, if not cured or waived, could result in acceleration of the related debt and the acceleration of debt under other instruments evidencing indebtedness that may contain cross-acceleration or cross-default provisions. Variable rate indebtedness subjects us to the risk of higher interest rates, which could cause our future debt service obligations to increase significantly.
Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our indebtedness.
Following this offering, we will be significantly leveraged. As of September 30, 2013, our total indebtedness on a pro forma basis after giving effect to the Pro Forma Transactions was $584.5 million. Our significant leverage could have important consequences, including the following: (i) a substantial portion of our cash flow from operations will be dedicated to the payment of principal and interest on indebtedness, thereby reducing the funds available for operations, future business opportunities and capital expenditures; (ii) our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate purposes in the future may be limited; (iii) certain of our borrowings are at variable rates of interest, which increase our vulnerability to increases in interest rates; (iv) we will be at a competitive disadvantage to lesser leveraged competitors; (v) we may be unable to adjust rapidly to changing market conditions; (vi) the debt service requirements of our indebtedness could make it more difficult for us to satisfy our financial obligations; and (vii) we may be vulnerable in a downturn in general economic conditions or in our business and we may be unable to carry out activities that are important to our growth.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance indebtedness depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the international banking and capital markets.
Risks Related to this Offering
An active trading market for our common stock may never develop or be sustained.
Although we intend to apply to have our common stock approved for listing on the NYSE, an active trading market for our common stock may not develop on that exchange or elsewhere or, if developed, that market may not be sustained. Accordingly, if an active trading market for our common stock does not develop or is not maintained, the liquidity of our common stock, your ability to sell your shares of common stock when desired and the prices that you may obtain for your shares of common stock will be adversely affected.
The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders.
Even if an active trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. The initial public offering price of our common stock will be determined by
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negotiation among us, the selling stockholder and the representatives of the underwriters based on a number of factors and may not be indicative of prices that will prevail in the open market following completion of this offering. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above your purchase price, if at all. The market price of our common stock may fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include:
• | quarterly variations in our operating results; |
• | operating results that vary from the expectations of securities analysts and investors; |
• | change in valuations; |
• | changes in the industries in which we operate; |
• | announcements by us or companies in our industries of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures, capital commitments, plans, prospects, service offerings or operating results; |
• | additions or departures of key personnel; |
• | future sales of our securities; |
• | other risk factors discussed herein; and |
• | other unforeseen events. |
Stock markets in the United States have experienced extreme price and volume fluctuations. Market fluctuations, as well as general political and economic conditions such as acts of terrorism, prolonged economic uncertainty, a recession or interest rate or currency rate fluctuations, could adversely affect the market price of our common stock.
The unaudited pro forma condensed consolidated financial information does not purport to be indicative of what our actual results of operations and financial condition would have been or will be.
The unaudited pro forma condensed consolidated financial information included in this prospectus is for illustrative and informational purposes only and does not necessarily reflect our results of operations or financial condition had the Pro Forma Transactions occurred at an earlier date. In addition, the unaudited pro forma condensed consolidated financial information does not purport to project our future results of operations and financial condition.
In addition, the pro forma condensed consolidated statement of operations excludes certain non-recurring items that we expect to incur in connection with the Pro Forma Transactions, including costs related to legal, accounting and consulting service. See Unaudited Pro Forma Condensed Consolidated Financial Information.
The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets.
After this offering, there will be shares of common stock outstanding, or shares outstanding if the underwriters exercise their option to purchase additional shares in full. Of our issued and outstanding shares, all the common stock sold in this offering will be freely transferable, except for any shares held by our affiliates, as that term is defined in Rule 144 under the Securities Act of 1933 (the Securities Act). Following completion of the offering, approximately % of our outstanding common stock (or % if the underwriters exercise their option to purchase additional shares in full) will be held by the Initial Stockholders and, subject to the lock-up restrictions described below, can be resold into the public markets in the future in accordance with the requirements of Rule 144. See Shares Eligible For Future Sale.
We and our executive officers, directors and the Initial Stockholders have agreed with the underwriters that, subject to certain exceptions, for a period of 180 days after the date of this prospectus, we and they will not directly or indirectly offer, pledge, sell, contract to sell, sell any option or contract to purchase or otherwise dispose of any common stock or any securities convertible into or exercisable or exchangeable for common stock, or in any manner transfer all or a portion of the economic consequences associated with the ownership of common stock, or cause a registration statement covering any common stock to be filed, without the prior written consent of Goldman, Sachs & Co. See Underwriting.
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Pursuant to the Stockholders Agreement, the Initial Stockholders, certain of their affiliates and permitted third party transferees have the right, in certain circumstances, to require us to register their shares of our common stock under the Securities Act for sale into the public markets. The timing of such sales is uncertain and could be influenced by numerous factors, including the market price of our common stock, economic conditions and the contractual obligations or liquidity needs of the Initial Stockholders or their affiliates. All shares sold pursuant to the registration statement will be freely transferable. See Certain Relationships and Related Party Transactions—Stockholders Agreement.
The market price of our common stock may decline significantly when the restrictions on resale by our Initial Stockholders lapse. A decline in the price of our common stock might impede our ability to raise capital through the issuance of additional common stock or other equity securities.
Investors in this offering will suffer immediate and substantial dilution.
The initial public offering price of our common stock will be substantially higher than the pro forma as adjusted net tangible book value per share issued and outstanding immediately after this offering. Investors who purchase common stock in this offering will pay a price per share that substantially exceeds the net tangible book value per share of common stock immediately prior to this offering. If you purchase shares of our common stock in this offering, you will experience immediate and substantial dilution of $ in the pro forma as adjusted net tangible book value per share, based upon the initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus). See Dilution.
We will have broad discretion in the use of the net proceeds to us from this offering and may not use them effectively.
Our management currently intends to use the net proceeds to us from this offering in the manner described under Use of Proceeds and will have broad discretion in the application of the net proceeds to us from this offering. The failure by our management to apply these funds effectively could affect our ability to operate and grow our business.
As a public company, we will incur additional costs and face increased demands on our management.
As a newly public company with shares listed on a U.S. exchange, will need to comply with an extensive body of regulations that did not apply to us previously, including certain provisions of the Sarbanes Oxley Act of 2002 (the Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act, regulations of the SEC and requirements of the NYSE. We expect these rules and regulations will increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, as a result of becoming a public company, we intend to add independent directors and create additional board committees. In addition, we may incur additional costs associated with our public company reporting requirements and maintaining directors and officers liability insurance. We are currently evaluating and monitoring developments with respect to these rules, which may impose additional costs on us and have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We are an emerging growth company and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an emerging growth company, as defined in the JOBS Act, and we intend to take advantage of exemptions from various requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act for so long as we are an emerging growth company, which may be for as long as five years following our initial public offering. We cannot predict if investors will find our common stock less attractive because our independent auditors will not have attested to the effectiveness of our internal controls. If some investors find our common stock less attractive as a result of our independent auditors not attesting to the effectiveness of our internal controls or other exemptions of which we plan to take advantage, there may be a less active trading market for our common stock.
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Some of the information contained in the sections entitled Prospectus Summary, Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations, Our Business and elsewhere in this prospectus may contain forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as outlook, believes, expects, potential, continues, may, will, should, could, seeks, approximately, predicts, intends, plans, estimates, anticipates, target, projects, contemplates or the negative version of those words or other comparable words. Any forward-looking statements contained in this prospectus are based upon our historical performance and our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us, Fortress, the selling stockholder, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to:
• | a prolonged weakness in general economic conditions; |
• | lack of adequate snowfall and unfavorable weather conditions; |
• | adverse events that occur during our peak operating periods combined with the seasonality of our business; |
• | the occurrence of natural disasters; |
• | the high fixed cost structure of our business; |
• | a disruption in our water supply; |
• | increased competition in the industries in which we operate; |
• | risks related to the fact that we are not the sole property manager at our developments; |
• | changes in consumer tastes and preferences; |
• | the loss of or inability to renew our governmental permits and leases; |
• | risks related to federal, state and provincial government laws, rules and regulations; |
• | the capital intensive nature of our business; |
• | our dependence on infrastructure and equipment; |
• | our ability to integrate and successfully realize anticipated benefits of acquisitions and future acquisitions; |
• | Steamboats dependence on subsidized direct air service from major hub airports; |
• | risks related to our reliance on information technology; |
• | implications arising from non-compliance with PCI DSS; |
• | our failure to maintain the integrity of our customer or employee data; |
• | a deterioration in the quality or reputation of our brands; |
• | currency risks; |
• | risks related to our insurance coverage; |
• | adverse consequences of current or future legal claims; |
• | our ability to hire and retain a sufficient seasonal workforce; |
• | loss of key personnel; |
• | risks related to our workforce, including implications arising from various federal, state and provincial laws that govern our workforce; |
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• | our ability to complete our real estate development projects and achieve the anticipated financial benefits from such projects; |
• | a partial or complete loss of Alpine Helicopters services, or a significant adverse change in our relationship with Alpine Helicopters; |
• | the reduction of our tax attributes as a result of the Restructuring; |
• | the effects of climate change; |
• | impairments or write downs of our assets; |
• | our ability to fund our pension obligations; |
• | our inability to fully utilize our net operating loss carryforwards; |
• | our ability to successfully remediate significant deficiencies in our internal control over financial reporting; |
• | the requirement that we must purchase an additional equity interest in Blue Mountain Resorts Limited if our co-owner exercises their put option; and |
• | competition with similar businesses owned by Fortress and its affiliates and the loss of corporate opportunities due to the corporate opportunity provisions in our restated certificate of incorporation. |
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. You should specifically consider the factors identified in this prospectus that could cause actual results to differ before making an investment decision to purchase our common stock. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.
The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or revise any forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise.
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The net proceeds to us from the sale of the shares of common stock offered by us hereby are estimated to be approximately $ million, after deducting the estimated underwriting discounts and offering expenses payable by us. Our net proceeds will increase by approximately $ million if the underwriters option to purchase additional shares is exercised in full. We will not receive any proceeds from the sale of our common stock by the selling stockholder, including any shares sold by the selling stockholder pursuant to the underwriters option to purchase additional shares. We have no specific plan for the net proceeds to us from this offering and intend to use such proceeds for working capital and other general corporate purposes, which may include potential investments in, and acquisitions of, ski and adventure travel businesses and assets. No material acquisitions are probable at this time.
Our management will have broad discretion over the use of the net proceeds to us from this offering and investors will be relying on the judgment of our management regarding the application of these proceeds. Pending their use, we plan to invest the net proceeds to us from this offering in short term, interest bearing obligations, investment grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.
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The following table sets forth cash and cash equivalents and capitalization of Cayman L.P. as of September 30, 2013 on an actual basis, and our cash and cash equivalents and capitalization as of September 30, 2013 on (i) a pro forma basis to give effect to the Pro Forma Transactions described under Unaudited Pro Forma Condensed Consolidated Financial Information and (ii) on a pro forma as adjusted basis to give effect to the Pro Forma Transactions as well as the sale of shares of common stock by us in this offering at an assumed initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus), after deducting the underwriting discount and estimated offering expenses payable by us.
This table should be read in conjunction with Selected Historical Consolidated Financial and Operating Information, Unaudited Pro Forma Condensed Consolidated Financial Information, Managements Discussion and Analysis of Financial Condition and Results of Operations and the interim consolidated financial statements of Cayman L.P. and related notes included elsewhere in this prospectus.
As of September 30, 2013 | ||||||||||||
Historical | Pro Forma | Pro Forma As Adjusted | ||||||||||
(in thousands) | ||||||||||||
Cash and cash equivalents | $ | 44,860 | $ | 59,098 | $ | |||||||
Long-term debt (including current portion): | ||||||||||||
Third-party long-term debt (including current portion) | $ | 607,553 | $ | 584,526 | $ | |||||||
Notes payable to affiliates | 1,426,350 | — | — | |||||||||
Total long-term debt (including current portion) | 2,033,903 | 584,526 | ||||||||||
Capital: | ||||||||||||
Partners’ (deficit) capital | (1,288,811 | ) | — | — | ||||||||
Common stock, par value $0.01 per share; authorized — 43,000,000 shares, pro forma; shares, pro forma as adjusted; issued and outstanding — 43,000,000 shares, pro forma; shares, pro forma as adjusted | — | 430 | ||||||||||
Additional paid-in capital | — | 157,795 | ||||||||||
Accumulated other comprehensive income | 158,500 | 158,500 | ||||||||||
Non-controlling interest | (330 | ) | (330 | ) | ||||||||
Total capital | (1,130,641 | ) | 316,395 | |||||||||
Total capitalization | $ | 903,262 | $ | 900,921 | $ |
Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus), would increase (decrease) cash and cash equivalents and total capital by $ million, assuming the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated offering expenses payable by us.
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If you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock upon consummation of this offering. Net tangible book value per share represents the book value of our total tangible assets less the book value of our total liabilities divided by the number of shares of common stock then issued and outstanding.
Our net tangible book value as of September 30, 2013 was approximately $ , or approximately $ per share based on shares of common stock issued and outstanding as of such date after giving effect to the -for-1 stock split of our common stock.
After giving effect to the Pro Forma Transactions, our pro forma net tangible book value as of September 30, 2013 would have been approximately $ , or approximately $ per share.
After giving effect to the Pro Forma Transactions as well as our sale of common stock in this offering at an initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus), our pro forma as adjusted net tangible book value as of September 30, 2013 would have been approximately $ , or approximately $ per share (assuming no exercise of the underwriters option to purchase additional shares). This represents an immediate and substantial dilution of $ per share to new investors purchasing common stock in this offering. Sales of shares by the selling stockholder in this offering do not affect our net tangible book value. The following table illustrates this dilution per share:
Assumed initial public offering price per share | $ | |
Net tangible book value per share as of September 30, 2013 | $ | |
Decrease in net tangible book value per share as of September 30, 2013 attributable to the Pro Forma Transactions | ||
Increase in net tangible book value per share attributable to this offering | ||
Pro forma as adjusted net tangible book value per share after giving effect to the Pro Forma Transactions as well as this offering | ||
Dilution per share to new investors in this offering |
A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus) would increase (decrease) our pro forma as adjusted net tangible book value by approximately $ , or approximately $ per share, and the dilution to new investors in this offering by approximately $ per share, assuming the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated offering expenses payable by us.
The following table summarizes, as of September 30, 2013 on a pro forma basis for the Pro Forma Transactions as well as this offering, the differences between the number of shares of common stock purchased from us and the total price and the average price per share paid by existing stockholders and by the new investors in this offering, before deducting the underwriting discounts and estimated offering expenses payable by us, at an assumed initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus).
Shares Purchased | Total Consideration | Average Price per Share | |||||||||||||||||
Number | Percent | Amount | Percent | ||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||
Existing stockholders | % | % | $ | ||||||||||||||||
New investors | |||||||||||||||||||
Total | 100 | % | $ | 100 | % | $ |
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A $1.00 increase (decrease) in the assumed initial offering price would increase (decrease) total consideration paid by new investors and average price per share paid by new investors by $ and $1.00 per share, respectively. An increase (decrease) of 1.0 million in the number of shares offered by us would increase (decrease) total consideration paid by new investors and average price per share paid by new investors by $ and $ per share, respectively.
The sale of shares of our common stock to be sold by the selling stockholder in this offering will reduce the number of shares of our common stock held by existing stockholders to shares, or % of the total shares outstanding, and will increase the number of shares of our common stock held by new investors to shares, or % of the total shares of our common stock outstanding.
If the underwriters option to purchase additional shares is fully exercised, pro forma as adjusted net tangible book value per share after giving effect to the Pro Forma Transactions as well as this offering would be approximately $ per share and the dilution to new investors per share after this offering would be approximately $ per share. Furthermore, the percentage of our shares held by existing stockholders after the sale of shares by the selling stockholder would decrease to approximately % and the percentage of our shares held by new investors would increase to approximately %, based on shares of common stock outstanding as of September 30, 2013, after giving effect to the -for-1 stock split, the Pro Forma Transactions and this offering.
The pro forma information discussed above is for illustrative and informational purposes only. See Unaudited Pro Forma Condensed Consolidated Financial Information.
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We do not currently anticipate paying dividends on our common stock. Any declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors in accordance with applicable law after taking into account various factors, including our financial condition, our operating results, our current and anticipated cash needs, the impact on our effective tax rate, our indebtedness, legal requirements and other factors that our board of directors deems relevant. Certain of our debt agreements limit our ability to pay dividends. See Description of Certain Indebtedness.
Because we are a holding company, our ability to pay cash dividends on our common stock will depend on the receipt of dividends or other distributions from our subsidiaries. Under Delaware law, dividends may be payable only out of surplus, which is calculated as our net assets less our liabilities and our capital, or, if we have no surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.
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Selected Historical Consolidated Financial and Operating Information
The following selected historical consolidated financial information for the years ended June 30, 2011, 2012 and 2013 and as of June 30, 2012 and 2013 has been derived from the audited consolidated financial statements of Cayman L.P. included elsewhere in this prospectus.
The following selected historical consolidated financial information for the three months ended September 30, 2012 and 2013 and as of September 30, 2013 has been derived from the unaudited interim consolidated financial statements of Cayman L.P. included elsewhere in this prospectus. In our opinion, such unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements of Cayman L.P. and reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of operations and financial position of Cayman L.P. Results as of and for the three months ended September 30, 2013 are not necessarily indicative of results that may be expected for the entire year.
Prior to the collapse in the housing markets in late 2007 and the global financial crisis that followed, we were actively engaged in large scale development and sales of resort real estate, primarily in North America. In light of the then prevailing market conditions, we ceased new development activities in late 2009. As a result, we were left with a portfolio of real estate assets, high leverage levels and litigation initiated by purchasers of resort real estate seeking to rescind their purchase obligations or otherwise mitigate their losses. This confluence of factors had a material impact on our consolidated financial results for the fiscal periods presented below. Through a series of debt refinancings, cost saving initiatives and divestitures of non-core assets, we believe we have streamlined our operations. As of September 30, 2013, we have divested substantially all of our legacy real estate assets and have settled the majority of litigation claims stemming from our pre-2010 development and sales activities. Although the effects of our pre-2010 legacy real estate development and sales activities on our consolidated financial results will continue in future periods, we expect that these effects will continue to diminish over time. After giving effect to the Refinancing and the Restructuring, we believe our financial results in future periods will be materially different from those reflected in the historical consolidated financial information of Cayman L.P. appearing in this prospectus.
You should read the following selected historical consolidated financial and operating information in conjunction with the information appearing under Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in this prospectus, and in conjunction with the consolidated financial statements of Cayman L.P. and the related notes appearing elsewhere in this prospectus.
Historical | ||||||||||||||||||||
Year Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2011(1) | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Mountain | $ | 322,194 | $ | 310,765 | $ | 339,003 | $ | 33,259 | $ | 33,305 | ||||||||||
Adventure | 96,693 | 109,496 | 113,622 | 29,047 | 22,617 | |||||||||||||||
Real Estate | 61,165 | 61,439 | 64,726 | 15,148 | 13,250 | |||||||||||||||
Total reportable segment revenues | 480,052 | 481,700 | 517,351 | 77,454 | 69,172 | |||||||||||||||
Legacy, non-core and other(2) | 79,471 | 31,747 | 7,056 | 1,741 | 11,389 | |||||||||||||||
Total revenues | 559,523 | 513,447 | 524,407 | 79,195 | 80,561 | |||||||||||||||
Operating expenses(2) | 504,005 | 453,187 | 448,944 | 101,179 | 104,196 | |||||||||||||||
Depreciation and amortization | 76,371 | 57,655 | 58,342 | 14,653 | 13,145 | |||||||||||||||
Loss (gain) on disposal of assets(1) | 26,196 | 9,443 | 12,448 | 1,210 | (236 | ) | ||||||||||||||
Impairment of long-lived assets | 12,140 | 782 | 143 | — | — | |||||||||||||||
Impairment of real estate | 73,230 | 8,137 | 1,052 | 62 | 633 | |||||||||||||||
Goodwill impairment | 64,097 | 3,575 | — | — | — | |||||||||||||||
Income (loss) from operations | (196,516 | ) | (19,332 | ) | 3,478 | (37,909 | ) | (37,177 | ) | |||||||||||
Interest income | 9,162 | 7,467 | 6,630 | 1,637 | 1,632 | |||||||||||||||
Interest expense on third party debt | (143,463 | ) | (135,929 | ) | (98,437 | ) | (35,006 | ) | (16,464 | ) | ||||||||||
Interest expense on notes payable to affiliates | (160,943 | ) | (195,842 | ) | (236,598 | ) | (55,371 | ) | (67,105 | ) | ||||||||||
Earnings (loss) from equity method investments(3) | 8,299 | 538 | (5,147 | ) | (91 | ) | (1,591 | ) | ||||||||||||
Gain on disposal of equity method investments(1) | — | — | 18,923 | — | — | |||||||||||||||
Loss on extinguishment of debt(4) | — | — | (11,152 | ) | — | — |
43 |
Historical | ||||||||||||||||||||
Year Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2011(1) | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||
(in thousands, except operating statistics) | ||||||||||||||||||||
Other income (expense), net(5) | $ | (2,021 | ) | $ | 1,199 | $ | 1,973 | $ | 402 | $ | (172 | ) | ||||||||
Loss from continuing operations before income taxes | (485,482 | ) | (341,899 | ) | (320,330 | ) | (126,338 | ) | (120,877 | ) | ||||||||||
Income tax (benefit) expense | 6,555 | (5,836 | ) | (23,616 | ) | 972 | 701 | |||||||||||||
Loss from continuing operations | (492,037 | ) | (336,063 | ) | (296,714 | ) | (127,310 | ) | (121,578 | ) | ||||||||||
Loss from discontinued operations, net of tax | (6,469 | ) | — | — | — | — | ||||||||||||||
Net loss | (498,506 | ) | (336,063 | ) | (296,714 | ) | (127,310 | ) | (121,578 | ) | ||||||||||
Loss (earnings) attributable to noncontrolling interest | (361 | ) | — | 757 | 34 | (436 | ) | |||||||||||||
Net loss attributable to Cayman L.P. | (498,867 | ) | (336,063 | ) | (295,957 | ) | (127,276 | ) | (122,014 | ) | ||||||||||
Net loss attributable to general partner | — | — | — | — | — | |||||||||||||||
Net loss attributable to limited partners | $ | (498,867 | ) | $ | (336,063 | ) | $ | (295,957 | ) | $ | (127,276 | ) | $ | (122,014 | ) | |||||
Weighted average units outstanding, basic and diluted | 1,348,253 | 1,348,412 | 1,350,412 | 1,350,253 | 1,352,253 | |||||||||||||||
Loss per unit, basic and diluted: | ||||||||||||||||||||
Loss from continuing operations attributable to Cayman L.P. | $ | (365.21 | ) | $ | (249.23 | ) | $ | (219.16 | ) | $ | (94.26 | ) | $ | (90.23 | ) | |||||
Loss from discontinued operations | (4.80 | ) | — | — | — | — | ||||||||||||||
Net loss attributable to limited partners | $ | (370.01 | ) | $ | (249.23 | ) | $ | (219.16 | ) | $ | (94.26 | ) | $ | (90.23 | ) | |||||
Key Business Metrics Evaluated by Management: | ||||||||||||||||||||
Mountain | ||||||||||||||||||||
Skier Visits(6) | 3,192,388 | 2,758,970 | 3,146,119 | — | — | |||||||||||||||
Mountain Segment Revenue Per Visit(7) | $ | 100.93 | $ | 112.64 | $ | 107.75 | — | — | ||||||||||||
ETP(8) | $ | 43.34 | $ | 47.65 | $ | 45.92 | — | — | ||||||||||||
Adventure | ||||||||||||||||||||
CMH Guest Nights(9) | 34,479 | 37,829 | 36,237 | 2,605 | 2,956 | |||||||||||||||
CMH RevPGN(10) | $ | 1,670 | $ | 1,650 | $ | 1,693 | $ | 1,426 | $ | 1,253 | ||||||||||
Cash Flow Data: | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 21,140 | $ | 43,390 | $ | 41,765 | $ | (5,296 | ) | $ | 384 | |||||||||
Net cash provided by (used in) investing activities | $ | 514,497 | $ | (21,286 | ) | $ | 105,407 | $ | (4,344 | ) | $ | (14,543 | ) | |||||||
Net cash used in financing activities | $ | (572,797 | ) | $ | (41,518 | ) | $ | (133,683 | ) | $ | (395 | ) | $ | (1,679 | ) |
Historical | ||||||||||||||||
As of June 30, | As of | |||||||||||||||
2012 | 2013 | September 30, 2013 | ||||||||||||||
(in thousands) | ||||||||||||||||
Balance Sheet Data: | ||||||||||||||||
Cash and cash equivalents | $ | 46,908 | $ | 59,775 | $ | 44,860 | ||||||||||
Real estate held for development(11) | $ | 193,806 | $ | 164,916 | $ | 154,645 | ||||||||||
Total assets | $ | 1,342,793 | $ | 1,121,600 | $ | 1,132,357 | ||||||||||
Third party long-term debt (including current portion)(12) | $ | 736,081 | $ | 588,863 | $ | 607,553 | ||||||||||
Notes payable to affiliates (including current portion) | $ | 1,109,005 | $ | 1,358,695 | $ | 1,426,350 | ||||||||||
Total long-term debt (including current portion) | $ | 1,845,086 | $ | 1,947,558 | $ | 2,033,903 |
(1) | Includes the operations of Whistler Blackcomb prior to their divestiture in November 2010. We sold our interest in the assets of Whistler Blackcomb to Whistler Holdings in November 2010 and recognized a loss of $24.4 million. As part of the sale proceeds, we received an equity investment of approximately 24% in Whistler Holdings. Fiscal 2011 includes legacy, non-core and other revenues, expenses and depreciation and amortization of $38.6 million, $51.1 million and $10.7 million, respectively, related to Whistler Blackcomb. In December 2012, we sold our investment in Whistler Holdings and recorded a $17.9 million gain related to this disposition. |
44 |
(2) | See notes 6(f) and 6(g) under Prospectus Summary – Summary Historical and Unaudited Pro Forma Condensed Consolidated Financial and Operating Information. See also Management’s Discussion and Analysis of Financial Condition and Results of Operations—Legacy, Non-Core and Other Items. |
(3) | See note 6(b) under Prospectus Summary – Summary Historical and Unaudited Pro Forma Condensed Consolidated Financial and Operating Information. |
(4) | Fiscal 2013 represents the loss recognized in the extinguishment of our senior debt facility in December 2012. |
(5) | Other income (expense), net, primarily includes gains or losses on currency rate fluctuations and other non-operating expenses that management does not believe are representative of the underlying performance of our ongoing operations. |
(6) | A Skier Visit represents an individuals use of a paid or complimentary ticket, frequency card or season pass to ski or snowboard at our Steamboat, Winter Park, Tremblant, Stratton and Snowshoe resorts for any part of one day. |
(7) | Mountain Segment Revenue Per Visit is defined as total revenue of our Mountain segment for a given period divided by total Skier Visits during such period. |
(8) | ETP is calculated by dividing lift revenue for a given period by total Skier Visits during such period. |
(9) | CMH Guest Nights represents the number of paid nights skiing or hiking customers spend at our CMH lodges for a given period. |
(10) | CMH RevPGN is total CMH revenue for a given period divided by the total number of CMH Guest Nights during such period. |
(11) | Real estate held for development includes land and infrastructure assets, net of impairments to fair value, intended to be used in the future development of real estate assets for sale and amenity enhancement at our resorts. |
(12) | Effective September 30, 2013, we and the Winter Park Recreational Association agreed to amend the lease under which we operate Winter Park Resort. Pursuant to the amendment, a contingency clause in which total rental payments could not exceed cash flow for annual payment was removed. The elimination of the contingency requires us to make annual rental payments of a minimum of $2.0 million until the end of the initial lease term, July 1, 2052, regardless of future cash flows, thus changing the future minimum lease payments. The amendment required a modification of the lease asset and lease obligation as the present value of the future minimum lease payments under the amendment is different from the minimum lease payments under the original agreement. The total increase in the lease obligation, based on a net present value of future payments, was $19.6 million. |
45 |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information consists of unaudited pro forma condensed consolidated statements of operations for the year ended June 30, 2013 and for the three months ended September 30, 2013, and an unaudited pro forma condensed consolidated balance sheet as of September 30, 2013. The unaudited pro forma condensed consolidated financial information has been derived by application of pro forma adjustments to the historical consolidated financial statements of Cayman L.P. included elsewhere in this prospectus.
Intrawest Resorts Holdings, Inc was formed on August 30, 2013, and had not, prior to the completion of the Restructuring, conducted any activities other than those incident to its formation and the preparation of the registration statement of which this prospectus forms a part. In December 2013, through a series of restructuring transactions, Cayman L.P. caused its indirect subsidiaries to contribute 100% of the equity interests in both Intrawest U.S. and Intrawest Canada to an indirect subsidiary of the Company.
The unaudited pro forma condensed consolidated statements of operations give effect to the Pro Forma Transactions (as defined below) as if the Pro Forma Transactions had occurred or had become effective as of July 1, 2012. The unaudited pro forma condensed consolidated balance sheet gives effect to the Pro Forma Transactions as if the Pro Forma Transactions had occurred on September 30, 2013.
The unaudited pro forma condensed consolidated financial information is based on available information and certain assumptions that we believe are reasonable in the circumstances. The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and does not necessarily reflect the Company's results of operations or financial condition had the Pro Forma Transactions occurred at an earlier date. The unaudited pro forma condensed consolidated financial information also should not be considered representative of the Companys future financial condition or results of operations.
The unaudited pro forma condensed consolidated financial information has been prepared to reflect adjustments to the historical financial information of Cayman L.P. that are (i) directly attributable to the Pro Forma Transactions, (ii) factually supportable and (iii) with respect to the unaudited pro forma condensed consolidated statement of operations, expected to have a continuing impact on our results. The unaudited pro forma condensed consolidated financial information reflects the following transactions (collectively, the Pro Forma Transactions):
• | the Restructuring, the elimination of the European operations of Cayman L.P. that were not contributed to the Company in the Restructuring as well as the cancellation of the notes payable to affiliates and accrued and unpaid interest thereon where $1,081.8 million of the notes payable to affiliates and accrued and unpaid interest thereon were exchanged for shares of our common stock, and the Company and its subsidiary guarantors were released from their obligations in respect of $344.5 million of the notes payable to affiliates and accrued interest thereon; |
• | the contribution to the Company of $48.3 million from an affiliate of Fortress and the refinancing of the outstanding borrowings under the First Lien Credit Agreement and the Second Lien Credit Agreement using borrowings under the New Credit Agreement, cash on hand and the funds contributed to the Company by an affiliate of Fortress; and |
• | other adjustments described in the notes to this section. |
The unaudited pro forma condensed consolidated balance sheet will also reflect an adjustment to present the Companys capitalization instead of the partners capital of Cayman L.P.
The unaudited pro forma condensed consolidated statement of operations for the three months ended September 30, 2013 excludes approximately $0.3 million of non-recurring charges that the Company incurred in connection with the Pro Forma Transactions, including costs related to legal, accounting and consulting services. The pro forma condensed consolidated financial information also excludes the effects of this offering.
The unaudited pro forma condensed consolidated financial information and the related notes should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and Description of Certain Indebtedness as well as the consolidated financial statements of Cayman L.P. and the related notes included elsewhere in this prospectus.
46 |
Unaudited
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended June 30, 2013
(in thousands, except share and per share data)
Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||
Revenue | $ | 524,407 | $ | (428 | ) | (a) | $ | 523,979 | ||||||
Operating expense | 448,944 | (2,096 | ) | (a) | 446,848 | |||||||||
— | (d) | |||||||||||||
Depreciation and amortization | 58,342 | (2 | ) | (a) | 58,340 | |||||||||
Loss on disposal of assets | 12,448 | (1,923 | ) | (a) | 10,525 | |||||||||
Impairment of long-lived assets | 143 | — | 143 | |||||||||||
Impairment of real estate | 1,052 | (649 | ) | (a) | 403 | |||||||||
Income from operations | 3,478 | 4,242 | 7,720 | |||||||||||
Interest income | 6,630 | (47 | ) | (a) | 6,583 | |||||||||
Interest expense on third party debt | (98,437 | ) | 50,775 | (c) | (47,662 | ) | ||||||||
Interest expense on notes payable to affiliates | (236,598 | ) | 236,598 | (b) | — | |||||||||
Loss from equity method investments | (5,147 | ) | — | (5,147 | ) | |||||||||
Gain on disposal of equity method investments | 18,923 | — | 18,923 | |||||||||||
Loss on extinguishment of debt | (11,152 | ) | 11,152 | (c) | — | |||||||||
Other income, net | 1,973 | (38 | ) | (a) | 1,935 | |||||||||
Loss before income taxes | (320,330 | ) | 302,682 | (17,648 | ) | |||||||||
Income tax benefit | (23,616 | ) | — | (e) | (23,616 | ) | ||||||||
Net (loss) income | $ | (296,714 | ) | $ | 302,682 | $ | 5,968 | |||||||
Loss per unit, basic and diluted | $ | (219.72 | ) | (g) | — | |||||||||
Weighted average units outstanding, basic and diluted | 1,350,412 | — | ||||||||||||
Earnings per share, basic and diluted | — | (g) | $ | 0.14 | ||||||||||
Weighted average shares outstanding, basic and diluted | — | 43,000,000 |
See notes to unaudited pro forma condensed consolidated financial information
47 |
Unaudited
Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended September 30, 2013
(in thousands, except share and per share data)
Historical | Pro
Forma Adjustments |
Pro Forma | ||||||||||||
Revenue | $ | 80,561 | $ | — | $ | 80,561 | ||||||||
Operating expense | 104,196 | (377 | ) | (a) | 103,563 | |||||||||
(256 | ) | (d) | ||||||||||||
Depreciation and amortization | 13,145 | — | 13,145 | |||||||||||
Gain on disposal of assets | (236 | ) | (101 | ) | (a) | (337 | ) | |||||||
Impairment of real estate | 633 | — | 633 | |||||||||||
Loss from operations | (37,177 | ) | 734 | (36,443 | ) | |||||||||
Interest income | 1,632 | (26 | ) | (a) | 1,606 | |||||||||
Interest expense on third party debt | (16,464 | ) | 4,932 | (c) | (11,532 | ) | ||||||||
Interest expense on notes payable to affiliates | (67,105 | ) | 67,105 | (b) | — | |||||||||
Loss from equity method investments | (1,591 | ) | — | (1,591 | ) | |||||||||
Other expense, net | (172 | ) | 21 | (a) | (151 | ) | ||||||||
Loss before income taxes | (120,877 | ) | 72,766 | (48,111 | ) | |||||||||
Income tax expense | 701 | — | (e) | 701 | ||||||||||
Net loss | $ | (121,578 | ) | $ | 72,766 | $ | (48,812 | ) | ||||||
Loss per unit, basic and diluted | $ | (89.91 | ) | (g) | — | |||||||||
Weighted average units outstanding, basic and diluted | 1,352,253 | — | ||||||||||||
Loss per share, basic and diluted | — | (g) | $ | (1.14 | ) | |||||||||
Weighted average shares outstanding, basic and diluted | — | 43,000,000 |
See notes to unaudited pro forma condensed consolidated financial information
48 |
Unaudited
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2013
(in thousands, except share data)
Historical | Pro
Forma Adjustments |
Pro Forma | ||||||||||||
ASSETS | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | $ | 44,860 | $ | (275 | ) | (a) | $ | 59,098 | ||||||
14,513 | (c) | |||||||||||||
Other current assets | 112,094 | (311 | ) | (a) | 111,783 | |||||||||
Total current assets | 156,954 | 13,927 | 170,881 | |||||||||||
Receivables, net of allowances | 44,075 | (7,911 | ) | (a) | 36,164 | |||||||||
Property, plant and equipment, net | 501,467 | — | 501,467 | |||||||||||
Real estate held for development | 154,645 | — | 154,645 | |||||||||||
Other assets | 116,094 | (3,222 | ) | (a) | 104,678 | |||||||||
(8,194 | ) | (c) | ||||||||||||
Goodwill and intangible assets | 159,122 | — | 159,122 | |||||||||||
Total assets | $ | 1,132,357 | $ | (5,400 | ) | $ | 1,126,957 | |||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||||
Total current liabilities | $ | 159,433 | $ | (2,669 | ) | (a) | $ | 157,664 | ||||||
900 | (c) | |||||||||||||
Long-term debt | 598,360 | (23,927 | ) | (c) | 574,433 | |||||||||
Notes payable to affiliates | 1,426,350 | (1,426,350 | ) | (b) | — | |||||||||
Other long-term liabilities | 78,855 | (390 | ) | (a) | 78,465 | |||||||||
Total liabilities | 2,262,998 | (1,452,436 | ) | 810,562 | ||||||||||
Stockholders equity: | ||||||||||||||
Common stock, $0.01 par value; 43,000,000 shares authorized on a pro forma basis; 43,000,000 shares issued and outstanding on a pro forma basis | — | 430 | (g) | 430 | ||||||||||
Additional paid-in capital | — | 157,795 | (g) | 157,795 | ||||||||||
Partners (deficit) capital: | ||||||||||||||
Partnership units, unlimited number authorized | ||||||||||||||
General partner | — | — | — | |||||||||||
Limited partner | (1,288,811 | ) | 1,447,036 | (f) | — | |||||||||
(158,225 | ) | (g) | ||||||||||||
Accumulated other comprehensive income | 158,500 | — | 158,500 | |||||||||||
Total (deficit) equity attributable to Intrawest Resorts Holdings, Inc. | (1,130,311 | ) | 1,447,036 | 316,725 | ||||||||||
Non-controlling interest | (330 | ) | — | (330 | ) | |||||||||
Total capital | (1,130,641 | ) | 1,447,036 | 316,395 | ||||||||||
Total liabilities and capital | $ | 1,132,357 | $ | (5,400 | ) | $ | 1,126,957 |
See notes to unaudited pro forma condensed consolidated financial information
49 |
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
(a) Elimination of operations that were not contributed
The European operations held by a wholly-owned subsidiary of Cayman L.P. were not contributed to the Company in connection with the Restructuring that occurred on December 9, 2013. As a result, net adjustments of $4.2 million and $0.5 million have been made to the unaudited pro forma condensed consolidated statement of operations for the year ended June 30, 2013 and the three months ended September 30, 2013, respectively. An adjustment to the unaudited pro forma condensed consolidated balance sheet as of September 30, 2013 has been made to reflect the removal of approximately $8.7 million in net assets.
The following table summarizes the results of the European operations that were not contributed to the Company in the Restructuring:
Year
ended June 30, 2013 |
Three months ended September 30, 2013 | |||||||
(in thousands) | ||||||||
Revenue | $ | 428 | $ | — | ||||
Operating expense | 2,096 | 377 | ||||||
Depreciation and amortization | 2 | — | ||||||
Loss on disposal of assets | 1,923 | 101 | ||||||
Impairment of real estate | 649 | — | ||||||
Loss from operations | (4,242 | ) | (478 | ) | ||||
Interest income | 47 | 26 | ||||||
Other income (expense), net | 38 | (21 | ) | |||||
Loss before income taxes | $ | (4,157 | ) | $ | (473 | ) |
The following table summarizes the financial position of the European operations that were not contributed to the Company in the Restructuring:
As
of September 30, 2013 | ||||
(in thousands) | ||||
Current assets | ||||
Cash and cash equivalents | $ | 275 | ||
Other current assets | 311 | |||
Total current assets | 586 | |||
Receivables, net of allowances | 7,911 | |||
Real estate held for development | — | |||
Other assets | 3,222 | |||
Total assets | $ | 11,719 | ||
Total current liabilities | $ | 2,669 | ||
Other long-term liabilities | 390 | |||
Partners deficit: Limited partner | 8,660 | |||
Total liabilities and partners deficit | $ | 11,719 |
(b) Cancellation of notes payable to affiliates
An adjustment to the unaudited pro forma condensed consolidated balance sheet as of September 30, 2013 has been made to reflect that (a) $1,081.8 million of the notes payable to affiliates and accrued and unpaid interest thereon were exchanged for shares of our common stock and (b) the Company and its subsidiary guarantors were released from their obligations in respect of $344.5 million of the notes payable to affiliates and accrued and unpaid interest thereon.
An adjustment to the unaudited pro forma condensed consolidated statement of operations for the year ended June 30, 2013 and the three months ended September 30, 2013, respectively, has been made to eliminate interest expense on notes payable to affiliates.
50 |
(c) Refinancing
On December 9, 2013, one of our subsidiaries entered into the New Credit Agreement. The borrowings under the New Credit Agreement, together with cash on hand and funds contributed to the Company by an affiliate of Fortress, were used to refinance and replace the borrowings under the First Lien Credit Agreement and the Second Lien Credit Agreement. The following table summarizes the adjustment in the unaudited pro forma condensed consolidated balance sheet to long-term debt:
As
of September 30, 2013 | ||||
(in thousands) | ||||
New Credit Agreement(1) | $ | 540,000 | ||
Less: Repayment of Fiscal Year 2013 First Lien Term Loan(2) | (440,842 | ) | ||
Less: Repayment of Fiscal Year 2013 Second Lien Term Loan(3) | (122,185 | ) | ||
(23,027 | ) | |||
Less: Current portion of long-term debt | 900 | |||
Long-term debt | $ | (23,927 | ) |
(1) | The New Term Loan is comprised of a current portion of $5.4 million and long-term portion of $534.6 million. |
(2) | The Fiscal Year 2013 First Lien Term Loan is comprised of a current portion of $4.5 million and long- term portion of $436.3 million. |
(3) | The Fiscal Year 2013 Second Lien Term Loan is comprised of a current portion of $nil and long-term portion of $122.2 million. |
In addition, as a result of the Refinancing, the unaudited pro forma condensed consolidated balance sheet reflects an increase in current liabilities of $0.9 million, consisting of an increase in the current portion of long-term debt. The unaudited pro forma condensed consolidated balance sheet also reflects a net decrease in other assets of $8.2 million, consisting of the elimination of deferred financing costs associated with the Fiscal Year 2013 Lien Loans of $19.0 million, partially offset by recording the capitalization of approximately $10.8 million of new deferred financing costs associated with the borrowings under the New Credit Agreement.
As a result of the Refinancing and Restructuring, cash and cash equivalents reflects a net cash increase of $14.5 million, consisting of the receipt of net cash of $529.2 million provided by the New Term Loan, offset by the payoff of the Fiscal Year 2013 Lien Loans of $563.0 million, and cash contributions of $48.3 million from an affiliate of Fortress as part of the Restructuring.
The following tables summarize the adjustments in the unaudited pro forma condensed consolidated statements of operations to reflect the adjustments to interest expense on third party debt:
Year Ended June 30, 2013 | ||||||||||||
Interest Expense | Debt
Issuance Costs Amortization | Total | ||||||||||
(in thousands) | ||||||||||||
New Term Loan | $ | 29,700 | $ | 1,543 | $ | 31,243 | ||||||
Less: Fiscal Year 2013 First Lien Term Loan | (18,293 | ) | (6,752 | ) | (25,045 | ) | ||||||
Less: Fiscal Year 2013 Second Lien Term Loan | (7,835 | ) | (3,127 | ) | (10,962 | ) | ||||||
Less: Fiscal Year 2010 First Lien Term Loan | (11,646 | ) | — | (11,646 | ) | |||||||
Less: Fiscal Year 2010 Second Lien Term Loan | (23,481 | ) | (10,884 | ) | (34,365 | ) | ||||||
Total | $ | (31,555 | ) | $ | (19,220 | ) | $ | (50,775 | ) |
Three Months Ended September 30, 2013 | ||||||||||||
Interest Expense | Debt
Issuance Costs Amortization | Total | ||||||||||
(in thousands) | ||||||||||||
New Term Loan | $ | 7,425 | $ | 386 | $ | 7,811 | ||||||
Less: Fiscal Year 2013 First Lien Term Loan | (8,308 | ) | (753 | ) | (9,061 | ) | ||||||
Less: Fiscal Year 2013 Second Lien Term Loan | (3,535 | ) | (147 | ) | (3,682 | ) | ||||||
Total | $ | (4,418 | ) | $ | (514 | ) | $ | (4,932 | ) |
51 |
The unaudited pro forma condensed consolidated statement of operations for the year ended June 30, 2013 also reflects the elimination of loss on extinguishment of debt recorded in December 2012 related to the full repayment of the Fiscal Year 2010 First Lien loans and Fiscal Year 2010 Second Lien Loans with the proceeds from the Fiscal Year 2013 Lien Loans.
The principal balance, deferred financing costs and interest expense related to the New Credit Agreement are based upon the terms of the financing. Pro forma interest expense (i) reflects an estimated annual interest rate of 5.5% on indebtedness to be incurred under the New Credit Agreement and (ii) reflects amortization expense on the approximately $10.8 million of deferred financing costs associated with the Companys borrowings under the New Credit Agreement, using a maturity of seven years. A 1/8% change in the assumed interest rate would change pro forma interest expense by approximately $0.7 million annually.
(d) Transaction costs
Reflects an adjustment to eliminate non-recurring transaction costs incurred in connection with the Pro Forma Transactions. These costs primarily include costs related to legal, accounting and consulting services, of which approximately $0.3 million were incurred for the three months ended September 30, 2013.
(e) Resulting tax effects
The unaudited pro forma condensed consolidated statement of operations does not include adjustments to the income tax provision as the Company has a full valuation allowance against its net deferred tax assets, excluding certain deferred tax liabilities. Any pro forma tax provision adjustment would be offset by a corresponding adjustment in valuation allowance.
(f) Resulting partners (deficit) capital effects
Reflects an adjustment to partners’ (deficit) capital for the items noted in (a) through (c).
(g) Contribution
Reflects the adjustment from partners’ capital to additional paid-in capital and the required balancing entry to reflect the par value of the Company’s outstanding common stock to reflect the contribution of both Intrawest U.S. and Intrawest Canada to the Company. The issuance of common stock was at a par value of $0.01 per share.
Pro forma loss per share
The number of shares used to compute pro forma basic and diluted loss per share is 43,000,000, which was the number of shares outstanding upon completion of the Pro Forma Transactions. This does not include shares of common stock being offered by us in this offering.
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Managements
Discussion and Analysis of
Financial Condition and Results of Operations
Intrawest Resorts Holdings, Inc. (New Intrawest) is a newly formed Delaware corporation that had not, prior to the Restructuring, conducted any activities other than those incident to its formation and the preparation of the registration statement of which this prospectus forms a part. Unless the context suggests otherwise, references in this prospectus to Intrawest, the Company, we, us and our refer to Cayman L.P. and its consolidated subsidiaries prior to the consummation of the Restructuring, and to New Intrawest and its consolidated subsidiaries after the consummation of the Restructuring. The following discussion and analysis of our financial condition and results of operations should be read together with the consolidated financial statements of Cayman L.P. and the related notes, the unaudited pro forma condensed consolidated financial statements set forth under Unaudited Pro Forma Condensed Consolidated Financial Information and the other financial information appearing elsewhere in this prospectus. See Certain Relationships and Related Party Transactions and Description of Certain Indebtedness for a description of certain of our related party arrangements and debt obligations. This discussion and analysis contains forward- looking statements that involve risks, uncertainties and assumptions. See Forward-Looking Statements. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of many factors, including those discussed in Risk Factors and elsewhere in this prospectus.
Overview
We are a North American mountain resort and adventure company, delivering distinctive vacation and travel experiences to our customers for over three decades. We own interests in seven four-season mountain resorts with more than 11,000 skiable acres and more than 1,150 acres of land available for real estate development. Our mountain resorts are geographically diversified across North America’s major ski regions, including the Eastern United States, the Rocky Mountains, the Pacific Southwest and Canada, which we believe helps reduce our financial exposure to any single geographic area as weather patterns and economic conditions vary across these regions. Our mountain resorts are located within an average of approximately 160 miles of major metropolitan markets with high concentrations of affluent skiers and major airports, including New York City, Boston, Washington D.C., Pittsburgh, Denver, Los Angeles, Montreal and Toronto. During fiscal 2013, our portfolio of resorts received more than six million visitors from all 50 states and more than 100 countries. We also operate an adventure travel business, the cornerstore of which is CMH, the leading heli-skiing adventure company in North America. CMH provides helicopter accessed skiing, mountaineering and hiking to more skiable terrain than all lift accessed mountain resorts combined. Additionally, we operate a comprehensive real estate business through which we manage, market and sell vacation club properties; manage condominium hotel properties; and sell and market residential real estate.
We manage our business through three reportable segments:
• | Mountain: Our Mountain segment includes our mountain resort and lodging operations at Steamboat, Winter Park, Tremblant, Stratton and Snowshoe, as well as our 50% interest in Blue Mountain. |
• | Adventure: The cornerstone of our Adventure segment is CMH. Within our Adventure segment, we also own and operate aviation businesses that support CMH and provide services to third parties. |
• | Real Estate: Our Real Estate segment includes our real estate development activities, as well as our real estate management, marketing and sales businesses. |
Prior to the collapse in housing markets in late 2007 and the global financial crisis that followed, we were actively engaged in large scale development and sales of resort real estate, primarily in North America. In light of the then prevailing market conditions, we ceased new development activities in late 2009. As a result, we were left with a portfolio of legacy real estate assets, high leverage levels and litigation initiated by purchasers of resort real estate seeking to rescind their purchase obligations or otherwise mitigate their losses. This confluence of factors had a material impact on our consolidated financial results for the fiscal years presented below. Through a series of debt refinancings, cost saving initiatives and divestitures of non-core assets, we believe we have streamlined our operations. As of September 30, 2013, we have divested substantially all of our legacy real estate assets and have settled the majority of litigation claims stemming from our pre-2010 development and sales activities. Although the effects of our pre-2010 legacy real estate development and sales activities on our consolidated financial results will continue in future periods, we expect that these effects will continue to diminish over time. The net loss attributable to Cayman L.P. was $498.9 million, $336.1 million and $296.0 million for fiscal 2011, 2012 and 2013, respectively, and
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$127.3 million and $121.8 million for the three months ended September 30, 2012 and 2013, respectively. After giving effect to the Refinancing and the Restructuring, we believe our financial results in future periods will be materially different from those reflected in the historical consolidated financial information appearing in this prospectus. See “—Restructuring and Refinancing.”
Factors Affecting our Business
Economic Conditions. Our results of operations are affected by consumer discretionary spending. Numerous economic trends support the notion that the health of the general economy is improving. We believe that as the economy continues to improve, consumers will have more disposable income and a greater inclination to engage in and spend on leisure activities, which will positively impact our results of operations.
Snowfall and Weather. The timing and amount of snowfall and other weather conditions can have a significant impact on visitation and financial results in our Mountain and Adventure segments. Our resorts are geographically diversified and have strong snowmaking capabilities, which helps to mitigate the impact of localized snow conditions and weather. In addition, our increasing percentage of revenue derived from season pass and frequency products sold prior to the ski season helps to insulate us from snowfall and weather conditions. Season pass and frequency product revenue has grown at a CAGR of 6.3% over the three year period ended June 30, 2013.
Resort Real Estate Markets. We intend to resume development of residential vacation homes at our mountain resorts when market conditions are favorable. The value and sales volume of vacation homes fluctuate with macro-economic trends and consumer sentiment. Macroeconomic conditions have improved over the past two years, which has supported a partial recovery in the market for vacation homes in the United States and Canada. However, despite these trends, the median vacation home price and number of vacation homes sold in the most recent year still remain well below the peak in 2005, suggesting ample room for continued growth.
Seasonality and Fluctuations in Quarterly Results. Our business is seasonal in nature. Although each of our mountain resorts operates as a four-season resort, based upon historical results, we generate the highest revenues during our second and third fiscal quarters, which is the peak ski season. Similarly, CMH generates the majority of its revenues during our second and third fiscal quarters, which is the peak heli-skiing season. As a result of the seasonality of our business, our mountain resorts and CMH typically experience operating losses during the first and fourth quarters of each fiscal year. In addition, throughout our peak quarters, we generate the highest daily revenues on weekends, during the Christmas/New Years and Presidents Day holiday periods and, in the case of our mountain resorts, during school spring breaks. Depending on how peak periods, holidays and weekends fall on the calendar, in any given year we may have more or less peak periods, holidays and weekends in our second fiscal quarter compared to prior years, with a corresponding difference in our third fiscal quarter. These differences can result in material differences in our quarterly results of operations and affect the comparability of our results of operations.
Restructuring and Refinancing
We conduct our U.S. operations through Intrawest U.S. Holdings Inc., a Delaware corporation, and our Canadian operations through Intrawest ULC, an unlimited liability company organized under the laws of the Province of Alberta. In December 2013, through a series of restructuring transactions, Cayman L.P. caused its indirect subsidiaries to contribute 100% of the equity interests in both Intrawest U.S. and Intrawest Canada to an indirect subsidiary of Intrawest Resorts Holdings, Inc., the issuer of the common stock offered hereby. In connection with these restructuring transactions, we were released as an obligor with respect to all of our debt owed to affiliates (approximately $1.4 billion as of September 30, 2013). In addition, in December 2013, we entered into the New Credit Agreement. At the time the New Credit Agreement was entered into, an affiliate of Fortress contributed $48.3 million to us. The borrowings under the New Credit Agreement, together with cash on hand and the funds contributed to us by an affiliate of Fortress, were used to refinance and replace the borrowings under the First Lien Credit Agreement and the Second Lien Credit Agreement. While these transactions occured subsequent to the periods presented, we expect them to have a material impact on our financial results in future periods. As of September 30, 2013, our total indebtedness on an actual and a pro forma basis after giving effect to the Pro Forma Transactions was $2,033.9 million and $584.5 million, respectively. In addition, for fiscal 2013, our interest expense on an actual and a pro forma basis after giving effect to the Pro Forma Transactions was $335.0 million and $47.7 million, respectively. See Description of Certain Indebtedness and Unaudited Pro Forma Condensed Consolidated Financial Information.
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Significant Transactions
The following significant transactions were executed during the periods presented:
Whistler Disposition. Prior to November 2010, we held an interest in the assets of Whistler Blackcomb ski resort. In November 2010, we sold our interest in the assets to Whistler Holdings in exchange for cash and shares of Whistler Holdings, a public company. We used the net proceeds from the sale to repay indebtedness. In December 2012, we sold our investment in Whistler Holdings for $116.9 million and recorded a $17.9 million gain on disposal of equity method investments in our consolidated statement of operations. All financial information attributable to Whistler Blackcomb and Whistler Holdings have been excluded from our reportable segments for all periods presented.
Fiscal 2013 Refinancing Transaction. In December 2012, we borrowed $575.0 million aggregate principal amount of corporate debt, comprised of a $450.0 million first lien term loan and a $125.0 million second lien term loan. See Description of Certain Indebtedness—First Lien Credit Agreement and Second Lien Credit Agreement. The net proceeds of these borrowings, together with the proceeds from the sale of our investment in Whistler Holdings, were used to repay $728.9 million of outstanding indebtedness and related fees. As a result, we recorded an $11.2 million loss on extinguishment of debt in fiscal 2013.
Results of Operations
The following historical consolidated statement of operations data for the years ended June 30, 2011, 2012 and 2013 and the three months ended September 30, 2012 and 2013 has been derived from the audited consolidated financial statements of Cayman L.P. and from the unaudited interim consolidated financial statements of Cayman L.P., respectively, included elsewhere in this prospectus.
Year Ended June 30, | Three
Months Ended September 30, | |||||||||||||||||||
2011 | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues | $ | 559,523 | $ | 513,447 | $ | 524,407 | $ | 79,195 | $ | 80,561 | ||||||||||
Operating expenses | 504,005 | 453,187 | 448,944 | 101,179 | 104,196 | |||||||||||||||
Depreciation and amortization | 76,371 | 57,655 | 58,342 | 14,653 | 13,145 | |||||||||||||||
Loss (gain) on disposal of assets | 26,196 | 9,443 | 12,448 | 1,210 | (236 | ) | ||||||||||||||
Impairment of long-lived assets | 12,140 | 782 | 143 | — | — | |||||||||||||||
Impairment of real estate | 73,230 | 8,137 | 1,052 | 62 | 633 | |||||||||||||||
Goodwill impairment | 64,097 | 3,575 | — | — | — | |||||||||||||||
Income (loss) from operations | (196,516 | ) | (19,332 | ) | 3,478 | (37,909 | ) | (37,177 | ) | |||||||||||
Interest income | 9,162 | 7,467 | 6,630 | 1,637 | 1,632 | |||||||||||||||
Interest expense on third party debt | (143,463 | ) | (135,929 | ) | (98,437 | ) | (35,006 | ) | (16,464 | ) | ||||||||||
Interest expense on notes payable to affiliates | (160,943 | ) | (195,842 | ) | (236,598 | ) | (55,371 | ) | (67,105 | ) | ||||||||||
Earnings (loss) from equity method investments | 8,299 | 538 | (5,147 | ) | (91 | ) | (1,591 | ) | ||||||||||||
Gain on disposal of equity method investments | — | — | 18,923 | — | — | |||||||||||||||
Loss on extinguishment of debt | — | — | (11,152 | ) | — | — | ||||||||||||||
Other income (expense), net | (2,021 | ) | 1,199 | 1,973 | 402 | (172 | ) | |||||||||||||
Loss from continuing operations before income taxes | (485,482 | ) | (341,899 | ) | (320,330 | ) | (126,338 | ) | (120,877 | ) | ||||||||||
Income tax (benefit) expense | 6,555 | (5,836 | ) | (23,616 | ) | 972 | 701 | |||||||||||||
Loss from continuing operations | (492,037 | ) | (336,063 | ) | (296,714 | ) | (127,310 | ) | (121,578 | ) | ||||||||||
Loss from discontinued operations, net of tax | (6,469 | ) | — | — | — | — | ||||||||||||||
Net loss | (498,506 | ) | (336,063 | ) | (296,714 | ) | (127,310 | ) | (121,578 | ) | ||||||||||
Loss (earnings) attributable to noncontrolling interest | (361 | ) | — | 757 | 34 | (436 | ) | |||||||||||||
Net loss attributable to Cayman L.P. | (498,867 | ) | (336,063 | ) | (295,957 | ) | (127,276 | ) | (122,014 | ) | ||||||||||
Net loss attributable to general partner | — | — | — | — | — | |||||||||||||||
Net loss attributable to limited partners | $ | (498,867 | ) | $ | (336,063 | ) | $ | (295,957 | ) | $ | (127,276 | ) | $ | (122,014 | ) |
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Our Segments
We manage and report operating results through three reportable segments:
• | Mountain (65.5% of fiscal 2013 and 48.1% of the three months ended September 30, 2013 reportable segment revenue): Our Mountain segment includes our mountain resort and lodging operations at Steamboat, Winter Park, Tremblant, Stratton and Snowshoe, as well as our 50% interest in Blue Mountain. |
• | Adventure (22.0% of fiscal 2013 and 32.7% of the three months ended September 30, 2013 reportable segment revenue):Our Adventure segment includes CMH and our aviation businesses that support CMH and provide services to third parties. |
• | Real Estate (12.5% of fiscal 2013 and 19.2% of the three months ended September 30, 2013 reportable segment revenue): Our Real Estate segment includes our real estate development activities, as well as our real estate management, marketing and sales businesses, including IRCG, IHM and Playground. |
Each of our reportable segments, although integral to the success of the others, offers distinctly different products and services and requires different types of management focus. As such, these segments are managed separately. In deciding how to allocate resources and assess performance, our Chief Operating Decision Maker (CODM) regularly evaluates the performance of our reportable segments on the basis of revenue and segment Adjusted EBITDA. We also evaluate segment Adjusted EBITDA as a key compensation measure. Following the consummation of this offering, the compensation committee of our board of directors will determine the annual variable compensation for certain members of our management team based, in part, on segment Adjusted EBITDA. Segment Adjusted EBITDA assists us in comparing our segment performance over various reporting periods because it removes from our operating results the impact of items that our management believes do not reflect our core operating performance.
Our reportable segment measure of Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. Reportable segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other entities may not calculate segment Adjusted EBITDA in the same manner. See Note 18 to the audited consolidated financial statements of Cayman L.P. included elsewhere in this prospectus.
Shown below is a summary of reportable segment revenues and reportable segment Adjusted EBITDA for fiscal 2011, 2012 and 2013 and for the three months ended September 30, 2012 and 2013:
Year Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2011 | 2012 | 2013 | 2012 | 2013 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Mountain revenues | $ | 322,194 | $ | 310,765 | $ | 339,003 | $ | 33,259 | $ | 33,305 | ||||||||||
Adventure revenues | 96,693 | 109,496 | 113,622 | 29,047 | 22,617 | |||||||||||||||
Real Estate revenues | 61,165 | 61,439 | 64,726 | 15,148 | 13,250 | |||||||||||||||
Total reportable segment revenues | $ | 480,052 | $ | 481,700 | $ | 517,351 | $ | 77,454 | $ | 69,172 | ||||||||||
Mountain Adjusted EBITDA | $ | 69,805 | $ | 66,051 | $ | 72,353 | $ | (19,588 | ) | $ | (22,590 | ) | ||||||||
Adventure Adjusted EBITDA | 15,563 | 16,151 | 19,740 | 7,153 | 3,656 | |||||||||||||||
Real Estate Adjusted EBITDA | 9,002 | 9,855 | 13,167 | 2,069 | 1,477 | |||||||||||||||
Total(1) | $ | 94,370 | $ | 92,057 | $ | 105,260 | $ | (10,366 | ) | $ | (17,457 | ) |
(1) | Total segment Adjusted EBITBA equals consolidated Adjusted EBITDA. For a reconciliation of net loss attributable to Cayman L.P. to consolidated Adjusted EBITDA, see Prospectus Summary—Summary Historical and Unaudited Pro Forma Condensed Consolidated Financial and Operating Information. |
Mountain
Our Mountain segment is comprised of all of the mountain resort operations at Steamboat, Winter Park, Tremblant, Stratton and Snowshoe, as well as our ancillary resort businesses. Our Mountain segment also includes our 50% ownership interest in Blue Mountain, which is accounted for using the equity method. Our Mountain
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segment contributed 67.1%, 64.5% and 65.5% of total reportable segment revenues for fiscal 2011, 2012 and 2013, respectively, and 42.9% and 48.1% of total reportable segment revenues for the three months ended September 30, 2012 and 2013, respectively.
Revenue and Mountain Adjusted EBITDA
The Mountain segment earns revenue from a variety of business activities conducted at our mountain resorts.
Lift revenue. Lift revenue is derived from a variety of lift pass products, including multi-resort and single-resort passes, season pass products, frequency card products of varying durations and single- and multi-day lift tickets. Our season pass products, including our multi-resort products, are predominately sold prior to the start of the ski season.
Season pass revenue, although primarily collected prior to the ski season during a fiscal year, is recognized in our consolidated financial statements during such fiscal year based on historical usage patterns. Frequency pass revenue is recognized as used, and unused portions are recognized at the end of the frequency period. For fiscal 2011, 2012 and 2013, approximately 30.7%, 34.4% and 33.2%, respectively, of total lift revenue consisted of season pass and frequency product revenue.
Lodging revenue. Lodging revenue is derived through our management of rental programs for condominium properties located at or in close proximity to our mountain resorts. We typically receive 25% to 50% of the daily room revenue, with the condominium owners receiving the remaining share of the room revenue. We also earn lodging revenue from hotel properties we own at Winter Park, Stratton and Snowshoe.
Ski school revenue. Ski school revenue is derived through our operation of ski and ride schools at each of our mountain resorts. We are the exclusive provider of these services at each of our resorts.
Retail and rental revenue. Retail and rental revenue is derived from the rental of ski, snowboard and bike equipment and the sale of ski accessories, equipment, apparel, logo wear, gifts and sundries at our on-mountain and base area outlets.
Food and beverage revenue. Food and beverage revenue is derived through our operation of restaurants, bars and other food and beverage outlets at our resorts.
Other revenue. Other revenue is derived from fees earned through a wide variety of activities and ancillary operations, including private clubs, municipal services, call centers, parking operations, golf, summer base area activities, strategic alliances, entertainment events and other resort activities.
Mountain Adjusted EBITDA. Mountain Adjusted EBITDA is Mountain revenue less Mountain operating expenses, adjusted for our pro rata share of EBITDA for our equity method investment in Blue Mountain Resorts Limited. Mountain operating expenses include: wages, incentives and benefits for resort personnel; direct costs of food, beverage and retail inventory; general and administrative expenses; and resort operating expenses, such as contract services, utilities, fuel, permit and lease payments, credit card fees, property taxes, and maintenance and operating supplies.
Key Business Metrics Evaluated by Management
None of the operating metrics in this section include Blue Mountain, which we account for using the equity method.
Skier Visits We measure visitation volume during the ski season, which is when most of our lift revenue is earned, by the number of Skier Visits at our resorts, each of which represents an individuals use of a paid or complimentary ticket, frequency card or season pass to ski or snowboard at our mountain resorts for any part of one day. The number of Skier Visits, viewed in conjunction with ETP, is the most important indicator of our lift revenue. Changes in the number of Skier Visits have a significant impact on Mountain revenue. The number of Skier Visits is affected by numerous factors, including the quality of the customer experience, the effectiveness of our marketing efforts, pricing policies, snow and weather conditions, overall industry trends, macroeconomic factors and the relative attractiveness of our resort offerings compared to competitive offerings.
ETP We measure average ticket price during a given period by calculating our effective ticket price, or ETP, which is determined by dividing lift revenue by Skier Visits. ETP is influenced by lift product mix and other factors. Season pass products offer unlimited access, subject to certain exceptions and restrictions, for a fixed upfront payment. As a result, season pass holders ski frequently and therefore a higher mix of these products will put
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downward pressure on ETP. This downward pressure on ETP is more pronounced in ski seasons with higher snowfall, as season pass holders increase their usage. Conversely, single- and multi-day lift ticket products are priced per visit and therefore a higher mix of these products will tend to increase our ETP. Our lift product mix is primarily influenced by pricing incentives for season pass and frequency products and the types of visitors we attract (destination customers versus regional customers). Destination customers, who travel to the resort from a significant distance, often visit a resort once or twice per season for extended stays and are therefore likely to purchase multi-day ticket products. Destination customers tend to make travel plans far in advance of their vacation and do not typically change their plans based on snow and weather conditions. By contrast, regional customers that drive to the resort for one-day or overnight trips tend to increase visitation when conditions are favorable. Regional customers tend to visit the resort more frequently at a lower ticket price per visit than destination customers. For fiscal 2013, destination customers comprised approximately 38.7% of our Skier Visits, which compares to approximately 42.7% for fiscal 2012 and 36.7% for fiscal 2011. We define destination customers as customers with an address containing a zip code outside the resorts region. Our definition may be different than other companies and therefore our statistics may not be comparable. Other factors that influence ETP include the number of complimentary or special promotional passes issued by us, the average age of skiers visiting our resorts, the volume of group or promotional sales and the relative volume of products sold through different sales channels, including our call centers, our e-commerce platform and our network of third-party online and traditional travel companies. Products sold at the ticket counter, which has been a declining percentage of lift revenue in recent years, are typically priced higher relative to other channels because walk-up customers are our least price sensitive customers.
Revenue per Visit is total Mountain revenue for a given period divided by total Skier Visits during such period. Revenue per Visit is influenced by our mix of customers. Destination customers are more likely to purchase ancillary products and services than regional customers and a higher percentage of destination customers in our skier mix typically increases Revenue per Visit.
Revenue per available room or RevPAR is determined by dividing gross lodging revenue during a given period by the number of units available to customers during such periods.
ADR or Average Daily Rate is determined by dividing gross lodging revenue during a given period by the number of occupied units under management during such period. ADR is a measure commonly used in the lodging industry and used by our management to track lodging pricing trends. ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a lodging operation. ADR is affected by numerous factors, including the quality of the customer experience, the effectiveness of our marketing efforts, snow and weather conditions, overall industry trends, macroeconomic factors and the relative attractiveness of our resort offerings compared to competing offerings.
Adventure
The cornerstone of our Adventure segment is CMH, which provides heli-skiing, mountaineering and hiking at 11 lodges in British Columbia, Canada. To support CMH’s operations, we own 40 helicopters that are also used in the off-season for fire suppression in the United States and Canada and other commercial uses. Our Alpine Aerotech subsidiary provides helicopter maintenance, repair and overhaul services to our fleet of helicopters as well as to aircraft owned by unaffiliated third parties. Our Adventure segment contributed 20.1%, 22.7% and 22.0% of total reportable segment revenue for fiscal 2011, 2012 and 2013, respectively, and 37.5% and 32.7% of total reportable segment revenue for the three months ended September 30, 2012 and 2013, respectively.
Revenue and Adventure Adjusted EBITDA
Revenue. The Adventure segment earns revenue from a variety of activities conducted at CMH. CMH customer revenue is derived primarily through the sale of adventure packages that include lodging at facilities owned or leased by CMH, food and beverage services and heli-skiing, heli-mountaineering or heli-hiking. In addition to package revenue, CMH earns ancillary revenue from the sale of additional vertical meters of skiing, retail merchandise, massages, alcoholic beverages and the sale of other products and services not included in the vacation package.
The Adventure segment also generates ancillary revenue relating to performance of fire suppression services during the summer months in the Western United States and Western Canada. These activities are performed on an as-needed basis or pursuant to contracts that have a term of one to five years. Ancillary revenue is also derived from MRO services performed by Alpine Aerotech on third-party aircraft, as well as from leasing underutilized aircraft to unaffiliated third parties for short term periods ranging from one to 12 months.
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Adventure Adjusted EBITDA. Adventure Adjusted EBITDA is Adventure revenue less Adventure operating expenses, adjusted for Adjusted EBITDA attributable to noncontrolling interests. Adventure operating expenses consist primarily of compensation and benefits, fuel, aircraft and facility maintenance expenses, insurance, utilities, permit and lease payments, credit card fees, food and beverage costs, and general and administrative expenses.
Key Business Metrics Evaluated by Management
CMH Guest Nights is the number of paid nights skiing or hiking customers spend at our CMH lodges for a given period. The number of CMH Guest Nights is affected by numerous factors, including the quality of the customer experience, the effectiveness of our sales efforts, pricing policies, global macroeconomic factors and the relative attractiveness of our CMH offering compared to competitive offerings. Management uses CMH Guest Nights to gauge utilization of CMH assets in a given period.
CMH RevPGN is total CMH revenue for a given period divided by the number of CMH Guest Nights for such period. CMH RevPGN trends provide useful information concerning the pricing environment and our effectiveness at cross-selling extra vertical meters and ancillary products and services.
Real Estate
Our Real Estate segment is comprised of our core ongoing real estate development activities and our real estate management, marketing and sales businesses. The segment includes IRCG, our vacation club business, IHM, which manages condominium hotel properties in Maui, Hawaii and in Mammoth Lakes, California, and Playground, our core residential real estate sales and marketing business. Our Real Estate segment also includes costs associated with our ongoing development activities, including planning activities and land carrying costs. Our Real Estate segment contributed 12.7%, 12.8% and 12.5% of total reportable segment revenue for fiscal 2011, 2012 and 2013, respectively, and 19.6% and 19.2% of total reportable segment revenue for the three months ended September 30, 2012 and 2013, respectively.
Revenue and Real Estate Adjusted EBITDA
Revenue. The Real Estate segment earns revenue from IRCG, IHM and Playground. During the fiscal years presented, we did not have any active development projects. IRCG generates revenue from selling vacation club points in Club Intrawest, managing Club Intrawest properties and running a private exchange company for Club Intrawests members. IHM generates revenue from managing rental operations at the Honua Kai Resort and Spa in Maui, Hawaii and the Westin Monache Resort in Mammoth Lakes, California. Playground earns revenue from the commissions on the sales of real estate. We also manage commercial and residential real estate for our properties and third parties through our Real Estate segment.
Real Estate Adjusted EBITDA. Real Estate Adjusted EBITDA is Real Estate revenue less Real Estate operating expenses, plus interest income earned from receivables related to IRCGs operations, adjusted for our pro rata share of EBITDA for our equity method investments in Mammoth Hospitality Management, LLC and Chateau M.T. Inc. Real Estate operating expenses include: compensation and benefits; insurance; general and administrative expenses; and land carrying costs and development planning and appraisal expenses related to the core entitled land surrounding the bases of our Steamboat, Winter Park, Tremblant, Stratton and Snowshoe resorts.
Legacy, Non-Core and Other Items
Legacy and other non-core. Certain activities and assets, and the resulting expenses, gains and losses from such activities and assets, are deemed to be non-core by our CODM when they are not sufficiently related to our ongoing business, we plan to divest or wind them down and they are not reviewed by our CODM in evaluating the performance of our business. Non-core activities and assets that influenced our consolidated results during the financial periods presented in this prospectus but that have not been allocated to our reportable segments include:
• | legacy real estate carrying costs and litigation; |
• | divested non-core operations, including the results of Whistler Blackcomb prior to our divestiture of the assets of Whistler Blackcomb in November 2010; and |
• | remaining non-core operations, including management of non-core commercial properties owned by third parties and our equity method investment in MMSA Holdings, Inc. |
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Prior to 2010, in addition to our mountain resort and other operations, we were actively engaged in large scale development of resort real estate, primarily in the United States and Canada. In late 2009, in light of the then-existing poor economic environment for real estate development, we ceased new development activities, but were left with a portfolio of real estate assets consisting of development land and other legacy real estate assets that are not located at or near our mountain resorts, the vast majority of which have been divested over the past few years, particularly in recent periods as real estate markets have strengthened. We consider these legacy real estate assets, and the gains, losses, revenue and expenses related to these assets, to be non-core.
We recognized significant losses on disposal of our legacy real estate assets and from impairments to the carrying value of our real estate portfolio during the fiscal years described in this prospectus. We recognized real
estate impairments of $73.2 million, $8.1 million and $1.1 million during fiscal 2011, 2012 and 2013, respectively, and $0.1 million and $0.6 million for the three months ended September 30, 2012 and 2013, respectively. As of September 30, 2013, we have divested substantially all of our legacy real estate.
Expenses related to legacy real estate development activities include the carrying costs of legacy real estate assets and legacy litigation consisting of claims for damages related to alleged construction defects, purported disclosure violations and allegations that we failed to construct planned amenities.
Many of the claims brought against us were similar to claims brought against residential developers industry-wide in the wake of the 2008 housing market collapse. The vast majority of these claims were filed in 2009 and 2010 when we began litigating hundreds of cases with purchasers who had entered into pre-sale contracts prior to 2010, failed to close on their purchases, and were seeking a return of their security deposits. We have been settling these and other legacy real estate claims on a consistent basis in fiscal 2012 and fiscal 2013 and settled our last two security deposit cases in September 2013. New claims filings relating to legacy real estate litigation are infrequent due to the amount of time that has passed since our last construction project.
We believe expenses associated with our legacy real estate development activities will diminish in future periods. We expect any remaining costs and expenses that we incur in future periods to principally relate to ongoing real estate litigation in which we are either the defendant or plaintiff. We also expect to incur additional remediation expenses related to pre-2009 construction projects.
Other. We incur certain additional costs that we do not allocate to our operating segments because they relate to items that management does not believe are representative of the underlying performance of our ongoing operations. These items include restructuring costs, severance expenses and non-cash compensation.
Results of Operations
Comparison of Operating Results for the Three Months ended September 30, 2012 and 2013
The following table presents our consolidated statements of operations for the three months ended September 30, 2012 and 2013:
Three Months Ended September 30, | ||||||||||||||||
2012 | 2013 | $ Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Revenues | $ | 79,195 | $ | 80,561 | $ | 1,366 | 1.7 | % | ||||||||
Operating expenses | 101,179 | 104,196 | 3,017 | 3.0 | % | |||||||||||
Depreciation and amortization | 14,653 | 13,145 | (1,508 | ) | (10.3 | )% | ||||||||||
Loss (gain) on disposal of assets | 1,210 | (236 | ) | (1,446 | ) | (119.5 | )% | |||||||||
Impairment of real estate | 62 | 633 | 571 | * | ||||||||||||
Loss from operations | (37,909 | ) | (37,177 | ) | 732 | 1.9 | % | |||||||||
Interest income | 1,637 | 1,632 | (5 | ) | (0.3 | )% | ||||||||||
Interest expense on third party debt | (35,006 | ) | (16,464 | ) | 18,542 | (53.0 | )% | |||||||||
Interest expense on notes payable to affiliates | (55,371 | ) | (67,105 | ) | (11,734 | ) | 21.2 | % | ||||||||
Loss from equity method investments | (91 | ) | (1,591 | ) | (1,500 | ) | * | |||||||||
Other income (expense), net | 402 | (172 | ) | (574 | ) | (142.8 | )% | |||||||||
Loss before income taxes | (126,338 | ) | (120,877 | ) | 5,461 | (4.3 | )% |
60 |
Three Months Ended September 30, | ||||||||||||||||
2012 | 2013 | $ Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Income tax expense | 972 | 701 | (271 | ) | (27.9 | )% | ||||||||||
Net loss | (127,310 | ) | (121,578 | ) | 5,732 | (4.5 | )% | |||||||||
Loss (earnings) attributable to noncontrolling interest | 34 | (436 | ) | (470 | ) | * | ||||||||||
Net loss attributable to Intrawest Cayman L.P. | $ | (127,276 | ) | $ | (122,014 | ) | $ | 5,262 | (4.1 | )% |
Total revenue. Total revenue increased $1.4 million, or 1.7%, from $79.2 million in the three months ended September 30, 2012 to $80.6 million in the three months ended September 30, 2013, primarily as a result of an increase in legacy, non-core and other revenue of $9.6 million, from $1.7 million in the three months ended September 30, 2012 to $11.4 million in the three months ended September 30, 2013. This increase is primarily a result of the sale of a non-core land holding and Tower Ranch. This increase was offset by an $8.3 million decrease in total reportable segment revenue as a result of decreases of $6.4 million and $1.9 million in Adventure and Real Estate revenues, respectively.
Operating expenses. Operating expenses increased $3.0 million, or 3.0%, from $101.2 million in the three months ended September 30, 2012 to $104.2 million in the three months ended September 30, 2013. The increase in operating expenses was primarily attributable to legacy, non-core and other expenses, which increased $4.5 million, from $10.6 million in the three months ended September 30, 2012 to $15.2 million in the three months ended September 30, 2013 principally as a result of the sale of real estate held for development. Total reportable segment operating expenses decreased $1.5 million, from $90.6 million in the three months ended September 30, 2012 to $89.0 million in the three months ended September 30, 2013. Mountain operating expenses increased by $3.2 million in the three months ended September 30, 2013, while Adventure and Real Estate operating expenses decreased $3.5 million and $1.2 million, respectively.
Loss on disposal of assets. In the three months ended September 30, 2012, the loss of $1.2 million was related to the sale of certain wholly-owned interests in commercial real estate and development land at Blue Mountain and development land at Mammoth. In the three months ended September 30, 2013, the gain of $0.2 million was primarily related to the liquidation of two European entities and the reversal of an accrual related to a legacy asset that was closed in the first quarter of fiscal 2014.
Impairments. Impairments of real estate increased to $0.6 million in the three months ended September 30, 2013. The impairment was due to a decline in the fair value of legacy real estate assets.
Interest expense on third party debt. Interest expense on third party debt decreased $18.5 million, or 53.0%, from $35.0 million in the three months ended September 30, 2012 to $16.5 million in the three months ended September 30, 2013. The decrease was a result of the refinancing of our senior debt facilities in December 2012, which lowered the average effective interest rate on our senior debt facilities from approximately 11.0% to approximately 8.0%, as well as a lower average outstanding principal balance for the three months ended September 30, 2013.
Interest expense on notes payable to affiliates. Interest expense on notes payable to affiliates increased $11.7 million, or 21.2 %, from $55.4 million in the three months ended September 30, 2012 to $67.1 million in the three months ended September 30, 2013 due to a higher principal amount of indebtedness outstanding in the three months ended September 30, 2013. Interest on notes payable to affiliates accrues without payment and is added to the principal balance of the notes on a quarterly basis.
Loss from equity method investments. Loss from equity method investments increased to $1.6 million in the three months ended September 30, 2013 primarily as a result of recording our share of net loss from our investments in Leisura US 1, Lodestar Golf and Blue Mountain.
Other income (expense), net. Other income (expense), net, decreased $0.6 million from other income, net of $0.4 million in the three months ended September 30, 2012 to other expense, net of $0.2 million in the three months ended September 30, 2013. The decrease was primarily due to a change in foreign exchange from a gain of $0.4 million in the three months ended September 30, 2012 to a loss of $0.1 million in the three months ended September 30, 2013.
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Income tax expense. Income tax expense decreased $0.3 million, or 27.9%, from $1.0 million in the three months ended September 30, 2012 to $0.7 million in the three months ended September 30, 2013. The decrease in tax expense is primarily due to a decrease in taxable income for our taxable Canadian operations.
Mountain
Three Months Ended September 30, | ||||||||||||||||
2012 | 2013 | Change | % Change | |||||||||||||
RevPAR | $ | 38.79 | $ | 37.18 | $ | (1.61 | ) | (4.2 | )% | |||||||
ADR | $ | 121.76 | $ | 119.83 | $ | (1.93 | ) | (1.6 | )% | |||||||
Mountain revenue: | (dollars in thousands) | |||||||||||||||
Lift | $ | 1,815 | $ | 1,674 | $ | (141 | ) | (7.8 | )% | |||||||
Lodging | 8,673 | 8,217 | (456 | ) | (5.3 | )% | ||||||||||
Ski School | 511 | 533 | 22 | 4.3 | % | |||||||||||
Retail and Rental | 5,572 | 5,590 | 18 | 0.3 | % | |||||||||||
Food and Beverage | 6,264 | 6,349 | 85 | 1.4 | % | |||||||||||
Other | 10,424 | 10,942 | 518 | 5.0 | % | |||||||||||
Total Mountain Revenue | $ | 33,259 | $ | 33,305 | $ | 46 | 0.1 | % | ||||||||
Mountain Adjusted EBITDA | $ | (19,588 | ) | $ | (22,590 | ) | $ | (3,002 | ) | 15.3 | % |
Total Mountain revenue. Total Mountain revenue remained relatively flat at $33.3 million for the three months ended September 30, 2012 when compared to the three months ended September 30, 2013.
Lift revenue. Lift revenue remained relatively flat in the three months ended September 30, 2012 when compared to the three months ended September 30, 2013.
Lodging revenue. Lodging revenue decreased $0.5 million, or 5.3%, from $8.7 million in the three months ended September 30, 2012 to $8.2 million in the three months ended September 30, 2013. This decrease in the three months ended September 30, 2013 was attributable to the decrease in RevPAR.
Ski school revenue. Ski school revenue remained relatively flat at $0.5 million for the three months ended September 30, 2012 when compared to the three months ended September 30, 2013. Ski school revenue for the first quarter of the fiscal year is typically generated from the mountain biking programs and mountain biking coaching activities.
Retail and rental revenue. Retail and rental revenue remained relatively flat at $5.6 million for the three months ended September 30, 2012 when compared to the three months ended September 30, 2013. Retail and rental revenue for the first quarter of the fiscal year is typically generated from the rental of mountain bikes in the summer months.
Food and beverage revenue. Food and beverage revenue remained relatively flat at $6.3 million for the three months ended September 30, 2012 when compared to the three months ended September 30, 2013.
Other revenue. Other revenue increased $0.5 million, or 5.0%, from $10.4 million in the three months ended September 30, 2012 to $10.9 million in the three months ended September 30, 2013. The increase in other revenue is primarily attributable to an increase in our summer mountain biking operations.
Mountain Adjusted EBITDA. Mountain Adjusted EBITDA decreased $3.0 million, or 15.3%, from a loss of $19.6 million for the three months ended September 30, 2012 to a loss of $22.6 million for the three months ended September 30, 2013. The decrease in Mountain Adjusted EBITDA was related to an increase in variable expenses over the prior year in response to the challenging weather conditions in 2012.
Adventure
Three Months Ended September 30, | ||||||||||||||||
2012 | 2013 | Change | % Change | |||||||||||||
CMH Guest Nights | 2,605 | 2,956 | 351 | 13.5 | % | |||||||||||
CMH RevPGN | $ | 1,426 | $ | 1,253 | $ | (172 | ) | (12.1 | )% | |||||||
(dollars in thousands) | ||||||||||||||||
Adventure revenue | $ | 29,047 | $ | 22,617 | $ | (6,430 | ) | (22.1 | )% | |||||||
Adventure Adjusted EBITDA | $ | 7,153 | $ | 3,656 | $ | (3,497 | ) | (48.8 | )% |
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Adventure revenue. Adventure revenue decreased $6.4 million, or 22.1%, from $29.0 million in the three months ended September 30, 2012 to $22.6 million in the three months ended September 30, 2013. This decrease was primarily due to a decrease in ancillary services with CMH revenue remaining relatively flat. The decrease in ancillary services was primarily attributable to a return to a more typical firefighting season in Canada.
Adventure Adjusted EBITDA. Adventure Adjusted EBITDA decreased $3.5 million, or 48.8%, from $7.2 million in the three months ended September 30, 2012 to $3.7 million in the three months ended September 30, 2013. The decrease in Adventure Adjusted EBITDA was related to a $6.4 million decrease in Adventure revenue partially offset by a $3.5 million decrease in Adventure operating expenses, which decreased from $22.0 million in the three months ended September 30, 2012 to $18.4 million in the three months ended September 30, 2013, and by the removal of $0.6 million of Adjusted EBITDA in the three months ended September 30, 2013 attributable to noncontrolling interest in Alpine Helicopters as a result of the restructuring of those operations in January 2013. The decrease in operating expense was primarily attributable to lower variable expenses associated with reduced firefighting activity.
Real Estate
Three Months Ended September 30, |
||||||||||||||||
2012 | 2013 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Real Estate Revenue | $ | 15,148 | $ | 13,250 | $ | (1,898 | ) | (12.5 | )% | |||||||
Real Estate Adjusted EBITDA | $ | 2,069 | $ | 1,477 | $ | (592 | ) | (28.6 | )% |
Real Estate revenue. Real Estate revenue decreased $1.9 million, or 12.5%, from $15.1 million in the three months ended September 30, 2012 to $13.3 million in the three months ended September 30, 2013. The decrease was primarily attributable to lower IRCG revenues due to lower Club Intrawest point sales.
Real Estate Adjusted EBITDA. Real Estate Adjusted EBITDA decreased $0.6 million, or 28.6%, from $2.1 million in the three months ended September 30, 2012 to $1.5 million in the three months ended September 30, 2013. Real Estate revenues decreased $1.9 million while real estate operating expenses decreased $1.2 million, from $15.0 million in the three months ended September 30, 2012 to $13.8 million for the three months ended September 30, 2013 stemming from decreased IRCG operating expenses as a result of lower sales volumes.
Comparison of Operating Results in Fiscal Years 2012 and 2013
The following table presents our consolidated statements of operations for fiscal 2012 and 2013:
Year Ended June 30, | ||||||||||||||||
2012 | 2013 | $ Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Revenues | $ | 513,447 | $ | 524,407 | $ | 10,960 | 2.1 | % | ||||||||
Operating expenses | 453,187 | 448,944 | (4,243 | ) | (0.9 | )% | ||||||||||
Depreciation and amortization | 57,655 | 58,342 | 687 | 1.2 | % | |||||||||||
Loss on disposal of assets | 9,443 | 12,448 | 3,005 | 31.8 | % | |||||||||||
Impairment of long-lived assets | 782 | 143 | (639 | ) | (81.7 | )% | ||||||||||
Impairment of real estate | 8,137 | 1,052 | (7,085 | ) | (87.1 | )% | ||||||||||
Goodwill impairment | 3,575 | — | (3,575 | ) | (100.0 | )% | ||||||||||
Income (loss) from operations | (19,332 | ) | 3,478 | 22,810 | 118.0 | % | ||||||||||
Interest income | 7,467 | 6,630 | (837 | ) | (11.2 | )% | ||||||||||
Interest expense on third party debt | (135,929 | ) | (98,437 | ) | 37,492 | (27.6 | )% | |||||||||
Interest expense on notes payable to affiliates | (195,842 | ) | (236,598 | ) | (40,756 | ) | 20.8 | % | ||||||||
Earnings (loss) from equity method investments | 538 | (5,147 | ) | (5,685 | ) | * | ||||||||||
Gain on disposal of equity method investments | — | 18,923 | 18,923 | * | ||||||||||||
Loss on extinguishment of debt | — | (11,152 | ) | (11,152 | ) | * | ||||||||||
Other income, net | 1,199 | 1,973 | 774 | 64.6 | % | |||||||||||
Loss from continuing operations before income taxes | (341,899 | ) | (320,330 | ) | 21,569 | (6.3 | )% | |||||||||
Income tax benefit | (5,836 | ) | (23,616 | ) | (17,780 | ) | 304.7 | % | ||||||||
Net loss | (336,063 | ) | (296,714 | ) | 39,349 | (11.7 | )% | |||||||||
Loss attributable to noncontrolling interest | — | 757 | 757 | * | ||||||||||||
Net loss attributable to Intrawest Cayman L.P. | $ | (336,063 | ) | $ | (295,957 | ) | $ | 40,106 | (11.9 | )% |
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Total revenue. Total revenue increased $11.0 million, or 2.1%, from $513.4 million in fiscal 2012 to $524.4 million in fiscal 2013, primarily as a result of an increase in our total reportable segment revenue of $35.7 million, which included increases of $28.2 million, $4.1 million and $3.3 million in Mountain, Adventure and Real Estate revenue, respectively. These increases were partially offset by a decrease in legacy, non-core and other revenue of $24.7 million, or 77.8%, from $31.7 million in fiscal 2012 to $7.1 million in fiscal 2013. This decrease is primarily a result of the wind down of legacy businesses, including Madrid SnowZone and certain non-core commercial property management businesses.
Operating expenses. Operating expenses decreased $4.2 million, or 0.9%, from $453.2 million in fiscal 2012 to $448.9 million in fiscal 2013. Total reportable segment operating expenses increased by $21.9 million in fiscal 2013 compared to fiscal 2012. Mountain operating expenses increased by $23.0 million in fiscal 2013, while Adventure and Real Estate operating expenses decreased $0.7 million and $0.4 million, respectively. Offsetting these increases in reportable segment operating expenses was a $26.1 million decrease in legacy and other non-core operating expenses, which decreased from $50.5 million in fiscal 2012 to $24.4 million in fiscal 2013. Contributing to the decrease in legacy and other non-core operating expenses was a $25.7 million decrease in operating expenses associated with non-core operations, such as Madrid SnowZone and certain non-core commercial property management businesses.
Loss on disposal of assets. In fiscal 2012, the loss of $9.4 million was related to the sale of non-core land at Copper Mountain. In fiscal 2013, the loss was primarily related to the sale of certain wholly-owned interests in commercial real estate and development land at Blue Mountain and development land at Mammoth.
Impairments. Goodwill impairments, impairments of long-lived assets and impairments of real estate decreased $11.3 million, or 90.4%, from $12.5 million in fiscal 2012 to $1.2 million in fiscal 2013. In fiscal 2012, we recognized an $8.1 million real estate impairment due to a downturn in the real estate market, which caused the
carrying value of our real estate assets held for development to be higher than the fair value. In fiscal 2013, we recognized a $1.1 million real estate impairment as a result of a decline in the fair value of legacy real estate assets. In fiscal 2012, we also recognized a goodwill impairment of $3.6 million related to a real estate reporting unit. There were no goodwill impairments in fiscal 2013.
Interest income. Interest income decreased $0.8 million, or 11.2%, from $7.5 million in fiscal 2012 to $6.6 million in fiscal 2013. The decrease is primarily the result of lower interest rates earned on our available cash in fiscal 2013 and repayment of certain real estate notes receivable.
Interest expense on third party debt. Interest expense on third party debt decreased $37.5 million, or 27.6%, from $135.9 million in fiscal 2012 to $98.4 million in fiscal 2013. The decrease was a result of the refinancing of our senior debt facilities in December 2012, which lowered the average effective interest rate on our senior debt facilities from approximately 11.0% to approximately 8.0%, as well as a lower average outstanding principal balance in fiscal 2013.
Interest expense on notes payable to affiliates. Interest expense on notes payable to affiliates increased $40.8 million, or 20.8%, from $195.8 million in fiscal 2012 to $236.6 million in fiscal 2013 due to a higher principal amount of indebtedness outstanding in fiscal 2013. Interest on notes payable to affiliates accrues without payment and is added to the principal balance of the notes on a quarterly basis.
Earnings (loss) from equity method investments. Earnings (loss) from equity method investments decreased $5.7 million, from earnings of $0.5 million in fiscal 2012 to a loss of $5.1 million in fiscal 2013. The change in fiscal 2013 is primarily a result of recording our share of net loss from our investment in Whistler Holdings prior to the sale in December 2012.
Gain on disposal of equity method investments. The gain on disposal of equity method investments in fiscal 2013 resulted from the sale of our investment in Whistler Holdings in December 2012.
Loss on extinguishment of debt. In December 2012, we refinanced our senior debt facilities and recognized a $11.2 million loss on extinguishment, which reflects the write-off of unamortized debt issuance costs and related fees.
Other income, net. Other income, net increased $0.8 million from $1.2 million in fiscal 2012 to $2.0 million in fiscal 2013 principally as a result of gains on foreign currency in fiscal 2013.
Income tax benefit. We realized an income tax benefit of $5.8 million in fiscal 2012 compared to a benefit of $23.6 million in fiscal 2013. The 2013 tax benefit is primarily due to a decrease in the valuation allowance attributable to a restructuring of our Canadian operations that will allow us to utilize additional deferred tax assets.
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Mountain
Fiscal
Year Ended June 30, | ||||||||||||||||
2012 | 2013 | Change | % Change | |||||||||||||
Skier Visits | 2,758,970 | 3,146,119 | 387,149 | 14.0 | % | |||||||||||
Revenue per Visit | $ | 112.64 | $ | 107.75 | $ | (4.89 | ) | (4.3 | )% | |||||||
ETP | $ | 47.65 | $ | 45.92 | $ | (1.73 | ) | (3.6 | )% | |||||||
RevPAR | $ | 48.74 | $ | 53.12 | $ | 4.38 | 9.0 | % | ||||||||
ADR | $ | 157.57 | $ | 157.28 | $ | (0.29 | ) | (0.2 | )% | |||||||
Mountain revenue: | (dollars in thousands) | |||||||||||||||
Lift | $ | 131,453 | $ | 144,480 | $ | 13,027 | 9.9 | % | ||||||||
Lodging | 39,380 | 41,982 | 2,602 | 6.6 | % | |||||||||||
Ski School | 24,669 | 27,042 | 2,373 | 9.6 | % | |||||||||||
Retail and Rental | 40,208 | 44,385 | 4,177 | 10.4 | % | |||||||||||
Food and Beverage | 38,464 | 43,711 | 5,247 | 13.6 | % | |||||||||||
Other | 36,591 | 37,403 | 812 | 2.2 | % | |||||||||||
Total Mountain Revenue | $ | 310,765 | $ | 339,003 | $ | 28,238 | 9.1 | % | ||||||||
Mountain Adjusted EBITDA | $ | 66,051 | $ | 72,353 | $ | 6,302 | 9.5 | % |
Total Mountain revenue. Total Mountain revenue increased $28.2 million, or 9.1%, from $310.8 million in fiscal 2012 to $339.0 million in fiscal 2013, primarily as a result of a 14.0% increase in Skier Visits in fiscal 2013. Increased visitation for fiscal 2013 was driven by improved snowfall and conditions, increased leisure travel interest and favorable spring break schedules.
Lift revenue. Lift revenue increased $13.0 million, or 9.9%, from $131.5 million in fiscal 2012 to $144.5 million in fiscal 2013. This increase in fiscal 2013 was attributable to an increase in Skier Visits.
Lodging revenue. Lodging revenue increased $2.6 million, or 6.6%, from $39.4 million in fiscal 2012 to $42.0 million in fiscal 2013. The increase in fiscal 2013 was attributable to the increase in RevPAR partially offset by a slight decrease in ADR. The increase in RevPAR was driven by the same factors that led to increased visitation levels.
Ski school revenue. Ski school revenue increased $2.4 million, or 9.6%, from $24.7 million in fiscal 2012 to $27.0 million in fiscal 2013. The increase in fiscal 2013 was primarily attributable to an increase in Skier Visits.
Retail and rental revenue. Retail and rental revenue increased $4.2 million, or 10.4%, from $40.2 million in fiscal 2012 to $44.4 million in fiscal 2013. The increase in fiscal 2013 was primarily attributable to an increase in Skier Visits.
Food and beverage revenue. Food and beverage revenue increased $5.2 million, or 13.6%, from $38.5 million in fiscal 2012 to $43.7 million in fiscal 2013. The increase in fiscal 2013 was primarily attributable to an increase in Skier Visits.
Other revenue. Other revenue increased $0.8 million, or 2.2%, from $36.6 million in fiscal 2012 to $37.4 million in fiscal 2013. The increase in other revenue is primarily attributable to an increase in our summer mountain biking operations and summer visitation at our resorts.
Mountain Adjusted EBITDA . Mountain Adjusted EBITDA increased $6.3 million, or 9.5%, from $66.1 million in fiscal 2012 to $72.4 million in fiscal 2013. The increase in Mountain Adjusted EBITDA was related to a $28.2 million increase in Mountain revenue and a $1.0 million increase in our pro rata share of EBITDA for our equity method investment in Blue Mountain Resorts Limited, which increased from $5.9 million in fiscal 2012 to $6.9 million in fiscal 2013. Partially offsetting these increases was a $23.0 million increase in Mountain operating expenses, which increased from $250.6 million in fiscal 2012 to $273.6 million in fiscal 2013, primarily as a result of higher Skier Visits in fiscal 2013, the absence in fiscal 2013 of temporary cost control measures, including the reduction of seasonal personnel, that were implemented in fiscal 2012 and higher incentive compensation expense in fiscal 2013.
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Adventure
Year Ended June 30, | ||||||||||||||||
2012 | 2013 | Change | % Change | |||||||||||||
CMH Guest Nights | 37,829 | 36,237 | (1,592 | ) | (4.2 | )% | ||||||||||
CMH RevPGN | $ | 1,650 | $ | 1,693 | $ | 43 | 2.6 | % | ||||||||
(dollars in thousands) | ||||||||||||||||
Adventure revenue | $ | 109,496 | $ | 113,622 | $ | 4,126 | 3.8 | % | ||||||||
Adventure Adjusted EBITDA | $ | 16,151 | $ | 19,740 | $ | 3,589 | 22.2 | % |
Adventure revenue . Adventure revenue increased $4.1 million, or 3.8%, from $109.5 million in fiscal 2012 to $113.6 million in fiscal 2013. This increase was primarily due to an increase in revenue from ancillary services partially offset by a decrease in CMH revenue. CMH revenue decreased $1.1 million, or 1.8%, in fiscal 2013 compared to fiscal 2012. The decrease was primarily attributable to a decrease of 4.2% in CMH Guest Nights, partially offset by the elimination of early booking discounts in fiscal 2013. The decline in CMH Guest Nights was primarily attributable to a decline in European customers as a result of weak European economic conditions. European customers historically have comprised more than 40% of our total CMH winter customers.
Revenue from ancillary services increased $5.2 million, or 11.2%, in fiscal 2013 compared to fiscal 2012. This increase was primarily attributable to increased fire suppression activities resulting from above average forest fire activity in the Western United States and Western Canada.
Adventure Adjusted EBITDA. Adventure Adjusted EBITDA increased $3.6 million, or 22.2%, from $16.2 million in fiscal 2012 to $19.7 million in fiscal 2013. The increase in Adventure Adjusted EBITDA was related to a $4.1 million increase in Adventure revenue and a $0.7 million decrease in Adventure operating expenses, which decreased from $93.3 million in fiscal 2012 to $92.7 million in fiscal 2013, partially offset by $1.2 million of Adjusted EBITDA attributable to noncontrolling interest in Alpine Helicopters as a result of the restructuring of those operations in fiscal 2013.
Real Estate
Year Ended June 30, | ||||||||||||||||
2012 | 2013 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Real Estate Revenue | $ | 61,439 | $ | 64,726 | $ | 3,287 | 5.4 | % | ||||||||
Real Estate Adjusted EBITDA | $ | 9,855 | $ | 13,167 | $ | 3,312 | 33.6 | % |
Real Estate revenue. Real Estate revenue increased $3.3 million, or 5.4%, from $61.4 million in fiscal 2012 to $64.7 million in fiscal 2013. The increase included a $1.2 million increase in Playground revenues as a result of the acceleration of commissions relating to the exit of our brokerage engagement at Honua Kai Resort and Spa in Maui. Additionally, revenues from IHM increased $1.1 million due to higher occupancy and ADR, and IRCG revenues increased $1.1 million due to higher point sales stemming from improved economic conditions and enhanced marketing initiatives.
Real Estate Adjusted EBITDA. Real Estate Adjusted EBITDA increased $3.3 million, or 33.6%, from $9.9 million in fiscal 2012 to $13.2 million in fiscal 2013. Real Estate revenues increased $3.3 million in fiscal 2013, while real estate operating expenses decreased $0.4 million, from $58.8 million in fiscal 2012 to $58.4 million in fiscal 2013. Of this total, IRCG operating expenses decreased $1.7 million in fiscal 2013 as a result of lower marketing and business development expenses, while IHM operating expenses increased $1.7 million in fiscal 2013 to support the increased occupancy at Westin Monache. We also recognized a $0.5 million decrease in our pro rata share of EBITDA for our equity method investments in Mammoth Hospitality Management, LLC and Chateau M.T. Inc. in fiscal 2013. Interest income from IRCG remained flat in fiscal 2013 at $4.8 million.
66 |
Comparison of Operating Results in Fiscal Years 2011 and 2012
The following table presents our consolidated statements of operations for fiscal 2011 and 2012:
Year Ended
June 30, | ||||||||||||||||
2011 | 2012 | $ Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Revenue | $ | 559,523 | $ | 513,447 | $ | (46,076 | ) | (8.2 | )% | |||||||
Operating expenses | 504,005 | 453,187 | (50,818 | ) | (10.1 | )% | ||||||||||
Depreciation and amortization | 76,371 | 57,655 | (18,716 | ) | (24.5 | )% | ||||||||||
Loss on disposal of assets | 26,196 | 9,443 | (16,753 | ) | (64.0 | )% | ||||||||||
Impairment of long-lived assets | 12,140 | 782 | (11,358 | ) | (93.6 | )% | ||||||||||
Impairment of real estate | 73,230 | 8,137 | (65,093 | ) | (88.9 | )% | ||||||||||
Goodwill impairment | 64,097 | 3,575 | (60,522 | ) | (94.4 | )% | ||||||||||
Income (loss) from operations | (196,516 | ) | (19,332 | ) | 177,184 | 90.2 | % | |||||||||
Interest income | 9,162 | 7,467 | (1,695 | ) | (18.5 | )% | ||||||||||
Interest expense on third party debt | (143,463 | ) | (135,929 | ) | 7,534 | (5.3 | )% | |||||||||
Interest expense on notes payable to affiliates | (160,943 | ) | (195,842 | ) | (34,899 | ) | 21.7 | % | ||||||||
Earnings (loss) from equity method investments | 8,299 | 538 | (7,761 | ) | (93.5 | )% | ||||||||||
Other income (expense), net | (2,021 | ) | 1,199 | 3,220 | 159.3 | % | ||||||||||
Loss from continuing operations before income taxes | (485,482 | ) | (341,899 | ) | 143,583 | (29.6 | )% | |||||||||
Income tax (benefit) expense | 6,555 | (5,836 | ) | (12,391 | ) | (189.0 | )% | |||||||||
Loss from continuing operations | (492,037 | ) | (336,063 | ) | 155,974 | (31.7 | )% | |||||||||
Loss from discontinued operations, net of tax | (6,469 | ) | — | 6,469 | (100.0 | )% | ||||||||||
Net loss | (498,506 | ) | (336,063 | ) | 162,443 | (32.6 | )% | |||||||||
Earnings attributable to noncontrolling interest | (361 | ) | — | 361 | (100.0 | )% | ||||||||||
Net loss attributable to Intrawest Cayman L.P. | (498,867 | ) | (336,063 | ) | 162,804 | (32.6 | )% |
Total revenue. Total revenue decreased $46.1 million, or 8.2%, from $559.5 million in fiscal 2011 to $513.4 million in fiscal 2012. Total reportable segment revenue increased $1.7 million as a result of increases of $12.8 million and $0.3 million in Adventure and Real Estate revenues, respectively, partially offset by a $11.4 million decrease in Mountain revenues. The increase in total reportable segment revenue was offset by a $47.8 million decrease in legacy, non-core and other revenue, which decreased from $79.5 million in fiscal 2011 to $31.7 million in fiscal 2012. $38.6 million of this decrease is attributable to the inclusion of Whistler Blackcomb revenue in fiscal 2011 prior to our disposition of our ownership interest in the assets of Whistler Blackcomb in November 2010, with the remaining $9.2 million decrease attributable to a $4.8 million decrease associated with legacy real estate development at Winter Park, a $4.1 million decrease from divested non-core hospitality operations and a net decrease of $0.3 million in other non-core operations.
Operating expenses. Operating expenses decreased $50.8 million, or 10.1%, from $504.0 million in fiscal 2011 to $453.2 million in fiscal 2012. Total reportable segment operating expenses increased $1.9 million as a result of an increase of $12.2 million in Adventure operating expenses, partially offset by decreases of $9.5 million and $0.8 million in Mountain and Real Estate operating expenses, respectively. Offsetting the increase in total reportable segment operating expenses was a $52.7 million decrease in legacy and other non-core operating expenses, which decreased from $103.2 million in fiscal 2011 to $50.5 million in fiscal 2012. $51.1 million of this decrease is attributable to the inclusion of Whistler Blackcomb operating expenses in fiscal 2011 prior to our disposition of our ownership interest in the assets of Whistler Blackcomb in November 2010.
Depreciation and amortization. Depreciation and amortization expense decreased $18.7 million, or 24.5%, from $76.4 million in fiscal 2011 to $57.7 million in fiscal 2012, due primarily to the inclusion of depreciation and amortization on Whistler Blackcombs assets in fiscal 2011 prior to our divestiture of these assets in November 2010.
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Loss on disposal of assets. In fiscal 2011, the loss on disposal of assets was primarily related to a loss of $24.4 million on the sale of our interest in the assets of Whistler Blackcomb in November 2010. In fiscal 2012, the loss of $9.4 million was related to the sale of legacy real estate at Copper Mountain.
Impairments. Goodwill impairments, impairments of long-lived assets and impairments of real estate decreased $137.0 million, or 91.6%, from $149.5 million in fiscal 2011 to $12.5 million in fiscal 2012. We recognized a $73.2 million real estate impairment in fiscal 2011 and a $8.1 million real estate impairment in fiscal 2012 due to a downturn in the real estate market, which caused the carrying value of our real estate assets held for development to be higher than the fair value. In fiscal 2011, we recognized a goodwill impairment of $64.1 million related to the change in expectations associated with two of our resorts. In fiscal 2012, we recognized a goodwill impairment of $3.6 million related to a real estate reporting unit.
Interest income. Interest income decreased $1.7 million, or 18.5%, from $9.2 million in fiscal 2011 to $7.5 million in fiscal 2012. The decrease is primarily attributable to a $0.1 million decrease in income from our IRCG receivables portfolio, a $0.6 million decrease in interest earned from legacy real estate sales where we provide seller financing and a $1.0 million decrease in other interest income.
Interest expense on third party debt. Interest expense on third party debt decreased $7.5 million, or 5.3%, from $143.5 million in fiscal 2011 to $135.9 million in fiscal 2012. The decrease in interest expense was associated with a decrease in our third party senior debt in fiscal 2012 compared to fiscal 2011 after giving effect to the application of the net proceeds from the sale of our ownership interest in the assets of Whistler Blackcomb in November 2010.
Interest expense on notes payable to affiliates. Interest expense on notes payable to affiliates increased $34.9 million, or 21.7%, from $160.9 million in fiscal 2011 to $195.8 million in fiscal 2012 due to a higher principal amount of indebtedness outstanding. Interest on notes payable to affiliates accrues without payment and is added to the principal balance of the notes on a quarterly basis.
Earnings (loss) from equity method investments. Earnings from equity method investments decreased $7.8 million, or 93.5%, from $8.3 million in fiscal 2011 to $0.5 million in fiscal 2012. The decrease was primarily associated with lower earnings from our resort investments, which were negatively affected by the poor weather conditions during fiscal 2012.
Other income (expenses), net. Other income (expense), net increased $3.2 million from other expense, net of $2.0 million in fiscal 2011 to other income of $1.2 million in fiscal 2012 principally as a result of gains on foreign currency in fiscal 2012 of $1.9 million.
Income taxes. We incurred income tax expense of $6.6 million in fiscal 2011 compared to a benefit of $5.8 million in fiscal 2012. The tax benefit is primarily due to a decrease in our reserve for unrecognized tax benefits of $6.0 million attributable to the lapse of the statute of limitations related to a state tax matter.
Mountain
Year Ended June 30, | ||||||||||||||||
2011 | 2012 | Change | % Change | |||||||||||||
Skier Visits | 3,192,388 | 2,758,970 | (433,418 | ) | (13.6 | )% | ||||||||||
Revenue per Visit | $ | 100.94 | $ | 112.64 | $ | 11.70 | 11.6 | % | ||||||||
ETP | $ | 43.34 | $ | 47.65 | $ | 4.31 | 9.9 | % | ||||||||
RevPAR | $ | 48.76 | $ | 48.74 | $ | (0.02 | ) | 0 | % | |||||||
ADR | $ | 157.35 | $ | 157.57 | $ | 0.22 | 0.1 | % | ||||||||
Mountain revenue: | (dollars in thousands) | |||||||||||||||
Lift | $ | 138,364 | $ | 131,453 | $ | (6,911 | ) | (5.0 | )% | |||||||
Lodging | 40,647 | 39,380 | (1,267 | ) | (3.1 | )% | ||||||||||
Ski School | 25,614 | 24,669 | (945 | ) | (3.7 | )% | ||||||||||
Retail and Rental | 40,777 | 40,208 | (569 | ) | (1.4 | )% | ||||||||||
Food and Beverage | 39,368 | 38,464 | (904 | ) | (2.3 | )% | ||||||||||
Other | 37,424 | 36,591 | (833 | ) | (2.2 | )% | ||||||||||
Total Mountain Revenue | $ | 322,194 | $ | 310,765 | $ | (11,429 | ) | (3.5 | )% | |||||||
Mountain Adjusted EBITDA | $ | 69,805 | $ | 66,051 | $ | (3,754 | ) | (5.4 | )% |
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Total revenue. Total revenue from the Mountain segment decreased $11.4 million, or 3.5%, from $322.2 million in fiscal 2011 to $310.8 million in fiscal 2012. This decrease was primarily attributable to a decrease in Skier Visits of 13.6%, from 3.2 million in fiscal 2011 to 2.8 million in fiscal 2012, due to poor weather conditions during the 2011/2012 ski season.
Lift revenue. Lift revenue decreased $6.9 million, or 5.0%, from $138.4 million in fiscal 2011 to $131.5 million to fiscal 2012. This decrease in fiscal 2012 was attributable to a decrease in Skier Visits.
Lodging revenue. Lodging revenue decreased $1.2 million, or 3.1%, from $40.6 million in fiscal 2011 to $39.4 million in fiscal 2012. The decrease in fiscal 2012 was attributable to a decrease in RevPAR partially offset by a slight increase in ADR. The decrease in RevPAR was driven by the same factors that led to decreased visitation levels.
Ski school revenue . Ski school revenue decreased $0.9 million, or 3.7%, from $25.6 million in fiscal 2011 to $24.7 million in fiscal 2012. The decrease in fiscal 2012 was primarily attributable to a decrease in Skier Visits offset by an increase in Revenue per Visit. The increase in Revenue per Visit was primarily the result of a greater percentage of destination customers in the skier mix.
Retail and rental revenue . Retail and rental revenue decreased $0.6 million, or 1.4%, from $40.8 million in fiscal 2011 to $40.2 million in fiscal 2012. The decrease in fiscal 2012 was primarily attributable to a decrease in Skier Visits offset almost entirely by an increase in Revenue per Visit as a result of a greater percentage of destination customers in the skier mix.
Food and beverage revenue . Food and beverage revenue decreased $0.9 million, or 2.3%, from $39.4 million in fiscal 2011 to $38.5 million in fiscal 2012. The decrease in fiscal 2012 was primarily attributable to a decrease in Skier Visits offset slightly by an increase in Revenue per Visit as a result of a greater percentage of destination customers in the skier mix.
Other revenue. Other revenue decreased $0.8 million, or 2.2%, from $37.4 million in fiscal 2011 to $36.6 million in fiscal 2012. The decrease in fiscal 2012 was primarily attributable to a decrease in Skier Visits, which resulted in a decrease in revenues from other winter activities at our resorts.
Mountain Adjusted EBITDA . Mountain Adjusted EBITDA decreased $3.7 million, or 5.4%, from $69.8 million in fiscal 2011 to $66.1 million in fiscal 2012. The decrease in Mountain Adjusted EBITDA was related to a $11.4 million decrease in Mountain revenue and a $1.8 million decrease in our pro rata share of EBITDA for our equity method investment in Blue Mountain Resorts Limited, which decreased from $7.7 million in fiscal 2011 to $5.9 million in fiscal 2012 due to decreased visitation as a result of poor weather conditions during the 2011/2012 ski season. Partially offsetting these decreases was a $9.5 million decrease in Mountain operating expenses, which decreased from $260.1 million in fiscal 2011 to $250.6 million in fiscal 2012, primarily due to temporary cost control measures, including the reduction of seasonal personnel, in fiscal 2012 in response to decreased visitation, decreased resort compensation and benefits as a result of lower bonus expenses and lower staffing levels across our resorts in fiscal 2012, as well as fewer operating days during the 2011/2012 ski season.
Adventure
Year Ended June 30, | ||||||||||||||||
2011 | 2012 | Change | % Change | |||||||||||||
CMH Guest Nights | 34,479 | 37,829 | 3,350 | 9.7 | % | |||||||||||
CMH RevPGN | $ | 1,670 | $ | 1,650 | $ | (20 | ) | (1.2 | )% | |||||||
(dollars in thousands) | ||||||||||||||||
Adventure revenue | $ | 96,693 | $ | 109,496 | $ | 12,803 | 13.2 | % | ||||||||
Adventure Adjusted EBITDA | $ | 15,563 | $ | 16,151 | $ | 588 | 3.8 | % |
Adventure revenue. Adventure revenue increased $12.8 million, or 13.2%, from $96.7 million in fiscal 2011 to $109.5 million in fiscal 2012. CMH revenue increased $4.9 million, or 8.4%, in fiscal 2012 compared to fiscal 2011. The increase was primarily attributable to an increase in CMH Guest Nights, partially offset by a slight decrease in CMH RevPGN. Total Guest Nights during fiscal 2012 increased 9.7% over fiscal 2011. In contrast to most of North America, snow and weather conditions in British Columbia were favorable during most of the 2011/2012 ski season.
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Revenue from ancillary services increased $8.2 million, or 19.7%, in fiscal 2012 compared to fiscal 2011. The increase was primarily attributable to increased MRO revenues associated with an increase in third party job volume.
Adventure Adjusted EBITDA. Adventure Adjusted EBITDA increased $0.6 million, or 3.8%, from $15.6 million in fiscal 2011 to $16.2 million in fiscal 2012. The increase in Adventure Adjusted EBITDA was related to a $12.8 million increase in Adventure revenue, partially offset by a $12.2 million increase in Adventure operating expenses, which increased from $81.1 million in fiscal 2011 to $93.3 million fiscal 2012. Adventure operating expenses increased as a result of the increase in CMH Guest Nights and an increase in ancillary services.
Real Estate
Year Ended June 30, | ||||||||||||||||
2011 | 2012 | Change | % Change | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Real Estate Revenue | $ | 61,165 | $ | 61,439 | $ | 274 | 0.4 | % | ||||||||
Real Estate Adjusted EBITDA | $ | 9,002 | $ | 9,855 | $ | 853 | 9.5 | % |
Real Estate revenue. Real Estate revenue increased $0.3 million, or 0.4%, from $61.2 million in fiscal 2011 to $61.4 million in fiscal 2012. IHM revenues increased $5.1 million due to higher occupancy and higher ADR and a $1.0 million increase in commercial revenues. Partially offsetting the increase in revenues was a decrease in IRCG revenues of $3.6 million related to lower point sales and a decrease in Playground revenues of $1.3 million related to a smaller number of units sold at Honua Kai.
Real Estate Adjusted EBITDA. Real Estate Adjusted EBITDA increased $0.9 million, or 9.5%, from $9.0 million in fiscal 2011 to $9.9 million in fiscal 2012. The increase in Real Estate Adjusted EBITDA was primarily related to a $0.3 million increase in Real Estate revenue and a $0.8 million decrease in Real Estate operating expenses, which decreased from $59.6 million in fiscal 2011 to $58.8 million in fiscal 2012. In addition, our income earned from receivables decreased $0.1 million while our pro rata share of EBITDA from our equity method investments in Mammoth Hospitality Management, LLC and Chateau M.T. Inc. increased by $0.1 million.
Liquidity and Capital Resources
Overview
Our primary goal as it relates to liquidity and capital resources is to attain and retain the optimal level of debt and cash to maintain and fund expansions, replacement projects and other capital investments and to ensure that we are poised for external growth in our industries. Our principal sources of liquidity are cash generated from operations, funds from borrowings and existing cash on hand. Our principal uses of cash include the funding of working capital obligations, capital expenditures and servicing our debt.
Due to the seasonality of our business cycle, there are significant fluctuations in our cash and liquidity throughout the year. Our cash balances are typically at their highest at the end of our third fiscal quarter, following the ski season, and at their lowest toward the middle of our second fiscal quarter, before the start of the ski season.
Over the next 12 months, we anticipate cash flows from operations to be the principal source of cash and believe current assets and cash generated from operations will be sufficient to meet anticipated working capital needs, planned capital expenditures and debt service obligations. We intend to use the net proceeds to us from this offering for working capital and other general corporate purposes, which may include potential investments in, and acquisitions of, ski and adventure travel businesses and assets. We may also elect to use cash from operations, debt or equity proceeds or a combination thereof to finance future acquisition opportunities.
Significant Sources of Cash
Historically, we have financed our capital expenditures and other cash needs through cash generated from operations. We generated $21.1 million, $43.4 million and $41.8 million of cash from operating activities during fiscal 2011, 2012 and 2013, respectively, and used $5.3 million and generated $0.4 million of cash from operating activities during the three months ended September 30, 2012 and 2013, respectively. We currently anticipate that our ongoing operations will continue to provide a significant source of future operating cash flows with the second and
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third fiscal quarters generating the highest cash flows due to the seasonality of our business. We have also generated significant cash flows in the fiscal years presented from asset sales, including our sale of the assets of Whistler Blackcomb and legacy real estate assets. These transactions generated $542.0 million, $4.8 million and $135.9 million of cash for fiscal 2011, 2012 and 2013, respectively, and $0.8 million and $0.1 million of cash for the three months ended September 30, 2012 and 2013, respectively. Following this offering, we do not expect to generate significant cash flows from non-core asset sales, as we have divested substantially all of our non-core real estate assets.
Our cash and cash equivalents balance as of September 30, 2013 was $44.9 million. As of September 30, 2013, after giving effect to the Pro Forma Transactions our cash and cash equivaltents balance was $59.1 million. Additionally, as of December 9, 2013, we had $25.0 million of available borrowings under the New Credit Agreement. See Unaudited Pro Forma Condensed Consolidated Financial Information.
Significant Uses of Cash
Our current cash requirements include providing for our working capital requirements, capital expenditures and servicing our debt. We generate the majority of our cash during the ski season, which is in our second and third fiscal quarters, primarily due to the seasonality of our business.
We make capital expenditures to maintain the high quality of our operations within our Mountain, Adventure and Real Estate segments. Many of these capital expenditures are non-discretionary, including snow grooming machine replacement, snowmaking equipment upgrades and building refurbishments. We also make capital expenditures that are discretionary in nature that are intended to improve our level of service or increase the scale of our operations, such as our commencement of construction of a new on-mountain restaurant and night skiing at Steamboat. We maintain a data driven approach to investment selection and the allocation of capital between competing opportunities. We have a centralized process to complete net present value, internal rate of return and sensitivity analyses for each investment idea. Senior management then reviews a prioritized list of potential investments to allocate capital to the ideas with the highest expected returns and the largest strategic benefits. Capital expenditures were $27.6 million, $30.1 million and $29.7 million in fiscal 2011, 2012 and 2013, respectively, or 4.9%, 5.9% and 5.7% of total revenue for fiscal 2011, 2012 and 2013, respectively. Capital expenditures were $5.1 million and $14.3 million for the three months ended September 30, 2012 and 2013, respectively, or 6.4% and 17.7% of total revenue for the respective periods. The increase in capital expenditures in the three months ended September 30, 2013 was attributable to several growth capital projects undertaken in the fiscal quarter.
We paid principal, interest and fees to our lenders of $671.2 million, $92.2 million and $819.8 million for fiscal 2011, 2012 and 2013, respectively, and $15.6 million and $13.4 million for the three months ended September 30, 2012 and 2013, respectively. As of September 30, 2013, after giving effect to the Pro Forma Transactions, we had $540.0 million outstanding under the New Credit Agreement. In connection with the Restructuring, we were released as an obligor with respect to all of our debt owed to affiliates. For more information, see —Debt, Description of Certain Indebtedness and Unaudited Pro Forma Condensed Consolidated Financial Information.
Cash Flows for the Three Months ended September 30, 2012 and 2013
The table below sets forth for the periods indicated our net cash flow from operating, investing and financing activities, as well as the effect of exchange rates on cash:
Three Months Ended September 30, | ||||||||||||
2012 | 2013 | Change | ||||||||||
(in thousands) | ||||||||||||
Net cash (used in) provided by: | ||||||||||||
Operating activities | $ | (5,296 | ) | $ | 384 | $ | 5,680 | |||||
Investing activities | (4,344 | ) | (14,543 | ) | (10,199 | ) | ||||||
Financing activities | (395 | ) | (1,679 | ) | (1,284 | ) | ||||||
Effect of exchange rate on cash | 786 | 923 | 137 | |||||||||
Net decrease in cash and cash equivalents | $ | (9,249 | ) | $ | (14,915 | ) | $ | (5,666 | ) |
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Cash provided by operating activities increased $5.7 million, from cash used in operating activities of $5.3 million in the three months ended September 30, 2012 to cash provided by operating activities of $0.4 million in the three months ended September 30, 2013. The change was primarily a result of a decrease in interest paid as well as the timing of cash flows related to the change in working capital.
Cash used in investing activities increased $10.2 million, from $4.3 million in the three months ended September 30, 2012 to $14.5 million in the three months ended September 30, 2013. The change was primarily driven by higher capital expenditures associated with new revenue producing projects at our resorts.
Cash used in financing activities increased $1.3 million, from $0.4 million in the three months ended September 30, 2012 to $1.7 million in the three months ended September 30, 2013. The change was primarily due to contributions from partners received in the three months ended September 30, 2012 of $2.7 million, partially offset by a decrease in repayment of debt of $1.4 million.
Cash Flows in Fiscal 2012 compared with Fiscal 2013
The table below sets forth for the periods indicated our net cash flow from operating, investing and financing activities, as well as the effect of exchange rates on cash:
Year Ended June 30, | ||||||||||||
2012 | 2013 | Change | ||||||||||
(in thousands) | ||||||||||||
Net cash (used in) provided by: | ||||||||||||
Operating activities | $ | 43,390 | $ | 41,765 | $ | (1,625 | ) | |||||
Investing activities | (21,286 | ) | 105,407 | 126,693 | ||||||||
Financing activities | (41,518 | ) | (133,683 | ) | (92,165 | ) | ||||||
Effect of exchange rate on cash | 609 | (622 | ) | (1,231 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | $ | (18,805 | ) | $ | 12,867 | $ | 31,672 |
Cash provided by operating activities decreased $1.6 million, from $43.4 million in fiscal 2012 to $41.8 million in fiscal 2013. The change was primarily a result of additional interest paid in fiscal 2013 as well as the timing of cash flows related to the change in working capital.
Cash provided by investing activities increased $126.7 million, from cash used in investing activities of $21.3 million in fiscal 2012 to cash provided by investing activities of $105.4 million in fiscal 2013. The increase in cash provided by investing activities was primarily related to the sale of our equity investment in Whistler Holdings and certain non-core commercial properties in fiscal 2013.
Cash used in financing activities increased $92.2 million, from $41.5 million in fiscal 2012 to $133.7 million in fiscal 2013. In December 2012, we entered into the First Lien Credit Agreement and the Second Lien Credit Agreement, the borrowings under which were used to refinance and replace the borrowings under our outstanding senior indebtedness, including the payment of related prepayments fees, issuance costs, transaction and legal fees. Total costs of the debt refinancing were $21.9 million, which were recorded as deferred financing costs, and $11.2 million was recorded as a loss on extinguishment of debt.
Cash Flows in Fiscal 2011 compared with Fiscal 2012
The table below sets forth for the periods indicated our net cash flow from operating, investing and financing activities, as well as the effect of exchange rates on cash:
Year Ended June 30, | ||||||||||||
2011 | 2012 | Change | ||||||||||
(in thousands) | ||||||||||||
Net cash (used in) provided by: | ||||||||||||
Operating activities | $ | 21,140 | $ | 43,390 | $ | 22,250 | ||||||
Investing activities | 514,497 | (21,286 | ) | (535,783 | ) | |||||||
Financing activities | (572,797 | ) | (41,518 | ) | 531,279 | |||||||
Effect of exchange rate on cash | 6,694 | 609 | (6,085 | ) | ||||||||
Net decrease in cash and cash equivalents | $ | (30,466 | ) | $ | (18,805 | ) | $ | 11,661 |
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Cash provided by operating activities increased $22.3 million, from $21.1 million in fiscal 2011 to $43.4 million in fiscal 2012. The change was primarily a result of a decrease in interest paid in fiscal 2012.
Cash used in investing activities increased $535.8 million, from cash provided by investing activities of $514.5 million in fiscal 2011 to cash used by investing activities of $21.3 million in fiscal 2012. In fiscal 2011, we disposed of our interest in the assets of Whistler Blackcomb and received proceeds of $513.0 million.
Cash used in financing activities decreased $531.3 million, from $572.8 million in fiscal 2011 to $41.5 million in fiscal 2012. The decrease was primarily related to the repayment of debt from the proceeds from the Whistler Blackcomb asset sale in fiscal 2011.
Debt
As of September 30, 2013, we were a party to the First Lien Credit Agreement, the Second Lien Credit Agreement and various credit agreements governing the notes payable to affiliates. As of September 30, 2013, $2.0 billion of borrowings were outstanding under these debt agreements. Our total remaining borrowing capacity under these debt agreements as of September 30, 2013 was $20.0 million. The First Lien Credit Agreement and the Second Lien Credit Agreement had a weighted average effective interest rate of approximately 8.0%. Notes payable to affiliates accrued interest without payment and unpaid interest was added on a quarterly basis to the principal balance.
On December 9, 2013, one of our subsidiaries entered into the New Credit Agreement. The borrowings under the New Credit Agreement, together with cash on hand and funds contributed to us by an affiliate of Fortress, were used to refinance and replace the borrowings under the First Lien Credit Agreement and the Second Lien Credit Agreement. In addition, on the date the New Credit Agreement was entered into, we were released as an obligor with respect to all of the notes payable to affiliates, together with all accrued and unpaid interest thereon. See Description of Certain Indebtedness and Unaudited Pro Forma Condensed Consolidated Financial Information.
The New Credit Agreement contains affirmative and negative covenants that restrict, among other things, the ability of our subsidiaries to incur indebtedness, dispose of property and make investments or distributions. We expect our subsidiaries to meet all applicable covenants in our New Credit Agreement. However, there can be no assurance that our subsidiaries will meet such covenants. If such covenants are not met, we would be required to seek a waiver or amendment from the lenders who are parties to the New Credit Agreement. There can be no assurance that such waiver or amendment would be granted. The failure to obtain a waiver or amendment could result in the acceleration of the related debt, which could have a material adverse impact on our liquidity.
Contractual Obligations
As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as debt agreements, lease agreements and construction agreements in conjunction with our resort capital expenditures. A summary of our contractual obligations as of June 30, 2013 on a pro forma basis for the Pro Forma Transactions is set forth below:
Contractual Obligations(1) | Total | Fiscal 2014 | 2-3 years | 4-5 years | More than 5 years | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
New Credit Agreement | $ | 540,000 | $ | 5,400 | $ | 10,800 | $ | 10,800 | $ | 513,000 | ||||||||||
Estimated interest on New Credit Agreement | 265,667 | 30,000 | 59,940 | 72,656 | 103,071 | |||||||||||||||
Capital lease obligations | 26,082 | 2,658 | 22,641 | 289 | 494 | |||||||||||||||
Operating leases | 39,715 | 11,568 | 13,670 | 7,383 | 7,094 | |||||||||||||||
Construction contract | 2,041 | 2,041 | — | — | — | |||||||||||||||
Pension obligations | 31,978 | 3,460 | 6,514 | 6,513 | 15,491 | |||||||||||||||
Purchase obligations and service contracts (2) | 10,601 | 9,609 | 950 | 42 | — | |||||||||||||||
Total contractual obligations | $ | 916,084 | $ | 64,736 | $ | 114,515 | $ | 97,683 | $ | 639,150 |
(1) | We do not expect any significant cash payments related to uncertain tax positions. |
(2) | Includes Steamboats contract with airlines that guarantees payment if minimum revenue goals are not attained by the airlines. For obligations with cancellation provisions, the amounts were limited to the non-cancelable portion of the agreement terms or the minimum cancellation fee. Also includes payments under a contract with a third-party provider of information technology services and payments under a guarantee of a loan agreement at Tremblant. |
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Off Balance Sheet Arrangements
We do not have off balance sheet transactions that are expected to have a material effect on our financial condition, revenue, expenses, results of operations, liquidity, capital expenditures or capital resources.
Quantitative and Qualitative Disclosures About Market Risk
Inflation
Inflation and changing prices have not had a material impact on our revenues, income (loss) from operations and net loss during any of our three most recent fiscal years or the three months ended September 30, 2012 and 2013.
However, to the extent inflationary trends affect short-term interest rates, a portion of our debt service costs, as well as the rates we charge on our consumer loans, may be affected.
Interest Rate Fluctuations
Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness. At September 30, 2013, we had $571.6 million of variable rate indebtedness, representing approximately 29% of our total debt outstanding, at an average interest rate for the three months ended September 30, 2013 of 8%. As of September 30, 2013, LIBOR was 0.2%. As our variable-rate borrowings have a LIBOR floor of 1.25%, a 100 basis point change in LIBOR would not affect our interest payments. Our market risk exposure fluctuates based on changes in underlying interest rates. In addition, prior to October 2008, we had outstanding interest rate swap contracts that were accounted for as cash flow hedges. The outstanding swap contracts were terminated, and the terminated swap liability is currently being recognized as an adjustment to interest expense.
Foreign Currency Fluctuations
In addition to our operations in the United States, we conduct operations in Canada from which we receive revenues in foreign currencies. Because our financial results are reported in U.S. dollars, fluctuations in the value of the Canadian dollar against the U.S. dollar have had and will continue to have an effect, which may be significant, on our reported financial results. A decline in the value of the Canadian dollar or any of the other foreign currencies in which we receive revenues against the U.S. dollar will reduce our reported revenues and expenses from operations in foreign currencies, while an increase in the value of any such foreign currencies against the U.S. dollar will tend to increase our reported revenues and expenses from operations in foreign currencies. Total Canadian dollar denominated revenues comprised approximately 46.3%, 44.3% and 41.6% of our total revenues for fiscal 2011, 2012 and 2013, respectively, and 63.6% and 62.4% for the three months ended September 30, 2012 and 2013, respectively. Total Canadian dollar denominated operating expenses comprised approximately 54.8%, 47.1%, 41.3%, 44.8% and 47.2% of our operating expenses for such periods, respectively. We believe that a weaker Canadian dollar as measured against the U.S. dollar tends to have a positive effect on visitation at our Canadian resorts and CMH and acts a natural hedge, as it increases the relative attractiveness of the pricing at these resorts among American customers. Variations in exchange rates can significantly affect the comparability of our financial results between financial periods. We do not currently perform any foreign currency hedging activities related to this exposure. For additional information on the potential impact of exchange rate fluctuations on our financial results, see Risk Factors—Risks Related to Our Business—We are subject to risks related to currency fluctuations.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and judgments are based on historical experience, future expectations and other factors and assumptions we believe to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions or conditions, and the impact of such differences may be material to our consolidated financial statements. The most significant estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Those critical accounting policies and estimates that require the most significant judgment are discussed further below.
Real Estate Held for Development
Real estate held for development is recorded at the lower of cost and net realizable value. We provide for impairment charges where the carrying value of a particular real estate property exceeds its estimated net realizable value. We periodically obtain third party valuations and record impairment charges when the carrying values of the properties are higher than fair value. We recorded impairment charges on real estate held for development in fiscal 2011, 2012 and 2013 and in the three months ended September 30, 2012 and 2013.
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Long-Lived Assets
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of each asset category. Certain buildings, area improvements and equipment are located on leased or licensed land and are depreciated over the lesser of the lease or license term
or its estimated useful life. These estimated useful lives range from three to 40 years. Finite-lived intangible assets consisting of permits and licenses, trademarks, customer relationships and other intangibles are amortized on a straight-line basis over their estimated useful lives, which is the period over which the assets are expected to contribute directly or indirectly to our future cash flows.
We must make estimates and assumptions when accounting for capital expenditures as either a maintenance expense or a capital asset. We capitalize costs incurred to renew or extend the term of a recognized intangible asset, such as permits and licenses, and amortize such costs over the remaining estimated life of the asset. In addition, depreciation and amortization expense on long-lived assets is dependent on the assumptions we make about the assets estimated useful lives. We determine the estimated useful lives based on our experience with similar assets and our estimate of the usage of the asset.
Long-lived assets subject to depreciation and amortization, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate future cash flows. If actual results are not consistent with our estimates and assumptions used to calculate estimated future cash flows, we may be exposed to impairment charges. We recorded impairment charges on long-lived assets including finite-lived intangible assets in fiscal 2011, 2012 and 2013.
Goodwill
Goodwill is evaluated or tested for impairment annually as of June 30th, and at any time when events or conditions suggest impairment may have occurred. We perform a qualitative assessment to assess whether it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If the assessment indicates that a reporting unit may be impaired, we perform a two-step impairment test. For purposes of goodwill impairment testing, we compare the fair value of each reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is determined based on expected discounted future cash flows. If the carrying amount of a reporting unit exceeds its fair value, the goodwill within the reporting unit may be potentially impaired. An impairment loss is recognized if the carrying amount of the goodwill exceeds implied fair value of that goodwill.
Considerable management judgment is necessary to initially value goodwill and to continually evaluate goodwill for impairment going forward, including the estimation of future cash flows, which is dependent on internal forecasts, available industry/market data (to the extent available), estimation of the long-term rate of growth for our business including expectations and assumptions regarding the impact of the timing and degree of any economic recovery, estimation of the useful life over which cash flows will occur (including terminal multiples), determination of the respective weighted average cost of capital and market participant assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and impairment for each reporting unit.
While historical performance and current expectations have resulted in fair values of our reporting units in excess of carrying values for fiscal 2013, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future. We recorded impairment charges on goodwill in fiscal 2011 and 2012.
Self-Insured Liabilities
We have a policy of self-insurance when the expected losses from self-insurance are low relative to the cost of purchasing third-party insurance at various deductible levels. The self-insurance program includes workers compensation in the United States and property, automobile and general liability coverage in the United States and Canada. An accrual for self-insured liabilities is recorded based on managements best estimate of the ultimate cost to settle claims considering historical claims experience, claims filed and the advice of actuaries and plan administrators. Actual insurance assessments may differ from our estimates and require us to record additional expense.
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Income Taxes
Through September 30, 2013, we have recorded a valuation allowance against our net operating losses for all of the deferred tax asset due to uncertainty of their realization as a result of our earnings history, the number of years our net operating losses and tax credits can be carried forward, the existence of taxable temporary differences and near-term earnings expectations. The amount of the valuation allowance could decrease if facts and circumstances change that materially increase taxable income prior to the expiration of the loss carryforwards. Any reduction would reduce (increase) the income tax expense (benefit) in the period such determination is made by us.
Recent Accounting Pronouncements
Refer to note 2, Summary of Significant Accounting Policies, of the notes to the audited consolidated financial statements of Cayman L.P. for a discussion of new accounting standards.
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We are a ski and adventure company operating within the leisure industry. Our results of operations are affected by consumer discretionary spending. We compete primarily with other leisure, lifestyle, entertainment and travel related businesses and activities, for both consumers discretionary time and spend.
Macro-Economic and Consumer Trends
Our industry and business are generally affected by macro-economic conditions and trends and their impact on the consumer. As such, we believe that our industry will benefit from the continued recovery in the economy following the recessionary challenges that began in 2008. Numerous economic trends support the notion that the health of the general economy is improving, which we believe will enhance consumer discretionary spending. U.S. equity markets, as represented by the S&P 500 Index, are up 44.2% over the five year period ending September 30, 2013. Disposable personal income increased 4.0% during the same five year period. As of April 26, 2013, consumer confidence, as measured by the Consumer Sentiment Index, was up 38.2% from its five-year low experienced in November 2008 and has been consistently above its five-year average since January 2012. In addition, household net worth increased 30.8% since 2008.
It is our belief that as the economy continues to improve, consumers will have more disposable income and a greater inclination to engage in and spend on leisure activities, which will positively impact the leisure industry. Since experiencing a trough in 2009, leisure industry GDP growth has outpaced broader U.S. GDP growth in each of the past three years, driven in part by a steady increase in the U.S. consumers time and expenditures devoted to leisure activities.
Mountain Resort Industry
The North American mountain resort industry is an established industry with significant barriers to entry. The barriers for new ski resort development result from the difficulty in obtaining necessary government permits and the significant capital required for development and construction. As such, no major ski resorts have been developed in the past 30 years, with the last major resorts opened being Blackcomb Mountain and Beaver Creek in 1980 and Deer
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Valley in 1981. Preliminary reports estimate that in the 2012/2013 ski season, there were 753 mountain resorts operating in North America, approximately 478 of which were located in the United States. The mountain resort industry is fragmented, as evidenced by the fact that companies that owned or operated four or more resorts made up less than 10% of the North American market.
North American mountain resorts range from small regional ski areas primarily attracting day visitors to large resorts offering a comprehensive vacation experience for both regional and destination customers. Resorts located near major metropolitan areas benefit from both large local populations and easy access to international airports. Local populations provide a stable source of season pass customers, which helps reduce the risks associated with adverse weather conditions and creates a base of loyal repeat visitors. Destination customers are often less price sensitive than regional customers, preferring to visit during weekend and peak holiday periods that generate higher ETP and higher lodging room rates.
Skier Visits and Effective Ticket Price
One of the principal measures of ski industry performance is the skier visit, which represents a person utilizing a ski ticket or ski pass to access a ski mountain for any part of one day, and includes both paid and complimentary access.
During the 10 years leading up to the 2008 financial crisis, skier visits grew at a CAGR of 1.7%, outpacing average United States and Canadian combined population growth of 1.2%, and ETP grew at a CAGR of 4.4%, outpacing core inflation of 2.2% during the same period.
Following the peak of the financial crisis in 2008, skier visits decreased by a mere 6.3% from the 2007/2008 ski season historical record of 80.8 million. In the following seasons, skier visits began a sustained recovery and nearly reached record levels again during the 2010/2011 ski season with 79.4 million visits. Although skier visits were down during the 2011/2012 ski season as a result of the lowest amount of snowfall in 20 years, skier visits increased again in the 2012/2013 ski season. In addition, during the past five years, despite high unemployment and fragile economic conditions, the industry has maintained the ability to increase ETP, with a CAGR of 2.7%, outpacing core inflation of 1.6%.
North American Ski Resort Visits and U.S. Effective Ticket Price (Visits in Millions)
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Market Trends
Over the last several decades, there has been a trend of consolidation within the mountain resort industry. The number of mountain resorts in North America has declined from 1,025 in the 1984/1985 ski season to an estimated 753 in the 2012/2013 ski season. Smaller mountain operators have underperformed and become less competitive than their larger multi-resort peers as a result of funding pressures from significant capital requirements. As a result, many smaller mountain operators have been forced to close. We believe this trend will continue and create an opportunity for increased mergers and acquisitions activity as larger multi-resort operators benefit from economies of scale in administration, access to capital and the ability to offer customers attractive multi-resort products.
In addition, the introduction of high-speed lifts, innovations in ski equipment, the growing popularity of snowboarding, improved snowmaking capabilities and changes in industry demographics have all played a significant role in the growth, stability and long-term sustainability of the ski industry. Along with improving the on-mountain ski experience, resorts have sought to address demands from consumers to provide a broader winter experience beyond skiing activities through the development of nightlife, entertainment, shopping, dining and spa amenities aimed at creating a higher-end, luxury resort experience. This trend became a source of growth as many resorts looked to real estate sales and development to create ancillary operations such as luxury lodges, condos and base villages with retail shops, restaurants and hotels. Eventually, this expansion led to the creation of the four-season resort experience, which allowed for year-round activities at many of the large destination ski resorts. Operators began adding amenities like golf courses, tennis courts and mountain biking trails, and offering warm weather activities such as sightseeing, river rafting, hiking, fishing, zip lining and horseback riding, all of which have served to mitigate the seasonality of the ski business.
Adventure Travel Industry
The Adventure Travel Trade Association and George Washington University define adventure travel as tourism activities involving two of the following three attributes: physical activity, interaction with nature, and cultural learning or exchange.
We believe the adventure travel industry is large, profitable, growing rapidly and highly fragmented. Compared to prior years, consumers are more cognizant of their health and general well-being, and are both living longer and leading more active lifestyles. In recent years, consumers have been spending a greater proportion of their income on wellness and have taken a more holistic approach to their health, including making a conscious effort to participate in leisure and recreational activities that also provide many of the benefits of traditional exercise. We believe that the industrys growth profile allows for expansion as well as the opportunity for larger operators to leverage their scale through consolidation.
We believe that there are currently less than 75 heli-skiing and snowcat-accessed skiing operators in North America, with most heli-skiing and catskiing occurring in British Columbia due to the vast alpine wilderness and consistent annual snowfall. The demographic of participants in the heli-ski industry has evolved over the past few decades, in large part due to improvements in ski equipment technology that have made the activity accessible to less fit and less skilled skiers. Today, intermediate skiers who can confidently navigate the advanced slopes at lift-accessed resorts have sufficient skill and physical conditioning to participate in heli-skiing. Given the growing popularity of backcountry skiing, we believe heli-skiing will continue to become an increasingly popular activity.
Real Estate
We own land available for development in and around our mountain resorts. This land is primarily reserved for residential vacation home as well as commercial development, such as the build-out of village areas and hotels. We believe the demand for vacation homes is reliant on the overall health of the U.S. real estate market and, in particular, the housing market.
The health of the housing market fluctuates with macro-economic trends and consumer sentiment. Key factors that influence consumer perception towards housing include stock market performance, unemployment levels and mortgage interest rates. As the broader economy has improved, so too has the housing market. For the four years ending August 31, 2013, new housing starts have increased by 24.1%. The Housing Price Index has risen 9.9% for the four years ending June 30, 2013. Increasing home prices give consumers the confidence to invest in home ownership. According to the National Realtors Association, existing single family home sales have increased by 10.9% in the last year.
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Along with the recovery in the housing market, vacation home sales have increased 10% year-over-year in 2012 to represent 11% of all home sale transactions in 2012, while the median sales price for vacation homes in 2012 increased 24% over the prior year. However, despite these strong trends, the median vacation home price and the number of vacation homes sold in the most recent year still remain well below the peak in 2005/2006, suggesting room for continued growth. Mountain home sales values and volumes in select resort destinations have outpaced the overall vacation home market. In Steamboat, median prices during December 2012 and January 2013 were up 36% over the prior year periods. Other major destination resort markets across the western United States experienced similar gains with unit sales at Vail up 29%, Lake Tahoe up 18% and Sun Valley up 51%.
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Overview
We are a North American premier mountain resort and adventure company, delivering distinctive vacation and travel experiences to our customers for over three decades. We own interests in seven four-season mountain resorts with more than 11,000 skiable acres and more than 1,150 acres of land available for real estate development. We also operate an adventure travel business, the cornerstone of which is CMH, the leading heli-skiing adventure company in North America. CMH provides helicopter accessed skiing, mountaineering and hiking to more skiable terrain than all lift accessed mountain resorts in North America combined. Additionally, we operate a comprehensive real estate business through which we manage, market and sell vacation club properties; manage condominium hotel properties; and sell and market residential real estate. During fiscal 2013, our portfolio of resorts received more than six million visitors from all 50 states and more than 100 countries, and we generated total revenues of $524.4 million.
We manage our business through three reportable segments: Mountain, which accounted for 65.5% of fiscal 2013 reportable segment revenue; Adventure, which accounted for 22.0% of fiscal 2013 reportable segment revenue; and Real Estate, which accounted for 12.5% of fiscal 2013 reportable segment revenue.
Through our Mountain segment, we operate five four-season mountain resorts: Steamboat Ski & Resort in Colorado; Winter Park Resort in Colorado; Mont Tremblant Resort in Quebec; Stratton Mountain Resort in Vermont; and Snowshoe Mountain in West Virginia. Through this segment, we also hold a 50% interest in Blue Mountain Ski Resort in Ontario. Our mountain resorts offer a breadth of activities for individuals of all ages that combine outdoor adventure and fitness with a wide variety of resort-based services and amenities, including retail, equipment rental, dining, lodging, ski school, spa services, golf, mountain biking and other summer activities. Our four-season mountain resorts are geographically diversified across North Americas major ski regions, including the Eastern United States, the Rocky Mountains, the Pacific Southwest and Canada, which we believe helps reduce our financial exposure to any single geographic area as weather patterns and economic conditions vary across these regions. Our mountain resorts are located within an average of approximately 160 miles of major metropolitan markets with high concentrations of affluent skiers and major airports, including New York City, Boston, Washington D.C., Pittsburgh, Denver, Los Angeles, Montreal and Toronto. In each of our markets, our mountain resorts have established a reputation for some of the best skiing, amenities and experiences.
Through our Adventure segment, we own and operate CMH, the premier heli-skiing adventure company in North America. CMH has been providing heli-skiing trips for the past 50 years and currently provides helicopter accessed skiing, mountaineering and hiking on 3.1 million powder-filled acres of terrain in British Columbia, which amounts to more skiable terrain than all lift accessed mountain resorts in North America combined. In addition to providing what we believe is an unparalleled skiing and backcountry experience in North America, CMH provides accommodation, service and dining at its lodges, nine of which are owned by us. In support of CMHs skiing, guiding and hospitality operations, we own a modified fleet of 40 helicopters and operate a helicopter maintenance, repair and overhaul business. CMHs integrated operating model enables us to scale the business and increase customer visits with limited reliance on third party providers. In addition, to more efficiently utilize our aircraft and CMH pilots year round, we provide heli-hiking, fire suppression and utility services during the summer months. By utilizing the same pilots each ski season who have an average of over 7,000 hours of experience flying in the high alpine and who possess extensive knowledge of the terrain, we believe CMH is able to provide a more consistent customer experience.
We also have a portfolio of more than 1,150 acres of core development parcels surrounding the bases of our Steamboat, Winter Park, Tremblant, Stratton and Snowshoe resorts, much of which is located adjacent or proximate to the ski trails, including ski-in ski-out parcels. As of November 30, 2013, this land had an appraised value of $154.0 million. We believe that our real estate platform and expertise will enable us to capitalize on improving economic conditions related to commercial and residential real estate through the potential future development of our core entitled land. We are currently working with consultants and architects to develop strategies for future development of this land in concert with planning for on-mountain and base village improvements. In addition to our core entitled land holdings and development planning, we maintain the capability to manage, market and sell real estate through IRCG, our vacation club business, IHM, which manages condominium hotel properties in Maui, Hawaii and in Mammoth Lakes, California, and Playground, our residential real estate sales and marketing business.
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Our Strengths
Geographically Diversified Market Leading Mountain Resort Company. We are one of the largest mountain resort companies in North America based on skier visits. Our portfolio of mountain resorts offers what we believe are distinctive experiences at some of North Americas most popular destinations. We have invested heavily in the development of lifts, trails, snowmaking capabilities and pedestrian villages with a large bed base and a variety of retail and dining options at our mountain resorts. We believe that these investments have established our resorts, in each of our markets, as having some of the best skiing, amenities and experiences. Our mountain resorts are dispersed throughout North America, with locations in the Eastern United States, the Rocky Mountains, the Pacific Southwest and Canada. During fiscal 2013, no single resort accounted for more than 16% of our total revenue. In addition, our resorts are located within an average of approximately 160 miles of large metropolitan areas with high concentrations of affluent skiers and major airports, such as New York City, Boston, Washington D.C., Pittsburgh, Denver, Los Angeles, Montreal and Toronto. This provides us a strong base of regional and destination visitors, which we believe helps reduce our financial exposure to any single geographic region as weather patterns and economic conditions can vary across regions. We believe that this is a differentiating factor from our competitors, many of which have more geographically concentrated businesses.
North Americas Premier Mountain Adventure Company. The cornerstone of our adventure business is CMH, the largest heli-skiing business in North America. CMHs operating area encompasses 3.1 million acres of high alpine terrain across British Columbia, which we believe offers an unparalleled skiing and backcountry experience. Repeat visitors accounted for the majority of CMHs customers during fiscal 2013. With its global brand, portfolio of terrain, collection of 11 lodges and integrated aviation support, CMH is North Americas leading heli-skiing platform and is positioned to further grow within the adventure travel industry. Through our CMH operations, we have also developed expertise in marketing adventure travel to the affluent as well as expertise in coordinating complex adventure travel experiences and hospitality. We believe that we will be able to leverage these core competencies to grow our adventure travel offerings both within heli-skiing and in other areas.
Strong Competitive Position with High Barriers to Entry. We operate or have an ownership interest in three of the top 10 mountain resorts in the United States as measured by skier visits. We also operate or have an ownership interest in what we believe are two of the top three mountain resorts in Canada as measured by skier visits. There are significant barriers to entry to new ski resort development in North America resulting from the limited number of remaining suitable sites, the difficulty in obtaining necessary government permits and the significant capital required for development and construction. As a result, no major ski resorts have been developed in the past 30 years. We believe these competitive dynamics have supported the ski industry’s ability to raise Effective Ticket Price by a 2.7% CAGR over the past five years, despite high unemployment and fragile economic conditions.
Customer Base with Significant Discretionary Income. We generally attract a more affluent customer than many other leisure activities. In fiscal 2013, the average household income of customers at our mountain resorts was more than $135,000. Given the quality of our assets and our affluent customer base, we believe that there is a long-term opportunity to increase revenues through cross-selling and upselling our customers. We maintain a database of more than 2.2 million past resort customers and are able to use this database to cross-sell and upsell new experiences within our portfolio of resorts and at CMH to our customers, season pass holders, second home owners and vacation club members.
Significant and Expanding Base of Season Pass Holders. We have loyal customers who visit our resorts frequently every year. Many of these customers purchase season passes or frequency products and either own real estate at our resorts or are potential future buyers of vacation real estate. Season pass and frequency product revenue contributed $42.5 million, $45.2 million and $48.0 million to lift revenues for fiscal 2011, 2012 and 2013, respectively, and represented 30.7%, 34.4% and 33.2% of our lift revenues during these respective years. While there can be no assurance that the number of season pass holders at our mountain resorts will remain constant or increase in future years, season pass and frequency product revenue has grown at a CAGR of 6.3% over the three year period ended June 30, 2013. Moreover, 69.8% of our fiscal 2013 season pass holders owned season passes at our resorts during prior ski seasons, representing a strong source of recurring cash flow. This source of recurring and stable revenue reduces our sensitivity to economic conditions and weather, and provides a base line of predictability that allows us to focus on pursuing growth and value creating opportunities for our businesses.
Experienced Management Team. Our management team, which is comprised of professionals with wide ranging experience in resort, real estate and leisure operations, has significant experience managing mountain resorts. We believe our management team has demonstrated its ability to adapt and adjust the business during economic
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downturns and to grow the business. In addition, our management team has extensive experience in identifying and evaluating businesses for acquisition, performing in-depth due diligence, negotiating with owners and management, and structuring, financing and closing acquisition transactions. We have also attracted qualified and dedicated resort chiefs who have an average of 11 years of service with us and 26 years of experience in the ski industry. We believe that the experience of our management team and resort chiefs is a significant contributor to our operating performance.
Growth Strategies
Consumer discretionary spending has increased as the economy has improved and, as the economy continues to improve, we believe that consumers will have more disposable income and a greater inclination to increase spending on leisure activities, such as skiing and adventure travel. We also expect recreational adventure and experiential travel to continue to gain in popularity as individuals, including the important “baby boomer” generation, live longer, healthier lives. In light of these trends, we intend to employ the following strategies to drive growth within our businesses:
Increase Revenues.
· | Increase prices at our mountain resorts and CMH. During the past five years, despite high unemployment and fragile economic conditions over much of that period, the mountain resort industry has increased Effective Ticket Price at a CAGR of 2.7%, outpacing core inflation of 1.6%. As the economy continues to improve, we believe that consumers will have more disposable income and a greater inclination to increase spending on leisure activities, such as skiing and adventure travel. We believe that these trends, combined with growth capital investments to improve the customer experience, will provide us with the opportunity to increase prices without impacting our customers’ perception of the value of our products. |
· | Grow visitation at our mountain resorts and CMH. There are four components of our strategy to grow visitor volume. First, we intend to leverage our existing customer database of 2.2 million skiers and adventure travelers to cross sell existing customers on new experiences within our portfolio of properties. Second, we are investing in new websites, e-commerce platforms and customer relationship management systems. In combination, these tools provide our sales and marketing team with greater insight into the preferences and purchasing patterns of existing and prospective customers, enabling us to make customized vacation offers and increase the likelihood of purchase. In addition, we believe that customer relationship management will enable front line employees to provide a higher level of customer service as they will have the customer’s pertinent information on-hand, which will allow our employees to immediately cater to that customer’s needs. Third, we are developing new products that target previously underserved market segments. Examples include a new season pass product available for young professionals and the addition of new small group and private trip options at CMH to meet demand from affluent CMH customers. Fourth, we are investing in revenue management systems to optimize our variable pricing strategy. These systems provide us with real-time demand data, enabling us to effectively raise prices for vacations and ticket products during periods of peak demand and lower prices to increase visitor volume during periods of off-peak demand. |
· | Targeted growth capital investments. We believe there is a significant opportunity to further increase revenues, visitation as well as utilization of our assets during off-peak periods by developing new activities and improved amenities at our mountain resorts and CMH. We are also focused on developing new recreational activities, attractions and amenities at our mountain resorts to maximize visitation and utilization of our assets during off-peak periods, including non-winter seasons, weekdays and evenings. We have a pipeline of projects that are actionable in the near-term, including adding night skiing at Steamboat this season with the goal of keeping customers on the slopes and at our venues longer into the evening and the expansion of our skiable terrain at Winter Park and Steamboat, which we believe will increase visitor volume and revenue per visit. We have also greatly increased the summer offerings at our resorts with the recent additions of mountain biking, zip lines, mountain coasters and other activities, and we believe we have the opportunity to expand our summer offerings further in the future. In addition, we are increasingly hosting special events and entertainment, such as the IRONMAN® 70.3 World Championship at Tremblant and MusicFest at Steamboat, to stimulate visitation during off-peak periods. We believe we have the opportunity to profitably execute similar resort improvement projects in the future. |
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Continue to Improve Operating Efficiency and Margins. We continue to focus on driving financial improvement and operational synergies. We believe that, as a multi-resort operator, we have significant opportunities to benefit from our scale of operations through centralization of key functions such as sales and marketing, human resources, accounting, finance, legal, procurement, insurance and technology. Our Denver headquarters provides a platform for further centralization of these key areas where there is an opportunity to benefit from economies of scale and leverage the skills of our senior management team. We believe that these operating efficiencies, combined with price and volume increases, will enable us to grow our margins. In addition, a significant portion of the operating costs at our mountain resorts is variable and can be rapidly adjusted in response to fluctuations in our business. For example, during the 2011/2012 ski season, our management team was able to adjust operating costs at our resorts by reducing seasonal personnel in response to the lowest amount of natural snowfall in North America in 20 years.
Pursue Strategic Acquisitions and Operating Relationships. The North American ski industry is highly fragmented, with approximately 753 ski areas in North America, of which fewer than 10% are owned by operators that operate four or more ski resorts. As a result of the advantages that we enjoy as a multi-resort operator, we believe we will have the opportunity to acquire complementary resorts in the future at attractive valuations, although there can be no assurance that we will be able to effect such acquisitions. Such acquisitions could involve expansion outside of North America. We evaluate the strategic fit of potential acquisitions based on the opportunity to enhance product offerings, such as multi-resort pass products, achieve operational synergies and expand our operating footprint. As a multi-resort operator, we believe we can generate substantial revenue and cost synergies through strategic acquisitions by leveraging our existing customer database of 2.2 million contacts for cross-resort marketing, by offering customers multi-resort products and by taking advantage of economies of scale in administration and pooled purchasing.
Through our CMH operations, we have developed expertise in marketing adventure travel to the affluent as well as expertise in coordinating complex adventure travel experiences and hospitality. We expect adventure travel to gain in popularity and believe that we will be able to leverage our core competencies to improve the revenues and operating efficiency of strategic acquisitions within the adventure travel industry.
We also intend to evaluate “capital light” opportunities such as managing third-party resort assets and entering into real estate development partnerships.
Monetization of Real Estate. We own more than 1,150 acres of land available for development at our mountain resorts, much of which is adjacent or proximate to the ski trails at the resorts, including ski-in and ski-out parcels. As the “home team” operator in our resort communities, we have a competitive advantage relative to other developers at our resorts because we are uniquely able to add additional value to real estate by bundling it with amenities and products at our resorts that we control. We also own or lease commercial properties within the villages at our resorts, which provides us with the opportunity to control the mix of activities and food, beverage and retail outlets in order to create an atmosphere that makes our resort communities more attractive to potential home buyers. With improvement in the second home and vacation home markets, we believe that we can generate significant profits from the future development of our core entitled land at our resorts. Additionally, although we cannot guarantee that incremental visitor growth at our resorts will occur, to the extent that future development increases the number of units and beds at our resorts, we believe that the extra lodging capacity will support incremental visitor growth and profits.
Business Operations
We operate our business through three reportable segments: Mountain, Adventure and Real Estate.
Mountain
Our four-season mountain resorts are geographically diversified across North Americas major ski regions, which we believe reduces our financial exposure to any single geographic area as weather pattern and economic conditions vary across these regions. In each of our markets, our mountain resorts have established a reputation for some of the best skiing, amenities and experiences.
Our four-season mountain resorts offer a breadth of activities for individuals of all ages that combine outdoor adventure and fitness with a wide variety of resort-based services and amenities, including retail, equipment rental, dining, lodging, ski school , spa services, golf, mountain biking and other summer activities. We own or manage many of these services and amenities, which allows us to capture a larger proportion of customer spending as well as ensure
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product and service quality at our resorts. In this way, each of our mountain resorts operates as a collection of small businesses allowing us to derive revenues from a wide variety of sources, including the following:
• | Lift Pass Products . We offer customers a wide variety of lift pass products targeted to particular customer segments. These products include season passes, frequency passes and single- and multi-day tickets. Season pass products are available for purchase prior to and during the ski season. We offer both unlimited and restricted season passes, the latter blocking out pre-determined periods (i.e., certain holidays). Season pass products provide a value option to our customers, which in turn assists us in developing a loyal base of customers who commit to ski at our resorts in advance of the ski season and typically ski more days each season at our resorts than those customers who do not buy season passes. As such, our season pass program drives strong customer loyalty, mitigates our exposure to weather and generates ancillary customer spending. Frequency pass products are valid for a specific period of time, providing our customers with flexibility as to when they visit our resorts during that timeframe. Single- and multi-day tickets constitute the balance of our lift pass products. Compared to frequency pass products, multi-day tickets have a shorter timeframe for their use. Most lift pass products are valid at a specific resort, although we also offer some products, such as our Rocky Mountain Super Pass PlusTM and our Rocky Mountain Super PassTM, that are valid across multiple resorts owned by us and third parties with whom we have contractual relationships. |
• | Lodging . We manage lodging properties and condominiums at and in close proximity to our mountain resorts. Historically, newly constructed townhomes and condominiums were sold to owners who placed the units into a rental pool managed by us. We perform a full complement of customer services for third-party property owners, including reservations, property management and housekeeping. In return for performing these services, we receive a portion of the revenue from the rental of these properties. |
• | Ski School. We are the exclusive operator of the ski school at each of our mountain resorts. Our ski schools offer a wide variety of private and group ski and snowboard lessons, which cater to all ages and skill levels. In the summer months, several of our resorts provide mountain biking lessons. |
• | Rental and Retail Shops . We offer a large rental fleet of ski, snowboard and mountain biking equipment at our mountain resorts. We also operate a range of retail shops at our mountain resorts. Shopping is generally an important part of the customer vacation experience and an appropriate mix of retail options is important to the total resort framework. Retail revenue also helps stabilize our daily and weekly cash flows, as our shops tend to have the strongest sales on poor weather days. Our retail shops are located on the mountains and in the base areas. On-mountain shops generally sell ski accessories such as goggles, sunglasses, hats and gloves while base-area shops sell these items as well as hard goods such as skis, snowboards, boots and larger soft goods such as jackets and other winter outerwear. In addition, our resorts offer our own logo-wear. In the non-winter seasons, most of the on-mountain shops are closed and the base-area shops sell mountain bikes, hiking and other outdoor products, and warm-weather apparel. The large number of retail locations operated by us allows us to improve margins through large quantity purchase agreements. |
• | Food and Beverage . Food and beverage is an important component in providing a satisfying customer experience. The introduction of high-speed lifts in the late 1980s has allowed skiers to ski more runs in a shorter period, thereby providing more time for other activities, such as dining. We own and operate the on-mountain food and beverage facilities at our mountain resorts. These facilities include restaurants, bars, cafes, warming huts, cafeterias and upscale dining options. At each of our mountain resorts, we also own and operate many of the base-area restaurants and bars as well as many of the food service outlets in the village centers. | |
• | Other. We generate additional revenue from a wide variety of activities and ancillary operations, including private clubs, municipal services (e.g., plowing roads), call centers, parking operations, golf courses, summer base area activities, strategic alliances, entertainment events and other resort activities. |
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The following table summarizes certain key statistics relating to each of our mountain resorts within our Mountain segment as of September 30, 2013.
Resort | Location | Year Opened | Average Snowfall(1) | Maximum Vertical Drop | Skiable Terrain | Snowmaking Coverage | # of Trails | # of Lifts | Lodging Units Under Mgmt. | Food & Beverage Outlets Operated | Retail & Rental Outlets Operated | |||||||||||||||||||||||||||||||
(inches) | (feet) | (acres) | (acres) | |||||||||||||||||||||||||||||||||||||||
Steamboat | Colorado | 1963 | 363 | 3,668 | 2,965 | 375 | 165 | 18 | 317 | 18 | 16 | |||||||||||||||||||||||||||||||
Winter Park | Colorado | 1939 | 322 | 3,060 | 3,081 | 313 | 143 | 25 | 348 | 14 | 11 | |||||||||||||||||||||||||||||||
Tremblant | Quebec | 1939 | 163 | 2,116 | 654 | 465 | 95 | 14 | 896 | 11 | 20 | |||||||||||||||||||||||||||||||
Stratton | Vermont | 1961 | 151 | 2,003 | 624 | 474 | 94 | 11 | 415 | 11 | 10 | |||||||||||||||||||||||||||||||
Snowshoe | West Virginia | 1974 | 166 | 1,500 | 251 | 251 | 57 | 14 | 1,149 | 16 | 13 | |||||||||||||||||||||||||||||||
Blue Mountain (50%) | Ontario | 1941 | 78 | 720 | 281 | 236 | 36 | 14 | 1,027 | 9 | 9 |
(1) | Based on the eight-year historical average of snowfall during the 2005/2006 ski season through the 2012/2013 ski season. Blue Mountain data is based on the seven-year historical average of snowfall during the 2006/2007 ski season through the 2012/2013 ski season (comparable data is not available for the 2005/2006 ski season). |
Steamboat Ski & Resort (operating since 1963) is located in the Colorado Rocky Mountains, 157 miles northwest of Denver, with access via direct flights from New York, Los Angeles, Chicago, Houston, Atlanta, Minneapolis, Seattle, Dallas and Denver. The town of Steamboat Springs, Colorado, where Steamboat is located, has a strong heritage of winter sports, as evidenced by the 79 winter Olympians that have trained in the town. With the potential to add an additional 430 acres of skiable terrain, the resort features a combination of high-end customer services (such as a full service spa and fine dining restaurants), an 1880s western atmosphere and some of the most consistent snowfall in the Rocky Mountain region. The resort receives approximately 363 inches of light, dry powder snow each ski season, which we refer to in our marketing materials as Champagne Powder® snow. Average snowfall at Steamboat is 25% more than the historical Rocky Mountain regional resort average of 290 inches.
We acquired Steamboat in 2007 from the American Skiing Company and have invested more than $25.0 million on mountain and base area improvements, such as terrain and snowmaking upgrades, two new high speed chairlifts and food court remodels. For the 2013/2014 ski season, Steamboat will open a new on-mountain lodge with a seating capacity of over 250 in the main dining level of its restaurant. In addition, we are adding night skiing at Steamboat for the 2013/2014 ski season.
Winter Park Resort (operating since 1939) is located in the Colorado Rocky Mountains, 67 miles west of Denver, and is one of the closest resorts to the Denver metropolitan areas nearly three million residents. The resort, which is comprised of Winter Park Mountain, Mary Jane Mountain, Vasquez Cirque and Vasquez Ridge, is the longest operating mountain resort in Colorado and has long been referred to in our marketing materials as Colorados Favorite®. The resort receives an average snowfall during the ski season of approximately 322 inches and features six terrain parks and world-class mogul skiing, as described by Powder Magazine. Winter Park has the option to add an additional 837 acres, which would expand our skiable terrain by approximately 27%. Each summer, Winter Park transforms into a mountain biking destination, with one of the largest bike parks in the United States. Winter Park has recently expanded the bike park and has added tubing to its slate of winter activities.
The City of Denver opened Winter Park in 1939 to provide a winter recreational area to the public. In 2002, we entered into a long-term lease with the WPRA, an instrumentality of the City of Denver, to operate the resort and develop land at the base area. See —Properties—Winter Park Operations.
Mont Tremblant Resort (operating since 1939) is located in Quebec, within a two hour drive from the Montreal metropolitan areas nearly four million residents and the Ottawa metropolitan areas nearly 1.2
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million residents. The resort is consistently ranked as one of the top ski resorts in Eastern North America by Ski Magazine. With 2,116 feet of vertical drop and snowmaking on 77% of trails, Tremblant offers customers the opportunity to ski down one of the biggest vertical drops in eastern Canada. In the summer, customers can play golf on two 18-hole golf courses, mountain bike, enjoy the pedestrian village and attractions or take in Tremblants free outdoor concerts.
Since acquiring Tremblant in 1991, we have significantly expanded the ski facilities and terrain, including the addition of high-speed detachable quad chairlifts, eight-passenger gondolas, a 1,000-seat mountain-top restaurant and an upgraded snowmaking system.
Stratton Mountain Resort (operating since 1961)is located in Southern Vermont approximately 220 miles north of New York City and approximately 150 miles northwest of Boston, whose metropolitan areas have a combined population of more than 23 million residents. Situated on one of the tallest peaks in New England, Stratton is widely considered the birthplace of snowboarding. Stratton features a vertical drop of 2,003 feet and snowmaking on 93% of trails. Strattons summer amenities feature 27 holes of golf, a 22-acre golf school and a sports and tennis complex. Winter and summer customers are also able to enjoy Strattons pedestrian village.
We acquired Stratton in 1994 and have made significant capital improvements, including a private club, upgraded snowmaking capabilities and lift infrastructure.
Snowshoe Mountain Resort (operating since 1974) is located in West Virginia and is one of the largest ski resorts in the Southeast region of the United States. Snowshoe primarily draws customers from the Baltimore-Washington D.C. and Pittsburgh metropolitan areas combined 11.7 million residents, as well as the Southeastern United States. The 251 acre resort has the biggest vertical drop in the region (1,500 feet) and receives an average snowfall during the ski season of approximately 166 inches while also enjoying 100% snowmaking coverage. The resorts mountaintop village offers a variety of nightlife, dining and retail options. Snowshoe was named #1 Overall Ski Resort and #1 for Nightlife in the Mid-Atlantic by OnTheSnow.com, a popular skiing website, in 2012.
We acquired Snowshoe in 1995 and have made significant capital improvements, including new lifts, snowmaking, terrain expansion as well as a spa and a zipline located in the village. 640 additional acres of land are available at Snowshoe for terrain expansion.
Blue Mountain Ski Resort (operating since 1941) is located in Ontario, approximately 90 miles northwest of Torontos approximately 5.6 million residents. With 281 skiable acres and snowmaking on 93% of trails, Blue Mountain is both the largest and most popular resort in Ontario. Blue Mountain also operates a year round conference center and offers a suite of summer amenities, including an 18-hole golf course, an open-air gondola, a mountain biking facility, a waterfront park and a mountain roller coaster
We acquired a 50% interest in Blue Mountain Resorts Limited in 1999. Since then, the resort has undergone major renovations, including installation of advanced snowmaking systems, service buildings, lodge upgrades, a conference center and the ongoing development of a 40-acre pedestrian village located at the base of the mountain. We expect to add six new trails and an additional high-speed chairlift at Blue Mountain in the 2013/2014 ski season.
We are party to a shareholders agreement with Blue Mountain Holdings, the owner of the other 50% interest in Blue Mountain Resorts Limited. The agreement provides for certain board of directors nomination rights, pre-emptive rights, rights of first offer between the shareholders, as well as drag along and tag along rights. In addition, subject to certain requirements, we have a call option on the equity interest held by Blue Mountain Holdings at 110% of fair market value and Blue Mountain Holdings has a put option, which would require us to purchase up to all of
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the equity interests held by Blue Mountain Holdings at 90% of fair market value. See Risk Factors—Risks Related to Our Business—Pursuant to a shareholders agreement, we may be required to purchase Blue Mountain Resorts Holdings Inc.s equity interest in Blue Mountain Resorts Limited.
The following table shows historical snowfall at our resorts compared to their corresponding regional resort averages:
Historical Average Snowfall(1) | ||||||||
Resort | vs. | Region(2) | % Difference | |||||
(inches) | (inches) | |||||||
363 | 290 | 25.2% | ||||||
322 | 290 | 11.0% | ||||||
163 | 140 | 16.4% | ||||||
151 | 140 | 7.9% | ||||||
166 | 58 | 186.2% | ||||||
78 | —(3) | — | ||||||
(1) | Based on eight-year historical average of snowfall during the 2005/2006 ski season through the 2012/2013 ski season. Blue Mountain data is based on the seven-year historical average of snowfall during the 2006/2007 ski season through the 2012/2013 ski season (comparable data is not available for the 2005/2006 ski season). |
(2) | Source: Kottke National End of Season Survey. Note Tremblant is compared to the Northeast U.S. regional resort average. |
(3) | Comparable data for Blue Mountain not available. |
Competition
There are significant barriers to entry for new ski resort development in North America resulting from the limited number of remaining suitable sites, the difficulty in obtaining necessary government permits and the significant capital required for development and construction. As such, no major ski resorts have been developed in the past 30 years, with the last major resorts opened being Blackcomb Mountain and Beaver Creek in 1980 and Deer Valley in 1981.
Competition within the ski resort industry is based on multiple factors, including location, price, weather conditions, the uniqueness and perceived quality of the terrain for various levels of skill and ability, the atmosphere of the base village, the quality of food and entertainment and ease of travel to the resort (including direct flights by major airlines). We believe we compete effectively and our competitive position is protected, due to the unique attributes and geographic diversity among our portfolio of mountain resorts. We believe that our mountain resorts feature a sufficient quality and variety of terrain and activities to make them highly competitive with other mountain resorts.
Our resorts directly compete with other mountain resorts in their respective local and regional markets, as well as with other major destination resorts. Our individual mountain resorts primarily compete as follows:
• | Steamboats primary competition is from Breckenridge Ski Resort in Colorado, Park City Mountain Resort in Utah and other large international ski destinations. |
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• | Winter Parks primary competition is from Copper Mountain Resort, Keystone Resort and other ski resorts located in Colorados Front Range. |
• | Tremblants primary competition is from Mont-Sainte-Anne, Mont Blanc, Le Massif and Mont Saint-Sauveur, all located in Quebec, other resorts in the Laurentian Mountains, and both Jay Peak and Stowe Mountain in Northern Vermont. |
• | Strattons primary competition is from other mid-to-large size ski resorts in Southern Vermont, including Okemo, Mount Snow and Killington Resort. |
• | Snowshoes primary competition is from ski resorts in the mid-Atlantic, such as Seven Springs Mountain Resort located in Pennsylvania, and Bryce Resort and Wintergreen Resort, both located in Virginia. |
• | Blue Mountains primary competition is from Horseshoe Valley Resort and Mount St. Louis, both located in Ontario, and Holiday Valley Resort in western New York. |
Adventure
The cornerstone of our Adventure segment is Canadian Mountain Holidays, the leading heli-skiing adventure company in North America. CMH has been providing heli-skiing trips for the past 50 years and currently operates in the Purcell, Selkirk, Monashee and Cariboo mountains of eastern British Columbia from 11 lodges, nine of which are owned by us. CMHs operating area encompasses 3.1 million acres of terrain granted under renewable 10 to 30 year licenses from the government of British Columbia for heli-ski/heli-hiking operations. CMHs acreage amounts to more skiable terrain than all lift access mountain resorts in North America combined. Customers at CMH typically ski more than 18,000 vertical feet per day, with some runs providing up to 7,820 vertical feet.
The following is a summary of CMHs existing tenures:
Lodges Associated with Tenure | Mountain Range | Skiing Terrain | ||||
(acres) | ||||||
Adamant | Selkirks | 259,559 | ||||
Bobbie Burns | Purcells & Selkirks | 260,111 | ||||
Bugaboo | Purcells | 251,274 | ||||
Cariboo(1) | Cariboos | 346,462 | ||||
Galena | Selkirks | 288,478 | ||||
Gothics | Selkirks & Monashees | 308,716 | ||||
CMH K2 | Selkirks & Monashees | 282,782 | ||||
McBride | Cariboos | 399,770 | ||||
Monashee | Monashees & Selkirks | 367,577 | ||||
Revelstoke | Monashees & Selkirks | 329,584 | ||||
Valemount(1) | Cariboos | 346,462 |
(1) | Cariboo and Valemount lodges share the same tenure. |
In the winter, CMH offers three- to seven-day heli-skiing trips. In the summer, CMH provides a variety of adventure vacation packages in the British Columbia mountains. CMH trips typically include all meals, snacks and non-alcoholic beverages, all lodge accommodations and use of lodge facilities and the services of certified guides. In fiscal 2013, we realized CMH RevPGN of approximately $1,700.
CMH hosted 6,358 paid customers during fiscal 2013, approximately 87% of whom participated in heli-skiing trips. A majority of CMHs customers for fiscal 2013 were repeat CMH customers. CMHs client base is geographically diverse. For fiscal 2013, 54% of total customers came from North America, 37% came from Europe and 9% came from Australia, Asia and South America.
To support CMHs skiing, guiding and hospitality operations, we own a modified fleet of 40 Bell helicopters and operate Alpine Aerotech, a platinum-certified Bell helicopter maintenance, repair and overhaul business. Alpine Aerotech is one of only 10 platinum-certified Bell helicopter MRO businesses in the world and, in addition to servicing our helicopters, the business caters to over 500 customers from 32 different countries. We lease our fleet of helicopters to Alpine Helicopters each ski season, which in turn acts as the exclusive provider of helicopter operations to CMH. In January 2013, we restructured our Alpine Helicopters business to comply with Canadian foreign ownership regulations governing aviation flight services in Canada. Prior to the restructuring, our helicopter
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operations in Canada were conducted through our wholly owned subsidiary, Alpine Helicopters, LP. The restructuring involved the formation of a new flight services company, Alpine Helicopters, Inc. We own a 20% equity interest in Alpine Helicopters and the remaining 80% is held in trust for the benefit of the management and employees of Alpine Helicopters, including the pilots and crew members that support our helicopter operations. We consolidate Alpine Helicopters for GAAP purposes because we are the primary beneficiary. Alpine Helicopters has been offering helicopter operations from bases across western Canada and the western United States for over 50 years and has long-standing relationships with the British Columbia Ministry of Forests, the Alberta Forest Service, Parks Canada and the U.S. Forest Service. Our integrated operating model enables us to scale the business and increase customer visits with limited reliance on third party providers, which we believe differentiates us from other heli-ski operations. In addition, by utilizing the same pilots each ski season who have an average of over 7,000 hours experience flying in the high alpine and who possess extensive knowledge of the terrain, we believe CMH is able to provide a more consistent customer experience.
To more efficiently utilize our aircraft year round, during the summer months, our subsidiary, Kachina Aviation, leases helicopters from us and Alpine Helicopters. Kachina Aviation, which is headquartered in Nampa, Idaho, provides fire suppression helicopter services in Idaho, California, Washington and Oregon under contracts with the U.S. Forest Service, The Bureau of Land Management and State governments. We also lease underutilized aircraft to unaffiliated third parties for short-term periods ranging from one to 12 months.
Competition
CMH directly competes with other heli-skiing and snowcat operations in Canada and the United States. We believe that there are currently less than 75 heli-skiing and catskiing operators in North America, with most heli-skiing and catskiing occurring in British Columbia due to the vast alpine wilderness and consistent annual snowfall. CMH also competes to a lesser extent with lift-accessed ski resorts in North America and other parts of the world.
Real Estate
We own a significant amount of land available for development at our mountain resorts and, through our Real Estate segment, are focused on designing strategies for future development of this land in concert with planning for on-mountain and base village improvements. In addition to our core land holdings and development planning, we maintain the capability to manage, market and sell real estate.
Prior to 2010, we were actively engaged in the development of resort real estate. In late 2009, in light of the then-existing poor economic environment for real estate, we ceased new development activities and substantially reduced our related administrative overhead.
As a result of our prior development activities, we accumulated a portfolio of core development parcels surrounding the bases of our Steamboat, Winter Park, Tremblant, Stratton and Snowshoe resorts, which we believe will provide us the ability to increase our revenues through the potential future development of this land. We currently own core entitled land surrounding the base of our resorts totaling more than 1,150 acres, much of which is located adjacent or proximate to the ski trails at our resorts, including ski-in and ski-out parcels. As of November 30, 2013, this core land had an appraised value of $154.0 million. We have significantly written down the carrying value of our core land holdings from their acquisition values and believe the land values are now positioned to rebound along with the North American economy.
Our core strategic land available for development includes:
Resort | Property Description | Acreage | Entitled Units | |||
Steamboat | Five resort development parcels | 27 acres | 640 | |||
Winter Park | 21 development parcels | 95 acres | 962 | |||
Tremblant |
Versant Soleil – five developable lots Versant Nord – one developable lot Versant Sud – 10 developable lots |
165 acres 181 acres 170 acres |
548 1,500 244 | |||
Stratton |
Four parcels of entitled land Three parcels of raw land |
95 acres 66 acres |
186 14 | |||
Snowshoe | Vacant land | 359 acres | 1,464 |
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As the home team operator in our resort communities, we have a competitive advantage relative to other developers at our resorts because we are uniquely able to add additional value to real estate by bundling it with amenities and products at our resorts that we control. We believe that we can generate significant profits from the future development of our core land. Additionally, to the extent that future development increases the number of units and beds at our resorts, we believe the extra lodging capacity will support incremental visitor growth and profits.
In addition to our core land holdings and development planning, we maintain the capability to manage, market and sell real estate through IRCG, our vacation club business, IHM, which manages condominium hotel properties in Maui, Hawaii and in Mammoth Lakes, California, and Playground, our residential real estate sales and marketing business.
We derive revenues from four core IRCG activities: selling vacation club points in Club Intrawest; providing financing for the purchase by consumers of vacation club points; managing Club Intrawests eight properties; and running a private exchange company for Club Intrawests members. As of October 31, 2013, Club Intrawest had over 21,000 members. As we develop the land surrounding the bases of our mountain resorts, we may construct additional properties that we transfer to the trustee for Club Intrawest, which would increase the number of Club Intrawest points available for sale.
Unlike traditional vacation club ownership businesses, Club Intrawest features ownership in a club that offers high-end accommodation and services through a points-based membership system. After constructing a Club Intrawest location, we transfer ownership of the built units, free and clear of all encumbrances, to a trustee for Club Intrawest, a non-profit, non-stock company. In return, we receive the right to sell points (memberships) to the general public, which allow stays in a Club Intrawest accommodation. Each individual purchasing points becomes a member of Club Intrawest with the entitlement to stay at any of Club Intrawests eight owned locations and the right to stay at over 3,000 affiliated locations if they join our private exchange company, Extraordinary Escapes. A member of Club Intrawest receives an annual allotment of points in perpetuity. The points can be utilized in different increments that vary with time of year, length of stay, location of vacation and the size of accommodation, all subject to availability. Except in the first year of ownership, unused points may be carried forward for one year or points may be borrowed from the next year to complete a vacation reservation. Points may be sold, transferred or bequeathed, subject to our right of first refusal to purchase such points. We can resell any points that we repurchase pursuant to this right of first refusal. The initial selling price per point is exclusively controlled by us depending upon market conditions.
We currently manage a total of 474 units across IRCGs eight owned properties located in Whistler, British Columbia; Vancouver, British Columbia; Panorama, British Columbia; Blue Mountain, Ontario; Tremblant, Quebec; Palm Desert, California; Sandestin, Florida; and Zihuatanejo, Mexico.
IHM, our hospitality management business, was established in March 1998. IHM is focused on providing management services to properties owned by third parties, including the Honua Kai Resort and Spa in Maui, Hawaii and the Westin Monache Resort at Mammoth Lakes, California, where we currently manage an aggregate of approximately 500 units.
Playground, our residential real estate sales and marketing business, was established as a stand-alone business in 2001. Through Playground, we currently manage the fractional condo sales process at the Four Seasons in Vail on behalf of a third party and, until November 2012, managed the condo sales process for the Honua Kai Resort and Spa in Maui, Hawaii. The Playground brand is also used in certain of the resale and brokerage operations at our mountain resorts. As we develop the land surrounding our mountain resorts, we expect Playground to provide sales and marketing expertise for these properties.
Finally, we have a 57% economic ownership interest in Chateau M.T., Inc., which owns a hotel and conference center in Tremblant, Quebec that is managed by Fairmont.We also have a 50% economic interest in Mammoth Hospitality Management, LLC, which runs the hospitality and lodging operations at Mammoth Mountain.
Competition
We compete with other vacation club and fractional ownership businesses in our efforts to sell points (memberships) in Club Intrawest. In addition, we compete with other property management companies in providing management services at IHMs properties. Our managed properties compete with rental management companies, locally owned independent hotels, as well as facilities and timeshare companies that are owned or managed by national and international chains. These properties also compete for convention and conference business across the
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North American market. Competition within the hotel and lodging industry is generally based on quality and consistency of rooms, restaurants and meeting facilities and services, attractiveness of locations, availability of a global distribution system, price and other factors.
Investments
We have invested heavily in the development of lifts, trails, snowmaking capabilities and pedestrian villages with a large bed base and a variety of retail and dining options at our mountain resorts. Similarly, in developing our CMH business, we sought to build a vertically integrated business that would allow us to provide a consistent, high-caliber customer experience. In each case, we built capacity to accommodate growth in our visitor volume. We have also prioritized developing robust and durable infrastructure, equipment and facilities to reduce ongoing maintenance expenditures.
We have the opportunity to grow our existing businesses by investing capital in projects that increase visitor volume, revenue per customer and the efficiency of our expense management. Recent investments have focused on developing new amenities to attract customers, new products to increase on-site customer spend and new customer relationship management technologies to improve marketing communications and prospect conversion. We maintain a data driven approach to investment selection and the allocation of capital between competing opportunities. Managers at our mountain resorts, CMH and within our Real Estate segment are staffed with identifying growth investment opportunities within their businesses. We have a centralized process to complete net present value, internal rate of return and sensitivity analyses for each investment idea. Senior management then reviews a prioritized list of potential investments to allocate capital to the ideas with the highest expected returns and the largest strategic benefits. Whenever possible, we apply successful initiatives to other resorts within our portfolio of properties. We believe that our disciplined approach to opportunity identification and capital allocation is a core strength.
Marketing and Sales
We employ a centralized marketing team that assists our resorts with product design, revenue management, dynamic pricing, digital marketing, customer relationship management campaigns and strategic alliances with promotional partners. Additionally, we have small, on-the-ground, resort-based marketing teams with local and intimate knowledge of each resorts customer base. These teams focus primarily on product development and tactical in-season campaign management.
Within our Mountain segment, the primary objectives of our marketing strategy are to increase market share, increase pre-sold revenues and increase customers spending on ancillary resort services and products. We continue to invest in market analytics and customer relationship tools that provide us with real-time information about our customers and potential customers. These tools, coupled with our vast database of more than 2.2 million past resort customers, enable us to tailor our customer communications and offerings with far greater precision and efficiency than was possible in the recent past, which we believe will drive increased visitation. We supplement this effort with promotions, digital marketing (including social, search and display), loyalty programs and traditional media advertising where appropriate. We are also expanding our use of sophisticated dynamic pricing models to optimize the tradeoff between pricing and customer volume. In addition, we have direct sales teams focused on attracting groups, corporate meetings and conference business. Our marketing efforts drive traffic to third party channels and our websites and call centers, where we provide our customers with information and booking assistance. Our resorts also host a number of sporting events, such as the IRONMAN® 70.3 World Championship, which will be held at Tremblant in 2014. Hosting these types of events, along with numerous concerts and cultural festivals, provides our resorts with both national and international exposure.
Within our Adventure segment, the primary objectives of our marketing strategy are to acquire new customers and increase existing customer retention. The purchase process for a heli-skiing trip is highly interactive, with CMH representatives spending significant time with prospective customers, educating them on trip options and answering general questions about this unique experience. In order to facilitate this process, we have a global network of third party sales representatives that are located in major metropolitan areas and have strong relationships with existing clients, as evidenced by repeat visitors accounting for the majority of CMHs customers during fiscal 2013. Our existing European sales network is well established, with 12 agents in 10 European countries that have been selling CMH trips for an average of 24 years, and we are currently expanding our North American sales presence. We also use direct advertising and e-commerce tools to target repeat and prospective customers that have existing knowledge of our product offerings.
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Seasonality
Our business is highly seasonal. Although each of our mountain resorts and CMH operates as a four-season business, we generate the highest revenues during our second and third fiscal quarters, which is the peak ski season. As a result of the seasonality of our business, our mountain resorts and CMH typically experience operating losses during the first and fourth quarters of each fiscal year. In addition, throughout our peak quarters, we generate the highest daily revenues on weekends, during the Christmas/New Years and Presidents Day holiday periods and, in the case of our mountain resorts, during school spring breaks. See Managements Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Business—Seasonality and Fluctuations in Quarterly Results.
In an effort to partially counterbalance the concentration of revenue in the winter months, we offer non-ski season attractions at our mountain resorts, such as sightseeing, mountain biking, guided hiking, alpine roller coasters and other recreational activities. We also operate golf courses at Stratton, Tremblant, Snowshoe and Blue Mountain. These activities help attract destination conference and group business to our mountain resorts. Similarly, CMH offers heli-hiking adventures during the summer months. Finally, pre-selling our products and services helps smooth the seasonality of our cash flows.
During seasonally slow times, we control operating costs by reducing operating hours and, in the case of CMH, closing a majority of our lodges and leasing a number of our helicopters for fire suppression activities. Employment levels required for peak operations are met largely through part-time and seasonal hiring.
Employees
Given the seasonal nature of our business, the number of people that we employ varies considerably depending on the season. We employ significantly more people during the peak ski season than during the summer season. During the peak 2012/2013 ski season, we had approximately 8,800 employees, approximately 2,800 of whom were employed on a full-time basis. As of September 30, 2013, we had approximately 4,000 employees, approximately 2,300 of whom were employed on a full-time basis.
Approximately 100 of Tremblants year-round employees and all of its additional seasonal employees are members of the union Le Syndicat Des Travailleurs(euses) de La Station du Mont Tremblant (CSN). The current contract with the union expires on October 31, 2015. In addition, approximately 70 ski patrol employees at Steamboat are members of the Communication Workers of America / Steamboat Professional Ski Patrol Association. The current contact with the union expired on September 1, 2013 and we are in the process of negotiating a new contract with the union. Other than as noted above, none of our employees are covered by a collective bargaining agreement.
We consider our relations with our employees to be good.
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Properties
The following table summarizes our principal properties. We also own additional parcels of real estate at certain of these properties.
Location | Owned | Permit | Leased | ||||||
Denver, Colorado | · | Office space (corporate head office) | |||||||
Steamboat Colorado, United States
|
· | 240 acres used for operations and 27 acres of developable land | · | 3,740 acre four season destination resort; includes 2,965 acres of skiable terrain and developable land and rental/retail outlets(1) | |||||
Winter Park Colorado, United States
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· | 7,630 acre four season destination resort; includes 3,081 acres of skiable terrain and developable land and rental/retail outlets(2) | |||||||
Tremblant Quebec, Canada
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· | 6,284 acre four season destination resort; includes 65 acres of skiable terrain, rental/retail outlets, village areas and two golf courses | · | 589 acre of skiable terrain(3) | |||||
Stratton Vermont, United States
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· | 3,700 acre four season destination resort; includes 624 acres of skiable terrain and developable land and rental/retail outlets | |||||||
Snowshoe West Virginia, United States
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· | 9,000 acre four season destination resort; includes 251 acres of skiable terrain and developable land and rental/retail outlets | |||||||
Columbia Mountains British Columbia, Canada
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· | 3.1 million acres of terrain for heli-ski/heli-hiking operations(4) |
(1) | See —Government Regulation and Environment, Health and Safety—United States—Winter Park and Steamboat. |
(2) | See —Winter Park Operations. |
(3) | See —Tremblant Operations. |
(4) | See —CMH Operations. |
Winter Park Operations
The operations at Winter Park are conducted on land and with operating assets that are beneficially owned by the City and County of Denver. Winter Park Recreational Association (WPRA) holds the Special Use Permit and Term Special Use Permit issued by the U.S. Forest Service (as defined below) for Winter Park (collectively, the
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Permits). Pursuant to an agreement between the City and County of Denver and WPRA (as amended, the City Agreement), WPRA has entered into a Second Amended And Restated Ground Lease Agreement (Arlberg Club Lease) with the Colorado Arlberg Club under which WPRA leases certain lands used in the operation of the Winter Park ski areas. The Arlberg Club Lease terminates April 30, 2078. Also pursuant to the terms of the City Agreement, WPRA has entered into a Lease and Operating Agreement (the Lease) with our subsidiary Intrawest/Winter Park Operations Corporation (IWPOC) under which IWPOC may be the operator of the Winter Park Resort (including the Winter Park ski areas) until 2078. The U.S. Forest Service has given its consent to the Lease and operation of Winter Park by IWPOC. The Colorado Arlberg Club has also given its consent to WPRAs subleasing of the land leased under the Arlberg Club Lease to IWPOC. IWPOC has, subject to the terms of the Permits, the City Agreement, the Arlberg Club Lease and the Lease, the full and legal right to enter into agreements and use the physical assets described in those documents in the operation, maintenance and development of Winter Park. See also —Government Regulation and Environment, Health and Safety—United States—Winter Park and Steamboat.
Tremblant Operations
A portion of Tremblants lifts and trails, and some of its buildings, are located on land leased to our subsidiary, Mont Tremblant Resorts and Company, LP (Tremblant LP), by the Province of Quebec under a ski area agreement that expires in 2051 (the Ski Area Agreement). Pursuant to the Ski Area Agreement, Tremblant LP pays annual lease payments equal to $5,000, adjusted for changes in the Consumer Price Index. The Ski Area Agreement contains ongoing covenants on the part of Tremblant LP, including that Tremblant LP comply with all applicable laws. Pursuant to the Ski Area Agreement, Tremblant LP has also agreed to indemnify the provincial government from third-party claims arising out of Tremblant LPs operations under the Ski Area Agreement. The Ski Area Agreement may be amended by mutual agreement between Tremblant LP and the provincial government to change the applicable ski area or permitted uses. Tremblant LP must submit to the provincial government for those areas under lease a capital investment program each year as well as a master development plan every five years.
CMH Operations
CMHs skiing and hiking operations occur on Crown land that is owned by the Government of the Province of British Columbia. As a result, each of CMHs 11 operating areas has a series of land tenures, which are legal contractual documents between CMH and the government, issued under either British Columbias Land Act or Park Act. Licenses of Occupation are the most common form of tenure held by CMH for its operating areas outside provincial parks or protected areas and for its ancillary facilities (such as radio repeaters and remote fuel caches). Licenses of Occupation are issued under the Land Act, are normally 30 years in length and are renewable at mid-term. Pursuant to the Licenses of Occupation, CMH pays a land rental amount on a per skier-day basis. CMHs Licenses of Occupation are non-exclusive and contain provisions whereby they can be amended or revoked by the Province for non-compliance or where the Province requires the land for what it deems to be a higher and better use. In CMHs existence, the Province has not exercised this right. In some cases, a portion of a CMH operating area lies inside a provincial park or protected area. In those cases, CMH also holds a required Park Use Permit issued under the Park Act. Park Use Permits are normally issued for 10-year terms, are renewable at mid-term and are non-exclusive. CMH also holds a small number of other forms of Land Act tenures, such as leases and rights-of-way for 30 or more years.
Intellectual Property
To protect Intrawest and our resorts as branded businesses with strong name recognition, we have registered trademarks in the United States, Canada and Mexico. We also rely on a combination of trademark licenses and other contracts, both as licensee and licensor of third party trademarks, as well as common law trademark and tradename rights. Third party policies governing reporting of unauthorized use of trademarks also assist in the protection of our trademark rights.
Monitoring the unauthorized use of our intellectual property is difficult, and the steps we have taken, including sending demand letters and taking actions against third parties, may not prevent unauthorized use by others in all instances. The failure to adequately build, maintain and enforce our trademark portfolio could impair the strength of our brands.
Legal Proceedings
We are involved in various lawsuits and claims arising in the ordinary course of business and arising from our legacy real estate development. These lawsuits and claims may include, among other things, claims or litigation
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relating to personal injury and wrongful death, allegations of violations of laws and regulations relating to our real estate activities and labor and employment, intellectual property and environmental matters and commercial contract disputes. We operate in multiple jurisdictions and, as a result, a claim in one jurisdiction may lead to claims or regulatory penalties in other jurisdictions.
By the nature of the activities at our mountain resorts and CMH, we are exposed to the risk that customers or employees may be involved in accidents during the use, operation or maintenance of our trails, lifts, helicopters and facilities. As a result, we are, from time to time, subject to various lawsuits and claims related to injuries occurring at our properties.
In addition, our pre-2010 legacy real estate development and sales activities, combined with the significant downward shift in real estate asset values that occurred in 2007 and 2008, resulted in claims being filed against us by owners and prospective purchasers of residences in our real estate developments. In some instances, we have been named as a defendant in lawsuits alleging construction defects at certain of our existing developments. In other lawsuits, purchasers are seeking rescission of real estate purchases and/or return of deposits paid on pre-construction purchase and sale agreements. These claims are related to alleged violations of state and federal laws that require providing purchasers with disclosures mandated under the Interstate Land Sales Act and similar state laws.
We believe that we have adequate insurance coverage or have accrued for loss contingencies for all material matters in which we believe a loss is probable and the amount of the loss is reasonably estimable. Although the ultimate outcome of claims against us cannot be ascertained, current pending and threatened claims are not expected to have a material adverse effect, individually or in the aggregate, on our financial position, results of operations or cash flows. However, regardless of their merits or their ultimate outcomes, such matters are costly, divert managements attention and may affect our reputation, even if resolved in our favor.
Government Regulation and Environmental, Health and Safety
United States
Steamboat and Winter Park
Federal Regulation
The 1986 Ski Area Permit Act (the 1986 Act) allows the U.S. Forest Service to grant Term Special Use Permits (each, a SUP) for the operation of ski areas and construction of related facilities on National Forest lands. In addition, the 1986 Act requires a Master Development Plan for each ski area that is granted a SUP. Under the SUPs, the U.S. Forest Service has the right to review and approve the location, design and construction of improvements in the permit area and many operational matters. In addition, each distinct area of National Forest lands is required by the National Forest Management Act of 1976 to develop and maintain a Land and Resource Management Plan (a Forest Plan), which establishes standards and guidelines for the U.S. Forest Service to follow and consider in reviewing and approving proposed actions. In November 2011, the Ski Area Recreational Opportunity Enhancement Act amended the 1986 Act to clarify that the U.S. Forest Service is authorized to permit year-round recreational activities on National Forest lands.
A majority of the skiable terrain at Steamboat and substantially all of the skiable terrain at Winter Park is located on U.S. Forest Service land. As a result, each of Steamboat and Winter Park operates under a SUP. Stratton and Snowshoe operate on privately owned land and, therefore, do not require a SUP.
Steamboat operates under a SUP for the use of 3,740 acres that expires on June 30, 2047. Steamboat also operates on 244 acres that it owns, essentially comprising the lower portion of the ski mountain. Winter Park operates under SUPs for the use of approximately 7,630 acres that expires on December 31, 2015. We anticipate requesting and receiving a new SUP for each resort prior to the expiration date identified above. We are not aware of the U.S. Forest Service refusing to issue a new SUP to replace an expiring SUP for a ski resort in operation at the time of expiration.
Each SUP contains a number of requirements, including that we indemnify the U.S. Forest Service from third-party claims arising out of our operations under the SUP and that we comply with applicable federal laws, such as those relating to water quality and endangered or threatened species.
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For use of the SUPs, we pay a fee to the U.S. Forest Service. The fee for Steamboat is calculated as a percentage of sales occurring on U.S. Forest Service land and ranges between 1.5% and 4.0% of such sales. The fee for Winter Park is calculated under a graduated-rate fee system, which is based on the relationship between sales and gross fixed assets. While Winter Park fees have varied from year to year, these fees have averaged approximately 2.0% of sales each year since we have operated the resort. Included in the calculation of both fees are sales from, among other items, lift tickets, ski school lessons, food and beverage sales within the permit area, equipment rentals and sales of retail merchandise within the permit area. Some retail sales that are outside of the permit area are also covered at Winter Park.
The SUPs may be amended by us or by the U.S. Forest Service to change the permit area or permitted uses. The U.S. Forest Service may amend a SUP if the U.S. Forest Service determines that such amendment is in the public interest. While the U.S. Forest Service is required to seek our consent to any amendment, an amendment may be finalized over our objection. Permit amendments must be consistent with the Forest Plan and are subject to the provisions of the National Environmental Policy Act (NEPA), both of which are discussed below.
The U.S. Forest Service can also terminate a SUP if it determines that termination is required in the public interest. However, to our knowledge, no SUP has ever been terminated by the U.S. Forest Service over the opposition of the permitee.
Master Development Plans
All improvements that we propose to make on National Forest lands under any of our SUPs must be included in a Master Development Plan (MDP). MDPs describe the existing and proposed facilities, developments and area of activity within the permit area. We prepare MDPs, which set forth a conceptual overview of all potential projects at each resort. The MDPs are reviewed by the U.S. Forest Service for compliance with the Forest Plan and other applicable law and, if found to be compliant, are accepted by the U.S. Forest Service. Notwithstanding acceptance by the U.S. Forest Service of the conceptual MDPs, individual projects still require separate applications to be submitted evidencing compliance with NEPA and other applicable laws before the U.S. Forest Service will approve such projects. We update or amend our MDPs for Steamboat and Winter Park on an as needed basis or as required under the terms of the SUPs. Our current MDPs at Steamboat and Winter Park have been accepted by U.S. Forest Service for expansion of our total skiable acres at those ski areas, subject to approval of individual applications for each project under NEPA and other applicable laws.
National Forest Plans
Operational and development activities on National Forest lands at Steamboat are subject to the additional regulatory and planning requirements set forth in the 1996 Revision of the Routt National Forest Land and Resource Management Plan, and operational and development activities on National Forest lands at Winter Park are subject to the additional regulatory and planning requirements set forth in the 1997 Revision of the Land and Resource Management Plan for Arapaho/Roosevelt National Forest. When approving our application for development, area expansion and other activities on National Forest lands, the U.S. Forest Service must adhere to the applicable Forest Plan. Any such decision may be subject to judicial review in federal court if a party, with standing, challenges a U.S. Forest Service decision that applies the requirements of a Forest Plan.
National Environmental Policy Act
NEPA requires the U.S. Forest Service to consider the environmental impacts of major proposed actions on National Forest land, such as expansion of a ski area, installation of new lifts or snowmaking facilities, or construction of new trails or buildings. The studies, prepared by the U.S. Forest Service, are subject to public review and comment. An Environmental Impact Statement (EIS) is required for projects with significant impacts to the environment and the process can be lengthy to complete. Projects that require an EIS typically take longer to approve than projects that require an Environmental Assessment (EA), which is prepared for projects with less significant impacts.
In each study, the U.S. Forest Service is required to analyze alternatives to the proposed action, including not taking the proposed action, as well as impacts that may be unavoidable. Following completion of study, the U.S. Forest Service may decide not to approve the proposed action or may decide to approve an alternative. Completion of the NEPA process does not guarantee that a project will be built.
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Projects may also be completed under NEPA absent an EIS or an EA if they are eligible under a Categorical Exclusion (Cat Ex). Cat Ex projects consist of those projects that are not expected to have a significant environmental impact. The U.S. Forest Service has a list of Cat Ex projects and some projects at Steamboat and Winter Park are eligible to be completed under a Cat Ex.
Stratton
Act 250 is a land use and development control law enforced by the Vermont Agency of Natural Resources that requires developers to consider impacts to, among other things, waterways, air, wildlife and earth resources using 10 criteria that are designed to safeguard the environment, community life and aesthetic character of Vermont. The State of Vermont Natural Resources Board, District Environmental Commission has the power to issue or deny a permit to real estate developers for any project that encompasses more than 10 acres, or more than one acre for towns that do not have permanent zoning and subdivision bylaws. The law also applies to any development project with more than 10 housing units or housing lots, and may apply for proposed construction above 2,500 feet of elevation. Stratton has a Master Plan detailing the real estate development considerations within the resort boundary. All projects within Strattons Master Plan have completed or will need to complete the Act 250 process at the project level.
The Vermont Department of Public Service is the state agency charged with oversight of propane facilities in Vermont for the Federal Governments Office of Pipeline Safety, which administers the United States Department of Transportations Pipeline and Hazardous Materials Safety Administrations propane pipeline regulatory program. Stratton owns an extensive propane distribution system consisting of three 30,000 gallon above-ground propane storage tanks and related piping, regulators, vaporizers and other equipment for the purpose of providing propane to homes in the Stratton area and to Strattons facilities. A third party supplies and operates the system.
Stratton also operates a waste water treatment facility. Operation of the waste water treatment facility requires state and local permits, and we are currently subject to a water quality remediation plan to reduce heat and sediment discharges.
Snowshoe
Snowshoe is home to the Cheat Mountain salamander, a threatened endangered species. Prior to conducting certain development activities at Snowshoe, we must submit a site survey to the U.S. Fish and Wildlife Service demonstrating the impact of the development activities on the Cheat Mountain salamander habitat at Snowshoe.
Snowshoe, through its subsidiary, Cheat Mountain Water Company, Inc., a private utility, owns and operates a potable water facility that is approximately 40 years old and requires state and local permits to operate in Pocahontas County in the State of West Virginia. Due to the age of this facility and increasingly more stringent water discharge standards, we are evaluating our options with respect to the facility, including potentially transferring the facility to a private operator, not-for-profit or municipality in the next few years.
USTs
The federal Solid Waste Disposal Act provides authority to the U.S. Environmental Protection Agency (EPA) to regulate underground storage tanks (USTs). USTs are present at Steamboat, Winter Park and Stratton and assist in storing fuel for base and mountain operations. In some states, the state UST program, if approved by the EPA, will govern over the federal regulations.
Canada
Tremblant
Our operations at Tremblant are also subject to a variety of federal, provincial and local laws, including environmental laws and health and safety regulations. Our ski operations are also subject to provincial regulations pertaining to the safety of our lifts and of individuals using our facilities at Tremblant for downhill activities. In addition, our operations at Tremblant are subject to the Province of Quebecs labor code. At Tremblant, there is one UST and it is regulated by the Ministry of Sustainable Development, Environment, Wildlife and Parks.
Our operations at Tremblant are also subject to municipal bylaws and regulations enacted by the Municipality of Mont-Tremblant that regulate, most notably, zoning, development, commercial advertising and the environment. Furthermore, in 1991, Tremblant entered into a master agreement with the Municipality of Mont-Tremblant. The agreement governs Tremblants real estate development and the operation of its village, as well as the use of municipal water for the purposes of snow making.
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CMH
CMH operates on land tenures issued by the Province of British Columbia in extensive areas inside and outside parks and protected areas. Pursuant to British Columbias Land Act, tenures are issued by the Ministry of Forests, Lands and Natural Resource Operations as Licenses of Occupation or Leases outside park and protected areas, on lands designated as vacant Crown land. Pursuant to British Columbias Park Act, tenures are issued, in the form of permits, by the same ministry.
A part of a lengthy application process, detailed management plans and maps are submitted as a foundation for the applications for tenures. The tenure applications are reviewed by the ministry and shared with a range of other government departments and public groups as referrals. They are also advertised in local newspapers for public comment. Applications must also be referred to local First Nations groups for comment. Most of the tenures that CMH holds are 30 years in length and are renewable at mid-term. CMH is required to renew or replace its tenure applications. While CMH has been able to renew its tenures several times in the past, the province retains the right not to renew all or a portion of the tenures for reasons of non-compliance, environmental protection or when the land is needed for what the Province deems to be a higher and better use.
Currently, CMH is the only heli-ski and heli-hiking operator operating within its tenured land, although the province has the legal right to issue additional tenures for the same use. The land management environment in British Columbia is such that the tenured operating areas for CMH can and do overlap with a range of other activities, such as forest management, mining and mineral exploration, and public recreation.
Aerotech
Aerotech is subject to a variety of federal, provincial and local laws and regulations applicable in the field of manufacturing, maintenance and repair of airframe parts and engines.
Water
We rely on a supply of water to operate our ski areas for domestic and snowmaking purposes. Availability of water depends on the existence of adequate water rights as well as physical delivery of the water when and where it is needed.
At our mountain resorts in Colorado, we own or have ownership or leasehold interests in water rights individually or through stock ownership in ditch and reservoir companies, groundwater wells and other sources. The primary source of snowmaking water for Steamboat is the Yampa River, in which we have adjudicated absolute water rights granting us access to water in accordance with those rights. The primary water source for Winter Parks snowmaking operations is the Moffat Collection System canal located, in part, on the ski area, and owned and operated by the Water Department of the City and County of Denver (Denver Water). Through our leasehold interest in water rights obtained by acquisition of shares in the Clinton Ditch and Reservoir Company at its formation in 1992 and our subsequent agreements with other water users in the region, we obtained the right to use water from the Denver Water canal in sufficient amounts to support our snowmaking operations at Winter Park. At both our Colorado resorts, base area water is obtained through municipal suppliers and on-mountain water needs are satisfied primarily from on-mountain wells for which adequate water rights are owned or obtained through leasehold arrangements. We believe we have rights to sufficient quantities of water for the operation of our mountain resorts for the foreseeable future.
Delivery of the snowmaking water to each resort typically comes from water diverted directly into the snowmaking system. The streams that deliver the water are subject to minimum stream flows, freezing and other limitations that may prevent or reduce the amount of water physically available to the resort. Other on-mountain water comes from wells from which water is pumped to on-site storage facilities where it is treated and then supplied to the various facilities where it will be used.
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Executive Directors and Officers
The following table sets forth the name, age and position of individuals who will serve as our directors and executive officers.
Name | Age | Position | ||||
William Jensen | 60 | Chief Executive Officer and Director | ||||
Joshua Goldstein | 46 | Chief General Counsel, Senior Vice President and Corporate Secretary | ||||
Travis Mayer | 31 | Senior Vice President, Finance and Business Development |
The following is a brief description of the background of our directors and executive officers listed above:
William Jensen
William (Bill) Jensen has been our Chief Executive Officer since June 2008 and a member of our board of directors since September 2013. From 2010 through 2012, Mr. Jensen also served as Chief Executive Officer and a member of the board of directors of Whistler Holdings, a publicly traded company on the Toronto Stock Exchange. Prior to his appointment at Intrawest, Mr. Jensen served as President of the Mountain Division at Vail Resorts, Inc. from February 2006 to February 2008, and prior to that held other leadership positions at Vail Resorts, Inc., including Chief Operating Officer at Vail Mountain and Chief Operating Officer at Breckenridge Ski Resort. Prior to joining Vail Resorts, Inc., Mr. Jensen acted as the President of Fiberboard Resort Group, where he oversaw the executive management of three ski resorts in California, Northstar at Tahoe, Sierra at Tahoe and Bear Mountain. Mr. Jensen currently serves on the board of MMSA Investors, L.L.C., which owns a majority interest in Mammoth.
Mr. Jensen was selected to serve on our board of directors because he is our Chief Executive Officer and has significant knowledge of, and relationships within, the leisure industry due to his experience as an executive of Fiberboard Resort Group, Vail Resorts, Inc. and Whistler Holdings. Mr. Jensen also brings to our board of directors his experience as a director of MMSA Investors, L.L.C and Whistler Holdings.
Joshua Goldstein
Joshua Goldstein has been our Senior Vice President, Chief General Counsel and Corporate Secretary since September 2012. From 2007 to 2012, Mr. Goldstein was a Counsel in the New York office of Skadden, Arps, Slate, Meagher & Flom LLP where he concentrated on corporate finance, corporate securities and mergers and acquisitions. From 2005 to 2007, Mr. Goldstein was a corporate partner in the New York office of Torys LLP. From 1996 to 2005, Mr. Goldstein was a corporate associate at Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Goldstein is also a Certified Public Accountant.
Travis Mayer
Travis Mayer joined Intrawest in 2007 and has served as Senior Vice President, Finance and Business Development since July 2013. Prior to July 2013, Mr. Mayer held various positions at Intrawest, including Director Financial Planning and Analysis, and Vice President, Finance and Business Development. In his current role at Intrawest, Mr. Mayer is a member of the Executive Committee and oversees financial planning and analysis, mergers and acquisitions, procurement and investor relations. Prior to joining Intrawest, Mr. Mayer was a member of the U.S. Ski Team for eight years and represented the United States at two Olympic Games, earning a silver medal in the 2002 Olympics in Salt Lake City, Utah. Mr. Mayer holds an MBA from Harvard Business School and a B.S. from Cornell University, summa cum laude.
Board of Directors
In connection with this offering, we will adopt a restated certificate of incorporation and bylaws. Our restated certificate of incorporation will provide that our board shall consist of not less than three and not more than eleven directors as the board of directors may from time to time determine. Our board of directors will be divided into three classes that are, as nearly as possible, of equal size. Each class of directors will be elected for a three-year term of
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office, but the terms are staggered so that the term of only one class of directors expires at each annual general meeting. The initial terms of the Class I, Class II and Class III directors will expire in 2014, 2015 and 2016, respectively. and will each serve as a Class I director, and will each serve as a Class II director and and will each serve as a Class III director. All officers serve at the discretion of the board of directors.
Under the stockholders agreement (the Stockholders Agreement) we expect to enter into with our Initial Stockholders, we will be required to take all reasonable actions within our control (including nominating as directors the individuals designated by our Initial Stockholders), subject to applicable regulatory and listing requirements (including the director independence requirements of the NYSE), so that up to a majority and, in some circumstances, a majority plus two, depending upon the size of the board (depending upon the level of ownership of the Initial Stockholders and certain other affiliates of Fortress and permitted transferees) of the members of our board of directors are individuals designated by our Initial Stockholders. Upon completion of this offering, and in accordance with our Stockholders Agreement, our board of directors will consist of directors, of whom will be independent, as defined under the rules of the NYSE. Our board of directors has determined that and will be our independent directors.
Our restated certificate of incorporation will not provide for cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of common stock can elect all of the directors standing for election, and the holders of the remaining shares will not be able to elect any directors, subject to our obligations under the Stockholders Agreement discussed in the previous paragraph.
Committees of the Board of Directors
Upon completion of this offering, we will establish the following committees of our board of directors.
Audit Committee
The audit committee:
• | reviews the audit plans and findings of our independent registered public accounting firm and our internal audit and risk review staff, as well as the results of regulatory examinations, and tracks managements corrective action plans where necessary; |
• | reviews our financial statements, including any significant financial items and changes in accounting policies, with our senior management and independent registered public accounting firm; |
• | reviews our financial risk and control procedures, compliance programs and significant tax, legal and regulatory matters; and |
• | has the sole discretion to appoint annually our independent registered public accounting firm, evaluate its independence and performance and set clear hiring policies for employees or former employees of the independent registered public accounting firm. |
The members of the audit committee are (Chair), and . Upon effectiveness of the registration statement, each member of the committee will be independent, as defined under the rules of the NYSE and Rule 10A-3 under the Exchange Act. Our board of directors has determined that each director appointed to the audit committee is financially literate, and the board has determined that is our audit committee financial expert.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee:
• | reviews the performance of our board of directors and makes recommendations to the board regarding the selection of candidates, qualification and competency requirements for service on the board and the suitability of proposed nominees as directors; |
• | advises the board with respect to the corporate governance principles applicable to us; |
• | oversees the evaluation of the board and management; |
• | reviews and approves in advance any related party transaction, other than those that are pre-approved pursuant to pre-approval guidelines or rules established by the committee; and |
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• | recommends guidelines or rules to cover specific categories of transactions. |
The members of the nominating and corporate governance committee are (Chair), and . Each member of our nominating and corporate governance committee is independent, as defined under the rules of the NYSE.
Compensation Committee
The compensation committee:
• | reviews and recommends to the board the salaries, benefits and equity incentive grants of consultants, officers, directors and other individuals we compensate; |
• | reviews and approves corporate goals and objectives relevant to Chief Executive Officer compensation, evaluates the Chief Executive Officers performance in light of those goals and objectives, and determines the Chief Executive Officers compensation based on that evaluation; and |
• | oversees our compensation and employee benefit plans. |
The members of the compensation committee are (Chair), and . Each member of our compensation committee is independent, as defined under the rules of the NYSE. The independent directors that are appointed to the compensation committee are also non-employee directors as defined in Rule 16b-3(b)(3) under the Exchange Act and outside directors within the meaning of Section 162(m)(4)(c)(i) of the Code.
Code of Ethics
We will adopt a Code of Business Conduct and Ethics, which will be posted on About Us—Investor Information—Corporate Governance of our website at www.intrawest.com, that applies to all employees and each of our directors and officers, including our principal executive officer and principal financial officer. The purpose of the Code of Business Conduct and Ethics will be to promote, among other things, honest and ethical conduct, full, fair, accurate, timely and understandable disclosure in public communications and reports and documents that we file with, or submit to, the SEC, compliance with applicable governmental laws, rules and regulations, accountability for adherence to the code and the reporting of violations thereof.
We will also adopt a Code of Ethics for Principal Executive and Senior Financial Officers that is applicable to our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer and Controller. The Code of Ethics for Principal Executive and Senior Financial Officers will be posted on About Us—Investor Information—Corporate Governance of our website at www.intrawest.com. We intend to post any amendments to the Code of Ethics for Principal Executive and Senior Financial Officers and any waivers that are required to be disclosed on our website.
Executive Compensation
Our named executive officers for the fiscal year ended June 30, 2013, which consist of our Chief Executive Officer and our two other most highly compensated executive officers who were serving as executive officers as of June 30, 2013, are as follows:
• | William Jensen, Chief Executive Officer; |
• | Dallas Lucas, former Chief Financial Officer; and |
• | Joshua Goldstein, Chief General Counsel. |
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Fiscal 2013 Summary Compensation Table
The following table summarizes the total compensation paid to or earned by each of our named executive officers in fiscal 2013.
Name and Principal Position | Year | Salary | Non-Equity | All
Other | Total ($) | |||||||||||||
William Jensen | ||||||||||||||||||
Chief Executive Officer | 2013 | 700,003 | 700,000 | 6,564 | 1,406,567 | |||||||||||||
Joshua Goldstein(3) | ||||||||||||||||||
Chief General Counsel | 2013 | 251,250 | 163,749 | 42,244 | 457,243 | |||||||||||||
Dallas Lucas(4) | ||||||||||||||||||
Former Chief Financial Officer | 2013 | 362,788 | 402,500 | 29,599 | 794,887 |
(1) | Represents performance based bonuses paid in respect of fiscal 2013 performance, as described in greater detail below under Fiscal 2013 Bonus Arrangements. |
(2) | Represents (i) for Mr. Jensen, company matching contributions under our 401(k) Plan, as described in greater detail below under —Retirement Benefits, and a tax equalization payment and (ii) for Messrs. Lucas and Goldstein, relocation and temporary housing expenses paid in fiscal 2013. |
(3) | Mr. Goldstein commenced employment with us on September 17, 2012. |
(4) | Mr. Lucas commenced employment with us on July 30, 2012. Mr. Lucas employment with us terminated effective as of October 11, 2013, as described in greater detail below under Separation Arrangement with Mr. Lucas. |
Fiscal 2013 Bonus Arrangements
Each of our named executive officers participated in our Fiscal Year 2013 Incentive Plan in fiscal 2013, pursuant to which each officer was eligible to receive a cash incentive bonus upon the achievement of certain performance goals and subject to the officer's continued employment through the applicable payment date. For Messrs. Jensen and Lucas, the Fiscal Year 2013 Incentive Plan provides that a total of 80% of the bonus for each officer was based on our achievement of an Adjusted EBITDA goal, and the remaining 20% was based on pre-determined quantifiable individual goals and objectives. For Mr. Goldstein, the Fiscal Year 2013 Incentive plan provides that a total of 50% was based on our achievement of an Adjusted EBITDA goal and 50% based on pre-determined quantifiable individual goals and objectives.
Messrs. Jensen and Lucas were eligible to receive a target cash bonus payment under the Fiscal Year 2013 Incentive Plan equal to 100% of their respective annual base salaries upon the achievement of the applicable objectives, and Mr. Goldstein was eligible to earn a bonus equal to 50% of his annual base salary upon the achievement of the applicable objectives. We achieved all of the applicable corporate performance metrics at the target level and Messrs. Jensen, Lucas and Goldstein each achieved all of their respective individual goals and objectives in respect of fiscal 2013. As a result, we made payment of the bonuses to each of Messrs. Jensen, Lucas and Goldstein in October 2013 in the respective amounts listed in the Fiscal 2013 Summary Compensation Table, above, under the heading Non-Equity Incentive Plan Compensation.
Employment Arrangements
In connection with this offering, we expect to enter into new employment agreements with Messrs. Jensen and Goldstein, which will replace each of their arrangements in effect for fiscal 2013. The terms of those arrangements have not yet been determined. This prospectus will be updated to include a summary of those arrangements once their terms are finalized.
Retirement Benefits
Each of our named executive officers who is employed by us is eligible to participate, along with substantially all of our U.S. employees, in the Intrawest 401(k) Retirement Plan.
The Intrawest 401(k) Retirement Plan provides for matching contributions to eligible employees who have completed one year of service that, prior to January 1, 2013, were equal to 50% of the first 1% of the participants compensation, and following January 1, 2013, were equal to 50% of the first 1.5% of the participants compensation.
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The matching contributions made to Mr. Jensen are included in the All Other Compensation column of the Fiscal 2013 Summary Compensation Table above. Messrs. Lucas and Goldstein had not met the one-year service requirement for a matching contribution as of June 30, 2013 and therefore did not receive a matching contribution in fiscal 2013.
Outstanding Equity Awards at Fiscal Year End
None of our named executive officers held any outstanding equity awards as of June 30, 2013.
Potential Payments Upon Termination or Change in Control
As described above in —Employment Arrangements, we expect to enter into new employment arrangements with Messrs. Jensen and Goldstein, the terms of which have not yet been determined. We expect that any payments or benefits that would be provided to them upon a termination of employment or change in control would be included in those arrangements. This prospectus will be updated to include a summary of any applicable payments and benefits in those arrangements once their terms are finalized.
Separation Arrangement with Mr. Lucas
Mr. Lucass employment with us terminated effective as of October 11, 2013. In accordance with the terms of his employment agreement, Mr. Lucas became entitled to receive the following payments and benefits as a result of his termination of employment: (i) a payment equal to $61,924, in respect of eight weeks of his base salary; (ii) continued employer contributions for health and dental coverage through January 31, 2014; and (iii) a pro-rated bonus for the portion of fiscal 2014 that he was employed by us, the amount of which will be determined based on our achievement of applicable performance goals for fiscal 2014. Mr. Lucas also received the full amount of his earned but unpaid fiscal 2013 annual bonus, as listed in the Fiscal 2013 Summary Compensation Table, above, under the heading Non-Equity Incentive Plan Compensation. Mr. Lucas executed a general release of claims in respect of receiving these payments and benefits and remains subject to certain non-competition and non-solicitation restrictions through the first anniversary of his date of termination.
Director Compensation
Intrawest Resorts Holdings, Inc. did not have any directors during fiscal 2013. As a result, no information relating to our fiscal 2013 director compensation has been included in this prospectus.
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Principal and Selling StockholderS
The following table sets forth information regarding the ownership of our common stock. Other than the Initial Stockholders and their direct and indirect equity holders, we are not aware of any person, or group of affiliated persons, who beneficially owns more than five percent of our outstanding common stock. None of our officers and directors beneficially own any shares of our common stock. The percentage of beneficial ownership of our common stock before this offering is based on shares of common stock issued and outstanding as of , 2013 (as adjusted to reflect the -for-1 stock split). The percentage of beneficial ownership of our common stock after this offering is based on shares of common stock issued and outstanding (as adjusted to reflect the -for-1 stock split). The table assumes that the underwriters will not exercise their option to purchase additional shares.
Name |
Shares |
Shares |
Shares | ||
Number |
Percent |
Number |
Percent | ||
Intrawest Europe Holdings S.à r.l.(1) | 100% |
(1) | Prior to this offering, Intrawest Europe Holdings S.à r.l. beneficially owns shares of our common stock. Intrawest Europe Holdings S.à r.l. directly owns shares of our common stock and Intrawest S.à r.l. directly owns shares of our common stock. Intrawest Europe Holdings S.à r.l. owns 100% of Intrawest S.à r.l. Intrawest Europe Holdings S.à r.l. is selling of the shares of our common stock that it directly owns in this offering. Intrawest Europe Holdings S.à r.l. and Intrawest S.à r.l are the “Initial Stockholders”. Intrawest Cayman L.P. owns 100% of Intrawest Holdings S.à r.l., which owns 100% of Intrawest Europe Holdings S.à r.l. Fortress Investment Fund IV (Fund A) L.P., Fortress Investment Fund IV (Fund B) L.P., Fortress Investment Fund IV (Fund C) L.P., Fortress Investment Fund IV (Fund D), L.P., Fortress Investment Fund IV (Fund E) L.P., Fortress Investment Fund IV (Fund F) L.P., Fortress Investment Fund IV (Fund G) L.P., Fortress Investment Fund IV (Coinvestment Fund A) L.P., Fortress Investment Fund IV (Coinvestment Fund B) L.P., Fortress Investment Fund IV (Coinvestment Fund C) L.P., Fortress Investment Fund IV (Coinvestment Fund D), L.P., Fortress Investment Fund IV (Coinvestment Fund F) L.P., Fortress Investment Fund IV (Coinvestment Fund G) L.P., Fortress IW Coinvestment Fund IV (Fund A) L.P., Fortress IW Coinvestment Fund IV (Fund B) L.P., Fortress IW Coinvestment Fund IV (Fund C) L.P., Fortress IW Coinvestment Fund IV (Fund D), L.P., and Fortress IW Coinvestment Fund IV (Fund G) L.P. (collectively, the Funds) collectively own 82.1% of the common units and 88.7% of the Class A Preferred Units of Intrawest Cayman L.P. FIG LLC is the investment manager of each of the Funds. Fortress Operating Entity I LP (FOE I) is the 100% owner of FIG LLC. FIG Corp. is the general partner of FOE I. FIG Corp. is a wholly owned subsidiary of Fortress Investment Group LLC. As of September 30, 2013, Mr. Wesley R. Edens owns 14.33% of Fortress Investment Group LLC (Class A and B shares), and Mr. Randal A. Nardone owns 10.44% of Fortress Investment Group LLC (Class A and B shares). By virtue of their ownership interest in Fortress Investment Group LLC and certain of its affiliates, Mr. Edens and Mr. Nardone may be deemed to own the shares listed as beneficially owned by the Initial Stockholders. Mr. Edens and Mr. Nardone each disclaim beneficial ownership of such shares except to the extent of his pecuniary interest therein. The address of Fortress Investment Group LLC is 1345 Avenue of the Americas, New York, NY 10105. Entities controlled by an affiliate of Grove International Partners LLP (“Grove”) collectively own 17.9% of the common units and 11.3% of the Class A Preferred Units of Intrawest Cayman L.P. |
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Certain Relationships and Related Party Transactions
Under SEC rules, a related person is an officer, director, nominee for director or beneficial holder of more than 5% of any class of our voting securities since the beginning of the last fiscal year or an immediate family member of any of the foregoing. We expect our officers and directors to review, approve and ratify transactions with related parties pursuant to the procedures outlined in a policy on related party transactions, which we will adopt prior to the completion of this offering. When considering potential transactions involving a related party that may require board approval, our officers will notify our board of directors in writing of the proposed transaction, provide a brief background of the transaction and schedule a meeting with the full board of directors to review the matter. At such meetings, our Chief Executive Officer, Chief Financial Officer and other members of management, as appropriate, will provide information to the board of directors regarding the proposed transaction, after which the board of directors and management will discuss the transaction and the implications of engaging a related party as opposed to an unrelated third party. If the board of directors (or specified directors as required by applicable legal requirements) determines that the transaction is in our best interests, it will vote to approve us entering into the transaction with the applicable related party.
Prior to the adoption of the written policy, we did not adopt a formal policy for reviewing existing related party transactions that are required to be disclosed under the SEC rules. Our board will review related party transactions as deemed necessary and advisable by members of our board, on a case by case basis, based on the particular facts and circumstances of each transaction and as required by law.
Stockholders Agreement
General
Prior to the completion of this offering, we will enter into the Stockholders Agreement with the Initial Stockholders.
As discussed further below, the Stockholders Agreement will provide certain rights to Fortress with respect to the designation of directors for nomination and election to our board of directors, as well as registration rights for certain of our securities beneficially owned, directly or indirectly, by the Initial Stockholders and Fortress and their affiliates and permitted transferees.
Our Stockholders Agreement will provide that the parties thereto will use their respective reasonable efforts (including voting or causing to be voted all of our voting shares beneficially owned by each) so that no amendment is made to our restated certificate of incorporation or amended and restated bylaws in effect as of the date of the Stockholders Agreement that would add restrictions to the transferability of our shares by the Initial Stockholders or their permitted transferees which are beyond those provided for in our restated certificate of incorporation, restated bylaws, the Stockholders Agreement or applicable securities laws, or that nullify the rights set out in the Stockholders Agreement of the Initial Stockholders or their permitted transferees unless such amendment is approved by Fortress.
Designation and Election of Directors
Our Stockholders Agreement will provide that, for so long as the Stockholders Agreement is in effect, we, the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress shall take all reasonable actions within our respective control (including voting or causing to be voted all of the securities entitled to vote generally in the election of our directors held of record or beneficially owned by the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress, and, with respect to us, including in the slate of nominees recommended by the board those individuals designated by Fortress) so as to elect to the board, and to cause to continue in office:
• | a number of directors equal to a majority of the board of directors, plus one director, shall be individuals designated by Fortress, for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress, directly or indirectly, beneficially own at least 30% of our voting power. |
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• | a number equal to a majority of the board of directors, minus one director, shall be individuals designated by Fortress, for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress, directly or indirectly, beneficially own less than 30% but at least 20% of our voting power, provided that if the board of directors consists of six or fewer directors, then Fortress shall have the right to designate a number of directors equal to three directors; |
• | a number of directors (rounded up to the nearest whole number) that would be required to maintain Fortress’ proportional representation on the board of directors shall be individuals designated by Fortress for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress, directly or indirectly, beneficially own less than 20% but at least 10% of our voting power, provided that if the board of directors consists of six or fewer directors, then Fortress shall have the right to designate two directors; and |
• | a number of directors (rounded up to the nearest whole number) that would be required to maintain Fortress’ proportional representation on the board of directors shall be individuals designated by Fortress for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress, directly or indirectly, beneficially own less than 10% but at least 5% of our voting power, provided that if the board of directors consists of six or fewer directors, then Fortress shall have the right to designate one director. |
In addition, the Stockholders Agreement will provide Fortress with the right to designate an additional director to our board of directors when Grove is able to select a director for nomination to our board pursuant to the provisions of the Cayman L.P. Limited Partnership Agreement described in the following paragraph.
Pursuant to the Third Amended and Restated Exempted Limited Partnership Agreement of Cayman L.P. (the “Cayman L.P. Limited Partnership Agreement”), the general partner of Cayman L.P. is required to use commercially reasonable efforts to cause the nomination and election to our board of directors of a director nominee designated by Grove until the earlier of (i) the date on which Grove no longer owns any partnership interests in Cayman L.P. or (ii) the date on which certain indebtedness of Cayman L.P. is repaid in full. We expect that Fortress will use its additional board designation right described in the preceding paragraph to nominate the director selected by Grove to our board of directors.
Indemnification
The Stockholders Agreement will provide that we will indemnify the Initial Stockholders and their officers, directors, employees, agents and affiliates against losses arising out of third-party claims (including litigation matters and other claims) based on, arising out of or resulting from:
• | the ownership or the operation of our assets or properties, and the operation or conduct of our business, prior to or following this offering; and |
• | any other activities we engage in. |
In addition, we will agree to indemnify the Initial Stockholders and their officers, directors, employees, agents and affiliates against losses, including liabilities under the Securities Act and the Exchange Act, relating to misstatements in or omissions from the registration statement of which this prospectus forms a part and any other registration statement or report that we file, other than misstatements or omissions made in reliance on information relating to and furnished by the Initial Stockholders for use in the preparation of that registration statement or report.
Registration Rights
Demand Rights. Under our Stockholders Agreement, the Initial Stockholders will have, for so long as the Initial Stockholders directly or indirectly beneficially own, together with Fortress and its affiliates, an amount of our common stock (whether owned at the time of this offering or subsequently acquired) equal to or greater than 1% of our shares of common stock issued and outstanding immediately after the consummation of this offering (a Registrable Amount), demand registration rights that allow the Initial Stockholders, for themselves and for Fortress and their affiliates and permitted transferees, at any time after 180 days following the consummation of this offering, to request that we register under the Securities Act an amount equal to or greater than a Registrable Amount. The Initial Stockholders, for themselves and for Fortress and their affiliates and permitted transferees, will be entitled to unlimited demand registrations so long as such persons, together, beneficially own a Registrable Amount. We will
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also not be required to effect any demand registration within one month of a firm commitment underwritten offering to which the requestor held piggyback rights, described below, and which included at least 50% of the shares of common stock requested by the requestor to be included. We will not be obligated to grant a request for a demand registration within one month of any other demand registration.
Piggyback Rights. For so long as the Initial Stockholders beneficially own, together with Fortress and their affiliates and permitted transferees, an amount of our common stock equal to or greater than 1% of our common stock issued and outstanding immediately after the consummation of this offering, the Initial Stockholders (and Fortress and its affiliates and permitted transferees) will also have piggyback registration rights that allow them to include the common stock that they own in any public offering of equity securities initiated by us (other than those public offerings pursuant to registration statements on Forms S-4 or S-8 or pursuant to an employee benefit plan arrangement) or by any of our other stockholders that have registration rights. These piggyback registration rights will be subject to proportional cutbacks based on the manner of the offering and the identity of the party initiating such offering.
Shelf Registration. Under our Stockholders Agreement, we will grant to the Initial Stockholders or any of their respective permitted transferees, for so long as the Initial Stockholders, together with Fortress and its affiliates and permitted transferees, beneficially own a Registrable Amount, the right to request a shelf registration on Form S-3 providing for offerings of our common stock to be made on a continuous basis until all shares covered by such registration have been sold, subject to our right to suspend the use of the shelf registration prospectuses for a reasonable period of time (not exceeding 60 days in succession or 90 days in the aggregate in any 12 month period) if we determine that certain disclosures required by the shelf registration statement would be detrimental to us or our stockholders. In addition, the Initial Stockholders, for themselves and for Fortress and their affiliates and permitted transferees, may elect to participate in such shelf registrations within ten days after notice of the registration is given. Pursuant to the Cayman L.P. Limited Partnership Agreement, the general partner of Cayman L.P. is required to use commercially reasonable efforts to cause us to use good faith efforts to have a registration statement on Form S-3 declared effective under the Securities Act after we are eligible to use a registration statement on Form S-3. Accordingly, the Initial Stockholders have informed us that they intend to request that we file a shelf registration statement on Form S-3 with the SEC promptly after we are eligible to do so. The Initial Stockholders have also informed us that the timing of any sales of their shares of our common stock has not been determined.
Indemnification; Expenses; Lock-ups. Under our Stockholders Agreement, we will agree to indemnify the applicable selling stockholder and its officers, directors, employees, managers, members, partners, agents and controlling persons against any losses or damages resulting from any untrue statement or omission of material fact in any registration statement or prospectus pursuant to which it sells shares of our common stock, unless such liability arose from the applicable selling stockholders misstatement or omission, and the applicable selling stockholder will agree to indemnify us against all losses caused by its misstatements or omissions. We will pay all registration and offering-related expenses incidental to our performance under the Stockholders Agreement, and the applicable selling stockholder will pay its portion of all underwriting discounts, commissions and transfer taxes, if any, relating to the sale of its shares of common stock under the Stockholders Agreement. We have agreed to enter into, and to cause our officers and directors to enter into, lock-up agreements in connection with any exercise of registration rights by the Initial Stockholders, for themselves and for Fortress and their affiliates and permitted transferees. Pursuant to the Stockholders Agreement, the Initial Stockholders are not obligated to enter into a lock-up agreement in connection with an underwritten offering by the Company.
Tax Services
For a period of up to 12 months following the date of the Stockholders Agreement, we will agree to continue to provide to the Initial Stockholders and their affiliates certain tax, accounting, recordkeeping services in a manner consistent with past practice. The Initial Stockholders will agree to reimburse us for all third-party costs we incur in connection with the provision of these services. The Initial Stockholders may terminate these services (and the obligation to reimburse us for third-party costs) upon not less than 30 days written notice.
Notes Payable to Affiliates
As of September 30, 2013, Cayman L.P. had loans due to affiliates of Fortress, consisting of notes payable to affiliates with a principal balance of approximately $597.5 million and accrued interest of approximately $828.8 million. Pursuant to the applicable loan agreements, Cayman L.P. accrued interest at rates ranging between 15.6% and
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20.0% per annum on the notes payable to affiliates. In connection with the Restructuring, we were released as an obligor with respect to all of the notes payable to affiliates. See Description of Certain IndebtednessNotes Payable to Affiliates.
Abercrombie & Kent Group of Companies, S.A. / Wintergames Travel L.P.
On October 26, 2006, Abercrombie & Kent Group of Companies, S.A. (A&K) was transferred to Wintergames Travel L.P. (Wintergames), which is controlled by Fortress. As of September 30, 2013, we had a receivable due from A&K with a principal balance of $5.5 million and accrued interest of $0.8 million. Interest accrued monthly
at an annually-adjusted rate based on LIBOR plus 1.0%. This debt was repaid in the Restructuring. Additionally, an affiliate of Fortress periodically made contributions to us. In fiscal 2013, we received contributions from an affiliate of Fortress in the amount of approximately $6.7 million. We did not receive any such contributions in the three months ended September 30, 2013 and will not receive any such contributions following the Restructuring.
Whistler Blackcomb Holdings, Inc.
From November 2010 through December 2012, William Jensen, our Chief Executive Officer and Director, was the chief executive officer and a director of Whistler Holdings. During that time, we held a 24% interest in Whistler Holdings. In connection with his agreement to serve as chief executive officer of Whistler Holdings, Mr. Jensen was given a base salary of $250,000 and 20,833 restricted stock units of Whistler Holdings, which were originally subject to vest over a three year period. One third of such restricted stock units vested on January 18, 2012. The value of such restricted stock units at the time of vesting was $74,799 (based on the market price of Whistler Holdings shares and the U.S./Canadian dollar exchange rate on such date). In connection with the sale of our interest in Whistler Holdings in November 2012, the vesting of all of Mr. Jensens remaining restricted stock units was accelerated to December 5, 2012. The value of such restricted stock units at the time of vesting was $175,058 (based on the market price of Whistler Holdings shares and the U.S./Canadian dollar exchange rate on such date).
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Description of Certain Indebtedness
Third-Party Long-Term Debt
New Credit Agreement
On December 9, 2013, one of our subsidiaries, Intrawest Operations Group, LLC, as borrower, entered into a Credit Agreement (the New Credit Agreement) with a syndicate of lenders, Goldman Sachs Bank USA, as issuing bank, and Goldman Sachs Lending Partners LLC, as administrative agent, providing for a $540.0 million senior secured first-lien term loan facility (the New Term Loan), a $25.0 million senior secured first-lien revolving loan facility, which may also be used to obtain letters of credit (the New Revolver), and a $55.0 million senior secured first lien letter of credit facility (the New LC Facility), with the ability by the borrower to increase the size of the New Term Loan from time to time in an aggregate amount of up to $100.0 million plus an additional amount such that, after giving effect to such additional amount, the Total Secured Debt Leverage Ratio (the ratio of net secured debt to Adjusted EBITDA) is less than or equal to 4.50:1.00. The maturity date for the New Term Loan is December 9, 2020, and the maturity date for the New Revolver and the New LC Facility is December 9, 2018.
The New Credit Agreement contains a mechanism to extend the maturity date of any facility or all facilities at the option of the borrower with the consent of the lenders holding the term loans, revolving loan commitments and LC facility commitments the maturities of which are being extended, subject to the satisfaction of certain conditions. Borrowings under the New Term Loan, the New Revolver and the New LC Facility accrue interest at a per annum rate equal to, at the option of the borrower, the Base Rate (as defined in the New Credit Agreement) plus 3.50% or the Adjusted Eurodollar Rate (as defined in the New Credit Agreement) plus 4.50%, with a 0.25% reduction on the interest rate applied to borrowings under the New Revolver if the Total Secured Debt Leverage Ratio for any four-quarter period drops below 4.50:1.00. Letter of credit fees are payable quarterly in arrears in an amount equal to 4.50% (with a 0.25% reduction on letters of credit issued under the New Revolver if the Total Secured Debt Leverage Ratio for any four-quarter period drops below 4.50:1.00) per annum times the average aggregate daily maximum amount available to be drawn under such letters of credit, plus a fronting fee payable to the issuing bank with respect to such letters of credit equal to 0.25% per annum times the average aggregate daily maximum amount available to be drawn under such letters of credit. Commitment fees are payable quarterly in arrears in an amount equal to (i) with respect to the New Revolver, the average of the daily difference between the commitments under the New Revolver and the aggregate principal amount of (A) all outstanding revolving loans (excluding swing line loans) plus (B) the maximum amount available to be drawn under letters of credit issued under the New Revolver plus the aggregate amount of unreimbursed drawings with respect to letters of credit issued under the New Revolver, times 0.375% per annum and (ii) with respect to the New LC Facility, the average of the daily difference between the commitments under the New LC Facility and the aggregate principal amount of the maximum amount available to be drawn under letters of credit issued under the New LC Facility plus the aggregate amount of unreimbursed drawings with respect to letters of credit issued under the New LC Facility, times 0.375% per annum, provided that if such average daily difference is greater than 15% of the commitments under the New LC Facility, then the commitment fee rate applied to such excess will be 4.50% per annum instead of 0.375% per annum. The New Term Loan is required to be repaid in advance of the maturity date in equal quarterly principal installment amounts of $1.35 million. Prepayments of the New Term Loan are required to be made with certain proceeds of asset sales, insurance claims, condemnation proceedings, debt issuances and excess cash flow, subject to certain exceptions, threshold amounts and reinvestment rights.
The borrower’s obligations under the New Term Loan, the New Revolver and the New LC Facility, along with obligations under hedge agreements entered into with the administrative agent, any lender or any of their respective affiliates, are guaranteed on a senior secured, first-lien basis by Intrawest Operations Group Holdings, LLC, as parent guarantor, as well as each existing and after-acquired or formed wholly owned (other than with respect to equity interests issued to current and former directors, officers and employees) domestic subsidiary of the borrower, other than certain exceptions. The borrower and guarantor obligations under the New Term Loan, the New Revolver and the New LC Facility, along with obligations under hedge agreements entered into with the administrative agent, any lender or any of their respective affiliates, are secured by first-priority liens, subject to permitted liens and certain exclusions, thresholds and exceptions, on substantially all assets of the borrower and the guarantors. The New Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default, in each case, subject to certain exceptions, thresholds, materiality qualifiers and, with respect to events of default, grace periods.
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Prior First Lien Credit Agreeement and Second Lien Credit Agreement
On December 4, 2012, Intrawest Canada, Intrawest Europe Holdings S.à r.l. (Intrawest Europe), Intrawest U.S., Wintergames and Steamboat Acquisition LLC (Steamboat Acquisition), as borrowers, entered into a First Lien Credit Agreement (the First Lien Credit Agreement) with a syndicate of lenders and Goldman Sachs Lending Partners LLC, as administrative agent, providing for a $450.0 million senior secured first lien term loan facility (the Fiscal Year 2013 First Lien Term Loan), a $20.0 million senior secured first lien revolving loan facility, which may also be used to obtain letters of credit (the Fiscal Year 2013 First Lien Revolver), and a $55.0 million senior secured first lien letter of credit facility (the Fiscal Year 2013 First Lien LC Facility and together with the Fiscal Year 2013 First Lien Term Loan and the Fiscal Year 2013 First Lien Revolver, the Fiscal Year 2013 First Lien Loans). On December 4, 2012, Intrawest Canada, Intrawest Europe, Intrawest U.S., Wintergames and Steamboat Acquisition, as borrowers, entered into a Second Lien Credit Agreement (the Second Lien Credit Agreement) with a syndicate of lenders and Goldman Sachs Lending Partners LLC, as administrative agent, providing for a $125.0 million senior secured second lien term loan facility (the Fiscal Year 2013 Second Lien Term Loan and together with the Fiscal Year 2013 First Lien Loans, the Fiscal Year 2013 Lien Loans). On December 9, 2013, one of our subsidiaries entered into the New Credit Agreement. SeeNew Credit Agreement. The borrowings under the New Credit Agreement, together with cash on hand and funds contributed to us by an affiliate of Fortress, were used to refinance and replace the borrowings under the First Lien Credit Agreement and the Second Lien Credit Agreement. See Unaudited Pro Forma Condensed Consolidated Financial Information.
Notes Payable to Affiliates
On April 27, 2010, Intrawest Europe, as borrower, entered into a third lien credit agreement with certain affiliates of the borrower and SKI ITW Trust LLC, as administrative agent, providing for a secured third lien term loan facility in an initial principal amount of $210.0 million. Amendments to the third lien credit agreement were entered into on December 4, 2012, April 30, 2013 and December 9, 2013. Intrawest Canada, Intrawest Europe, Intrawest U.S., Wintergames and Steamboat Acquisition, as borrowers, are parties with certain affiliates of the borrowers and Ski ITW Trust LLC, as administrative agent, to an amended and restated credit agreement, dated as of February 28, 2007, as amended from time to time, including most recently on December 4, 2012, providing for a term loan facility in an initial principal amount of $300.0 million. On October 23, 2008, Intrawest Europe and Intrawest U.S., as borrowers, and certain affiliates of the borrowers entered into a credit agreement, dated as of October 23, 2008, as amended from time to time, including most recently on December 4, 2012, providing for a term loan facility in an initial principal amount of $100.0 million. In this prospectus, we refer to the indebtedness outstanding under these credit agreements as notes payable to affiliates. In connection with the Restructuring, we were released as an obligor with respect to all of the notes payable to affiliates, together with all accrued and unpaid interest thereon. See Unaudited Pro Forma Condensed Consolidated Financial Information.
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The following descriptions are summaries of the material terms of our restated certificate of incorporation and amended and restated bylaws. These descriptions contain all information which we consider to be material, but may not contain all of the information that is important to you. To understand them fully, you should read our restated certificate of incorporation and amended and restated bylaws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part.
Please note that, with respect to any of our shares held in book-entry form through The Depository Trust Company or any other share depositary, the depositary or its nominee will be the sole registered and legal owner of those shares, and references in this prospectus to any stockholder or holder of those shares means only the depositary or its nominee. Persons who hold beneficial interests in our shares through a depositary will not be registered or legal owners of those shares and will not be recognized as such for any purpose. For example, only the depositary or its nominee will be entitled to vote the shares held through it, and any dividends or other distributions to be paid, and any notices to be given, in respect of those shares will be paid or given only to the depositary or its nominee. Owners of beneficial interests in those shares will have to look solely to the depositary with respect to any benefits of share ownership, and any rights they may have with respect to those shares will be governed by the rules of the depositary, which are subject to change from time to time. We have no responsibility for those rules or their application to any interests held through the depositary.
Under our restated certificate of incorporation, our authorized capital stock consists of:
• | 2,000,000,000 shares of common stock, par value $0.01 per share; and |
• | 300,000,000 preferred shares, par value $0.01 per share. |
Upon completion of this offering, there will be outstanding shares of common stock after giving effect to the - for-1 stock split (which will be effective upon completion of this offering) and assuming no exercise of the underwriters option to purchase additional shares, and no outstanding shares of preferred stock.
The following is a description of the material terms of our restated certificate of incorporation and amended and restated bylaws. We refer you to our restated certificate of incorporation and amended and restated bylaws, copies of which will be filed with the SEC as exhibits to our registration statement of which this prospectus forms a part.
Common Stock
Each holder of common stock is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess the exclusive right to vote for the election of directors and for all other purposes. Our restated certificate of incorporation does not provide for cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of common stock can elect all of the directors standing for election, and the holders of the remaining shares are not able to elect any directors.
Subject to any preference rights of holders of any preferred stock that we may issue in the future, holders of our common stock are entitled to receive dividends, if any, declared from time to time by our board of directors out of legally available funds. In the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to share ratably in all assets remaining after the payment of liabilities, subject to any rights of holders of our preferred stock prior to distribution.
Holders of our common stock have no preemptive, subscription, redemption or conversion rights. Any shares of common stock sold under this prospectus will be validly issued, fully paid and nonassessable upon issuance against full payment of the purchase price for such shares.
Preferred Stock
Our board of directors has the authority, without action by our stockholders, to issue preferred stock and to fix voting powers for each class or series of preferred stock, and to provide that any class or series may be subject to redemption, entitled to receive dividends, entitled to rights upon dissolution, or convertible or exchangeable for shares of any other class or classes of capital stock. The rights with respect to a series or class of preferred stock may
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be greater than the rights attached to our common stock. It is not possible to state the actual effect of the issuance of any shares of our preferred stock on the rights of holders of our common stock until our board of directors determines the specific rights attached to that preferred stock. The effect of issuing preferred stock could include, among other things, one or more of the following:
• | restricting dividends in respect of our common stock; |
• | diluting the voting power of our common stock or providing that holders of preferred stock have the right to vote on matters as a class; |
• | impairing the liquidation rights of our common stock; or |
• | delaying or preventing a change of control of us. |
Stockholders Agreement
For a description of the Stockholders Agreement that we intend to enter into with the Initial Stockholders, see Certain Relationships and Related Party Transactions—Stockholders Agreement.
Anti-Takeover Effects of Delaware Law, Our Restated Certificate of Incorporation and Our Amended and Restated Bylaws
The following is a summary of certain provisions of Delaware law, our restated certificate of incorporation and our restated bylaws that may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interest, including those attempts that might result in a premium over the market price for the shares held by stockholders.
Authorized but Unissued Shares
The authorized but unissued shares of our common stock and our preferred stock will be available for future issuance without obtaining stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of our common stock and preferred stock could render more difficult or discourage an attempt to obtain control over us by means of a proxy contest, tender offer, merger or otherwise.
Delaware Business Combination Statute
We are organized under Delaware law. Some provisions of Delaware law may delay or prevent a transaction that would cause a change in our control.
Our restated certificate of incorporation provides that Section 203 of the Delaware General Corporation Law, as amended (the DGCL), an anti-takeover law, will not apply to us. However, our restated certificate of incorporation contains similar provisions providing that we may not engage in certain business combinations with any interested stockholder for a three-year period following the time that the stockholder became an interested stockholder, unless:
• | prior to such time, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
• | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or |
• | at or subsequent to that time, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders and not by written consent by the affirmative vote of holders at least 66 2/3 % of the outstanding voting stock that is not owned by the interested stockholder. |
Generally, a business combination includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an interested stockholder is a person who, together with that persons affiliates and associates, owns, or within the previous three years owned, 15% or more of our voting stock.
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Under certain circumstances, the provision will make it more difficult for a person who would be an interested stockholder to effect various business combinations with a corporation for a three-year period. This provision may encourage companies interested in acquiring our company to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.
Our restated certificate of incorporation provides that Fortress and certain of its affiliates, and any group as to which such persons are a party or any transferee of any such person or group of persons, will not constitute interested stockholders for purposes of this provision.
Other Provisions of Our Restated Certificate of Incorporation and Amended and Restated Bylaws
Our restated certificate of incorporation provides for a staggered board of directors consisting of three classes of directors. Directors of each class are chosen for three-year terms upon the expiration of their current terms and each year one class of our directors will be elected by our stockholders. The terms of the first, second and third classes will expire in 2014, 2015 and 2016, respectively. We believe that classification of our board of directors will help to assure the continuity and stability of our business strategies and policies as determined by our board of directors. Additionally, there is no cumulative voting in the election of directors. This classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult. At least two annual meetings of stockholders, instead of one, will generally be required to effect a change in a majority of our board of directors. Thus, the classified board provision could increase the likelihood that incumbent directors will retain their positions. The staggered terms of directors may delay, defer or prevent a tender offer or an attempt to change control of us, even though a tender offer or change in control might be believed by our stockholders to be in their best interest. In addition, our restated certificate of incorporation and amended and restated bylaws provide that directors may be removed only for cause and only with the affirmative vote of at least 80% of the voting interest of stockholders entitled to vote; provided, however, that for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 30% of our issued and outstanding common stock, directors may be removed with or without cause with the affirmative vote of a majority of the voting interest of stockholders entitled to vote. Pursuant to our restated certificate of incorporation, shares of our preferred stock may be issued from time to time, and the board of directors is authorized to determine and alter all rights, preferences, privileges, qualifications, limitations and restrictions without limitation. See “—Preferred Stock.”
Ability of our Stockholders to Act
Our restated certificate of incorporation and amended and restated bylaws do not permit our stockholders to call special stockholders meetings; provided, however, that for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 20% of our issued and outstanding common stock, any stockholders that collectively beneficially own at least 20% of our issued and outstanding common stock may call special meetings of our stockholders. Written notice of any special meeting so called shall be given to each stockholder of record entitled to vote at such meeting not less than 10 or more than 60 days before the date of such meeting, unless otherwise required by law.
Under our restated certificate of incorporation and amended and restated bylaws, any action required or permitted to be taken at a meeting of our stockholders may be taken without a meeting by written consent of a majority of our stockholders for so long as the Initial Stockholders, certain of their permitted transferees and affiliates of Fortress beneficially own, directly or indirectly, at least 20% of our issued and outstanding common stock. After Fortress and certain of its affiliates and permitted transferees beneficially own, directly or indirectly, less than 20% of our issued and outstanding stock (including Fortress’ proportionate interest in shares of our common stock held by the Initial Stockholders), only action by unanimous written consent of our stockholders can be taken without a meeting.
Our amended and restated bylaws provide that nominations of persons for election to our board of directors may be made at any annual meeting of our stockholders, or at any special meeting of our stockholders called for the purpose of electing directors, (a) by or at the direction of our board of directors or (b) by any of our stockholders. In addition to any other applicable requirements, for a nomination to be properly brought by a stockholder, such
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stockholder must have given timely notice thereof in proper written form to the Secretary of the Company. To be timely, a stockholders notice must be delivered to or mailed and received at our principal executive offices (a) in the case of an annual meeting of stockholders, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by a stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting of our stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs.
Our amended and restated bylaws provide that no business may be transacted at any annual meeting of our stockholders, other than business that is either (a) specified in the notice of meeting given by or at the direction of our board of directors, (b) otherwise properly brought before the annual meeting by or at the direction of our board of directors or (c) otherwise properly brought by any of our stockholders. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to our Secretary. To be timely, a stockholders notice must be delivered to or mailed and received at our principal executive offices not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by a stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.
Forum Selection Clause
Unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or (iv) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. In the event that the Court of Chancery lacks jurisdiction over any such action or proceeding, our restated certificate of incorporation provides that the sole and exclusive forum for such action or proceeding will be another state or federal court located within the State of Delaware. Our restated certificate of incorporation further provides that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and consented to the forum selection clause.
Limitations on Liability and Indemnification of Directors and Officers
Our restated certificate of incorporation provides that our directors will not be personally liable to us or our stockholders for monetary damages for breach of a fiduciary duty as a director, except for the following (to the extent such exemption is not permitted under the DGCL, as amended from time to time):
• | any breach of the directors duty of loyalty to us or our stockholders; |
• | intentional misconduct or a knowing violation of law; |
• | liability under Delaware corporate law for an unlawful payment of dividends or an unlawful stock purchase or redemption of stock; or |
• | any transaction from which the director derives an improper personal benefit. |
Our restated certificate of incorporation and amended and restated bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by law. We are also expressly authorized to advance certain expenses (including attorneys fees and disbursements and court costs) to our directors and officers and carry directors and officers insurance providing indemnification for our directors and officers for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.
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Prior to the completion of this offering, we intend to enter into separate indemnification agreements with each of our directors and executive officers. Each indemnification agreement will provide, among other things, for indemnification to the fullest extent permitted by law and our restated certificate of incorporation against (i) any and all expenses and liabilities, including judgments, fines, penalties and amounts paid in settlement of any claim with our approval and counsel fees and disbursements, (ii) any liability pursuant to a loan guarantee, or otherwise, for any of our indebtedness and (iii) any liabilities incurred as a result of acting on our behalf (as a fiduciary or otherwise) in connection with an employee benefit plan. The indemnification agreements will provide for the advancement or payment of all expenses to the indemnitee and for reimbursement to us if it is found that such indemnitee is not entitled to such indemnification under applicable law and our restated certificate of incorporation. These provisions and agreements may have the practical effect in some cases of eliminating our stockholders ability to collect monetary damages from our directors and executive officers.
Corporate Opportunity
Under our restated certificate of incorporation, to the extent permitted by law:
• | Fortress and its affiliates, including the Initial Stockholders, have the right to, and have no duty to abstain from exercising such right to, engage or invest in the same or similar business as us, do business with any of our customers or vendors or employ or otherwise engage any of our officers, directors or employees; |
• | if Fortress or its affiliates, including the Initial Stockholders, or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty to offer such corporate opportunity to us, our stockholders or affiliates; |
• | we have renounced any interest or expectancy in, or in being offered an opportunity to participate in, such corporate opportunities; |
• | in the event that any of our directors and officers who is also a director, officer or employee of any of Fortress or its affiliates, including the Initial Stockholders, acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such persons capacity as our director or officer and such person acted in good faith, then such person is deemed to have fully satisfied such persons fiduciary duty and is not liable to us if any of Fortress or its affiliates, including the Initial Stockholders, pursues or acquires such corporate opportunity or if such person did not present the corporate opportunity to us; and |
• | any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provisions. |
Transfer Agent
The registrar and transfer agent for our common stock is American Stock Transfer & Trust Company, LLC.
Listing
We intend to apply to list our shares of common stock on the NYSE under the symbol SNOW.
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Shares Eligible for Future Sale
Prior to this offering, there has been no public market for our common stock, and we cannot predict the effect, if any, that sales of shares or availability of any shares for sale will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of common stock (including shares issued on the exercise of options, warrants or convertible securities, if any) or the perception that such sales could occur, could adversely affect the market price of our common stock and our ability to raise additional capital through a future sale of securities.
Upon completion of this offering, we will have shares of common stock issued and outstanding (or shares if the underwriters exercise their option to purchase additional shares in full). All of the shares of our common stock sold in this offering will be freely tradable without restriction or further registration under the Securities Act unless such shares are purchased by affiliates as that term is defined in Rule 144 under the Securities Act. Upon completion of this offering, approximately % of our outstanding common stock will be beneficially owned by the Initial Stockholders. These shares will be restricted securities as that phrase is defined in Rule 144. Subject to certain contractual restrictions, including the lock-up agreements described below, holders of restricted shares will be entitled to sell those shares in the public market if they qualify for an exemption from registration under Rule 144 or any other applicable exemption under the Securities Act. Subject to the lock-up agreements described below and the provisions of Rules 144 and 701, additional shares will be available for sale as set forth below.
Lock-Up Agreements
We, all of our directors and executive officers and the Initial Stockholders have agreed that, subject to certain exceptions, for 180 days after the date of this prospectus, without the prior written consent of Goldman, Sachs & Co., we and they will not directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of our common stock (including, without limitation, shares of our common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for our common stock, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock or (3) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of our common stock or securities convertible, exercisable or exchangeable into our common stock or any of our other securities.
Goldman, Sachs & Co., in its sole discretion, may release our common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice. When determining whether or not to release our common stock and other securities from the lock-up agreements, Goldman, Sachs & Co. will consider, among other factors, the holders reasons for requesting the release, the number of shares of our common stock and other securities for which the release is being requested and market conditions at the time.
Rule 144
In general, under Rule 144 under the Securities Act, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.
A person (or persons whose shares are aggregated) who is deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of one percent of the then outstanding shares of our common stock or the average weekly trading volume of our common stock reported through the NYSE during the four calendar weeks preceding such sale. Such sales are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.
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Rule 701
In general, under Rule 701 of the Securities Act, most of our employees, consultants or advisors who purchased shares from us in connection with a qualified compensatory stock plan or other written agreement are eligible to resell those shares 90 days after the date of this prospectus in reliance on Rule 144, but without compliance with the holding period or certain other restrictions contained in Rule 144.
Registration Rights
Pursuant to the Stockholders Agreement, the Initial Stockholders and certain of their affiliates and permitted third party transferees will have the right, in certain circumstances, to require us to register their shares of our common stock under the Securities Act for sale into the public markets at any time following the expiration of the 180-day lock-up period described above. The Initial Stockholders and certain of their affiliates and permitted third party transferees will also be entitled to piggyback registration rights with respect to future registration statements that we file for an underwritten public offering of our securities. Upon the effectiveness of such a registration statement, all shares covered by the registration statement will be freely transferable. If these rights are exercised and the Initial Stockholders sell a large number of shares of common stock, the market price of our common stock could decline. The Initial Stockholders have informed us that they intend to request that we file a shelf registration statement on Form S-3 with the SEC promptly after we become eligible to do so. See Certain Relationships and Related Party Transactions—Stockholders Agreement for a more detailed description of these registration rights.
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United States Federal Tax Consequences to Non-U.S. Holders
The following is a summary of the U.S. federal income tax considerations generally applicable to non-U.S. holders (as defined below) of the purchase, ownership and disposition of our common stock. The following summary is based on current provisions of the Code, Treasury regulations and judicial and administrative authority, all of which are subject to change or differing interpretation, possibly with retroactive effect. State, local, estate and foreign tax consequences are not summarized, nor are tax consequences to special classes of investors including, but not limited to, certain former citizens and former long-term residents of the United States, a controlled foreign corporation, a passive foreign investment company, a corporation that accumulates earnings to avoid U.S. federal income tax, a partnership or other pass through entity or an investor in any such entity, a tax-exempt organization, a bank or other financial institution, a broker, dealer or trader in securities, commodities or currencies, a person holding our common stock as part of a hedging, conversion, straddle, constructive sale or other risk reduction transaction or an insurance company. Tax consequences may vary depending upon the particular status of an investor. The summary is limited to non-U.S. Holders who purchase our common stock for cash and will hold our common stock as capital assets (generally, property held for investment). Each potential investor should consult its tax advisor as to the U.S. federal, state, local, foreign and any other tax consequences of the purchase, ownership and disposition of our common stock.
For purposes of this summary, a non-U.S. holder means a beneficial owner of our common stock (other than a partnership or other pass-through entity) that is not a citizen or individual resident of the United States, a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized in the United States or under the laws of the United States, any state thereof or the District of Columbia, an estate the income of which is subject to U.S. federal income taxation regardless of its source, or a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect to be treated as a U.S. person.
If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If you are treated as a partner in a partnership holding our common stock, you should consult your tax advisor as to the particular U.S. federal income tax consequences applicable to you.
Distributions
Distributions with respect to our common stock will be treated as dividends to the extent paid from our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated first as a return of capital to the extent of a holders adjusted tax basis in our common stock and thereafter as capital gain from the sale or exchange of such common stock, subject to the tax treatment described below in —Dispositions.
Generally, distributions treated as dividends paid to a non-U.S. holder with respect to our common stock will be subject to a 30% U.S. withholding tax, or such lower rate as may be specified by an applicable income tax treaty. Distributions treated as dividends that are effectively connected with such non-U.S. holders conduct of a trade or business within the United States (and, if required by an applicable tax treaty, are attributable to a U.S. permanent establishment of such non-U.S. holder) are generally subject to U.S. federal income tax on a net income basis and are exempt from the 30% withholding tax (assuming compliance with certain certification requirements). Any such effectively connected distributions received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to an additional branch profits tax at a rate of 30% (or lower applicable treaty rate).
To claim the benefit of an applicable tax treaty or an exemption from withholding because the income is effectively connected with the non-U.S. holders conduct of a trade or business in the United States, a non-U.S. holder generally will be required to provide a properly executed IRS Form W-8BEN (if the holder is claiming the benefits of an income tax treaty) or Form W-8ECI (for income effectively connected with a trade or business in the United States) or other suitable form. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under a relevant tax treaty.
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Dispositions
A non-U.S. holder generally will not be subject to U.S. federal income or withholding tax with respect to gain realized on the sale, exchange or other disposition of our common stock unless (i) the gain is effectively connected with such non-U.S. holders conduct of a trade or business within the United States (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment of such non-U.S. holder), (ii) in the case of a non-U.S. holder that is a non-resident alien individual, such non-U.S. holder is present in the United States for 183 or more days in the taxable year of disposition and certain other requirements are met, or (iii) we are or have been a United States real property holding corporation at any time within the shorter of the five-year period ending on the date of such sale, exchange, or other taxable disposition or the period that such non-U.S. holder held our common stock and (as long as our common stock is regularly traded on an established securities market at any time during the calendar year in which the sale, exchange or other disposition occurs) such non-U.S. holder owns or owned (actually or constructively) more than five percent of our common stock at any time during the shorter of the two periods mentioned above.
If gain or loss is effectively connected with a non-U.S. holders conduct of a trade or business within the United States (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment of such non-U.S. holder) or, if we are or become a United States real property holding corporation and a non-U.S. holder owns or owned five percent or more of our common stock during the shorter of the two periods mentioned above, any gain or loss that is realized on the disposition of our common stock by such a non-U.S. holder will be recognized in an amount equal to the difference between the amount of cash and the fair market value of any other property received for the common stock and the non-U.S. holders basis in the common stock. Such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the common stock has been held for more than one year. In the case of a non-U.S. holder that is a foreign corporation, such gain may also be subject to an additional branch profits tax at a rate of 30% (or a lower applicable treaty rate). If a non-U.S. holder is an individual that is present in the United States for 183 or more days in the taxable year of disposition and certain other requirements are met, the non-U.S. holder generally will be subject to a flat income tax at a rate of 30% (or lower applicable treaty rate) on any capital gain recognized on the disposition of our common stock, which may be offset by certain U.S. source capital losses.
Foreign Account Tax Compliance Act
Legislation enacted in 2010 and existing guidance issued thereunder will require, after June 30, 2014, withholding at a rate of 30% on dividends in respect of, and, after December 31, 2016, gross proceeds from the sale of, our common stock held by or through certain foreign financial institutions (including investment funds), unless such institution enters into an agreement with the Treasury to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution to the extent such interests or accounts are held by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments. An intergovernmental agreement between the United States and an applicable foreign country, or future Treasury regulations or other guidance, may modify these requirements. Accordingly, the entity through which our common stock is held will affect the determination of whether such withholding is required. Similarly, dividends in respect of, and gross proceeds from the sale of, our common stock held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exemptions will be subject to withholding at a rate of 30%, unless such entity either (i) certifies to us that such entity does not have any substantial United States owners or (ii) provides certain information regarding the entitys substantial United States owners, which we will in turn provide to the Internal Revenue Service. We will not pay any additional amounts to stockholders in respect of any amounts withheld. Stockholders are encouraged to consult their tax advisors regarding the possible implications of the legislation on their investment in our common stock.
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Goldman, Sachs & Co., Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in an underwriting agreement among us, the selling stockholder and the underwriters, we and the selling stockholder have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us and the selling stockholder, the number of shares of common stock set forth opposite its name below.
Underwriter |
Number | ||
Goldman, Sachs & Co. | |||
Deutsche Bank Securities Inc. | |||
Merrill Lynch, Pierce, Fenner & Smith Incorporated |
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Total |
The underwriting agreement provides that the underwriters obligation to purchase shares of common stock depends on the satisfaction of the conditions contained in the underwriting agreement including:
• | the obligation to purchase all of the shares of common stock offered hereby (other than those shares of common stock covered by their option to purchase additional shares as described below), if any of the shares are purchased; |
• | that the representations and warranties made by us and the selling stockholder to the underwriters are true; |
• | that there is no material change in our business or the financial markets; and |
• | that we deliver customary closing documents to the underwriters. |
We and the selling stockholder have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.
There is no established trading market for shares of our common stock and a liquid trading market may not develop. It is also possible that the shares will not trade at or above the initial offering price following the offering.
The underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority.
Although the selling stockholder acquired beneficial ownership of our common stock in the ordinary course of business in connection with our formation and the Restructuring and at such time the selling stockholder had no agreements or understandings, directly or indirectly, with any person to distribute the common stock, the selling stockholder may be deemed a statutory underwriter.
Commissions and Discounts
The representatives have advised us and the selling stockholder that the underwriters propose initially to offer the shares to the public at the public offering price set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per share. The underwriters may allow, and the dealers may reallow, a discount not in excess of $ per share to other dealers. After the initial offering, the public offering price, concession or any other term of the offering may be changed. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
The following table shows the underwriting discounts and expenses we and the selling stockholder will pay to the underwriters. The information assumes either no exercise or full exercise by the underwriters of their option to purchase additional shares.
Without Option | With Option | |||||||||||||||
Per Share | Total | Per Share | Total | |||||||||||||
Public offering price | $ | $ | $ | $ | ||||||||||||
Underwriting discount | $ | $ | $ |
| $ | |||||||||||
Proceeds to us before expenses | $ | $ | $ | $ | ||||||||||||
Proceeds to the selling stockholder before expenses | $ | $ | $ | $ |
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The expenses of the offering, not including the underwriting discount, are estimated at $ million and are payable by us. We have agreed to reimburse the underwriters for expenses relating to the clearance of the offering with the Financial Industry Regulatory Authority in an amount of up to $ .
The Option to Purchase Additional Shares
We have granted an option to the underwriters to purchase up to additional shares at the public offering price, less the underwriting discount, and the selling stockholder has granted an option to the underwriters to purchase up to additional shares at the public offering price, less underwriting discount. Any shares sold pursuant to the option to purchase additional shares will be apportioned between us and the selling stockholder pro rata in accordance with the number of shares initially sold by us and the selling stockholder. The underwriters may exercise this option for 30 days from the date of this prospectus. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional shares proportionate to that underwriters initial amount reflected in the above table.
Lock-Up Agreements
We, all of our directors and executive officers and the Initial Stockholders have agreed that, subject to certain exceptions, for 180 days after the date of this prospectus, without the prior written consent of Goldman, Sachs & Co., we and they will not directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of our common stock (including, without limitation, shares of our common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for our common stock, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock or (3) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of our common stock or securities convertible, exercisable or exchangeable into our common stock or any of our other securities.
Goldman, Sachs & Co., in its sole discretion, may release our common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice. When determining whether or not to release our common stock and other securities from the lock-up agreements, Goldman, Sachs & Co. will consider, among other factors, the holders reasons for requesting the release, the number of shares of our common stock and other securities for which the release is being requested and market conditions at the time.
Listing
We intend to apply to list our shares of common stock on the NYSE under the symbol . In order to meet the requirements for listing on that exchange, the underwriters have undertaken to sell a minimum number of shares to a minimum number of beneficial owners as required by that exchange.
Determination of Offering Price
Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us, the selling stockholder and the representatives of the underwriters. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are:
• | the valuation multiples of publicly traded companies that the representatives believe to be comparable to us; |
• | our financial information; |
• | the history of, and the prospects for, our company and the industry in which we compete; |
• | an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues; |
• | the present state of our development; and |
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• | the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours. |
Price Stabilization, Short Positions and Penalty Bids
Until the distribution of the shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price.
In connection with the offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. Covered short sales are sales made in an amount not greater than the underwriters option to purchase additional shares described above. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option to purchase additional shares. Naked short sales are sales in excess of the option to purchase additional shares. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Similar to other purchase transactions, the underwriters purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. The underwriters may conduct these transactions on the NYSE, in the over-the-counter market or otherwise.
Neither we, the selling stockholder nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we, the selling stockholder nor any of the underwriters makes any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
Electronic Distribution
In connection with the offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail.
Other Relationships
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing market making and brokerage activities. Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. In particular, affiliates of each of Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are lenders under our New Credit Facility and also act in administrative capacities thereunder.
The underwriters and their respective affiliates have received, or may in the future receive, customary fees and commissions for the foregoing transactions. In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial
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instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
Notice to Prospective Investors in the European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date), no offer of shares may be made to the public in that Relevant Member State other than:
A. | to any legal entity which is a qualified investor as defined in the Prospectus Directive; |
B. | to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives; or |
C. | in any other circumstances falling within Article 3(2) of the Prospectus Directive, |
provided that no such offer of shares shall require us or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
Each person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed that (A) it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive, and (B) in the case of any shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the shares acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors as defined in the Prospectus Directive, or in circumstances in which the prior consent of the has been given to the offer or resale. In the case of any shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a nondiscretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of has been obtained to each such proposed offer or resale.
The selling stockholder, the representatives and their affiliates and we will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement.
This prospectus has been prepared on the basis that any offer of shares in any Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of shares. Accordingly any person making or intending to make an offer in that Relevant Member State of shares which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for the Initial Stockholders, any of the underwriters or us to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither the Company, the selling stockholder nor the underwriters have authorized, nor do they authorize, the making of any offer of shares in circumstances in which an obligation arises for the Company, the selling stockholder or the underwriters to publish a prospectus for such offer.
For the purpose of the above provisions, the expression an offer to the public in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC (including the
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2010 PD Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU.
Notice to Prospective Investors in the United Kingdom
In the United Kingdom, this prospectus is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are qualified investors (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the Order), and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). This prospectus must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any investment or investment activity to which this prospectus relates is only available to, and will be engaged in with, relevant persons.
Notice to Prospective Investors in Switzerland
Our shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this prospectus nor any other offering or marketing material relating to the offering, us, the selling stockholder or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (CISA). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.
Notice to Prospective Investors in the Dubai International Financial Centre
This prospectus relates to an exempt offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This prospectus is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with exempt offers. The Dubai Financial Services Authority has not approved this prospectus nor taken steps to verify the information set out in it, and has no responsibility for it. The shares which are the subject of the offering contemplated by this prospectus may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this document you should consult an authorized financial adviser.
Notice to Prospective Investors in Hong Kong
The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to professional investors within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder or (iii) in other circumstances which do not result in the document being a prospectus within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
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Notice to Prospective Investors in Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Notice to Prospective Investors in Japan
Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law. The shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law), and each underwriter has agreed that it will not offer or sell any shares, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
Notice to Prospective Investors in Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (ASIC) in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the Corporations Act), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of our shares of common stock may only be made to persons (the Exempt Investors) who are sophisticated investors (within the meaning of section 708(8) of the Corporations Act), professional investors (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.
The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
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Skadden, Arps, Slate, Meagher & Flom LLP is representing us in connection with this offering. The underwriters are being represented by Davis Polk & Wardwell LLP.
The balance sheet of Intrawest Resorts Holdings, Inc. as of September 24, 2013 has been included herein in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and financial statement schedule of Intrawest Cayman L.P. and subsidiaries as of June 30, 2012 and 2013, and for each of the years in the two-year period ended June 30, 2013, have been included herein in reliance upon the report of KPMG LLP (United States), independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
The consolidated statements of operations, comprehensive loss, partners deficit, and cash flows and financial statement schedule of Intrawest Cayman L.P. for the year ended June 30, 2011 have been included herein in reliance upon the report of KPMG LLP (Canada), independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
Market and Industry Data and Forecasts
Certain market and industry data included in this prospectus has been obtained from third party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications, government publications and third party forecasts in conjunction with our assumptions about our markets. We have not independently verified such third party information. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings Forward-Looking Statements and Risk Factors in this prospectus.
Where You Can Find More Information
We have filed a registration statement, of which this prospectus is a part, on Form S-1 with the SEC relating to this offering. This prospectus does not contain all of the information in the registration statement and the exhibits included with the registration statement. References in this prospectus to any of our contracts, agreements or other documents are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contracts, agreements or documents. You may read and copy the registration statement, the related exhibits and other material we file with the SEC at the SECs public reference room in Washington, D.C. at 100 F Street, Room 1580, N.E., Washington, D.C. 20549. You can also request copies of those documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. The SEC also maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file with the SEC. The website address is www.sec.gov.
Upon the effectiveness of the registration statement, we will be subject to the informational requirements of the Exchange Act, and, in accordance, with the Exchange Act, will file reports, proxy and information statements and other information with the SEC. Such annual, quarterly and special reports, proxy and information statements and other information can be inspected and copied at the locations set forth above. We intend to make this information available on the investor relations section of our website, www.intrawest.com. Information on, or accessible through, our website is not part of this prospectus.
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F-1 |
Report of Independent Registered Public Accounting Firm
The Stockholders
Intrawest Resorts Holdings, Inc.:
We have audited the accompanying balance sheet of Intrawest Resorts Holdings, Inc. (the Company) as of September 24, 2013. This financial statement is the responsibility of the Companys management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Intrawest Resorts Holdings, Inc. as of September 24, 2013, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
Denver, Colorado
September 30, 2013
F-2 |
Intrawest Resorts Holdings, Inc.
Balance Sheet
September
24, 2013 | ||||
ASSETS | ||||
Cash and cash equivalents | $ | 100 | ||
Total assets | $ | 100 | ||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||
Total liabilities | $ | — | ||
Stockholders equity: | ||||
Common stock: $0.01 par value, 100 shares authorized; 100 shares issued and outstanding | 1 | |||
Additional paid-in capital | 99 | |||
Total stockholders equity | 100 | |||
Total liabilities and stockholders equity | $ | 100 |
See accompanying notes to balance sheet.
F-3 |
Intrawest Resorts Holdings, Inc.
Notes to Balance Sheet
September 24, 2013
1. Organization
Intrawest Resorts Holdings, Inc. (the Company) was incorporated in Delaware on August 30, 2013. The Company has nominal assets, no liabilities, and has conducted no operations. It is intended that Intrawest Cayman L.P. will cause its indirect subsidiaries to contribute 100% of the equity interests in both Intrawest U.S. Holdings Inc. and Intrawest ULC, to the Company. Through this restructuring, the Company will become an indirect subsidiary of Intrawest Cayman L.P.
2. Summary of Significant Accounting Policies
Basis of Presentation
The balance sheet has been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Separate statements of income, changes in stockholders equity, and cash flows have not been presented in the financial statements because there have been no activities of this entity.
3. Stockholders Equity
The Company is authorized to issue one class of stock designated as “Common Stock”. The total number of shares which the Company is authorized to issue is 100 shares, of which 100 shares shall be Common Stock, each having a par value $0.01 per share. On September 24, 2013, the Company issued 100 shares of Common Stock in exchange for $100. Under the Companys certificate of incorporation in effect as of August 30, 2013, all shares of Common Stock are identical.
F-4 |
Report of Independent Registered Public Accounting Firm
The Partners
Intrawest Cayman L.P.:
We have audited the accompanying consolidated balance sheets of Intrawest Cayman L.P. and subsidiaries (the Partnership) as of June 30, 2012 and 2013, and the related consolidated statements of operations, comprehensive loss, partners deficit, and cash flows for each of the years in the two-year period ended June 30, 2013. These consolidated financial statements and financial statement schedule, Schedule II Valuation and Qualifying Accounts and Reserves, are the responsibility of the Partnerships management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Intrawest Cayman L.P. and subsidiaries as of June 30, 2012 and 2013, and the results of their operations and their cash flows for each of the years in the two-year period ended June 30, 2013, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, Schedule II Valuation and Qualifying Accounts and Reserves, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ KPMG LLP
Denver, Colorado
September 30, 2013
F-5 |
Report of Independent Registered Public Accounting Firm
To the Partners of
Intrawest Cayman L.P.:
We have audited the accompanying consolidated statements of operations, comprehensive loss, partners deficit, and cash flows of Intrawest Cayman L.P. (the Partnership) for the year ended June 30, 2011. In connection with our audit of the consolidated financial statements, we also have audited the financial statement schedule for the year ended June 30, 2011 as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Partnerships management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of its operations and its cash flows for the year ended June 30, 2011, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ KPMG LLP
Vancouver, Canada
September 30,
2013
F-6 |
INTRAWEST CAYMAN L.P.
Consolidated Balance Sheets
June 30, 2012 and 2013
(In thousands)
2012 | 2013 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 46,908 | $ | 59,775 | ||||
Restricted cash | 71,138 | 13,685 | ||||||
Receivables, net of allowances of $10,332 and $8,333 | 38,108 | 38,298 | ||||||
Amounts due from related parties, net of allowances of $24,483 and $0 | 728 | 79 | ||||||
Inventories | 34,256 | 29,151 | ||||||
Prepaid expenses and other assets | 22,365 | 20,759 | ||||||
Total current assets | 213,503 | 161,747 | ||||||
Receivables, net of allowances of $3,753 and $6,264 | 44,246 | 37,779 | ||||||
Amounts due from related parties | 5,996 | 6,262 | ||||||
Property, plant and equipment, net | 510,178 | 475,856 | ||||||
Real estate held for development | 193,806 | 164,916 | ||||||
Deferred charges and other | 10,272 | 28,584 | ||||||
Equity method investments | 196,627 | 86,344 | ||||||
Intangible assets, net | 73,554 | 65,503 | ||||||
Goodwill | 94,611 | 94,609 | ||||||
Total assets | $ | 1,342,793 | $ | 1,121,600 | ||||
Liabilities and Partners Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 59,347 | $ | 62,196 | ||||
Amounts due to related parties | 1,493 | — | ||||||
Deferred revenue and deposits | 43,216 | 52,110 | ||||||
Long-term debt due within one year | 16,681 | 8,201 | ||||||
Total current liabilities | 120,737 | 122,507 | ||||||
Deferred revenue and deposits | 25,807 | 22,115 | ||||||
Long-term debt | 719,400 | 580,662 | ||||||
Notes payable to affiliates | 1,109,005 | 1,358,695 | ||||||
Deferred income taxes | 26,199 | 31 | ||||||
Other long-term liabilities | 65,926 | 56,336 | ||||||
Total liabilities | 2,067,074 | 2,140,346 | ||||||
Commitments and contingencies (note 20) | ||||||||
Partners deficit: | ||||||||
Partnership units, unlimited number authorized | ||||||||
General partner: 0 units outstanding at June 30, 2012 and 2013 | — | — | ||||||
Limited partners: 1,350,253 and 1,352,253 units oustanding at June 30, 2012 and 2013, respectively | (877,879 | ) | (1,166,797 | ) | ||||
Accumulated other comprehensive income | 153,598 | 148,805 | ||||||
Total Intrawest Cayman L.P. deficit | (724,281 | ) | (1,017,992 | ) | ||||
Noncontrolling interest | — | (754 | ) | |||||
Total partners deficit | (724,281 | ) | (1,018,746 | ) | ||||
Total liabilities and partners deficit | $ | 1,342,793 | $ | 1,121,600 |
See accompanying notes to consolidated financial statements.
F-7 |
INTRAWEST CAYMAN L.P.
Consolidated Statements of Operations
Years ended June 30, 2011, 2012 and 2013
(In thousands, except unit and per unit data)
2011 | 2012 | 2013 | ||||||||||
Revenues | $ | 559,523 | $ | 513,447 | $ | 524,407 | ||||||
Operating expenses | 504,005 | 453,187 | 448,944 | |||||||||
Depreciation and amortization | 76,371 | 57,655 | 58,342 | |||||||||
Loss on disposal of assets | 26,196 | 9,443 | 12,448 | |||||||||
Impairment of long-lived assets | 12,140 | 782 | 143 | |||||||||
Impairment of real estate | 73,230 | 8,137 | 1,052 | |||||||||
Goodwill impairment | 64,097 | 3,575 | — | |||||||||
(Loss) income from operations | (196,516 | ) | (19,332 | ) | 3,478 | |||||||
Interest income | 9,162 | 7,467 | 6,630 | |||||||||
Interest expense on third party debt | (143,463 | ) | (135,929 | ) | (98,437 | ) | ||||||
Interest expense on notes payable to affiliates | (160,943 | ) | (195,842 | ) | (236,598 | ) | ||||||
Earnings (loss) from equity method investments | 8,299 | 538 | (5,147 | ) | ||||||||
Gain on disposal of equity method investments | — | — | 18,923 | |||||||||
Loss on extinguishment of debt | — | — | (11,152 | ) | ||||||||
Other (expense) income , net | (2,021 | ) | 1,199 | 1,973 | ||||||||
Loss from continuing operations before income taxes | (485,482 | ) | (341,899 | ) | (320,330 | ) | ||||||
Income tax expense (benefit) | 6,555 | (5,836 | ) | (23,616 | ) | |||||||
Loss from continuing operations | (492,037 | ) | (336,063 | ) | (296,714 | ) | ||||||
Loss from discontinued operations, net of tax | (6,469 | ) | — | — | ||||||||
Net loss | (498,506 | ) | (336,063 | ) | (296,714 | ) | ||||||
(Earnings) loss attributable to noncontrolling interest | (361 | ) | — | 757 | ||||||||
Net loss attributable to Intrawest Cayman L.P. | (498,867 | ) | (336,063 | ) | (295,957 | ) | ||||||
Net loss attributable to general partner | — | — | — | |||||||||
Net loss attributable to limited partners | $ | (498,867 | ) | $ | (336,063 | ) | $ | (295,957 | ) | |||
Weighted average units outstanding, basic and diluted | 1,348,253 | 1,348,412 | 1,350,412 | |||||||||
Loss per unit, basic and diluted: | ||||||||||||
Loss from continuing operations attributable to Intrawest Cayman L.P. | $ | (365.21 | ) | $ | (249.23 | ) | $ | (219.16 | ) | |||
Loss from discontinued operations | (4.80 | ) | 0.00 | 0.00 | ||||||||
Net loss attributable to limited partners | $ | (370.01 | ) | $ | (249.23 | ) | $ | (219.16 | ) |
See accompanying notes to consolidated financial statements.
F-8 |
INTRAWEST CAYMAN L.P.
Consolidated Statements of Comprehensive Loss
Years ended June 30, 2011, 2012 and 2013
(In thousands)
2011 | 2012 | 2013 | ||||||||||
Net loss | $ | (498,506 | ) | $ | (336,063 | ) | $ | (296,714 | ) | |||
Foreign currency translation adjustments | 77,996 | (34,201 | ) | (8,022 | ) | |||||||
Realized portion on cash flow hedge (net of tax of $0) | 14,488 | 5,558 | 3,937 | |||||||||
Actuarial gains and losses on pensions (net of tax of $0) | (1,481 | ) | (4,689 | ) | (705 | ) | ||||||
Comprehensive loss | (407,503 | ) | (369,395 | ) | (301,504 | ) | ||||||
Comprehensive (income) loss attributable to noncontrolling interest | (1,884 | ) | — | 754 | ||||||||
Comprehensive loss attributable to Intrawest Cayman L.P. | $ | (409,387 | ) | $ | (369,395 | ) | $ | (300,750 | ) |
See accompanying notes to consolidated financial statements.
F-9 |
INTRAWEST CAYMAN L.P.
Consolidated Statements of Partners Deficit
Years ended June 30, 2011, 2012 and 2013
(In thousands)
General
Partner | Limited
Partners | Accumulated
other comprehensive income (loss) | Noncontrolling
interest | Total | ||||||||||||||||
Balance, June 30, 2010 | $ | — | $ | (55,439 | ) | $ | 97,450 | $ | 38,301 | $ | 80,312 | |||||||||
Net (loss) income | — | (498,867 | ) | — | 361 | (498,506 | ) | |||||||||||||
Cumulative effect of change in accounting policy | — | 181 | — | — | 181 | |||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | — | — | 76,473 | 1,523 | 77,996 | |||||||||||||||
Realized portion on cash flow hedge (net of tax of $0) | — | — | 14,488 | — | 14,488 | |||||||||||||||
Actuarial gains and losses on pensions (net of tax of $0) | — | — | (1,481 | ) | — | (1,481 | ) | |||||||||||||
Noncontrolling interest | — | — | — | (35,601 | ) | (35,601 | ) | |||||||||||||
Distributions and other to noncontrolling interest | — | — | — | (4,584 | ) | (4,584 | ) | |||||||||||||
Contribution from Partners | — | 6,590 | — | — | 6,590 | |||||||||||||||
Unit-based compensation | — | 1,881 | — | — | 1,881 | |||||||||||||||
Cash settlement of unit-based compensation | — | (199 | ) | — | — | (199 | ) | |||||||||||||
Balance, June 30, 2011 | — | (545,853 | ) | 186,930 | — | (358,923 | ) | |||||||||||||
Net loss | — | (336,063 | ) | — | — | (336,063 | ) | |||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | — | — | (34,201 | ) | — | (34,201 | ) | |||||||||||||
Realized portion on cash flow hedge (net of tax of $0) | — | — | 5,558 | — | 5,558 | |||||||||||||||
Actuarial gains and losses on pensions (net of tax of $0) | — | — | (4,689 | ) | — | (4,689 | ) | |||||||||||||
Contribution from Partners | — | 3,420 | — | — | 3,420 | |||||||||||||||
Unit-based compensation | — | 579 | — | — | 579 | |||||||||||||||
Cash settlement of unit-based compensation | — | 38 | — | — | 38 | |||||||||||||||
Balance, June 30, 2012 | — | (877,879 | ) | 153,598 | — | (724,281 | ) | |||||||||||||
Net loss | — | (295,957 | ) | — | (757 | ) | (296,714 | ) | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | — | — | (8,025 | ) | 3 | (8,022 | ) | |||||||||||||
Realized portion on cash flow hedge (net of tax of $0) | — | — | 3,937 | — | 3,937 | |||||||||||||||
Actuarial gains and losses on pensions (net of tax of $0) | — | — | (705 | ) | — | (705 | ) | |||||||||||||
Contribution from Partners | — | 6,700 | — | — | 6,700 | |||||||||||||||
Unit-based compensation | — | 317 | — | — | 317 | |||||||||||||||
Cash settlement of unit-based compensation | — | 22 | — | — | 22 | |||||||||||||||
Balance, June 30, 2013 | $ | — | $ | (1,166,797 | ) | $ | 148,805 | $ | (754 | ) | $ | (1,018,746 | ) |
See accompanying notes to consolidated financial statements.
F-10 |
INTRAWEST
CAYMAN L.P.
Consolidated Statements of Cash Flows
Years ended June 30, 2011, 2012 and 2013
(In thousands)
2011 | 2012 | 2013 | ||||||||||
Cash (used in) provided by: | ||||||||||||
Operating activities: | ||||||||||||
Net loss | $ | (498,506 | ) | $ | (336,063 | ) | $ | (296,714 | ) | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 76,467 | 57,655 | 58,342 | |||||||||
Goodwill impairment | 64,097 | 3,575 | — | |||||||||
Impairment of real estate held for development | 73,230 | 8,137 | 1,052 | |||||||||
Impairment of long-lived assets held for use | 12,140 | 782 | 143 | |||||||||
(Earnings) loss from equity method investments | (8,299 | ) | (538 | ) | 5,147 | |||||||
Distributions of earnings from equity method investments | 8,233 | 10,537 | 6,293 | |||||||||
Provision for deferred income taxes | (2,178 | ) | (2,802 | ) | (26,169 | ) | ||||||
Provision for doubtful accounts | 6,353 | 3,234 | 2,370 | |||||||||
Loss on extinguishment of debt | — | — | 11,152 | |||||||||
Amortization of deferred financing costs | 7,943 | 5,501 | 4,969 | |||||||||
Realized portion on cash flow hedge | 9,242 | 5,558 | 3,937 | |||||||||
Amortization of facility fee and discount | 22,494 | 40,327 | 20,982 | |||||||||
Unit-based compensation | 1,881 | 579 | 317 | |||||||||
Deferred gain on asset sale | — | (1,478 | ) | 95 | ||||||||
Loss (gain) on disposal of assets | 29,946 | 10,921 | (6,570 | ) | ||||||||
Funding of pension plans | (3,788 | ) | (1,082 | ) | (816 | ) | ||||||
Changes in assets and liabilities: | ||||||||||||
Accrued interest on notes payable to affiliates | 160,943 | 195,842 | 236,506 | |||||||||
Restricted cash | 799 | 3,687 | (4,778 | ) | ||||||||
Receivables | 11,382 | 8,257 | 2,371 | |||||||||
Amounts due from related parties | (1,619 | ) | 1,405 | 383 | ||||||||
Inventories | 3,756 | 4,925 | 5,141 | |||||||||
Prepaid expenses and other assets | (8,721 | ) | (2,694 | ) | (652 | ) | ||||||
Real estate held for development | 24,067 | 27,303 | 3,353 | |||||||||
Accounts payable and accrued liabilities | 26,505 | 4,365 | 8,863 | |||||||||
Amounts due to related parties | 159 | (13 | ) | (1,493 | ) | |||||||
Deferred revenue and deposits | 4,614 | (4,530 | ) | 7,541 | ||||||||
Net cash provided by operating activities | 21,140 | 43,390 | 41,765 | |||||||||
Investing activities: | ||||||||||||
Capital expenditures | (27,567 | ) | (30,061 | ) | (29,679 | ) | ||||||
Distributions of capital from equity method investments | 54 | 4,044 | 23 | |||||||||
Contributions to equity method investments | — | (17 | ) | (839 | ) | |||||||
Proceeds from the disposition of equity method investments | — | — | 117,868 | |||||||||
Proceeds from the sale of assets | 542,010 | 4,748 | 18,034 | |||||||||
Net cash provided by (used in) investing activities | 514,497 | (21,286 | ) | 105,407 | ||||||||
Financing activities: | ||||||||||||
Proceeds from bank and other borrowings | 25,684 | — | 565,132 | |||||||||
Proceeds from restricted cash | — | — | 60,656 | |||||||||
Repayments of bank and other borrowings | (600,388 | ) | (41,518 | ) | (744,245 | ) | ||||||
Financing costs paid | — | — | (21,926 | ) | ||||||||
Contributions by partners | 6,590 | — | 6,700 | |||||||||
Distributions to noncontrolling interest | (4,683 | ) | — | — | ||||||||
Net cash used in financing activities | (572,797 | ) | (41,518 | ) | (133,683 | ) | ||||||
Effect of exchange rate changes on cash | 6,694 | 609 | (622 | ) | ||||||||
(Decrease) increase in cash and cash equivalents | (30,466 | ) | (18,805 | ) | 12,867 | |||||||
Cash and cash equivalents, beginning of year | 96,179 | 65,713 | 46,908 | |||||||||
Cash and cash equivalents, end of year | $ | 65,713 | $ | 46,908 | $ | 59,775 | ||||||
Supplementary information: | ||||||||||||
Interest paid | $ | 70,828 | $ | 50,634 | $ | 53,609 | ||||||
Income tax paid | $ | 1,282 | $ | 5,329 | $ | 1,082 |
See accompanying notes to consolidated financial statements.
F-11 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(1) | Organization and Business Operations |
Intrawest Cayman L.P. (the Partnership) was formed on February 20, 2007 under the laws of the Cayman Islands. The Partnership is organized as a holding company that operates through various subsidiaries, which are primarily engaged in the operation of mountain resorts, adventure and real estate businesses, principally throughout North America. The Partnership has a network of six mountain resorts, geographically diversified across North Americas major ski regions. The resorts include Steamboat and Winter Park in Colorado, Stratton in Vermont, Snowshoe in West Virginia, Tremblant in Quebec, and Blue Mountain (50% interest) in Ontario. The Mountain segment derives revenue mainly from sales of lift tickets, retail and rental merchandise, food and beverage, lodging management, ski school services, and golf. The Adventure segment includes Canadian Mountain Holidays (CMH), which provides heli-skiing, mountaineering and hiking at 11 lodges in British Columbia, Canada. In support of CMHs operations, the Partnership owns 40 Bell helicopters that are also used in the off-season for fire suppression in the United States and Canada and other commercial uses. The Alpine Aerotech subsidiary provides helicopter maintenance, repair and overhaul services to our fleet of helicopters as well as to aircraft owned by unaffiliated third parties. The Real Estate segment is comprised of ongoing real estate development activities and management, marketing and sales businesses. This segment includes Intrawest Resort Club Group (IRCG), a vacation club business, Intrawest Hospitality Management (IHM), which manages condominium hotel properties in Maui, Hawaii and in Mammoth, California, and Playground, a residential real estate sales and marketing business. The Real Estate segment also includes costs associated with ongoing development activities, including planning activities and land carrying costs.
In November 2010, the Partnership disposed of its 77% interest in the assets of Whistler Blackcomb in exchange for cash and 24% of the shares of Whistler Blackcomb Holdings Inc. (Whistler Holdings), a public company and holder of a 75% interest of Whistler Blackcomb Partnership. Results for the year ended June 30, 2011 included revenues, expenses and depreciation of $38.6 million, $51.1 million and $10.7 million, respectively, related to Whistler Blackcomb. Upon the sale of the assets in November 2010, the noncontrolling interest of $35.6 million was eliminated as the Partnership no longer consolidated the entity as of the date of sale. In December 2012, the Partnership sold its investment in Whistler Holdings and recorded a $17.9 million gain related to this disposition to gain on disposal of equity method investments in the consolidated statements of operations.
During the fiscal years ended June 30, 2011 and 2012, the operations of the Partnership were negatively impacted by macroeconomic factors in its principal markets, including reductions in customer spending and credit availability and other adverse developments affecting real estate markets. These factors resulted in impairments of the Partnerships assets and incurrence of significant interest expense.
(2) | Significant Accounting Policies |
Basis of Presentation
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Partnership, its majority-owned subsidiaries and all variable interest entities (VIEs) for which the Partnership is the primary beneficiary. All significant intercompany transactions are eliminated in consolidation. Investments in which the Partnership does not have a controlling interest or is not the primary beneficiary, but over which the Partnership is able to exercise significant influence, are accounted for under the equity method. Under the equity method, the original cost of the investment is adjusted for the Partnerships share of post-acquisition earnings or losses less distributions received.
In January of 2013, the Partnership reorganized its Canadian helicopter business and formed Alpine Helicopters Inc. (Alpine Helicopters) in which the Partnership owns a 20% share. Alpine Helicopters employs all the pilots that fly the helicopters in the CMH land tenures. Alpine Helicopters leases 100% of its helicopters from Intrawest ULC (IULC), a consolidated subsidiary, creating economic dependence thus giving IULC a variable interest in Alpine Helicopters. Alpine Helicopters is a VIE for which the Partnership is the primary beneficiary and is consolidated in these financial statements. As of June 30, 2013, Alpine Helicopters had total assets of $8.0 million and total liabilities of $6.0 million.
F-12 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The significant areas requiring management estimates include the determination of the fair values assigned to net assets acquired in business combinations, analysis of potential impairments and related estimates of fair values of real estate, reporting units and long-lived assets, useful lives for depreciation and amortization calculations, the values assigned to deferred income tax assets, including consideration of the need for valuation allowances, pension obligations, and warranty and other claims provisions.
Cash and Cash Equivalents
Cash and cash equivalents are all highly liquid investments with original terms to maturity of three months or less.
Restricted Cash
Restricted cash deposits are comprised primarily of deposits to settle future claims related to self-insurance, guest lodging in jurisdictions that require such down payments or deposits to be retained in a trust account, and to secure certain letters of credit. As of June 30, 2012 and 2013, the Partnerships restricted cash balances were $71.1 million and $13.7 million, respectively. Restricted cash balances were held as security for insurance claims for the Partnerships self-insurance policy and credit card transactions as well as security for executive pension plans. As of June 30, 2012, the Partnership had restricted cash of $60.7 million collateralizing letters of credit, which was released in connection with the 2012 debt refinancing.
Receivables
Trade receivables are stated at amounts due from customers for the Partnerships goods and services net of an allowance for doubtful accounts. The allowance is based on a specific reserve analysis and considers such factors as the customers past repayment history, the economic environment and other factors that could affect collectability. Write-offs are evaluated on a case by case basis. The Partnership recognized a provision for doubtful accounts of $6.4 million, $3.2 million and $2.4 million for the years ended June 30, 2011, 2012 and 2013, respectively.
For notes receivable, interest income is recognized on an accrual basis when earned. Any deferred portion of contractual interest is recognized on methods that approximate the effective interest method over the term of the corresponding note. Interest income on notes receivable was $6.4 million, $5.7 million and $5.2 million for the years ended June 30, 2011, 2012 and 2013, respectively.
Inventories
Inventories consisting of retail goods, food and beverage products are recorded at the lower of cost and net realizable value, determined using the weighted-average cost method.
Vacation points inventories are stated at the lower of cost or market value less cost to sell. Inventory costs are allocated to cost of point sales using a method that approximates the relative sales value method. The Partnership periodically reviews the carrying value of the inventory for impairment.
Real Estate Held for Development
Real estate held for development is recorded at the lower of cost or net realizable value. Cost for land and infrastructure for development includes all expenditures incurred in connection with the acquisition, development and construction of real estate. These expenditures consist of all direct costs, interest on specific debt, interest on total costs financed by the Partnerships pooled debt and property taxes during the development period. The Partnership expenses costs directly related to the acquisition of new real estate properties and resort businesses. The Partnership capitalizes interest once construction activities commence and real estate deposits have been utilized in construction.
F-13 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
The Partnership has not been involved in new development activities during the years ended June 30, 2011, 2012 or 2013. Costs incurred in connection with operating properties classified as real estate held for development are charged to cost of sales when incurred. Indirect and general and administrative overhead costs are expensed as incurred. Sales commission expenses are recorded in the period that the related revenues are recorded.
Real estate held for development is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of a particular real estate property exceeds the estimated net realizable value. The Partnership recorded impairment charges of $73.2 million, $8.1 million and $1.0 million on the consolidated statements of operations in the years ended June 30, 2011, 2012 and 2013, respectively.
Deferred Charges and Other Assets
Deferred financing costs consist of legal and other fees directly related to debt financing of the Partnerships businesses. These costs are amortized by methods that approximate the effective interest method over the term of the related financing to interest expense.
Long-Lived Assets
Long-lived assets subject to depreciation and amortization, including property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Partnership recorded impairment charges on long-lived assets held for use of $12.1 million, $0.8 million and $0.1 million in the years ended June 30, 2011, 2012 and 2013, respectively.
Property, plant and equipment are stated at cost less accumulated depreciation. Repairs and maintenance are expensed as incurred. Expenditures that improve the service capacity or extend the useful life of an asset are capitalized. When property, plant and equipment are retired or otherwise disposed of, the related gain or loss is included on the consolidated statement of operations. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of each asset category, which are as follows:
Buildings and building improvements | 5 – 40 years | |||
Ski lifts and area improvements | 5 – 30 years | |||
Automotive, helicopters and other equipment | 3 – 20 years | |||
Golf course improvements | 20 years |
Certain buildings, area improvements and equipment are located on leased or licensed land and are amortized over the lesser of the lease or license term or its estimated useful life.
Intangible assets are amortized on a straight-line basis over their estimated useful lives, which is the period over which the assets are expected to contribute directly or indirectly to the Partnerships future cash flows. The estimated useful lives of each intangible asset category are as follows:
Permits and licenses | 20 – 45 years | |||
Trademarks and trade names | 20 years | |||
Customer relationships | 8 years | |||
Other intangibles | 8 – 20 years |
The Partnership capitalizes costs incurred to renew or extend the term of a recognized intangible asset, such as permits and licenses, and amortizes such costs over the remaining life of the asset. Permits and licenses are amortized using the straight-line method over the shorter of their estimated useful lives or the period until the permit renews.
Goodwill
Goodwill represents the excess of purchase price over fair value of the net assets of businesses acquired in a business combination. Goodwill is not amortized, but is tested for impairment annually as of June 30th and at any time when events or conditions suggest impairment may have occurred. The Partnership has reporting units with allocated goodwill in both the Mountain and Real Estate segments. During the year ended June 30, 2013, the provisions of
F-14 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
Accounting Standards Update 2011-08 Testing Goodwill for Impairment (ASU 2011-08) were adopted. ASU 2011-08 permits the Partnership to perform a qualitative assessment (termed a step zero impairment test) of potential impairment indicators to assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, before proceeding to a quantitative two-step goodwill impairment test. If the Partnership determines that it is not more likely than not that the fair value of the reporting unit exceeds its carrying value, the two-step goodwill impairment test is required. In the two-step impairment test, the Partnership compares the fair value of each reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is determined based on expected discounted future cash flows. If the carrying amount of a reporting unit exceeds its fair value, the goodwill within the reporting unit may be potentially impaired. An impairment loss is recognized if the carrying amount of the goodwill exceeds implied fair value of that goodwill.
Deferred Revenue and Deposits
Deferred revenue and deposits are mainly comprised of season pass revenue, government grants, lodging and tour deposits, deposits on real estate sales and mountain club initiation deposits. Deferred revenue relating to the sale of season passes is recognized throughout the season based on the estimated number of skier visits based on historical data. Deferred revenue relating to government grants associated with capital assets and revenue-producing properties are recognized on the same basis as the related asset, while deferred revenue relating to government grants associated with properties under development and properties held for sale are recorded against cost of sales when the sale is recognized. Lodging and tour deposits deferred revenue is recognized when the related service is provided. Deferred revenue relating to real estate deposits is recognized upon closing of the sale. Deferred revenue relating to mountain club initiation deposits is recognized on a straight-line basis over the estimated membership terms.
Advertising Costs
The Partnership expenses advertising costs at the time such advertising commences. Advertising expenses are classified in operating expenses on the consolidated statements of operations and were $15.9 million, $12.8 million and $14.4 million for the years ended June 30, 2011, 2012 and 2013, respectively.
Self-Insured Liabilities
The Partnership has a policy of self-insuring when the expected losses from self-insurance are low relative to the cost of purchasing third-party insurance at various deductible levels. The self-insurance program includes workers compensation in the United States and property, automobile and general liability coverage in the United States and Canada. An accrual for self-insured liabilities is recorded based on managements best estimate of the ultimate cost to settle claims considering historical claims experience, claims filed and the advice of actuaries and plan administrators.
Liabilities for insurance-related assessments are not discounted and are included as part of other long-term liabilities on the consolidated balance sheets. As of June 30, 2012 and 2013, the liability balances were $9.5 million and $6.7 million, respectively.
Revenue Recognition
The following describes revenue recognition for the Partnership:
(i) | Mountain segment revenue is derived from a wide variety of sources, including sales of lift tickets (including season passes), ski school operations, dining operations, retail sales, equipment rentals, lodging operations and food and beverage operations. Revenue is recognized as goods are delivered or services are performed. |
(ii) | Adventure segment revenue is derived from a variety of sources, including all-inclusive packages for stays and tours for heli-skiing, mountaineering and hiking at Partnership owned and leased resorts, as well as ancillary revenues from helicopter maintenance and repair services, off-season fire suppression services and leasing. Revenues are recognized as goods are delivered or services are performed. |
F-15 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(iii) | The Real Estate segment earns revenues from IRCG, IHM and Playground. During the fiscal years presented, there were no active development projects or development revenues. IRCG generates revenues from the sale of vacation points, management of Club Intrawest properties, an unaffiliated, not-for-profit entity, management of a private exchange company, and income on the receivables portfolio. Vacation points revenue associated with membership in the vacation ownership business of IRCG is recognized when the purchaser has paid the amount due on closing, all contract documentation has been executed and all other significant conditions of sale are met. The Partnership follows real estate time-sharing accounting principles, which set out specific guidelines for assessing whether the buyers initial and continuing investments are adequate to demonstrate a commitment to pay for the property. Such a demonstration is required for the seller of a time-sharing arrangement to recognize profit by the full accrual method. Sales are recorded upon closing when profitability can be determined and collectability can be reasonably assured. Buyers can finance a portion of the sales price through nonrecourse loans. IHM generates revenue from managing rental operations at the Honua Kai Resort and Spa in Maui, Hawaii and the Westin Monache Resort in Mammoth Lakes, California. Playground earns revenue from the commissions on the sales of real estate. The Partnership also manages commercial real estate for owned properties and third parties. | |
Commission revenue from brokerage operations for Partnership owned real estate is included in real estate revenue and is recognized at the time an offer of sale is closed by the purchaser or all other contractual obligations have been satisfied. Commission revenue for third-party projects from real estate brokerage operations is included in real estate revenue and is recognized when the deals listing agreement is executed. |
Income Taxes
Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between tax bases of assets and liabilities and book basis reported in the consolidated balance sheets and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit in the period of enactment. To the extent that it is not considered to be more likely than not that some or all of the deferred tax assets will not be realized, a valuation allowance is provided.
The Partnership recognizes accrued interest related to uncertain tax positions as a component of income tax expense. Penalties, if incurred, are recorded in operating expenses in the consolidated statements of operations.
Foreign Currency Translation
These consolidated financial statements are presented in U.S. dollars. The Partnerships Canadian subsidiaries generally use the Canadian dollar as their functional currency.
The accounts of entities where the U.S. dollar is not the functional currency are translated into U.S. dollars using the exchange rate in effect at the balance sheet date for asset and liability amounts and at the average rate for the period for amounts included in the determination of income. Cumulative unrealized gains or losses arising from the translation of the financial position of these subsidiaries into U.S. dollars are included in Partners deficit as a component of accumulated other comprehensive income (loss).
Exchange gains or losses arising from the translation of transactions that are denominated in foreign currencies into the applicable functional currency are included in the determination of income. Total foreign exchange loss from transactions was $1.5 million for the year ended June 30, 2011. Total foreign exchange gains from transactions was $0.4 million and $0.6 million for the years ended June 30, 2012 and 2013, respectively. Foreign exchanges gains and losses are reported in other income (expense), net in the consolidated statements of operations.
Unit-Based Compensation
The Partnership has implemented unit-based compensation plans as described in note 13. The awards under the plans are measured at the grant date based on the estimated fair value of the award using a fair value pricing model and are charged to income as compensation expense over the vesting period. Any consideration paid on the exercise of
F-16 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
options or purchase of shares is credited to Partners deficit. As of June 30, 2013, there are no options outstanding and all restricted units have vested. As of June 30, 2013, no awards are eligible to be converted to Partnership units and all other awards have been forfeited.
Employee Benefit Plans
Substantially all of the Partnerships employees are covered by defined contribution plans or by Partnership-sponsored 401(k) plans. The Partnerships contributions to these plans are based on a percentage of employee compensation. These plans are funded on a current basis.
In addition, certain employees are covered by noncontributory defined benefit pension plans. These plans are funded in conformity with the funding requirements of applicable government regulations. Generally, benefits are based on age, years of service and level of compensation during the final years of employment. The Partnership accounts for these defined benefit plans by accruing its obligations under the employee benefit plans and the related costs as the underlying services are provided. No further service benefits are being earned by plan participants in the defined plans.
The funded status of defined benefit plans is recognized entirely on the consolidated balance sheets. The amount recognized as an asset or liability for pension and other postretirement benefit plans is measured as the difference between the benefit obligation and the fair value of plan assets. Overfunded plans are aggregated and recognized as an asset while underfunded plans are aggregated and recognized as a liability. Actuarial gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net pension expense are recognized in accumulated other comprehensive income (loss) net of income tax effects. Actuarial gains and losses are comprised of changes in the amount of either the projected benefit obligation (for pension plans), the accumulated benefit obligation (for other postretirement plans) or differences between actual and expected return on plan assets and from changes in assumptions.
The Partnership measures its pension assets and liabilities as of June 30th of each year.
Fair Value of Financial Instruments
The Partnership has various financial instruments, including cash and cash equivalents, receivables, payables, accrued liabilities and debt obligations. Due to their short-term nature, or, in the case of receivables, their market comparable interest rates, the instruments book value approximates their fair value. Certain of the Partnerships long-term debt bears interest at floating rates. Fluctuations in these rates will impact the cost of financing incurred in the future. The fair value of debt was calculated using Level 3 inputs.
Derivative Financial Instruments
The Partnership engages in activities that expose it to market risks including the effects of changes in interest rates and exchange rates. Financial exposures are managed as an integral part of the Partnerships risk management program, which seeks to reduce the potentially adverse effect that the volatility of interest rates or exchange rates may have on operating results.
As of June 30, 2012 and 2013, the Partnership has no significant outstanding derivative instruments. Prior to October 2008, the Partnership had outstanding interest rate swaps that were accounted for as cash flow hedges. The outstanding swap contracts were terminated on October 11, 2008, and the deferred loss previously recorded in accumulated other comprehensive income is being recognized in earnings during the period that the hedge covered. The Partnership estimates that $3.0 million of deferred losses related to the terminated interest rate swaps will be amortized from accumulated other comprehensive income into interest expense in the next 12 months.
Concentration of Credit Risk
The Partnerships financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash. The Partnership places its cash and temporary cash investments in high quality credit institutions, but these investments may be in excess of regulatory insurance limits. The Partnership does not
F-17 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
enter into financial instruments for trading or speculative purposes. Concentration of credit risk with respect to trade and notes receivables is limited due to the wide variety of customers and markets in which the Partnership transacts business, as well as their dispersion across many geographical areas. The Partnership performs ongoing credit evaluations of its customers and generally does not require collateral, but does require advance deposits on certain transactions.
Impact of Recently Issued Accounting Standards
In July 2013, the Financial Accounting Standards Board (FASB) issued Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update addresses when unrecognized tax benefits should be presented as reductions to deferred tax assets for net operating loss carryforwards in the financial statements. The Partnership adopted this standard retrospectively and there was no material impact on the consolidated financial statements.
In January 2011, the FASB issued Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements as they relate to financial assets and liabilities. This update introduces new requirements and clarifies existing requirements for the disclosure of fair value measurements. Separate disclosure is required for the significant transfers into and out of Level 1 and Level 2 fair value measurements. An entity must disclose and consistently follow its policy for determining when transfers between levels are recognized. Also, the FASB clarified existing fair value measurement disclosure for transactions on a gross basis in the reconciliation of Level 3 fair value measurements. The Partnership adopted the disclosure requirements prospectively and there was no material impact on the consolidated financial statements.
In September 2011, the FASB issued Testing Goodwill for Impairment. This update allows entities an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity would no longer be required to calculate the fair value of a reporting unit unless the entity determines, based on that qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The Partnership adopted this standard effective July 1, 2012, and there was no material impact on the consolidated financial statements.
In June 2011, the FASB issued Presentation of Comprehensive Income (ASU 2011-05). This update was amended in December 2011 by ASU No. 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income. This update defers only those changes in update ASU 2011-05 that relate to the presentation of reclassification adjustments. All other requirements in ASU 2011-05 are not affected by this update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. The Partnership adopted these requirements retrospectively effective July 1, 2012 and there was no material impact on the consolidated financial statements.
Recent Accounting Standards Issued But Not Yet Effective
In February 2013, the FASB issued Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this update supersede and replace the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05, Presentation of Comprehensive Income (issued in June 2011) and 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income (issued in December 2011). The amendments are effective July 1, 2013 for the Partnership. The adoption of this authoritative guidance will not have an impact on the Partnerships financial position or results of operations, but will require the Partnership to present either in a single note or parenthetically on the face of the financial statements the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. If a component is not required to be reclassified to net income in its entirety, the Partnership would instead cross- reference to the related note for additional information.
In July 2012, the FASB issued Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This update amends ASU 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing
F-18 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. The amendments are effective for the Partnership July 1, 2013. The adoption of this update is not expected to have a material impact on the consolidated financial statements.
(3) | Supplementary Balance Sheet Information |
Receivables
Receivables as of June 30, 2012 and 2013 consisted of the following (in thousands):
June 30, | ||||||||||
2012 | 2013 | |||||||||
Receivables – current: | ||||||||||
Trade receivables | $ | 16,416 | $ | 14,522 | ||||||
Loans, mortgages and notes receivable | 10,524 | 10,467 | ||||||||
Other amounts receivable | 21,500 | 21,642 | ||||||||
Allowance for doubtful accounts | (10,332 | ) | (8,333 | ) | ||||||
$ | 38,108 | $ | 38,298 |
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities as of June 30, 2012 and 2013 consisted of the following (in thousands):
June 30, | ||||||||||
2012 | 2013 | |||||||||
Trade payables | $ | 54,667 | $ | 53,390 | ||||||
Other payables and accrued liabilities | 4,680 | 8,806 | ||||||||
$ | 59,347 | $ | 62,196 |
Deferred revenue and deposits
Deferred revenue and deposits as of June 30, 2012 and 2013 consisted of the following (in thousands):
June 30, | ||||||||||
2012 | 2013 | |||||||||
Deferred revenue and deposits – current: | ||||||||||
Season pass and other | $ | 22,830 | $ | 31,262 | ||||||
Lodging and tour deposits | 12,591 | 12,147 | ||||||||
Deposits on real estate sales | 7,795 | 8,701 | ||||||||
$ | 43,216 | $ | 52,110 |
June 30, | ||||||||||
2012 | 2013 | |||||||||
Deferred revenue and deposits – long term: | ||||||||||
Government grants | $ | 13,843 | $ | 12,814 | ||||||
Club initiation deposits and other | 11,964 | 9,301 | ||||||||
$ | 25,807 | $ | 22,115 |
F-19 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
Other long-term liabilities
Other long-term liabilities as of June 30, 2012 and 2013 consisted of the following (in thousands):
June 30, | ||||||||||
2012 | 2013 | |||||||||
Other long-term liabilities: | ||||||||||
Pension liability | $ | 33,132 | $ | 34,456 | ||||||
Other long-term liabilities | 32,794 | 21,880 | ||||||||
$ | 65,926 | $ | 56,336 |
(4) | Notes Receivable |
The Partnership allows deferred payment terms that exceed one year for customers purchasing vacation points. A note receivable exists when all contract documentation has been executed. Notes receivable primarily consist of nonrecourse installment loans. The Partnership performs a credit review of its notes receivable individually each reporting period to determine if an allowance for credit losses is required. As of June 30, 2012 and 2013, the allowance for credit losses on the notes receivable was $3.5 million and $3.4 million, respectively.
(5) | Property, Plant and Equipment |
Property, plant and equipment consist of the following as of June 30, 2012 and 2013 (in thousands):
Cost | Accumulated
depreciation and amortization | Net
book value | ||||||||||
2012: | ||||||||||||
Land | $ | 39,658 | $ | — | $ | 39,658 | ||||||
Buildings | 263,424 | 58,600 | 204,824 | |||||||||
Ski lifts and area improvements | 235,694 | 106,039 | 129,655 | |||||||||
Automotive, helicopters and other equipment | 277,263 | 156,706 | 120,557 | |||||||||
Golf course improvements | 23,988 | 8,504 | 15,484 | |||||||||
$ | 840,027 | $ | 329,849 | $ | 510,178 |
Cost | Accumulated
depreciation and amortization | Net
book value | ||||||||||
2013: | ||||||||||||
Land | $ | 37,753 | $ | — | $ | 37,753 | ||||||
Buildings | 253,178 | 66,540 | 186,638 | |||||||||
Ski lifts and area improvements | 232,736 | 105,578 | 127,158 | |||||||||
Automotive, helicopters and other equipment | 275,851 | 165,594 | 110,257 | |||||||||
Golf course improvements | 23,702 | 9,652 | 14,050 | |||||||||
$ | 823,220 | $ | 347,364 | $ | 475,856 |
Depreciation and amortization expense on property, plant and equipment for the years ended June 30, 2011, 2012 and 2013 totaled $65.8 million, $51.4 million and $51.5 million, respectively.
During the year ended June 30, 2011, certain reporting units experienced deteriorated financial performance including reduced profitability at certain locations. These factors resulted in losses and an unfavorable outlook, which were indicators of potential impairment of property, plant and equipment at these certain locations. The Partnership tested the recoverability of its long-lived assets using projected future undiscounted cash flows based on internal budgets. The Partnership recorded an impairment charge on long-lived assets held for use of $12.1 million in the year ended
F-20 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
June 30, 2011, the majority of which related to the Mountain segment. During the years ended June 30, 2012 and 2013, the Partnership recorded impairment charges of $0.8 million and $0.1 million, respectively, primarily related to legacy and other non-core operations.
(6) | Real Estate Held for Development |
Real estate held for development was $193.8 million and $164.9 million as of June 30, 2012 and 2013, respectively.
The Partnership monitors for triggering events that indicate real estate held for development may be impaired. The Partnership experienced deteriorated real estate conditions which indicated that real estate held for development could have carrying values higher than their fair values in the periods presented. Consequently, the Partnership obtained third party valuations and recorded impairment charges on real estate held for development in the consolidated statements of operations of $73.2 million, $8.1 million and $1.1 million in the years ended June 30, 2011, 2012 and 2013, respectively. Impairments related to legacy and non-core operations for the years ended June 30, 2011, 2012 and 2013 were $12.0 million, $8.1 million and $1.0 million, respectively. Impairments related to the Real Estate segment for the years ended June 30, 2011, 2012 and 2013 were $61.2 million, $0 and $0.1 million, respectively.
(7) | Equity Method Investments |
The Partnership had total equity method investments of $196.6 million and $86.3 million as of June 30, 2012 and 2013, respectively.
The Partnerships carrying amount of its equity method investments reflects its expectation of cash to be realized from its interests in the net assets of the affiliate, taking into account the return order of equity distribution per the respective agreements.
The Partnership accounts for its equity method investments using the equity method. The difference between the carrying value and the undistributed earnings is primarily comprised of goodwill.
The Partnership had the following ownership interest in its equity method investments as of June 30, 2013, including:
Ownership
interest | ||||
Blue Mountain Resorts Limited | 50.0% | |||
Chateau M.T. Inc. | 49.5 | |||
Mammoth Hospitality Management, LLC | 50.0 | |||
MMSA Holdings Inc. | 15.0 |
In December 2012, the Partnership sold its 24% investment in Whistler Holdings and recorded a $17.9 million gain related to this disposition to gain on disposal of equity method investments in the consolidated statements of operations.
F-21 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
Although the Partnership owns less than 20% of MMSA Holdings Inc. (MMSA), the equity method is used to account for this investment because the Partnership exercises significant influence over MMSA by virtue of holding a seat on the MMSA board of seven members. In addition, the Partnership owns 50% of Mammoth Hospitality Management, LLC, which also has an ownership interest in MMSA.
The Partnership currently holds a 49.5% voting interest in Chateau M.T. Inc. (Chateau) with a non-voting debt interest that can be converted to voting interest, resulting in up to a 57% economic ownership interest in the entity. The following are combined summarized data for the Partnerships equity method investments (in thousands):
June 30, | ||||||||||
2012 | 2013 | |||||||||
Current assets | $ | 118,768 | $ | 60,835 | ||||||
Noncurrent assets | 1,314,283 | 497,850 | ||||||||
Current liabilities | 96,252 | 75,919 | ||||||||
Noncurrent liabilities | 519,775 | 239,974 | ||||||||
Noncontrolling interest | 144,694 | 6,999 |
Year Ended June 30, | ||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||
Net revenues | $ | 409,004 | $ | 412,086 | $ | 271,376 | ||||||||||
Gross profit | 390,989 | 396,165 | 254,348 | |||||||||||||
Income (loss) from continuing operations | 51,554 | 27,641 | (28,329 | ) | ||||||||||||
Net income (loss) | 45,367 | 19,674 | (21,033 | ) | ||||||||||||
Partnerships share of investees earnings (loss) | 8,299 | 538 | (5,147 | ) |
(8) | Intangible Assets |
Finite-lived intangible assets as of June 30, 2012 and 2013 are as follows (in thousands):
Cost | Accumulated
amortization | Net
book value | ||||||||||
2012: | ||||||||||||
Permits and licenses | $ | 16,759 | $ | 3,858 | $ | 12,901 | ||||||
Trademarks and trade names | 76,090 | 20,769 | 55,321 | |||||||||
Customer relationships | 17,571 | 12,320 | 5,251 | |||||||||
Other | 9,188 | 9,107 | 81 | |||||||||
$ | 119,608 | $ | 46,054 | $ | 73,554 |
Cost | Accumulated
amortization | Net
book value | ||||||||||
2013: | ||||||||||||
Permits and licenses | $ | 15,747 | $ | 4,222 | $ | 11,525 | ||||||
Trademarks and trade names | 75,217 | 24,302 | 50,915 | |||||||||
Customer relationships | 17,105 | 14,129 | 2,976 | |||||||||
Other | 8,999 | 8,912 | 87 | |||||||||
$ | 117,068 | $ | 51,565 | $ | 65,503 |
Amortization expense was $10.6 million, $6.3 million and $6.8 million for the years ended June 30, 2011, 2012 and 2013, respectively.
F-22 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
The estimated aggregate intangible amortization expense for the next five years is as follows (in thousands):
2014 | $ | 6,523 | ||||
2015 | 5,224 | |||||
2016 | 4,385 | |||||
2017 | 4,385 | |||||
2018 | 4,385 |
(9) | Goodwill |
Goodwill and changes therein for the years ended June 30, 2012 and 2013 are as follows, by segment, (in thousands):
Mountain | Real Estate | Total | ||||||||||
Balance as of June 30, 2011 | $ | 93,418 | $ | 5,498 | $ | 98,916 | ||||||
Impact of foreign exchange and other | — | (730 | ) | (730 | ) | |||||||
Impairment charge | — | (3,575 | ) | (3,575 | ) | |||||||
Balance as of June 30, 2012 | 93,418 | 1,193 | 94,611 | |||||||||
Impact of foreign exchange and other | — | (2 | ) | (2 | ) | |||||||
Balance as of June 30, 2013 | $ | 93,418 | $ | 1,191 | $ | 94,609 |
On October 26, 2006, an entity owned indirectly by funds managed by Fortress Investment Group LLC (Fortress) acquired all of the issued and outstanding shares of Intrawest Corporation, the Partnerships predecessor (the Predecessor). Substantially concurrent with the acquisition, Fortress effected a reorganization of the Predecessor that resulted in it becoming IULC, an unlimited liability company incorporated under the laws of the Province of Alberta, Canada. Subsequent to the acquisition, Fortress effected further reorganizations whereby the former travel business of the Predecessor, Abercrombie & Kent Group of Companies, S.A. (A&K), was transferred to a separate partnership, Wintergames Travel (Wintergames). In March of 2007, the Partnership acquired Steamboat and recorded $9.6 million of goodwill. As a result of the Partnerships disposition of its 77% interest in the assets of Whistler Blackcomb in the year ended June 30, 2011, the Partnership disposed of $411.0 million of goodwill. Also in the year ended June 30, 2011, the Partnership recorded a noncash pretax goodwill impairment charge of $64.1 million primarily related to the Mountain segment.
At June 30, 2013, the Partnership considered qualitative factors to evaluate whether it was more likely than not that any reporting units fair value was less than its carrying amount and determined quantitative impairment testing was not necessary. At June 30, 2012, the Partnership considered the seasonal results of all reporting units with goodwill along with other ski resort industry valuation metrics and current revised future expectations and determined no impairment of goodwill was required to be recognized for the Mountain reporting units. However, the Partnership determined that the fair value of certain assets in the Real Estate reporting units was lower than the carrying value, and a noncash pretax goodwill impairment charge was recorded for $3.6 million in June 2012.
F-23 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(10) | Long-Term Debt and Notes Payable to Affiliates |
Long-term debt as of June 30, 2012 and 2013 is as follows (in thousands):
June 30, | ||||||||||
2012 | 2013 | |||||||||
FY13 First Lien Loans(a) | $ | — | $ | 441,669 | ||||||
FY13 Second Lien Loans(a) | — | 122,084 | ||||||||
FY10 First Lien Loans(b) | 294,349 | — | ||||||||
FY10 Second Lien Loans(b) | 405,325 | — | ||||||||
Obligations under capital leases(c) | 21,787 | 20,264 | ||||||||
Other obligations(d) | 12,052 | 4,846 | ||||||||
Interim financing on properties under development and held for sale(e) | 2,568 | — | ||||||||
736,081 | 588,863 | |||||||||
Less current maturities(f) | 16,681 | 8,201 | ||||||||
$ | 719,400 | $ | 580,662 |
Notes payable to affiliates as of June 30, 2012 and 2013 are as follows (in thousands):
June 30, | ||||||||||
2012 | 2013 | |||||||||
Third Lien Loan(b) | $ | 183,812 | $ | 196,991 | ||||||
Accrued interest on Third Lien Loans | 84,140 | 133,328 | ||||||||
Tranche B Term Loans(g) | 300,000 | 300,000 | ||||||||
Accrued Interest on Tranche B Term Loans | 329,711 | 469,963 | ||||||||
Affiliate Loan(g) | 100,000 | 100,000 | ||||||||
Accrued interest on Affiliate Loan | 111,342 | 158,413 | ||||||||
$ | 1,109,005 | $ | 1,358,695 |
(a) | The Partnership and certain subsidiaries entered into new credit agreements on December 4, 2012 (the FY13 First Lien Loans and the FY13 Second Lien Loans, collectively known as the FY13 Lien Loans). The proceeds from these loans were used to extinguish the existing debt under the First Lien Credit Agreement dated April 27, 2010 (the FY10 First Lien Loans) and the Second Lien Credit Agreement also dated April 27, 2010 (FY10 Second Lien Loans). |
The FY13 First Lien Loans have a maturity date of December 4, 2017 and bear interest at LIBOR + 5.75% with a LIBOR floor of 1.25%. The agreement requires quarterly principal payments in the amount of $1.125 million. The net cash proceeds received from the FY13 First Lien Loans were reduced by an Original Issuer Discount of $6.75 million. The discount is amortized using the effective interest method over the term of the loan ($6.1 million at 8.33% remaining as of June 30, 2013). |
The FY13 Second Lien Loans have a maturity date of December 4, 2018 and bear interest at LIBOR + 9.5%, with a LIBOR floor of 1.25%. No principal payments are required until the maturity date. The net cash proceeds received from the FY13 Second Lien Loans were reduced by an Original Issuer Discount of $3.125 million. The discount is amortized using the effective interest method over the term of the loan ($2.9 million at 12.24% remaining as of June 30, 2013). The FY13 Second Lien Loans also have a 3% call premium if voluntarily repaid prior to the second anniversary of the December 4, 2012 closing date, and 1% call premium if voluntarily repaid between the second and third anniversary. |
The Partnership capitalized costs of $21.9 million in connection with the FY13 Lien Loans in deferred charges and other on the consolidated balance sheets. These costs are amortized using the effective interest method over the remaining term ($15.5 million at 8.33% for the FY13 First Lien Loan and $4.4 million at 12.24% for the FY13 Second Lien Loan remaining as of June 30, 2013). |
F-24 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
The Partnerships obligations under the FY13 Lien Loans are collateralized by a guarantee of the Partnership and guarantees of substantially all of its material subsidiaries. The guarantees are further supported by mortgages against certain properties held by subsidiaries of the Partnership. The collateral includes both general and specific assets. |
The FY13 Lien Loans provide for affirmative and negative covenants that restrict, among other things, the Partnerships ability to incur indebtedness, dispose of property, make capital expenditures, or make investments or distributions. In addition, the FY13 Lien Loans include financial covenants related to leverage and interest coverage ratios. They also include customary cross-default provisions with respect of certain other borrowings of the Partnership, and in certain circumstances, borrowings of noncontrolled partnerships where the Partnership has provided a guarantee. |
Wintergames pledged its shares in A&K as security and provided a guarantee of the obligations of the Partnership and its subsidiaries under the FY13 Lien Loans and the Tranche Loans (discussed in note 10(g)). These consolidated financial statements do not include the results of Wintergames. Wintergames and its subsidiary A&K are also subject to affirmative and negative covenants under the FY13 Lien Loans and are included in the calculation of the restrictive financial covenants. At June 30, 2013, Wintergames has no amounts outstanding under the FY13 Lien Loans or the Tranche Loans. |
The Partnership was in compliance with the covenants of the FY13 Lien Loans at June 30, 2013. |
(b) | On April 27, 2010, the Partnership and certain subsidiaries entered into a series of credit agreements (the FY10 First Lien Loans, the FY10 Second Lien Loans, and the Third Lien Loan). |
On December 4, 2012, the FY10 First Lien Loans and FY10 Second Lien Loans were fully repaid with proceeds from the FY13 Lien Loans. As a result, the Partnership recorded an $11.2 million loss on extinguishment of debt in the consolidated statements of operations in the year ended June 30, 2013. |
The Third Lien Loans entered into with affiliates of the Partnership had an original maturity date of April 27, 2013 and were extended to June 4, 2019 on December 4, 2012. The Third Lien Loans bear interest at 15.6% per annum until April 24, 2015, at which point the interest rate will increase to 22.5% per annum. No interest payments are to be made and interest is accrued monthly and compounded quarterly until the maturity date. In addition, the Third Lien Loan has a principal balance repayable at maturity of $210 million. The $60 million difference between the $210 million principal balance repayable at maturity and the funds advanced of $150 million, the discount, is amortized using a method which approximates the effective interest method over the term of the loan ($13 million remaining at June 30, 2013). The Third Lien Loan is subordinate to the FY13 Lien Loans for the purpose of security. |
(c) | Capital lease obligations are primarily for equipment except for the lease of Winter Park ski resort. As of June 30, 2012 and 2013, the carrying value of leased assets was $ 66.1 million and $69.2 million, respectively, net of accumulated amortization of $21.3 million and $25.4 million, respectively. Amortization of assets under capital leases is included in depreciation and amortization expense in the consolidated statements of operations. The leases have remaining terms ranging from 8 years to 39 years and interest rates that range from 3% to 20%. |
The Partnership operates the Winter Park ski resort under a capital lease agreement that requires lease payments that are both fixed and variable. The fixed portion of the agreement is included in the table below. |
Future minimum payments under the capital leases consisted of the following as of June 30, 2013 (in thousands): |
2014 | $ | 2,658 | ||||
2015 | 2,362 | |||||
2016 | 20,279 | |||||
2017 | 145 | |||||
2018 | 145 | |||||
Thereafter | 493 | |||||
Total minimum lease payments | 26,082 | |||||
Less amount representing interest | 5,818 | |||||
Present value of net minimum lease payments | $ | 20,264 |
F-25 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(d) | In addition to various other lending agreements, a subsidiary of the Partnership entered into government loan agreements with remaining terms ranging from two to three years and interest rates ranging from 0% to 7.25%. Government loan agreements were $4.0 million and $3.3 million as of June 30, 2012 and 2013, respectively. |
(e) | The Partnership or its subsidiaries enter into construction loan agreements from time to time for specific real estate projects. These agreements typically are revolving and must be used for the payment of certain costs in connection with the real estate projects. Repayment is generally from closings of unit sales. Project specific financing construction loans outstanding were $2.6 million and $0 at June 30, 2012 and 2013, respectively. Borrowings under the construction loan agreements are based on various floating base rates. At June 30, 2012, the weighted average borrowing rate was 5.0%. |
(f) | Current maturities represent principal payments due in the next 12 months. Aggregate maturities for long-term debt and capital lease obligations outstanding as of June 30, 2013 are as follows (in thousands): |
2014 | $ | 8,201 | ||||
2015 | 7,751 | |||||
2016 | 20,953 | |||||
2017 | 4,942 | |||||
2018 | 423,894 | |||||
Thereafter | 123,122 | |||||
$ | 588,863 |
(g) | On October 23, 2008, the Partnership and the subsidiary borrowers entered into an amendment (the Second Amendment) of their credit agreement to, among other things: (i) restructure the approximately $1.7 billion outstanding at October 23, 2008 into two tranches of term loans, (the Tranche A Term Loans and the Tranche B Term Loans); (ii) have the Tranche A Term Loans, including the interest rate swap settlement payment described in item (iii) equal $1.4 billion and the Tranche B Term Loan equal $300 million; (iii) include an amount in the repayment of the liability owing upon termination of the Partnerships interest rate swaps in October 2008 of $111.4 million as part of the Tranche A Term Loan. |
On April 27, 2010, the Tranche A Term Loans were repaid from proceeds under the FY10 First Lien Loans, the FY10 Second Lien Loans and the Third Lien Loan. |
The Tranche B Term Loans had a maturity date of April 24, 2015 and were extended to June 4, 2019 on December 4, 2012. The Tranche B Term Loans bear interest at 20% per annum; however no interest payments are to be made and interest is accrued and compounded monthly until the FY13 Lien Loans are repaid. The Tranche B Term Loans are subordinate to the FY13 Lien Loans and the Third Lien Loan for the purpose of security. |
In addition, on October 23, 2008, the Partnership through its subsidiaries entered into a loan agreement with affiliates to borrow $100 million (the Affiliate Loan). The Affiliate Loan had a maturity date of October 22, 2013 and was extended to June 4, 2019 on December 4, 2012. It bears interest at 20% per annum; however no interest payments are to be made and interest is accrued and compounded monthly until the FY13 Lien Loans are repaid. The Affiliate Loan is subordinated to all obligations under the FY13 Lien Loans and the Third Lien Loan and is currently unsecured but may, at the option of the lender, be subject to the same security as the Tranche B Term Loan. |
The Partnership capitalized $29.2 million in connection with the Second Amendment to deferred costs and other on the consolidated balance sheets. These costs are amortized using the straightline method, which approximates the effective interest method, over the remaining term ($2.1 million remaining as of June 30, 2013). |
The amounts due to affiliates comprising the Tranche B Term Loans and the Affiliate Loans aggregating $1 billion as of June 30, 2013 must be repaid on June 4, 2019 unless there is an amount outstanding under the Third Lien Loan, in which case they are extended until 2020. The Third Lien Loan, with a balance of $330 million |
F-26 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
as of June 30, 2013, must be repaid on June 4, 2019, but is automatically extended to June 4, 2020 if balances are outstanding under the FY13 Lien Loans. |
The Partnership was in compliance with the covenants of the Tranche B Term Loans and the Affiliate Loan at June 30, 2013. |
On December 4, 2012, the Partnership entered into a credit agreement with Goldman Sachs Lending Partners LLC and UBS Securities LLC (First Lien Credit Agreement) to secure a $55.0 million letter of credit facility and a $20.0 million revolving line of credit. The extensions of credit on the revolving facility may be made in the form of loans or letters of credit. The Partnership is required to adhere to certain operating and financial covenants including a minimum interest coverage ratio and a total secured debt leverage ratio.
The annual interest rate for cash borrowings and letter of credit issuances under this agreement ranges from 4.5% to 7.0%.
The Partnership agrees to pay an annual commitment fee to Goldman Sachs Lending Partners LLC equal to 0.5% of the unused revolving line of credit and unused letter of credit facility up to $5.0 million from December 4, 2012 through December 4, 2017 plus 5.75% of the amount in excess of $5.0 million. Pursuant to the terms of the agreement, any outstanding obligations under the line of credit are secured by substantially all of the Partnerships assets. As of June 30, 2013, the Partnership had letters of credit outstanding totaling $52.4 million. There have been no cash borrowings against the revolving line of credit since it was established.
The Partnership recorded gross interest expense of $ 304.4 million, $331.8 million and $335.0 million in the consolidated statements of operations for the years ended June 30, 2011, 2012 and 2013, respectively, of which $7.9 million, $5.5 million and $5.0 million was amortization of deferred financing costs.
In October 2006, the Partnership entered into interest rate swap contracts to minimize the impact of changes in interest rates on its cash flows for certain of the Partnerships floating bank rates and other indebtedness. The outstanding swap contracts were terminated on October 11, 2008. The fair value of the swap contracts on conversion at October 11, 2008 was a liability of $111.4 million. The terminated swap liability recorded in accumulated other comprehensive income is being recognized periodically as an adjustment to interest expense consistent with hedge accounting principles. The portion included in interest expense in the consolidated statements of operations for the years ended June 30, 2011, 2012 and 2013 was $9.2 million, $5.6 million and $3.9 million, respectively.
F-27 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(11) | Fair Value Measurements |
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy, which is described below, prioritizes the inputs used in measuring fair value:
• | Level 1 – Quoted prices for identical instruments in active markets. |
• | Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations, in which all significant inputs are observable in active markets. |
• | Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
A summary of the carrying amount and fair value of the Partnerships financial instruments for which there is a difference between carrying value and fair value is as follows (in thousands):
June 30, 2012 | June 30, 2013 | |||||||||||||||||||||
Carrying
Value | Fair
Value | Carrying
Value | Fair
Value | |||||||||||||||||||
Long-term debt | $ | 699,674 | $ | 542,183 | $ | 563,753 | $ | 544,717 |
The Partnerships debt is recorded at cost and is not actively traded. Fair value is estimated based on discounted future contractual cash flows and a market interest rate based on published corporate borrowing rates for debt instruments with similar terms and average maturities, with adjustments for credit risk. Accordingly, the Partnerships debt is classified within Level 3 of the fair value hierarchy. The fair value of debt does not represent the amounts that will ultimately be paid upon the maturities of the loans. Due to the debt terms received from affiliates, the Partnership has determined that it is not practicable to estimate the fair value of the notes payable to affiliates because of the lack of market comparable terms and the inability to estimate the fair value without incurring excessive cost.
(12) | Partnership Units |
Intrawest Cayman G.P. Ltd is owned indirectly by funds managed by the limited partners. The Partnerships capital accounts are comprised of 100% limited partner interests. The limited partners have limited rights of ownership as provided for under the partnership agreement, and the right to participate in distributions as determined by the general partner. The general partner manages the Partnerships operations.
The Partnership receives annual distributions from Fortress, which are recorded as capital contributions in Partners deficit on the consolidated balance sheets. Amounts received in 2011, 2012 and 2013 were $6.6 million, $3.4 million and $6.7 million, respectively. The Partnership and its subsidiaries have no obligation to repay Fortress for such payments.
(13) | Unit-Based Compensation Plans |
In June 2007, the Partnership introduced an equity based compensation plan for eligible executives and authorized 53,100 partnership units to be awarded under the plan. Plan participants receive awards based on the country in which they live. Those awards can be converted into Partnership units upon exercise.
For Canadian participants, options are granted to acquire shares in a subsidiary of IULC. They have an exercise price of $.01 and vest over a four or five year period. For the four-year vesting term, one-third vests after each of years two, three and four. For the five-year vesting term, one-third vests after each of years three, four and five. The weighted average grant date fair value of the options granted was $62 for the year ended June 30, 2011. There were no grants in the years ended June 30, 2012 or 2013.
For U.S. participants, restricted units are granted in US Holdings. These grants vest over a five-year period, with one-third vesting after each of years three, four and five.
F-28 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
As of June 30, 2013, there are no options outstanding and all restricted units have vested. 33,298 options and restricted units remain available for grant and 4,300 Partnership units have been issued from conversion of exercised options or vested restricted units (300 units in fiscal year 2011, 2,000 units in fiscal year 2012 and 2,000 units in fiscal year 2013). As of June 30, 2013, no Canadian or U.S. awards are eligible to be converted to Partnership units and all other awards have been forfeited.
Total compensation expense associated with these awards recognized in operating expenses in the statements of operations was $1.9 million, $0.6 million and $0.3 million in each of fiscal years ended June 31, 2011, 2012 and 2013, respectively. No tax benefit was recognized in any year associated with the grants.
(14) | Income Taxes |
(a) | The consolidated income tax (benefit) expense from continuing operations attributable to the Partnerships tax-paying entities is as follows (in thousands): |
Year Ended June 30, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
Income taxes: | ||||||||||||
Current | $ | 8,733 | $ | (3,034 | ) | $ | 2,553 | |||||
Deferred | (2,178 | ) | (2,802 | ) | (26,169 | ) | ||||||
$ | 6,555 | $ | (5,836 | ) | $ | (23,616 | ) |
Income tax (benefit) expense of the following components are as follows (in thousands):
Year Ended June 30, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
Current income taxes: | ||||||||||||
United States | $ | 5,833 | $ | (5,987 | ) | $ | 173 | |||||
Foreign | 2,900 | 2,953 | 2,380 | |||||||||
Total current income tax (benefit) expense | 8,733 | (3,034 | ) | 2,553 | ||||||||
Deferred income taxes: | ||||||||||||
United States | — | — | — | |||||||||
Foreign | (2,178 | ) | (2,802 | ) | (26,169 | ) | ||||||
Total deferred income tax benefit | (2,178 | ) | (2,802 | ) | (26,169 | ) | ||||||
Total income tax (benefit) expense | $ | 6,555 | $ | (5,836 | ) | $ | (23,616 | ) |
(b) | The reconciliation of income taxes calculated at the statutory rate to the actual income tax (benefit) provision is as follows (in thousands): |
Year Ended June 30, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
Income tax charge at statutory rate | $ | (151,660 | ) | $ | (104,807 | ) | $ | (100,504 | ) | |||
State tax | (9,611 | ) | (13,447 | ) | (5,742 | ) | ||||||
Nondeductible impairments | ||||||||||||
and expenses | 50,093 | (57,059 | ) | (11,662 | ) | |||||||
Alternative minimum and other | 11,331 | (347,028 | ) | 502 | ||||||||
Changes in tax laws and rates | 1,021 | 15,383 | (3,653 | ) | ||||||||
Foreign taxes less than statutory rate | (2,116 | ) | — | — | ||||||||
Unrecognized tax assets | 107,497 | 501,122 | 97,443 | |||||||||
(Benefit) provision for taxes | $ | 6,555 | $ | (5,836 | ) | $ | (23,616 | ) |
The statutory rate is the blended rate for the jurisdictions in which the Partnership has operations. For the years ended June 30, 2011, 2012 and 2013, this rate was 31.2%, 30.7% and 31.4% respectively.
F-29 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(c) | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and future tax liabilities as of June 30, 2012 and 2013 are presented below (in thousands): |
June 30, | ||||||||
2012 | 2013 | |||||||
Deferred tax assets: | ||||||||
Real estate held for development | $ | 39,562 | $ | 37,931 | ||||
Loss carryforwards | 1,529,322 | 1,637,099 | ||||||
Differences in working capital deductions for tax and accounting purposes | 17,474 | 18,311 | ||||||
Bank and other indebtedness | 11,164 | 22,983 | ||||||
Intangible assets | 10,153 | 8,795 | ||||||
Investments | 4,480 | 7,539 | ||||||
Property, plant and equipment | 21,081 | 1,413 | ||||||
Other | 31,159 | 13,997 | ||||||
Total gross deferred tax assets | 1,664,395 | 1,748,068 | ||||||
Valuation allowance | (1,657,309 | ) | (1,737,756 | ) | ||||
Net deferred tax assets | 7,086 | 10,312 | ||||||
Deferred tax liabilities: | ||||||||
Property, plant and equipment | 26,709 | 1,980 | ||||||
Intangible assets | 6,576 | 8,363 | ||||||
Total gross deferred tax liabilities | 33,285 | 10,343 | ||||||
Net deferred tax liabilities | $ | 26,199 | $ | 31 |
As of June 30, 2012 and 2013, net deferred tax liabilities of $26.2 million and $31,000, respectively, are classified as deferred income taxes on the consolidated balance sheets. The deferred tax liability is noncurrent and there is no current asset due to the valuation allowance.
The reduction in the net deferred tax liability from June 30, 2012 is primarily the result of the restructuring of certain operations in Canada due to regulatory requirements. As a result of this restructuring, a significant portion of the previous deferred tax liability is now offset by the existing deferred tax asset at the parent company.
(d) | The Partnership has noncapital loss carryforwards for income tax purposes of approximately $3.7 billion and $4.0 billion as of June 30, 2012 and 2013, respectively, that are available to offset future taxable income and will expire in varying amounts over the next 20 years. |
There are capital loss carryforwards for United States income tax purposes of approximately $94.8 million at June 30, 2012 and 2013 that are available to offset future capital gains in the United States and will expire after 2015. The Partnerships net operating loss carryforwards pertaining to federal, state and foreign jurisdictions and will primarily expire after 2024 are as follows (in thousands):
June 30, | ||||||||
2012 | 2013 | |||||||
United States | $ | 1,198,763 | $ | 1,373,405 | ||||
Canada | 461,318 | 505,177 | ||||||
Europe | 2,012,105 | 2,140,920 | ||||||
$ | 3,672,186 | $ | 4,019,502 |
F-30 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
The amount of loss carryforwards reflect the Partnerships best estimate and are subject to final determination by the taxing authorities. The accumulated losses in Europe are an aggregate of nonoperating losses, which have arisen primarily as a result of recording impairments of the Partnerships investments in its subsidiaries based on book values as an estimate of fair values as required by the appropriate European accounting and tax authorities. These losses do not expire.
The Partnership believes that uncertainty exists with respect to the future realization of the loss carryforwards and a full valuation allowance has been established for the net operating loss carryforwards. The Partnership estimates that it is not more likely than not that the benefit of these losses will be utilized prior to their expiry date.
(e) | The Partnership or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various states, Canada federal jurisdiction and various provinces, and foreign jurisdictions. With few exceptions, the Partnership is no longer subject to federal, state and local examinations by the tax authorities in most jurisdictions for years before June 30, 2007. Various other authority reviews are ongoing, which do not have a material impact on the Partnerships financial statements. |
The Partnership adopted the provisions for accounting for uncertainty in income taxes on July 1, 2011. A reconciliation of the beginning and the ending amount of unrecognized tax benefits is as follows (in thousands):
2012 | 2013 | |||||||
Balance as of July 1 | $ | 22,536 | $ | 19,184 | ||||
Additions based on tax positions related to the current year | — | 293 | ||||||
Additions for tax positions of prior years | 2,017 | 2,716 | ||||||
Reductions for tax positions of prior years | (5,369 | ) | (355 | ) | ||||
Balance as of June 30 | $ | 19,184 | $ | 21,838 |
The total balance of unrecognized tax benefits as of June 30, 2013, if recognized, would reduce income tax expense by $2.6 million. The balance of the unrecognized tax benefits would not impact the annual effective tax rate to the extent the Partnership continued to apply a valuation allowance against its net deferred tax assets.
The Partnership had accrued interest and penalties of $2.4 million and $2.6 million as of June 30, 2012 and 2013, respectively, which are included in accounts payable and accrued liabilities on the consolidated balance sheets. For the year ended June 30, 2012 the Partnership recovered approximately $2.7 million in interest and penalties. For the year ended June 30, 2013, the Partnership recognized approximately $0.2 million in interest and penalties.
Included in the balance as of June 30, 2013 are $0.3 million of tax positions, which the Partnership expects will change within 12 months due to settlement or expiration of statute of limitations.
(15) | Pension Plans |
The Partnership has three closed noncontributory defined benefit pension plans, one registered and two nonregistered, covering certain of its executives, the majority of which are no longer employees of the Partnership. In addition to these plans, one of the Partnerships mountain resorts has two defined benefit pension plans covering certain employees. There are no additional service costs to the Partnership on any of the plans.
F-31 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
The following details the underfunded status of the defined benefit plans and the associated amounts recognized in the consolidated balance sheets as of June 30, 2012 and 2013 (in thousands):
Executive plans | Employee plans | |||||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Benefit obligation at beginning of year | $ | 38,173 | $ | 38,771 | $ | 9,225 | $ | 10,827 | ||||||||
Interest cost | 1,866 | 1,716 | 446 | 419 | ||||||||||||
Participant contributions | — | — | 1,587 | — | ||||||||||||
Actuarial (gains) losses | 3,083 | 1,204 | — | 251 | ||||||||||||
Benefits paid | (2,303 | ) | (2,319 | ) | (431 | ) | (680 | ) | ||||||||
Foreign currency translation | (2,048 | ) | (1,269 | ) | — | — | ||||||||||
Benefit obligation at end of year | $ | 38,771 | $ | 38,103 | $ | 10,827 | $ | 10,817 |
Executive plans | Employee plans | |||||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Fair value of plan assets at beginning of year | $ | 11,925 | $ | 9,736 | $ | 6,642 | $ | 6,730 | ||||||||
Actual return of assets | 231 | 170 | 392 | (404 | ) | |||||||||||
Employer contributions | 648 | 346 | 434 | 485 | ||||||||||||
Actuarial gains (losses) | (52 | ) | (117 | ) | (306 | ) | 742 | |||||||||
Benefits paid | (2,303 | ) | (2,319 | ) | (432 | ) | (680 | ) | ||||||||
Foreign currency translation | (713 | ) | (226 | ) | — | — | ||||||||||
Fair value of plan assets at end of year | $ | 9,736 | $ | 7,590 | $ | 6,730 | $ | 6,873 |
Executive plans | Employee plans | |||||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Net liability recognized on the consolidated balance sheets | $ | 29,036 | $ | 30,513 | $ | 4,096 | $ | 3,943 |
The net liability of all the plans is included in other long-term liabilities on the consolidated balance sheets.
The Partnership has issued letters of credit aggregating $39.6 million and $39.5 million as of June 30, 2012 and 2013, respectively, as security for its obligations under the executive plans.
Pension plans with an accumulated benefit obligation in excess of plan assets are as follows (in thousands):
Year Ended June 30, | ||||||||||||
2011 | 2012 | 2013 | ||||||||||
Projected benefit obligation | $ | 47,398 | $ | 49,598 | $ | 48,920 | ||||||
Fair value of plan assets | 18,567 | 16,466 | 14,463 |
The Partnership expects to contribute $0.6 million to the pension plans in fiscal year 2014.
F-32 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
The following details the amounts recognized in other comprehensive income (loss) for the years ended June 30, 2012 and 2013 (in thousands):
Executive plans | Employee plans | |||||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Cumulative amounts recognized in accumulated other comprehensive income (loss) before tax consists of: | ||||||||||||||||
Actuarial loss | $ | 6,043 | $ | 6,860 | $ | 3,703 | $ | 3,591 | ||||||||
Net actuarial loss | $ | 3,135 | $ | 1,322 | $ | 1,893 | $ | 318 | ||||||||
Foreign currency translation | (103 | ) | (241 | ) | — | — | ||||||||||
Amortization of net actuarial loss | (128 | ) | (264 | ) | (108 | ) | (430 | ) | ||||||||
Net loss (gain) recognized in other comprehensive income (loss) before tax | $ | 2,904 | $ | 817 | $ | 1,785 | $ | (112 | ) |
The actuarial losses included in accumulated other comprehensive income and expected to be recognized in net periodic pension cost during fiscal year 2014 are $0.6 million. There are no prior service costs.
The following details the components of net pension expense, recorded in operating expense in the consolidated statements of operations, and the underlying assumptions for the defined benefit plans for the years ended June 30, 2011, 2012 and 2013 (in thousands):
Executive plans | Employee plans | |||||||||||||||||||||||
2011 | 2012 | 2013 | 2011 | 2012 | 2013 | |||||||||||||||||||
Components of pension expense: | ||||||||||||||||||||||||
Interest cost | $ | 1,862 | $ | 1,866 | $ | 1,716 | $ | 471 | $ | 446 | $ | 419 | ||||||||||||
Expected return on plan assets | (253 | ) | (231 | ) | (171 | ) | (409 | ) | (392 | ) | (404 | ) | ||||||||||||
Actuarial loss | 28 | 128 | 264 | 153 | 109 | 251 | ||||||||||||||||||
Settlement loss | — | — | — | 189 | — | 178 | ||||||||||||||||||
Total pension expense | $ | 1,637 | $ | 1,763 | $ | 1,809 | $ | 404 | $ | 163 | $ | 444 |
Executive plans | Employee plans | |||||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Weighted average assumptions used: | ||||||||||||||||
Discount rate | 4.5 | % | 4.3 | % | 4.0 | % | 4.4 | % | ||||||||
Expected rate of return on plan assets | 1.9 | % | 2.0 | % | 6.1 | % | 6.0 | % |
The discount rate assumption used to determine the obligations of the Executive plans at the measurement date of June 30, 2013 was based on market yields on high quality corporate bonds in Canada, which was provided by PC Bond Analytics. The hypothetical yield curve is made up of AA rated corporate bonds. The average timing of benefit payments was compared to average timing of cash flows from the long-term bonds to assess potential timing adjustments. The resulting discount rate was 4.3% as of June 30, 2013.
The discount rate assumption used to determine the obligations of the Employee plans at the measurement date of June 30, 2013 was based on the Hewitt Top Quartile (HTQ) curve, which was designed by Hewitt Associates to provide a means for plan sponsors to value the liabilities of the pension plans or postretirement benefit plans. The HTQ curve is a hypothetical AA yield curve represented by a series of annualized individual discount rates. Each bond issue underlying the HTQ curve is required to have a rating of AA or better by Moodys Investor Service, Inc. or a rating AA or better by Standard & Poors. The average timing of benefit payments was compared to average timing of cash flows from the long-term bonds to assess potential timing adjustments. The resulting discount rate was 4.4% as of June 30, 2013.
F-33 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
The expected long-term rate of return for the executive pension plan employs a building block approach based on historical markets and historical relationship between equities and fixed income investments. Current market factors are also evaluated.
The expected long-term rate of return for the employee pension plan is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments.
(a) | Plan assets |
The asset allocation of the Partnerships pension benefits as of June 30, 2012 and 2013, the dates of the actuarial valuations, was as follows (in thousands):
Executive plans | Employee plans | |||||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Equity securities | 3 | % | 5 | % | 45 | % | 46 | % | ||||||||
Fixed income securities | 10 | % | 11 | % | 52 | % | 52 | % | ||||||||
Cash | 87 | % | 84 | % | 3 | % | 2 | % |
The market value of the Partnership funded assets of the executive plans as of June 30, 2012 was $9.7 million, of which $5.6 million was in a noninterest bearing refundable tax account held by the Receiver General of Canada. At June 30, 2013, the market value was $7.6 million, of which $4.4 million was held by the Receiver General of Canada.
The defined benefit plans employ a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities and plan funded status. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large capitalizations. Investment risk and surplus risk (i.e., plan assets minus plan liabilities) are measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements and periodic asset/liability studies.
(b) | Fair value of plan assets: |
The following tables present information about the fair value of pension plan assets as of June 30, 2012 (in thousands):
Fair value hierarchy | ||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Executive Plans: | ||||||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||
Cash (1) | $ | 2,812 | $ | 2,812 | $ | — | $ | — | ||||||||||||||
Restricted cash (2) | 5,593 | 5,593 | — | — | ||||||||||||||||||
Equity Securities: | ||||||||||||||||||||||
Canadian equity pooled funds (3) | 1,332 | — | 1,332 | — | ||||||||||||||||||
Total | $ | 9,737 | $ | 8,405 | $ | 1,332 | $ | — |
F-34 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
Fair value hierarchy | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Employee Plans: | ||||||||||||||||
Cash and cash equivalents (4) | $ | 229 | $ | 229 | $ | — | $ | — | ||||||||
Equity securities: | ||||||||||||||||
Large Cap growth funds (5) | 1,340 | 1,340 | — | — | ||||||||||||
Large Cap value funds (6) | 918 | 918 | — | — | ||||||||||||
Small Cap funds (7) | 306 | 306 | — | — | ||||||||||||
International equities (8) | 453 | 453 | — | — | ||||||||||||
Fixed income securities: | ||||||||||||||||
Total return bond funds (9) | 3,484 | 3,484 | — | — | ||||||||||||
Total | $ | 6,730 | $ | 6,730 | $ | — | $ | — |
The following tables present information about the fair value of pension plan assets as of June 30, 2013 (in thousands):
Fair value hierarchy | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Executive plans: | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Cash (1) | $ | 2,006 | $ | 2,006 | $ | — | $ | — | ||||||||
Restricted cash (2) | 4,404 | 4,404 | — | — | ||||||||||||
Equity Securities: | ||||||||||||||||
Canadian equity pooled funds (3) | 1,180 | — | 1,180 | — | ||||||||||||
Total | $ | 7,590 | $ | 6,410 | $ | 1,180 | $ | — |
Fair value hierarchy | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Employee plans: | ||||||||||||||||
Cash and cash equivalents (4) | $ | 142 | $ | 142 | $ | — | $ | — | ||||||||
Equity securities: | ||||||||||||||||
Large Cap growth funds (10) | 663 | 168 | 495 | — | ||||||||||||
Large Cap value funds (11) | 481 | — | 481 | — | ||||||||||||
Large Cap blend funds (12) | 816 | — | 816 | — | ||||||||||||
Small Cap funds (13) | 131 | — | 131 | — | ||||||||||||
Mid Cap funds (14) | 416 | — | 416 | — | ||||||||||||
International equities (15) | 675 | 413 | 262 | — | ||||||||||||
Fixed income securities: | ||||||||||||||||
Total return bond funds (9) | 3,548 | 1,791 | 1,757 | — | ||||||||||||
Total | $ | 6,872 | $ | 2,514 | $ | 4,358 | $ | — |
(1) | This category is cash held in Canadian dollars used to pay benefits and the fair value is the carrying amount. |
(2) | This category includes funds that are held in a non-interest bearing refundable tax account by the Receiver General of Canada. |
(3) | This category includes investments in pooled funds that invest in diversified portfolio of equity securities of Canadian companies. The funds are benchmarked against the S&P/TSX Total Return index. |
(4) | This category includes investments in short term U.S. denominated money market instruments of domestic and foreign issuers. The fund is benchmarked to Lipper Institutional Money Market Funds Average and the Citigroup 3-months T-bill. |
(5) | This category includes investments with the aim to achieve long-term capital appreciation. The funds invest at least 80% of the funds net assets in equity securities of large capitalization companies and up to 25% of the funds total assets in equities of foreign issuers through ADRs and similar investments. The funds are benchmarked to the Russell 1000 Growth index. |
F-35 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(6) | This category includes investments with the aim to achieve capital appreciation by investing primarily in equity securities of undervalued, high quality companies with larger market capitalizations. The funds are benchmarked to the Russell 1000 Value index. |
(7) | This category includes investments with the aim to achieve long-term capital appreciation. The funds invest at least 80% of the funds net assets in equity securities of U.S. small-cap companies and may invest up to 25% of the funds net assets in foreign securities or derivatives including futures contracts, options and swaps and exchange traded funds. The funds are benchmarked to the Russell 2000 Growth and Value index. |
(8) | This category includes investments with the aim to achieve long-term total return, principally from growth of capital. The funds invest no less than 65% of the funds assets primarily in common and preferred stocks of foreign companies, including those located in emerging market countries. Companies in the funds portfolio generally have market capitalizations in excess of $1 billion at the time of purchase. The funds are benchmarked to the MSCI EAFE index. |
(9) | This category of funds seeks total return, consisting of income and capital appreciation. Under normal circumstances, the funds invest in at least 80% of its net assets in investment-grade bonds or fixed grade income securities, up to 25% of the funds total assets in asset-backed securities, and up to 20% of the funds total assets in U.S. dollar denominated debt securities of foreign issuers. The funds are benchmarked to the Barclays Capital U.S. Aggregate Bond index. |
(10) | This category includes investments in pooled funds with the aim to achieve capital appreciation by investing primarily in equity securities of all market capitalizations, including high quality companies with larger market capitalizations. The funds are benchmarked to the Russell 1000 Value index and the Russell 3000 Growth index. |
(11) | This category includes investments in pooled funds with the aim to achieve long-term capital appreciation by investing in the common stocks of well-established companies. The funds invest a majority of the funds net assets in equity securities of large capitalization companies and may also invest assets in equities of foreign issuers through ADRs and similar investments. The funds are benchmarked to the Russell 1000 Value index. |
(12) | This category includes investments in pooled funds with the aim to achieve capital appreciation by investing primarily in equity securities of companies that compose the S&P 500 index. The funds are benchmarked to the S&P 500 index. |
(13) | This category includes investments in pooled funds with the aim to achieve long-term capital appreciation. The funds invest a majority of the funds net assets in equity securities of U.S. small-cap companies and may also invest its net assets in foreign securities or derivatives including futures contracts, options and swaps and exchange traded funds. The funds are benchmarked to the Russell 2000 Growth and Value index. |
(14) | This category includes investments in pooled funds with the aim to achieve capital appreciation by investing primarily in equity securities of companies that compose the S&P mid-cap 400 index. The funds are benchmarked to the S&P 400 mid-cap index. |
(15) | This category includes investments in pooled funds with the aim to achieve long-term total return, principally from growth of capital. The funds invest primarily in common and preferred stocks of foreign companies, including those located in emerging market countries. The majority of the funds net assets are invested in stocks of international companies that fall within the market capitalization of the MSCI EAFE index. The funds are benchmarked to the MSCI EAFE index. |
Transfers between levels of the fair value hierarchy are recognized at the end of the fiscal year, which generally coincides with the Partnerships valuation process. In the year ended June 30, 2013, $4.4 million of pension assets, classified as Level 1 as of June 30, 2012, were liquidated from certain investments and reinvested in pooled fund investments, which were classified as Level 2 assets as of June 30, 2013.
(c) | Cash flows: |
As of June 30, 2013, the expected benefit payments for the next 10 years before discounting are as follows (in thousands):
Executive
plans | Employee
plans | |||||||||
2014 | $ | 2,260 | $ | 1,200 | ||||||
2015 | 2,249 | 1,094 | ||||||||
2016 | 2,246 | 925 | ||||||||
2017 | 2,311 | 885 | ||||||||
2018 | 2,379 | 938 | ||||||||
2019 – 2023 | 11,815 | 3,676 |
The expected benefit payments above are based on the same assumptions used to measure the Partnerships benefit obligation as of June 30, 2013.
F-36 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(16) | Related Party Transactions |
The Partnership had notes payable to affiliates (the Third Lien Loans, the Tranche B Term Loans and the Affiliate Loan) with principal balances of $583.8 million and $597.0 million, and accrued interest of $525.2 million and $761.7 million, as of June 30, 2012 and 2013, respectively. Per the loan agreements, the Partnership accrues interest related to these loans ranging from 15.6% to 20%. In the case of the Third Lien Loans, interest payments will not be made until maturity. In the case of the Tranche B Term Loans, interest payments will not be made until the FY13 Lien Loans and the Third Lien Loan are repaid. In the case of the Affiliate Loan, interest payments will not be made until the FY13 Lien Loans, the Third Lien Loan and the Tranche B Term Loans are repaid.
The Partnership had a receivable due from A&K with a principal balance of $5.5 million and accrued interest of $0.5 million and $0.8 million as of June 30, 2012 and 2013, respectively. Interest accrues monthly at an annually adjusted rate based on LIBOR + 1%. The principal and accrued interest is due upon maturity, which is December 31, 2014.
(17) | Discontinued Operations |
The Partnership has classified all operations meeting specified criteria as discontinued operations in the consolidated statements of operations. These discontinued operations represent the disposal of non-core mountain resorts, lodging, and golf operations sold during the year ended June 30, 2011.
There were no significant operations disposed of during the years ended June 30, 2012 or 2013.
Loss from discontinued operations and the results of the loss relating to discontinued operations for the year ended June 30, 2011 are as follows (in thousands):
Year Ended June 30, 2011 | ||||
Revenue: | ||||
Copper Mountain | $ | — | ||
Panorama | — | |||
Sandestin Golf & Beach Resort | — | |||
Mountain Creek | — | |||
Napa | 1,805 | |||
Other | 248 | |||
Revenue | $ | 2,053 |
F-37 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
Year
Ended June 30, 2011 | ||||
Loss from discontinued operations, net of income taxes: | ||||
Copper Mountain | $ | (289 | ) | |
Panorama | 230 | |||
Sandestin Golf & Beach Resort | (1,494 | ) | ||
Mountain Creek | (46 | ) | ||
Napa | (469 | ) | ||
Other | (651 | ) | ||
Loss from discontinued operations, net of income taxes of $0 | (2,719 | ) | ||
Loss on sale of discontinued operations, net of income tax expense: | ||||
Copper Mountain | (197 | ) | ||
Panorama | (1,399 | ) | ||
Sandestin Golf & Beach Resort | (52 | ) | ||
Mountain Creek | (57 | ) | ||
Napa | (2,208 | ) | ||
Other | 163 | |||
Loss on sale of discontinued operations, net of income tax expense of $0 | (3,750 | ) | ||
Loss from discontinued operations | $ | (6,469 | ) |
F-38 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(18) | Segment Information |
The Partnership currently manages and reports operating results through three reportable segments: Mountain, Adventure and Real Estate. The Mountain segment includes the operations of the Partnerships mountain resorts and related ancillary activities, comprising Steamboat, Winter Park, Mont Tremblant, Stratton, Snowshoe, as well as our 50% interest in Blue Mountain. The Adventure segment comprises CMH, which provides heli-skiing, mountaineering and hiking adventures, and our ancillary aviation services, which include fire suppression and maintenance and repair of aircraft. The Real Estate segment includes our core real estate development activities, as well as our real estate management, marketing and sales activities, including our vacation club business, management of condominium hotel properties, and sale of real estate. Each of the Partnerships reportable segments, although integral to the success of the others, offers distinctly different products and services and requires different types of management focus. As such, these segments are managed separately. In deciding how to allocate resources and assess performance, the Partnerships Chief Operating Decision Maker (CODM) regularly evaluates the performance of its reportable segments on the basis of revenues and segment Adjusted EBITDA. We also evaluate segment Adjusted EBITDA as a key compensation measure. The compensation committee determines the annual variable compensation for certain members of our management team based, in part, on Adjusted EBITDA or segment Adjusted EBITDA. Segment Adjusted EBITDA assists us in comparing our segment performance over various reporting periods because it removes from our operating results the impact of items that our management believes do not reflect our core operating performance.
Our reportable segment measure of Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other entities may not calculate segment Adjusted EBITDA in the same manner. We define Adjusted EBITDA as net income (loss) attributable to Intrawest Cayman L.P. before interest expense, net (excluding interest income earned from receivables related to our IRCG operations), income tax benefit or expense, and depreciation and amortization, further adjusted to exclude certain items, including, but not limited to: (i) impairments of goodwill, real estate and long-lived assets; (ii) gains and losses on asset dispositions; (iii) earnings and losses from equity method investments; (iv) gains and losses from disposal of equity method investments; (v) gains and losses on extinguishment of debt; (vi) other income or expense; (vii) earnings and losses attributable to noncontrolling interest; (viii) discontinued operations, net of tax; and (ix) other items, which include revenue and expenses of our legacy and other non-core operations, restructuring charges and associated severance expenses, non-cash compensation and other items. For purposes of calculating Adjusted EBITDA, we also add back to net loss attributable to Intrawest Cayman L.P. our pro rata share of EBITDA related to equity method investments included within our reportable segments and we remove from Adjusted EBITDA the Adjusted EBITDA attributable to noncontrolling interests within our reportable segments. Asset information by segment, except for capital expenditures as shown in the table below, is not included in reports used by our CODM in its monitoring of our performance and, therefore, is not disclosed.
F-39 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
Segment Adjusted EBITDA for all periods presented has been calculated using this definition. The following table presents revenues and Adjusted EBITDA for our reportable segments, reconciled to consolidated amounts (in thousands):
Year Ended June 30, | ||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||
Revenues: | ||||||||||||||||
Mountain | $ | 322,194 | $ | 310,765 | $ | 339,003 | ||||||||||
Adventure | 96,693 | 109,496 | 113,622 | |||||||||||||
Real Estate | 61,165 | 61,439 | 64,726 | |||||||||||||
Total reportable segment revenues | 480,052 | 481,700 | 517,351 | |||||||||||||
Legacy, non-core and other revenues (1) | 79,471 | 31,747 | 7,056 | |||||||||||||
Total revenues | $ | 559,523 | $ | 513,447 | $ | 524,407 | ||||||||||
Segment Adjusted EBITDA | ||||||||||||||||
Mountain (2) | 69,805 | 66,051 | 72,353 | |||||||||||||
Adventure (3) | 15,563 | 16,151 | 19,740 | |||||||||||||
Real Estate (4), (5) | 9,002 | 9,855 | 13,167 | |||||||||||||
Total Segment Adjusted EBITDA | 94,370 | 92,057 | 105,260 | |||||||||||||
Legacy and other non-core expenses, net (6) | (19,707 | ) | (13,762 | ) | (12,878 | ) | ||||||||||
Other operating expenses (7) | (4,039 | ) | (4,989 | ) | (4,416 | ) | ||||||||||
Depreciation and amortization | (76,371 | ) | (57,655 | ) | (58,342 | ) | ||||||||||
Impairment of long-lived assets | (12,140 | ) | (782 | ) | (143 | ) | ||||||||||
Impairment of real estate | (73,230 | ) | (8,137 | ) | (1,052 | ) | ||||||||||
Goodwill impairment | (64,097 | ) | (3,575 | ) | — | |||||||||||
Loss on disposal of assets | (26,196 | ) | (9,443 | ) | (12,448 | ) | ||||||||||
Interest income (5) | 4,390 | 2,814 | 1,827 | |||||||||||||
Interest expense on third party debt | (143,463 | ) | (135,929 | ) | (98,437 | ) | ||||||||||
Interest expense on notes payable to affiliates | (160,943 | ) | (195,842 | ) | (236,598 | ) | ||||||||||
Earnings (loss) from equity method investments (8) | 8,299 | 538 | (5,147 | ) | ||||||||||||
Pro rata share of EBITDA related to equity method investments (2), (4) | (10,334 | ) | (8,393 | ) | (8,932 | ) | ||||||||||
Adjusted EBITDA attributable to noncontrolling interest (3) | — | — | 1,232 | |||||||||||||
Gain on disposal of equity method investments | — | — | 18,923 | |||||||||||||
Loss on extinguishment of debt | — | — | (11,152 | ) | ||||||||||||
Other income (expense), net | (2,021 | ) | 1,199 | 1,973 | ||||||||||||
Income tax benefit (expense) | (6,555 | ) | 5,836 | 23,616 | ||||||||||||
Discontinued operations, net of tax | (6,469 | ) | — | — | ||||||||||||
Loss (earnings) attributable to noncontrolling interest | (361 | ) | — | 757 | ||||||||||||
Net loss attributable to Intrawest Cayman L.P. | $ | (498,867 | ) | $ | (336,063 | ) | $ | (295,957 | ) |
(1) | Other revenues represent legacy and other non-core operations that are not reviewed regularly by the CODM to assess performance and make decisions regarding the allocation of resources. It includes legacy real estate asset sales, non-core retail revenues and revenues from management of non-core commercial properties. For the year ended June 30, 2011, it also includes $38.6 million of revenue from operations of Whistler Blackcomb Holdings, Inc. prior to its divestiture in November 2010. |
(2) | Includes our pro rata share of EBITDA from our equity method investment in Blue Mountain Resorts Limited, which is regularly reviewed by our CODM. Our pro rata share of EBITDA represents our share of EBITDA from the equity method investment based on our economic ownership percentage. |
F-40 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(3) | Adventure segment Adjusted EBITDA excludes Adjusted EBITDA attributable to noncontrolling interest. |
(4) | Includes our pro rata share of EBITDA from our equity method investments in Mammoth Hospitality Management, LLC, and Chateau M.T. Inc., which are regularly reviewed by our CODM. Our pro rata share of EBITDA represents our share of EBITDA from these equity method investments based on our economic ownership percentage. |
(5) | Real Estate segment Adjusted EBITDA includes interest income earned from receivables related to our IRCG operations, in the amount of $4.8 million, $4.7 million and $4.8 million for the years ended June 30, 2011, 2012 and 2013, respectively. Interest income reflected in the reconciliation excludes the interest income earned from receivables related to our IRCG operations. |
(6) | Represents revenue and expenses of our legacy and other non-core operations that are not reviewed regularly by our CODM to assess performance and make decisions regarding the allocation of resources. Revenues and expenses related to legacy and other non-core operations include the results of Whistler Blackcomb prior to its divestiture in November 2010, income (loss) from the equity method investment in MMSA Holdings Inc., retail operations not located at the Partnerships properties and management of non-core commercial properties owned by third parties. For the year ended June 30, 2011, it includes the net loss from operations of Whistler Blackcomb prior to its divestiture in November 2010 of $12.5 million. It also includes legacy litigation consisting of claims for damages related to alleged construction defects, purported disclosure violations and allegations that we failed to construct planned amenities. |
(7) | Includes non-cash compensation, restructuring charges relating to Alpine Helicopters and moving our corporate office from Vancouver, British Columbia to Denver, Colorado and the associated severance expense. |
(8) | Represents the earnings (loss) from our equity method investments, including: Blue Mountain Resort Limited, Chateau M.T. Inc., Mammoth Hospitality Management, LLC, MMSA Holdings, Inc., and Whistler Blackcomb Holdings, Inc. |
The following table presents capital expenditures for our reportable segments, reconciled to consolidated amounts (in thousands):
Year Ended June 30, | ||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||
Capital Expenditures | ||||||||||||||||
Mountain | $ | 17,782 | $ | 16,710 | $ | 15,742 | ||||||||||
Adventure | 6,085 | 4,844 | 3,098 | |||||||||||||
Real Estate | 1,960 | 1,404 | 3,092 | |||||||||||||
Total segment capital expenditures | $ | 25,827 | $ | 22,958 | $ | 21,932 | ||||||||||
Corporate and other | 1,740 | 7,103 | 7,747 | |||||||||||||
Total capital expenditures | $ | 27,567 | $ | 30,061 | $ | 29,679 |
Geographic Data
Information about the Partnerships revenues by geographic region for the years ended June 30, 2011, 2012 and 2013 is as follows (in thousands):
Year Ended June 30, | ||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||
Revenues: | ||||||||||||||||
United States | $ | 293,884 | $ | 280,090 | $ | 306,084 | ||||||||||
International | 265,639 | 233,357 | 218,323 | |||||||||||||
Revenues | $ | 559,523 | $ | 513,447 | $ | 524,407 |
F-41 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(19) | Loss per Unit |
Loss per unit attributable to limited partners is based on the weighted average number of limited partner units outstanding during each period. For the years ended June 30, 2011, 2012 and 2013, there were no potentially dilutive units. The following table sets forth the computation of the Partnerships basic and diluted earnings per unit attributable to limited partners (in thousands, except unit and per unit data):
Year Ended June 30, | ||||||||||||||||
2011 | 2012 | 2013 | ||||||||||||||
Basic and diluted earnings per unit computation: | ||||||||||||||||
Numerator: | ||||||||||||||||
Loss from continuing operations | $ | (492,037 | ) | $ | (336,063 | ) | $ | (296,714 | ) | |||||||
Loss (earnings) attributable to noncontrolling interests | (361 | ) | — | 757 | ||||||||||||
Loss from continuing operations attributable to Intrawest Cayman LP | $ | (492,398 | ) | $ | (336,063 | ) | $ | (295,957 | ) | |||||||
Denominator: | ||||||||||||||||
Weighted average units outstanding, basic and diluted | 1,348,253 | 1,348,412 | 1,350,412 | |||||||||||||
Basic and diluted loss per unit from continuing operations attributable to Intrawest Cayman L.P. | $ | (365.21 | ) | $ | (249.23 | ) | $ | (219.16 | ) | |||||||
Basic and diluted loss per unit from discontinued operations | (4.80 | ) | — | — | ||||||||||||
Basic and diluted loss per unit from net loss attributable to limited partners | $ | (370.01 | ) | $ | (249.23 | ) | $ | (219.16 | ) |
(20) | Commitments and Contingencies |
Commitments
(a) | The Partnership holds forestry licenses and land leases with respect to certain of its resort operations. These leases expire at various times between 2012 and 2051 and provide for annual payments generally in the range of 2% of defined gross revenues. Payments for forestry licenses and land leases for the years ended June 30, 2011, 2012 and 2013 were $2.5 million, $2.6 million and $2.4 million, respectively. |
(b) | The Partnership has estimated costs to complete property, plant and equipment as of June 30, 2013 of $2.0 million. |
(c) | In addition to the forestry licenses and land leases described in (a) above, the Partnership has entered into other operating lease commitments, payable as follows (in thousands): |
2014 | $ | 11,568 | ||||
2015 | 8,487 | |||||
2016 | 5,182 | |||||
2017 | 4,457 | |||||
2018 | 2,926 | |||||
Thereafter | 7,094 | |||||
$ | 39,714 |
Total operating lease payments recorded in operating expenses in the consolidated statements of operations for the years ended June 30, 2011, 2012 and 2013 were $19.9 million, $17.9 million and $15.1 million, respectively.
Contingencies
(d) | The Partnership has issued letters of credit at June 30, 2012 and 2013 of $57.2 million and $52.4 million, respectively, mainly to secure its commitments under self-insurance claims and the executive pension plans. At June 30, 2012, the letters of credit were secured by cash on deposit, which is classified in restricted cash on the consolidated balance sheets. |
F-42 |
INTRAWEST CAYMAN L.P.
Notes to Consolidated Financial Statements
June 30, 2011, 2012 and 2013
(e) | The Partnership and its subsidiaries are involved in various lawsuits arising in the ordinary course of business. In addition, the Partnerships pre-2010 legacy real estate development activities, combined with the unprecedented downward shift in real estate asset values that occurred in 2007 and 2008, resulted in claims being filed against the Partnership by owners and prospective purchasers of residences in the real estate developments. The Partnership has been named as a defendant in lawsuits alleging construction defects at certain of the existing developments. In other lawsuits, purchasers are seeking rescission of real estate purchases and/or return of deposits paid on pre-construction purchase and sale agreements. These claims are related to alleged violations of state and federal laws that require providing purchasers with certain mandated disclosures. | |
The Partnership believes that it has adequate insurance coverage or has accrued for loss contingencies for all material matters in which it believes a loss is probable and the amount of the loss is reasonably estimable. Although the ultimate outcome of claims cannot be ascertained, current pending and threatened claims are not expected to have a material adverse effect, individually or in the aggregate, on the Partnerships financial position, results of operations or cash flows. |
(f) | The federal government of Canada and the provincial government of Quebec have granted financial assistance to a subsidiary of the Partnership in the form of interest-free loans and forgivable grants for the construction of specified four-season tourist facilities at Tremblant. Loans totaling $4.0 million and $3.3 million as of June 30, 2012 and 2013, respectively, have been advanced and are repayable over seven years starting in 2010. The grants received, which will total $118.6 million and $114.8 million as of June 30, 2012 and 2013, respectively, when they are fully advanced, amounted to $87.2 million and $84.9 million as of June 30, 2012 and 2013 respectively. Nonrepayable government assistance relating to capital expenditures is reflected as a reduction of the cost of such assets. Reimbursable government loans are presented as long-term debt. |
(g) | The Partnership operates the Winter Park ski resort under a capital lease that requires annual payments that are contingent on the combination of future cash flows and future gross revenue levels. As such payments are contingent and not readily determinable, the potential obligation of such amounts has not been recorded. |
Certain leases also include escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or concession such as a rent holiday, rent expense is recognized using the straight-line method over the term of the lease.
(21) | Subsequent Events |
In August 2013, the Partnership sold a parcel of real estate held for development for proceeds of $9.0 million and recorded no significant gain or loss on the sale.
F-43 |
Schedule II – Valuation and Qualifying Accounts and Reserves
For the Years Ended June 30, 2011, 2012 and 2013
Balance
at Beginning of Period | Charged
to Costs and Expenses | Deductions | Balance
at End of Period | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
2011 | ||||||||||||||||||||||
Valuation Allowance on Income Taxes | $ | (1,027,001 | ) | $ | — | $ | (166,939 | ) | $ | (1,193,940 | ) | |||||||||||
Trade Receivable Allowances | (3,883 | ) | (3,281 | ) | (1,313 | ) | (8,477 | ) | ||||||||||||||
Related Party Accounts Receivable Allowance | (24,483 | ) | — | — | (24,483 | ) | ||||||||||||||||
Loans, Mortgages and Notes Receivable Allowance | (8,344 | ) | (3,072 | ) | 389 | (11,027 | ) | |||||||||||||||
2012 | ||||||||||||||||||||||
Valuation Allowance on Income Taxes | $ | (1,193,940 | ) | $ | — | $ | (463,369 | ) | $ | (1,657,309 | ) | |||||||||||
Trade Receivable Allowances | (8,477 | ) | (1,946 | ) | 7,082 | (3,341 | ) | |||||||||||||||
Related Party Accounts Receivable Allowance | (24,483 | ) | — | — | (24,483 | ) | ||||||||||||||||
Loans, Mortgages and Notes Receivable Allowance | (11,027 | ) | (1,288 | ) | 1,571 | (10,744 | ) | |||||||||||||||
2013 | ||||||||||||||||||||||
Valuation Allowance on Income Taxes | $ | (1,657,309 | ) | $ | — | $ | (80,447 | ) | $ | (1,737,756 | ) | |||||||||||
Trade Receivable Allowances | (3,341 | ) | (1,097 | ) | 943 | (3,495 | ) | |||||||||||||||
Related Party Accounts Receivable Allowance | (24,483 | ) | — | 24,483 | — | |||||||||||||||||
Loans, Mortgages and Notes Receivable Allowance | (10,744 | ) | (1,273 | ) | 915 | (11,102 | ) |
See accompanying report of independent registered public accounting firm.
F-44 |
INTRAWEST
CAYMAN L.P.
Condensed Consolidated Balance Sheets
(In thousands, except unit data)
(Unaudited)
June 30, 2013 | September 30, 2013 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 59,775 | $ | 44,860 | ||||
Restricted cash | 13,685 | 13,466 | ||||||
Receivables, net of allowances of $8,333 and $7,693 | 38,298 | 39,954 | ||||||
Amounts due from related parties | 79 | 97 | ||||||
Inventories | 29,151 | 35,649 | ||||||
Prepaid expenses and other assets | 20,759 | 22,928 | ||||||
Total current assets | 161,747 | 156,954 | ||||||
Receivables, net of allowances of $6,264 and $6,412 | 37,779 | 37,788 | ||||||
Amounts due from related parties | 6,262 | 6,287 | ||||||
Property, plant and equipment, net of accumulated depreciation of $347,364 and $362,594 | 475,856 | 501,467 | ||||||
Real estate held for development | 164,916 | 154,645 | ||||||
Deferred charges and other | 28,584 | 29,606 | ||||||
Equity method investments | 86,344 | 86,488 | ||||||
Intangible assets, net | 65,503 | 64,513 | ||||||
Goodwill | 94,609 | 94,609 | ||||||
Total assets | $ | 1,121,600 | $ | 1,132,357 | ||||
Liabilities and Partners Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 62,196 | $ | 74,136 | ||||
Deferred revenue and deposits | 52,110 | 76,104 | ||||||
Long-term debt due within one year | 8,201 | 9,193 | ||||||
Total current liabilities | 122,507 | 159,433 | ||||||
Deferred revenue and deposits | 22,115 | 22,263 | ||||||
Long-term debt | 580,662 | 598,360 | ||||||
Notes payable to affiliates | 1,358,695 | 1,426,350 | ||||||
Deferred income taxes | 31 | 32 | ||||||
Other long-term liabilities | 56,336 | 56,560 | ||||||
Total liabilities | 2,140,346 | 2,262,998 | ||||||
Commitments and contingencies (note 13) | ||||||||
Partners deficit: | ||||||||
Partnership units, unlimited number authorized | ||||||||
General partner: 0 units outstanding at June 30, 2013 and September 30, 2013 | — | — | ||||||
Limited partners: 1,352,253 units outstanding at June 30, 2013 and September 30, 2013 | (1,166,797 | ) | (1,288,811 | ) | ||||
Accumulated other comprehensive income | 148,805 | 158,500 | ||||||
Total Intrawest Cayman L.P. deficit | (1,017,992 | ) | (1,130,311 | ) | ||||
Noncontrolling interest | (754 | ) | (330 | ) | ||||
Total partners deficit | (1,018,746 | ) | (1,130,641 | ) | ||||
Total liabilities and partners deficit | $ | 1,121,600 | $ | 1,132,357 |
See accompanying notes to condensed consolidated financial statements.
F-45 |
INTRAWEST
CAYMAN L.P.
Condensed Consolidated Statements of Operations
(In thousands, except unit and per unit data)
(Unaudited)
Three Months Ended September 30, | ||||||||
2012 | 2013 | |||||||
Revenues | $ | 79,195 | $ | 80,561 | ||||
Operating expenses | 101,179 | 104,196 | ||||||
Depreciation and amortization | 14,653 | 13,145 | ||||||
Loss (gain) on disposal of assets | 1,210 | (236 | ) | |||||
Impairment of real estate | 62 | 633 | ||||||
Loss from operations | (37,909 | ) | (37,177 | ) | ||||
Interest income | 1,637 | 1,632 | ||||||
Interest expense on third party debt | (35,006 | ) | (16,464 | ) | ||||
Interest expense on notes payable to affiliates | (55,371 | ) | (67,105 | ) | ||||
Loss from equity method investments | (91 | ) | (1,591 | ) | ||||
Other income (expense), net | 402 | (172 | ) | |||||
Loss before income taxes | (126,338 | ) | (120,877 | ) | ||||
Income tax expense | 972 | 701 | ||||||
Net loss | (127,310 | ) | (121,578 | ) | ||||
Loss (earnings) attributable to noncontrolling interest | 34 | (436 | ) | |||||
Net loss attributable to Intrawest Cayman L.P. | (127,276 | ) | (122,014 | ) | ||||
Net loss attributable to general partner | — | — | ||||||
Net loss attributable to limited partners | $ | (127,276 | ) | $ | (122,014 | ) | ||
Weighted average units outstanding, basic and diluted | 1,350,253 | 1,352,253 | ||||||
Net loss per unit, basic and diluted | $ | (94.26 | ) | $ | (90.23 | ) |
See accompanying notes to condensed consolidated financial statements.
F-46 |
INTRAWEST
CAYMAN L.P.
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
(Unaudited)
Three Months Ended September 30, | ||||||||
2012 | 2013 | |||||||
Net loss | $ | (127,310 | ) | $ | (121,578 | ) | ||
Foreign currency translation adjustments | 18,744 | 8,225 | ||||||
Realized portion on cash flow hedge (net of tax of $0) | 970 | 1,601 | ||||||
Actuarial loss on pensions (net of tax of $0) | (215 | ) | (143 | ) | ||||
Comprehensive loss | (107,811 | ) | (111,895 | ) | ||||
Comprehensive loss (income) attributable to noncontrolling interest | 36 | (424 | ) | |||||
Comprehensive loss attributable to Intrawest Cayman L.P. | $ | (107,775 | ) | $ | (112,319 | ) |
See accompanying notes to condensed consolidated financial statements.
F-47 |
INTRAWEST
CAYMAN L.P.
Condensed Consolidated Statements of Partners Deficit
(In thousands)
(Unaudited)
Accumulated | ||||||||||||||||||||
Other | ||||||||||||||||||||
General | Limited | Comprehensive | Noncontrolling | |||||||||||||||||
Partner | Partners | Income | Interest | Total | ||||||||||||||||
Balance, June 30, 2012 | $ | — | $ | (877,879 | ) | $ | 153,598 | $ | — | $ | (724,281 | ) | ||||||||
Net loss | — | (127,276 | ) | — | (34 | ) | (127,310 | ) | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | — | — | 18,746 | (2 | ) | 18,744 | ||||||||||||||
Realized portion on cash flow hedge (net of tax of $0) | — | — | 970 | — | 970 | |||||||||||||||
Actuarial loss on pensions (net of tax of $0) | — | — | (215 | ) | — | (215 | ) | |||||||||||||
Contribution from Partners | 2,667 | 2,667 | ||||||||||||||||||
Unit-based compensation | 223 | 223 | ||||||||||||||||||
Cash settlement of unit-based compensation | — | (23 | ) | — | — | (23 | ) | |||||||||||||
Balance, September 30, 2012 | $ | — | $ | (1,002,288 | ) | $ | 173,099 | $ | (36 | ) | $ | (829,225 | ) | |||||||
Balance, June 30, 2013 | $ | — | $ | (1,166,797 | ) | $ | 148,805 | $ | (754 | ) | $ | (1,018,746 | ) | |||||||
Net (loss) income | — | (122,014 | ) | — | 436 | (121,578 | ) | |||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||
Foreign currency translation adjustments | — | — | 8,237 | (12 | ) | 8,225 | ||||||||||||||
Realized portion on cash flow hedge (net of tax of $0)(1) | — | — | 1,601 | — | 1,601 | |||||||||||||||
Actuarial loss on pensions (net of tax of $0)(2) | — | — | (143 | ) | — | (143 | ) | |||||||||||||
Balance, September 30, 2013 | $ | — | $ | (1,288,811 | ) | $ | 158,500 | $ | (330 | ) | $ | (1,130,641 | ) |
(1) | Amount reclassified out of Accumulated Other Comprehensive Income is included in interest expense on third party debt in the unaudited condensed consolidated statements of operations. |
(2) | Amount reclassified out of Accumulated Other Comprehensive Income is included in operating expenses in the unaudited condensed consolidated statements of operations. |
See accompanying notes to condensed consolidated financial statements.
F-48 |
INTRAWEST
CAYMAN L.P.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended September 30, | |||||||||
2012 | 2013 | ||||||||
Cash (used in) provided by: | |||||||||
Operating activities: | |||||||||
Net loss | $ | (127,310 | ) | $ | (121,578 | ) | |||
Adjustments to reconcile net income to net cash (used in) provided by | |||||||||
operating activities: | |||||||||
Depreciation and amortization | 14,653 | 13,145 | |||||||
Impairment of real estate | 62 | 633 | |||||||
Loss from equity method investments | 91 | 1,591 | |||||||
Distributions of earnings from equity method investments | 2,470 | 26 | |||||||
Provision for doubtful accounts | 608 | 386 | |||||||
Amortization of deferred financing costs | 1,501 | 1,011 | |||||||
Realized portion on cash flow hedge | 970 | 1,601 | |||||||
Amortization of facility fee and discount | 11,959 | 942 | |||||||
Unit-based compensation | 223 | — | |||||||
Deferred gain on asset sale | 24 | (24 | ) | ||||||
Loss (gain) on disposal of assets | 1,186 | (212 | ) | ||||||
Funding of pension plans | (171 | ) | (97 | ) | |||||
Changes in assets and liabilities: | |||||||||
Accrued interest on notes payable to affiliates | 55,371 | 67,105 | |||||||
Restricted cash | 814 | 237 | |||||||
Receivables | (385 | ) | (1,067 | ) | |||||
Amounts due from related parties | (233 | ) | (43 | ) | |||||
Inventories | (2,383 | ) | (6,150 | ) | |||||
Prepaid expenses and other assets | 1,469 | (3,264 | ) | ||||||
Real estate held for development | 1,195 | 10,829 | |||||||
Accounts payable and accrued liabilities | 11,744 | 11,677 | |||||||
Amounts due to related parties | (925 | ) | — | ||||||
Deferred revenue and deposits | 21,771 | 23,636 | |||||||
Net cash (used in) provided by operating activities | (5,296 | ) | 384 | ||||||
Investing activities: | |||||||||
Capital expenditures | (5,091 | ) | (14,277 | ) | |||||
Contributions to equity method investments | (20 | ) | (337 | ) | |||||
Proceeds from the sale of assets | 767 | 71 | |||||||
Net cash used in investing activities | (4,344 | ) | (14,543 | ) | |||||
Financing activities: | |||||||||
Repayments of bank and other borrowings | (3,062 | ) | (1,679 | ) | |||||
Contributions by partners | 2,667 | — | |||||||
Net cash used in financing activities | (395 | ) | (1,679 | ) | |||||
Effect of exchange rate changes on cash | 786 | 923 | |||||||
Decrease in cash and cash equivalents | (9,249 | ) | (14,915 | ) | |||||
Cash and cash equivalents, beginning of period | 46,908 | 59,775 | |||||||
Cash and cash equivalents, end of period | $ | 37,659 | $ | 44,860 | |||||
Supplemental non-cash transactions: | |||||||||
Property, plant and equipment financed by capital lease obligations | — | 19,565 |
See accompanying notes to condensed consolidated financial statements.
F-49 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
(1) | Organization and Business Operations |
Intrawest Cayman L.P. (the Partnership) was formed on February 20, 2007 under the laws of the Cayman Islands. The Partnership is organized as a holding company that operates through various subsidiaries, which are primarily engaged in the operation of mountain resorts, adventure, and real estate businesses, principally throughout North America. The Partnership has a network of six mountain resorts, geographically diversified across North Americas major ski regions. The resorts include Steamboat and Winter Park in Colorado, Stratton in Vermont, Snowshoe in West Virginia, Tremblant in Quebec, and Blue Mountain (50% interest) in Ontario. The Mountain segment derives revenue mainly from sales of lift tickets, retail and rental merchandise, food and beverage, lodging management, ski school services, and golf. The Adventure segment includes Canadian Mountain Holidays (CMH), which provides heli-skiing, mountaineering and hiking at 11 lodges in British Columbia, Canada. In support of CMHs operations, the Partnership owns 40 Bell helicopters that are also used in the off-season for fire suppression in the United States and Canada and other commercial uses. The Alpine Aerotech subsidiary provides helicopter maintenance, repair and overhaul services to the Partnership’s fleet of helicopters as well as to aircraft owned by unaffiliated third parties. The Real Estate segment is comprised of ongoing real estate development activities and management, marketing and sales businesses. This segment includes Intrawest Resort Club Group (IRCG), a vacation club business, Intrawest Hospitality Management (IHM), which manages condominium hotel properties in Maui, Hawaii and in Mammoth, California, and Playground, a residential real estate sales and marketing business. The Real Estate segment also includes costs associated with ongoing development activities, including planning activities and land carrying costs.
(2) | Significant Accounting Policies |
Basis of Presentation
The accompanying consolidated financial statements include the accounts of the Partnership, its majority-owned subsidiaries, and all variable interest entities (VIEs) for which the Partnership is the primary beneficiary. All significant intercompany transactions are eliminated in consolidation. Investments in which the Partnership does not have a controlling interest or is not the primary beneficiary, but over which the Partnership is able to exercise significant influence, are accounted for under the equity method. Under the equity method, the original cost of the investment is adjusted for the Partnerships share of post-acquisition earnings or losses less distributions received.
In January of 2013, the Partnership reorganized its Canadian helicopter business and formed Alpine Helicopters Inc. (Alpine Helicopters) in which the Partnership owns a 20% share. Alpine Helicopters employs all the pilots that fly the helicopters in the CMH land tenures. Alpine Helicopters leases 100% of its helicopters from Intrawest ULC (IULC), a consolidated subsidiary, creating economic dependence thus giving IULC a variable interest in Alpine Helicopters. Alpine Helicopters is a VIE for which the Partnership is the primary beneficiary and is consolidated in these financial statements. As of September 30, 2013, Alpine Helicopters had total assets of $9.0 million and total liabilities of $6.5 million.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements contained herein. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America (GAAP). We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes contained herein.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which include normal and recurring adjustments, necessary to present fairly our financial position as of
F-50 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
September 30, 2013, and the results of our operations and comprehensive income for the three months ended September 30, 2012 and 2013, and cash flows for the three months ended September 30, 2012 and 2013. Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations.
Derivative Financial Instruments
The Partnership engages in activities that expose it to market risks including the effects of changes in interest rates and exchange rates. Financial exposures are managed as an integral part of the Partnerships risk management program, which seeks to reduce the potentially adverse effect that the volatility of interest rates or exchange rates may have on operating results.
As of June 30, 2013 and September 30, 2013, the Partnership has no significant outstanding derivative instruments. Prior to October 2008, the Partnership had outstanding interest rate swaps that were accounted for as cash flow hedges. The outstanding swap contracts were terminated on October 11, 2008, and the deferred loss previously recorded in accumulated other comprehensive income is being recognized in earnings during the period that the hedge covered. The Partnership estimates that $2.7 million of deferred losses related to the terminated interest rate swaps will be amortized from accumulated other comprehensive income into interest expense in the next 12 months.
Concentration of Credit Risk
The Partnerships financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash. The Partnership places its cash and temporary cash investments in high quality credit institutions, but these investments may be in excess of regulatory insurance limits. The Partnership does not enter into financial instruments for trading or speculative purposes. Concentration of credit risk with respect to trade and notes receivables is limited due to the wide variety of customers and markets in which the Partnership transacts business, as well as their dispersion across many geographical areas. The Partnership performs ongoing credit evaluations of its customers and generally does not require collateral, but does require advance deposits on certain transactions.
Receivables
Trade receivables are stated at amounts due from customers for the Partnerships goods and services net of an allowance for doubtful accounts. The allowance is based on a specific reserve analysis and considers such factors as the customers past repayment history, the economic environment and other factors that could affect collectability. Write-offs are evaluated on a case by case basis.
For notes receivable, interest income is recognized on an accrual basis when earned. Any deferred portion of contractual interest is recognized on methods that approximate the effective interest method over the term of the corresponding note.
Recent Accounting Standards
In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The ASU does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the ASU requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. Specifically, the ASU requires the Partnership to present either in a single note or parenthetically on the face of the financial statements the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. If a component is not required to be reclassified to net income in its entirety, the Partnership would instead cross-reference to the related note for additional information. The guidance included in ASU 2013-02 was effective for the Partnership beginning July 1, 2013 and was applied prospectively. The adoption of this authoritative guidance did not have an impact on the Partnerships financial position, results of operations or cash flows.
F-51 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
In July 2012, the FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The Partnership adopted the provisions of the ASU effective July 1, 2013. The adoption of ASU 2012-02 did not have material impact on the Partnerships financial position, results of operations or cash flows.
(3) | Supplementary Balance Sheet Information |
Receivables
Receivables as of June 30, 2013 and September 30, 2013 consisted of the following (in thousands):
June 30, | September 30, | |||||||
2013 | 2013 | |||||||
Receivables – current: | ||||||||
Trade receivables | $ | 14,522 | $ | 17,761 | ||||
Loans, mortgages and notes receivable | 10,467 | 10,777 | ||||||
Other amounts receivable | 21,642 | 19,109 | ||||||
Allowance for doubtful accounts | (8,333 | ) | (7,693 | ) | ||||
$ | 38,298 | $ | 39,954 |
Deferred charges and other
Deferred charges and other as of June 30, 2013 and September 30, 2013 consisted of the following (in thousands):
June 30, | September 30, | |||||||
2013 | 2013 | |||||||
Long-term deferred financing costs, net | $ | 22,124 | $ | 21,132 | ||||
Deferred initial public offering costs(a) | — | 2,349 | ||||||
Other long-term assets | 6,460 | 6,125 | ||||||
$ | 28,584 | $ | 29,606 |
(a) | Deferred initial public offering costs consist principally of legal, printing and registration costs in connection with the initial public offering (IPO) costs of the Company. Such costs are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds. In the event the offering is unsuccessful or aborted, the costs will be expensed. |
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities as of June 30, 2013 and September 30, 2013 consisted of the following (in thousands):
June 30, | September 30, | |||||||
2013 | 2013 | |||||||
Trade payables | $ | 53,390 | $ | 62,787 | ||||
Other payables and accrued liabilities | 8,806 | 11,349 | ||||||
$ | 62,196 | $ | 74,136 |
F-52 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
Deferred revenue and deposits
Deferred revenue and deposits as of June 30, 2013 and September 30, 2013 consisted of the following (in thousands):
June 30, | September 30, | |||||||
2013 | 2013 | |||||||
Deferred revenue and deposits – current: | ||||||||
Season pass and other | $ | 31,262 | $ | 52,134 | ||||
Lodging and tour deposits | 12,147 | 15,176 | ||||||
Deposits on real estate sales | 8,701 | 8,794 | ||||||
$ | 52,110 | $ | 76,104 |
June 30, | September 30, | |||||||
2013 | 2013 | |||||||
Deferred revenue and deposits – long term: | ||||||||
Government grants | $ | 12,814 | $ | 12,776 | ||||
Club initiation deposits and other | 9,301 | 9,487 | ||||||
$ | 22,115 | $ | 22,263 |
Other long-term liabilities
Other long-term liabilities as of June 30, 2013 and September 30, 2013 consisted of the following (in thousands):
June 30, | September 30, | |||||||
2013 | 2013 | |||||||
Other long-term liabilities: | ||||||||
Pension liability | $ | 34,456 | $ | 35,596 | ||||
Other long-term liabilities | 21,880 | 20,964 | ||||||
$ | 56,336 | $ | 56,560 |
(4) | Notes Receivable |
The Partnership allows deferred payment terms that exceed one year for customers purchasing vacation points. A note receivable exists when all contract documentation has been executed. Notes receivable primarily consist of nonrecourse installment loans. The Partnership performs a credit review of its notes receivable individually each reporting period to determine if an allowance for credit losses is required. As of June 30, 2013 and September 30, 2013, notes receivable were $42.1 million and $42.2 million, respectively, and are included in current receivables and long-term receivables on the unaudited condensed consolidated balance sheet. As of June 30, 2013 and September 30, 2013, the allowance for credit losses on the notes receivable was $3.4 million and $3.5 million, respectively.
(5) | Intangible Assets |
Finite-lived intangible assets as of June 30, 2013 and September 30, 2013 are as follows (in thousands):
Accumulated | Net book | |||||||||||
Cost | amortization | value | ||||||||||
June 30, 2013 | ||||||||||||
Permits and licenses | $ | 15,747 | $ | 4,222 | $ | 11,525 | ||||||
Trademarks and trade names | 75,217 | 24,302 | 50,915 | |||||||||
Customer relationships | 17,105 | 14,129 | 2,976 | |||||||||
Other | 8,999 | 8,912 | 87 | |||||||||
$ | 117,068 | $ | 51,565 | $ | 65,503 |
F-53 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
Accumulated | Net book | |||||||||||
Cost | amortization | value | ||||||||||
September 30, 2013 | ||||||||||||
Permits and licenses | $ | 16,076 | $ | 4,466 | $ | 11,610 | ||||||
Trademarks and trade names | 75,787 | 25,445 | 50,342 | |||||||||
Customer relationships | 17,399 | 14,917 | 2,482 | |||||||||
Other | 9,132 | 9,053 | 79 | |||||||||
$ | 118,394 | $ | 53,881 | $ | 64,513 |
(6) | Long-Term Debt and Notes Payable to Affiliates |
Long-term debt as of June 30, 2013 and September 30, 2013 is as follows (in thousands):
June 30, | September 30, | |||||||||||
Maturity | 2013 | 2013 | ||||||||||
FY13 First Lien Loans(a) | 2017 | $ | 441,669 | $ | 440,842 | |||||||
FY13 Second Lien Loans(a) | 2018 | 122,084 | 122,185 | |||||||||
Obligations under capital leases(b) | 2021-2052 | 20,264 | 39,632 | |||||||||
Other obligations(c) | 2014-2016 | 4,846 | 4,894 | |||||||||
588,863 | 607,553 | |||||||||||
Less current maturities(d) | 8,201 | 9,193 | ||||||||||
$ | 580,662 | $ | 598,360 |
Notes payable to affiliates as of June 30, 2013 and September 30, 2013 are as follows (in thousands):
June 30, | September 30, | |||||||||||
Maturity | 2013 | 2013 | ||||||||||
Third Lien Loan (e) | 2019 | $ | 196,991 | $ | 197,541 | |||||||
Accrued interest on Third Lien Loans | 2019 | 133,328 | 146,972 | |||||||||
Tranche B Term Loans (f) | 2019 | 300,000 | 300,000 | |||||||||
Accrued Interest on Tranche B Term Loans | 2019 | 469,963 | 509,990 | |||||||||
Affiliate Loan (g) | 2019 | 100,000 | 100,000 | |||||||||
Accrued interest on Affiliate Loan | 2019 | 158,413 | 171,847 | |||||||||
$ | 1,358,695 | $ | 1,426,350 |
(a) | The Partnership and certain subsidiaries entered into new credit agreements on December 4, 2012 (the FY13 First Lien Loans and the FY13 Second Lien Loans, collectively known as the FY13 Lien Loans). The FY13 First Lien Loans bear interest at LIBOR + 5.75% with a LIBOR floor of 1.25%. The agreement requires quarterly principal payments in the amount of $1.125 million. |
The FY13 Second Lien Loans bear interest at LIBOR + 9.5%, with a LIBOR floor of 1.25%. No principal payments are required until the maturity date. The FY13 Second Lien Loans also have a 3% call premium if voluntarily repaid prior to the second anniversary of the December 4, 2012 closing date, and 1% call premium if voluntarily repaid between the second and third anniversary. | |
The Partnerships obligations under the FY13 Lien Loans are collateralized by a guarantee of the Partnership and guarantees of substantially all of its material subsidiaries. The guarantees are further supported by mortgages against certain properties held by subsidiaries of the Partnership. The collateral includes both general and specific assets. | |
F-54 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
The FY13 Lien Loans provide for affirmative and negative covenants that restrict, among other things, the Partnerships ability to incur indebtedness, dispose of property, make capital expenditures, or make investments or distributions. In addition, the FY13 Lien Loans include restrictive financial covenants related to leverage and interest coverage ratios. The FY13 Lien Loans also include customary cross-default provisions with respect of certain other borrowings of the Partnership, and in certain circumstances, borrowings of noncontrolled partnerships where the Partnership has provided a guarantee. | |
Wintergames pledged its shares in A&K as security and provided a guarantee of the obligations of the Partnership and its subsidiaries under the FY13 Lien Loans and the Tranche B Term Loans (discussed in note 6(f)). These consolidated financial statements do not include the results of Wintergames. Wintergames and its subsidiary A&K are also subject to affirmative and negative covenants under the FY13 Lien Loans and are included in the calculation of the restrictive financial covenants. At September 30, 2013, Wintergames has no amounts outstanding under the FY13 Lien Loans or the Tranche B Term Loans. | |
The Partnership was in compliance with the covenants of the FY13 Lien Loans at September 30, 2013. |
(b) | Capital lease obligations are primarily for equipment except for the lease of Winter Park ski resort. The Winter Park capital lease was modified as of September 30, 2013, resulting in a $19.6 million increase to the capital lease obligation and related capital lease assets due to a change in the present value of the future minimum lease payments. |
Amortization of assets under capital leases is included in depreciation and amortization expense in the unaudited condensed consolidated statements of operations. The leases have remaining terms ranging from 8 years to 39 years and interest rates that range from 3% to 20%. |
(c) | In addition to various other lending agreements, a subsidiary of the Partnership entered into government loan agreements with interest rates ranging from 0% to 7.25%. |
(d) | Current maturities represent principal payments due in the next twelve months. |
(e) | The Third Lien Loans bear interest at 15.6% per annum until April 24, 2015, at which point the interest rate will increase to 22.5% per annum. No interest payments are to be made and interest is accrued monthly and compounded quarterly until the maturity date. In addition, the Third Lien Loan has a principal balance repayable at maturity of $210 million. |
(f) | The Tranche B Term Loans bear interest at 20% per annum; however no interest payments are to be made and interest is accrued and compounded monthly until the FY13 Lien Loans are repaid. The Tranche B Term Loans are subordinate to the FY13 Lien Loans and the Third Lien Loan for the purpose of security. |
The Partnership was in compliance with the covenants of the Tranche B Term Loans at September 30, 2013.
(g) | The Affiliate Loan bears interest at 20% per annum; however no interest payments are to be made and interest is accrued and compounded monthly until the FY13 Lien Loans are repaid. The Affiliate Loan is subordinated to all obligations under the FY13 Lien Loans and the Third Lien Loan and is currently unsecured but may, at the option of the lender, be subject to the same security as the Tranche B Term Loan. |
The Partnership was in compliance with the covenants of the Affiliate Loan at September 30, 2013.
The Partnership has a credit agreement with Goldman Sachs Lending Partners LLC and UBS Securities LLC (First Lien Credit Agreement) to secure a $55.0 million letter of credit facility and a $20.0 million revolving line of credit. The annual interest rate for cash borrowings and letter of credit issuances under this agreement ranges from 4.5% to 7.0%. As of June 30, 2013 and September 30, 2013, the Partnership had letters of credit outstanding totaling $52.4 million and $51.6 million, respectively. There have been no cash borrowings against the revolving line of credit since it was established.
F-55 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
The Partnership recorded gross interest expense of $90.4 million and $83.6 million in the unaudited condensed consolidated statements of operations for the three months ended September 30, 2012 and 2013, respectively, of which $1.5 million and $1.0 million was amortization of deferred financing costs, respectively.
In October 2006, the Partnership entered into interest rate swap contracts to minimize the impact of changes in interest rates on its cash flows for certain of the Partnerships floating bank rates and other indebtedness. The outstanding swap contracts were terminated on October 11, 2008. The fair value of the swap contracts on conversion at October 11, 2008 was a liability of $111.4 million. The terminated swap liability recorded in accumulated other comprehensive income is being recognized periodically as an adjustment to interest expense consistent with hedge accounting principles. The portion included in interest expense in the unaudited condensed consolidated statements of operations for the three months ended September 30, 2012 and 2013 was $1.0 million and $1.6 million, respectively.
(7) | Fair Value of Measurements |
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy, which is described below, prioritizes the inputs used in measuring fair value:
• | Level 1 – Quoted prices for identical instruments in active markets. |
• | Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations, in which all significant inputs are observable in active markets. |
• | Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
As of June 30, 2013 and September 30, 2013, the fair value of cash and cash equivalents, receivables, net and accounts payable and accrued liabilities approximated their carrying value based on the net short-term nature of these instruments. Estimates of fair value may be affected by assumptions made and, accordingly, are not necessarily indicative of the amounts the Partnership could realize in a current market exchange.
The Partnerships long-term debt obligations are not measured at fair value on a recurring basis. The Partnerships debt is recorded based upon carrying value and is not actively traded. Fair value is estimated based on discounted future contractual cash flows and a market interest rate based on published corporate borrowing rates for debt instruments with similar terms and average maturities, with adjustments for credit risk. Accordingly, the Partnerships long-term debt is classified within Level 3 of the fair value hierarchy. The fair value of debt does not represent the amounts that will ultimately be paid upon the maturities of the loans.
A summary of the carrying amount and fair value of the Partnerships financial instruments for which there is a difference between carrying value and fair value is as follows (in thousands):
June 30, 2013 | September 30, 2013 | |||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||
value | value | value | value | |||||||||||||||
Long-term debt | $ | 563,753 | $ | 544,717 | $ | 563,027 | $ | 529,998 |
Due to the debt terms received from affiliates, the Partnership has determined that it is not practicable to estimate the fair value of the notes payable to affiliates because of the lack of market comparable terms and the inability to estimate the fair value without incurring excessive cost.
F-56 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
(8) | Accumulated Other Comprehensive Income |
The following table presents the changes in accumulated other comprehensive income (“AOCI”), by component for the three months ended September 30, 2013:
Accumulated other comprehensive income, June 30, 2013 | $ | 148,805 | ||
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 8,237 | |||
Realized portion on cash flow hedge (net for tax of $0)(1) | 1,601 | |||
Actuarial loss on pensions (net of tax of $0)(2) | (143 | ) | ||
Accumulated other comprehensive income, September 30, 2013 | $ | 158,500 |
(1) | Amount reclassified out of AOCI is included in interest expense on third party debt in the unaudited condensed consolidated statements of operations. |
(2) | Amount reclassified out of AOCI is included in operating expenses in the unaudited condensed consolidated statements of operations. |
(9) | Income Taxes |
The Partnerships quarterly income tax provision for income taxes is calculated using an estimated annual effective tax rate for the period, adjusted for discrete items that occurred within the periods presented.
The consolidated income tax expense attributable to the Partnerships tax-paying entities was $1.0 million and $0.7 million for the three months ended September 30, 2012 and 2013, respectively, which represents an effective tax rate of 0.77% and 0.57%, respectively. The effective tax rate for the three months ended September 30, 2012 and 2013 differs from the federal blended statutory rate of 31.64% and 31.99%, respectively, due to changes in recorded valuation allowances for entities in the United States, Europe, and the majority of Canada. Alpine Helicopters is currently the only cash taxpayer which solely accounts for the tax provision.
(10) | Pension Plans |
The Partnership has three closed noncontributory defined benefit pension plans, one registered and two nonregistered, covering certain of its executives, the majority of which are no longer employees of the Partnership. In addition to these plans, one of the Partnerships mountain resorts has two defined benefit pension plans covering certain employees. There are no additional service costs to the Partnership on any of the plans.
The following details the components of net pension expense, recorded in operating expense in the unaudited condensed consolidated statements of operations for the defined benefit plans for the three months ended September 30, 2012 and 2013 (in thousands):
Executive plans | Employee plans | |||||||||||||||
Three
Months Ended September 30, | Three
Months Ended September 30, | |||||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Components of pension expense: | ||||||||||||||||
Interest cost | $ | 420 | $ | 393 | $ | 105 | $ | 111 | ||||||||
Expected return on plan assets | (42 | ) | (33 | ) | (101 | ) | (96 | ) | ||||||||
Actuarial loss | 109 | 77 | 106 | 66 | ||||||||||||
Settlement loss | — | — | 45 | 111 | ||||||||||||
Total pension expense | $ | 487 | $ | 437 | $ | 155 | $ | 192 |
The Partnership expects to contribute $0.6 million to the pension plans in fiscal year 2014.
F-57 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
(11) | Related Party Transactions |
The Partnership had notes payable to affiliates (the Third Lien Loans, the Tranche B Term Loans and the Affiliate Loan) with principal balances of $597.0 million and $597.5 million, and accrued interest of $761.7 million and $828.8 million, as of June 30, 2013 and September 30, 2013, respectively. Per the loan agreements, the Partnership accrues interest related to these loans ranging from 15.6% to 20%. In the case of the Third Lien Loans, interest payments will not be made until maturity. In the case of the Tranche B Term Loans, interest payments will not be made until the FY13 Lien Loans and the Third Lien Loan are repaid. In the case of the Affiliate Loan, interest payments will not be made until the FY13 Lien Loans, the Third Lien Loan and the Tranche B Term Loans are repaid.
The Partnership had a receivable due from A&K with a principal balance of $5.5 million and accrued interest of $0.8 million as of June 30, 2013 and September 30, 2013. Interest accrues monthly at an annually adjusted rate based on LIBOR + 1%. The principal and accrued interest is due upon maturity, which is December 31, 2014.
(12) | Segment Information |
The Partnership currently manages and reports operating results through three reportable segments: Mountain, Adventure and Real Estate. The Mountain segment includes the operations of the Partnerships mountain resorts and related ancillary activities, comprising Steamboat, Winter Park, Tremblant, Stratton, Snowshoe, as well as our 50% interest in Blue Mountain. The Adventure segment comprises CMH, which provides heli-skiing, mountaineering and hiking adventures, and our ancillary aviation services, which include fire suppression, maintenance and repair of aircraft. The Real Estate segment includes our core real estate development activities, as well as our real estate management, marketing and sales activities, including our vacation club business, management of condominium hotel properties, and sale of real estate. Each of the Partnerships reportable segments, although integral to the success of the others, offers distinctly different products and services and requires different types of management focus. As such, these segments are managed separately. In deciding how to allocate resources and assess performance, the Partnerships Chief Operating Decision Maker (CODM) regularly evaluates the performance of its reportable segments on the basis of revenues and segment Adjusted EBITDA. We also evaluate segment Adjusted EBITDA as a key compensation measure. The compensation committee determines the annual variable compensation for certain members of our management team based, in part, on Adjusted EBITDA or segment Adjusted EBITDA. Segment Adjusted EBITDA assists us in comparing our segment performance over various reporting periods because it removes from our operating results the impact of items that our management believes do not reflect our core operating performance.
Our reportable segment measure of Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other entities may not calculate segment Adjusted EBITDA in the same manner. We define Adjusted EBITDA as net income (loss) attributable to Intrawest Cayman L.P. before interest expense, net (excluding interest income earned from receivables related to our IRCG operations), income tax benefit or expense, and depreciation and amortization, further adjusted to exclude certain items, including, but not limited to: (i) impairments of goodwill, real estate and long-lived assets; (ii) gains and losses on asset dispositions; (iii) earnings and losses from equity method investments; (iv) gains and losses from disposal of equity method investments; (v) gains and losses on extinguishment of debt; (vi) other income or expense; (vii) earnings and losses attributable to noncontrolling interest; (viii) discontinued operations, net of tax; and (ix) other items, which include revenue and expenses of our legacy and other non-core operations, restructuring charges and associated severance expenses, non-cash compensation and other items. For purposes of calculating Adjusted EBITDA, we also add back to net loss attributable to Intrawest Cayman L.P. our pro rata share of EBITDA related to equity method investments included within our reportable segments and we remove from Adjusted EBITDA the Adjusted EBITDA attributable to noncontrolling interests within our reportable segments. Asset information by segment, except for capital expenditures as shown in the table below, is not included in reports used by our CODM in its monitoring of our performance and, therefore, is not disclosed.
F-58 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
Segment Adjusted EBITDA for all periods presented has been calculated using this definition. The following table presents revenues and Adjusted EBITDA for our reportable segments, reconciled to consolidated amounts (in thousands):
Three
Months Ended September 30, | ||||||||
2012 | 2013 | |||||||
Revenues: | ||||||||
Mountain | $ | 33,259 | $ | 33,305 | ||||
Adventure | 29,047 | 22,617 | ||||||
Real Estate | 15,148 | 13,250 | ||||||
Total reportable segment revenues | 77,454 | 69,172 | ||||||
Legacy, non-core and other revenues(1) | 1,741 | 11,389 | ||||||
Total revenues | $ | 79,195 | $ | 80,561 | ||||
Segment Adjusted EBITDA | ||||||||
Mountain(2) | (19,588 | ) | (22,590 | ) | ||||
Adventure(3) | 7,153 | 3,656 | ||||||
Real Estate(4),(5) | 2,069 | 1,477 | ||||||
Total Segment Adjusted EBITDA | (10,366 | ) | (17,457 | ) | ||||
Legacy and other non-core expenses, net(6) | (8,869 | ) | (3,536 | ) | ||||
Other operating expenses(7) | (454 | ) | (1,027 | ) | ||||
Depreciation and amortization | (14,653 | ) | (13,145 | ) | ||||
Impairment of real estate | (62 | ) | (633 | ) | ||||
(Loss) gain on disposal of assets | (1,210 | ) | 236 | |||||
Interest income(5) | 481 | 449 | ||||||
Interest expense on third party debt | (35,006 | ) | (16,464 | ) | ||||
Interest expense on notes payable to affiliates | (55,371 | ) | (67,105 | ) | ||||
Loss from equity method investments(8) | (91 | ) | (1,591 | ) | ||||
Pro rata share of EBITDA related to equity method investments(2),(4) | (1,139 | ) | (1,067 | ) | ||||
Adjusted EBITDA attributable to noncontrolling interest (3) | — | 635 | ||||||
Other income (expense), net | 402 | (172 | ) | |||||
Income tax expense | (972 | ) | (701 | ) | ||||
Loss (earnings) attributable to noncontrolling interest | 34 | (436 | ) | |||||
Net loss attributable to Intrawest Cayman L.P. | $ | (127,276 | ) | $ | (122,014 | ) |
(1) | Other revenues represent legacy and other non-core operations that are not reviewed regularly by the CODM to assess performance and make decisions regarding the allocation of resources. It includes legacy real estate asset sales, non-core retail revenues and revenues from management of non-core commercial properties. For the three months ended September 30, 2013, it also includes $9.0 million of revenue from the sale of a parcel of real estate held for development (Tower Ranch) in August 2013. |
(2) | Includes our pro rata share of EBITDA from our equity method investment in Blue Mountain Resorts Limited, which is regularly reviewed by our CODM. Our pro rata share of EBITDA represents our share of EBITDA from the equity method investment based on our economic ownership percentage. |
(3) | Adventure segment Adjusted EBITDA excludes Adjusted EBITDA attributable to noncontrolling interest. |
(4) | Includes our pro rata share of EBITDA from our equity method investments in Mammoth Hospitality Management, LLC, and Chateau M.T. Inc., which are regularly reviewed by our CODM. Our pro rata share of EBITDA represents our share of EBITDA from these equity method investments based on our economic ownership percentage. |
F-59 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
(5) | Real Estate segment Adjusted EBITDA includes interest income earned from receivables related to our IRCG operations, in the amount of $1.2 million for each of the three months ended September 30, 2012 and 2013. Interest income reflected in the reconciliation excludes the interest income earned from receivables related to our IRCG operations. |
(6) | Represents revenue and expenses of our legacy and other non-core operations that are not reviewed regularly by our CODM to assess performance and make decisions regarding the allocation of resources. Revenues and expenses related to legacy and other non-core operations include income (loss) from the equity method investment in MMSA Holdings Inc., retail operations not located at the Partnerships properties and management of non-core commercial properties owned by third parties. It also includes legacy litigation consisting of claims for damages related to alleged construction defects, purported disclosure violations and allegations that we failed to construct planned amenities. |
(7) | Includes non-cash compensation and reduction in workforce severance. |
(8) | Represents the earnings (loss) from our equity method investments, including: Blue Mountain Resort Limited, Chateau M.T. Inc., Mammoth Hospitality Management, LLC, MMSA Holdings, Inc. and Whistler Blackcomb Holdings, Inc. |
The following table presents capital expenditures for our reportable segments, reconciled to consolidated amounts for the three months ended September 30, 2012 and 2013 (in thousands):
Three
Months Ended September 30, | ||||||||
2012 | 2013 | |||||||
Capital Expenditures | ||||||||
Mountain | $ | 2,550 | $ | 10,311 | ||||
Adventure | 649 | 2,308 | ||||||
Real Estate | 661 | 128 | ||||||
Total segment capital expenditures | 3,860 | 12,747 | ||||||
Corporate and other | 1,231 | 1,530 | ||||||
Total capital expenditures | $ | 5,091 | $ | 14,277 |
Geographic Data
Information about the Partnerships revenues by geographic region for the three months ended September 30, 2012 and 2013 (in thousands):
Three
Months Ended September 30, | ||||||||
2012 | 2013 | |||||||
Revenues: | ||||||||
United States | $ | 28,501 | $ | 30,162 | ||||
International | 50,694 | 50,399 | ||||||
Revenues | $ | 79,195 | $ | 80,561 |
(13) | Loss per Unit |
Loss per unit attributable to limited partners is based on weighted average number of limited partner units outstanding during each period. For the three months ended September 30, 2012 and 2013, there were no potentially dilutive units.
(14) | Commitments and Contingencies |
(a) | The Partnership has issued letters of credit at June 30, 2013 and September 30, 2013 of $52.4 million and $51.6 million, respectively, mainly to secure its commitments under self-insurance claims and the executive pension plans. |
F-60 |
INTRAWEST
CAYMAN L.P.
Notes to Condensed Consolidated Financial Statements
Three Months Ended September 30, 2012 and 2013
(Unaudited)
(b) | The Partnership and its subsidiaries are involved in various lawsuits arising in the ordinary course of business. In addition, the Partnerships pre-2010 legacy real estate development activities, combined with the downward shift in real estate asset values that occurred in 2007 and 2008, resulted in claims being filed against the Partnership by owners and prospective purchasers of residences in the real estate developments. The Partnership has been named as a defendant in lawsuits alleging construction defects at certain of the existing developments. In other lawsuits, purchasers are seeking rescission of real estate purchases and/or return of deposits paid on pre-construction purchase and sale agreements. These claims are related to alleged violations of state and federal laws that require providing purchasers with certain mandated disclosures. |
The Partnership believes that it has adequate insurance coverage or has accrued for loss contingencies for all material matters in which it believes a loss is probable and the amount of the loss is reasonably estimable. Although the ultimate outcome of claims cannot be ascertained, current pending and threatened claims are not expected to have a material adverse effect, individually or in the aggregate, on the Partnerships financial position, results of operations or cash flows. |
(c) | The federal government of Canada and the provincial government of Quebec have granted financial assistance to a subsidiary of the Partnership in the form of interest-free loans and forgivable grants for the construction of specified four-season tourist facilities at Tremblant. Loans totaling $3.3 million and $3.4 million as of June 30, 2013 and September 30, 2013, respectively, have been advanced and are repayable over seven years starting in 2010. The grants received, which will total $114.8 million and $115.1 million as of June 30, 2013 and September 30, 2013, respectively, when they are fully advanced, amounted to $84.9 million and $83.2 million as of June 30, 2013 and September 30, 2013, respectively. Nonrepayable government assistance relating to capital expenditures is reflected as a reduction of the cost of such assets. Reimbursable government loans are presented as long-term debt. |
(d) | The Partnership operates the Winter Park ski resort under a capital lease that requires annual payments that are contingent on future gross revenue levels. As such payments are contingent and not readily determinable, the potential obligation of such amounts has not been recorded. |
Certain leases also include escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or concession such as a rent holiday, rent expense is recognized using the straight-line method over the term of the lease. |
(15) | Subsequent Events |
Debt Refinancing
On December 9, 2013, one of our subsidiaries, Intrawest Operations Group, LLC, as borrower, entered into a new credit agreement (the “FY14 First Lien Loans”) with a syndicate of lenders, Goldman Sachs Bank USA, as issuing bank, and Goldman Sachs Lending Partners LLC, as administrative agent, providing for a $540.0 million term loan facility (the “Term Loan”), $25.0 million revolving line of credit (the “Revolver”), and $55.0 million letter of credit facility (the “Letter of Credit”). The proceeds from the FY14 First Lien Loans were used to extinguish the existing FY13 Lien Loans.
Cancellation of notes payable to affiliates
On December 9, 2013, through a series of restructuring transactions, the Partnership caused its indirect subsidiaries to contribute 100% of the equity interests in both Intrawest U.S. and Intrawest Canada to an indirect subsidiary of Intrawest Resorts Holdings, Inc. (“IRHI”). In connection with these restructuring transactions, all of our debt owed to affiliates, including accrued and unpaid interest was either (a) exchanged for equity interests in IRHI and subsequently cancelled or (b) amended to release the Company and its subsidiary guarantors from their obligations in respect of the notes payable to affiliates and accrued and unpaid interest thereon.
F-61 |
Shares
Intrawest Resorts Holdings, Inc.
Common Stock
PRELIMINARY PROSPECTUS
, 2014
PART II
Information Not Required In Prospectus
ITEM 13. | Other Expenses of Issuance and Distribution |
SEC registration fee | $ | 12,880 | ||
FINRA filing fee | 15,500 | |||
Printing and engraving costs | * | |||
Legal fees and expenses | * | |||
Accountants fees and expenses | * | |||
Transfer agent fees | * | |||
Miscellaneous | * | |||
Total | $ | * |
* | To be furnished by amendment |
ITEM 14. | Indemnification of Directors and Officers |
Section 102 of the DGCL allows a corporation to eliminate the personal liability of directors to a corporation or its stockholders for monetary damages for a breach of a fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct, knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase or redemption in violation of Delaware corporate law or obtained an improper personal benefit.
Section 145 of the DGCL provides, among other things, that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation or is or was serving at the corporations request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding. The power to indemnify applies if (i) such person is successful on the merits or otherwise in defense of any action, suit or proceeding or (ii) such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The power to indemnify applies to actions brought by or in the right of the corporation as well, but only to the extent of defense expenses (including attorneys fees but excluding amounts paid in settlement) actually and reasonably incurred and not to any satisfaction of judgment or settlement of the claim itself, and with the further limitation that in such actions no indemnification shall be made in the event of any adjudication of negligence or misconduct in the performance of his duties to the corporation, unless a court believes that in light of all the circumstances indemnification should apply.
Section 174 of the DGCL provides, among other things, that a director who willfully and negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption may be held liable for such actions. A director who was either absent when the unlawful actions were approved or dissented at the time may avoid liability by causing his or her dissent to such actions to be entered in the books containing the minutes of the meetings of the board of directors at the time the action occurred or immediately after the absent director receives notice of the unlawful acts.
The registrants restated certificate of incorporation states that no director shall be personally liable to the registrant or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as it exists or may be amended. A director is also not exempt from liability for any transaction from which he or she derived an improper personal benefit, or for violations of Section 174 of the DGCL. To the maximum extent permitted under Section 145 of the DGCL, the registrants restated certificate of incorporation authorizes the registrant to indemnify any and all persons whom the registrant has the power to indemnify under the law.
The registrants amended and restated bylaws provide that the registrant will indemnify, to the fullest extent permitted by the DGCL, each person who was or is made a party or is threatened to be made a party in any legal
II-1 |
proceeding by reason of the fact that he or she is or was a director or officer of the registrant or is or was a director or officer of the registrant serving at the request of the registrant as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. However, such indemnification is permitted only if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such persons conduct was unlawful. Indemnification is authorized on a case-by-case basis by (1) the registrants board of directors by a majority vote of disinterested directors, (2) a committee of the disinterested directors, (3) independent legal counsel in a written opinion if (1) and (2) are not available, or if disinterested directors so direct, or (4) the stockholders. Indemnification of former directors or officers shall be determined by any person authorized to act on the matter on the registrants behalf. Expenses incurred by a director or officer in defending against such legal proceedings are payable before the final disposition of the action, provided that the director or officer undertakes to repay the registrant if it is later determined that he or she is not entitled to indemnification.
Prior to completion of this offering, the registrant intends to enter into separate indemnification agreements with its directors and officers. Each indemnification agreement will provide, among other things, for indemnification to the fullest extent permitted by law and the registrants restated certificate of incorporation and amended and restated bylaws against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim. The indemnification agreements will provide for the advancement or payment of all expenses to the indemnitee and for reimbursement to the registrant if it is found that such indemnitee is not entitled to such indemnification under applicable law and the registrants restated certificate of incorporation and amended and restated bylaws.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. The registrant maintains directors and officers liability insurance for its officers and directors.
ITEM 15. | Recent Sales of Unregistered Securities |
During the past three years, the registrant has only issued unregistered securities to the Initial Stockholders (as defined in the prospectus forming part of this Registration Statement) in connection with its formation and the Restructuring (as defined in the prospectus forming part of this Registration Statement). The registrant believes that these transactions were exempt from registration pursuant to Section 4(2) of the Securities Act.
ITEM 16. | Exhibits and Financial Statements Schedules |
(a) | Exhibits |
See the Index to Exhibits included in this Registration Statement.
(b) | Financial Statement Schedule |
Schedule II—Valuation and Qualifying Accounts and Reserves for the Years Ended June 30, 2011, 2012 and 2013
ITEM 17. | Undertakings |
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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The undersigned registrant hereby undertakes that:
• | For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
• | For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 2 to the Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on the 10th day of January, 2014.
Intrawest Resorts Holdings, Inc. | ||
By: | /s/ William Jensen | |
Name: William Jensen | ||
Title: Chief Executive Officer and Director |
Pursuant to the requirements of the Securities Act, this Amendment No. 2 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated below.
Name | Title | Date | ||||
/s/ William Jensen | Principal Executive Officer and Director | January 10, 2014 | ||||
William Jensen | ||||||
* | Principal Financial Officer | January 10, 2014 | ||||
Travis Mayer | ||||||
* | Principal Accounting Officer | January 10, 2014 | ||||
Juan Perez |
*By: | /s/ William Jensen | |
Attorney-in-Fact | ||
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EXHIBIT INDEX
Exhibit Number | Description | |||
1.1 | Form of Underwriting Agreement† | |||
3.1 | Form of Restated Certificate of Incorporation of the Registrant | |||
3.2 | Form of Amended and Restated Bylaws of the Registrant | |||
5.1 | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP† | |||
10.1 | Stockholders Agreement | |||
10.2 | U.S. Department of Agriculture Forest Service Special Use Permit for Steamboat* | |||
10.3 | U.S. Department of Agriculture Forest Service Special Use Permit for Winter Park | |||
10.4 | U.S. Department of Agriculture Forest Service Term Special Use Permit for Winter Park | |||
10.5 | Amendment No. 1 to U.S. Department of Agriculture Forest Service Term Special Use Permit for Winter Park* | |||
10.6 | Amendment No. 2 to U.S. Department of Agriculture Forest Service Term Special Use Permit for Winter Park | |||
10.7 | Amendment No. 3 to U.S. Department of Agriculture Forest Service Term Special Use Permit for Winter Park* | |||
10.8 | Amendment No. 4 to U.S. Department of Agriculture Forest Service Term Special Use Permit for Winter Park* | |||
10.9 | Supplemental Agreement No. VII to Agreement between the City and County of Denver and Winter Park Recreational Association, dated October 4, 2002 | |||
10.10 | First Amendatory Agreement to Supplemental Agreement No. VII, dated December 20, 2005* | |||
10.11 | Second Amendatory Agreement to Supplemental Agreement No. VII, dated December 30, 2008* | |||
10.12 | Third Amendatory Agreement to Supplemental Agreement No. VII, dated August 30, 2012* | |||
10.13 | Second Amended and Restated Ground Lease Agreement, dated December 20, 2002, between Winter Park Recreational Association and the Colorado Arlberg Club | |||
10.14 | Lease and Operating Agreement, dated December 23, 2002, between Winter Park Recreational Association and Intrawest/Winter Park Operations Corporation* | |||
10.15 | Guaranty Agreement, dated June 6, 2007, among Intrawest Holdings S.à.r.l., Intrawest U.S. Holdings Inc. and Winter Park Recreational Association* | |||
10.16 | Form of Indemnification Agreement | |||
10.17 | [Reserved] | |||
10.18 | Ski Area Lease Agreement, dated January 28, 2000, between Mont Tremblant Resorts and Company, LP and the Government of Quebec | |||
10.19 | Shareholders’ Agreement, dated January 28, 1999, among Blue Mountain Resorts Holdings Inc., Intrawest Corporation and Blue Mountain Resorts Limited | |||
10.20 | [Reserved] | |||
10.21 | Separation Agreement, dated October 1, 2013, between Intrawest U.S. Holdings Inc. and Dallas E. Lucas* | |||
10.22 | Credit Agreement, dated December 9, 2013, among Intrawest Operations Group Holdings, LLC, Intrawest Operations Group, LLC, the lenders party thereto, Goldman Sachs Bank USA, as issuing bank, and Goldman Sachs Lending Partner, LLC, as administrative agent* | |||
10.23 | First Amendment to Lease and Operating Agreement, dated June 15, 2004, between Winter Park Recreational Association and Intrawest/Winter Park Operations Corporation* | |||
10.24 | Second Amendment to Lease and Operating Agreement, dated May 4, 2009, between Winter Park Recreational Association and Intrawest/Winter Park Operations Corporation* | |||
II-5 |
Exhibit Number | Description | |||
10.25 | Third Amendment to Lease and Operating Agreement, dated May 4, 2009, between Winter Park Recreational Association and Intrawest/Winter Park Operations Corporation* | |||
10.26 | Fourth Amendment to Lease and Operating Agreement, dated January 30, 2013, between Winter Park Recreational Association and Intrawest/Winter Park Operations Corporation* | |||
10.27 | Fifth Amendment to Lease and Operating Agreement, dated April 10, 2013, between Winter Park Recreational Association and Intrawest/Winter Park Operations Corporation* | |||
10.28 | Sixth Amendment to Lease and Operating Agreement, dated September 30, 2013, between Winter Park Recreational Association and Intrawest/Winter Park Operations Corporation* | |||
21.1 | Subsidiaries of the Registrant | |||
23.1 | Consent of KPMG LLP | |||
23.2 | Consent of KPMG LLP | |||
23.3 | Consent of KPMG LLP | |||
23.4 | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (contained in its opinion filed as Exhibit 5.1 hereto)† | |||
24.1 | Powers of Attorney* |
* | Previously filed. | |
† | To be filed by amendment. | |
II-6 |
FORM OF
RESTATED
CERTIFICATE OF INCORPORATION
OF
INTRAWEST RESORTS HOLDINGS, INC.
Pursuant to Sections 242 and 245 of the
Delaware General Corporation Law
Intrawest Resorts Holdings, Inc. (the Corporation), a corporation organized and existing under the General Corporation Law of the State of Delaware (the GCL), does hereby certify as follows:
1. The name of the Corporation is Intrawest Resorts Holdings, Inc. The Corporation was originally formed on August 30, 2013 as Intrawest Holdings, Inc., a Delaware corporation. It subsequently changed its name to Intrawest Resorts Holdings, Inc. on September 23, 2013. The original certificate of incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware on August 30, 2013.
2. This Restated Certificate of Incorporation was duly adopted by the board of directors of the Corporation (the Board of Directors) and by the sole stockholder of the Corporation in accordance with Sections 228, 242 and 245 of the GCL.
3. This Restated Certificate of Incorporation restates and integrates and further amends the certificate of incorporation of the Corporation, as heretofore amended or supplemented.
4. Effective as of the date of its filing with the office of the Secretary of State of the State of Delaware, the text of the certificate of incorporation of the Corporation is restated in its entirety as follows:
FIRST: The name of the Corporation is Intrawest Resorts Holdings, Inc.
SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle 19801. The name of its registered agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the GCL.
FOURTH: (a) Authorized Capital Stock. The total number of shares of stock which the Corporation shall have authority to issue is two billion, three hundred million (2,300,000,000) shares of capital stock, consisting of (i) two billion (2,000,000,000) shares of common stock, par value $0.01 per share (the Common Stock) and (ii) three hundred million (300,000,000) shares of preferred stock, par value $0.01 per share (the Preferred Stock).
(b) Common Stock. The powers, preferences and rights, and the qualifications, limitations and restrictions, of the Common Stock are as follows:
(1) Except as otherwise expressly provided herein or required by law or the terms of any class or series of Preferred Stock issued in accordance with Part (c) of this Article FOURTH, each holder of record of shares of Common Stock shall be entitled to vote at all meetings of the stockholders and shall have one vote for each share held by such holder of record; provided, however, that, except as otherwise required by law, holders of record of shares of Common Stock shall not be entitled to vote on any amendment to this Restated Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Restated Certificate of Incorporation (including any resolutions relating to any series of Preferred Stock adopted by the Board of Directors in accordance with this Article FOURTH) or pursuant to the GCL.
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(2) Subject to applicable law and the preferential rights as to dividends of the holders of all classes or series of Preferred Stock at the time outstanding, the holders of shares of Common Stock shall be entitled to receive, when and as declared by the Board of Directors, out of the assets of the Corporation legally available therefor, such dividends as may be declared from time to time by the Board of Directors.
(3) Subject to the prior rights of creditors of the Corporation and the holders of all classes or series of stock at the time outstanding having prior rights as to distributions upon liquidation, dissolution or winding up of the Corporation, in the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of shares of Common Stock shall be entitled to receive their ratable and proportionate share of the remaining assets of the Corporation.
(4) No holder of shares of Common Stock shall have cumulative voting rights.
(5) No holder of shares of Common Stock shall be entitled to preemptive or subscription rights solely by virtue of owning shares of Common Stock.
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(c) Preferred Stock.
(1) The Board of Directors is hereby expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in a resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.
(2) The number of authorized shares of Preferred Stock and Common Stock may be increased (but not above the total number of authorized shares of the class) or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of at least a majority of the voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the GCL (or any successor provision thereto), and no vote of the holders of any of the Common Stock or the Preferred Stock voting separately as a class shall be required therefor.
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(d) Power to Sell and Purchase Shares. Subject to the requirements of applicable law, the Corporation shall have the power to issue and sell all or any part of any shares of any class of stock herein or hereafter authorized to such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not greater consideration could be received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law. Subject to the requirements of applicable law, the Corporation shall have the power to purchase any shares of any class of stock herein or hereafter authorized from such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of the same number of shares of another class, and as otherwise permitted by law.
FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders.
(a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
(b) The Board of Directors shall consist of not less than three nor more than eleven members, the exact number of which shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors.
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(c) The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The initial division of the Board of Directors into classes shall be made by the decision of the affirmative vote of a majority of the total number of directors that the Corporation would have if there were no director vacancies (the entire Board of Directors). The term of the initial Class I directors assigned at the time of the filing of this Restated Certificate of Incorporation shall terminate on the date of the annual meeting of stockholders held in 2014; the term of the initial Class II directors assigned at the time of the filing of this Restated Certificate of Incorporation shall terminate on the date of the annual meeting of stockholders held in 2015; and the term of the initial Class III directors assigned at the time of the filing of this Restated Certificate of Incorporation shall terminate on the date of the annual meeting of stockholders held in 2016. At each succeeding annual meeting of stockholders beginning with the annual meeting of stockholders held in 2014, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term and until their successors are duly elected and qualified. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy shall hold office for a term that shall coincide with the remaining term of the directors of that class, but in no case shall a decrease in the number of directors shorten the term of any incumbent director.
(d) Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any director or the entire Board of Directors may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote in the election of directors (the Voting Shares), provided, however, that for so long as the Fortress Stockholders (as defined in Part (a) of Article ELEVENTH), collectively, beneficially own (as defined in Part (a) of Article ELEVENTH) at least 30% of the then issued and outstanding Voting Shares, any director or the entire Board of Directors may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding Voting Shares. The vacancy or vacancies in the Board of Directors caused by any such removal shall be filled as provided in Part (f) of this Article FIFTH.
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(e) A director shall hold office until the annual meeting of stockholders for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office.
(f) Subject to the terms of any one or more classes or series of Preferred Stock, (i) any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and (ii) any other vacancy occurring on the Board of Directors, other than for a vacancy resulting from the removal of a director as provided in Part (d) of this Article FIFTH which may be filled in the first instance by the stockholders, may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Any director of any class elected to fill a vacancy resulting from an increase in the number of directors of such class shall hold office for a term that shall coincide with the remaining term of that class. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Restated Certificate of Incorporation (including any resolutions relating to any series of Preferred Stock adopted by the Board of Directors in accordance with Article FOURTH) applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article FIFTH unless expressly provided by such terms.
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(g) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Restated Certificate of Incorporation, and any bylaws of the Corporation adopted by the stockholders or the Board of Directors, as the case may be, as amended and/or restated from time to time (the Bylaws); provided, however, that no Bylaws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such Bylaws had not been adopted.
(h) Unless otherwise required by law, special meetings of stockholders, for any purpose or purposes, may be called at any time by either (i) the Chairman of the Board of Directors, if there be one, or (ii) the Chief Executive Officer, if there be one, and shall be called by any such officer at the request in writing of (i) the Board of Directors, (ii) a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers include the authority to call such meetings or (iii) at any time the Fortress Stockholders, collectively, beneficially own at least twenty percent (20%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote, any stockholders that collectively beneficially own at least twenty percent (20%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. If at any time the Fortress Stockholders do not, collectively, beneficially own at least twenty percent (20%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote, then the ability of the stockholders to call or cause a special meeting of stockholders to be called is hereby specifically denied.
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SIXTH: No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the GCL as the same exists or may hereafter be amended. If the GCL is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the GCL, as so amended. Any amendment, repeal or modification of this Article SIXTH shall not adversely affect any right or protection of a director of the Corporation existing at the time of such amendment, repeal or modification with respect to acts or omissions occurring prior to such amendment, repeal or modification.
SEVENTH: The Corporation shall indemnify its directors and officers to the fullest extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The right to indemnification conferred by this Article SEVENTH shall include the right to be paid by the Corporation the expenses (including attorneys fees) incurred in defending or otherwise participating in any proceeding in advance of its final disposition upon receipt by the Corporation of an undertaking by or on behalf of the director or officer receiving advancement to repay the amount advanced if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation under this Article SEVENTH.
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The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article SEVENTH to directors and officers of the Corporation.
The rights to indemnification and to the advance of expenses conferred in this Article SEVENTH shall not be exclusive of any other right which any person may have or hereafter acquire under this Restated Certificate of Incorporation, the Bylaws, any statute, agreement, vote of stockholders or disinterested directors or otherwise.
The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation against any liability asserted against him or her and incurred by him or her or on his or her behalf in such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability.
Any repeal or modification of this Article SEVENTH shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification.
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EIGHTH: Any action required or permitted to be taken by the stockholders of the Corporation at any meeting of stockholders may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the stockholders entitled to vote with respect to the subject matter thereof, provided, however, that at any time the Fortress Stockholders, collectively, beneficially own at least twenty percent (20%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote, any action required or permitted to be taken by the stockholders of the Corporation at any meeting of stockholders may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by stockholders holding at least a majority of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote with respect to the subject matter thereof.
NINTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws.
TENTH: (a) Subject to Part (b) of this Article TENTH, the Bylaws may be altered, amended or repealed, in whole or in part, either (i) without the approval of the Board of Directors, by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote thereon; provided, however, that at any time the Fortress Stockholders, collectively, beneficially own at least twenty (20)% of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote, the Bylaws also may be altered, amended or repealed, in whole or in part, by the affirmative vote of the holders of at least a majority of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote thereon or (ii) by the affirmative vote of a majority of the entire Board of Directors.
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(b) Notwithstanding Part (a) of this Article TENTH, or any other provision of the Bylaws (and in addition to any other vote that may be required by law), (i) any amendment, alteration or repeal, in whole or in part, of Section 2.3 (Special Meetings), Section 2.11 (Consent of Stockholders in Lieu of Meeting), Section 3.1 (Number and Election of Directors), Section 3.2 (Vacancies), Section 3.3 (Duties and Powers), Section 3.6 (Resignations and Removals of Directors), Article IX (Amendments) and Article XI (Definitions) of the Bylaws (collectively, the Specified Bylaws) as in effect immediately following the initial public offering of Common Stock (which, for the avoidance of doubt, would include the adoption of any provision as part of the Bylaws that is inconsistent with the purpose and intent of the Specified Bylaws), shall require the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote thereon, and (ii) the ability of the Board of Directors to amend, alter or repeal the Specified Bylaws is specifically denied; provided, however, that at any time that the Fortress Stockholders, collectively, beneficially own at least twenty (20%) of the voting power of the issued and outstanding shares of capital stock entitled to vote thereon, the Specified Bylaws may be amended, altered or repealed, in whole or in part, by the affirmative vote of a majority of the entire Board of Directors (and, for the avoidance of doubt, without approval of the stockholders).
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ELEVENTH: (a) Definitions. For purposes of this Restated Certificate of Incorporation, the following definitions shall apply:
Affiliate means, for purposes of this definition and Parts (b) through (h) of this Article ELEVENTH, with respect to a given person, any other person that, directly or indirectly, controls, is controlled by or is under common control with, such person; provided, however, that for purposes of this definition and Parts (b) through (h) of this Article ELEVENTH, none of (i) the Intrawest Entities and any entities (including corporations, partnerships, limited liability companies or other persons) in which such Intrawest Entities hold, directly or indirectly, an ownership interest, on the one hand, or (ii) the Fortress Stockholders and their Affiliates (excluding any Intrawest Entities or other entities described in clause (i)), on the other hand, shall be deemed to be Affiliates of one another. For purposes of this definition, control (including, with correlative meanings, the terms controlled by and under common control with) as applied to any person, means the possession, directly or indirectly, of beneficial ownership of, or the power to vote, ten percent (10%) or more of the securities having voting power for the election of directors (or other persons acting in similar capacities) of such person or the power otherwise to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities, by contract or otherwise.
beneficially own and beneficial ownership and similar terms used herein shall be determined in accordance with Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934 as in effect on the date of this Restated Certificate of Incorporation.
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corporate opportunity shall include, but not be limited to, business opportunities which the Corporation is financially able to undertake, which are, from their nature, in the line of the Corporations business, are of practical advantage to it and are ones in which the Corporation has an interest or a reasonable expectancy, and in which, by embracing the opportunities, the self-interest of the Fortress Stockholders or any of their Affiliates or their officers or directors could be brought into conflict with that of any of the Intrawest Entities or their Affiliates.
Fortress Affiliate Stockholder means (A) any director of the Corporation who may be deemed an Affiliate of Fortress Investment Group LLC (FIG), (B) any director or officer of FIG or its Affiliates and (C) any investment funds (including any managed accounts) managed directly or indirectly by FIG or its Affiliates; provided that, for purposes of this definition, Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under the Securities Exchange Act of 1934; provided further that, for purposes of this definition of Affiliate, no person shall be deemed an Affiliate of any other person solely by reason of any investment in the Corporation.
Fortress Stockholders means (i) the Initial Stockholders, (ii) each Fortress Affiliate Stockholder and each entity formed by a Fortress Affiliate Stockholder to directly or indirectly hold any interests in the Initial Stockholders or the Corporation and (iii) each Permitted Transferee (as defined in the Stockholders Agreement) who becomes a party to or bound by the provisions of the Stockholders Agreement in accordance with the terms thereof, or Permitted Transferee (as defined in the Stockholders Agreement) thereof who is entitled to enforce the provisions of the Stockholders Agreement in accordance with the terms thereof.
Governmental Entity means any national, state, provincial, municipal, local or foreign government, any court, arbitral tribunal, administrative agency or commission or other governmental or regulatory authority, commission or agency or any non-governmental, self-regulatory authority, commission or agency.
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Initial Stockholders means Intrawest Europe Holdings S.à r.l. and Intrawest S.à r.l., each a société à responsabilité limitée (private limited liability company) duly formed and validly existing under the laws of the Grand-Duchy of Luxembourg, and their respective Subsidiaries (other than Subsidiaries that constitute Intrawest Entities) and successors.
Intrawest Entities means the Corporation and its Subsidiaries, and Intrawest Entity includes any of the Intrawest Entities.
Judgment means any order, writ, injunction, award, judgment, ruling or decree of any Governmental Entity.
Law means any statute, law, code, ordinance, rule or regulation of any Governmental Entity.
Lien means any pledge, claim, equity, option, lien, charge, mortgage, easement, right-of-way, call right, right of first refusal, tag- or drag- along right, encumbrance, security interest or other similar restriction of any kind or nature whatsoever.
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Restriction with respect to any capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security, means any voting or other trust or agreement, option, warrant, preemptive right, right of first offer, right of first refusal, escrow arrangement, proxy, buy-sell agreement, power of attorney or other contract, any Law, license, permit or Judgment that, conditionally or unconditionally, (i) grants to any person the right to purchase or otherwise acquire, or obligates any person to sell or otherwise dispose of or issue, or otherwise results or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, may result in any person acquiring, (A) any of such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security, (B) any of the proceeds of, or any distributions paid or that are or may become payable with respect to, any of such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security or (C) any interest in such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security or any such proceeds or distributions, (ii) restricts or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, is reasonably likely to restrict the transfer or voting of, or the exercise of any rights or the enjoyment of any benefits arising by reason of ownership of, any such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security or any such proceeds or distributions or (iii) creates or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, is reasonably likely to create a Lien or purported Lien affecting such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security, proceeds or distributions.
Stockholders Agreement means the stockholders agreement, dated on or about [ ], 2014, between the Corporation and the Initial Stockholders, as may be amended from time to time.
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Subsidiary with respect to any person means: (i) a corporation, a majority in voting power of whose capital stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly owned by such person, by a Subsidiary of such person, or by such person and one or more Subsidiaries of such person, without regard to whether the voting of such capital stock is subject to a voting agreement or similar Restriction, (ii) a partnership or limited liability company in which such person or a Subsidiary of such person is, at the date of determination, (A) in the case of a partnership, a general partner of such partnership with the power affirmatively to direct the policies and management of such partnership or (B) in the case of a limited liability company, the managing member or, in the absence of a managing member, a member with the power affirmatively to direct the policies and management of such limited liability company or (iii) any other person (other than a corporation) in which such person, a Subsidiary of such person or such person and one or more Subsidiaries of such person, directly or indirectly, at the date of determination thereof, has (A) the power to elect or direct the election of a majority of the members of the governing body of such person (whether or not such power is subject to a voting agreement or similar restriction) or (B) in the absence of such a governing body, a majority ownership interest.
(b) Fortress Stockholders, etc. In anticipation and in recognition that:
(1) the Initial Stockholders or their Permitted Transferees (as defined in the Stockholders Agreement) or their Affiliates will be significant stockholders of the Corporation;
(2) directors, officers and/or employees of the Fortress Stockholders and their Affiliates may serve as directors, officers and/or employees of the Intrawest Entities and their Affiliates;
(3) the Intrawest Entities and their Affiliates, on the one hand, and the Fortress Stockholders and their Affiliates, on the other hand, may engage in the same, similar or related lines of business and may have an interest in the same, similar or related areas of corporate opportunities;
(4) the Intrawest Entities and their Affiliates, on the one hand, and the Fortress Stockholders and their Affiliates, on the other hand, may enter into, engage in, perform and consummate contracts, agreements, arrangements, transactions and other business relations; and
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(5) the Intrawest Entities and their Affiliates will derive benefits therefrom and through their continued contractual, corporate and business relations with the Fortress Stockholders and their Affiliates, the provisions of this Article ELEVENTH are set forth to regulate, define and guide, to the fullest extent permitted by Law, the conduct of certain affairs of the Intrawest Entities and their Affiliates as they may involve the Fortress Stockholders and their Affiliates and their officers and directors, and the powers, rights, duties and liabilities of the Intrawest Entities and their Affiliates and their officers, directors and stockholders in connection therewith, provided, however, that nothing in this Article ELEVENTH will impair the ability of the Intrawest Entities or their Affiliates to enter into contractual arrangements with any Fortress Stockholders or their Affiliates, which arrangements restrict such Fortress Stockholders or their Affiliates from engaging in activities otherwise allowed by this Article ELEVENTH, and the following provisions shall be subject to any such contractual obligation of the Intrawest Entities or their Affiliates.
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(c) Related Business Activities, etc. Except as the Fortress Stockholders and their Affiliates, on the one hand, and the Intrawest Entities or their Affiliates, on the other hand, may otherwise agree in writing, the Fortress Stockholders and their Affiliates shall have the right to, and shall have no duty to abstain from exercising such right to, (i) engage or invest, directly or indirectly, in the same, similar or related business activities or lines of business as the Intrawest Entities or their Affiliates, (ii) do business with any client, customer, vendor or lessor of any of the Intrawest Entities or their Affiliates or (iii) employ or otherwise engage any officer, director or employee of the Intrawest Entities or their Affiliates, and, to the fullest extent permitted by Law, the Fortress Stockholders and their Affiliates and officers, directors and employees thereof (subject to Part (e) of this Article ELEVENTH) shall not have or be under any fiduciary duty, duty of loyalty nor duty to act in good faith or in the best interests of the Corporation or its stockholders and shall not be liable to the Corporation or its stockholders for any breach or alleged breach thereof or for any derivation of any personal economic gain by reason of any such activities of the Fortress Stockholders or any of their Affiliates or of any of their officers, directors or employees participation therein.
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(d) Corporate Opportunity, etc. Except as the Fortress Stockholders and their Affiliates, on the one hand, and the Intrawest Entities or their Affiliates, on the other hand, may otherwise agree in writing, if the Fortress Stockholders or any of their Affiliates, or any officer, director or employee thereof (subject to the provisions of Part (e) of this Article ELEVENTH), acquires knowledge of a potential transaction or matter that may be a corporate opportunity for the Fortress Stockholders or any of their Affiliates, none of the Intrawest Entities or their Affiliates or any stockholder thereof shall have an interest in, or expectation that, such corporate opportunity be offered to it or that it be offered an opportunity to participate therein, and any such interest, expectation, offer or opportunity to participate, and any other interest or expectation otherwise due to the Corporation or any other Intrawest Entity with respect to such corporate opportunity, is hereby renounced by the Corporation on its behalf and on behalf of the other Intrawest Entities and their respective Affiliates and stockholders in accordance with Section 122(17) of the GCL. Accordingly, subject to Part (e) of this Article ELEVENTH and except as the Fortress Stockholders or their Affiliates may otherwise agree in writing, (i) none of the Fortress Stockholders or their Affiliates or any officer, director or employee thereof will be under any obligation to present, communicate or offer any such corporate opportunity to the Intrawest Entities or their Affiliates and (ii) the Fortress Stockholders and any of their Affiliates shall have the right to hold any such corporate opportunity for their own account, or to direct, recommend, sell, assign or otherwise transfer such corporate opportunity to any person or persons other than the Intrawest Entities and their Affiliates, and, to the fullest extent permitted by Law, the Fortress Stockholders and their respective Affiliates and officers, directors and employees thereof (subject to Part (e) of this Article ELEVENTH) shall not have or be under any fiduciary duty, duty of loyalty or duty to act in good faith or in the best interests of the Corporation, the other Intrawest Entities and their respective Affiliates and stockholders and shall not be liable to the Corporation, the other Intrawest Entities or their respective Affiliates and stockholders for any breach or alleged breach thereof or for any derivation of personal economic gain by reason of the fact that the Fortress Stockholders or any of their Affiliates or any of their officers, directors or employees pursues or acquires the corporate opportunity for itself, or directs, recommends, sells, assigns or otherwise transfers the corporate opportunity to another person, or the Fortress Stockholders or any of their Affiliates or any of their officers, directors or employees does not present, offer or communicate information regarding the corporate opportunity to the Intrawest Entities or their Affiliates.
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(e) Directors, Officers and Employees. Except as the Fortress Stockholders and their Affiliates, on the one hand, and the Intrawest Entities or their Affiliates, on the other hand, may otherwise agree in writing, in the event that a director, officer or employee of any of the Intrawest Entities or their Affiliates who is also a director, officer or employee of any of the Fortress Stockholders or their Affiliates acquires knowledge of a potential transaction or matter that may be a corporate opportunity or is offered a corporate opportunity, if (i) such person acts in good faith and (ii) such knowledge of such potential transaction or matter was not obtained solely in connection with, or such corporate opportunity was not offered to such person solely in, such persons capacity as director or officer of any of the Intrawest Entities or their Affiliates, then (A) such director, officer or employee, to the fullest extent permitted by Law, (1) shall be deemed to have fully satisfied and fulfilled such persons fiduciary duty to the Corporation, the other Intrawest Entities and their respective Affiliates and stockholders with respect to such corporate opportunity, (2) shall not have or be under any fiduciary duty to the Corporation, the other Intrawest Entities and their respective Affiliates and stockholders and shall not be liable to the Corporation, the other Intrawest Entities or their respective Affiliates and stockholders for any breach or alleged breach thereof by reason of the fact that any of the Fortress Stockholders or their Affiliates pursues or acquires the corporate opportunity for itself, or directs, recommends, sells, assigns or otherwise transfers the corporate opportunity to another person, or any of the Fortress Stockholders or their Affiliates or such director, officer or employee does not present, offer or communicate information regarding the corporate opportunity to the Intrawest Entities or their Affiliates, (3) shall be deemed to have acted in good faith and in a manner such person reasonably believes to be in, and not opposed to, the best interests of the Corporation and its stockholders for the purposes of Article SIXTH and the other provisions of this Restated Certificate of Incorporation and (4) shall not have any duty of loyalty to the Corporation, the other Intrawest Entities and their respective Affiliates and stockholders or any duty not to derive any personal benefit therefrom and shall not be liable to the Corporation, the other Intrawest Entities or their respective Affiliates and stockholders for any breach or alleged breach thereof for purposes of Article SIXTH and the other provisions of this Restated Certificate of Incorporation as a result thereof and (B) such potential transaction or matter that may be a corporate opportunity, or the corporate opportunity, shall belong to the applicable Fortress Stockholder or respective Affiliates thereof (and not to any of the Intrawest Entities or Affiliates thereof).
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(f) Agreements with Fortress Stockholders. The Intrawest Entities and their Affiliates may from time to time enter into and perform one or more agreements (or modifications or supplements to pre-existing agreements) with the Fortress Stockholders and their respective Affiliates pursuant to which the Intrawest Entities and their Affiliates, on the one hand, and the Fortress Stockholders and their respective Affiliates, on the other hand, agree to engage in transactions of any kind or nature with each other and/or agree to compete, or to refrain from competing or to limit or restrict their competition, with each other, including to allocate and to cause their respective directors, officers and employees (including any who are directors, officers or employees of both) to allocate corporate opportunities between or to refer corporate opportunities to each other. Subject to Part (e) of this Article ELEVENTH, except as otherwise required by Law, and except as the Fortress Stockholders and their Affiliates, on the one hand, and the Intrawest Entities or their Affiliates, on the other hand, may otherwise agree in writing, no such agreement, or the performance thereof by the Intrawest Entities and their Affiliates, or the Fortress Stockholders or their Affiliates, shall be considered contrary to or inconsistent with any fiduciary duty to the Corporation, any other Intrawest Entity or their respective Affiliates and stockholders of any director or officer of the Corporation, any other Intrawest Entity or any Affiliate thereof who is also a director, officer or employee of any of the Fortress Stockholders or their Affiliates or to any stockholder thereof. Subject to Part (e) of this Article ELEVENTH, to the fullest extent permitted by Law, and except as the Fortress Stockholders or their Affiliates, on the one hand, and the Intrawest Entities or their Affiliates, on the other hand, may otherwise agree in writing, none of the Fortress Stockholders or their Affiliates shall have or be under any fiduciary duty to refrain from entering into any agreement or participating in any transaction referred to in this Part (f) of Article ELEVENTH and no director, officer or employee of the Corporation, any other Intrawest Entity or any Affiliate thereof who is also a director, officer or employee of the Fortress Stockholders or their Affiliates shall have or be under any fiduciary duty to the Corporation, the other Intrawest Entities and their respective Affiliates and stockholders to refrain from acting on behalf of the Fortress Stockholders or their Affiliates in respect of any such agreement or transaction or performing any such agreement in accordance with its terms. Any Director of the Corporation who is also a director of a Fortress Stockholder or Affiliate thereof may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes the agreement or transaction.
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(g) Ambiguity. Nothing contained in this Article ELEVENTH amends or modifies, or will amend or modify, in any respect, any written contractual arrangement between the Fortress Stockholders or any of their Affiliates, on the one hand and the Intrawest Entities or any of their Affiliates, on the other hand.
(h) Application of Provision, etc. This Article ELEVENTH shall apply as set forth above except as otherwise provided by Law. It is the intention of this Article ELEVENTH to take full advantage of statutory amendments, the effect of which may be to specifically authorize or approve provisions such as this Article ELEVENTH. No alteration, amendment, termination, expiration or repeal of this Article ELEVENTH nor the adoption of any provision of this Restated Certificate of Incorporation inconsistent with this Article ELEVENTH shall eliminate, reduce, apply to or have any effect on the protections afforded hereby to any director, officer, employee or stockholder of the Intrawest Entities or their Affiliates for or with respect to any investments, activities or opportunities of which such director, officer, employee or stockholder becomes aware prior to such alteration, amendment, termination, expiration, repeal or adoption, or any matters occurring, or any cause of action, suit or claim that, but for this Article ELEVENTH, would accrue or arise, prior to such alteration, amendment, termination, expiration, repeal or adoption.
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(i) Deemed Notice. Any person or entity purchasing or otherwise acquiring any interest in any shares of the capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article ELEVENTH.
(j) Chairman or Chairman of a Committee. For purposes of this Article ELEVENTH, a director who is chairman of the Board of Directors or chairman of a committee of the Board of Directors is not deemed an officer of the Corporation by reason of holding that position unless that person is a full-time employee of the Corporation.
(k) Severability. If this Article ELEVENTH or any portion hereof shall be invalidated or held to be unenforceable on any ground by any court of competent jurisdiction, the decision of which shall not have been reversed on appeal, this Article ELEVENTH shall be deemed to be modified to the minimum extent necessary to avoid a violation of law and, as so modified, this Article ELEVENTH and the remaining provisions hereof shall remain valid and enforceable in accordance with their terms to the fullest extent permitted by law.
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(l) Neither the alteration, amendment or repeal of this Article ELEVENTH nor the adoption of any provision of this Restated Certificate of Incorporation inconsistent with this Article ELEVENTH shall eliminate or reduce the effect of this Article ELEVENTH in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article ELEVENTH, would accrue or arise, prior to such alteration, amendment, repeal or adoption. Following the expiration of this Article ELEVENTH, any contract, agreement, arrangement or transaction involving a corporate opportunity shall not by reason thereof result in any breach of any fiduciary duty or duty of loyalty or failure to act in good faith or in the best interests of the Corporation or derivation of any improper benefit or personal economic gain, but shall be governed by the other provisions of this Restated Certificate of Incorporation, the Bylaws, the GCL and other applicable law.
TWELFTH: (a) The Corporation expressly elects not to be governed by Section 203 of GCL.
(b) Notwithstanding Part (a) of this Article TWELFTH, the Corporation shall not engage in any business combination (as defined below), at any point in time at which the Common Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, with any interested stockholder (as defined below) for a period of three (3) years following the time that such stockholder became an interested stockholder, unless:
(1) Prior to such time, the Board of Directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; or
(2) Upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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(3) At or subsequent to such time, the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the Corporation which is not owned by the interested stockholder.
(c) For purposes of this Article TWELFTH, references to:
(1) affiliate means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.
(2) associate, when used to indicate a relationship with any person, means: (i) Any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.
(3) business combination, when used in reference to the Corporation and any interested stockholder of the Corporation, means:
(i) Any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation with (A) the interested stockholder, or (B) any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Part (b) of this Article TWELFTH is not applicable to the surviving entity;
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(ii) Any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;
(iii) Any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority−owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (B) pursuant to a merger under Section 251(g) of the GCL; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (D) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (E) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (C)−(E) of this subsection (iii) shall there be an increase in the interested stockholders proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation;
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(iv) Any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or
(v) Any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (i)−(iv) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.
(4) control, including the terms controlling, controlled by and under common control with, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of the Corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Section, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.
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(5) Fortress Direct Transferee means any person that acquires (other than in a registered public offering) directly from Fortress or any of its affiliates or successors or any group, or any member of any such group, to which such persons are a party under Rule 13d-5 of the Securities Exchange Act of 1934 beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.
(6) Fortress Indirect Transferee means any person that acquires (other than in a registered public offering) directly from any Fortress Direct Transferee or any other Fortress Indirect Transferee beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.
(7) interested stockholder means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three (3) year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder, and the affiliates and associates of such person; provided, however, that interested stockholder shall not include (A) any Fortress Stockholder, any Fortress Direct Transferee, any Fortress Indirect Transferee or any of their respective affiliates or successors or any group, or any member of any such group, to which such persons are a party under Rule 13d-5 of the Securities Exchange Act of 1934, or (B) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of any action taken solely by the Corporation, provided that, solely with respect to clause (B) and not with respect to clause (A), such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of owner below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
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(8) person means any individual, corporation, partnership, unincorporated association or other entity.
(9) stock means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.
(10) voting stock means stock of any class or series entitled to vote generally in the election of directors.
(11) owner, including the terms own and owned, when used with respect to any stock, means a person that individually or with or through any of its affiliates or associates:
(i) Beneficially owns such stock, directly or indirectly; or
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(ii) Has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such persons affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such persons right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten (10) or more persons; or
(iii) Has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subsection (ii) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.
THIRTEENTH: The Corporation reserves the right to amend, alter or repeal any provision contained in this Restated Certificate of Incorporation in the manner now or hereafter prescribed in this Restated Certificate of Incorporation, the Bylaws or the GCL, and all rights herein conferred upon stockholders are granted subject to such reservation; provided, however, that, notwithstanding any other provision of this Restated Certificate of Incorporation (and in addition to any other vote that may be required by law), the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote thereon shall be required to amend, alter or repeal, or to adopt any provision as part of this Restated Certificate of Incorporation inconsistent with the purpose and intent of Articles FIFTH, EIGHTH, TENTH or ELEVENTH of this Restated Certificate of Incorporation or this Article THIRTEENTH.
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FOURTEENTH: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer of the Corporation to the Corporation or the Corporations stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the GCL or this Restated Certificate of Incorporation or Bylaws or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine; provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or federal court located within the State of Delaware. Failure to enforce the foregoing provisions would cause the Corporation irreparable harm and the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article FOURTEENTH.
FIFTEENTH: The Corporation is to have perpetual existence.
[Signature page follows]
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IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of Incorporation to be executed on its behalf this ____ day of [ ], 2014.
INTRAWEST RESORTS | ||
HOLDINGS, INC. | ||
By: | ||
Name: | ||
Title: |
FORM OF
AMENDED AND RESTATED
BYLAWS
OF
INTRAWEST RESORTS HOLDINGS, INC.
A Delaware Corporation
Effective [ ], 2014
TABLE OF CONTENTS | |||
Page | |||
ARTICLE I | |||
OFFICES | |||
Section 1.1 | Registered Office | 1 | |
Section 1.2 | Other Offices | 1 | |
ARTICLE II | |||
MEETINGS OF STOCKHOLDERS | |||
Section 2.1 | Place of Meetings | 1 | |
Section 2.2 | Annual Meetings | 2 | |
Section 2.3 | Special Meetings | 2 | |
Section 2.4 | Notice | 3 | |
Section 2.5 | Adjournments | 3 | |
Section 2.6 | Waiver of Notice | 4 | |
Section 2.7 | Quorum | 4 | |
Section 2.8 | Organization | 5 | |
Section 2.9 | Voting | 5 | |
Section 2.10 | Proxies | 6 | |
Section 2.11 | Consent of Stockholders in Lieu of Meeting | 7 | |
Section 2.12 | List of Stockholders Entitled to Vote | 8 | |
Section 2.13 | Record Date | 9 | |
Section 2.14 | Stock Ledger | 11 | |
Section 2.15 | Meetings by Remote Communications | 11 | |
Section 2.16 | Conduct of Meetings | 12 | |
Section 2.17 | Inspectors of Election | 13 | |
Section 2.18 | Nature of Business at Meetings of Stockholders | 14 | |
Section 2.19 | Nomination of Directors | 18 | |
Section 2.20 | Requirement to Appear | 22 | |
ARTICLE III | |||
DIRECTORS | |||
Section 3.1 | Number and Election of Directors | 23 | |
Section 3.2 | Vacancies | 25 | |
Section 3.3 | Duties and Powers | 26 | |
Section 3.4 | Meetings | 26 | |
Section 3.5 | Organization | 27 | |
Section 3.6 | Resignations and Removals of Directors | 28 | |
Section 3.7 | Quorum | 29 |
i |
Section 3.8 | Action at Meeting | 29 | |
Section 3.9 | Actions of the Board by Written Consent | 29 | |
Section 3.10 | Meetings by Means of Conference Telephone | 30 | |
Section 3.11 | Rules and Regulations | 30 | |
Section 3.12 | Committees | 30 | |
Section 3.13 | Compensation | 35 | |
Section 3.14 | Interested Directors | 36 | |
Section 3.15 | Chairman of the Board of Directors | 37 | |
ARTICLE IV | |||
OFFICERS | |||
Section 4.1 | General | 37 | |
Section 4.2 | Election | 38 | |
Section 4.3 | Salaries of Elected Officers | 38 | |
Section 4.4 | Voting Securities Owned by the Corporation | 38 | |
Section 4.5 | Chief Executive Officer | 39 | |
Section 4.6 | President | 40 | |
Section 4.7 | Vice Presidents | 40 | |
Section 4.8 | Secretary | 41 | |
Section 4.9 | Chief Financial Officer | 41 | |
Section 4.10 | Other Officers | 42 | |
Section 4.11 | Resignation | 42 | |
Section 4.12 | Removal | 42 | |
ARTICLE V | |||
STOCK | |||
Section 5.1 | Form of Certificates | 43 | |
Section 5.2 | Signatures | 43 | |
Section 5.3 | Lost Certificates | 43 | |
Section 5.4 | Transfers | 44 | |
Section 5.5 | Record Owners | 44 | |
Section 5.6 | Transfer and Registry Agents | 44 | |
Section 5.7 | Regulations | 45 | |
ARTICLE VI | |||
NOTICES | |||
Section 6.1 | Notices | 45 | |
Section 6.2 | Waivers of Notice | 46 |
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ARTICLE VII | |||
GENERAL PROVISIONS | |||
Section 7.1 | Dividends | 47 | |
Section 7.2 | Disbursements | 48 | |
Section 7.3 | Fiscal Year | 48 | |
Section 7.4 | Corporate Seal | 48 | |
Section 7.5 | Records to be Kept | 48 | |
Section 7.6 | Execution of Instruments | 49 | |
Section 7.7 | Certificate of Incorporation | 49 | |
Section 7.8 | Construction | 49 | |
ARTICLE VIII | |||
INDEMNIFICATION | |||
Section 8.1 | Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation | 50 | |
Section 8.2 | Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation | 51 | |
Section 8.3 | Authorization of Indemnification | 52 | |
Section 8.4 | Good Faith Defined | 52 | |
Section 8.5 | Indemnification by a Court | 53 | |
Section 8.6 | Expenses Payable in Advance | 54 | |
Section 8.7 | Non-exclusivity of Indemnification and Advancement of Expenses | 54 | |
Section 8.8 | Insurance | 55 | |
Section 8.9 | Certain Definitions | 56 | |
Section 8.10 | Survival of Indemnification and Advancement of Expenses | 57 | |
Section 8.11 | Contractual Rights | 57 | |
Section 8.12 | Limitation on Indemnification | 57 | |
Section 8.13 | Indemnification of Employees and Agents | 58 | |
Section 8.14 | Severability | 58 | |
ARTICLE IX | |||
AMENDMENTS | |||
Section 9.1 | Amendments | 58 | |
ARTICLE X | |||
EMERGENCY BYLAWS | |||
Section 10.1 | Emergency Board of Directors | 60 | |
Section 10.2 | Membership of Emergency Board of Directors | 60 | |
Section 10.3 | Powers of the Emergency Board | 60 |
iii |
Section 10.4 | Stockholders Meeting | 61 | |
Section 10.5 | Emergency Corporate Headquarters | 61 | |
Section 10.6 | Limitation of Liability | 61 | |
Section 10.7 | Amendments; Repeal | 61 | |
ARTICLE XI | |||
DEFINITIONS | |||
Section 11.1 | Defined terms | 62 |
iv |
BYLAWS
OF
INTRAWEST RESORTS HOLDINGS, INC.
(hereinafter called the Corporation)
Adopted by the Board of Directors of Intrawest Resorts Holdings, Inc. on [ ], 2014, as amended and restated by the Board of Directors of the Corporation effective as of [ ], 2014 (as amended and restated, the Bylaws).
ARTICLE
I
OFFICES
Section 1.1 Registered Office. The registered office of the Corporation shall be in the City of Wilmington, New Castle County, State of Delaware.
Section 1.2 Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors of the Corporation (the Board of Directors) may from time to time determine.
ARTICLE
II
MEETINGS OF STOCKHOLDERS
Section 2.1 Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or outside the State of Delaware, as shall be designated from time to time by the Board of Directors. The Board of Directors may, in its discretion, determine that a meeting of the stockholders shall not be held at any place, but may instead be held solely by means of remote communication in the manner authorized by the General Corporation Law of the State of Delaware (the DGCL).
Section 2.2 Annual Meetings. The Annual Meeting of Stockholders for the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the Annual Meeting of Stockholders.
Section 2.3 Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended and/or restated from time to time (the Certificate of Incorporation), Special Meetings of Stockholders, for any purpose or purposes, may be called at any time by either (i) the Chairman of the Board of Directors, if there be one, or (ii) the Chief Executive Officer, if there be one, and shall be called by any such officer at the request in writing of (i) the Board of Directors, (ii) a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers include the authority to call such meetings or (iii) at any time the Fortress Stockholders, collectively, beneficially own at least twenty percent (20%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote, any stockholders that collectively beneficially own at least twenty percent (20%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. If at any time the Fortress Stockholders do not, collectively, beneficially own at least twenty percent (20%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote, then the ability of the stockholders to call or cause a Special Meeting of Stockholders to be called is hereby specifically denied. At a Special Meeting of Stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto).
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Section 2.4 Notice. Except as otherwise provided by law, these Bylaws or the Certificate of Incorporation, whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given in accordance with Section 6.1 hereof, which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a Special Meeting of Stockholders, the purpose or purposes for which the meeting is called. Unless otherwise required by law, written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to notice of and to vote at such meeting, except that, where any other minimum or maximum notice period for any action to be taken at such meeting is required under the DGCL, then such other minimum or maximum notice period shall control.
Section 2.5 Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholder may be deemed to be present in person and vote at such adjourned meeting thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting in accordance with the requirements of Section 2.4 hereof shall be given to each stockholder of record entitled to notice of and to vote at the meeting.
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Section 2.6 Waiver of Notice. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy and shall not, at the beginning of such meeting, object to the transaction of any business because the meeting has not been lawfully called or convened, or who shall, either before or after the meeting, submit a signed waiver of notice or waive notice by electronic transmission, in person or by proxy. To the extent permitted by law, a stockholders attendance at a meeting, in person or by proxy, waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder objects to considering the matter when it is presented. Any stockholder so waiving notice of a meeting shall be bound by the proceedings of such meeting in all respects as if due notice thereof had been given.
Section 2.7 Quorum. Unless otherwise required by applicable law or the Certificate of Incorporation, the holders of a majority of the Corporations capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. Where a separate vote by one or more series or classes is required, a majority in voting power of the outstanding shares of such one or more series or classes present in person or by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 2.5 hereof, until a quorum shall be present or represented.
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Section 2.8 Organization. Such person as the Chairman of the Board may have designated or, in the absence of such person, such person as the Board of Directors may have designated or, in the absence of such person, the Chief Executive Officer, or in his or her absence, such person as may be chosen by the holders of a majority of the Corporations shares of capital stock issued and outstanding and entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary, the secretary of the meeting shall be such person as the chairman of the meeting appoints.
Section 2.9 Voting. Unless otherwise required by law, the Certificate of Incorporation or these Bylaws or permitted by the rules of any stock exchange on which the Corporations shares are listed and traded, any question brought before any meeting of the stockholders, other than the election of directors, shall be decided by the vote of the holders of a majority of the total number of votes of the Corporations capital stock present or represented at the meeting and entitled to vote on such question, voting as a single class. Unless otherwise provided in the Certificate of Incorporation, and subject to Section 2.13 of this Article II, each stockholder present or represented at a meeting of the stockholders shall be entitled to cast one (1) vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 2.10 of this Article II. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of the stockholders, in such officers discretion, may require that any votes cast at such meeting shall be cast by written ballot.
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Section 2.10 Proxies. Each stockholder entitled to vote at a meeting of the stockholders, or to express consent or dissent to corporate action in writing without a meeting, may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon after three years from its date, unless such proxy provides for a longer period. Any proxy to be used at a meeting of stockholders must be filed with the Secretary or his or her representative at or before the time of the meeting. Except as otherwise limited therein, proxies shall entitle the persons authorized thereby with respect to a meeting of stockholders to vote at any adjournment of such meeting but shall not be valid after final adjournment of such meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by one of them if the person signing appears to be acting on behalf of all the co-owners unless prior to exercise of the proxy the Corporation receives a specific written notice to the contrary from any one of them. Subject to the provisions of Section 212 of the DGCL and to any express limitation on the proxys authority provided in the appointment form, the Corporation is entitled to accept the proxys vote or other action as that of the stockholder making the appointment. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:
(i) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholders authorized officer, director, employee or agent signing such writing or causing such persons signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.
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(ii) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that such transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other means of electronic transmission are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information on which they relied.
Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing, telegram, cablegram or transmission for any and all purposes for which the original writing, telegram or cablegram could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
Section 2.11 Consent of Stockholders in Lieu of Meeting. Any action required or permitted to be taken by the stockholders of the Corporation at any meeting of stockholders may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the stockholders entitled to vote with respect to the subject matter thereof, provided, however, that at any time the Fortress Stockholders, collectively, beneficially own at least twenty percent (20%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote, any action required or permitted to be taken by the stockholders of the Corporation at any meeting of stockholders may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by stockholders holding at least a majority of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote with respect to the subject matter thereof.
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Section 2.12 List of Stockholders Entitled to Vote. In accordance with Section 219 of the DGCL, the officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make available, at least ten (10) days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder; provided, however, that if the record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting either (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
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Section 2.13 Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day immediately preceding the day on which notice is given, or, if notice is waived, at the close of business on the day immediately preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In such case, the Board of Directors shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this clause (a) at the adjourned meeting.
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(b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded. Delivery made to the Corporations registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
(c) Any stockholders notice requesting the setting of a record date pursuant to clause (b) of this Section 2.13 shall be valid and effective only if received by the Secretary at the principal executive offices of the Corporation and only if it contains the information set forth in Section 2.19 (and, if such notice relates to the nomination of any person for election or re-election as a director of the Corporation, the questionnaire, representation and agreement required by Section 2.19 must also be delivered with and at the same time as such notice). The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation. In addition, a stockholder requesting a record date for proposed stockholder action by consent shall promptly provide any other information reasonably requested by the Corporation.
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Section 2.14 Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 2.12 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of the stockholders.
Section 2.15 Meetings by Remote Communications. Unless otherwise provided in the Certificate of Incorporation, if authorized by the Board of Directors, any annual or special meeting of stockholders, whether such meeting is to be held at a designated place or by means of remote communication, may be conducted in whole or in part by means of remote communication. If authorized by the Board of Directors, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communications: (a) participate in such meeting of stockholders; and (b) be deemed present in person and vote at such meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that: (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder; (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.
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Section 2.16 Conduct of Meetings.
(a) The Board of Directors may adopt by resolution such rules and regulations for the conduct of any meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants.
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(b) The chairman of any meeting of stockholders shall have the power and duty to determine all matters relating to the conduct of the meeting, including determining whether any nomination or item of business has been properly brought before the meeting in accordance with these Bylaws (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made, solicited (or is part of a group that solicited) or did not so solicit, as the case may be, proxies in support of such stockholders nominee or proposal in compliance with such stockholders representation as required by Section 2.19), and if the chairman should so determine and declare that any nomination or item of business has not been properly brought before a meeting of stockholders, then such business shall not be transacted or considered at such meeting and such nomination shall be disregarded. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 2.17 Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman or the Chief Executive Officer shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before assuming the duties of inspector, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of such inspectors ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable law.
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Section 2.18 Nature of Business at Meetings of Stockholders. Only such business (other than nominations for election to the Board of Directors, which must comply with the provisions of Section 2.19 of this Article II) may be transacted at an Annual Meeting as is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (iii) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (A) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.18 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting and (B) who complies with the notice procedures set forth in this Section 2.18. This Section shall be the exclusive means for a stockholder to make business proposals before a special meeting of stockholders (other than matters properly bought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the Exchange Act) and included in the Corporations notice of meeting). Subject to Rule 14a-8 under the Exchange Act, nothing in these Bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporations proxy statement any business proposal.
In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
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To be timely, a stockholders notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that no annual meeting was held in the previous year, or the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not earlier than the opening of business one hundred twenty (120) days before the date of such annual meeting, and not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholders notice as described above.
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To be in proper written form, a stockholders notice to the Secretary must set forth the following information: (i) as to each matter such stockholder proposes to bring before the Annual Meeting, (A) a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting; and (B) the text of the proposal to be voted on by stockholders (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend the Bylaws, the language of the proposed amendment); and (ii) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made, (A) the name and address of such person; (B)(I) the class or series and number of all shares of capital stock of the Corporation that are Beneficially Owned or of record by such person and any affiliates or associates of such person, (II) the name of each nominee holder of shares of all capital stock of the Corporation Beneficially Owned but not of record by such person or any affiliates or associates of such person, and the number of such shares of capital stock of the Corporation held by each such nominee holder, (III) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to shares of capital stock of the Corporation and (IV) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of capital stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to capital stock of the Corporation; (C) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons (including their names) in connection with the proposal of such business and any material interest of such person or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (D) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting; and (E) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the Annual Meeting pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder. In addition, the stockholder making such proposal shall promptly provide any other information reasonably requested by the Corporation.
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A stockholder providing notice of business proposed to be brought before an Annual Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.18 shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of the Annual Meeting.
No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 2.18; provided, however, that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 2.18 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
Nothing contained in this Section 2.18 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporations proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision of law).
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Section 2.19 Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances and except as otherwise provided under the Stockholders Agreement (as defined in Section 11.1). Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors, (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any stockholder of the Corporation (A) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.19 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting or Special Meeting and (B) who complies with the notice procedures set forth in this Section 2.19. This Section shall be the exclusive means for a stockholder to make nominations before a special meeting of stockholders (other than matters properly bought under Rule 14a-8 under the Exchange Act and included in the Corporations notice of meeting). Subject to Rule 14a-8 under the Exchange Act, nothing in these Bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporations proxy statement any nomination of director or directors.
In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
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To be timely, a stockholders notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation (i) in the case of an Annual Meeting, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that no annual meeting was held in the previous years, or the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not earlier than the opening of business one hundred twenty (120) days before the date of the annual meeting, and not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs; and (ii) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Special Meeting was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting or a Special Meeting called for the purpose of electing directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholders notice as described above. In the event that the number of directors to be elected to the Board of Directors at an annual meeting of stockholders is increased and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the date of the Corporations proxy statement released to stockholders in connection with the previous years annual meeting of stockholders, a stockholders notice required by this Section 2.19 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
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To be in proper written form, a stockholders notice to the Secretary must set forth the following information: (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C)(I) the class or series and number of all shares of capital stock of the Corporation that are Beneficially Owned or of record by such person and any affiliates or associates of such person, (II) the name of each nominee holder of shares of all capital stock of the Corporation Beneficially Owned but not of record by such person or any affiliates or associates of such person, and the number of such shares of capital stock of the Corporation held by each such nominee holder, (III) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to shares of capital stock of the Corporation and (IV) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of capital stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to capital stock of the Corporation; and (D) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (ii) as to the stockholder giving the notice, and the beneficial owner, if any, on whose behalf the nomination is being made, (A) the name and record address of such person; (B)(I) the class or series and number of all shares of capital stock of the Corporation that are Beneficially Owned or of record by such person and any affiliates or associates of such person, (II) the name of each nominee holder of shares of the Corporation Beneficially Owned but not of record by such person or any affiliates or associates of such person, and the number of shares of capital stock of the Corporation held by each such nominee holder, (III) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to shares of capital stock of the Corporation and (IV) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of capital stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to capital stock of the Corporation; (C) a description of all agreements, arrangements, or understandings (whether written or oral) between such person, or any affiliates or associates of such person, and any proposed nominee or any other person or persons (including their names) pursuant to which the nomination(s) are being made by such person, and any material interest of such person, or any affiliates or associates of such person, in such nomination, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (D) a representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting or Special Meeting to nominate the persons named in its notice; and (E) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
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A stockholder providing notice of any nomination proposed to be made at an Annual Meeting or Special Meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.19 shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting or Special Meeting, and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of such Annual Meeting or Special Meeting.
To be eligible to be a nominee for election or re-election by the stockholders as a director of the Corporation or to serve as a Director of the Corporation, a person must deliver (not later than the deadline prescribed in the foregoing) to the Secretary a written questionnaire with respect to the background and qualification of such person and, if applicable, the background of any other person on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person: (i) is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person as to how such person, if elected as a director, will act or vote on any issue or question that has not been disclosed in such questionnaire; (ii) is not and will not become a party to any agreement, arrangement or understanding with any person other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed in such questionnaire; and (iii) in such persons individual capacity and on behalf of any person on whose behalf the nomination is being made, would be in compliance, if elected as a director, and will comply with, applicable law and all conflict of interest, confidentiality and other policies and guidelines of the Corporation (including the Corporations Corporate Governance Guidelines) applicable to directors generally and publicly available (whether on the Corporations website or otherwise) as of the date of such representation and agreement.
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No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.19. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
Section 2.20 Requirement to Appear. Notwithstanding anything to the contrary contained in Section 2.18 and Section 2.19, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or item of business, such proposed business shall not be transacted and such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation.
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ARTICLE
III
DIRECTORS
Section 3.1 Number and Election of Directors. The Board of Directors shall consist of not less than three (3) nor more than eleven (11) members, the exact number of which shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into three (3) classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The initial division of the Board of Directors into classes shall be made by the decision of the affirmative vote of a majority of the entire Board of Directors. The term of the initial Class I directors assigned at the time of the filing of the Certificate of Incorporation shall terminate on the date of the annual meeting of stockholders held in 2014; the term of the initial Class II directors assigned at the time of the filing of the Certificate of Incorporation shall terminate on the date of the annual meeting of stockholders held in 2015; and the term of the initial Class III directors assigned at the time of the filing of the Certificate of Incorporation shall terminate on the date of the annual meeting of stockholders held in 2016 or, in each case, upon such directors earlier death, resignation or removal. At each succeeding annual meeting of stockholders beginning in 2014, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term and until their successors are duly elected and qualified. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy shall hold office for a term that shall coincide with the remaining term of the other directors of that class, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. Except as provided in Section 3.2 of this Article III, directors shall be elected by a plurality of the votes of the shares of capital stock of the Corporation present in person or represented by proxy and entitled to vote on the election of directors (Voting Shares) at any meeting of stockholders or in any action by written consent in lieu of such a meeting with respect to which (a) the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors (including a notice that a stockholder seeks to include a nominee in the Corporations proxy materials pursuant to Rule 14a-11 under the Exchange Act) that was timely made in accordance with the applicable nomination periods provided in these Bylaws (or, in the case of a notice that a stockholder seeks to include a nominee in the Corporations proxy materials pursuant to Rule 14a-11 under the Exchange Act, the applicable notice periods provided in such rule), and (ii) such nomination or notice has not been withdrawn (and, in the case of a notice under Rule 14a-11, the Corporation has not determined that it will exclude such proposed nominee from its proxy materials) on or before the tenth (10th) day before the Corporation first mails its initial proxy statement in connection with such election of directors; provided, however, that the determination that directors shall be elected by a plurality of the votes cast shall be determinative only as to the timeliness of a notice of nomination or notice under Rule 14a-11 and not otherwise as to its validity. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. Directors need not be stockholders.
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The Board of Directors shall present to the stockholders nominations of candidates for election to the Board of Directors (or recommend the election of such candidates as nominated by others) such that, and shall take such other corporate actions as may be reasonably required to provide that, to the best knowledge of the Board of Directors, if such candidates are elected by the stockholders, at least a majority of the members of the Board of Directors shall be Independent Directors (as hereinafter defined). The Board of Directors shall only elect any person to fill a vacancy on the Board of Directors if, to the best knowledge of the Board of Directors, after such persons election at least a majority of the members of the Board of Directors shall be Independent Directors. The foregoing provisions of this paragraph shall not cause a director who, upon commencing his or her service as a member of the Board of Directors was determined by the Board of Directors to be an Independent Director but did not in fact qualify as such, or who by reason of any change in circumstances ceases to qualify as an Independent Director, from serving the remainder of the term as a director for which he or she was selected. Notwithstanding the foregoing provisions of this paragraph, no action of the Board of Directors shall be invalid by reason of the failure at any time of a majority of the members of the Board of Directors to be Independent Directors.
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Section 3.2 Vacancies. Unless otherwise required by law or the Certificate of Incorporation, and subject to the terms of any one or more classes or series of preferred stock of the Corporation, (i) any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and (ii) any other vacancy occurring on the Board of Directors, other than for a vacancy resulting from the removal of a director as provided in Section 3.6 which may be filled in the first instance by the stockholders, may be filled by a majority of the Board of Directors then in office, even if less than a quorum, by a sole remaining director. Any director of any class elected to fill a vacancy resulting from an increase in the number of directors of such class shall hold office for a term that shall coincide with the remaining term of that class. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor.
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Section 3.3 Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders.
Section 3.4 Meetings. The Board of Directors and any committee thereof may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors or any committee thereof may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors or such committee, respectively. Special meetings of the Board of Directors may be called by the Chairman, if there be one, the Chief Executive Officer, or by any two directors. Special meetings of any committee of the Board of Directors may be called by the chairman of such committee, if there be one, the Chief Executive Officer or any director serving on such committee. Notice thereof stating the place, date and hour of the special meeting shall be given to each director (or, in the case of a committee, to each member of such committee) either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, telegram or electronic means on twenty-four (24) hours notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. A notice of a special meeting of the Board of Directors need not specify the purpose of the meeting unless required by the Certificate of Incorporation or these Bylaws. Notice of any meeting of the Board shall not, however, be required to be given to any director who submits a signed waiver of notice, or waives notice of such meeting by electronic transmission, whether before or after the meeting, or if he or she shall be present at such meeting; and any meeting of the Board of Directors shall be a legal meeting without any notice thereof having been given if all the directors of the Corporation then in office shall be present thereat or shall have waived notice thereof.
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The Independent Directors shall meet periodically without any member of management present and, except as the Independent Directors may otherwise determine, without any other director present to consider the overall performance of management and the performance of the role of the Independent Directors in the governance of the Corporation; such meetings shall be held in connection with a regularly scheduled meeting of the Board of Directors except as the Independent Directors shall otherwise determine.
Section 3.5 Organization. At each meeting of the Board of Directors or any committee thereof, the Chairman of the Board of Directors or the chairman of such committee, as the case may be, or, in his or her absence or if there be none, a director chosen by a majority of the directors present, shall act as chairman. Except as provided below, the Secretary of the Corporation shall act as secretary at each meeting of the Board of Directors and of each committee thereof. In case the Secretary shall be absent from any meeting of the Board of Directors or of any committee thereof, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting. Notwithstanding the foregoing, the members of each committee of the Board of Directors may appoint any person to act as secretary of any meeting of such committee and the Secretary or any Assistant Secretary of the Corporation may, but need not if such committee so elects, serve in such capacity.
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Section 3.6 Resignations and Removals of Directors. Any director of the Corporation may resign from the Board of Directors or any committee thereof at any time, by giving notice in writing or electronic transmission to (i) the Chairman of the Board of Directors, if there be one, or to the Chief Executive Officer, if there is no Chairman of the Board, and (ii) the Secretary of the Corporation and, in the case of a committee, to the chairman of such committee, if there be one. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Except as otherwise required by applicable law and subject to the rights, if any, of the holders of shares of preferred stock of the Corporation then outstanding, any director or the entire Board of Directors may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least eighty (80%) of the voting power of the then issued and outstanding Voting Shares; provided, however, that for so long as the Fortress Stockholders, collectively, beneficially own at least thirty percent (30%) of the then issued and outstanding Voting Shares, any director or the entire Board of Directors may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of the then issued and outstanding Voting Shares. The vacancy or vacancies in the Board of Directors caused by any such removal shall be filled as provided in Section 3.2. Any director serving on a committee of the Board of Directors may be removed from such committee at any time by the Board of Directors.
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Section 3.7 Quorum. Except as otherwise required by law, the Certificate of Incorporation or the rules and regulations of any securities exchange on which the Corporations securities are listed and traded, at all meetings of the Board of Directors or any committee thereof, a majority of the entire Board of Directors or a majority of the directors constituting such committee, as the case may be, shall constitute a quorum for the transaction of business and the act of a majority of the directors or committee members present at any meeting at which there is a quorum shall be the act of the Board of Directors or such committee, as applicable. If a quorum shall not be present at any meeting of the Board of Directors or any committee thereof, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.
Section 3.8 Action at Meeting. At any meeting of the Board of Directors at which a quorum is present (or such smaller number as may make a determination pursuant to Section 145 of the DGCL or any successor provision), business shall be transacted in such order and manner as the Board of Directors may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present at such meeting at which there is a quorum, except as is required or provided by law, by the Certificate of Incorporation or by any other provision of these Bylaws.
Section 3.9 Actions of the Board by Written Consent. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or such committee. Action taken under this Section 3.9 is effective when the last director signs or delivers the consent, unless the consent specifies a different effective date. A consent signed or delivered under this Section 3.9 has the effect of a meeting vote and may be described as such in any document.
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Section 3.10 Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a telephone conference or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.10 shall constitute presence in person at such meeting.
Section 3.11 Rules and Regulations. The Board of Directors may adopt such rules and regulations for the conduct of its meetings and the management of the affairs of the Corporation as it may deem proper, not inconsistent with the laws of the State of Delaware, the Certificate of Incorporation or the other provisions of these Bylaws.
Section 3.12 Committees.
(a) Delegation of Board Powers. The Board of Directors shall appoint from among its members an audit committee, a compensation committee and a nominating and corporate governance committee, each composed of at least two (2) directors, with such lawfully delegable powers and duties as it thereby confers. Each member of a committee must meet the requirements for membership, if any, imposed by applicable law and the rules and regulations of any securities exchange or quotation system on which the securities of the Corporation are listed or quoted for trading. Unless otherwise provided by the Certificate of Incorporation, the Board of Directors may from time to time elect from its members one or more other committees of the Board and may delegate thereto such lawfully delegable powers and duties as it thereby confers. All members of any committee of the Board of Directors shall serve at the pleasure of the Board of Directors, and the Board of Directors may abolish any such committee at any time. Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and shall report its actions to the Board of Directors. The Board of Directors shall have the power to rescind any action of any such committee, but no such rescission shall have retroactive effect.
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(b) Audit Committee. The audit committee (the Audit Committee) shall be composed of at least three (3) members of the Board of Directors. The Audit Committee shall assist the Board of Directors in overseeing the Corporations financial reporting and shall have such authority and responsibility as is provided in the Audit Committees charter (as hereinafter provided for) and, subject thereto, as is normally incident to the functioning of the audit committee of a publicly-traded company and shall perform the other functions provided to be performed by it by the Bylaws and such other functions as are from time to time assigned to it by the Board of Directors.
(c) Compensation Committee. The compensation committee (the Compensation Committee) shall assist the Board of Directors in overseeing the compensation of the Corporations officers, the Corporations employee stock option or other equity-based compensation plans and programs and the Corporations management compensation policies and shall have such authority and responsibility as is provided in the committees charter (as hereinafter provided for) and, subject thereto and subject to other direction of the Board of Directors, as is normally incident to the functioning of the compensation committee of a publicly-traded company and shall perform the other functions provided to be performed by it by the Bylaws and such other functions as are from time to time assigned to it by the Board of Directors. No member of the Compensation Committee shall be eligible to participate in any compensation plan or program of the Corporation or any subsidiary of the Corporation that is administered or overseen by the Compensation Committee. Unless reviewed and, if necessary, approved by the Compensation Committee, the Corporation shall not cause or permit any Subsidiary of the Corporation to pay or grant any compensation to any officer or employee of the Corporation which, if paid or granted by the Corporation, would require review or approval of the Compensation Committee.
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(d) Nominating and Corporate Governance Committee. The nominating and corporate governance committee (the Nominating and Corporate Governance Committee) (i) shall have authority and responsibility to recommend to the Board of Directors for approval the candidates to be recommended by the Board of Directors to the stockholders for election as directors of the Corporation or to be elected by the Board of Directors to fill a vacancy on the Board of Directors, who shall be such as to cause, if such candidates are elected, the composition of the Board of Directors to satisfy the requirements of the Certificate of Incorporation regarding director independence and the requirements of this section, (ii) shall advise the Board of Directors on its policies and procedures for carrying out its responsibilities and on the Corporations policies and procedures respecting shareholder participation in corporate governance and (iii) shall have such authority and responsibility as is provided in the Nominating and Corporate Governance Committees charter (as hereinafter provided for) and, subject thereto and subject to other direction of the Board of Directors, as is normally incident to the functioning of the nominating or governance committee of a publicly-traded company and (iv) shall perform the other functions provided to be performed by it by the Bylaws and such other functions as are from time to time assigned to it by the Board of Directors.
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(e) Committee Charters. The Board of Directors, by majority of the entire Board of Directors, shall approve a charter describing the purposes, functions and responsibilities of each standing committee of the Board of Directors (each, a Board-approved Charter). Each standing committee of the Board of Directors shall prepare and recommend to the Board of Directors for its approval the committees charter and shall, at least annually, review and report to the Board of Directors on the adequacy thereof. In addition to and without limiting the provisions of paragraphs (a) through (d) of this section, each standing committee of the Board of Directors shall have the authority and responsibility provided by its Board-approved charter, subject to further action by the Board of Directors, and no further authorization of the Board of Directors shall be necessary for actions by a committee within the scope of its charter. Any other committee of the Board of Directors may likewise prepare and recommend to the Board of Directors a charter for the committee and shall have the authority and responsibility provided by its Board-approved charter.
(f) Committee Advisors and Resources. Each standing committee of the Board of Directors shall have the authority to retain, at the Corporations expense, such legal and other counsel and advisors as it determines to be necessary or appropriate to carry out its responsibilities within the scope of its charter. Each other committee of the Board of Directors shall have like authority to the extent provided by its charter or otherwise authorized by the Board of Directors. The Corporation shall pay the compensation of the independent auditor of the Corporation for all audit services, as approved by the Audit Committee, without need for further authorization.
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(g) Alternate Members. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. Subject to the rules and regulations of any securities exchange on which the securities of the Corporation are listed traded, in the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another qualified member of the Board of Directors to act at the meeting in the place of any absent or disqualified member.
(h) Committee Powers. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it, but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) required by the DGCL to be submitted to stockholders for approval; or (ii) adopt, amend or repeal the Bylaws of the Corporation. The Board of Directors shall have the power to rescind any action of any such committee, but no such rescission shall have retroactive effect.
(i) Committee Procedures. Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings. A majority of the members shall constitute a quorum unless the committee shall consist of one (1) or two (2) members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Notwithstanding anything to the contrary contained in this Article III, the resolution of the Board of Directors establishing any committee of the Board of Directors and/or the charter of any such committee may establish requirements or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set forth in these Bylaws and, to the extent that there is any inconsistency between these Bylaws and any such resolution or charter, the terms of such resolution or charter shall be controlling.
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(j) Modification, Termination and Removal. The Board, subject to the requirements specifically set forth in this Section 3.12, may at any time change, increase or decrease the number of members of a committee or terminate the existence of a committee. A directors membership on a committee shall terminate on the date of his or her death or resignation, but the Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may, subject to any requirements specifically set forth in this Section 3.12, fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee.
Section 3.13 Compensation. The Board of Directors may establish reasonable compensation (including reasonable pensions, disability or death benefits, and other benefits or payments) of directors for services to the Corporation as directors, or may delegate such authority to an appropriate committee, irrespective of any personal interest of any of its members. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors in addition to a stated salary for service as director, payable in cash or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for service as committee members.
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Section 3.14 Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because any such directors or officers vote is counted for such purpose if: (i) the material facts as to the directors or officers relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to the directors or officers relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
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Section 3.15 Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board of Directors (who must be a director but is not required to be an employee of the Corporation) shall be designated by the Board of Directors and, except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation that may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as may from time to time be assigned by these Bylaws or by the Board of Directors.
ARTICLE
IV
OFFICERS
Section 4.1 General. The officers of the Corporation shall be chosen by the Board of Directors and shall include a Chief Executive Officer, a President, a Chief Financial Officer and a Secretary. The Board of Directors, in its discretion, also may choose a Treasurer and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these Bylaws. The officers of the Corporation need not be (i) stockholders of the Corporation or (ii) directors of the Corporation. Whenever an officer or officers is absent, or whenever for any reason the Board of Directors may deem it desirable, the Board may delegate the powers and duties of any officer or officers to any director or directors. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any other provision hereof.
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Section 4.2 Election. The Board of Directors shall elect the officers of the Corporation who shall hold their offices for such terms and exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors, except that the Chief Executive Officers may from time to time appoint one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers or other officers. Each officer of the Corporation shall hold office until such officers successor is elected and qualified, or until such officers earlier death, resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the Board of Directors, including by unanimous written consent. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.
Section 4.3 Salaries of Elected Officers. The salaries of all officers of the Corporation shall be fixed from time to time by the Board of Directors. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he or she is also a director of the Corporation.
Section 4.4 Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chief Executive Officer, the President or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.
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Section 4.5 Chief Executive Officer. The Chief Executive Officer shall, subject to the control of the Board of Directors and if there be one, the Chairman of the Board, have general supervision of the affairs of the Corporation and general and active control of all its business. In the absence or disability of the Chairman of the Board of Directors, or if there be none, the Chief Executive Officer shall preside at all meetings of the stockholders and, provided the Chief Executive Officer is also a director, the Board of Directors. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors and the stockholders are carried into effect. The Chief Executive Officer shall have general authority to execute bonds, deeds and contracts in the name of the Corporation and affix the corporate seal thereto; to sign stock certificates; to cause the employment or appointment of such employees and agents of the Corporation as the proper conduct of operations may require, and to fix their compensation, subject to the provisions of these Bylaws; to remove or suspend any employee or agent who shall have been employed or appointed under the Chief Executive Officers authority or under authority of an officer subordinate to the Chief Executive Officer; to suspend for cause, pending final action by the authority which shall have elected or appointed the Chief Executive Officer, any officer subordinate to the Chief Executive Officer; and, in general, to exercise all the powers and authority usually appertaining to the chief executive officer of a corporation, except as otherwise provided in these Bylaws.
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Section 4.6 President. The President shall, subject to the control of the Board of Directors and, if there be one, the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these Bylaws, the Board of Directors or the President. If there be no Chairman of the Board of Directors, or if the Board of Directors shall otherwise designate, the President shall be the Chief Executive Officer of the Corporation. The President shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer by these Bylaws or by the Board of Directors.
Section 4.7 Vice Presidents. At the request of the President or in the Presidents absence or in the event of the Presidents inability or refusal to act (and if there be no Chairman of the Board of Directors), the Vice President, or the Vice Presidents if there are more than one (in the order designated by the Board of Directors), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Chairman of the Board of Directors and no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of the President to act, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President.
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Section 4.8 Secretary. Except as otherwise provided herein, the Secretary, or an Assistant Secretary under the direction of the Secretary, shall record all the proceedings of meetings of the Board of Directors and all meetings of the stockholders in a book or books to be kept for that purpose, and the Secretary, or an Assistant Secretary under the direction of the Secretary, shall also perform like duties for committees of the Board of Directors when required. The Secretary, or an Assistant Secretary under the direction of the Secretary, shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board of Directors or the President, under whose supervision the Secretary shall be. If the Secretary, or an Assistant Secretary under the direction of the Secretary, shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary, or an Assistant Secretary under the direction of the Secretary, shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by such officers signature. The Secretary, or an Assistant Secretary under the direction of the Secretary, shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.
Section 4.9 Chief Financial Officer. The Chief Financial Officer shall, subject to the control of the Board of Directors, and if there be one, the Chairman of the Board, the Chief Executive Officer and President, keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as shall be designated by the Board of Directors or, in the absence of such designation in such depositories, as the Chief Financial Officer shall from time to time deem proper. The Chief Financial Officer shall be the treasurer of the Corporation, unless a Treasurer shall be appointed. The Chief Financial Officer, Treasurer or Assistant Chief Financial Officer, shall sign all stock certificates as treasurer of the Corporation. The Chief Financial Officer shall disburse the funds of the Corporation as shall be ordered by the Board of Directors, taking proper vouchers for such disbursements, shall promptly render to the Chief Executive Officer and to the Board of Directors such statements of his or her transactions and accounts as the Chief Executive Officer and Board of Directors respectively may from time to time require, and in general, shall exercise all the powers and authority usually appertaining to the chief financial officer of a corporation, except as otherwise provided in these Bylaws.
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Section 4.10 Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to appoint such other officers and to prescribe their respective duties and powers.
Section 4.11 Resignation. Any officer may resign by delivering his or her written resignation to the Corporation at its principal office, and such resignation shall be effective upon receipt unless it is specified to be effective at a later time. If a resignation is made effective at a later date and the Corporation accepts the future effective date, the Board of Directors may fill the pending vacancy before the effective date if the Board of Directors provides that the successor shall not take office until the effective date. An officers resignation shall not affect the Corporations contract rights, if any, with the officer.
Section 4.12 Removal. The Board of Directors may remove any officer with or without cause. Nothing herein shall limit the power of any officer to discharge any subordinate.
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ARTICLE
V
STOCK
Section 5.1 Form of Certificates. Except as otherwise provided in a resolution approved by the Board of Directors, all shares of capital stock of the Corporation issued after [ ], 2014 shall be uncertificated shares.
Section 5.2 Signatures. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.
Section 5.3 Lost Certificates. The Board of Directors may direct a new certificate or uncertificated shares be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issuance of a new certificate or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or such owners legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity, or provide a written undertaking to indemnify, against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate or uncertificated shares.
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Section 5.4 Transfers. Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these Bylaws. Transfers of stock shall be made on the books of the Corporation, and in the case of certificated shares of stock, only by the person named in the certificate or by such persons attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed or accompanied by a written assignment and power of attorney properly executed for transfer and payment of all necessary transfer taxes; or, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such persons attorney lawfully constituted in writing, and upon payment of all necessary transfer taxes and compliance with appropriate procedures for transferring shares in uncertificated form; provided, however, that such surrender and endorsement, compliance or payment of taxes shall not be required in any case in which any of the officers of the Corporation shall determine to waive such requirement. With respect to certificated shares of stock, every certificate exchanged, returned or surrendered to the Corporation shall be marked Cancelled, with the date of cancellation, by the Secretary or Assistant Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.
Section 5.5 Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.
Section 5.6 Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.
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Section 5.7 Regulations. The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.
ARTICLE
VI
NOTICES
Section 6.1 Notices. Whenever written notice is required by law, the Certificate of Incorporation or these Bylaws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such persons address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under applicable law, the Certificate of Incorporation or these Bylaws shall be effective if given by a form of electronic transmission if consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed to be revoked if (i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by electronic transmission, as described above, shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the mailing or other means of giving any notice of any stockholders meeting, executed by the Secretary, an Assistant Secretary or any transfer agent of the Corporation giving the notice, shall be prima facie evidence of the giving of such notice or report. Notice shall be deemed to have been given to all stockholders of record who share an address if notice is given in accordance with the householding rules set forth in Rule 14a-3(e) under the Exchange Act, and Section 233 of the DGCL. Notice to directors or committee members may be given personally or by telegram, telex, cable or other means of electronic transmission.
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Section 6.2 Waivers of Notice. Whenever any notice is required by applicable law, the Certificate of Incorporation or these Bylaws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to notice, or a waiver by electronic transmission by the person or persons entitled to notice, or a waiver by electronic transmission by the person or persons entitled to notice whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any Annual or Special Meeting of Stockholders or any regular or special meeting of the directors or members of a committee of directors need be specified in any written waiver of notice unless so required by law, the Certificate of Incorporation or these Bylaws.
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ARTICLE
VII
GENERAL PROVISIONS
Section 7.1 Dividends.
(a) Dividends upon the capital stock of the Corporation, subject to the requirements of the DGCL and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with Section 3.9 of Article III hereof), and may be paid in cash, in property, or in shares of the Corporations capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.
(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
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Section 7.2 Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
Section 7.3 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. If the Board makes no determination to the contrary, the fiscal year of the Corporation shall be the twelve months ending with June 30 in each year.
Section 7.4 Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words Corporate Seal, Delaware. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal (the original of which shall be kept with the Secretary) may be kept and used by the Treasurer or by an Assistant Treasurer or Assistant Secretary (if there be such officers appointed).
Section 7.5 Records to be Kept.
(a) The Corporation shall keep as permanent records minutes of all meetings of its stockholders and Board of Directors, a record of all actions taken by the stockholders or Board of Directors without a meeting, and a record of all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the Corporation. The Corporation or its agent shall maintain a record of its stockholders, in a form that permits preparation of a list of the names and addresses of all stockholders, in alphabetical order by class or series of shares showing the number and class or series of shares held by each. The Corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.
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(b) The Corporation shall keep within the State of Delaware a copy of such records at its principal office or an office of its transfer agent or of its Secretary or Assistant Secretary or of its registered agent as may be required by law.
Section 7.6 Execution of Instruments. The Board of Directors may authorize, or provide for the authorization of, officers, employees or agents to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization must be in writing or by electronic transmission and may be general or limited to specific contracts or instruments.
Section 7.7 Certificate of Incorporation. All references in these Bylaws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time, including any certificate of designations in effect from time to time with respect to Preferred Stock.
Section 7.8 Construction. The words include and including and similar terms shall be deemed to be followed by the words without limitation. Whenever used in these Bylaws, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. Any reference in these Bylaws to provision of any statute shall be deemed to include any successor provision. Unless the context otherwise requires, the term person shall be deemed to include any natural person or any corporation, organization or other entity.
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ARTICLE
VIII
INDEMNIFICATION
Section 8.1 Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 8.3 of this Article VIII, the Corporation shall indemnify and hold harmless to the fullest extent authorized by Delaware law any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving in such official capacity, against expenses (including attorneys fees), liability, loss, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such persons conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such persons conduct was unlawful.
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Section 8.2 Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 8.3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving in such official capacity, against expenses (including attorneys fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the Court of Chancery or such other court shall deem proper.
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Section 8.3 Authorization of Indemnification. Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 8.1 or Section 8.2 of this Article VIII, as the case may be. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the Corporation. To the extent, however, that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.
Section 8.4 Good Faith Defined. For purposes of any determination under Section 8.3 of this Article VIII, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such persons conduct was unlawful, if such persons action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The provisions of this Section 8.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 8.1 or Section 8.2 of this Article VIII, as the case may be.
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Section 8.5 Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 8.3 of this Article VIII, and notwithstanding the absence of any determination thereunder, any director or officer may apply to the Court of Chancery of the State of Delaware or any other court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Section 8.1 or Section 8.2 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 8.1 or Section 8.2 of this Article VIII, as the case may be. Neither a contrary determination in the specific case under Section 8.3 of this Article VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 8.5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application; provided, however, that such >notice shall not be a requirement for an award of or a determination of entitlement to indemnification or advancement of expenses.
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Section 8.6 Expenses Payable in Advance. To the fullest extent authorized by Delaware law, expenses (including attorneys fees and other professionals fees and disbursements and court costs) incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII. Such expenses (including attorneys fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.
Section 8.7 Non-exclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, these Bylaws, any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such persons official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of and advancement of expenses to the persons specified in Section 8.1 and Section 8.2 of this Article VIII shall be made to the fullest extent permitted by law, including as a result of any amendment of the DGCL expanding the right of corporations to indemnify and advance expenses. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Section 8.1 or Section 8.2 of this Article VIII but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL, or otherwise. The Corporations obligation, if any, to indemnify, to hold harmless, or to provide advancement of expenses to any indemnitee who was or is serving at its request as a director, officer, employee, agent or manager of another corporation, partnership, limited liability company, joint venture, trust or other enterprise or nonprofit entity (including service with respect to an employee benefit plan) shall be reduced by any amount such indemnitee actually collects as indemnification, holding harmless, or advancement of expenses from such other corporation, partnership, limited liability company, joint venture, trust or other enterprise nonprofit entity.
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Section 8.8 Insurance. The Corporation may, but shall not be required, to purchase and maintain at its expense insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such persons status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VIII or Delaware law. Nothing contained in this Article VIII shall prevent the Corporation from entering into with any person any agreement that provides independent indemnification, hold harmless or exoneration rights to such person or further regulates the terms on which indemnification, hold harmless or exoneration rights are to be provided to such person or provides independent assurance of the Corporations obligation to indemnify, hold harmless and/or exonerate such person, whether or not such indemnification, hold harmless or exoneration rights are on the same or different terms than provided for by this Article VIII or is in respect of such person acting in any other capacity, and nothing contained herein shall be exclusive of, or a limitation on, any right to indemnification, to be held harmless, to exoneration or to advancement of expenses to which any person is otherwise entitled. The Corporation may create a trust fund, grant a security interest or use other means (including a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification and the advancement of expenses as provided in this Article VIII.
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Section 8.9 Certain Definitions. For purposes of this Article VIII, references to the Corporation shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. The term another enterprise as used in this Article VIII shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. For purposes of this Article VIII, references to fines shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to serving at the request of the Corporation shall include any service as a director, officer, employee or agent of the Corporation that imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner not opposed to the best interests of the Corporation as referred to in this Article VIII.
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Section 8.10 Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 8.11 Contractual Rights. The rights conferred upon any person in this Article VIII shall be contract rights and such rights shall continue as to any person who has ceased to be a director, officer, employee, trustee or agent, and shall inure to the benefit of such persons heirs, executors and administrators. A right to indemnification or to advancement of expenses arising under any provision of this Article VIII shall not be eliminated or impaired by an amendment, alteration or repeal of any provision of the Bylaws of this Corporation after the occurrence of the act or omission that is the subject of the proceeding for which indemnification or advancement of expenses is sought (even in the case of a proceeding based on such a state of facts that is commenced after such time).
Section 8.12 Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 8.5 of this Article VIII), the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors.
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Section 8.13 Indemnification of Employees and Agents. Subject to applicable law, the Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and officers of the Corporation.
Section 8.14 Severability. If this Article VIII or any portion hereof shall be invalidated or held to be unenforceable on any ground by any court of competent jurisdiction, the decision of which shall not have been reversed on appeal, this Article VIII shall be deemed to be modified to the minimum extent necessary to avoid a violation of law and, as so modified, this Article and the remaining provisions hereof shall remain valid and enforceable in accordance with their terms to the fullest extent permitted by law.
ARTICLE
IX
AMENDMENTS
Section 9.1 Amendments.
(a) Subject to Section 9.1(b) below, these Bylaws may be altered, amended or repealed, in whole or in part, either (i) without the approval of the Board of Directors, by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote thereon; provided, however, that at any time the Fortress Stockholders, collectively, beneficially own at least twenty percent (20)% of the then issued and outstanding of capital stock of the Corporation entitled to vote, any such alterations, amendments, repeals or adoptions may be approved by the affirmative vote of the holders of at least a majority of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote thereon or (ii) by the affirmative vote of a majority of the entire Board of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such meeting (if there is one) of the stockholders or Board of Directors, as the case may be.
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(b) Notwithstanding Section 9.1(a), or any other provision of these Bylaws (and in addition to any other vote that may be required by law), (i) any amendment, alteration or repeal, in whole or in part, of Section 2.3 (Special Meetings), Section 2.11 (Consent of Stockholders in Lieu of Meeting), Section 3.1 (Number and Election of Directors), Section 3.2 (Vacancies), Section 3.3 (Duties and Powers), Section 3.6 (Resignations and Removals of Directors), this Article IX and Article XI (Definitions) (collectively, the Specified Bylaws) (which, for the avoidance of doubt, would include the adoption of any provision as part of these Bylaws that is inconsistent with the purpose and intent of the Specified Bylaws) shall require the affirmative vote of the holders of at least eighty (80%) of the voting power of the then issued and outstanding shares of capital stock of the Corporation entitled to vote thereon, in addition to any amendment to the Certificate of Incorporation that may be required, and (ii) the ability of the Board of Directors to amend, alter, repeal, or adopt any provision as part of these Bylaws inconsistent with the purpose and intent of the Specified Bylaws is hereby specifically denied; provided, however, that at any time that the Fortress Stockholders, collectively, beneficially own at least twenty (20%) of the voting power of the issued and outstanding shares of capital stock entitled to vote thereon, the Specified Bylaws may be amended, altered or repealed, in whole or in part, by the affirmative vote of a majority of the entire Board of Directors (and, for the avoidance of doubt, without approval of the stockholders).
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ARTICLE
X
EMERGENCY BYLAWS
Section 10.1 Emergency Board of Directors. In case of an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of the Board of Directors or its stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors or a committee thereof cannot readily be convened for action in accordance with the provisions of the Bylaws, the business and affairs of the Corporation shall be managed by or under the direction of an Emergency Board of Directors (hereinafter called the Emergency Board) established in accordance with Section 10.2.
Section 10.2 Membership of Emergency Board of Directors. The Emergency Board shall consist of at least three of the following persons present or available at the Emergency Corporate Headquarters determined according to Section 10.5: (a) those persons who were directors at the time of the attack or other event mentioned in Section 10.1, and (b) any other persons appointed by such directors to the extent required to provide a quorum at any meeting of the Board of Directors. If there are no such directors present or available at the Emergency Corporate Headquarters, the Emergency Board shall consist of the three highest-ranking officers or employees of the Corporation present or available and any other persons appointed by them.
Section 10.3 Powers of the Emergency Board. The Emergency Board will have the same powers as those granted to the Board of Directors in these Bylaws, but will not be bound by any requirement of these Bylaws which a majority of the Emergency Board believes impracticable under the circumstances.
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Section 10.4 Stockholders Meeting. At such time as it is practicable to do so, the Emergency Board shall call a meeting of stockholders for the purpose of electing directors. Such meeting will be held at a time and place (or by means of remote communication) to be fixed by the Emergency Board and pursuant to such notice to stockholders as it is deemed practicable to give. The stockholders entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum.
Section 10.5 Emergency Corporate Headquarters. Emergency Corporate Headquarters shall be at such location as the Board of Directors or the Chief Executive Officer shall determine prior to the attack or other event, or if not so determined, at such place as the Emergency Board may determine.
Section 10.6 Limitation of Liability. No officer, director or employee acting in accordance with the provisions of this Article X shall be liable except for willful misconduct.
Section 10.7 Amendments; Repeal. At any meeting of the Emergency Board, the Emergency Board may modify, amend or add to the provisions of this Article X so as to make any provision that may be practical or necessary for the circumstances of the emergency. The provisions of this Article X shall be subject to repeal or change by further action of the Board of Directors or by action of the stockholders, but no such repeal or change shall modify the provisions of Section 10.6 with regard to action taken prior to the time of such repeal or change.
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ARTICLE
XI
DEFINITIONS
Section 11.1 Defined terms. For purposes of these Bylaws, the following terms shall have the following meanings:
(a) Affiliate shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act; provided that no Person shall be deemed an Affiliate of any other Person solely by reason of any investment in the Corporation.
(b) Beneficially own and beneficial ownership and similar terms used herein shall be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the date of these Bylaws.
(c) Bylaws shall have the meaning set forth in the Preamble.
(d) Certificate of Incorporation shall have the meaning set forth in Section 2.3.
(e) Corporation shall have the meaning set forth in the Preamble.
(f) DGCL shall have the meaning set forth in Section 2.1.
(g) entire Board of Directors means the total number of directors that the Corporation would have if there were no director vacancies.
(h) Exchange Act shall have the meaning set forth in Section 2.18.
(i) Fortress Affiliate Stockholder shall mean (A) any director of the Corporation who may be deemed an Affiliate of Fortress Investment Group LLC (FIG), (B) any director or officer of FIG or its Affiliates and (C) any investment funds (including any managed accounts) managed directly or indirectly by FIG or its Affiliates.
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(j) Fortress Stockholders shall mean (i) the Initial Stockholders, (ii) each Fortress Affiliate Stockholder and each entity formed by a Fortress Affiliate Stockholder to directly or indirectly hold any interests in the Initial Stockholders or the Corporation and (iii) each Permitted Transferee (as defined in the Stockholders Agreement) who becomes a party to or bound by the provisions of the Stockholders Agreement in accordance with the terms thereof, or Permitted Transferee (as defined in the Stockholders Agreement) thereof who is entitled to enforce the provisions of the Stockholders Agreement in accordance with the terms thereof.
(k) Governmental Entity shall mean any national, state, provincial, municipal, local or foreign government, any court, arbitral tribunal, administrative agency or commission or other governmental or regulatory authority, commission or agency or any non-governmental, self-regulatory authority, commission or agency.
(l) Initial Stockholders means Intrawest Europe Holdings S.à r.l. and Intrawest S.à r.l., each a société à responsabilité limitée (private limited liability company) duly formed and validly existing under the laws of the Grand-Duchy of Luxembourg, and their respective Subsidiaries (other than Subsidiaries that constitute Intrawest Entities) and successors.
(m) Intrawest Entities means the Corporation and its Subsidiaries, and Intrawest Entity includes any of the Intrawest Entities.
(n) Judgment shall mean any order, writ, injunction, award, judgment, ruling or decree of any Governmental Entity.
(o) Law shall mean any statute, law, code, ordinance, rule or regulation of any Governmental Entity.
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(p) Lien shall mean any pledge, claim, equity, option, lien, charge, mortgage, easement, right-of-way, call right, right of first refusal, tag- or drag- along right, encumbrance, security interest or other similar restriction of any kind or nature whatsoever.
(q) Person shall mean any individual, firm, corporation, partnership, limited liability company or other entity, and shall include any successor (by merger or otherwise) of such entity.
(r) Restriction with respect to any capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security, shall mean any voting or other trust or agreement, option, warrant, preemptive right, right of first offer, right of first refusal, escrow arrangement, proxy, buy-sell agreement, power of attorney or other contract, any Law, license, permit or Judgment that, conditionally or unconditionally, (i) grants to any person the right to purchase or otherwise acquire, or obligates any person to sell or otherwise dispose of or issue, or otherwise results or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, may result in any person acquiring, (A) any of such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security, (B) any of the proceeds of, or any distributions paid or that are or may become payable with respect to, any of such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security or (C) any interest in such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security or any such proceeds or distributions, (ii) restricts or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, is reasonably likely to restrict the transfer or voting of, or the exercise of any rights or the enjoyment of any benefits arising by reason of ownership of, any such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security or any such proceeds or distributions or (iii) creates or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, is reasonably likely to create a Lien or purported Lien affecting such capital stock, partnership interest, membership interest in a limited liability company or other equity interest or security, proceeds or distributions.
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(s) Securities Act shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(t) Stockholders Agreement means the stockholders agreement, dated as of [ ], 2014, between the Corporation and the Initial Stockholders, as may be amended from time to time.
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(u) Subsidiary with respect to any person means: (i) a corporation, a majority in voting power of whose capital stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly owned by such person, by a Subsidiary of such person, or by such person and one or more Subsidiaries of such person, without regard to whether the voting of such capital stock is subject to a voting agreement or similar Restriction, (ii) a partnership or limited liability company in which such person or a Subsidiary of such person is, at the date of determination, (A) in the case of a partnership, a general partner of such partnership with the power affirmatively to direct the policies and management of such partnership or (B) in the case of a limited liability company, the managing member or, in the absence of a managing member, a member with the power affirmatively to direct the policies and management of such limited liability company or (iii) any other person (other than a corporation) in which such person, a Subsidiary of such person or such person and one or more Subsidiaries of such person, directly or indirectly, at the date of determination thereof, has (A) the power to elect or direct the election of a majority of the members of the governing body of such person (whether or not such power is subject to a voting agreement or similar restriction) or (B) in the absence of such a governing body, a majority ownership interest.
(v) Voting Shares shall have the meaning set forth in Section 3.1.
* * *
Adopted as of: [ ], 2014
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FORM OF
STOCKHOLDERS AGREEMENT
BY AND AMONG
INTRAWEST RESORTS HOLDINGS, INC.,
INTRAWEST EUROPE HOLDINGS S.À R.L.
AND
INTRAWEST S.À R.L.
Dated as of [•], 2014
TABLE OF CONTENTS
Page | ||||||
ARTICLE I DEFINITIONS | ||||||
Section 1.1 | Certain Defined Terms | 1 | ||||
Section 1.2 | Construction. | 6 | ||||
ARTICLE II TRANSFER | ||||||
Section 2.1 | Binding Effect on Transferees | 6 | ||||
Section 2.2 | Additional Purchases | 6 | ||||
Section 2.3 | Charter Provisions | 6 | ||||
Section 2.4 | Legend | 6 | ||||
ARTICLE III BOARD OF DIRECTORS | ||||||
Section 3.1 | Board | 7 | ||||
Section 3.2 | Committees | 9 | ||||
ARTICLE IV REGISTRATION RIGHTS | ||||||
Section 4.1 | Demand Registration | 9 | ||||
Section 4.2 | Piggyback Registrations | 11 | ||||
Section 4.3 | Shelf Registration | 12 | ||||
Section 4.4 | Withdrawal Rights | 14 | ||||
Section 4.5 | Registration Procedures | 14 | ||||
Section 4.6 | Registration Expenses | 28 | ||||
ARTICLE V INDEMNIFICATION | ||||||
Section 5.1 | General Indemnification | 19 | ||||
Section 5.2 | Registration Statement Indemnification | 19 | ||||
Section 5.3 | Contribution | 20 | ||||
Section 5.4 | Procedure | 20 | ||||
Section 5.5 | Other Matters | 21 |
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ARTICLE VI SERVICES | ||||||
Section 6.1 | Tax Services | 22 | ||||
ARTICLE VII MISCELLANEOUS | ||||||
Section 7.1 | Headings | 22 | ||||
Section 7.2 | Entire Agreement | 22 | ||||
Section 7.3 | Further Actions; Cooperation | 22 | ||||
Section 7.4 | Notices | 22 | ||||
Section 7.5 | Applicable Law | 24 | ||||
Section 7.6 | Severability | 24 | ||||
Section 7.7 | Successors and Assigns | 24 | ||||
Section 7.8 | Amendments | 24 | ||||
Section 7.9 | Waiver | 25 | ||||
Section 7.10 | Counterparts | 25 | ||||
Section 7.11 | Submission To Jurisdiction | 25 | ||||
Section 7.12 | Injunctive Relief | 25 | ||||
Section 7.13 | Recapitalizations, Exchanges, Etc. Affecting the Shares of Common Stock; New Issuance | 25 | ||||
Section 7.14 | Termination | 26 | ||||
Section 7.15 | Third Party Beneficiary | 26 | ||||
Section 7.16 | Rule 144 | 26 | ||||
Section 7.17 | Information | 26 |
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STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this “Agreement”) is made as of , 2014, by and between Intrawest Europe Holdings S.à r.l., a société à responsabilité limitée (private limited liability company) duly formed and validly existing under the laws of the Grand-Duchy of Luxembourg (“IEH”), Intrawest S.à r.l., a société à responsabilité limitée (private limited liability company) duly formed and validly existing under the laws of the Grand-Duchy of Luxembourg (“ITW S.à r.l.”) and Intrawest Resorts Holdings, Inc., a Delaware corporation (the “Company”). Unless otherwise indicated, references to articles and sections shall be to articles and sections of this Agreement. WHEREAS, the IEH and ITW S.à r.l. are holders of shares of Common Stock (as hereinafter defined); and
WHEREAS, the Company has agreed to provide the registration rights and other rights set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section 1.1 Certain Defined Terms. For purposes of this Agreement, the following terms shall have the following meanings:
(a) “Actions” shall have the meaning assigned to it in Section 5.1(a).
(b) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act; provided that no Stockholder shall be deemed an Affiliate of any other Stockholder solely by reason of any investment in the Company.
(c) “Agreement” shall have the meaning assigned to it in the preamble.
(d) A Person shall be deemed to “Beneficially Own” securities if such Person is deemed to be a “beneficial owner” within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the date of this Agreement.
(e) “Board” shall mean the board of directors of the Company.
(f) “Bylaws” shall mean the bylaws of the Company, as may be amended and/or restated from time to time.
(g) “Cayman L.P. Limited Partnership Agreement” shall mean the Third Amended and Restated Exempted Limited Partnership Agreement of Intrawest Cayman L.P., an exempted limited partnership formed and existing under the laws of the Cayman Islands, as such agreement may be amended, supplemented, modified or replaced.
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(h) “Certificate of Incorporation” shall mean the certificate of incorporation of the Company, as may be amended and/or restated from time to time.
(i) “Commission” shall mean the United States Securities and Exchange Commission or any successor agency.
(j) “Common Stock” shall mean the Company’s common stock, par value $0.01 per share, and any and all securities of any kind whatsoever of the Company which may be issued and outstanding on or after the date hereof in respect of, in exchange for, or upon conversion of shares of Common Stock pursuant to a merger, consolidation, stock split, stock dividend, recapitalization of the Company or otherwise.
(k) “Company” shall have the meaning assigned to it in the preamble.
(l) “Company Securities” shall mean (i) any Common Stock and (ii) any other securities of the Company entitled to vote generally in the election of directors of the Company.
(m) “Demand” shall have the meaning assigned to it in Section 4.1(a).
(n) “Demand Registration” shall have the meaning assigned to it in Section 4.1(a).
(o) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(p) “FIG” shall mean Fortress Investment Group LLC, a Delaware limited liability company.
(q) “FIG LLC” shall mean FIG LLC, a Delaware limited liability company, or any other Person designated as “FIG LLC” by FIG in a written notice to the Company.
(r) “Filings” shall mean annual, quarterly and current reports and other documents filed or furnished by the Company or any Subsidiary of the Company under the Exchange Act; annual reports to stockholders, annual and quarterly statutory statements of the Company or any Subsidiary of the Company; and any registration statements, prospectuses documents filed or furnished by the Company or any of its Subsidiaries under the Securities Act (other than any registration statement, any Issuer Free Writing Prospectus, any prospectus or preliminary prospectus or any amendment thereof or supplement thereto to the extent that Section 5.2 of this Agreement applies).
(s) “FINRA” shall mean the Financial Industry Regulatory Authority.
(t) “Fortress Affiliate Stockholder” shall mean (A) any director of the Company who may be deemed an Affiliate of FIG, (B) any director or officer of FIG or its Affiliates and (C) any investment funds (including any managed accounts) managed directly or indirectly by FIG or its Affiliates.
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(u) “Form S-3” shall have the meaning assigned to it in Section 4.3(a).
(v) “Free Writing Prospectus” shall mean a free writing prospectus, as defined in Rule 405 under the Securities Act.
(w) “Grove Limited Partners” shall have the meaning assigned to it in the Cayman L.P. Limited Partnership Agreement.
(x) “IEH” shall have the meaning assigned to it in the preamble.
(y) “Initial Public Offering” shall mean the initial public offering of Common Stock pursuant to an effective registration statement under the Securities Act.
(z) “Initial Stockholders” shall mean IEH and ITW S.à r.l.
(aa) “Inspectors” shall have the meaning assigned to it in Section 4.5(a)(viii).
(bb) “IPO Underwriting Agreement” shall mean the underwriting agreement, dated , 2014, between the Company and the underwriters named therein.
(cc) “Issuer Free Writing Prospectus” shall mean an issuer free writing prospectus, as defined in Rule 433 under the Securities Act.
(dd) “ITW S.à r.l.” shall have the meaning assigned to it in the preamble.
(ee) “Losses” shall have the meaning assigned to it in Section 5.1(a).
(ff) “Offering Expenses” shall have the meaning assigned to it in Section 4.6(a).
(gg) “Other Demanding Sellers” shall have the meaning assigned to it in Section 4.2(b).
(hh) “Other Proposed Sellers” shall have the meaning assigned to it in Section 4.2(b).
(ii) “Partnership Interest” shall have the meaning assigned to it in the Cayman L.P. Limited Partnership Agreement.
(jj) “Permitted Transferee” shall mean, with respect to each Stockholder, (i) any other Stockholder, (ii) such Stockholder’s Affiliates, (iii) in the case of any Stockholder, (A) any equity holder, member or general or limited partner of such Stockholder (including any equity holder of the Initial Stockholders), (B) any corporation, partnership, limited liability company or other entity that is an Affiliate of such Stockholder or any equity holder, member, general or limited partner of such Stockholder (collectively, “Stockholder Affiliates”), (C) any investment funds managed directly or indirectly by such Stockholder or any Stockholder Affiliate (a “Stockholder Fund”), (D) any general or limited partner of any Stockholder Fund, (E) any managing director, general partner, director, limited partner, officer or employee of any Stockholder Affiliate, or any spouse, lineal descendant, sibling, parent, heir, executor, administrator, testamentary trustee, legatee or beneficiary of any of the foregoing persons described in this clause (E) (collectively, “Stockholder Associates”) or (F) any trust, the beneficiaries of which, or any corporation, limited liability company or partnership, the stockholders, members or general or limited partners of which, consist solely of any one or more of such Stockholder, any general or limited partner of such Stockholder, any Stockholder Affiliates, any Stockholder Fund, any Stockholder Associates, their spouses or their lineal descendants and (iv) any other Person that acquires shares of Common Stock from such Stockholder other than pursuant to a Public Offering and that agrees to become party to or be bound by this Agreement.
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(kk) “Person” shall mean any individual, firm, corporation, partnership, limited liability company or other entity, and shall include any successor (by merger or otherwise) of such entity.
(ll) “Piggyback Notice” shall have the meaning assigned to it in Section 4.2(a).
(mm) “Piggyback Registration” shall have the meaning assigned to it in Section 4.2(a).
(nn) “Piggyback Seller” shall have the meaning assigned to it in Section 4.2(a).
(oo) “Public Offering” shall mean an offering of equity securities of the Company pursuant to an effective registration statement under the Securities Act, including an offering in which Stockholders are entitled to sell Common Stock pursuant to the terms of this Agreement.
(pp) “Records” shall have the meaning assigned to it in Section 4.5(a)(viii).
(qq) “Registrable Amount” shall mean a number of shares of Common Stock equal to 1% of the Common Stock issued and outstanding immediately after the consummation of the Initial Public Offering.
(rr) “Registrable Securities” shall mean any Common Stock currently owned or hereafter acquired by any Stockholder. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (x) a registration statement registering such securities under the Securities Act has been declared effective and such securities have been sold or otherwise transferred by the holder thereof pursuant to such effective registration statement or (y) such securities are sold in accordance with Rule 144 (or any successor provision) promulgated under the Securities Act.
(ss) “Registration Expenses” shall have the meaning assigned to it in Section 4.6(a).
(tt) “Requesting Stockholder” shall have the meaning assigned to it in Section 4.1(a).
(uu) “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(vv) “Selling Holders” shall have the meaning assigned to it in Section 4.5(a)(i).
(ww) “Shelf Notice” shall have the meaning assigned to it in Section 4.3(a).
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(xx) “Shelf Registration Effectiveness Period” shall have the meaning assigned to it in Section 4.3(c).
(yy) “Shelf Registration Statement” shall have the meaning assigned to it in Section 4.3(a).
(zz) “Shelf Underwritten Offering” shall have the meaning assigned to it in Section 4.3(f).
(aaa) “Stockholders” shall mean (i) the Initial Stockholders, (ii) each Fortress Affiliate Stockholder and each entity formed by a Fortress Affiliate Stockholder to directly or indirectly hold any interests in the Initial Stockholders or the Company and (iii) each Permitted Transferee who becomes a party to or bound by the provisions of this Agreement in accordance with the terms hereof or a Permitted Transferee thereof who is entitled to enforce the provisions of this Agreement in accordance with the terms hereto, in each case of clauses (i), (ii) and (iii) to the extent that the Initial Stockholder, Fortress Affiliate Stockholders and Permitted Transferees, together, hold of record or Beneficially Own at least a Registrable Amount.
(bbb) “Subsidiary” shall mean with respect to any Person (i) a corporation, fifty percent (50%) or more of the voting or capital stock of which is, as of the time in question, directly or indirectly owned by such Person, (ii) any other partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity economic interest thereof or has the power to elect or direct the election of fifty percent (50%) or more of the members of the governing body of such entity or otherwise has control over such entity (e.g., as the managing partner of a partnership), or (iii) which would be considered subsidiaries of such Person within the meaning of Regulation S-K or Regulation S-X.
(ccc) “Suspension Period” shall have the meaning assigned to it in Section 4.3(d).
(ddd) “Third Lien Loan” shall have the meaning assigned to it in the Cayman L.P. Limited Partnership Agreement.
(eee) “Underwritten Offering” shall mean a sale of securities of the Company to an underwriter or underwriters for reoffering to the public.
(fff) “Voting Power of the Company” shall mean the voting power of the then issued and outstanding capital stock of the Company entitled to vote in the election of directors of the Company.
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Section 1.2 Construction. For the purposes of this Agreement (i) words (including capitalized terms defined herein) in the singular shall be held to include the plural and vice versa and words (including capitalized terms defined herein) of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to Articles and Sections of this Agreement, unless otherwise specified, (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” (iv) all references to any period of days shall be deemed to be to the relevant number of calendar days unless otherwise specified, and (v) all references herein to “$” or dollars shall refer to United States dollars, unless otherwise specified.
ARTICLE
II
TRANSFER
Section 2.1 Binding Effect on Transferees. A Permitted Transferee shall become a Stockholder hereunder, without any further action by the Company, following a transfer by a Stockholder of Company Securities to such Permitted Transferee upon the execution by such Permitted Transferee of a joinder providing that such Person shall be bound by and shall fully comply with the terms of this Agreement (including the provisions of Article IV with respect to the Company Securities being transferred to such transferee). The Fortress Affiliate Stockholders shall be deemed to be Stockholders without any further action.
Section 2.2 Additional Purchases. Any Company Securities owned by a Stockholder on or after the date of this Agreement shall have the benefit of and be subject to the terms and conditions of this Agreement.
Section 2.3 Charter Provisions. The parties hereto shall use their respective reasonable efforts (including voting or causing to be voted all of the Company Securities held of record by such party or Beneficially Owned by such party by virtue of having voting power over such Company Securities) so as to cause no amendment to be made to the Certificate of Incorporation or Bylaws as in effect as of the date of this Agreement in a manner that would (a) add restrictions to the transferability of the Company Securities by the Initial Stockholders, any Fortress Affiliate Stockholder or their Permitted Transferees who remain a “Stockholder” (as such term is used herein) at the time of such an amendment, which restrictions are beyond those then provided for in the Certificate of Incorporation, this Agreement or applicable securities laws or (b) nullify any of the rights of the Initial Stockholders, any Fortress Affiliate Stockholder or their Permitted Transferees who remain a “Stockholder” (as such term is used herein) at the time of such amendment, which rights are explicitly provided for in this Agreement, unless, in each such case, such amendment shall have been approved by such Stockholder.
Section 2.4 Legend. Any certificate representing Company Securities issued to a Stockholder shall be stamped or otherwise imprinted with a legend in substantially the following form:
“The shares represented by this certificate are subject to the provisions contained in the Stockholders Agreement, dated as of , 2014, by and among Intrawest Resorts Holdings, Inc. and the stockholder of Intrawest Resorts Holdings, Inc. described therein.”
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The Company shall make customary arrangements to cause any Company Securities issued in uncertificated form to be identified on the books of the Company in a substantially similar manner.
ARTICLE
III
BOARD OF DIRECTORS
Section 3.1 Board.
(a) For so long as this Agreement is in effect, the Company and each Stockholder shall take all reasonable actions within their respective control (including voting or causing to be voted all of the Company Securities held of record by such Stockholder or Beneficially Owned by such Stockholder by virtue of having voting power over such Company Securities, and, with respect to the Company, as provided in Sections 3.1(d) and (e)) so as to cause to be elected to the Board, and to cause to continue in office:
(i) a number of directors equal to a majority of the Board, plus one director, shall be individuals designated by FIG LLC, for so long as the Stockholders, together, have Beneficial Ownership of at least 30% of the Voting Power of the Company;
(ii) a number of directors equal to a majority of the Board, minus one director, shall be individuals designated by FIG LLC, for so long as the Stockholders, together, have Beneficial Ownership of less than 30% but at least 20% of the Voting Power of the Company, provided that if the Board consists of six or fewer directors, then FIG LLC shall have the right to designate a number of directors equal to three directors;
(iii) a number of directors (rounded up to the nearest whole number) that would be required to maintain the Stockholder’s proportional representation on the Board shall be individuals designated by FIG LLC, for so long as the Stockholders, together, have Beneficial Ownership of less than 20% but at least 10% of the Voting Power of the Company, provided that if the Board consists of six or fewer directors, then FIG LLC shall have the right to designate a number of directors equal to two directors; and
(iv) a number of directors (rounded up to the nearest whole number) that would be required to maintain the Stockholder’s proportional representation on the Board shall be individuals designated by FIG LLC, for so long as the Stockholders, together, have Beneficial Ownership of less than 10% but at least 5% of the Voting Power of the Company, provided that if the Board consists of six or fewer directors, then FIG LLC shall have the right to designate a number of directors equal to one director.
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(b) In addition to the number of directors that FIG LLC may designate pursuant Section 3.1(a), until the earlier of the date on which (i) the Third Lien Loan is repaid in full or (ii) the Grove Limited Partners cease to own any Partnership Interest, the Company shall take all reasonable actions within its control and as provided in Sections 3.1(d) and (e)) so as to cause to be elected to the Board, and to cause to continue in office, one additional director; provided that the director elected pursuant to this Section 3.1(b) shall not be counted as a director designated by FIG LLC for purposes of the calculations set forth in Section 3.1(a).
(c) If FIG LLC notifies the Stockholders of its desire to remove, with or without cause, any director previously designated by it, the Stockholders shall vote or cause to be voted all of the shares of Company Securities held of record by such Stockholders or Beneficially Owned by such Stockholders by virtue of having voting power over such Company Securities and take all other reasonable actions within its control to cause the removal of such director.
(d) The Company agrees to include in the slate of nominees recommended by the Board those persons designated by FIG LLC in accordance with Section 3.1(a) and 3.1(b) and to use its reasonable best efforts to cause the election of each such designee to the Board, including nominating such designees to be elected as directors, in each case subject to applicable law.
(e) In the event that a vacancy is created at any time by the death, disability, retirement, resignation or removal (with or without cause) of any director who is designated by FIG LLC in accordance with Section 3.1(a) or 3.1(b), the Company agrees to take at any time and from time to time all actions necessary to cause the vacancy created thereby to be filled as promptly as practicable by a new designee of FIG LLC. In the event that the size of the Board is expanded to more than six directors, the Company agrees to take at any time and from time to time all actions necessary to cause the Board to continue to have the number of FIG LLC’s designees that corresponds to the requirements of Section 3.1(a).
(f) In the event that at any time the number of directors entitled to be designated by FIG LLC pursuant to Section 3.1(a) decreases, the Initial Stockholders and their Permitted Transferees shall take reasonable actions to cause a sufficient number of directors designated pursuant to Section 3.1(a) to resign from the Board at or prior to the end of such designated director’s term such that the number of designated directors after such resignation(s) equals the number of directors FIG LLC would have been entitled to designate pursuant to Section 3.1(a). Any vacancies created by such resignation may remain vacant until the next annual meeting of stockholders or filled by a majority vote of the Board. Notwithstanding the foregoing, such designated director(s) need not resign from the Board at or prior to the end of such director’s term if the Company’s nominating committee recommends the nomination of such director(s) for election at the next annual meeting coinciding with the end of such director’s term, or otherwise (and for the avoidance of doubt, such director shall no longer be considered a designee of FIG LLC).
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Section 3.2 Committees. For so long as this Agreement is in effect, the Company shall take all reasonable actions within its control at any given time so as to cause to be appointed to any committee of the Board a number of directors designated by FIG LLC that is up to the number of directors that is proportionate (rounding up to the next whole director) to the representation that FIG LLC is entitled to designate to the Board under Section 3.1(a), to the extent such directors are permitted to serve on such committees under the applicable rules of the Commission and the New York Stock Exchange (“NYSE”) or by any other applicable stock exchange. It is understood by the parties hereto that FIG LLC shall not be required to have its directors represented on any committee and any failure to exercise such right in this section in a prior period shall not constitute any waiver of such right in a subsequent period.
ARTICLE
IV
REGISTRATION RIGHTS
Section 4.1 Demand Registration.
(a) At any time after the date that is 180 days after the date hereof (or such earlier date (i) as would permit the Company to cause any filings required hereunder to be filed on the 180th day after the date hereof or (ii) as is permitted by waiver under the IPO Underwriting Agreement), any Person that is a Stockholder (a “Requesting Stockholder”) on the date a Demand is made shall be entitled to make a written request of the Company (a “Demand”) for registration under the Securities Act of a number of Registrable Securities that, when taken together with the number of Registrable Securities requested to be registered under the Securities Act by such Requesting Stockholder’s Affiliates, equals or is greater than the Registrable Amount (a “Demand Registration”) and thereupon the Company will, subject to the terms of this Agreement, use its commercially reasonable efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so requested to register by the Requesting Stockholders for disposition in accordance with the intended method of disposition stated in such Demand, which may be an Underwritten Offering;
(ii) all other Registrable Securities which the Company has been requested to register pursuant to Section 4.1(b); and
(iii) all shares of Common Stock which the Company may elect to register in connection with any offering of Registrable Securities pursuant to this Section 4.1, but subject to Section 4.1(f);
all to the extent necessary to permit the disposition (in accordance with the intended methods thereof) of the Registrable Securities and the additional Common Stock, if any, to be so registered.
(b) A Demand shall specify: (i) the aggregate number of Registrable Securities requested to be registered in such Demand Registration, (ii) the intended method of disposition in connection with such Demand Registration, to the extent then known and (iii) the identity of the Requesting Stockholder (or Requesting Stockholders). Within five days after receipt of a Demand, the Company shall give written notice of such Demand to any other Persons that on the date a Demand is delivered to the Company is a Stockholder (excluding Fortress Affiliate Stockholders which have not signed a joinder as contemplated by Section 2.1). Subject to Section 4.1(f), the Company shall include in the Demand Registration covered by such Demand all Registrable Securities with respect to which the Company has received a written request for inclusion therein. Such written request shall comply with the requirements of a Demand as set forth in this Section 4.1(b).
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(c) Each Stockholder shall be entitled to an unlimited number of Demand Registrations until such time as the Stockholders, together, Beneficially Own less than a Registrable Amount.
(d) Demand Registrations shall be on such registration form of the Commission for which the Company is eligible as shall be selected by the Requesting Stockholders whose shares represent a majority of the Registrable Securities that the Company has been requested to register, including, to the extent permissible, an automatically effective registration statement or an existing effective registration statement filed by the Company with the Commission, and shall be reasonably acceptable to the Company.
(e) The Company shall not be obligated to effect any Demand Registration (A) within one month of a “firm commitment” Underwritten Offering in which all Stockholders were given “piggyback” rights pursuant to Section 4.2 (subject to Section 4.1(f)) and provided that at least 50% of the number of Registrable Securities requested by such Stockholders to be included in such Demand Registration were included or (B) within one month of any other Underwritten Offering pursuant to Section 4.3(e). In addition, the Company shall be entitled to postpone (upon written notice to all Stockholders) for a reasonable period of time not to exceed 60 days in succession the filing or the effectiveness of a registration statement for any Demand Registration (but no more than twice, or for more than 90 days in the aggregate, in any period of 12 consecutive months) if the Board determines in good faith and in its reasonable judgment that the filing or effectiveness of the registration statement relating to such Demand Registration would cause the disclosure of material, non-public information that the Company has a bona fide business purpose for preserving as confidential. In the event of a postponement by the Company of the filing or effectiveness of a registration statement for a Demand Registration, the holders of a majority of Registrable Securities held by the Requesting Stockholder(s) shall have the right to withdraw such Demand in accordance with Section 4.4.
(f) The Company shall not include any securities other than Registrable Securities in a Demand Registration, except with the written consent of Stockholders participating in such Demand Registration that hold a majority of the Registrable Securities included in such Demand Registration. If, in connection with a Demand Registration, any managing underwriter (or, if such Demand Registration is not an Underwritten Offering, a nationally recognized investment bank engaged in connection with such Demand Registration) advises the Company, that, in its opinion, the inclusion of all of the securities, including securities of the Company that are not Registrable Securities, sought to be registered in connection with such Demand Registration would adversely affect the marketability of the Registrable Securities sought to be sold pursuant thereto, then the Company shall include in such registration statement only such securities as the Company is advised by such underwriter or investment bank can be sold without such adverse effect as follows and in the following order of priority: (i) first, up to the number of Registrable Securities requested to be included in such Demand Registration by the Stockholders, which, in the opinion of the underwriter can be sold without adversely affecting the marketability of the offering, pro rata among such Stockholders requesting such Demand Registration on the basis of the number of such securities held by such Stockholders and such Stockholders that are Piggyback Sellers; (ii) second, securities the Company proposes to sell; and (iii) third, all other securities of the Company duly requested to be included in such registration statement, pro rata on the basis of the number of such other securities requested to be included or such other method determined by the Company.
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(g) Any investment bank(s) that will serve as an underwriter with respect to such Demand Registration or, if such Demand Registration is not an Underwritten Offering, any investment bank engaged in connection therewith, shall be selected (i) by FIG LLC, for so long as a majority of the outstanding Common Stock of the Company is owned by the Initial Stockholders, their Permitted Transferees and any Fortress Affiliate Stockholder, and thereafter (ii) by the Stockholder participating in such Demand Registration that holds (together with its Permitted Transferees) a number of Registrable Securities included in such Demand Registration constituting a plurality of all Registrable Securities included in such Demand Registration.
Section 4.2 Piggyback Registrations.
(a) Subject to the terms and conditions hereof, whenever the Company proposes to register any of its equity securities under the Securities Act (other than a registration by the Company (x) on a registration statement on Form S-4 or (y) on a registration statement on Form S-8 (or, in any of the cases of (x) or (y), on any successor forms thereto)) (each, a “Piggyback Registration”), whether for its own account or for the account of others, the Company shall give the Stockholders (excluding Fortress Affiliate Stockholders which have not signed a joinder as contemplated by Section 2.1) prompt written notice thereof (but not less than five days prior to the filing by the Company with the Commission of any registration statement with respect thereto). Such notice (a “Piggyback Notice”) shall specify, at a minimum, the number of equity securities proposed to be registered, the proposed date of filing of such registration statement with the Commission, the proposed means of distribution and the proposed managing underwriter or underwriters (if any and if known). Upon the written request of any Person that on the date of such Piggyback Notice is a Stockholder, given within five days after such Piggyback Notice is received by such Person (any such Persons, a “Piggyback Seller”) (which written request shall specify the number of Registrable Securities then presently intended to be disposed of by such Piggyback Seller), the Company, subject to the terms and conditions of this Agreement, shall use its commercially reasonable efforts to cause all such Registrable Securities held by Piggyback Sellers with respect to which the Company has received such written requests for inclusion to be included in such Piggyback Registration on the same terms and conditions as the Company’s equity securities being sold in such Piggyback Registration.
(b) If, in connection with a Piggyback Registration, any managing underwriter (or, if such Piggyback Registration is not an Underwritten Offering, a nationally recognized investment bank engaged in connection with such Demand Registration) advises the Company in writing that, in its opinion, the inclusion of all the equity securities sought to be included in such Piggyback Registration by (i) the Company, (ii) others who have sought to have equity securities of the Company registered in such Piggyback Registration pursuant to rights to demand (other than pursuant to so-called “piggyback” or other incidental or participation registration rights) such registration (such Persons being “Other Demanding Sellers”), (iii) the Piggyback Sellers and (iv) any other proposed sellers of equity securities of the Company (such Persons being “Other Proposed Sellers”), as the case may be, would adversely affect the marketability of the equity securities sought to be sold pursuant thereto, then the Company shall include in the registration statement applicable to such Piggyback Registration only such equity securities as the Company is so advised by such underwriter or investment bank can be sold without such an effect, as follows and in the following order of priority:
(i) if the Piggyback Registration relates to an offering for the Company’s own account, then (A) first, such number of equity securities to be sold by the Company as the Company, in its reasonable judgment and acting in good faith and in accordance with sound financial practice, shall have determined, (B) second, Registrable Securities of Piggyback Sellers and securities sought to be registered by Other Demanding Sellers (if any), pro rata on the basis of the number of shares of Common Stock held by such Piggyback Sellers and Other Demanding Sellers and (C) third, other equity securities held by any Other Proposed Sellers; or
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(ii) if the Piggyback Registration relates to an offering other than for the Company’s own account, then (A) first, such number of equity securities sought to be registered by each Other Demanding Seller and the Piggyback Sellers (if any), pro rata in proportion to the number of shares of Common Stock held by all such Other Demanding Sellers and Piggyback Sellers and (B) second, other equity securities held by any Other Proposed Sellers or to be sold by the Company as determined by the Company and with such priorities among them as may from time to time be determined or agreed to by the Company.
(c) In connection with any Underwritten Offering under this Section 4.2 for the Company’s account, the Company shall not be required to include a holder’s Registrable Securities in the Underwritten Offering unless such holder accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company; provided, that any applicable underwriting agreement includes only customary terms and conditions.
(d) If, at any time after giving written notice of its intention to register any of its equity securities as set forth in this Section 4.2 and prior to the time the registration statement filed in connection with such Piggyback Registration is declared effective, the Company shall determine for any reason not to register such equity securities, the Company may, at its election, give written notice of such determination to each Stockholder and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such particular withdrawn or abandoned Piggyback Registration (but not from its obligation to pay the Registration Expenses in connection therewith as provided herein); provided, that Stockholders may continue the registration as a Demand Registration pursuant to the terms of Section 4.1.
Section 4.3 Shelf Registration.
(a) Subject to Section 4.3(e), and further subject to the availability of a Registration Statement on Form S-3 or a successor form, which may be an automatically effective registration statement at any time the Company is eligible (“Form S-3”) to the Company, the Initial Stockholders or any of their Permitted Transferees (in each case to the extent a Stockholder hereunder) may by written notice delivered (which notice can be delivered at any time after the eleven month anniversary of the date hereof) to the Company (the “Shelf Notice”) require the Company to (i) file as promptly as practicable (but no later than 30 days after the date the Shelf Notice is delivered), and to use commercially reasonable efforts to cause to be declared effective by the Commission at the earliest possible date permitted under the rules and regulations of the Commission (but no later than 60 days after such filing date), a Form S-3, or (ii) use an existing Form S-3 filed with the Commission, in each case providing for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act relating to the offer and sale, from time to time, of the Registrable Securities owned by the Initial Stockholders or the Fortress Affiliate Stockholders (or any of their Permitted Transferees), as the case may be, and any other Persons that at the time of the Shelf Notice meet the definition of a Stockholder who elect to participate therein as provided in Section 4.3(b) (a “Shelf Registration Statement”).
(b) The Initial Stockholders and their Permitted Transferees shall be entitled to require the Company to file an unlimited number of Shelf Registration Statements until such time as the Stockholders, together, Beneficially Own less than a Registrable Amount.
(c) Within five business days after receipt of a Shelf Notice pursuant to Section 4.3(a), the Company will deliver written notice thereof to each Stockholder (excluding Fortress Affiliate Stockholders which have not signed a joinder as contemplated by Section 2.1). Each Stockholder may elect to participate in the Shelf Registration Statement by delivering to the Company a written request to so participate.
(d) Subject to Section 4.3(e), the Company will use commercially reasonable efforts to keep the Shelf Registration Statement continuously effective until the date on which all Registrable Securities covered by the Shelf Registration Statement have been sold thereunder in accordance with the plan and method of distribution disclosed in the prospectus included in the Shelf Registration Statement, or otherwise (the “Shelf Registration Effectiveness Period”).
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(e) Notwithstanding anything to the contrary contained in this Agreement, the Company shall be entitled, from time to time, by providing notice to the Stockholders who elected to participate in the Shelf Registration Statement, to require such Stockholders to suspend the use of the prospectus for sales of Registrable Securities under the Shelf Registration Statement for a reasonable period of time not to exceed 60 days in succession or 90 days in the aggregate in any 12 month period (a “Suspension Period”) if the Board determines in good faith and in its reasonable judgment that it is required to disclose in the Shelf Registration Statement material, non-public information that the Company has a bona fide business purpose for preserving as confidential. Immediately upon receipt of such notice, the Stockholders covered by the Shelf Registration Statement shall suspend the use of the prospectus until the requisite changes to the prospectus have been made as required below. Any Suspension Period shall terminate at such time as the public disclosure of such information is made. After the expiration of any Suspension Period and without any further request from a Stockholder, the Company shall as promptly as practicable prepare a post-effective amendment or supplement to the Shelf Registration Statement or the prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(f) At any time, and from time-to-time, during the Shelf Registration Effectiveness Period (except during a Suspension Period), each of the Initial Stockholders, the Fortress Affiliate Stockholders or any of their Permitted Transferees (in each case to the extent a Stockholder hereunder) may notify the Company of their intent to sell Registrable Securities covered by the Shelf Registration Statement (in whole or in part) in an Underwritten Offering (a “Shelf Underwritten Offering”); provided that the Company shall not be obligated to participate in more than four underwritten offerings during any twelve-month period. Such notice shall specify (x) the aggregate number of Registrable Securities requested to be registered in such Shelf Underwritten Offering and (y) the identity of the Stockholder(s) requesting such Shelf Underwritten Offering. Upon receipt by the Company of such notice, the Company shall promptly comply with the applicable provisions of this Agreement, including those provisions of Section 4.5 relating the Company’s obligation to make filings with the Commission, assist in the preparation and filing with the Commission of prospectus supplements and amendments to the Shelf Registration Statement, participate in “road shows,” agree to customary “lock-up” agreements with respect to the Company’s securities and obtain “comfort” letters, and the Company shall take such other actions as necessary or appropriate to permit the consummation of such Shelf Underwritten Offering as promptly as practicable. Each Shelf Underwritten Offering shall be for the sale of a number of Registrable Securities equal to or greater than the Registrable Amount. In any Shelf Underwritten Offering, the Company shall select the investment bank(s) and managers that will serve as lead or co-managing underwriters with respect to the offering of such Registrable Securities, which shall be reasonably acceptable to the Stockholders participating in such Shelf Underwritten Offering that hold a majority of the Registrable Securities included in such Shelf Underwritten Offering.
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Section 4.4 Withdrawal Rights. Any Stockholder having notified or directed the Company to include any or all of its Registrable Securities in a registration statement under the Securities Act shall have the right to withdraw any such notice or direction with respect to any or all of the Registrable Securities designated by it for registration by giving written notice to such effect to the Company prior to the effective date of such registration statement. In the event of any such withdrawal, the Company shall not include such Registrable Securities in the applicable registration and such Registrable Securities shall continue to be Registrable Securities for all purposes of this Agreement. No such withdrawal shall affect the obligations of the Company with respect to the Registrable Securities not so withdrawn; provided, however, that in the case of a Demand Registration, if such withdrawal shall reduce the number of Registrable Securities sought to be included in such registration below the Registrable Amount, then the Company shall as promptly as practicable give each holder of Registrable Securities sought to be registered notice to such effect and, within ten days following the mailing of such notice, such holder(s) of Registrable Securities still seeking registration shall, by written notice to the Company, elect to register additional Registrable Securities, when taken together with elections to register Registrable Securities by its Permitted Transferees, to satisfy the Registrable Amount or elect that such registration statement not be filed or, if theretofore filed, be withdrawn. During such ten day period, the Company shall not file such registration statement if not theretofore filed or, if such registration statement has been theretofore filed, the Company shall not seek, and shall use commercially reasonable efforts to prevent, the effectiveness thereof.
Section 4.5 Registration Procedures.
(a) If and whenever the Company is required to use commercially reasonable efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Sections 4.1, 4.2 and 4.3, the Company shall as promptly as practicable (in each case, to the extent applicable):
(i) prepare and file with the Commission a registration statement to effect such registration, cause such registration statement to become effective at the earliest possible date permitted under the rules and regulations of the Commission, and thereafter use commercially reasonable efforts to cause such registration statement to remain effective pursuant to the terms of this Agreement; provided, however, that the Company may discontinue any registration of its securities which are not Registrable Securities at any time prior to the effective date of the registration statement relating thereto; provided, further that before filing such registration statement or any amendments thereto, the Company will furnish to the counsel selected by the holders of Registrable Securities which are to be included in such registration (“Selling Holders”) copies of all such documents proposed to be filed, which documents will be subject to the review of and comment by such counsel (it being understood that counsel to the Selling Holders will conduct its review and provide any comments promptly);
(ii) prepare and file with the Commission such amendments (including post-effective amendments) and supplements to such registration statement and the prospectus used in connection therewith and any Exchange Act reports incorporated by reference therein as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until the earlier of such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the Selling Holder(s) set forth in such registration statement or (i) in the case of a Demand Registration pursuant to Section 4.1, the expiration of 60 days after such registration statement becomes effective or (ii) in the case of a Piggyback Registration pursuant to Section 4.2, the expiration of 60 days after such registration statement becomes effective or (iii) in the case of a Shelf Registration pursuant to Section 4.3, the Shelf Registration Effectiveness Period;
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(iii) furnish to each Selling Holder and each underwriter, if any, of the securities being sold by such Selling Holder such number of conformed copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and any Issuer Free Writing Prospectus and such other documents as such Selling Holder and underwriter, if any, may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such Selling Holder;
(iv) use commercially reasonable efforts to register or qualify such Registrable Securities covered by such registration statement under such other securities laws or blue sky laws of such jurisdictions as any Selling Holder and any underwriter of the securities being sold by such Selling Holder shall reasonably request, and take any other action which may be reasonably necessary or advisable to enable such Selling Holder and underwriter to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Selling Holder, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this clause (iv) be obligated to be so qualified, to subject itself to taxation in any such jurisdiction or to file a general consent to service of process in any such jurisdiction;
(v) use best efforts to cause such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if no such securities are so listed, use commercially reasonable efforts to cause such Registrable Securities to be listed on the NYSE or the Nasdaq Stock Market;
(vi) use commercially reasonable efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Selling Holder(s) thereof to consummate the disposition of such Registrable Securities;
(vii) in connection with an Underwritten Offering, obtain for each Selling Holder and underwriter:
(1) an opinion of counsel for the Company, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Selling Holder and underwriters, and
(2) a “comfort” letter (or, in the case of any such Person which does not satisfy the conditions for receipt of a “comfort” letter specified in AU Section 634 of the AICPA Professional Standards, an “agreed upon procedures” letter) signed by the independent registered public accountants who have certified the Company’s financial statements included in such registration statement (and, if necessary, any other independent registered public accountant of any Subsidiary of the Company or any business acquired by the Company from which financial statements and financial data are, or are required to be, included in the registration statement);
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(viii) promptly make available for inspection by any Selling Holder, any underwriter participating in any disposition pursuant to any registration statement, and any attorney, accountant or other agent or representative retained by any such Selling Holder or underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably necessary to enable such Selling Holder or underwriter to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any such Inspector in connection with such registration statement promptly; provided, however, that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Company shall not be required to provide any information under this subparagraph (viii) if (i) the Company believes, after consultation with counsel for the Company, that to do so would cause the Company to forfeit an attorney-client privilege that was applicable to such information or (ii) if either (A) the Company has requested and been granted from the Commission confidential treatment of such information contained in any filing with the Commission or documents provided supplementally or otherwise or (B) the Company reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing unless prior to furnishing any such information with respect to (i) or (ii) such holder of Registrable Securities requesting such information agrees, and causes each of its Inspectors, to enter into a confidentiality agreement on terms reasonably acceptable to the Company; and provided, further, that each Holder of Registrable Securities agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action and to prevent disclosure of the Records deemed confidential;
(ix) promptly notify in writing each Selling Holder and the underwriters, if any, of the following events:
(1) the filing of the registration statement, the prospectus or any prospectus supplement related thereto, any Issuer Free Writing Prospectus or post-effective amendment to the registration statement, and, with respect to the registration statement or any post-effective amendment thereto, when the same has become effective;
(2) any request by the Commission for amendments or supplements to the registration statement or the prospectus or for additional information;
(3) the issuance by the Commission of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings by any Person for that purpose;
(4) when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the registration statement; and
(5) the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation or threat of any proceeding for such purpose;
(x) notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and, at the request of any Selling Holder, promptly prepare and furnish to such Selling Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;
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(xi) use every reasonable best effort to obtain the withdrawal of any order suspending the effectiveness of such registration statement;
(xii) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to Selling Holders, as promptly as practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first day of the Company’s first full quarter after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(xiii) use its reasonable best efforts to assist Stockholders who made a request to the Company to provide for a third party “market maker” for the Common Stock; provided, however, that the Company shall not be required to serve as such “market maker;”
(xiv) cooperate with any Selling Holder and any underwriter and the managing underwriter to facilitate the timely preparation and delivery of certificates (which shall not bear any restrictive legends unless required under applicable law), if necessary or appropriate, representing securities sold under any registration statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or such Selling Holder may request and keep available and make available to the Company’s transfer agent prior to the effectiveness of such registration statement a supply of such certificates as necessary or appropriate;
(xv) have appropriate officers of the Company prepare and make presentations at any “road shows” and before analysts and rating agencies, as the case may be, take other actions to obtain ratings for any Registrable Securities (if they are eligible to be rated) and otherwise use its reasonable best efforts to cooperate as reasonably requested by the Selling Holders and the underwriters in the offering, marketing or selling of the Registrable Securities;
(xvi) have appropriate officers of the Company, and cause representatives of the Company’s independent registered public accountants, to participate in any due diligence discussions reasonably requested by any Selling Holder or any underwriter;
(xvii) if requested by any underwriter, agree, and cause the Company and any directors or officers of the Company to agree, to be bound by customary “lock-up” agreements restricting the ability to dispose of Company securities;
(xviii) if requested by any Selling Holders or any underwriter, promptly incorporate in the registration statement or any prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Selling Holders may reasonably request to have included therein, including information relating to the “Plan of Distribution” of the Registrable Securities;
(xix) cooperate and assist in any filings required to be made with the FINRA and in the performance of any due diligence investigation by any underwriter that is required to be undertaken in accordance with the rules and regulations of the FINRA;
(xx) otherwise use reasonable best efforts to cooperate as reasonably requested by the Selling Holders and the underwriters in the offering, marketing or selling of the Registrable Securities;
(xxi) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and all reporting requirements under the rules and regulations of the Exchange Act; and
(xxii) use reasonable best efforts to take any action requested by the Selling Holders, including any action described in clauses (i) through (xxi) above to prepare for and facilitate any “over-night deal” or other proposed sale of Registrable Securities over a limited timeframe.
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The Company may require each Selling Holder and each underwriter, if any, to furnish the Company in writing such information regarding each Selling Holder or underwriter and the distribution of such Registrable Securities as the Company may from time to time reasonably request to complete or amend the information required by such registration statement.
(b) Without limiting any of the foregoing, in the event that the offering of Registrable Securities is to be made by or through an underwriter, the Company shall enter into an underwriting agreement with a managing underwriter or underwriters containing representations, warranties, indemnities and agreements customarily included (but not inconsistent with the covenants and agreements of the Company contained herein) by an issuer of common stock in underwriting agreements with respect to offerings of common stock for the account of, or on behalf of, such issuers. In connection with any offering of Registrable Securities registered pursuant to this Agreement, the Company shall furnish to the underwriter, if any (or, if no underwriter, the Selling Holder), unlegended certificates representing ownership of the Registrable Securities being sold (unless, in the Company’s sole discretion, such Registrable Securities are to be issued in uncertificated form pursuant to the customary arrangements for issuing shares in such form), in such denominations as requested and instruct any transfer agent and registrar of the Registrable Securities to release any stop transfer order with respect thereto.
(c) Each Selling Holder agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4.5(a)(ix), such Selling Holder shall forthwith discontinue such Selling Holder’s disposition of Registrable Securities pursuant to the applicable registration statement and prospectus relating thereto until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4.5(a)(ix) and, if so directed by the Company, deliver to the Company, at the Company’s expense, all copies, other than permanent file copies, then in such Selling Holder’s possession of the prospectus current at the time of receipt of such notice relating to such Registrable Securities. In the event the Company shall give such notice, any applicable 60 day period during which such registration statement must remain effective pursuant to this Agreement shall be extended by the number of days during the period from the date of giving of a notice regarding the happening of an event of the kind described in Section 4.5(a)(ix) to the date when all such Selling Holders shall receive such a supplemented or amended prospectus and such prospectus shall have been filed with the Commission.
Section 4.6 Registration Expenses.
(a) All expenses incident to the Company’s performance of, or compliance with, its obligations under this Agreement including (i)(A) all registration and filing fees, all fees and expenses of compliance with securities and “blue sky” laws, (B) all fees and expenses associated with filings required to be made with FINRA (including, if applicable, the fees and expenses of any “qualified independent underwriter” as such term is defined in FINRA Rule 5121 or the equivalent rule incorporated into the FINRA rulebook), (C) all fees and expenses of compliance with securities and “blue sky” laws, (D) all printing (including expenses of printing certificates, if any, for the Registrable Securities in a form eligible for deposit with the Depository Trust Company and of printing prospectuses if the printing of prospectuses and Issuer Free Writing Prospectuses is requested by a holder of Registrable Securities) and copying expenses, (E) all messenger and delivery expenses, (F) all fees and expenses of the Company’s independent certified public accountants and counsel (including with respect to “comfort” letters, “agreed-upon procedures” letter and opinions), (G) fees and expenses of one counsel to the Stockholders selling in such registration (which firm shall be selected by the Stockholders selling in such registration that hold a majority of the Registrable Securities included in such registration), (H) except as provided in clause (ii) below, the fees and expenses (including underwriting discounts and commissions and transfer taxes) of every nationally recognized investment bank engaged in connection with a Demand Registration or a Piggyback Registration that is not an Underwritten Offering, (collectively, the “Registration Expenses”) and (ii) any expenses described in clauses (i)(A) through (H) above incurred in connection with the marketing and sale of Registrable Securities (“Offering Expenses”) shall be borne by the Company, regardless of whether a registration is effected, marketing is commenced or sale is made. The Company will pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties, the expense of any annual audit and the expense of any liability insurance) and the expenses and fees for listing the securities to be registered on each securities exchange and included in each established over-the-counter market on which similar securities issued by the Company are then listed or traded.
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(b) Each Selling Holder shall pay its portion of all underwriting discounts and commissions and transfer taxes, if any, relating to the sale of such Selling Holder’s Registrable Securities pursuant to any registration.
ARTICLE
V
INDEMNIFICATION
Section 5.1 General Indemnification. The Company agrees to indemnify and hold harmless the Initial Stockholders and each of the officers, directors, employees, members, managers, partners and agents or Affiliates of the Initial Stockholders against any and all losses, claims, damages, liabilities and expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses) (collectively, the “Losses”), in each case, based on, arising out of, resulting from or in connection with any claim, action, cause of action, suit, proceeding or investigation, whether civil, criminal, administrative, investigative or other (collectively, “Actions”), based on, arising out of, pertaining to or in connection with (i) the ownership or the operation of the assets or properties, and the operation or conduct of the business of, including contracts entered into by, the Company, whether before, on or after the date hereof (ii) any other activity that the Company or its Subsidiaries engages in and (iii) any untrue statement or alleged untrue statement of a material fact contained in any Filing or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, other than misstatements or omissions made in reliance on information relating to and furnished by the Initial Stockholders in writing expressly for use in the preparation of such Filing. The indemnity agreement contained in this Section 5.1 shall be applicable whether or not any Action or the facts or transactions giving rise to such Action arose prior to, on or subsequent to the date of this Agreement.
Section 5.2 Registration Statement Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Selling Holder, its officers, directors, employees, managers, members, partners and Affiliates, such Selling Holder or such other indemnified Person from and against all Losses caused by, resulting from or relating to any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, any Issuer Free Writing Prospectus, any prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission (or alleged omission) of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as the same are caused by any information furnished in writing to the Company by such Selling Holder expressly for use therein. In connection with an Underwritten Offering and without limiting any of the Company’s other obligations under this Agreement, the Company shall also indemnify such underwriters, their officers, directors, employees and agents and each Person who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) such underwriters or such other indemnified Person to the same extent as provided above with respect to the indemnification (and exceptions thereto) of the holders of Registrable Securities being sold. Reimbursements payable pursuant to the indemnification contemplated by this Section 5.2(a) will be made by periodic payments during the course of any investigation or defense, as and when bills are received or expenses incurred.
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(b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such Selling Holder will furnish to the Company in writing information regarding such Selling Holder’s ownership of Registrable Securities and its intended method of distribution thereof and, to the extent permitted by law, shall, severally and not jointly, indemnify the Company, its directors, officers, employees and agents and each Person who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) the Company or such other indemnified Person against all Losses caused by any untrue statement of material fact contained in the registration statement, any Issuer Free Writing Prospectus, any prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but only to the extent that such untrue statement or omission is caused by and contained in such information so furnished in writing by such Selling Holder expressly for use therein; provided, however, that each Selling Holder’s obligation to indemnify the Company hereunder shall, to the extent more than one Selling Holder is subject to the same indemnification obligation, be apportioned between each Selling Holder based upon the net amount received by each Selling Holder from the sale of Registrable Securities, as compared to the total net amount received by all of the Selling Holders of Registrable Securities sold pursuant to such registration statement. Notwithstanding the foregoing, no Selling Holder shall be liable to the Company for amounts in excess of the lesser of (i) such apportionment and (ii) the net amount received by such holder in the offering giving rise to such liability.
Section 5.3 Contribution.
(a) If recovery is not available under the foregoing indemnification provisions for any reason or reasons other than as specified therein, any Person who would otherwise be entitled to indemnification by the terms thereof shall nevertheless be entitled to contribution with respect to any Losses with respect to which such Person would be entitled to such indemnification but for such reason or reasons. In determining the amount of contribution to which the respective Persons are entitled, there shall be considered the Persons’ relative knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement or omission, and other equitable considerations appropriate under the circumstances. It is hereby agreed that it would not necessarily be equitable if the amount of such contribution were determined by pro rata or per capita allocation. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not found guilty of such fraudulent misrepresentation. Notwithstanding the foregoing, no Selling Holder or transferee thereof shall be required to make a contribution in excess of the net amount received by such holder from its sale of Registrable Securities in connection with the offering that gave rise to the contribution obligation.
Section 5.4 Procedure.
(a) Any Person entitled to indemnification hereunder shall give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided, however, the failure to give such notice shall not release the indemnifying party from its obligation, except to the extent that the indemnifying party has been materially prejudiced by such failure to provide such notice on a timely basis.
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(b) In any case in which any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not (so long as it shall continue to have the right to defend, contest, litigate and settle the matter in question in accordance with this paragraph) be liable to such indemnified party hereunder for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, supervision and monitoring (unless (i) such indemnified party reasonably objects to such assumption on the grounds that there may be defenses available to it which are different from or in addition to the defenses available to such indemnifying party or (ii) the indemnifying party shall have failed within a reasonable period of time to assume such defense and the indemnified party is or is reasonably likely to be prejudiced by such delay, in either event the indemnified party shall be promptly reimbursed by the indemnifying party for the expenses incurred in connection with retaining separate legal counsel).The indemnifying party shall lose its right to defend, contest, litigate and settle a matter if it shall fail to diligently contest such matter (except to the extent settled in accordance with the next following sentence).
Section 5.5 Other Matters.
(a) An indemnifying party shall not be liable for any settlement of an Action effected without its consent. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Action.
(b) Any Losses for which an indemnified party is entitled to indemnification or contribution under this Article V shall be paid by the indemnifying party to the indemnified party as such Losses are incurred. The indemnity and contribution agreements contained in this Article V shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee, the Company, its directors or officers, or any person controlling the Company, and (ii) any termination of this Agreement.
(c) The parties hereto shall, and shall cause their respective Subsidiaries to, cooperate with each other in a reasonable manner with respect to access to unprivileged information and similar matters in connection with any Action. The provisions of this Article V are for the benefit of, and are intended to create third party beneficiary rights in favor of, each of the indemnified parties referred to herein.
(d) Not less than three days before the expected filing date of each registration statement pursuant to this Agreement, the Company shall notify each Stockholder who has timely provided the requisite notice hereunder entitling the Stockholder to register Registrable Securities in such registration statement of the information, documents and instruments from such Stockholder that the Company or any underwriter reasonably requests in connection with such registration statement, including, but not limited to a questionnaire, custody agreement, power of attorney, lock-up letter and underwriting agreement (the “Requested Information”). If the Company has not received, on or before the day before the expected filing date, the Requested Information from such Stockholder, the Company may file the Registration Statement without including Registrable Securities of such Stockholder. The failure to so include in any registration statement the Registrable Securities of a Stockholder (with regard to that registration statement) shall not in and of itself result in any liability on the part of the Company to such Stockholder.
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ARTICLE VI
SERVICES
Section 6.1 Tax Services. For a period of up to twelve months following the date of this Agreement, the Company agrees to continue to provide to the Initial Stockholders and their Affiliates tax, accounting, recordkeeping services (the “Services”) in a manner consistent with past practice prior to the date of this Agreement. The Initial Stockholders shall reimburse the Company on a quarterly basis for all Third-Party Costs. For purposes of this section, “Third-Party Costs” means all payments by the Company or any of its subsidiaries to third parties reasonably attributable to the provision of the Services. The Initial Stockholders may terminate the Services (and the obligation to reimburse the Company for Third-Party Costs) upon not less than 30 days written notice to the Company.
ARTICLE
VII
MISCELLANEOUS
Section 7.1 Headings. The headings in this Agreement are for convenience of reference only and shall not control or effect the meaning or construction of any provisions hereof.
Section 7.2 Entire Agreement. (a) This Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein, and there are no restrictions, promises, representations, warranties, covenants, conditions or undertakings with respect to the subject matter hereof, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties hereto with respect to the subject matter hereof.
Section 7.3 Further Actions; Cooperation. Each of the Stockholders agrees to use its reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to give effect to the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, each of the Stockholders (i) acknowledges that such Stockholder will prepare and file with the Commission filings under the Exchange Act, including under Section 13(d) of the Exchange Act, relating to its Beneficial Ownership of the Common Stock and (ii) agrees to use its reasonable efforts to assist and cooperate with the other parties in promptly preparing, reviewing and executing any such filings under the Exchange Act, including any amendments thereto.
Section 7.4 Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by facsimile, nationally recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated on the signature pages of this Agreement or in writing by such party to the other parties:
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If to the Initial Stockholders, to:
Intrawest Europe Holdings S.à r.l.
c/o Fortress Investment Group LLC
1345 Avenue of the Americas, 46th Floor
New York, NY 10105
Fax: (212) 798-6122
Email: rnardone@fortress.com
Attn: Randal A. Nardone
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, NY 10036-6522
Fax: (212) 735-2000
Email: gregory.fernicola@skadden.com
Attn: Gregory A. Fernicola, Esq.
If to the Company, to:
Intrawest Resorts Holdings, Inc.
1621 18th Street, Suite 300
Denver, Colorado 80202
Email: JGoldstein@intrawest.com
Attn: Joshua B. Goldstein, Esq.
If to a Stockholder that is not one of the Initial Stockholders, then to the address set forth in the written agreement of such Stockholder provided for in Section 2.1 hereof.
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All such notices, requests, consents and other communications shall be deemed to have been given or made if and when received (including by overnight courier) by the parties at the above addresses or sent by email, facsimile, with confirmation received, to the email addresses or facsimile numbers specified above (or at such other address or facsimile number for a party as shall be specified by like notice). Any notice delivered by any party hereto to any other party hereto shall also be delivered to each other party hereto simultaneously with delivery to the first party receiving such notice.
Section 7.5 Applicable Law. The substantive laws of the State of New York shall govern the interpretation, validity and performance of the terms of this Agreement, without regard to conflicts of law doctrines.
Section 7.6 Severability. The provisions of this Agreement are independent of and separable from each other. The invalidity, illegality or unenforceability of one or more of the provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement, including any such provisions, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. The parties hereto shall endeavor in good faith negotiations to replace any invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provision, as applicable.
Section 7.7 Successors and Assigns. Except as otherwise provided herein, all the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors and permitted assigns of the parties hereto. No Stockholder may assign any of its rights hereunder to any Person other than a Permitted Transferee. Each Permitted Transferee of any Stockholder shall be subject to all of the terms of this Agreement, and by taking and holding such shares such Person shall be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to comply with all of the terms and provisions of this Agreement; provided, however, no transfer of rights permitted hereunder shall be binding upon or obligate the Company unless and until (i) if required under Section 2.1 hereof, the Company shall have received written notice of such transfer and the joinder of the transferee provided for in Section 2.1 hereof, and (ii) such transferee can establish Beneficial Ownership or ownership of record of a Registrable Amount (whether individually or together with its Affiliates that are Stockholders or transferees of Stockholders and, if applicable, its other Permitted Transferees that are Stockholders or transferees of Stockholders). The Company may not assign any of its rights or obligations hereunder without the prior written consent of each of the Stockholders, and any assignment attempted or effected without obtaining such required consent shall be null and void. Notwithstanding the foregoing, no successor or assignee of the Company shall have any rights granted under this Agreement until such Person shall acknowledge its rights and obligations hereunder by a signed written statement of such Person’s acceptance of such rights and obligations.
Section 7.8 Amendments. This Agreement may not be amended, modified or supplemented unless such amendment, modification or supplement is in writing and signed by each of the Stockholders and the Company.
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Section 7.9 Waiver. The failure of a party hereto at any time or times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in a writing signed by the party against whom the waiver is to be effective, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty.
Section 7.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same Agreement.
Section 7.11 Submission To Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND ANY ACTION FOR ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND THE APPELLATE COURTS THEREOF. EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS FOR NOTICES SET FORTH HEREIN. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PARTIES HERETO WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO DISPUTES HEREUNDER.
Section 7.12 Injunctive Relief. Each party hereto acknowledges and agrees that a violation of any of the terms of this Agreement will cause the other parties irreparable injury for which an adequate remedy at law is not available. Therefore, the Stockholders agree that each party shall be entitled to, an injunction, restraining order, specific performance or other equitable relief from any court of competent jurisdiction, restraining any party from committing any violations of the provisions of this Agreement, without the need to post a bond or prove the inadequacy of monetary damages.
Section 7.13 Recapitalizations, Exchanges, Etc. Affecting the Shares of Common Stock; New Issuance. The provisions of this Agreement shall apply, to the full extent set forth herein, with respect to Company Securities and to any and all equity or debt securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets, or otherwise) which may be issued in respect of, in exchange for, or in substitution of, such Company Securities and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, reclassifications, recapitalizations, reorganizations and the like occurring after the date hereof.
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Section 7.14 Termination. Upon the mutual consent of all of the parties hereto or, with respect to each Stockholder, at such earlier time as such Stockholder and its Affiliates and Permitted Transferees ceases to Beneficially Own a Registrable Amount, the terms of this Agreement shall terminate, and be of no further force and effect; provided, however, that the following shall survive the termination of this Agreement: (i) the provisions of Sections 4.2 (which shall terminate, and be of no further force and effect, with respect to each Stockholder, at such time as such Stockholder and its Affiliates and Permitted Transferees ceases to Beneficially Own a Registrable Amount), 4.6, Article 5, 7.5, 7.11, this Section 7.14 and Section 7.15; (ii) the rights with respect to the breach of any provision hereof by the Company and (iii) any registration rights vested or obligations accrued as of the date of termination of this Agreement to the extent, in the case of registration rights so vested, if such Stockholder ceases to meet the definition of a Stockholder under this Agreement subsequent to the vesting of such registration rights as a result of action taken by the Company.
Section 7.15 Third Party Beneficiary. FIG LLC shall be a third party beneficiary to the agreements made hereunder between the Company and the Initial Stockholders and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder.
Section 7.16 Rule 144. The Company covenants and agrees that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if it is not required to file such reports, it will, upon the request of any holder of Registrable Securities, make publicly available other information so long as necessary to permit sales in compliance with Rule 144 under the Securities Act), and it will take such further reasonable action, to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rule 144 may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. Upon the reasonable request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with such information and filing requirements.
Section 7.17 Information. The Company covenants and agrees that for so long as the Stockholders, together, have Beneficial Ownership of at least 1% of the Voting Power of the Company, it will provide or cause to be provided, upon request, to persons affiliated with FIG LLC who are covered by applicable FIG LLC confidentiality policies, all information about the Company and its operations as the Company would ordinarily provide to a director upon his or her request.
[Remainder of page left blank intentionally]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective officers thereunto duly as of the date first above written.
INTRAWEST RESORTS HOLDINGS, INC. | ||
By: | ||
Name: | ||
Title: |
INTRAWEST EUROPE HOLDINGS S.À R.L. | ||
By: | ||
Name: | ||
Title: |
INTRAWEST S.À R.L. | ||
By: | ||
Name: | ||
Title: |
United States Department of Agriculture Forest Service |
a. Record no. (1-2)
70 |
b. Region (3-4)
02 |
c. Forest (5-6)
01 |
SPECIAL USE PERMIT |
d. District (7-8)
03 |
e. Use number (9-12)
4144 |
f. Kind of use (13-15)
161 |
Act
of June 4, 1897 This permit is revocable and nontransferable (Ref. FSM 2710) |
g. State (16-17)
08 |
h. County (18-20)
049 |
k. Card no. (21)
1 |
Permission is hereby granted to City and County of Denver, through Winter Park Recreational Association, as Agent of P. O. Box 36, Winter Park, CO 80482 hereinafter called the permittee, to use subject to the conditions set out below, the following described lands or improvements: an area in portions of sections 4-6, 7-10, 14-17, 20-23, 26-29 and tract 37 in T. 2 S., R. 75 W., 6th P.M. (unsurveyed), as more particularly shown on a map titled Exhibit A, Permit Map, which is attached to and made a part of this permit.
This permit covers 7,027 acres more or less, and is issued for the purpose of constructing, operating, and maintaining a recreation area known as Winter Park, Mary Jane, and Vasquez Four-Season Recreation Area. This permit is supplemental to the Term Special Use Permit of the same date and designation.
The charge for this additional area and the terms and conditions under which the area may be operated are provided for in the Term Permit of the same date and designation.
1. This use shall be actually exercised at least 365 days each year, unless otherwise authorized in writing.
2. This permit is accepted subject to the conditions set forth herein, and to conditions 19 to 37 attached hereto and made a part of this permit.
PERMITTEE |
NAME OF PERMITTEE
City and County of Denver through the Winter Park Recreational Association, as Agent |
SIGNATURE OF AUTHORIZED OFFICER
/s/ Gerald F. Groswold TITLE President |
DATE
12/8/83 |
ISSUING OFFICER |
NAME AND SIGNATURE
/s/ Raymond O. Benton Raymond O. Benton |
TITLE
Forest Supervisor |
DATE
12/8/83 |
(CONTINUED ON REVERSE)
3. Development plans; layout plans; construction, reconstruction, or alteration of improvements; or revision of layout or construction plans for this area must be approved in advance and in writing by the forest supervisor. Trees or shrubbery on the permitted area may be removed or destroyed only after the forest officer in charge has approved, and has marked or otherwise designated that which may be removed or destroyed. Timber cut or destroyed will be paid for by the permittee as follows: Merchantable timber at appraised value; young-growth timber below merchantable size at current damage appraisal value; provided that the Forest Service reserves the right to dispose of the merchantable timber to others than the permittee at no stumpage cost to the permittee. Trees, shrubs, and other plants may be planted in such manner and in such places about the premises as may be approved by the forest officer in charge.
4. The permittee shall maintain the improvements and premises to standards of repair, orderliness, neatness, sanitation, and safety acceptable to the forest officer in charge.
5. This permit is subject to all valid claims.
6. The permittee in exercising the privileges granted by this permit shall comply with the regulations of the Department of Agriculture and all Federal, State, county, and municipal laws, ordinances, or regulations which are applicable to the area or operations covered by this permit.
7. The permittee shall take all reasonable precautions to prevent and suppress forest fires. No material shall be disposed of by burning in open fires during the closed season established by law or regulation without a written permit from the forest officer in charge or his authorized agent.
8. The permittee shall exercise diligence in protecting from damage the land and property of the United States covered by and used in connection with this permit, and shall pay the United States for any damage resulting from negligence of from the violation of the terms of this permit or of any law or regulation applicable to the National Forests by the permittee, or by any agents or employees of the permittee acting within the scope of their agency or employment.
9. The permittee shall fully repair all damage, other than ordinary wear and tear, to national forest roads and trails caused by the permittee in the exercise of the privilege granted by this permit.
10. No Member of or Delegate to Congress or Resident Commissioner shall be admitted to any share or part of this agreement or to any benefit that may arise herefrom unless it is made with a corporation for its general benefit.
11. Upon abandonment, termination, revocation, or cancellation of this permit, the permittee shall remove within a reasonable time all structures and improvements except those owned by the United States, and shall restore the site, unless otherwise agreed upon in writing or in this permit. If the permittee fails to remove all such structures or improvements within a reasonable period, they shall become the property of the United States, but that will not relieve the permittee of liability for the cost of their removal and restoration of the site.
12. This permit is not transferable. If the permittee through voluntary sale or transfer, or through enforcement of contract, foreclosure, tax sale, or other valid legal proceeding shall cease to be the owner of the physical improvements other than those owned by the United States situated on the land described in this permit and is unable to furnish adequate proof of ability to redeem or otherwise reestablish title to said improvements, this permit shall be subject to cancellation. But if the person to whom title to said improvements shall have been transferred in either manner provided is qualified as a permittee and is willing that his future occupancy of the premises shall be subject to such new conditions and stipulations as existing or prospective circumstances may warrant, his continued occupancy of the premises may be authorized by permit to him if, in the opinion of the issuing officer of his successor, issuance of a permit is desirable and in the public interest.
13. In case of change of address, the permittee shall immediately notify the forest supervisor.
14. The temporary use and occupancy of the premises and improvements herein described may be sublet by the permittee to third parties only with the prior written approval of the forest supervisor but the permittee shall continue to be responsible for compliance with all conditions of this permit by persons to whom such premises may be sublet.
15. This permit may be terminated upon breach of any of the conditions herein or at the discretion of the regional forester or the Chief, Forest Service.
16. In the event of any conflict between any of the preceding printed clauses or any provisions thereof and any of the following clauses or any provisions thereof, the following clauses will control.
WINTER PARK SKI AREA
19. | Fees |
The annual fees due the United States for those activities authorized by this permit shall be calculated on sales according to the schedule below.
Kind of Business | Break-even point (Sales to GPA) (Percentage) | Rate base (Percentage) | Balance of Sales rate (Percentage) | |||||||||
Service, food | 70 | 1.25 | 1 .50 | |||||||||
Merchandise | 70 | 1.50 | 1.80 | |||||||||
Service, liquor | 60 | 1.80 | 2.15 | |||||||||
Outfitting, guiding | 50 | 2.00 | 2.65 | |||||||||
Rental and Services | 30 | 4.50 | 5.95 | |||||||||
Lifts, Tows, and Ski Schools | 20 | 2.00 | 5.00 |
A weighted-average break-even point (called the break-even point) and a weighted-average rate base (called the rate base) will be calculated and used when applying the schedule to mixed business. If the permittee’s business records do not clearly segregate the sales into the business categories authorized by this permit, they will be placed in the most logical category whenever possible. If sales with a different rate base are grouped, it will be necessary to place them all in the rate category that will yield the highest fee. The fee on sales below the break-even point will be calculated using 50 percent of the rate base. The fee on sales between the break-even point and twice the break-even point will be calculated using 150 percent of the rate base. The fee on sales above twice the break-even point will be calculated using the balance of sales rate. Form 2700-19 will simplify computation. A sample form 2700-19 is shown in Exhibit C.
This use occupies both private and public land. For purposes of the fee calculation, “GFA” and “Sales” will be adjusted by a percentage representing the portion of the use attributed to National Forest System land. This percentage has been calculated on the basis of the Slope Transport- Feet method as defined in Clause 27. This has been determined to be 95.8 percent as of April 8, 1981, and is subject to annual review and adjustment by the Forest Service as may be necessitated by the addition or removal of improvements.
To the above basic fee will be added the fee for commissions calculated by applying the weighted average fee rate to revenue collected as commissions. The weighted average fee rate is derived by dividing the total basic fee by sales.
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The minimum annual fee for this use, which is due in advance and is not subject to refund, will be equal to the fee that would result when sales are 40 percent of the break-even point. This fee will be calculated and billed by the Forest Service during the final quarter of the permittee’s fiscal year, using the most recent GFA figure and previously reported sales data for the current year. (Plus, if the operating season is still active, estimated sales for the remainder of the year.)
20. | Definitions of Kinds of Business, Gross Fixed Asset and Sales |
For purposes of recording and reporting sales, and sales-related information including the cost of sales, the activities of the concessioner are divided into:
Service, Food. Includes the serving of meals, sandwiches, and other food materials either consumed on the premises or prepared for carryout. Snackbars are included here, as well as the sale of nonalcoholic drinks and beer, served in conjunction with food.
Merchandise. Includes the sale of miscellaneous clothing, and such items as hardware, souvenirs, and gifts. Bait, fishing rods, reels, boats, motor and boating accessories are included as well as other sporting equipment and clothing sales. Where a “Service, Cars” category of business is not established by this permit, the sale of auto accessories is included in this category.
Service, Liquor. Includes the sale of alcoholic drinks for consumption on the premises and other sales ordinarily a part of a bar or cocktail lounge business. Where a bar is operated in conjunction with a restaurant or overnight accommodations, liquor and beer sales are recorded separately from the other sales and included in this category. The sale of alcoholic beverages for consumption off the premises is also included in this item, except as indicated in “Grocery” and “Service, Food”.
Outfitting, Guiding. Includes all activities or commercial guiding services involving back-country travel, regardless of mode of travel, when associated with a resort or dude ranch with a mixture of businesses. All fees charged are considered sales.
Rentals and Services. Includes the rental of furnished or unfurnished cabins, cottages, housekeeping rooms, condominiums, motel units, (where daily maid service is not furnished by the permittee), etc., and the rental of camping space, trailer space, horses, trailers, and other equipment rentals. Also included are services such as barber shops, and amusements, such as billiards. Includes the rental of marina-type equipment, such as boats, motors, boat docks and boat moorings, and boat launching. Rentals of ski and snow play equipment and snowmobiles are also included.
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Lifts, Tows, and Ski Schools. Includes charges for use of all types of uphill transportation facilities and for sports lessons and training.
Gross Fixed Assets (GFA) is the total cost of improvements, equipment, and fixtures necessary and used to generate sales and other income during the permit year on the permitted area or within the development boundary shown in this permit.
a. | Costs of the following items verified by a representative of the Forest Service to be in existence and use by the permittee are included: |
(1) | Expensed items that are identifiable structures, major equipment, such as road maintenance equipment, or land improvements which play a distinct role in generating sales. |
(2) | Identifiable permittee costs, whether capitalized or not, to provide utility services to the area. Utility services that extend beyond the development boundary may be included in GFA to the extent they are necessary for the generation of sales and are paid by the permittee. |
b. | Such items as the following are not part of GFA. |
(1) | Assets that ordinarily qualify for inclusion in GFA, but which are out of service for the full operating year for which fees are being determined. |
(2) | Land. |
(3) | Expendable or consumable supplies. |
(4) | Intangible assets, such as goodwill, organization expense, and permit value. |
(5) | Improvements not related to the operation. |
(6) | Luxury improvements not used to generate sales. |
(7) | Improvements not located on the permit sites within the development boundary, except for utility services identified in a (2) above. |
As of April 30, 1983, the initial GFA under this ownership has been determined to be $28,255,913.00, as shown in detail in Exhibit D.
Sales for the purpose of fee calculation include 1) revenue derived from all goods and services sold which are related to operations under this permit and, 2) the value of gratuities not excluded by item g. Gratuities include such goods, services, or privileges as discounts, gifts, dividends, or benefits that are furnished to such individuals as stockholders, owners, creditors or other obligees, officers, employees or their families, at rates or under conditions not available to the general public. Such gratuities will be sales priced by the permittee at the current price to the public.
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The following items will be excluded from gross receipts or revenue to arrive at sales:
a. | Refunds from returned merchandise and receipts from sales or real and non-rental personal property used in the operation. Sales of property such as rental equipment previously used for generating operating revenue, when sold on the premises are to be included in gross receipts. Examples of this are rental items, such as boats, motors, skis, or boots, which may be sold periodically and replaced. If such equipment is traded in or sold off-premises, the value or revenue shall be excluded from sales. |
b. | Rents paid to the permittee by sublessees, even if based on sales. (The gross sales of sublessees are included as provided under item (1).) |
c. | Amounts received for goods sold, services rendered, or privileges granted at a price lower than the permittee’s current price to the public. (The full value is included as provided under item (2).) |
d. | Sales taxes paid or payable to taxing authorities and Federal and State gasoline taxes on sales of gasoline collected from customers. |
e. | Amounts paid or payable to a Government licensing authority or recreation administering agency from sales of hunting or fishing licenses and recreation fee tickets. |
f. | Value of sales where the permittee is serving as a collection or sales agent for businesses not directly associated with the permitted operation. This includes such things as bus or sightseeing ticket sales for trips not related to activities on the permitted area, telephone toll charges, and accident insurance sales. |
g. | Items listed in a policy statement prepared by the permittee pertaining to gratuities previously approved in writing by the Forest Supervisor. The policy may provide for those furnished to persons present in the interest of public safety; those whose presence will significantly increase sales by publicity for the operation; competitors, judges, and other officials of organized competitive or exhibition events; officials responsible for inspection and administration of the permitted use; and other similar purposes. The policy will describe how gratuities are to be recorded. A record of all gratuities will be kept by the permittee as a part of the records under this permit. |
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h. | Franchise receipts (see definition below). |
i. | Commissions (see definition below). |
Franchise Receipts are defined as amounts paid the permittee by sublessees, as determined at the time franchise operations are authorized, solely for the opportunity to do business at a specific location in addition to a stated rental fee. Franchise receipts may be in the form of fixed amounts of money or reduced prices for the franchiser’s product or service. No franchise operations will be undertaken until approved, in advance, by the Forest Supervisor.
Commissions are payments received by the permittee for serving as an agent or providing services, such as those described in items e and f.
21. | Rate Redetermination |
Upon determination by the Chief of the Forest Service that sufficient changes have occurred in conditions relating to specific kinds of business to warrant review, break-even points and rates will be reexamined and, if appropriate, new schedules will be prepared by the Forest Service to be effective in all permits authorizing such business or businesses. The charges for this permit will be developed according to the new schedule, as of, and effective on, the beginning of the permittee’s business year following approval of the revised rate schedules.
22. | Payment of Fees |
Reports and deposits required as outlined above shall be tendered in accordance with the schedule below. They will be sent or delivered to the Collection Officer, Arapaho and Roosevelt National Forests, 240 West Prospect, Fort Collins, CO 80526. Checks or money orders will be payable to “Forest Service, USDA”.
The permittee wil1:
(1) | During the final fiscal quarter, pay within 15 days of billing by the Forest Service, the annual minimum fee for the next year. |
(2) | The permittee will send to the Forest Supervisor on or before August 1 of each year an annual operating statement reporting the results of operations including year-end adjustments. The permittee will also include or cause to be provided from each sublessee an operating statement covering the results of its operations for the same period. The permittee will also include a balance sheet representing his financial condition at the close of his business year, and a schedule of gross fixed assets adjusted to comply with the terms of this permit in a format and manner prescribed by the Forest Service. |
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(3) | Within 15 days of receipt of a statement from the Forest Supervisor, pay any additional fee required to correct fees paid for the past year’s operation. |
(4) | Report sales, calculate fees due using forms supplied, and make payment each calendar month except for months in which no sales take place and the permittee has notified the Forest Service that his operation has entered a seasonal shutdown for a specific period. Reports and payments will be made the 15th of each month. |
The Forest Supervisor, prior to May 31, will furnish the permittee with a tentative rate which shall be applied to sales in the fee calculation (item 4), such rate to be one that will produce the expected fee based on past experience. The correct fee will be determined at the end of the year and adjustment made as provided under item (3). Any balance that may exist will be credited and applied against the next payment due.
All fee calculations and records of sales and GFA are subject to periodic audit. Errors in payment will be corrected as needed in conformance with those audits.
23. | Service Charge |
A service charge, in addition to the regular fees, shall be made for failure to meet the fee payment due date or any of the dates specified for submission of statements required for fee calculation. The late payment charge shall be $25, or an amount calculated by applying the current rate prescribed by Treasury Fiscal Requirements Manual Bulletins to the overdue amount for each 30-day period or fraction thereof that the payment is overdue, whichever is greater. If the due date falls on a nonworkday, the late payment charge will not apply until the end of the next workday.
24. | Access to Records |
For the purpose of administering this permit (including ascertaining that fees paid were correct and evaluating the propriety of the fee base), the permittee agrees to make all of the accounting books and supporting records to his business activities, as well as those of sublessees operating within the authority of this permit, available for analysis by qualified representatives of the Forest Service or other Federal agencies authorized to review the Forest Service activities. Review of accounting books and supporting records will be made at dates convenient to the permittee and reviewers. Financial information so obtained will be treated as confidential to the extent allowed in The Freedom of Information Act (5 U.S.C. 552.).
The permittee will retain the above records and keep them available for review for 3 years after the end of the year involved, unless disposition is otherwise authorized by the Forest Service in writing.
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25. | Accounting Records |
The permittee shall follow generally accepted accounting principles in recording his financial transactions and in reporting results to the Forest Service. When requested by the Forest Service, the permittee, at his own expense, will have his annual accounting reports audited by a public accountant acceptable to the Forest Service. The permittee will require his sublessees to comply with these same requirements. The minimum acceptable accounting system will include:
a. | Systematic internal controls and recording by kind of business the gross receipts derived from all sources of business conducted under this permit. Receipts should be recorded daily and, if possible, deposited into a bank account without reduction by disbursements. Receipt entries should be supported by such source documents as cash register tapes, sale invoices, room rental records, and cash accounts from other sources. |
b. | A record of all disbursements, including capital items, and a permanent record of investments in facilities. |
c. | Bank accounts will be maintained separately for the businesses conducted under this permit and not commingled with those for other businesses of the permittee. |
26. | Definition of Terms |
District Ranger - The Forest Service Officer who has the responsibility for the direct administration of this permit.
Designated Administering Officer - A government employee to whom responsibility for administration of the area has been delegated in writing.
Permittee’s Representative - A person designated, in writing, by the permittee, who is authorized to receive instruction from Forest Service personnel and to take such action as instructed.
Authorized Officer - The authorized officer for winter sports concessions as referenced in FSM 2342 and FSM 7320 - Tramways, Ski Lifts, and Tows shall be the line officer authorized to sign the special-use permit which includes the Master Development Plan and Operating Plan. This is the Forest Supervisor for all downhill winter-sports sites in Region 2. The authorized officer may delegate monitoring, inspection, and permit administration duties as appropriate.
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Development Boundary - The line delineating the development area is shown in the Master Development Plan map, Exhibit B.
Development Area - The area of a mixed ownership operation in which are located the land, improvements, and facilities which together constitute a logical single overall integrated business operation regardless of the land ownership involved. It is identified to enable the proration of GFA and sales by ownership so an equitable fee for the use of Government land involved can be determined.
Slope Tranport Feet Method and Slope Transport Feet - A method of prorating winter sport uphill facility capacity on the basis of land ownership. The slope distance traveled by lifts on each ownership is multiplied by the lift capacity giving a factor called slope transport feet. This factor is then used to determine the weighted capacity of the uphill facilities by ownership.
Capacity - A theoretic planning level of Skiers-at-One-Time (SAOT) which the overall mountain area can handle as determined by characteristics specifically described in the Master Development Plan.
27. | Nondiscrimination |
a. | Nondiscrimination Services. During the performance of this permit, the permittee agrees: |
(1) | In connection with the performance of work under this permit, including construction, maintenance, and operation of facility, the permittee shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. |
(2) | The permittee and his employees shall not discriminate by segregation or otherwise against any person on the basis of race, color, religion, sex, or national origin by curtailing or refusing to furnish accommodations, facilities, services, or use privileges offered to the public generally. |
(3) | The permittee shall include and require compliance with the above nondiscrimination provisions in any subcontract made with respect to the operations under this permit. |
(4) | Signs setting forth this policy of nondiscrimination to be furnished by the Forest Service will be conspicuously displayed at the public entrance to the premises, and at other exterior or interior locations as directed by the Forest Service. |
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b. | Nondiscrimination Employment |
In connection with the performance of work under this permit, the permittee agrees as follows:
(1) | The permittee will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The permittee will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to, the following employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The permittee agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Forest Service setting forth the provisions of this nondiscrimination clause. |
(2) | The permittee will, in all solicitations or advertisements for employees placed by or on behalf of the permittee, state that all qualified applicants will receive consideration for employment, without regard to race, color, religion, sex, or national origin. |
(3) | The permittee will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the Forest Service, advising the labor union or workers’ representative of the permittee’s commitments under this clause, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. |
(4) | The permittee will comply with all provisions of Executive Order No. 11246 of September 24, 1965, as amended by the Executive Order No. 11375 of October 31, 1967, and of the rules, regulations, and relevant orders of the Secretary of Labor. |
(5) | The permittee will furnish all information and reports required by Executive Order No. 11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records and accounts by the Forest Service and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders. |
(6) | In the event of the permittee’s noncompliance with the nondiscrimination clauses of this permit or with any of such rules, regulations, or orders, this permit may be canceled or terminated in whole or in part, and the permittee may be declared ineligible for further government contracts in accordance with procedures authorized in Executive Order No. 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No. 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor or as otherwise provided by law. |
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(7) | The permittee will include the provisions of the foregoing paragraphs (1) through (6) to every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order No. 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The permittee will take such action with respect to any subcontract or purchase order as the contracting agency may direct as a means of enforcing such provisions, including sanctions for noncompliance: Provided, however, that in the event the permittee becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the Forest Service, the permittee may request the United States to enter into such litigation to protect the interests of the United States. |
c. | Covenant and Reverter |
The permittee does by the acceptance of this document covenant and agree for itself, its assigns, and its successors in interest of the property herein leased, or any part thereof, that the covenant set forth below shall attach to and run with the land:
(1) | That the described property and its appurtenant areas and its building and facilities whether or not on the land therein leased will be operated as a recreation resort, in full compliance with Title VI of the Civil Rights Act of 1964 and all requirements imposed by or pursuant to the regulations issued thereunder by the Department of Agriculture and in effect on the date of this document to the end that no person in the United States shall, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any programs or activities provided thereon; and |
(2) | That the United States shall have the right to judicial enforcement of these covenants not only as to the permittee, its successors and assigns, but also as to lessees and licensees doing business or extending services under contractual or other arrangements on the land herein conveyed. |
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In the event of a breach of any of the conditions set forth above, all right, title, and interest in and to the above described property shall, at the option of the Grantor revert to and become the property of the United States of America, which shall have an immediate right of entry thereon, and the permittee, its successors or assigns, shall forfeit all right, title and interest in and to the above described property and in any and all of the tenements, hereditaments, and appurtenances thereunto belonging; provided, however, that the failure of the Grantor to insist in any one or more instances upon complete performance of any of the said conditions shall not be construed as a waiver of a relinquishment of the future performance of any such conditions, but the obligations of the permittee with respect to such future performance shall continue in full force and effect.
28. | Liability |
a. | Indemnification of the United States |
The permittee shall indemnify the United States against any liability for damage to life or property arising from the occupancy or use of National Forest lands under this permit.
b. | Insurance |
The permittee shall have in force public liability insurance covering, 1) property damage in the amount of twenty thousand dollars ($20,000) and; 2) damage to persons in the minimum amount of three hundred thousand dollars ($300,000) in the event of death or injury to one individual and the minimum amount of one million dollars ($1,000,000) in the event of death or injury to more than one individual. The coverage shall extend to property damage, bodily injury, or death arising out of the permittee’s activities under the permit including, but not limited to, the occupancy or use of the land and the construction, maintenance, and operation of the structures, facilities, or equipment authorized by this permit. Such insurance shall also name the United States as a co-insured and provide for specific coverage of the permittee’s contractually assumed obligation to indemnify the United States. The permittee shall require the insurance company to send an authenticated copy of its insurance policy to the Forest Service immediately upon issuance of the policy. The policy shall also contain a specific provision or rider to the effect that the policy will not be canceled or its provisions changed or deleted before thirty (30) days written notice to the Forest Supervisor, Arapaho and Roosevelt National Forests, 240 West Prospect, Fort Collins, CO 80526, by the insurance company.
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29. | Natural Resource Standards |
Permit clauses 4, 8, 9, and 10 are hereby supplemented as follows:
a. | Erosion Control |
The permittee shall be responsible for the prevention and control of soil erosion and gullying on lands covered by this permit and adjacent thereto, resulting from the construction or maintenance of the authorized use. He shall so construct and maintain his improvements to avoid the accumulation of excessive heads of water and to avoid encroachment on streams. He shall revegetate all ground where the soil has been exposed and shall construct and maintain terracing, water bars, leadoff ditches, or other preventative works they may be required to prevent and control erosion as prescribed by the District Ranger.
b. | Pesticides |
Chemical materials may not be used to control undesirable woody and herbaceous vegetation, aquatic plants, insects, rodents, trash, fish, etc., without the prior written approval of the Forest Service. A report of planned use of pesticides will be submitted annually by the permittee on the due date established by the Forest Supervisor. The report will cover a 12-month period of planned use beginning three months after the reporting date. Information essential for review will be provided in the form specified. Exceptions to this schedule may be allowed only when unexpected outbreaks of pests require control measures which were not anticipated at the time the annual report was submitted.
Only those materials approved and registered by the U.S. Department of Agriculture for the specific purpose planned will be considered for use on these lands. Label instructions will be strictly followed in the preparation and application of pesticides and disposal of excess materials and containers. The permittee will, within the development boundary, adhere to state and federal water quality laws and air pollution laws and regulations.
c. | Archeological-Paleontological Discoveries |
The permittee shall immediately bring to the attention of the District Ranger any and all antiquities or other objects of historic or scientific interest including, but not limited to, historic or prehistoric ruins, fossils, or artifacts discovered as the result of operations under this permit, and shall leave such discoveries intact until authorized to proceed by the District Ranger. Protective and/or mitigative measures specified by the Forest Service shall be the responsibility of the permittee.
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30. | Structural Plans and Standards |
a. | Plan Approval |
Plans for ski lifts, buildings, structures, or other improvements, all or partly on National Forest System land, must be approved by the Forest Service prior to construction. Plans and specifications shall be submitted to the District Ranger with sufficient time being given for study and approval, commensurate with complexity, before the construction date stipulated in the development schedule.
b. | Ski Lifts |
Plans for ski lift systems shall be prepared by a qualified engineer or tramway firm. The design, construction, maintenance, operation, and inspection of all aerial lifts and tows shall be in accordance with the American National Standard Safety Requirements for Aerial Passenger Tramways (ANSI B77.1), as supplemented by the Forest Service; and/or codes adopted by the Colorado Passenger Tramway Safety Board, whichever is the more restrictive. A qualified engineer is one authorized to practice engineering in the State either by reason of his employment by the State or Federal Government or by registration as provided by law of the State. All lifts and tows installed on National Forest System land, or which serve National Forest together with other lands, must be constructed under the supervision of a qualified engineer or such other supervision as may be approved in writing by the Forest Supervisor.
c. | Buildings |
All plans and specifications for public use buildings shall be prepared by an architect licensed in the State of Colorado. The plans shall be in accordance with the Uniform Building Code. Building plumbing shall be in accordance with the National Plumbing Code. The electrical system shall be in accordance with the National Electric Code. Other systems shall be designed in accordance with recognized standards.
d. | Construction Certification |
Before any public use building or facility is approved for use, the permittee shall submit to the District Ranger a certification by the architect or engineer who inspected construction that the building or facility has been constructed in accordance with the approved plans.
e. | Power and Telephone Lines |
All water, telephone, and power transmission lines of 34.5 kv or less, will be installed underground except where prohibited by technical circumstances, and they shall be designed and installed in accordance with accepted standards and specifications.
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f. | Surveys, Land Corners |
The permittee shall reestablish or restore public land monuments disturbed or destroyed by construction, reconstruction, or maintenance according to instructions of the Bureau of Land Management, Department of the Interior. Other land monuments and property corners or witness markers shall not be damaged, destroyed, or obliterated without the prior permission of the District Ranger and shall be relocated or reestablished in accordance with standards satisfactory to the Forest Service.
g. | Facility Operation and Maintenance |
The operation and maintenance of all sanitation, food-service, and water supply methods, systems, and facilities shall comply with the standards of the local department of health and the United States Public Health Service.
The permittee shall dispose of all garbage and refuse in a place and manner specified by the Forest officer in charge.
(1) | All outdoor toilets shall be of a sealed vault, flyproof construction. As a minimum, they shall be located in accordance with State and County sanitation requirements and on a site approved by the District Ranger. |
(2) | Liquid wastes and sewage shall be disposed of by facilities constructed and operated as required by State, County and local laws and regulations, and on a site approved by the District Ranger. |
(3) | Garbage and rubbish cans shall be covered, watertight and flyproof. Garbage and rubbish shall be disposed of only at locations designated for that purpose. The area around the garbage and rubbish containers shall be kept clean and dry. |
31. | Signs and Advertising |
a. | Signs |
No signs or advertising devices shall be erected on the area covered by this permit, or highways leading thereto relating to the permit without prior approval by the Forest Service as to location, design, size, color, and message as specified in the area’s operating plan. Erected signs shall be maintained or renewed as necessary to neat and presentable standards.
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b. | Advertising |
The permittee, in his advertisements, signs, circulars, brochures, letterheads, and like materials, as well as orally, shall not misrepresent in any way, either the accommodations provided, the status of his permit, or the area covered by it or tributary thereto.
The fact that the permitted areas are located on the Arapaho National Forest shall be made apparent in all of the permittee’s brochures and advertising regarding use and management of the area and facilities under permit.
32. | Master Development Plan |
In consideration of the privileges authorized by this permit, the permittee agrees to prepare the Master Development Plan encompassing the entire winter sports resort presently envisioned for development in connection with the National Forest System lands authorized by this permit, and in a form acceptable to the Forest Service for approval by the Forest Supervisor. Additional construction beyond maintenance of existing improvements and that which has been contemplated in presently approved Master Plans will not be authorized pending completion of the new Vasquez-Winter Park master plan. Requests for approval for such contemplated construction shall address the impacts of such developments upon future development within the expanded area boundary. Development planning should fully utilize the existing permit area. Areas within the permit boundary which are not necessary to meet the goals of the overall Master Development Plan may be deleted from this permit. The new Master Development Plan will be completed by April 27, 1988. The approved Master Development Plan will become a part of this permit and will replace attached Exhibit 8.
For planning purposes, a capacity for the ski area in skiers-at-one-time (SAOT) will be established in the Master Development Plan and appropriate National Environmental Policy Act (NEPA) document. The overall mountain development will not exceed that capacity level without further environmental analysis and documentation through the appropriate NEPA process.
In the event there is agreement with the Forest Service to expand the facilities and services provided on the areas covered by this permit, the permittee shall jointly prepare with the Forest Service a development schedule for the added facilities prior to any construction. Such schedule shall be made a part of the Summer Operating Plan.
To assure proper vegetative treatment, an inventory of the vegetative condition must be made and a long-range vegetative management plan developed by the permittee with Forest Service recommendations.
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33. | Area Safety and Operations |
a. | Operations Plans |
The permittee representative and the District Ranger shall prepare summer and winter operations plans covering details of safety, land treatment resource protection, and current development programs. These plans will specify annual “how to” methods of treatment and protection. These plans will be based on standards spelled out in this permit. Provisions of the Operations Plans, as currently revised, will become a part of this permit and be signed by the Forest Supervisor and the permittee or his designated representative. As a minimum, the plans shall include, but not be limited to, the following three sections and subheadings:
(1) | Statement of Responsibilities and Procedures, including public parking and access requirements. |
(2) | Annual Operations Plans (reviewed annually by November 1): |
Winter Operations Plan
(a) | Ski patrol and first aid procedures, including location of patrol stations, sweep procedures, lift evacuation, avalanche control and rescue, accident reporting, communications, etc. |
(b) | Lift operation and procedures |
(c) | Trail maintenance and grooming, including sno-cat operations, snowmaking, etc. |
(d) | Customer service operations, including hosts, etc. |
(e) | Ski school procedures |
(f) | Sign Plan |
(g) | Building fire protection |
Summer Operations Plan
(a) | Erosion control |
(b) | Tree and debris disposal |
(c) | Sanitation |
(d) | General safety (including public safety) |
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(e) | List of planned development work for the work season by April 15. |
(f) | Design criteria and landscaping |
(g) | Road closure program |
(h) | Vegetative management |
b. | Permittee Representative |
The permittee or a designated representative shall be present on the premises at all times when the facilities are open to the public. The permittee will notify the District Ranger in writing who the representative(s) will be.
c. | Inspections and Suspension of Operations |
(1) | Permittee |
The permittee is responsible for continuous inspection of improvements covered by this permit to assure that hazards are removed and that public safety, health, and welfare are adequately protected. The permittee will take corrective action as needed.
Avalanches, rising waters, high winds, falling limbs or trees, and other hazards are natural phenomenons in the forest that present risks which the permittee assumes. The permittee has the responsibility of inspecting his site, lot, right-of-way, and immediate adjoining area for dangerous trees, hanging limbs, and other evidence of hazardous conditions and, after securing permission from the Forest Service, of removing such hazards.
The permittee shall perform all work with explosives in such a manner as not to endanger life or property. All storage places for explosives and flammable material shall be marked Explosive. The method of storing and handling explosives and flammable materials shall conform to recommended procedures contained in all local, state, and federal laws and regulations.
Inspections of lifts and tows shall be performed in accordance with the Colorado Passenger Tramway Safety Board’s Rules and Regulations or the American National Standard Safety Requirements for Aerial Passenger Tramways (ANSI B77.1), with Forest Service supplements, at least annually. Before public operation is permitted, the inspector must certify that the lift is safe for use by the public. Copies of the inspection report and safety certification shall be provided by the District Ranger.
-17- |
WINTER PARK SKI AREA
(2) | Forest Service |
The Forest Service reserves the right to inspect the permitted facilities and improvements at any time for compliance with terms of this permit, and if in the opinion of the Forest Supervisor there is insufficient adherence to the terms of the permit, he may suspend use or operation of any part, or all, of the permitted facilities or improvements. Such inspections by the Forest Service do not relieve the permittee of his responsibilities under the terms of this permit.
d. | Non-skiing Equipment |
Sleds, toboggans, saucers, snowmobiles, and other snowplay device may be permitted when separate and effectively segregated runs or areas are provided. Required safety maintenance and administrative provisions to regulate such uses will be made a part of the winter operation plan. Specialized equipment necessary for the handicapped may be permitted as long as required safety precautions, as listed in the operation plan, are followed.
e. | Ski Patrol |
The permittee shall maintain an adequate ski patrol organization. Patrol members may be paid or volunteer and shall meet the qualifications and the number to be on duty as specified in the winter operation plan.
34. | Correlations with Other National Forest Uses and Outstanding Rights |
a. | Area Access |
Except for such restrictions as the permittee and the Forest Supervisor may agree to be necessary to protect the installation and operation of authorized structures and developments, the lands and waters covered by this permit shall remain open to the public for all lawful purposes. To facilitate public use of this area, all existing roads or such roads as may be constructed by the permittee, shall remain open to the public, except for such roads as may be closed by joint agreement of the permittee and the Forest Supervisor.
b. | Nonexclusive Use |
This permit shall not be exclusive. The Forest Service reserves the right to use or permit others to use any part of the permitted area for any purpose, provided such use does not interfere with the rights and privileges hereby authorized.
-18- |
WINTER PARK SKI AREA
c. | Administrative Use of Lifts |
The lifts and tows shall be open to free use of all Forest Service personnel on official business. The Forest Supervisor will annually furnish a list of such personnel to the permittee, and the District Ranger or authorized officer will be required to vouch for others as the need arises.
d. | Water Rights |
This permit confers no right upon the permittee to the use of the water involved; such right must be obtained under Colorado State law. All water rights acquired or claimed by the permittee during the term of this permit which involve diversion of water directly from National Forest System lands, to the extent the same are applied to beneficial uses on National Forest System lands authorized under this permit, shall be acquired by the permittee and transferred to the United States. Such transactions are subject to the permit holder’s right of use.
35. | Regulation of Services and Rates |
a. | Services and Rates |
The Forest Service shall have the authority to check and regulate the adequacy and type of service provided the public and to require that such service conform to satisfactory standards. The permittee may be required to furnish the Forest Service a schedule of prices for sale and services authorized by the permit. Such prices and services may be regulated by the Forest Service; Provided, That the permittee shall not be required to charge prices lower than those charged by comparable or competing enterprises.
b. | Implied Permission |
Nothing in this permit shall be construed to imply permission to build or maintain any structure not specifically named on the face of this permit, or approved by the Forest Service in the form of a new permit or permit amendment.
c. | Alcoholic Beverages |
The sale of beer, wine, and liquors is allowed under this permit. However, if conditions develop as a result of this privilege, which in the judgment of the Forest Service are undesirable, the sale of such liquors shall be discontinued. In the event that this action becomes necessary, the permittee will be informed in writing by the Forest Service.
-19- |
WINTER PARK SKI AREA
d. | Gambling |
Gambling or gambling machines or devices will not be permitted on National Forest System lands regardless of whether or not they are lawful under state law or county ordinances.
e. | Fireworks |
No fireworks shall be stored or used on the land covered by this permit, or in the structures thereon, unless approved by the Forest Supervisor or a designated representative.
f. | Ski School |
The permittee shall have the exclusive right to maintain and operate a ski school on the permit area. The director for said school shall be qualified to the satisfaction of the Forest Supervisor, to give instruction and to direct others in giving instruction in all degrees of skiing proficiency required at the site. Ski safety shall be emphasized in all instruction.
g. | Lift Ticket Sales |
If and when the ski area permittee determines it necessary to limit lift ticket sales on the area, the permittee and the Forest Supervisor will mutually agree on the number of tickets that will be made available on a daily basis to the general walk-in skier.
36. | Association Status Notification |
The permittee shall furnish the Forest Supervisor an authenticated copy of a resolution specifically authorizing one certain individual or individuals to represent the permittee in its dealings with the Forest Service.
It is understood that the Winter Park Recreational Association, a nonprofit corporation, operates the Winter Park recreational area, pursuant to all of the terms and conditions of that certain instrument entitled “Agreement Between the Winter Park Recreational Association and the City and County of Denver, State of Colorado”, dated November 22, 1950, as now or hereafter amended. In the event of the termination of said underlying agreement, the Term Special Use Permit shall likewise terminate.
37. | This permit shall not be terminated under the provisions of Clause 15 until the Permittee is notified in writing of breach of conditions and shall be given such notice to correct said breach as is provided by policy current at the time of breach. |
-20- |
WINTER PARK SKI AREA
38. | Superseded Permit |
This permit supersedes term and annual special use permits, both designated: City and County of Denver through the Winter Park Recreational Association as agent, dated October 1, 1965, as amended.
-21- |
EXHIBIT D - GFA SUMMARY
WINTER PARK RECREATIONAL ASSOCIATION
Gross Fixed Assets 1982-1983
For Fiscal Year Ended April 30, 1983
DESCRIPTION | ASSET BAL. 4-24-1982 |
ADDITIONS 1982-1983 |
ASSET BAL. 4-30-1983 |
|||||||
Buildings | $ | 11,718,076 | 53,788 | 11,771,864 | ||||||
Lifts and Tows | 4,284,434 | 38,872 | 4,323,306 | |||||||
Snowmaking | 1,731,152 | -0- | 1,731,152 | |||||||
Trucks, Tractors, Autos & Sprytes | 1,417,303 | 169,933 | 1,587,236 | |||||||
Trails | 851,082 | 9,277 | 860,359 | |||||||
Restaurant Equipment | 717,881 | 10,884 | 728,765 | |||||||
Utilities | 1,814,141 | 49,920 | 1,864,061 | |||||||
Parking Lots and Roads | 2,223,716 | 139,217 | 2,362,933 | |||||||
Building Equipment | 333,529 | 13,015 | 346,544 | |||||||
Furniture and Office Equipment | 447,137 | 15,437 | 462,574 | |||||||
Tools | 106,124 | -0- | 106,124 | |||||||
Permanent Signs | 99,293 | 15,400 | 114,693 | |||||||
Miscellaneous Equipment | 298,970 | 155,095 | 454,065 | |||||||
Ski Racks | 3,203 | -0- | 3,203 | |||||||
Alpine Slide | 852,251 | -0- | 852,251 | |||||||
Accident Reporting System | 4,951 | -0- | 4,951 | |||||||
Traffic Control Panels | 10,843 | -0- | 10,843 | |||||||
Leased Equipment | 69,863 | (877 | ) | 68,986 | ||||||
TOTAL FOR WINTER PARK | $ | 26,983,949 | $ | 669,961 | $ | 27,653,910 | ||||
Winter Park Ski Repair & Rentals | 271,927 | 96,845 | 368,772 | |||||||
Winter Park Ski School | 29,238 | (29,238 | ) | -0- | ||||||
Gorsuch, Ltd., Ski Repair & Rentals | 87,196 | (87,196 | ) | -0- | ||||||
Golden Spike Ski Shop | 48,065 | 48,065 | ||||||||
Ski Racks & Lockers | 32,250 | (32,250 | ) | -0- | ||||||
Ski Sentry | 8,500 | 8,500 | ||||||||
Walco Vending and Game Machines | 131,927 | (10,904 | ) | 121,023 | ||||||
Sharp Shooters Photography | 1,975 | 2,725 | 4,700 | |||||||
King Pretzel | 8,200 | 1,200 | 9,400 | |||||||
Rainbow Tunes | 10,960 | (10,960 | ) | -0- | ||||||
Nursery | 1,323 | 1,323 | ||||||||
Coffee and Tea Market | 40,220 | 40,220 | ||||||||
TOTAL CONCESSIONS | $ | 573,673 | $ | 28,330 | $ | 602,003 | ||||
GRAND TOTAL | $ | 27,557,622 | $ | 698,291 | $ | 28,255,913 | ||||
TBG:cke | ||||||||||
6-09-83 |
United States Department of Agriculture |
Forest Service | Arapaho and Roosevelt NF | 240 West Prospect Fort Collins, CO 80526 |
Reply to: 2720
Date: DEC 09 1983
Mr. Gerald F. Groswold
President
Winter Park Recreational Association
Box 36
Winter Park, CO 80482
Dear Jerry:
Enclosed is the approved special use for the expanded Winter Park ski area. The original of the special use permit has been hand carried to Sulphur District Ranger, Art Smith, by Steve Amsbaugh. We have retained our copy for our files.
Please note that we have included the lands you requested in the permit. It is our conclusion that this has no environmental effects that have not been previously considered.
Sincerely,
/s/ Raymond O. Benton | |||
RAYMOND O. BENTON Forest Supervisor |
Enclosure
cc:
Sulphur RD
[LOGO]
December 8, 1983
Mr. Art Smith, District Ranger
Sulphur Ranger District
U.S. Forest Service
Star Route
Granby, CO 80446
Re: Permit Boundary Map – Additional Modifications to Permit Boundary
Dear Art:
Please accept the Permit Boundary Map as Exhibit A of the new Term Permit for Winter Park/Mary Jane/Vasquez.
The permit boundary line has been altered from the most recent map in the following two locations:
A. | The southern permit boundary line has been amended to conform with the proposed Vasquez Wilderness Study Area boundary. The change eliminates a potential no-mans-land between the wilderness area and our permit boundary. Also, the adjustment places National Forest land within our permit which might enhance our summer program in the future and give us control over a potential avalanche area which might affect some skier terrain. |
B. | A portion of the eastern permit boundary line has been adjusted to reflect a boundary line adjustment previously approved on May 15, 1980 by Gray F. Reynolds, Forest Supervisor. This 26.28 acre parcel of land is generally described as lying south and west of Exchange Survey No. 367 near the Winter Park Ski Area Base and including Tract C of Exchange Survey No. 367. |
The total revised permit area is now 7,027 acres.
Sincerely,
/s/ Gerald F. Groswold | |||
Gerald F. Groswold President |
cc: Raymond O. Benton
William T. Brown
GFG: aef
Winter Park Recreational Association • Box 36 • Winter Park, Colorado 80482 • (303) 726-5514
PERMITTEE COPY
United States Department of Agriculture Forest Service |
a. Record no. (1-2)
70 |
b. Region (3-4)
02 |
c. Forest (5-6)
01 |
TERM SPECIAL USE PERMIT |
d. District (7-8)
08 |
e. Use number (9-12)
4144 |
f. Kind of use (13-15)
161 |
Act of March 4, 1915, as amended (Ref. FSM 2710) |
g. State (16-17)
08 |
h. County (18-20)
049 |
k. Card no. (21)
1 |
Permission is hereby granted to City and County of Denver, Winter Park Recreational Association, as Agent of P.O. Box 36, Winter Park, CO 80482 hereinafter called the permittee, to use subject to the conditions set out below, the following described lands or improvements for the period ending December 31, 2013: an area in portions of sections 4-6, 7-10, 14-17, 20-23, 26-29 and tract 37 in T. 2 S., R. 75 W., 6th P.M. (unsurveyed) as more particularly shown on a map titled Exhibit A, Permit Map, which is attached hereto and made a part of this permit.
This permit is not to exceed 80 acres and is issued for the purpose of: constructing, operating, and maintaining a four-season recreation area including ski lifts and trails, appurtenant structures, and public facilities, as more particularly shown in the Development Plan.
This permit covers the area specifically identified on the map titled Exhibit A, Permit Map, and includes the National Forest System land actually occupied by permitted buildings, lifts, utility lines, and pipelines. The remaining area is covered by a supplemental terminable permit of the same date attached hereto.
1. This use shall be actually exercised at least 365 days each year, unless otherwise authorized in writing.
2. This permit is accepted subject to the conditions set forth herein, and to conditions 19 to 37 attached hereto and made a part of this permit.
PERMITTEE |
NAME OF PERMITTEE
City and County of Denver through the Winter Park Recreational Association, as Agent |
SIGNATURE OF AUTHORIZED OFFICER
/s/ Gerald F. Groswold TITLE President |
DATE
12/8/83 |
ISSUING OFFICER |
NAME AND SIGNATURE
/s/ Raymond O. Benton Raymond O. Benton |
TITLE
Forest Supervisor |
DATE
12/9/83 |
(CONTINUED ON REVERSE)
3. Development plans; lay-out plans; construction, reconstruction, or alteration of improvements; or revision of lay-out or construction plans for this area must be approved in advance and in writing by the forest supervisor. Trees or shrubbery on the permitted area may be removed or destroyed only after the forest officer in charge has approved, and has marked or otherwise designated that which may be removed or destroyed. Timber cut or destroyed will be paid for by the permittee as follows: Merchantable timber at appraised value; young-growth timber below merchantable size at current damage appraisal value; provided that the Forest Service reserves the right to dispose of the merchantable timber to others than the permittee at no stumpage cost to the permittee, Trees, shrubs, and other plants may be planted in such manner and in such places about the premises as may be approved by the forest officer in charge.
4. The permittee shall maintain the improvements and premises to standards of repair, orderliness, neatness, sanitation, and safety acceptable to the forest officer in charge.
5. This permit is subject to all valid claims.
6. The permittee, in exercising the privileges granted by this permit, shall comply with the regulations of the Department of Agriculture and all Federal, State, county, and municipal laws, ordinances, or regulations which are applicable to the area or operations covered by this permit.
7. The permittee shall take all reasonable precaution to prevent and suppress forest fires.
8. The permittee shall exercise diligence in protecting from damage the land and property of the United States covered by and used in connection with this permit, and shall pay the United States for any damage resulting from negligence or from the violation of the terms of this permit or of any law or regulation applicable to the national forests by the permittee, or by any agents or employees of the permittee acting within the scope of their agency or employment.
9. The permittee shall fully repair all damage, other than ordinary wear and tear, to national forest roads and trails caused by the permittee in the exercise of the privilege granted by this permit.
10. No Member of or Delegate to Congress or Resident Commissioner shall be admitted to any share or part of this agreement or to any benefit that may arise herefrom unless it is made with a corporation for its general benefit.
11. Except as provided in Clause 16 below, upon abandonment, termination, revocation, or cancellation of this permit, the permittee shall remove within a reasonable time all structures and improvements except those owned by the United States, and shall restore the site, unless otherwise agreed upon in writing or in this permit. If the permittee fails to remove all such structures or improvements within a reasonable period, they shall become the property of the United States, but that will not relieve the permittee of liability for the cost of their removal and the restoration of the site.
12. This permit is not transferable. If the permittee through voluntary sale or transfer, or through enforcement of contract, foreclosure, tax sale, or other valid legal proceeding shall cease to be the owner of the physical improvements other than those owned by the United States situated on the land described in this permit and is unable to furnish adequate proof of ability to redeem or otherwise reestablish title to said improvements, this permit shall be subject to cancellation. But if the person to whom title to said improvements shall have been transferred in either manner above provided is qualified as a permittee, and is willing that his future occupancy of the premises shall be subject to such new conditions and stipulations as existing or prospective circumstances may warrant, his continued occupancy of the premises will be authorized by a permit to him, which may be for the unexpired term of this permit or for such new period as the circumstances justify.
13. The permittee may sublease the use of land and improvements covered under this permit and the operation of concessions and facilities authorized; Provided the express written permission of the Forest Supervisor has been secured. The permittee shall continue to be responsible for compliance with all conditions of this permit by persons to whom such premises may be sublet.
14. This permit may be terminated upon breach of any of the conditions herein.
15. If during the term of this permit or any extension thereof, the Secretary of Agriculture or any official of the Forest Service acting by or under his authority shall determine that the public interest requires termination of this permit, this permit shall terminate upon thirty days’ written notice to the permittee of such determination, and the United States shall have the right thereupon to purchase the permittee’s improvements, to remove them, or to require the permittee to remove them, at the option of the United States, and the United States shall be obligated to pay an equitable consideration for the improvements or for removal of the improvements and damages to the improvements resulting from their removal. The amount of the consideration shall be fixed by mutual agreement between the United States and the permittee and shall be accepted by the permittee in full satisfaction of all claims against the United States under this clause: Provided, That if mutual agreement is not reached, the Forest Service shall determine the amount and if the permittee is dissatisfied with the amount thus determined to be due him he may appeal the determination in accordance with the Appeal Regulation (36 C.F.R. 211.20 - 211.37) and the amount as determined on appeal shall be final and conclusive on the parties hereto; Provided further, That upon the payment to the permittee of 75% of the amount fixed by the Forest Service, the right of the United States to remove or require the removal of the improvements shall not be stayed pending final decision on appeal.
16. In case of change of address the permittee shall immediately notify the forest supervisor.
17. In the event of any conflict between any of the preceding printed clauses or any provision thereof and any of the following clauses or any provisions thereof, the following clauses will control.
U S Department of Agriculture Forest Service AMENDMENT #2 FOR SPECIAL USE PERMIT (Ref: FSM 2714) |
a. Record no. 70
|
b. Region 02 |
c. Forest 10 |
d. District 08
|
e. User No. 1019.20 |
f. Kind of use 161 |
|
THIS AMENDMENT IS ATTACHED TO AND MADE A PART OF THE ANNUAL PERMIT | g. State 08 |
h. County 049 |
k. Card No. 01 |
For Winter Sports issued to Denver, City & County, Winter Park Recreation Association on 12/09/83, which is hereby amended as follows:
This permit covers 7630 acres more or less.
Replace Permit Map, Exhibit A dated 12/9/83, with new permit map dated, 07/13/90.
This Amendment is accepted subject to the conditions set forth herein and made a part of this Amendment.
PERMITEE |
Name of Permittee City and County of Denver |
Signature of Authorized Officer
/s/ Gerald F. Groswold Title President |
Date
7/20/90
|
ISSUING OFFICER |
Name and Signature
/s/ M. M. Underwood, Jr. M. M. UNDERWOOD, JR. |
Title
Forest Supervisor
|
Date
7/13/90
|
2700-23 (3/72)
SUPPLEMENTAL AGREEMENT NO. VII TO
AGREEMENT BETWEEN
WINTER PARK RECREATIONAL ASSOCIATION
AND THE CITY AND COUNTY OF DENVER
THIS SUPPLEMENTAL AGREEMENT NO. VII (this “Supplement”), is entered into as of Oct 4, 2002, by and between WINTER PARK RECREATIONAL ASSOCIATION, a Colorado nonprofit corporation (the “Association”) and THE CITY AND COUNTY OF DENVER, a Colorado municipal corporation (the “City”).
WITNESSETH THAT:
WHEREAS, the Association and the City, on or about November 22, 1950, made and entered into a certain written agreement which was supplemented by written agreements entered into on or about April 14, 1951, April 20, 1957, December 9, 1961, June 11, 1971, April 13, 1979 and May 3, 1994, respectively (such agreement and its supplements through May 3, 1994 being hereinafter referred to as the “Agreement”), which Agreement is now hereby amended and restated in its entirety by this Supplement; and
WHEREAS, pursuant to the Agreement, the Association has had the obligation, as agent for the City, to facilitate the operation, maintenance, and development of the Winter Park Resort (the “Resort”) for the benefit of the citizens of the City and the general public, and the City acknowledges that the Association has performed such obligations in strict compliance with the Agreement; and
WHEREAS, the Resort has become the place that it is today because of the great vision of its creator, George Cranmer, as well as the efforts of the Association; and
WHEREAS, the Resort requires great vision again, as the Association recognizes that there have been changes in the skiing and mountain recreation industries and has advised the City that in the Association’s judgment, it would be in the best interest of the Resort for the Association to enter into an agreement with a private company which has expertise and resources in this area to insure that the Resort remains a competitive ski resort; and
WHEREAS, Intrawest Corporation, a corporation continued pursuant to the Canadian Business Corporations Act and its affiliates (collectively “Intrawest”), has been identified as the private commercial entity with which such an agreement should be entered into; and
WHEREAS, Intrawest is a leader in North America in the development and operation of ski resorts, and has the experience and resources to help secure the future of the Resort; and
WHEREAS, the Association and the City agree that the Association and Intrawest should enter into a certain Lease and Operating Agreement for the Resort, substantially in the form of Exhibit A attached hereto (the “Lease”), and provide Intrawest an option to purchase certain development real estate therein by a certain Option Agreement substantially in the form attached hereto as Exhibit B (the “Option Agreement”), and enter into other related documents in the forms attached as exhibits to the Lease and the Option Agreement.
1 |
NOW, THEREFORE, in consideration of the premises set forth above and of the agreements of the parties to be kept and performed as set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the purpose of explicitly stating and setting forth the understandings and agreements between the City and the Association with respect to the Resort, it is hereby agreed that the Agreement is amended and restated in its entirety as follows:
I. ASSOCIATION STRUCTURE
1. Transition. The Amended and Restated Articles of Incorporation and the Amended and Restated Bylaws, which are attached hereto as Exhibits C and D respectively (the “Organizational Documents”), establish the structure described in Section 4 of this Supplement. The Organizational Documents were conditionally adopted by the Board of the Association on SEPTMBER 20, 2002, and will become effective upon their disbursement by Grand County Title and Escrow Company (the “Escrow Agent”) at such time as the Escrow Agent receives written notice expressly directing such disbursement from the current Chairman of the Board and the President and Chief Executive Officer of WPRA. Thus, this Supplement shall only be effective upon the Organizational Documents becoming effective as provided in this paragraph.
2. Ratification. The City hereby ratifies and approves of all acquisitions of real property and interests in real property by the Association prior to the effective date of this Supplement, and all actions taken by the Association prior to the effective date of this Supplement.
3. Release. The City and the Association acknowledge that the persons currently and previously acting as Trustees and Officers of the Association prior to the effective date of this Supplement have duly discharged their fiduciary and other obligations to the Association, the City and the general public, and the City and the Association hereby waive, release and discharge any and all claims, whether contingent or absolute, whether known or unknown, that the City or the Association might have against such persons under the Agreement or arising out of or relating to their actions as Trustees and Officers of the Association or the operation, maintenance and development of the Resort.
4. Structure of Board of Directors
a. Directors. The Organizational Documents provide for the Association to have a Board of Directors consisting of five Directors who will be appointed and elected as follows:
2 |
i. First Appointee. The Mayor (“Mayor”) of the City and County of Denver shall appoint a Director for a term of four (4) years (“First Appointee”). The First Appointee shall be an individual who, at the time of the appointment, occupies a senior-level policy-making position with the City, including without limitation as an appointee of the Mayor or as a member of the City Council. The Mayor shall have the right to remove and replace the First Appointee at any time during such Appointee’s term with a person possessing similar qualifications to those set forth in the preceding sentence. After the term of the initial First Appointee, successors shall be appointed to terms of five (5) years.
ii. Second Appointee. The Mayor shall appoint a Director for a term of five (5) years (“Second Appointee” and together with the First Appointee, the “Appointees”). The Second Appointee shall be an individual who, at the time of the appointment, occupies a senior-level policy-making position with the City, including without limitation as an appointee of the Mayor or as a member of the City Council. The Mayor shall have the right to remove and replace the Second Appointee at any time during such Appointee’s term with a person possessing similar qualifications to those set forth in the preceding sentence. After the term of the initial Second Appointee, successors shall be appointed to terms of five (5) years.
iii. First Citizen Director. The Mayor shall appoint a Director for a term of three (3) years (“First Citizen Director”). Upon expiration of the initial First Citizen Director’s term, the new First Citizen Director shall be elected by the four remaining Directors. The First Citizen Director shall: 1) serve a term of five (5) years, 2) be a resident of the City of Denver, and 3) have professional experience in commercial business, real estate, law, or finance.
iv. Second Citizen Director. The Mayor shall appoint a Director for a term of six (6) years (“Second Citizen Director”). Upon expiration of the initial Second Citizen Director’s term, the new Second Citizen Director shall be elected by the four remaining Directors. The Second Citizen Director shall: 1) serve a term of five (5) years, 2) be a resident of the City of Denver, and 3) have professional experience in commercial business, real estate, law, or finance.
v. Third Citizen Director. The Mayor shall appoint a Director for a term of seven (7) years (“Third Citizen Director” and together with the First and Second Citizen Directors, the “Citizen Directors”). Upon expiration of the initial Third Citizen Director’s term, the new Third Citizen Director shall be elected by the four remaining Directors. The Third Citizen Director shall: 1) serve a term offive (5) years, 2) be a resident of the City of Denver, and 3) have professional experience in commercial business, real estate, law, or finance.
b. Term; Election. All Citizen Directors shall serve no more than one term. Upon the expiration of the term of a Citizen Director, if the four remaining Directors cannot agree to the election of the new Citizen Director by a majority vote, they shall each submit the name of their candidates to the Citizen Director whose term is expired, who shall elect one of such candidates.
II. ROLE OF THE ASSOCIATION
5. Purpose and Powers. The Association acknowledges and agrees that the sole purpose for its existence is to lessen the burdens of the City’s government by acting as agent for the City with respect to the Resort in accordance with its Articles of Incorporation, Bylaws and this Supplement. The Association shall have and exercise all powers under this Supplement that are necessary or appropriate for it to act as such agent, subject to the specific provisions and limitations set forth in this Supplement.
3 |
6. Responsibilities of the Association. The Association shall:
a. Enter into the Lease, the Option Agreement, that certain Additional Consideration Agreement between the Association and Intrawest/Winter Park Holdings Corporation (the “Additional Consideration Agreement”), and that certain Guaranty by Intrawest Corporation (the “Guaranty”);
b. Hold the title as agent for the City to the assets that are leased pursuant to the Lease;
c. Execute any and all documents referenced in, attached to or now or hereafter relating to the Lease and the Option Agreement and implement the actions contemplated thereby;
d. Be the borrower of the Agreed Upon Indebtedness (as defined in the Lease) and execute all documents necessary or appropriate in connection therewith;
e. Take all actions required to be taken by the Landlord pursuant to the Lease in accordance with the terms of the Lease and related documents, including without limitation, providing from available closing funds for the payment or reimbursement of Reimbursable Transaction Costs as defined in the Lease;
f. Take all actions required to be taken by the WPRA pursuant to the Option Agreement in accordance with the terms of the Option Agreement and related documents; and
g. Take no action that is inconsistent with or results in a breach of the terms of this Supplement.
7. City Decisions. As the residual owner of the Resort property and as a third party beneficiary to the Lease and Option Agreement and related documents, the City retains the ability to protect its interests by reserving the right to make decisions regarding the issues listed in this Section. All other decisions required to be made under the Lease and Option Agreement shall be made by the Association using its reasonable best efforts. Any capitalized terms used in this Section shall be as defined in the Lease or the Option Agreement, as applicable. The Association shall act in accordance with directions given by the City with respect to the following matters and shall not:
a. Sell, transfer, exchange or lease the Leased Assets except with the approval of the Mayor and City Council, provided, however, that this restriction shall not apply to the property that is subject to conveyance (including, without limitation, transfers of title, granting of easements and the issuance of licenses) pursuant to the Option Agreement or the Lease;
b. Pledge, mortgage, or grant a deed of trust or security interest or other lien with respect to any interest in the Leased Assets except with the approval of the Mayor and City Council, provided, however, that this restriction shall not apply to such actions with respect to the Development Parcels as collateral under the Agreed-Upon Indebtedness as provided in the Lease;
4 |
c. Terminate the Lease, Option Agreement, the Additional Consideration Agreement, or the Guaranty, or amend or modify such documents in any way that has a materially adverse financial effect on the interests of the City, except with the approval of the Mayor and City Council;
d. Agree or consent to expansion, contraction or other modification to the boundaries covered by the Forest Service Permits or the Forest Service Master Plan except with the approval of the Mayor;
e. Grant permission for Tenant to acquire USFS Real Property that is not for Resort Operations except with the approval of the Mayor;
f. Approve a waiver of any sublease limitations contained in the existing lease from The Colorado Arlberg Club or enter into a new lease with The Colorado Arlberg Club except with the approval of the Mayor;
g. Exercise rights upon default by Intrawest under the Lease, Option Agreement, Additional Consideration Agreement, the Guaranty, or related documents except with the approval of the Mayor;
h. Consent to assignments, encumbrances and other transfers under the Lease or Option Agreement that require such consent, except with the approval of the Mayor;
i. Amend or modify or consent with respect to any aspect of the Resort Operations Core Master Plan, Resort Operations Space identified on any Master Plan, and the deviations from permitted and prohibited uses with respect to any of the Core Areas in the Option Agreement except with the approval of the Mayor.
The provisions of this Section 7 govern the relationship between the City and the Association, and shall not constitute notice to any third party. Unless and until a person receives a specific prior written notice from the City to the contrary, any person dealing with the Association may, without further inquiry, rely upon actions taken by the Association as being duly authorized and not in contravention of this Supplement.
8. Termination. The City may terminate the Agreement as amended and restated by this Supplement, without cause, upon ninety (90) days’ prior written notice. The City may terminate the Agreement as amended and restated by this Supplement with cause if the Association is in default of its obligations under this Supplement, the Lease, or the Option Agreement, and the Association has not taken the curative actions set forth in the City’s written notice of default within the period of time set forth in such notice. Termination of the Agreement as amended and restated by this Supplement shall not terminate the Lease, the Option Agreement, the Additional Consideration Agreement, or the Guaranty, and shall not affect the liability of the Association under or the collateral given by the Association to secure the Agreed-Upon Indebtedness (as defined in the Lease). Upon termination of the Agreement as amended and restated by this Supplement, the Association shall:
a. provide for the payment or other satisfaction of all liabilities (debts and other obligations) of the Association, which shall be by actual payment or by a transfer of assets of the Association subject to an assumption of some or all of the liabilities of the Association, or a combination thereof as may be necessary for such payment or other satisfaction;
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b. subject to the provisions of subparagraph a. above and provided that the following action does not result in a default under any Agreed-Upon Indebtedness (as defined in the Lease), donate, give, grant, convey, assign, set-over, and deliver to the City or its governmental or non-profit corporate designee, by good and sufficient instruments of transfer, for the use and benefit of the people of the City, all right, title and interest of the Association in and to the land, leases, permits, licenses, buildings, improvements, facilities, and all other property, real and personal, tangible and intangible, including all money and accounts receivable and all contract rights and choices in action, which the Association then owns or has or may later acquire; and
c. promptly dissolve the Association in accordance with the requirements and responsibilities of Colorado law.
9. Visitation. The City and the Association agree that the Mayor, City Auditor, members of the City Council, and the Manager of Parks and Recreation shall have access to the Resort for visitation and inspection.
10. Inspection of Records. The Association shall maintain its books and records in the City and County of Denver at a place known at all times to the City. Representatives of the City, including without limitation, the City’s Auditor, shall have the right to inspect and copy such books and records from time to time on one (1) business day’s notice to the Association. The Association shall maintain its financial records in accordance with generally accepted accounting principles consistently applied. At any time after five (5) business days prior notice to the Association of its intention to do so, the City may cause to be made a complete audit of the records of the Association for any fiscal period within the preceding ten (10) years. The acceptance of payments by the City computed on the basis of statements furnished by the Association shall be without prejudice to the City’s rights to inspect and/or audit the records of the Association. A representative of the Association shall appear before City Council to answer any questions upon request of the City. The Association agrees to abide by the Colorado Open Public Records Law described in CRS Title 24, Article 72, or successor provisions.
11. Budget and Operating Expenses Reimbursement. The Association shall deliver to the City no later than November 1 of each year, a copy of its budget for the following calendar year. The budget shall set forth an itemized list of the Association’s projected expenses to perform its duties hereunder for the following year. The Association shall submit a reconciliation statement of its revenues and expenses on or before July 31 of each year in such detail as the City and the Association may require. A representative of the Association shall appear before the City Council of the City and County of Denver to answer any questions upon the City’s request.
12. Notices. The Association agrees to give prompt notice to the City of any and all notices of any kind and nature that the Association receives from or delivers to Intrawest pursuant to the terms of the Lease and Option Agreement and any related agreements, in whatever manner and to whatever persons as the City may identify to the Association from time to time. If pursuant to those notices or otherwise, the Association is required to or has the right to consent, object or comment and has a responsibility to follow the directions of the City for the matters specified in Section 7 herein, the Association shall promptly provide to the City all necessary available material information relative to the making of that decision. Except as otherwise specifically provided in this Supplement, the Association shall proceed as it deems best for the Resort using reasonable and prudent business judgment, and shall provide the City and the Association with a copy of its decision or action.
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13. Proceeds from the Lease and Option Agreement. The Association agrees to collect from Intrawest any and all money due or payable to the Association under the terms of the Lease and to transmit all such money to the City as promptly as possible, and in no event later than thirty (30) days after receipt thereof. If Intrawest makes a payment pursuant to the Option Agreement, the Association shall promptly transmit any amount that it receives and/or any amount which the Association is not required to pay to an Agreed-Upon Indebtedness Lender (as defined in the Lease) to the City, and in no event later than thirty (30) days after receipt thereof.
14. Termination or Default by Intrawest. If the Association believes that Intrawest is in default of its obligations under the Lease or Option Agreement, or if the Lease or Option Agreement terminate for any reason, the Association shall take such steps as may be necessary to preserve any legal rights, and shall promptly give notice of such default or termination to the City. Thereafter, the Association shall consult in good faith with the City to determine how to proceed. If the Association and the City cannot agree, the Association shall proceed as the City may direct, provided that such direction does not impose on the Association or its officers or Directors any liability for breach of fiduciary responsibility or otherwise.
15. 501(c) Status and Organizational Structure. The Association shall at all times take such actions as may be necessary, and shall refrain from taking such actions as may be detrimental, to preserve its status as a nonprofit corporation that qualifies as a tax exempt entity under Section 501(c) of the Internal Revenue Code (or its successor provision). The Organizational Documents shall not be amended without the prior written consent of the Mayor.
16. Insurance. The Association shall maintain adequate liability insurance at all times as directed by the Director of the Risk Management Division of the City. It is further agreed that the Association and the Risk Management Division shall reevaluate the reasonableness of the amounts and types of insurance coverage every three (3) years, and if such amounts or types of insurance have become inadequate, they shall agree to such additional insurance or policy amounts or coverage as necessary, subject to commercial availability and consistent with the need to protect the City and the Association.
17. Indemnification. The Association shall indemnify the City, its agents and employees against any and all liability arising from the acts or omissions of the Association pursuant to this Supplement occurring after the date hereof.
18. Capitalized and Defined Terms. All terms not otherwise defined in this Supplement shall have the meaning given them in the Lease or the Option Agreement.
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19. Severability. The invalidity of any provision of this Supplement shall not affect the validity of any other provision of this Supplement. If any provision of this Supplement or the application thereof to either party shall be found by a court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Supplement and the application of such provision to the other party shall not be affected thereby and shall be enforced to the greatest extent permitted by law.
20. Independent Rights. The Association acknowledges that the City has independent rights with respect to the Lease, the Option Agreement, the Additional Consideration Agreement, and the Guaranty, and such rights are not modified or reduced by this Supplement.
21. Beneficaries. There are no third-party beneficiaries of this Agreement except as expressly provided herein.
22. Waiver of Breach. No waiver or breach of any covenant, condition or agreement herein contained shall operate as a waiver of the covenant, condition or agreement itself, or of any subsequent breach thereof.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed by their proper officers authorized to do so as of the day and year first written above.
THE CITY: | |||
DEPUTY CITY CLERK | |||
CITY AND COUNTY OF DENVER, a | |||
ATTEST: | Colorado municipal corporation | ||
/s/ Elzsa Vincent |
By: | /s/ Wellington E. Webb | |
SHERRY L. JACKSON, Clerk and Recorder of the City and Country of Denver |
MAYOR |
RECOMMENDED AND APPROVED: | |||
By: | /s/ James Mejia | ||
Manager of Denver Parks and Recreation |
APPROVED AS TO FORM: | ||||
J. WALLACE WORTHAM, JR., | ||||
Attorney for the City and County of Denver | REGISTERED AND COUNTERSIGNED: | |||
By: | /s/ Cynthia Gale |
By: | /s/ Donald J. Mares | |
Assistant City Attorney | Auditor for the City and County of Denver Contract Control # RC2Y008 |
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THE ASSOCIATION: | |||
WINTER PARK RECREATIONAL ASSOCIATION, a Colorado nonprofit organization | |||
By: | /s/ Gary DeFrange | ||
President | |||
By: | /s/ William E. Mosher | ||
Chairman, Board of Trustees |
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LEASE AND OPERATING AGREEMENT
BY AND BETWEEN
WINTER PARK RECREATIONAL ASSOCIATION
AND
INTRAWEST/WINTER PARK OPERATIONS CORPORATION
TABLE OF CONTENTS
Page | |||
RECITALS | 1 | ||
ARTICLE I - DEFINITIONS | 2 | ||
ARTICLE II - LEASED ASSETS | 12 | ||
2.1 | Leases and Subleases | 12 | |
2.2 | Assignments and Licenses | 13 | |
2.3 | Assignment of Warranties | 13 | |
2.4 | Winter Park Restaurant Company | 14 | |
2.5 | Additional Leased Assets | 14 | |
2.6 | Ownership of Leased Assets | 14 | |
2.7 | Option Agreement Parcels | 16 | |
ARTICLE III - LIABILITY ASSUMPTIONS | 16 | ||
3.1 | Delivery of Current Assets | 16 | |
3.2 | Assumption of Liabilities | 16 | |
3.3 | Employment of Employees | 17 | |
3.4 | Employee Benefit Plans | 17 | |
ARTICLE IV - TERM | 19 | ||
4.1 | Initial Term | 19 | |
4.2 | Extension of Initial Term | 19 | |
ARTICLE V- LEASE PAYMENTS; OTHER PAYMENTS; ALLOCATION OF CERTAIN EXPENSES | 20 | ||
5.1 | Rental and Other Payments | 20 | |
5.2 | Credit for Certain Required Quarterly Payments | 21 | |
5.3 | Capital Expenditures | 22 | |
5.4 | Payment of Reimbursable Transaction Costs | 23 | |
5.5 | Allocation of Certain Costs and Revenues | 23 | |
5.6 | Statement of Amounts Due | 25 | |
5.7 | Guaranty by Intrawest Corporation | 25 | |
ARTICLE VI - PERFORMANCE OBLIGATIONS OF TENANT | 26 | ||
6.1 | General Principles | 26 | |
6.2 | Triple Net Lease | 28 | |
6.3 | Shared Resources | 29 | |
6.4 | Compliance with Applicable Law | 30 | |
6.5 | Tenant Obligation to Pay Certain Taxes | 30 | |
6.6 | Compliance with Environmental Laws | 30 | |
6.7 | Inspection and Landlord’s Access | 31 | |
6.8 | Non-Competition and Gaming | 32 | |
6.9 | Development of Leased Assets | 32 | |
6.10 | Names | 33 | |
ARTICLE VII - REPORTS AND AUDITS | 33 | ||
7.1 | Quarterly Reports | 33 | |
7.2 | Annual Reports | 34 | |
7.3 | Maintenance of Records | 34 | |
7.4 | Inspections and Audits of Records | 35 | |
7.5 | Confidentiality | 36 |
ARTICLE VIII - DELIVERY; CONDITION AND INDEMNIFICATION | 36 | ||
8.1 | Delivery and Acceptance of the Leased Assets | 36 | |
8.2 | Indemnification | 36 | |
8.3 | Quiet Enjoyment | 37 | |
ARTICLE IX - INSURANCE | 38 | ||
9.1 | Coverage | 38 | |
9.2 | General Insurance Provisions | 40 | |
9.3 | Settlement and Payment of Claims | 40 | |
9.4 | Failure to Insure | 41 | |
9.5 | Adjustment of Insurance Coverage | 41 | |
9.6 | Prohibition on Acts Affecting Insurance Coverage | 41 | |
9.7 | Insurance Under Separate Contracts | 41 | |
ARTICLE X - INDEBTEDNESS | 42 | ||
10.1 | Agreed-Upon Indebtedness | 42 | |
10.2 | Use of Agreed-Upon Indebtedness | 42 | |
10.3 | Security for Agreed-Upon Indebtedness | 42 | |
10.4 | Repayment of Agreed-Upon Indebtedness | 43 | |
10.5 | No Limitation on Tenant Right to Borrow | 43 | |
10.6 | Rights of the Agreed-Upon Indebtedness Lender | 44 | |
10.7 | Affiliate Lenders | 48 | |
10.8 | Permitted Equipment Financing | 49 | |
ARTICLE XI - NATIONAL FOREST SYSTEM LANDS OPERATING AGREEMENT | 50 | ||
11.1 | Maintenance of Forest Service Permits | 50 | |
11.2 | Obligations with Respect to Forest Service Permits | 50 | |
11.3 | Term | 51 | |
11.4 | Additional Obligations of Tenant to the United States | 51 | |
11.5 | Forest Service Master Plan | 51 | |
ARTICLE XII - CONDITIONS TO EFFECTIVENESS | 52 | ||
12.1 | Conditions | 52 | |
ARTICLE XIII - REPRESENTATIONS AND WARRANTIES | 54 | ||
13.1 | Representations and Warranties of Tenant | 54 | |
13.2 | Representations and Warranties of Landlord | 55 | |
ARTICLE XIV - DAMAGE, DESTRUCTION OR DEPRIVATION OF USE; EMINENT DOMAIN | 58 | ||
14.1 | Damage or Destruction of the Leased Assets | 58 | |
14.2 | Eminent Domain | 59 | |
14.3 | Right to Terminate Due to Inadequate Snowfall | 59 | |
14.4 | Effect of Termination | 59 | |
14.5 | No Abatement if Lease Is Not Terminated | 59 | |
ARTICLE XV - DEFAULT AND REMEDIES | 60 | ||
15.1 | Default by Tenant | 60 | |
15.2 | Remedies of Landlord | 62 | |
15.3 | Default by Landlord | 64 | |
15.4 | Remedies of Tenant | 65 | |
15.5 | No Implied Surrender or Waiver | 66 | |
15.6 | No Default Resulting from Certain Failures | 66 | |
15.7 | Non-Binding Mediation | 66 | |
ARTICLE XVI - ASSIGNMENT, SUBLETTING AND OTHER TRANSFERS | 67 | ||
16.1 | Consent Required | 67 | |
16.2 | When Consent Is Not Required | 67 | |
16.3 | Tenant to Furnish Information | 68 |
16.4 | No Consideration | 69 | |
16.5 | Landlord’s Rights | 69 | |
16.6 | Tenant Pays All Costs | 69 | |
16.7 | Continuing Tenant Liability | 69 | |
ARTICLE XVII - TERMINATION EVENTS | 70 | ||
17.1 | Termination Events | 70 | |
17.2 | Option | 71 | |
ARTICLE XVIII - MISCELLANEOUS | 73 | ||
18.1 | Landlord - Tenant Relationship | 73 | |
18.2 | Release | 73 | |
18.3 | Dollar Value | 74 | |
18.4 | Captions | 74 | |
18.5 | Partial Invalidity | 74 | |
18.6 | Attorneys’ Fees | 74 | |
18.7 | Waiver of Breach | 74 | |
18.8 | Currency | 74 | |
18.9 | Written Agreement | 74 | |
18.10 | Further Assurances | 75 | |
18.11 | Notices | 75 | |
18.12 | Governing Law | 76 | |
18.13 | Counterpart Signatures | 76 | |
18.14 | City as Beneficiary | 76 | |
18.15 | Time of the Essence | 76 | |
18.l6 | Venue | 76 |
SCHEDULE OF EXHIBITS:
Exhibit A | Additional Considerate on Agreement | Section 5.1(c) | |
Exhibit B | Current Capital Maintenance Items | ARTICLE I | |
Exhibit C | Employee Benefit Plans - Pension | ARTICLE I | |
Exhibit D | Employee Benefit Plans - Welfare | ARTICLE I | |
Exhibit E | Employee Benefit Plans - Additional Plans or Policies | ARTICLE I | |
Exhibit F | Forest Service Permits | ARTICLE I | |
Exhibit G | Water Rights | ARTICLE I | |
Exhibit H | Guaranty Agreement | ARTICLE I | |
Exhibit I | Owned Real Property | ARTICLE I | |
Exhibit J | Tangible Personal Property | ARTICLE I | |
Exhibit K | Transition Costs | ARTICLE I | |
Exhibit L | Assignment and Assumption Agreement (Intangible Personal Property) | Section 2.2 | |
Exhibit M | License Agreement (Intellectual Property) | Section 2.2 | |
Exhibit N | SERP Liabilities | Section 3.4(d) | |
Exhibit O | Deferred Compensation Arrangements | Section 3.4(f) | |
Exhibit P | Terms for Program - Lifetime Ski Pass Holders | Section 6.1(m) | |
Exhibit Q | Ski Run Names to be Retained | Section 6,10(b) | |
Exhibit R | Long-Term Liabilities | Section 10.2 | |
Exhibit S | Real Property Landlord Leases from Third Parties | Section 13.2(e)(i) | |
Exhibit T | Real Property Landlord Leases to Third Parties | Section 13,2(e)(ii) | |
Exhibit U | Leased Tangible Personal Property | Section 13.2(f) | |
Exhibit V | Intangible Personal Property - Intellectual Property | Section 13.2(g) | |
Exhibit W | Intangible Personal Property - Material Permits and Licenses | Section 13.2(h) | |
Exhibit X | Intangible Personal Property - Material Agreements | Section 13,2(i) | |
Exhibit Y | Current Assets and Current Liabilities | Section 13,2(1) |
LEASE AND OPERATING AGREEMENT
THIS LEASE AND OPERATING AGREEMENT (this “Agreement” or “Lease”), dated as of December 23, 2002, by and between WINTER PARK RECREATIONAL ASSOCIATION, a Colorado non-profit corporation (“Landlord”), as agent for the City and County of Denver, a Colorado municipal corporation (the “City”), pursuant to the Agency Agreement (as hereinafter defined), and INTRAWEST/WINTER PARK OPERATIONS CORPORATION, a Delaware corporation (“Tenant”). Landlord and Tenant are referred to collectively herein as the “Parties.”
RECITALS:
WHEREAS, the Landlord owns, leases and licenses certain real and personal property located in Grand County, Colorado used in the operation of the mountain resorts known, as of the date hereof, as Winter Park, Mary Jane and Vasquez (collectively, the “Winter Park Resort”); and
WHEREAS, pursuant to that certain Agreement Between Winter Park Recreational Association and the City and County of Denver, State of Colorado, dated November 22, 1950, the City, as beneficial and residual owner of the Winter Park Resort, appointed Landlord as its agent for purposes of, inter alia, controlling, developing, managing and operating the Winter Park Resort; and
WHEREAS, Landlord has determined that it is the best interest of Landlord, the City and the Winter Park Resort to allow Tenant to control, develop, manage and operate the Winter Park Resort, and in connection therewith, to cause Landlord to lease, sublease and transfer certain assets to Tenant pursuant to the terms of this Agreement and to grant an option to purchase certain developable land to an affiliate of Tenant in a related transaction; and
WHEREAS, Landlord and the City have expressed their concurrence in this determination by entering into that certain Supplemental Agreement No. VII to Agreement Between Winter Park Recreational Association and the City and County of Denver dated as of October 4, 2002 (as amended and restated, the “Agency Agreement”); and
WHEREAS, Tenant is committed to outreach to all qualified people and firms and Landlord and Tenant intend that Tenant will use its resources and the controlling interest in Winter Park Resort granted to Tenant in this Lease, to endeavor, in a manner consistent with sound business practices, to improve Winter Park Resort as a mountain resort; and
WHEREAS, it is Landlord’s and Tenant’s desire that Winter Park Resort be economically viable on a stand-alone basis upon expiration of this Lease.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, the Parties agree as follows.
AGREEMENT:
ARTICLE I
DEFINITIONS
The following terms, when used in this Agreement, shall have the following meanings:
“Accountants” shall mean the nationally-recognized and respected firm of independent certified public accountants selected by Tenant and employed by Intrawest Corporation from time to time as its primary accounting firm.
“Additional Consideration Agreement” means the agreement, in the form attached to this Agreement as Exhibit A, to be executed by Intrawest Holdings and Landlord.
“Additional Leased Assets” shall mean real property, tangible personal property, intellectual property, and intangible personal property to be used in Resort Operations hereafter acquired, constructed or modified by Tenant, except as otherwise specifically provided in this Agreement. Without limiting the foregoing, Additional Leased Assets shall include any and all improvements constructed on the Real Property or the National Forest System Lands, and all real property acquired by Tenant or any affiliate of Tenant within the boundaries of the National Forest System Lands to the extent such real property is used in connection with Resort Operations.
“Affiliate Lender” shall mean Tenant or any affiliate of Tenant that extends credit from time to time that constitutes Agreed-Upon Indebtedness.
“Agency Agreement” shall have the meaning set forth in the fourth Recital of this Agreement.
“Agreed-Upon Indebtedness” shall mean, as of any measurement date, the outstanding principal amount of debt of Landlord existing as of the Effective Date plus the amount of additional debt to be incurred as additional Agreed-Upon Indebtedness for the limited purposes specified in this Agreement with respect to the Winter Park Resort. The maximum principal amount of Agreed-Upon Indebtedness shall not, at any time during the Term, exceed $33,000,000 less the amount of any principal payments required to be made by Landlord pursuant to Section 10.4 or otherwise voluntarily made by Landlord in repayment of the Agreed-Upon Indebtedness. Such maximum aggregate amount shall not be reduced to the extent Tenant or Landlord make repayments of principal for the purpose of refinancing any then-existing Agreed-Upon Indebtedness or Tenant otherwise makes any other payments of principal that are required to be made pursuant to the terms of the Agreed-Upon Indebtedness Documents from time to time.
“Agreed-Upon Indebtedness Documents” shall mean all notes, liens, security agreements, collateral assignments and other agreements, certificates, documents or instruments executed by Landlord in favor of any Agreed-Upon Indebtedness Lender to create, evidence, secure or otherwise document any Agreed-Upon Indebtedness.
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“Agreed-Upon Indebtedness Lender” shall mean the lender or lenders from time to time extending the credit constituting the Agreed-Upon Indebtedness, and may include an Affiliate Lender.
“Agreement” or “Lease” shall mean this Lease and Operating Agreement.
“Applicable Law” means any law, rule, regulation, order, decree or other requirement having the force of law and, where applicable, any interpretation thereof by any authority having jurisdiction with respect thereto or charged with the administration thereof.
“Business Acquisition Properly” shall mean and include any or all of Tenant’s or its affiliate’s rights, title and interest in and to any business located and operating on, any real property located on, and any personal property used in connection with, any Purchased Developable Land, but only to the extent that Tenant or its affiliate owns or holds any such right, title or interest during the Business Acquisition Term.
“Business Acquisition Properly Investment” means the capital invested in a particular item of Business Acquisition Property by Tenant and its affiliates periodically over the Business Acquisition Property Life.
“Business Acquisition Properly Life” shall mean the period from date of the acquisition, organization or creation of an item of Business Acquisition Property through the Closing Date for such Business Acquisition Property.
“Business Acquisition Property Return” means the EBITDA accruing to the Tenant or its affiliate from the Business Acquisition Property periodically over the Business Acquisition Property Life.
“Business Acquisition Term” means (a) if this Agreement remains in effect through the normal expiration of the Term, the last five (5) years of the Term (as the Term may be extended), or (b) if this Agreement terminates earlier than normal expiration of the Term, one (1) year after the date of such termination.
“Cash Flow for Annual Payment” shall mean, with respect to the financial results of Tenant during any Fiscal Year, EBITDA, with the following adjustments: (a) Tenant’s share of general and administrative expenses of Intrawest Corporation shall not be taken into account (but the allocations of shared costs specified in Section 5.5 shall be taken into account); (b) fines and penalties imposed by a governmental entity shall not be taken into account; (c) attorneys’ fees and related costs incurred in connection with any claim made or suit brought by Tenant against Landlord or the City shall not be taken into account unless Tenant is the prevailing party, in which case such fees and costs shall be taken into account by reducing Cash Flow for Annual Payment; (d) the Required Interest Payments for such Fiscal Year shall be taken into account by reducing Cash Flow for Annual Payment; (e) the Required Annual Capital Maintenance Amount for such Fiscal Year shall be taken into account by reducing Cash Flow for Annual Payment; (f) any expenditure, whether ordinary (i.e., non-capital) or capital, associated with any liability whatsoever, which (i) arises out of, or in any way relates to, ownership, operation, management or maintenance of Winter Park Resort, (ii) arose prior to the Effective Date, and (iii) was not reflected and set forth specifically on the schedules attached to this Agreement as Exhibits R or Y as a Long-Term or Current Liability, shall be taken into account by reducing Cash Flow for Annual Payment either by taking such expense into account in calculating EBITDA or otherwise by making an adjustment after the calculation of EBITDA.
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“City” shall mean THE CITY AND COUNTY OF DENVER, a Colorado municipal corporation.
“Clinton Ditch” means The Clinton Ditch & Reservoir Company, a Colorado non-profit ditch and reservoir company.
“Closing” shall have the meaning set forth in Section 17.2(b) of this Agreement.
“Closing Date” shall have the meaning set forth in Section 17.2(b) of this Agreement.
“Competitive Rentals” shall mean the rental of sports equipment by Tenant and its affiliates (a) within Clear Creek County five (5) miles on each side of US Highway 40 from Interstate 70 to the Grand County line, excluding the rental operations of Breeze Ski Rental/MAX Snowboards located along Interstate 70 at 999 County Road, Dumont, Colorado, or (b) within Grand County, if such sports equipment is usable at the Winter Park Resort, provided, however, that not included are such rentals obviously intended for use at another resort property or facility (such as the rental of golf clubs at a golf course) or otherwise to the extent Tenant is able clearly to establish that such rentals will be used at someplace other than Winter Park Resort (such as the rental of mountain bikes or backcountry ski equipment for a tour conducted someplace other than at Winter Park Resort).
“Current Assets” shall mean any and all assets of Landlord that would be treated as current assets under GAAP.
“Current Capital Maintenance Items” shall mean those items of scheduled capital maintenance described on Exhibit B attached hereto.
“Current Liabilities” shall mean any and all liabilities of Landlord that would be treated as current liabilities under GAAP.
“Designated Non-Tenant Operator” shall mean any Non-Tenant Operator designated in good faith by Tenant as one for whom it is not economically feasible to pay rental rates based on an amount equal to three percent (3%) of such Designated Non-Tenant Operator’s contribution to Gross Revenues, but including only Non-Tenant Operators which satisfy the following conditions during the Fiscal Year immediately preceding the Fiscal Year of such designation: (a) the portion of Gross Revenues attributable to any such Non-Tenant Operator’s Resort Operations shall not have accounted for more than one percent (I %) of all Gross Revenues, and (b) the portion of Gross Revenues attributable to all such Non-Tenant Operators so designated shall not, in the aggregate, have accounted for more than five percent (5%) of all Gross Revenue. With respect to the first Fiscal Year during which any Designated Non-Tenant Operator begins its Resort Operations, the portion of Gross Revenues attributable to such Designated Non-Tenant Operator shall be calculated based on Tenant’s reasonable projections.
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“EBITDA” shall mean Tenant’s earnings from Gross Revenues, as determined under GAAP, before interest, taxes, depreciation and amortization, derived solely from Resort Operations or from activities conducted on the Real Property or the National Forest System Lands.
“Effective Date” means the first date on which all Parties have executed this Agreement and all conditions set forth in Section 12.1 of this Agreement have been satisfied or waived by the Party benefiting from such condition.
“Employee Benefit Plans” means the following plans which currently exist or for which continuing liabilities exist:
(a) All “employee pension benefit plans,” as defined in section 3(2) of ERISA, including retirement, pension and profit-sharing plans, which have been maintained or contributed to by Landlord or its affiliates during any of the last five (5) years, a list of which is attached hereto as Exhibit C;
(b) All “employee welfare benefit plans,” as defined in section 3(1) of ERISA, which have been maintained or contributed to by Landlord or its affiliates, including group insurance (including retiree life and medical insurance) and other employee benefit plans or arrangements and related trust agreements, a list of which is attached hereto as Exhibit D.
(c) All additional employee plans or policies which may or may not be ERISA plans, which have been maintained or contributed to by Landlord or its affiliates, including bonus incentive, deferred compensation, stock purchase, stock option, and stock bonus plans, and other employee benefit plans or arrangements and related trust agreements and individual option agreements, a list of which is attached hereto as Exhibit E.
“Encumbrance” means any item which encumbers or burdens the Leased Assets, including any security interest, restriction, covenant, reservation, right, easement, lease, other title or interest retention arrangement, and any other encumbrance of any nature whatsoever.
“Environmental, Health and Safety Requirements” shall mean all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as now or hereafter in effect.
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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, together with all administrative regulations, rules and rulings issued thereunder.
“Exercise Notice” shall have the meaning set forth in Section 17.2(b) of this Agreement.
“First Loan Documents” shall mean the Agreed-Upon Indebtedness Documents to be executed and delivered by Landlord in favor of the initial Agreed-Upon Indebtedness Lender.
“Fiscal Year” shall mean any period during the Term commencing on July 1 and ending on the next ensuing June 30, except for the first Fiscal Year, which shall mean the period commencing on the Effective Date and ending on the next ensuing June 30.
“Forest Service Master Plan” shall mean the master plan of development and operations required by the terms of the Forest Service Permits as approved by the U.S. Department of Agriculture, Forest Service.
“Forest Service Permits” shall mean the permits issued from time to time by the U.S. Department of Agriculture, Forest Service with respect to the right to operate certain of the Leased Assets on those parcels of real property located in Grand County, Colorado, a copy of those permits existing as of the date of this Agreement being attached hereto as Exhibit F.
“GAAP” means those generally accepted accounting principles set forth in Statements of the Financial Accounting Standards Board and in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants or which have other substantial authoritative support in the United States and are applicable in the circumstances, as applied on a consistent basis.
“Governmental Authority” shall mean any nation or government, any state or political subdivision thereof, any municipal corporation, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, excluding the City or Landlord as agent for the City.
“Gross Revenue” shall mean the aggregate of all fees, receipts, revenue and income of every kind and nature derived directly or indirectly from all sources arising from Resort Operations or from activities conducted on the Real Property or the National Forest System Lands, before deducting any cost or expense, as determined in accordance with GAAP, except as expressly provided below. Gross Revenue shall include, without limitation, to the extent related to Resort Operations or from activities conducted on the Real Property or the National Forest System Lands, proceeds of business interruption and business loss insurance actually paid to
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Tenant, deposits not refunded or otherwise retained by Tenant, and amounts recovered in legal proceedings or settlements thereof. Gross Revenue shall also include fees and charges for central reservations booking services (without regard to where central reservations are conducted and whether it is central reservations for activities or housing, but only to the extent relating to activities or accommodations in Grand County, Colorado, excluding activities or accommodations conducted or owned by Tenant or an affiliate of Tenant that are located outside the Winter Park Resort and outside the Purchased Developable Land), all sales of Lift tickets for use at the Winter Park Resort, and Competitive Rentals. Gross Revenue shall not include (a) any fees or revenues (including, without limitation, real estate sales deposits) derived from the development or operation by Intrawest Development Corp. or a third party of buildings or portions of buildings or improvements developed on Purchased Developable Land; (b) applicable excise, sales, and use taxes, or any other governmental taxes or charges collected from third parties; (c) proceeds from financing or refinancing; (d) insurance proceeds received from any insurance policies pertaining to and invested in the repair or replacement of physical loss or damage to the Real Property or the Tangible Personal Property and Improvements; (e) any rents or revenues derived from the providing of housing for employees; or (f) income from property management or rental management businesses conducted on property other than the Real Property and National Forest System Lands. Any contrary or inconsistent provision of this Lease notwithstanding, if any Resort Operations are conducted by Designated Non-Tenant Operators, the portion of Gross Revenues attributable to any such Resort Operations and each such Designated Non-Tenant Operator shall include only the actual amounts paid by such Designated Non-Tenant Operator to Tenant.
“Improvements” shall mean any and all improvements to real property now or hereafter (a) owned or leased by Landlord, whether or not such improvements are located on land owned or leased by Landlord and (b) used in Resort Operations.
“Initial Term” shall mean the period from the Effective Date through June 30, 2052 or any earlier date upon which this Agreement may terminate as provided by this Agreement.
“Intangible Personal Property” shall mean all intangible personal property as defined under Colorado law now or hereafter owned by the Landlord and used or useful in connection with the ownership, operation or maintenance of Resort Operations, excluding Intellectual Property and excluding real property options to purchase, rights of first refusal, rights of first offer, or other acquisition rights for real property personal to the Landlord. The term Intangible Personal Property shall not include the Agency Agreement and any other contract now or hereafter existing for the operation of Landlord as contrasted to operation of the Winter Park Resort. .
“Intellectual Property” shall mean all of the trademarks, service marks, trade names, patents, licenses, permits and copyrights now or hereafter owned or licensed by Landlord.
“Interest Rate” shall mean one thousand (1,000) basis points in excess of LIBOR (rounded upward, if necessary, to the nearest one-sixteenth of one percent (1/16 of 1%)). “LIBOR” means the rate of interest per annum for deposits in U.S. dollars for a period of thirty (30) days which appears on Telerate Page 3750 as of 11:00 a.m., London time, on the date that is two (2) business days prior to the date of calculation. If for any reason no applicable rate(s) are available on Telerate Page 3750 for a particular date, LIBOR will be determined in accordance with the definition of “USD-LIBOR-Reference Banks” contained in the 1991 I SDA Definitions published by the International Swaps and Derivatives Association, Inc., or any successor or update to such publication.
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“Intrawest Corporation” shall mean Intrawest Corporation, a corporation continued pursuant to the Canadian Business Corporations Act, which is the ultimate parent entity of Intrawest Holdings.
“Intrawest Development Corp.” shall mean Intrawest/Winter Park Development Corporation, a Delaware corporation and an affiliate of Tenant.
“Intrawest Holdings” shall mean Intrawest/Winter Park Holdings Corporation, a Delaware corporation, which is the direct parent entity of both Tenant and Intrawest Development Corp.
“Investment Return Deficiency” means the difference, compounded over the Business Acquisition Property Life by the Return on Equity, between the present values, as of the beginning of the Business Acquisition Property Life, discounted at the Return on Equity, of (a) the Business Acquisition Property Investment and (b) the Business Acquisition Property Return, for each Fiscal Year of the Business Acquisition Property Life. For greater certainty, the present value shall be computed assuming the Business Acquisition Property Return occurs at the end of each Fiscal Year.
“Landlord’ shall mean WINTER PARK RECREATIONAL ASSOCIATION, a Colorado non-profit corporation, and its successors and assigns.
“Leased Assets” shall mean all of the Real Property, Improvements, Tangible Personal Property, Intangible Personal Property and Intellectual Property now or hereafter owned, leased, or licensed by Landlord and used or useful in the operation of the Winter Park Resort, excluding only cash paid or owing by Tenant to Landlord, proceeds from condemnation or conveyance of title in lieu of condemnation (subject to Sections 14.2 and 14,5 of this Agreement) and the Mineral Rights.
“Leasehold Tide Policy” shall mean the ALTA Extended Coverage Leasehold Policy (with standard printed exceptions in such form deleted and with such endorsements as Tenant may reasonably request) insuring Tenant’s leasehold interest in the Real Property pursuant to the terms of tins Agreement.
“Lift” shall mean a device which alone or in combination with other devices is primarily designed to move participants in on-mountain sporting activities from one elevation to another, and may include without limitations tows, chairlifts, gondolas and cable or cog railways.
“Material Adverse Effect” shall mean (a) a material adverse effect on the business, condition (financial or otherwise), prospects, operations, performance or properties of a Party at the Winter Park Resort, or (b) a material impairment of the ability of a Party to perform its obligations under or to remain in compliance with this Agreement.
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“Mineral Rights” means the following if owned by Landlord: all oil and oil rights; gas and gas rights; coal and other solid fuel minerals; metallic minerals and ores thereof, of whatever grade; and all other minerals and mineral rights on, under or appurtenant to the Real Property.
“Mountain Base Area Cafeteria” shall mean a facility (a) the principal function of which is the efficient and convenient provision of food and beverages to guests of Winter Park Resort who are participating in on-mountain sports activities as an integral part of the Resort Operations and (b) which serves a variety of packaged, prepared and/or convenient food and beverages under circumstances where the guests serve themselves or are served at a counter and, in either case, take their food and beverages to a common seating area located within, or immediately outside, the same facility. For example, the principal food and beverage facility operated in the building commonly known as West Portal Station during the 2001-2002 ski season would constitute a Mountain Base Area Cafeteria.
“National Forest System Lands” means those parcels of real property owned by the United States and operated or used pursuant to the Forest Service Permits. Real property within the boundaries of the Forest Service Permits acquired by Tenant from the United States as permitted by this Agreement shall upon such acquisition cease to be included with the term National Forest System Lands.
“Non-Tenant Operator” shall mean any Person conducting Resort Operations other than Tenant.
“Option Agreement” shall mean that certain option agreement of even date herewith whereby Landlord and Intrawest Development Corp. have agreed that Intrawest Development Corp. shall have the option to purchase certain parcels of the Real Property upon the terms and conditions contained therein.
“PPI Escalation” means a fraction, the numerator of which is the PPI Index published most recently as of the date when any escalation is being calculated and the denominator of which is the PPI Index published most recently as of the Effective Date.
“PPI Index” means the Producers Price Index for Finished Goods as published by the U.S. Department of Labor Bureau of Labor Statistics.
“Parent Guaranty” means that certain guaranty in the form of Exhibit H attached hereto, pursuant to which Intrawest Corporation has guaranteed certain of the obligations of Tenant under this Agreement, of Intrawest Holdings under the Additional Consideration Agreement, and of Intrawest Development Corp. under the Option Agreement.
“Parties” shall mean Landlord and Tenant.
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“Permitted Equipment Financing” shall mean with respect to certain specific items of Tangible Personal Property, financing (including leases that would be characterized as capital leases but not those that would be characterized as operating leases) to be incurred by Tenant that may not exceed in the aggregate a maximum amount of $1,000,000 multiplied by the PPI Escalation at any given time, as more particularly described in Section 10.8 of this Agreement.
‘ “Person” shall mean any natural person, Governmental Authority, corporation, partnership, limited liability company, joint venture, association, trust or other entity of any kind.
“Purchased Developable Land” shall mean those parcels of Real Property, if any, that are acquired by Intrawest Development Corp., or its affiliate or a successor permitted by the terms of the Option Agreement, from time to time pursuant to the Option Agreement, excluding real property repurchased by Landlord or (b) real property conveyed to Landlord and leased back to Tenant for the conduct of Resort Operations.
“Real Property” means all real property as defined under Colorado law that is owned or leased by Landlord from time to time, including without limitation that certain property described on Exhibits I and S attached hereto, and includes all Improvements, easements, licenses, rights-of-way and other privileges, appurtenances, hereditaments and rights (including, without limitation, any and all development or zoning rights) belonging and inuring to the benefit of such real property or otherwise providing rights of use to the Landlord, but shall not include (unless expressly provided to the contrary): (a) Mineral Rights or Water Rights, (b) Purchased Developable Land, (c) the National Forest System Lands, or (d) options to purchase, rights of first refusal, rights of first offer, or other acquisition rights personal to the Landlord.
“Reimbursable Transaction Costs” shall mean (a) One Hundred Fifty Thousand Dollars ($150,000) for Landlord’s future operating expenses, and (b) One Million One Hundred Thousand Dollars ($1,100,000) for the actual legal fees and financial consultant fees accrued or paid by the City or the Landlord (limited, in the case of the Landlord, to fees accrued or paid from and after July 6, 2002) in connection with the requests for qualification and proposal leading to, and the negotiation and delivery of, this Agreement, the Option Agreement, and the other instruments and agreements relating thereto and in connection with the consummation thereof.
“Rental Payments” shall mean all cash obligations from Tenant to Landlord pursuant to this Agreement.
“Required Annual Capital Maintenance Amount” shall mean an amount equal to six percent (6%) of Gross Revenue during any Fiscal Year.
“Required Interest Payments” shall mean the interest payments required to be paid on the Agreed-Upon Indebtedness during any Fiscal Year pursuant to the terms and conditions of the Agreed-Upon Indebtedness Documents.
“Required Quarterly Payment” shall mean a regular installment in the amount of $500,000 due and payable in advance each July 1, October 1, January 1 and April 1, commencing on October 1, 2002. Such amounts are to be paid by Intrawest Holdings pursuant to the Additional Consideration Agreement for the period beginning October 1, 2002, and ending September 30, 2012, and thereafter such amounts are to be paid by Tenant as Rental Payments through the remainder of the Term.
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“Resort Operations” shall mean (a) all activities and operations of Tenant or any lessee, sublessee, licensee, franchisee or other user of every kind and nature for, relating to or in the support of the on-mountain activities of snowsliding, mountain biking and mountain hiking or other on-mountain recreational activities conducted or required by this Agreement to be conducted on any or all of the Real Property and the National Forest System Lands; (b) sales of Lift tickets; (c) Competitive Rentals; and (d) central reservations (without regard to where central reservations are conducted and whether it is central reservations for activities or housing, but only to the extent relating to activities or accommodations in Grand County, Colorado excluding any activities or accommodations that are conducted or owned by Tenant or an affiliate of Tenant that are located outside the Winter Park Resort and outside the Purchased Developable Land).
“Return on Equity” shall mean the geometric average rate of return (expressed as a percentage) earned by Intrawest Corporation (or its permitted successor and assign) on its collective corporate equity over the Business Acquisition Property Life.
“Revenue-Based Annual Payment” shall mean a Rental Payment, the amount of which is determined as a percentage of Gross Revenue as more particularly described in Section 5.1(d).
“Tangible Personal Property” shall mean all motor vehicles, machines, machinery, Lifts, tows, snow grooming equipment, snow making equipment, component parts thereof, furniture, fixtures, other equipment, inventory, and other items of tangible personal property under Colorado law now or hereafter owned by the Landlord and used or useful in connection with the ownership, operation or maintenance of Resort Operations, including, without limitation, the tangible personal property described on Exhibit J attached hereto.
“Taxes” shall mean all taxes, fees and assessments due, imposed, assessed or levied against any Leased Assets (or the purchase, ownership, delivery, leasing, possession, use or operation thereof) by any federal, state or local government or taxing authority, including, without limitation, all license and registration fees, and all sales, use, personal property, real property, possessory interest, excise, gross receipts, value added, franchise, stamp or other taxes, imposts, duties and charges, together with any penalties, fines or interest thereon in any way relating thereto. Notwithstanding the foregoing, Taxes shall not mean any obligations imposed by the United States of America or any state thereof or political subdivision thereof which are on, or measured by, the income of Landlord.
“Tenant” shall mean INTRAWEST/WINTER PARK OPERATIONS CORPORATION, a Delaware corporation, and its permitted successors and assigns,
“Term” shall mean the Initial Term, as extended and as it may be terminated early, pursuant to the provisions of this Agreement.
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“Third Party Lender” means an Agreed-Upon Indebtedness Lender other than an Affiliate Lender.
“Title Company” shall mean Grand County Title and Escrow Company, Inc.
“Transition Costs” shall mean certain costs and expenses that have been or are anticipated to be incurred by Tenant in connection with the initial transition of the control and operation of the Winter Park Resort from Landlord to Tenant, including, without limitation, those costs identified on Exhibit K attached hereto.
“Water Rights” means, to the extent the same are owned or leased by Landlord or are held by it under an exchange agreement: all water and water rights, water contracts and agreements, ditches and ditch rights, water and ditch company stock (including Clinton Ditch rights), wells and well permits, springs, rights in canals and laterals, aqueducts, reservoirs, appropriations and franchises upon, leading to, connected with or had and enjoyed in connection with the Real Property or the National Forest System Lands, and including all rights in the Diamond Bar Tee No. 2 Ditch. The Water Rights include without limitation those rights described on Exhibit G attached as a part hereof.
“Winter Park Resort” means the recreational resort and its related activities carried on within the Real Property and the National Forest System Lands known, as of the date hereof, as Winter Park, Mary Jane and Vasquez.
ARTICLE II
LEASED ASSETS
2.1 Leases and Subleases. Subject to the terms and conditions set forth in this Agreement, commencing on the Effective Date, Landlord hereby leases or subleases to Tenant, as applicable, and Tenant hereby leases or subleases from Landlord, as applicable, the following Leased Assets:
(a) The Real Property;
(b) The Water Rights; and
(c) The Tangible Personal Property.
The Mineral Rights are specifically excluded from the Leased Assets, provided, however, that Landlord shall not exploit the same without obtaining the prior written consent of Tenant, and Tenant’s consent shall not be unreasonably withheld taking into account the facts and circumstances, including without limitation present or future potential interference with Resort Operations and development of Purchased Developable Land and the aesthetic effect of such exploitation. Tenant shall have the right to excavate, remove, use, dispose of or sell any sand and gravel within the Real Property as Tenant deems appropriate for development of the Real Property or the Purchased Developable Land, and Landlord shall, if requested to do so by Tenant, execute any documentation or agreements reasonably required by Tenant evidencing such rights. The amendment, modification or termination of any or all licenses and permits relating to Water Rights shall require the prior consent or approval of Landlord (which Landlord shall not unreasonably withhold) unless such action has obtained the prior consent or approval of the Board of Water Commissioners for the City.
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2.2 Assignments and Licenses. Concurrently herewith, Landlord is delivering to Tenant an assignment and assumption agreement in the form attached hereto as Exhibit L, pursuant to which Landlord is assigning to Tenant all Intangible Personal Property concurrent with the Term of this Agreement. Throughout the Term, Tenant shall have the right to amend, modify and terminate Intangible Personal Property rights in connection with Resort Operations without the consent or approval of Landlord, provided, however, that the consent and approval of Landlord (which Landlord may grant or withhold in its sole discretion) shall be required for any amendment, modification or termination that may have a material adverse effect on the interest of Landlord upon termination of this Lease, whether upon its normal expiration date or any earlier termination date that may occur with or without default. Also concurrently herewith, Landlord is delivering to Tenant a licensing agreement in the form attached hereto as Exhibit M, pursuant to which Landlord is licensing the Intellectual Property to Tenant concurrent with the Term of this Agreement. Throughout the Term, Tenant shall have the right to amend, modify and terminate the Intellectual Property so licensed in connection with Resort Operations without the consent or approval of Landlord, provided, however, that the consent and approval of Landlord (which Landlord may grant or withhold in its sole discretion) shall be required for any amendment, modification or termination that may have a material adverse effect on the interest of Landlord upon termination of this Lease, whether upon its normal expiration date or any earlier termination date that may occur with or without default. Landlord shall grant to third parties easements and licenses that are reasonable in their terms and scope to the extent requested by Tenant to protect or enhance Resort Operations.
2.3 Assignment of Warranties. Landlord agrees that Tenant may have the benefit as a third party beneficiary of any warranties or other rights to which Landlord is entitled from any third party with respect to the Leased Assets, and Landlord hereby assigns (reserving rights for itself upon expiration or earlier termination of the Lease) such benefits to Tenant to the extent the same may be assignable by the terms of the agreements with such third party and as permitted under law. To the extent such warranties are not assignable, Landlord shall enforce its rights under such warranties upon the request and at the expense of Tenant, Tenant agrees that Landlord may have the benefit as a third party beneficiary of any warranties or other rights to which Tenant is entitled from any third party with respect to the Leased Assets, and Tenant hereby assigns (reserving rights for itself upon expiration or earlier termination of the Lease) such benefits to Landlord to the extent the same may be assignable by the terms of the agreements with such third party and as permitted under law. Tenant shall use good faith efforts to add language to its future contracts for the design, construction or acquisition of Leased Assets to the effect that “Winter Park Recreational Association is a third party beneficiary hereunder for the purposes of enforcing warranties under this contract.
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2.4 Winter Park Restaurant Company. If requested to do so by Tenant, Landlord shall lease or cause Winter Park Restaurant Company to sublease to Tenant the real property, personal property and intangible personal property, if any, of the Winter Park Restaurant Company.
2.5 Additional Leased Assets. In connection with the operation of the Winter Park Resort, Tenant shall have the right to acquire, construct, modify and replace Additional Leased Assets to be used in Resort Operations. Except to the extent (a) Tenant acquires or constructs or any Person providing financing retains ownership to such Additional Leased Assets, and such Additional Leased Assets are security for Permitted Equipment Financing, or (b) Tenant leases assets (other than Lifts and other related equipment such as motors, chairs and cable) under a true operating lease under GAAP, these Additional Leased Assets shall at all times thereafter, including after the termination of this Agreement, be the property of Landlord, and Tenant hereby conveys all such Additional Leased Assets to Landlord, and Landlord hereby leases all Additional Leased Assets to Tenant pursuant to the terms and conditions contained in this Agreement. Landlord and Tenant agree to take whatever additional actions are reasonably required to cause such Additional Leased Assets to be conveyed by Tenant to Landlord, and leased back by Landlord to Tenant, in order to more effectively vest in Landlord title to the Additional Leased Assets and cause the Additional Leased Assets to be leased back to Tenant in accordance with this Agreement. To the extent that any National Forest System Lands are acquired by Tenant and are used in connection with Resort Operations, Tenant shall convey such real property to Landlord, and Landlord shall lease such real property back to Tenant as Additional Leased Assets under this Agreement. To the extent that Tenant may in the future propose to acquire National Forest System Lands not for use in Resort Operations, such acquisition is conclusively presumed to modify the boundaries covered by the Forest Service Permits and is subject to the prior approval of Landlord, which it may grant, withhold or condition in its sole and absolute discretion.
2.6 Ownership of Leased Assets.
(a) True Lease. All Leased Assets are, and shall remain at all times including after the termination of this Agreement, the property of Landlord, and Tenant’s interest therein is that of a tenant under a lease, provided, however, that during the Term Tenant shall control the Leased Assets and the operation of the Winter Park Resort consistent with the provisions of this Lease.
(b) Permitted Equipment Financing and Leases. Notwithstanding anything to the contrary contained herein, Tenant shall have the right to continue to own (or permit a financing entity to own) or to lease certain items of Tangible Personal Property to the extent and for a period of time as provided in Section 2.5 and Article X.
(c) Tenant’s Mortgages, Encumbrances and Disposal. Except as otherwise expressly provided in this Agreement and the Option Agreement, Tenant agrees that, without the prior written consent of Landlord, it will not pledge, loan or mortgage any interest of the Landlord in the Leased Assets, nor attempt in any manner to dispose of the Leased Assets (except that Tenant shall have the authority to sell, replace or otherwise dispose of any Tangible Personal Property, and shall remove the same from National Forest System Lands if located thereon, free and clear of any ownership interest of Landlord, in the ordinary course of business), nor to suffer any Encumbrances to be incurred or levied on any interest of the Landlord in the Leased Assets (other than leases, subleases, concessions or licenses for the benefit of the Resort Operations entered into in the ordinary course of business).
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(d) Landlord’s Mortgages, Encumbrances and Disposal. Except with respect to the Agreed-Upon Indebtedness, when Landlord is Winter Park Recreational Association, the City, an agency or an agent of the City or another entity having at least one director, trustee or manager appointed by the City or an agency thereof, Landlord will not, without Tenant’s prior written consent, which Tenant may grant or withhold in its sole discretion, pledge, mortgage, or grant a deed of trust or security interest or other lien with respect to, any interest of Landlord in the Leased Assets. Any sale, transfer, exchange, lease or other disposition by Landlord of its interest in the Leased Assets at any time shall be made expressly subject to this Lease and the rights of Tenant hereunder, shall be made expressly subject to the terms of the Agreed-Upon Indebtedness, and shall not cause a debt service payment obligation of Tenant on Agreed-Upon Indebtedness. Until the 20th anniversary of the Effective Date, any such sale, transfer, exchange, lease or other disposition by Landlord of its interest in the Leased Assets shall be subject to Tenant’s right of first refusal described in Section 2.6(e). From and after the twentieth (20th) anniversary of the Effective Date and continuing for the balance of the Term, any sale, transfer, exchange, lease or other disposition by Landlord of its interest in the Leased Assets shall be only made in a public process in which Tenant has the right to participate on terms and conditions that are not less favorable to Tenant than to any other participant in such process.
(e) Right of First Refusal. Commencing on the Effective Date and continuing until the twentieth (20th) anniversary of the Effective Date, Landlord may sell, transfer, exchange, lease or otherwise dispose of any or all of the Leased Assets, but Tenant shall have a right of first refusal with respect to any offer or agreement to purchase such Leased Assets that Landlord wishes to consummate on the following terms and conditions:
(i) Any such proposed sale, transfer, exchange, lease or other disposition by Landlord shall be expressly subject to this Lease and the rights of Tenant hereunder, and shall not cause a debt service payment obligation by Tenant on the Agreed-Upon Indebtedness.
(ii) Tenant shall have the right to purchase such Leased Assets at the same purchase price and on the same terms and conditions as the agreement with the offeror (the “Offer”).
(iii) Landlord shall, within five (5) business days of receipt of an Offer, deliver a copy of the Offer to Tenant. Tenant shall, within fifteen (15) business days of receipt of the Offer (the “Offer Period”), give written notice to Landlord as to whether or not Tenant elects to purchase the Leased Assets. If the Offer includes consideration other than cash, Tenant shall have the right to substitute the equivalent thereof in cash.
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(iv) The closing of the purchase shall be held at a date agreed to by the Landlord and Tenant, but not later than thirty (30) days after the closing date specified in the Offer. If Tenant does not notify Landlord of its election to purchase such Leased Assets within the Offer Period, or if Tenant does not close the purchase in accordance with this section, Landlord may close the transfer to the proposed transferee on the terms and conditions specified in the Offer, within the later to occur of (A) the period of time specified in the Offer or (B) sixty (60) days after the end of the Offer Period or after such failure to close, as applicable, subject to compliance with any other applicable provisions of this section. If such transfer is not made within such period, the provisions of this section shall again apply to any future agreement to transfer any or all of the Leased Assets.
2.7 Option Agreement Parcels. As partial consideration for Tenant entering into this Agreement with Landlord, Landlord has entered into the Option Agreement. When title to a given parcel of the Real Property has been conveyed in the event Intrawest Development Corp. exercises its option to purchase such parcel pursuant to the Option Agreement, such parcel shall cease to be a Leased Asset, subject to any obligations of the acquiring entity to deliver back to Landlord any space for Resort Operations and any necessary easements, and subject also to Landlord’s right to repurchase if the acquiring entity fails to commence construction within a certain period of time, all as provided in this Agreement and the Option Agreement.
ARTICLE III
ASSETS AND LIABILITIES
3.1 Delivery of Current Assets. On the Effective Date, Landlord shall deliver to Tenant all Current Assets, including without limitation, all cash. Between the date of Tenant’s execution of this Lease and the Effective Date, Landlord shall not expend cash except in the ordinary course of its business or as reasonably necessary to enter into and conclude this Lease, the Option Agreement and related transactions (and such latter expenditures shall be credited towards Tenant’s payment of Reimbursable Transaction Costs).
3.2 Assumption of Liabilities. From and after the Effective Date and during the Term, Tenant hereby assumes and agrees to pay or perform when due all obligations of Landlord of every kind and nature arising out of, or in any way relating to, the Winter Park Resort, whether such obligations arose before or after the Effective Date, including without limitation, those arising in contract, tort, or under environmental laws or other regulatory programs, whether contingent or absolute, and whether known or unknown, except that Tenant does not assume the obligations of Landlord under the Agency Agreement or under this Agreement or any obligations of Landlord to the City or any of the City’s agencies, agents, employees or officials acting in such capacities, or any obligations or liabilities resulting or arising out of a breach or default by Landlord under this Agreement, the Option Agreement or any documents related to this Agreement or the Option Agreement.
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3.3 Employment of Employees. Tenant hereby agrees to employ at the Winter Park Resort all of the current permanent employees of Landlord as of the Effective Date and as disclosed to Tenant by Landlord in writing, provided, however, that such obligation shall not extend to the Landlord’s President and CEO, Vice President of Operations, Vice President of Administration, Vice President of Finance, Vice President of Marketing and Vice President and General Counsel (but as to such excluded employees, Tenant specifically assumes the obligations under existing severance policies and written employment contracts applicable to them as disclosed to Tenant by Landlord prior to the Effective Date). This employment obligation for employees not excluded in the preceding sentence is for the express benefit of Landlord with respect to its liabilities to its employees, does not limit the right of Tenant to terminate employees according to its normal policies mid practices, does not change the status of all such Winter Park Resort employees as employees “at will,” and is not for the benefit of the employees themselves, and they are not third party beneficiaries of this Section. This Section 3.3 does not constitute an employment contract for the benefit of such employees.
3.4 Employee Benefit Plans.
(a) Service Credit. Following the Effective Date, Tenant will provide former employees of Landlord who are hired by Tenant for the winter or summer season ending June 30, 2003, with credit under each of Tenant’s benefit plans for their service with Landlord prior to the Effective Date based upon the service credit the employees received under the corresponding Landlord’s Employee Benefit Plan. In the event the applicable Tenant’s benefit plan has a higher requirement for computing a participant’s service than the corresponding Landlord’s plan, the service credit provisions of the Landlord’s plan as disclosed to Tenant will be used in determining the prior service credit (i.e., an employee of Landlord who has a specific number of years of service credit under the terms of the applicable Landlord’s plan will be given credit for not less than that same number of years of service under the corresponding Tenant’s plan). Thereafter, the future service credit under the Tenant’s plans shall be computed under the terms of the applicable Tenant’s plan provisions. For purposes of this Section 3.4(a), Tenant’s benefit plans and policies are limited to health insurance, dental insurance, life insurance, voluntary group life insurance, accidental death & dismemberment insurance, long term disability, vacation, sick days, and 401(k) Retirement Plan.
(b) Pension Plan. Prior to and effective as of the Effective Date, Landlord will amend its pension plan to provide that all plan participants who are employed by Landlord as of the Effective Date or who accrued a Year of Service (as defined by such pension plan) with Landlord during the twelve-month period ending on May 31, 2002, are one hundred percent (100%) vested in their benefits accrued as of the Effective Date. On the Effective Date, all pension plan assets will be transferred by Landlord to Tenant, and Tenant will assume all obligations and liabilities of Landlord as the employer under the Landlord’s pension plan, including all plan funding obligations, and will indemnify Landlord from and against all liabilities and obligations with respect to the pension plan. Following the Effective Date, Tenant will have the right, in its discretion, to continue, freeze or terminate the pension plan, subject to compliance with all Applicable Laws.
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(c) 401(k) Plan. Prior to the Effective Date, Landlord will authorize the termination of its 401(k) plan in accordance with all Applicable Laws with such termination to be effective as of the day prior to the Effective Date and distributions to be completed as soon as administratively feasible thereafter. Tenant shall allow all participants in Landlord’s terminated 401(k) plan who are hired by the Tenant and who become participants in Tenant’s 401(k) Plan to rollover their assets to the extent such assets constitute an “eligible rollover distribution” within the meaning of Internal Revenue Code Section 402(f)(2)(A), including without limitation participant loans, into the 401(k) plan maintained by Tenant upon demonstration by Landlord reasonably satisfactory to Tenant that Landlord’s 401(k) plan was qualified pursuant to Sections 401(a) and 401(k) of the Internal Revenue Code. Tenant shall take all necessary steps relating to Tenant’s 40l(k) plan to ensure that such plan will accept participants’ rollover assets, including without limitation participant loans, in a manner which allows the rollover to be treated as an eligible rollover distribution. Landlord shall be obligated to fully terminate the Landlord’s 401(k) plan, obtain an IRS favorable determination letter on the terminated plan, and complete distributions to plan participants and beneficiaries.
(d) National Sports Center for the Disabled. Tenant will undertake to make its benefit plans available to the National Sports Center for the Disabled, Inc. (“NSCD”) for participation by NSCD as a participating employer as of the Effective Date. Tenant’s obligation to make such benefit plans available is conditional upon NSCD undertaking the actions required to adopt such benefit plans as a participating employer for its employees. For purposes of this paragraph and subject to the foregoing condition, the benefit plans which Tenant shall be obligated to make available to NSCD are limited to the following: 401(k) Retirement Plan, health insurance, dental insurance, life insurance, voluntary group life insurance, accidental death & dismemberment insurance, and long-term disability, provided, however, that Tenant may elect to make additional benefit plans available.
(e) SERP. As of the day prior to the Effective Date, the participants in the Landlord’s Supplemental Executive Retirement Plan (“SERP”) under the Employee Benefit Plans will be deemed fully vested in their accrued benefits, and the Landlord shall pay to participants other than the participant noted in a separate written disclosure previously delivered from Landlord to Tenant the accrued benefit of each participant to be calculated based upon his or her age as of the Effective Date and the difference between the SERP benefit accrued as of the Effective Date and the estimated Landlord’s pension plan benefit accrued as of the Effective Date (“Accrued SERP Benefits”). The payments to the participants will be made by Landlord as of the day prior to the Effective Date and will be subject to required tax withholding. Landlord represents and warrants that the Accrued SERP Benefits payable to the SERP participants as of August 1, 2002 are shown on Exhibit N attached hereto. As of the Effective Date, the Tenant will assume all obligations pursuant to the SERP with respect only to the participant identified in the above-referenced separate written disclosure and the Tenant will make the payments set forth in Exhibit N to such participant. The Landlord agrees to transfer to the Tenant on the Effective Date, the remaining assets of the rabbi trust in which the Landlord currently maintains assets for the benefit of SERP participants.
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(f) Health Insurance.
(i) As of the Effective Date, Tenant will provide health insurance coverage pursuant the terms of the Consolidated Omnibus Reconciliation Act (“COBRA”) for: (A) former Landlord’s employees who have elected COBRA coverage under the Landlord’s health insurance plan; (B) former Landlord’s employees who would be eligible to elect COBRA coverage under the Landlord’s health insurance plan if Landlord were to continue its existing health insurance plan; and (C) Landlord’s employees who are terminated by Landlord as of the Effective Date and who do not become employees of Tenant after the Effective Date.
(ii) As of the Effective Date, Tenant will assume all obligations to provide health insurance coverage as required under the Landlord’s contracts with retired employees listed in a separate written disclosure previously delivered by Landlord to Tenant. Tenant will provide the health coverage required by such contracts and will indemnify Landlord from and against all liabilities and obligations relating thereto.
(iii) From and after the Effective Date, Tenant will provide health insurance coverage under Tenant’s medical plan to Landlord’s retirees specified in a separate written disclosure previously delivered from Landlord to Tenant who have coverage under Landlord’s regular health insurance plan under the plan of insurance available to Tenant’s employees. These retirees will continue to be eligible for coverage under the Tenant’s health insurance plan until their coverage would have terminated under their current arrangements with Landlord, and the date of such termination is set forth in such separate disclosure.
(g) Deferred Compensation Arrangements. As of the Effective Date, the Tenant will assume all obligations pursuant to the Deferred Compensation Arrangements identified on Exhibit O and only for participants listed in a separate written disclosure previously delivered from Landlord to Tenant.
ARTICLE IV
TERM
4.1 Initial Term. The initial term of this Agreement shall be approximately fifty (50) years, commencing on the Effective Date and expiring on June 30, 2052 at 5 p.m. MDT, unless sooner terminated by law or pursuant to the terms and conditions of this Agreement.
4.2 Extension of Initial Term. Tenant shall have the option of extending the Term for up to two (2), ten (10) year extension terms, followed by one (1), six (6) year extension term (each, an “Extension Term”). Tenant shall be deemed to have exercised its option to extend this Agreement unless at least two (2) years prior to the end of the then current Term or any subsequent extension term, Tenant shall have notified Landlord in writing of its intention to terminate this Agreement at the conclusion of such Term.
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ARTICLE V
LEASE
PAYMENTS: OTHER PAYMENTS;
ALLOCATION OF CERTAIN EXPENSES
5.1 Rental and Other Payments. Tenant hereby covenants and agrees to pay to Landlord, as rent for the Leased Assets, all of the following Rental Payments and other payments:
(a) Initial Payment. On the Effective Date, Tenant shall pay an initial, one-time payment to Landlord equal to three million dollars ($3,000,000).
(b) Required Agreed-Upon Indebtedness Payments. On or before the date that any payment of principal or interest is required to be made pursuant to the terms-of the Agreed-Upon Indebtedness Documents, Tenant shall pay such amount to the Agreed-Upon Indebtedness Lender, provided, however, that any such payments of principal by Tenant shall not operate to reduce the maximum principal amount of the Agreed-Upon Indebtedness. In the event Tenant makes any such payment of principal, Tenant shall be an Agreed-Upon Indebtedness Lender to the extent of such payment in accordance with Section 10.7 of this Agreement.
(c) Additional Consideration Agreement. Tenant shall cause Intrawest Holdings to execute and deliver to Landlord on the Closing Date the Additional Consideration Agreement.
(d) Rental Payments. Subject to the provisions contained in Section 5.2(a), on or before July 1, October 1, January 1 and April 1 of each Fiscal Year during the Term beginning October 1,2012, Tenant shall pay to Landlord the Required Quarterly Payment. Commencing on September 30,2013, and continuing throughout the remainder of the Term, on or before September 30 of each Fiscal Year, Tenant shall pay to Landlord as additional Rental Payments for the Leased Assets the Revenue-Based Annual Payment in an amount equal to three percent (3.0%) of Gross Revenue in excess of thirty-three million dollars ($33,000,000) received during the immediately preceding Fiscal Year (beginning with the Fiscal Year ending June 30,2013), but in no event shall the Revenue-Based Annual Payment exceed the amount by which Cash Flow for Annual Payment for such immediately preceding Fiscal Year exceeded two million dollars ($2,000,000). Landlord and Tenant shall agree upon the manner in which each Required Quarterly Payment and each Revenue-Based Annual Payment shall be allocated as consideration for (i) the leasing of Real Property, (ii) the leasing of Tangible Personal Property, (iii) the assignment of Intangible Personal Property, and (iv) the licensing of Intellectual Property under this Agreement.
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(e) Example. The following calculations of the Required Quarterly Payments for a full Fiscal Year and the Revenue-Based Annual Payment on account of such Fiscal Year are provided by way of example and not by way of limitation:
Example 1 | Example 2 | |||||||||||
Assumed Gross Revenue for the Fiscal Year | $ | 83,000,000 | $ | 83,000,000 | ||||||||
Less Gross Revenue Threshold | (33,000,000 | ) | (33,000,000 | ) | ||||||||
Gross Revenue Included in Calculation | 50,000,000 | 50,000,000 | ||||||||||
Multiplied by 3% factor | x 3% | x 3% | ||||||||||
Maximum Revenue Based Annual Payment | 1,500,000 | 1,500,000 | ||||||||||
Required Aggregate Quarterly Payments made for such Fiscal Year | 2,000,000 | 2,000,000 | ||||||||||
(A) | Total Maximum Rent | 3,500,000 | 3,500,000 | |||||||||
(B) | Assumed Cash Flow for Annual Payment for the Fiscal Year | 5,000,000 | 1,900,000 | |||||||||
Total Rent Payments to Landlord for such Fiscal Year (lesser of line (A) or line (B)) | $ | 3,500,000 | $ | 1,900,000 |
5.2 Credit for Certain Required Quarterly Payments. The following subparagraphs (a) and (b) relate only to the periods of time for calculating whether there are applicable certain prepayments or credits, and are not intended to modify the periods of time when payments are made under the Additional Consideration Agreement or Section 5.1(d) above.
(a) Developable Land Prepayments. For the period beginning as of October 1,2002 and ending on June 30,2012, Intrawest Holdings is obligated to pay the Required Quarterly Payments under the Additional Consideration Agreement, on the condition that the amount by which the aggregate of the Required Quarterly Payments exceeds Cash Flow for Annual Payment of Tenant for a given Fiscal Year shall be considered a conditional prepayment and credited (at Intrawest Development Corp’s discretion) against Intrawest Development Corp’s obligation to make payments pursuant to and in accordance with the terms of the Option Agreement. The foregoing provision does not modify the requirement in the Additional Consideration Agreement that Intrawest Holdings also make a Required Quarterly Payment on July 1,2012.
(b) Credit for Future Required Quarterly Payments. The terms of this paragraph shall apply only for the period beginning as of July 1,2012 and continuing throughout the remainder of the Term. If, for any given Fiscal Year, the Required Quarterly Payments made exceed Cash Flow for Annual Payment, the amount of such excess shall be credited against and reduce the amount of Required Quarterly Payments required to be paid in the next succeeding Fiscal Year, such credit to be applied (and thus reducing) the succeeding Required Quarterly Payments until such excess has been exhausted.
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5.3 Capital Expenditures.
(a) Tenant shall make such capital expenditures with respect to the Leased Assets and shall create such Additional Leased Assets as it determines to be necessary and appropriate in its sole business judgment to satisfy the requirements set forth in this Agreement. In general, Tenant’s priorities in establishing its capital expenditure plan include, without limitation, maintaining the Leased Assets in a safe and useable condition with all preventative maintenance procedures performed and replacements made where necessary, addressing capacity issues, and using its resources to endeavor, in a manner consistent with sound business practices, to improve or at least maintain the competitive position of Winter Park Resort as a mountain area resort.
(b) During each Fiscal Year, Tenant shall reserve the Required Annual Capital Maintenance Amount from Gross Revenues, which shall be expended by Tenant from time to time as deemed necessary and appropriate in the sole business judgment of Tenant only to expenditures that are capitalized under GAAP to repair, upgrade, replace, substitute or otherwise maintain the then existing Leased Assets (including amounts allocated as contemplated by Section 5.5(d)). Nothing in this paragraph shall be construed to limit the amount that may be expended by Tenant for capital maintenance. In any Fiscal Year, if Tenant spends an amount in excess of the Required Annual Capital Maintenance Amount, such excess shall be credited towards the expenditure of the Required Annual Capital Maintenance Amount for the following Fiscal Year(s) (up to a maximum of five (5) Fiscal Years).
(c) Subject to Tenant obtaining all necessary approvals from the United States Forest Service, Tenant shall complete certain Current Capital Maintenance Items before December 1,2003, and Tenant shall complete Current Capital Maintenance Items at a cost of not less than eight million one hundred sixty-five thousand dollars ($8,165,000), not later than December 1,2004, and provide an itemization thereof to Landlord. During the period beginning on the Effective Date and ending on September 30, 2007, the total amount of capital expenditures completed or under binding contract for construction by Tenant at the Winter Park Resort for Resort Operations that support (with support including without limitation base area skier services but expressly not including general base area offices and administration, employee housing or skier parking) the on-mountain activities of snowsliding, mountain biking and mountain hiking or other on-mountain recreational activities, when added to the Current Capital Maintenance Items and the aggregate expenditures from the Required Annual Capital Maintenance Amount, shall not be less than an aggregate of twenty-one million eight hundred eighty thousand dollars ($21,880,000). If during the period beginning on the Effective Date and ending on September 30,2007, the cumulative amount of EBITDA is at least forty-seven million dollars ($47,000,000), then the total amount of capital expenditures completed or under binding contract for construction by Tenant at the Winter Park Resort for Resort Operations that support (with support including without limitation base area skier services but expressly not including general base area offices and administration, employee housing or skier parking) the on-mountain activities of snowsliding, mountain
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biking, mountain hiking or other on-mountain recreational activities, when added to the Current Capital Maintenance Items and the aggregate expenditures from the Required Annual Capital Maintenance Amount, for the period beginning on the Effective Date and ending on September 30, 2009 shall not be less than an aggregate of forty million dollars ($40,000,000). During the period beginning on the Effective Date and ending on September 30,2012, the total amount of capital expenditures completed or under binding contract for construction by Tenant at the Winter Park Resort for Resort Operations that support (with support including without limitation base area skier services but expressly not including general base area offices and administration, employee housing or skier parking) the on-mountain activities of snowsliding, mountain biking, mountain hiking or other on-mountain recreational activities, when added to the Current Capital Maintenance Items and the aggregate expenditures from the Required Annual Capital Maintenance Amount, shall not be less than an aggregate of fifty million dollars ($50,000,000). If Tenant is substantially impaired from completing these requirements due to a “Force Majeure Event” (as defined below), Tenant shall have an extension of time for such time as is necessary to mitigate the impairment, but in no event more than twelve (12) months.
(d) “Force Majeure Event” means labor disputes, fire, unusual delay in transportation, adverse weather conditions, utility shortages, the effects of laws and regulations, construction material shortages, acts of terrorism or war, unavoidable casualties, acts of government where the government, though purporting to act in the course of its ordinary and customary procedures, imposes unreasonable delays or requirements which are beyond its authority or otherwise substantially inconsistent with its ordinary and customary procedures, or other causes beyond the reasonable control of the Tenant which by the exercise of reasonable efforts the Tenant is unable to overcome, and which Tenant was not able with reasonable diligence to foresee or avoid. However, Force Majeure Events shall specifically exclude any financing incapabilities or burdens of the Tenant, or a mere failure of performance by any agent or contractor of the Tenant.
5.4 Payment of Reimbursable Transaction Costs. On the Effective Date, Tenant shall pay as directed by Landlord cash in the amount of the Reimbursable Transaction Costs, reduced by (a) Reimbursable Transaction Costs that have been paid after July 6, 2002 and prior to the Effective Date by Landlord and have had the effect of reducing Current Assets and (b) Reimbursable Transaction Costs that have been accrued after July 6,2002 but not yet paid by WPRA that have the effect of increasing Current Liabilities to be assumed by Tenant pursuant to Section 3.2 hereof. The amount of the Reimbursable Transaction Costs shall constitute a part of the Agreed-Upon Indebtedness, and to the extent that the amount so paid by Tenant is not replaced by loan proceeds from a third-party Agreed-Upon Indebtedness Lender, Tenant shall be treated as an Agreed-Upon Indebtedness Lender as to such amount.
5.5 Allocation of Certain Costs and Revenues.
(a) Landlord acknowledges that Tenant and its affiliates operate multiple resorts, and that as a result, Tenant and its affiliates from time to time share certain operational and overhead costs and expenses including, without limitation, reservation services, sales and marketing, shared employees, information technology support, training, recruitment, project management, purchasing and risk management, and that in the future additional types of operational and overhead costs and expenses may arise. Landlord further acknowledges that from time to time, Tenant and its affiliates derive revenue from shared participation in corporate sponsorship or similar programs.
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(b) For purposes of determining Gross Revenue, EBITDA, Cash Flow for Annual Payment, and other amounts derived from the financial performance of Tenant under this Agreement, Tenant and its affiliates will be allocated a portion of such revenues and shared costs and expenses. Tenant shall be permitted to include such allocated revenues, costs and expenses in the calculation of Gross Revenue, EBITDA, Cash Flow for Annual Payment, and other amounts derived from the financial performance of Tenant under this Agreement on the following conditions and principles: (i) that such allocations are at all times calculated in a manner that is fair and equitable to Landlord; (ii) that such or similar allocations are not made in an inconsistent manner elsewhere within Intrawest Corporation and its affiliated entities to the disadvantage of Landlord; and (iii) that the allocations of any such revenues, costs or expenses bear a fair relationship to the benefits derived by the Winter Park Resort from such revenues, costs or expenses.
(c) The Parties specifically agree that: (i) under current circumstances where Intrawest Corporation and its affiliated entities operate village-based ski resorts, allocations for costs incurred by the Enterprise Group (a group of senior management individuals within the Intrawest Corporation group of companies who work with resort operating managers to develop and execute the strategy for operating initiatives and to transfer best practices) may be based pro rata on skier visit days if that forms the basis for such allocations for internal business purposes among the other resorts owned by Intrawest Corporation or its affiliates; (ii) that allocations for costs incurred by the IT Group (a group of individuals and systems within the Intrawest Corporation group of companies that, among other things, improve communication and relationships with guests and enhance guest services and convenience through the application of information technology) may be based on a reasonable charge per hour if that forms the basis for such allocations for internal business purposes among the other resorts owned by Intrawest Corporation or its affiliates; (iii) that allocations between or among Winter Park Resort and one or more other resorts in Colorado with respect to a resource shared between them may be on an equal basis if their access to and benefit from such resource is approximately equal or may be based pro rata on a count of resort traffic (such as ski visit days in the case of a resource shared between Winter Park Resort and Copper Mountain); (iv) that trade and joint programs with third parties (such as co-marketing) shall be allocated a reasonable credit for the revenue value and shall be charged a reasonable amount for the cost; and (v) that the value of Lift tickets provided or sold at a discount to guests in a program of Tenant or its affiliates whose revenues are not included in Gross Revenue (such as Club Intrawest) shall be included in Gross Revenue at the regular or discounted (as applicable) third party price for a comparable ticket.
(d) In addition to the allocation of revenues and expenses as described in this Section, Tenant and its affiliates from time to time also share certain capital expenditures, including, without limitation uniform computer systems used by Tenant and its affiliates. To the extent that Tenant is allocated amounts pertaining to such capital expenditures, such allocations may be credited by Tenant against the Required Annual Capital Maintenance Amount for such Fiscal Year on the condition that such allocations are at all times calculated according to the conditions and principles set forth in subparagraph (b) above.
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5.6 Statement of Amounts Due. Concurrently with each payment required by Section 5.1(d), Tenant shall deliver to Landlord a written statement, signed by an officer of Tenant, showing the calculation of the amounts due pursuant to such Sections, and setting forth in reasonable detail the financial statement information supporting such calculations. Such statements shall include a description of the manner in which all allocated costs were allocated pursuant to Section 5.5 and setting forth in reasonable detail the information necessary to verify the allocations.
5.7 Guaranty by Intrawest Corporation. Pursuant to the terms and conditions of the Parent Guaranty, Intrawest Corporation has guaranteed Tenant’s obligations to make payments under this Article V, proven damages on default for accrued and accelerated rent, and Tenant’s indemnity obligations to Landlord, if any, for wrongful or negligent acts.
ARTICLE VI
PERFORMANCE OBLIGATIONS OF TENANT
6.1 General Principles.
(a) Tenant shall use its controlling interest in the Winter Park Resort to conduct the Resort Operations in accordance with high quality industry standards for a recreational mountain resort that plans to become a destination resort. Tenant intends to make a reasonable level of investment of resources in the Winter Park Resort to improve its current competitive position and reputation within the resort industry and the quality of its operating assets, subject to and without expanding the specific obligations of Tenant to invest capital set forth elsewhere in this Lease, and otherwise subject to prudent business-oriented policies of Intrawest Corporation. Tenant is committed to outreach to all qualified people and firms and anticipates using its human, intellectual and technological resources to endeavor, in a manner consistent with sound business practices, to improve Winter Park Resort by improving on-mountain services and in general improving the on-mountain experience for guests of Winter Park Resort. In addition, Tenant intends to attempt to broaden the appeal of the Winter Park Resort beyond the winter experience by creating activities and experiences for guests at more times of the year. Finally, it is Landlord’s and Tenant’s desire that Winter Park Resort be economically viable on a stand-alone basis upon the expiration of the Term.
(b) Intrawest Corporation is a leader in North America in the development and operation of village-based recreational resorts and, in particular, ski resorts. Tenant shall provide a quality experience to its guests and shall not discriminate in devoting resources and attention to Winter Park Resort relative to the other ski resorts controlled by Intrawest Corporation or its affiliates. Tenant shall devote to Winter Park Resort an appropriate share of its human, intellectual and technological resources, exercising sound business judgment and conforming to industry standards for high quality mountain resorts of a size and character comparable to Winter Park Resort, taking into consideration the needs and requirements of Winter Park Resort as its size and character develop and evolve over the Term.
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(c) Tenant shall continue to operate, maintain and promote the Winter Park Resort as a quality resort experience both for day and for overnight guests. Except as otherwise prohibited because of a Force Majeure Event, and subject to snow and weather conditions, Tenant shall conduct the Resort Operations for skiing and snowboarding daily during the periods from Thanksgiving Day through Easter Day, and for summer activities from July 4th weekend through Labor Day weekend.
(d) Tenant or any lessee, sublessee, licensee, franchisee or other user of or through Tenant shall conduct the following activities and functions as seasonally appropriate solely on the Real Property and the National Forest System Lands: (i) Lifts, (ii) trails that are operated for a fee and that are used in connection with on-mountain sports activities such as snowsliding, mountain-biking and mountain-hiking, (iii) snowsliding schools, (iv) day-skier parking, (v) ski patrol, (vi) children’s day care, (vii) public lockers for day skiers, (viii) Mountain Base Area Cafeterias, and (ix) on-mountain maintenance facilities. Tenant or any lessee, sublessee, licensee, franchisee or other user of or through Tenant shall conduct the following activities and functions as seasonally appropriate on the Real Property and the National Forest System Lands to the extent conducted by Landlord on the Effective Date: (i) first aid, (ii) mountain sports equipment rentals, and (iii) retail sales of athletic equipment, apparel and accessories. Tenant may conduct any other commercial, residential or recreational activities on the Real Property and the National Forest System Lands consistent with this Agreement and the Forest Service Permits.
(e) Tenant shall not conduct its operations at the Winter Park Resort in a manner that would involve any illegal purposes or would constitute waste or a nuisance or would be likely to materially impair the value of the Leased Assets.
(f) Subject to the provisions of this Agreement, Tenant shall at all times hold open its facilities and provide service to all members of the public who shall conform to and abide by reasonable rules and regulations adopted by Tenant applicable to all users in compliance with all Applicable Laws prohibiting discrimination.
(g) Tenant shall use commercially reasonable efforts to ensure that the level of service, staffing and standards of hospitality at Winter Park Resort are comparable to those of other resorts of a similar size and character (as the size and character of Winter Park Resort develop and evolve over the Term), which reasonable efforts shall include continuing training and development of employees. The management, maintenance and operation of the Winter Park Resort and all services and facilities therein at all times during the Term shall be under the supervision and direction of an active, qualified, competent and experienced on-site manager subject at all times to the direction and control of Tenant.
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(h) Tenant shall take all proper and lawful steps (as reasonably deemed appropriate by Tenant) to discipline and/or terminate employees who participate in criminal acts in the Winter Park Resort, including illegal gambling, prostitution, illegal serving of alcoholic beverages, or acts of fraud and theft.
(i) Tenant agrees that it will procure, or cause to be procured, without expense to Landlord, all permits and licenses required by Applicable Laws for the conduct of any operation or facility that is operated by Tenant in the Winter Park Resort.
(j) Tenant agrees to use its good faith efforts (for example, by publicizing job opportunities in the media and on the internet) to recruit full-time and seasonal employees from within the City; provided, however, that this agreement by Tenant shall not be construed to limit in any way (other than the exercise of good faith) the right of Tenant to employ the persons of its choosing.
(k) Tenant shall continue to provide the financial and other support to the National Sports Center for the Disabled during the Term at least to the same extent as Landlord is required to provide such support to it under that certain Commercial Lease and License Agreement dated October 1, 2001, a copy of which Landlord has delivered to Tenant.
(1) Tenant agrees to continue in good faith to provide programs and special considerations that benefit the City’s and other youth to at least the same extent as was provided during the 2001-2002 season.
(m) Landlord has certified to Tenant a list, dated as of the Effective Date, of all persons who have been issued lifetime ski passes for the Winter Park Resort. Tenant agrees to honor the terms of all such passes during the Term in accordance with the privileges accorded such passes under Landlord’s lifetime ski pass program, the terms and conditions of which are described on Exhibit P attached hereto.
(n) Tenant shall maintain, replace and develop as necessary, space and facilities for Resort Operations on the Real Property and the National Forest System Lands at least equal in functional capacity to the amount of such space presently existing at the Winter Park Resort as of the Effective Date and such additional space as may be appropriate to the development of any new portal providing ski Lift access onto the mountains at the Winter Park Resort.
(o) Tenant shall establish a Winter Park Advisory Committee having no more than six (6) members, and the senior management members of Tenant shall meet with such committee at least semi-annually. The members of the committee shall include representatives of the Fraser Valley business and residential communities and governmental entities, as well as Landlord. The purpose of the committee is to provide a forum in which matters of concern for or relating to the Winter Park Resort and its impact on the Fraser Valley can be identified and discussed. The committee is an advisory board and is not a decision-making body.
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6.2 Triple Net Lease.
(a) This Agreement is intended and shall be construed to be a “triple net lease,” and, except as may be specifically provided in this Agreement, Tenant (i) assumes all responsibilities, duties, obligations, guarantees, risks, charges, taxes, assessments, costs or expenses of any nature of any kind whatsoever, and (ii) shall pay to Landlord, without notice, absolutely net throughout the Term, the Rental Payments provided for in this Agreement, free of any expense, charge or deduction whatsoever, with respect to the Leased Assets or the ownership, leasing, operation, management, maintenance, repairs, improving, use or occupancy thereof.
(b) In addition to all other obligations of Tenant specified in this Agreement, Tenant is responsible to pay all ordinary and necessary operating and maintenance expenses of the Winter Park Resort, including without limitation (i) salaries, wages and employee benefits of Tenant’s Winter Park Resort employees, (ii) repairs, maintenance and utilities, (iii) operating and administrative expenses of the operation of the Winter Park Resort, (iv) costs of marketing, advertising and business promotion, (v) sales and use taxes and ad valorem real and personal property taxes, (vi) insurance premiums, (vii) funding of the Required Annual Capital Maintenance Amount, (viii) the shared fees and charges allocated pursuant to Section 5.5, (ix) costs of deductibles or retentions, settlements, awards, attorneys’ fees and related costs attributable to items or expenses specified hereunder, (x) fees and charges under the Forest Service Permits, (xi) ground rent, (xii) the cost of supplies and materials used in the operation of the Winter Park Resort, and (xiii) principal and interest and any penalties, late charges or other payments or expenses, including transactional costs, under the Agreed-Upon Indebtedness (subject to the specific provisions relating thereto in this Agreement), the Permitted Equipment Financing and any other leasehold mortgage and any other borrowings of Tenant.
(c) Under no circumstances or conditions, whether now existing or hereafter arising, or whether within or beyond the present contemplation of the parties except to the extent expressly provided herein to the contrary, (i) shall Landlord be expected or required to make any payment of any kind whatsoever by reason of its estate or interest in the Leased Assets or by reason of any rights or interest of Landlord under this Agreement, nor (ii) shall there be any abatement, diminution, or reduction of, setoffs against or deductions from the Rental Payments, except as may be specifically provided in this Agreement or the Option Agreement.
(d) The obligations of Tenant to make the payments required hereunder and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional and shall not be subject to any defense (other than payment) or any right of set off (except as may be specifically provided in this Agreement), counterclaim, abatement or otherwise, and Tenant (i) will not suspend or discontinue, or permit the suspension or discontinuance of, any payments required to be paid hereunder, (ii) will perform and observe all of its other agreements contained in this Agreement, and (iii) will not suspend the performance of its obligations hereunder for any cause, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, failure of or a defect of title to the Leased Assets or any part thereof, destruction, damage or condemnation to or of all or any part of the Leased Assets, commercial frustration of purpose, or any change in the tax or other laws or administrative rulings of or administrative actions by the United States of America or the State of Colorado or any political subdivision of either.
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(e) Nothing contained in this Section 6.2 shall be construed to release Landlord from the performance of any of the agreements on its part herein contained; and in the event Landlord shall fail to perform any such agreement on its part, Tenant may institute such action against Landlord as Tenant may deem necessary to compel performance, provided that no such action shall (i) violate the covenants on the part of Tenant contained in this Agreement, or (ii) diminish the Rental Payments required to be paid by Tenant hereunder. Tenant may, however, at its own cost and expense and in its own name or in the name of Landlord (provided Landlord is a necessary party under law) prosecute or defend any action or proceeding or take any other action involving third persons which Tenant deems reasonably necessary in order to secure or protect its rights hereunder with respect to the Leased Assets, and in such event Landlord hereby agrees to reasonably cooperate with Tenant in all material respects and to take all action reasonably necessary to effect the substitution of Tenant for Landlord in any such action or proceeding if Tenant shall so request; provided that Landlord shall not be required to take any action which, in the reasonable judgment of Landlord would be prejudicial to the rights or interests of Landlord in connection with such action or proceeding or the facts giving rise thereto.
(f) Notwithstanding anything in this Agreement to the contrary, Tenant shall not include in its calculation of Cash Flow for Annual Payment or capital expenditures, as appropriate, the cost of developing any main line or right-of-way infrastructure such as roads and utilities, provided, however, that the cost of extensions of such infrastructure from the main lines or rights-of-way solely to the Leased Assets for the purpose of providing service or access to Resort Operations may be so included.
6.3 Shared Resources. As part of Tenant’s exercise of its controlling interest in Winter Park Resort, Tenant shall make available to the Winter Park Resort, and shall not discriminate against the Winter Park Resort with respect to, access to its various shared resources and Intrawest Corporation’s combined expertise in the planning, design, construction, operation and marketing of pedestrian villages and facilities on mountain. This expertise is embodied, without limitation, in a Resort Enterprise Team, programs such as Leadership, Sales and Development Schools, a resort reservations network, an information technology group, a company-wide customer relationship management database and technical support, and a lodging and sales group, all as may exist and/or be available from time to time. The collective advantage of being a member of the Intrawest Corporation group of resorts, which shall similarly be provided to Winter Park Resort on a non-discriminatory basis, also includes opportunities such as global purchasing and corporate sponsorships as may be available from time to time.
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6.4 Compliance with Applicable Law. At all times during the Term, Tenant shall comply with and cause the Leased Assets to comply with all laws applicable to the Leased Assets or the operation, use or possession thereof.
6.5 Tenant Obligation to Pay Certain Taxes. During the Term, Tenant shall file all required Tax returns (to the extent that it is legally permissible) and pay promptly all Taxes directly to the applicable Governmental Authority. Tenant may, in good faith and with due diligence, contest any Taxes levied on all or any portion of the Leased Assets, upon furnishing security reasonably acceptable to Landlord in an amount equal to 150% of such Taxes, and in such event may permit any lien securing such contested Taxes to remain undischarged and unsatisfied during the period of such contest and appeal therefrom if (a) Tenant shall effectively prevent or stay the execution, foreclosure or enforcement of such lien; or (b) such contest or appeal shall prevent or stay the execution or enforcement or foreclosure of such lien. If such lien is so stayed and such stay thereafter expires or if by nonpayment of any such items the Leased Assets or any portion thereof will be subject to loss or forfeiture, then Tenant shall forthwith pay and cause to be satisfied and discharged such lien. Landlord shall cooperate in all material respects with Tenant in any such contest at Tenant’s sole cost and expense. Tenant shall give timely notice to Landlord of all such liens of which it becomes aware; Tenant shall, with respect to all Taxes that are required to be paid by Tenant, (i) reimburse Landlord upon receipt of written request for reimbursement for any Taxes charged to or assessed against Landlord, (ii) on request of Landlord, submit to Landlord written evidence of Tenant’s payment of Taxes, and (iii) send a copy of all reports or returns relating to Taxes to Landlord.
6.6 Compliance with Environmental Laws.
(a) Tenant, in conducting any activity on the Real Property, shall comply with all applicable local, state or federal Environmental, Health and Safety Requirements, including, but not limited to, such Requirements regarding the storage, use and disposal of Hazardous Materials and regarding releases or threatened releases of Hazardous Materials to the environment. For purposes of this Lease the term “Hazardous Materials” shall mean asbestos and asbestos-containing materials, special wastes, polychlorinated biphenyls (PCBs), used oil or any petroleum products, natural gas, radioactive source material, pesticides, and any solid waste or hazardous waste as defined at 42 U.S.C. §§ 6903(27) and 6903(5) of the Solid Waste Disposal Act, any hazardous substance as defined at 42 U.S.C. § 9601(14) of the Comprehensive Environmental Response, Compensation and Liability Act, any criteria pollutant or hazardous air pollutant regulated under the Clean Air Act, 42 U.S.C. § 7401 et seq., and any rules or regulations promulgated pursuant to such statutes or any other applicable federal or state statute.
(b) Tenant shall acquire all necessary federal, state and local environmental permits and comply with all applicable federal, state and local environmental permit requirements relating to Tenant’s use of the Real Property.
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(c) Tenant agrees to ensure that (1) the Additional Leased Assets are designed, operated and maintained in a manner that mitigates environmental impact through commercially reasonable preventive measures, and (2) all Leased Assets at all times comply with all applicable federal, state and local environmental requirements. Tenant agrees to comply with all Applicable Laws regarding discharge or disposal of any Hazardous Materials to floors, floor drains, storm or sanitary sewer systems, surface or ground water, or the land surface at the Real Property.
(d) In the case of a release, spill or leak of Hazardous Materials, Tenant shall immediately contact all applicable federal, state and local agencies that are required to be contacted under such circumstances and to take any and all actions as may be required by such agencies to control and/or remediate the release, spill or leak. Tenant shall reimburse the Landlord for any penalties and all cost and expense, including, without limitation, reasonable attorney’s fees incurred by the Landlord as a result of the release or disposal by Tenant of any Hazardous Materials on the Real Property. Tenant shall also immediately notify Landlord in writing of the existence of a release, spill or leak, and the control and remediation response actions taken, and any responses, notifications or actions taken by any federal, state or local agency with regard to such release, spill or leak.
(e) Tenant shall make available for inspection and copy upon reasonable notice and at reasonable times, any or all of the documents and materials that Tenant has prepared pursuant to any requirement under this Section or submitted to any governmental or regulatory agency under this Section. If there is a requirement to file any notice or report of a release or threatened release of Hazardous Materials on, under or about the Real Property, Tenant shall provide a copy of such report or notice to Landlord.
If Tenant fails to comply with any applicable Environmental, Health and Safety Requirement, upon reasonable notice to Tenant and opportunity for Tenant to cure such failure (or commence and be diligently pursuing such cure) within ten (10) days of such notice, Landlord may elect, in addition to its rights and remedies described elsewhere in this Agreement, to enter the Real Property and take such measures as may be necessary to ensure compliance with such Requirements, all at Tenant’s expense. In the event of Tenant’s failure to take immediate measures to control a release, spill or leak of Hazardous Materials at the Real Property, the notice and opportunity to cure provision in this section is hereby waived to allow Landlord to take immediate action if Landlord so elects.
6.7 Inspection and Landlord’s Access. Landlord, through its duly authorized agents, shall have at any reasonable time the full and unrestricted right to enter the Real Property for the purpose of periodic inspection for compliance with the terms of this Agreement; provided, however, that except in the case of emergency (in which event no notice shall be necessary), such right shall be exercised upon reasonable prior notice to Tenant and with an opportunity for Tenant to have an employee or agent present.
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6.8 Non-Competition and Gaming.
(a) Tenant, for itself and its affiliates, agrees that it shall not conduct or maintain and, to the extent it is legally able to do so, it will not allow third parties to conduct or maintain the following activities and facilities on the Purchased Developable Land: (i) Lifts, (ii) trails that are operated for a fee and that are used in connection with on-mountain sports activities such as snowsliding, mountain biking and mountain hiking, (iii) snowsliding schools, (iv) day-skier parking, (v) ski patrol, (vi) children’s day care, (vii) public lockers for day skiers, (viii) Mountain Base Area Cafeterias, and (ix) on-mountain maintenance facilities.
(b) Tenant, for itself and its affiliates, agrees that, to the extent it is legally able to do so, it will not allow third parties to rent snowsliding equipment on the Purchased Developable Land. Tenant and its affiliates shall have the right to rent snowsliding equipment on the Purchased Developable Land, provided however, to the extent that such activity is Competitive Rentals, the revenue therefrom shall be included in Gross Revenue.
(c) If and when gaining is a legally permitted activity at the Winter Park Resort, the Parties acknowledge that such activity can significantly affect the Winter Park Resort in ways that cannot currently be predicted. Therefore, Tenant and Landlord and their affiliates shall not conduct such activity on the Real Property or on the Purchased Developable Land until Tenant and Landlord shall have first determined with one another in good faith the potential impact of gaining activity on the long-term economic viability of the Winter Park Resort and made such modificiations to this Lease and the Option Agreement as they mutually deem appropriate at that time to protect their respective interests and investments (including, without limitation, the interest of Landlord in preserving the Winter Park Resort as an economically viable stand alone business upon the expiration of the Term).
6.9 Development of Leased Assets.
(a) All construction work shall be performed in a good and workmanlike manner and in accordance with all Applicable Laws.
(b) Subject to Tenant’s right to contest as set forth in Section 6.9(c), Tenant shall not permit any mechanic’s lien for labor or materials furnished or alleged to have been furnished to it to attach to any portion of the Leased Assets; and Tenant herein agrees that if any mechanic’s lien is filed upon any portion of the Leased Assets (except to the extent such mechanic’s lien is caused by Landlord), Tenant shall protect and save harmless Landlord against any loss, liability or expense whatsoever by reason thereof and shall proceed with or defend, at its own expense, such action or proceedings as may be necessary to remove such lien from the records. Upon receipt of notice thereof by Landlord, Landlord shall promptly give Tenant written notice of the existence of any such mechanic’s lien in the Leased Assets, but the failure of Landlord to give such notice shall not affect the responsibilities of Tenant as set forth in this Section.
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(c) Tenant may, in good faith and with due diligence, contest any mechanic’s lien or other lien filed or established against all or arty portion of the Leased Assets, upon either removing the lien of record or by posting a bond in accordance with applicable Colorado law, or upon furnishing security reasonably acceptable to Landlord in an amount equal to 150% of such claim or lien, and in such event may permit such lien or charge to remain undischarged and unsatisfied during the period of such contest and appeal therefrom if (i) Tenant shall effectively prevent or stay the execution, foreclosure or enforcement of such lien or charge; or (ii) such contest or appeal shall prevent or stay the execution or enforcement or foreclosure of such lien or charge. If such lien or charge is so stayed and such stay thereafter expires or if by nonpayment of any such items the Leased Assets or any portion thereof will be subject to loss or forfeiture, then Tenant shall forthwith pay and cause to be satisfied and discharged such lien or charge or secure such payment by posting additional bond in form reasonably satisfactory to Landlord, Landlord shall cooperate in all material respects with Tenant in any such contest at Tenant’s sole cost and expense. Tenant shall give timely notice to Landlord of all such claims and liens of which it becomes aware.
(d) Tenant shall timely establish and record appropriate legal instruments that run with the title to the Real Property to evidence all necessary or appropriate legal rights, including without limitation access easements and reciprocal easement agreements, in connection with any development of the Real Property so that, when the Term expires (whether by maturity or by acceleration as provided in this Agreement), Landlord shall be able to efficiently and effectively operate the Winter Park Resort, including any Purchased Developable Land repurchased by or on behalf of Landlord or the City, as a stand-alone operation from the Purchased Developable Land.
6.10 Names.
(a) Tenant will retain the words “Winter Park” and “Mary Jane” prominently in the name of the Winter Park Resort in all promotional literature and primary signage.
(b) Tenant will retain the names of those ski runs identified on Exhibit Q attached hereto that commemorate individuals who have been important in the history of the Winter Park Resort.
(c) Tenant will consider the Winter Park Resorts heritage and history in naming or renaming most ski runs.
ARTICLE VII
REPORTS AND AUDITS
7.1 Quarterly Reports. Tenant agrees to furnish to Landlord in a form reasonably acceptable to Landlord not later than the thirtieth (30th) day immediately succeeding each Fiscal Year quarter during the Term other than the last quarter of each Fiscal Year, and the month immediately succeeding the expiration or termination of this Agreement, a true and correct statement of Gross Revenue and component items (in summary form) of Cash Flow for Annual Payment (EBITDA, Required Annual Capital Maintenance Amounts, and Required Interest Payments) for the preceding quarter, certified by the chief financial officer of Tenant.
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7.2 Annual Reports. Not later than ninety (90) days after the end of each Fiscal Year, Tenant shall deliver to Landlord and to the City annual report statements (in form and substance reasonably satisfactory to Landlord) that include:
(a) Statements of the Gross Revenue and Cash Flow for Annual Payment for the immediately preceding Fiscal Year (or portion thereof) included in the Term, which statements shall specify all Gross Revenue and component items of Cash Flow for Annual Payment (EBITDA, Required Annual Capital Maintenance Amounts, and Required Interest Payments), and shall be certified by the Accountants and acknowledged by an officer of Tenant as being accurate and complete.
(b) A statement from the chief financial officer of Tenant certifying that all fees and charges and all allocated costs comply with the categories, descriptions and limitations specified in this Agreement.
(c) Audited financial statements of the Tenant prepared by the Accountants on a non-consolidated basis, consistent with the form and information required to be disclosed by GAAP.
7.3 Maintenance of Records. Tenant shall, at all times during the Term, and consistent with good business practices:
(a) Prepare and maintain for the Winter Park Resort, in accordance with GAAP, adequate records that shall show all Gross Revenue received by Tenant, which records shall include, but need not be limited to, (i) copies of all gross income, sales, retail or excise tax returns filed with any governmental authority; (ii) bank deposit records; (iii) such other records, if any, which would normally be examined by an independent accountant pursuant to generally accepted auditing standards in performing an audit of gross receipts; and (iv) the records, if any, of subleases, assignees, concessionaires, or licensees, furnished to Tenant in connection with such operations.
(b) Prepare and maintain for the Winter Park Resort in accordance with GAAP adequate records, that shall show all component items necessary and appropriate in determining Cash Flow for Annual Payment, which records shall include but need not be limited to such records that would be examined by an independent accountant pursuant to generally accepted auditing standards in performing an audit of such items.
(c) Prepare and maintain, in accordance with reasonable practices consistent with the manner in which Tenant maintains such records at its other resorts, all skier and other paying guest visit records for the Winter Park Resort.
(d) Keep safe at the Winter Park Resort, or with the Landlord’s approval not to be unreasonably withheld, at another location in the greater metropolitan Denver area or elsewhere in Colorado within a fifty (50) mile radius of Copper Mountain or the Winter Park Resort, for a period ending not less than three (3) years after the close of each Fiscal Year, all of such records for each Fiscal Year.
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(e) Maintain, in a manner consistent with good business practices, a written inventory of the Leased Assets (other than units of personal property that individually have only a nominal value, such as office supplies, silverware and spare mechanical parts).
7.4 Inspections and Audits of Records. Until the expiration of three (3) years after the final Rental Payment, Tenant shall permit Landlord and duly authorized representatives of the City (and for the purposes of this Section, Landlord and Tenant specifically acknowledge that the City is an intended third party beneficiary and shall have the right to enforce the provisions of this Section which Landlord and Tenant may not modify without the prior written consent of the City), including without limitation the Mayor, Manager of Parks and Recreation and the City Auditor:
(a) At all reasonable times to examine the books, documents, accounts, papers and records of Tenant pertinent to transactions related to this Agreement.
(b) At any time after five (5) business days prior notice to Tenant of its intention to do so, cause to be made a complete audit of the records of Tenant for any or all of the most recent three (3) Fiscal Years during the Term. No such audit with respect to a Fiscal Year may be requested earlier than ninety (90) days after the end of such Fiscal Year. Any audit as described in this Section shall be at Landlord’s or the City’s expense except that if such audit discloses that, to the detriment of Landlord, actual Gross Revenue or actual Cash Flow for Annual Payment for any Fiscal Year exceeded by more than five percent (5%) the amount reported to Landlord, the cost of such audit shall be paid by Tenant if for such Fiscal Year the amount of Rental Payments actually made by Tenant was less than the amount payable. The acceptance of Rental Payments by Landlord computed on the basis of statements furnished by Tenant shall be without prejudice to Landlord’s and the City’s rights to inspect and/or audit the records pertaining to Gross Revenue and component items of Cash Flow for Annual Payment as authorized under this Section and upon the discovery following any such examination or audit of any discrepancy in the reporting of Gross Revenue and component items of Cash Flow for Annual Payment whereby rent has previously been underpaid, such deficiency together with interest thereon at the Interest Rate shall be immediately due and payable. If the inspection and/or audit under this Section reveals that rent has previously been overpaid, such overpayment shall be credited against the obligation of Tenant to make Rental Payments for the subsequent Fiscal Year or promptly repaid to Tenant, as determined by Landlord in its sole discretion; provided that after the Term any such excess shall be promptly repaid to Tenant.
(c) Tenant agrees that the City, and its authorized representatives, may inspect any sales tax return or report and accompanying schedules and data which Tenant may file with any municipal or state agency, and, solely for purposes of permitting the City to inspect such materials, Tenant waives any rights of confidentiality which it may have in connection therewith, except as specifically provided in Section 7.5 below.
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7.5 Confidentiality. If any documents submitted by any Person to Landlord or the City under this Agreement are deemed by such Person to be confidential business data, trade secrets, or otherwise not subject to public disclosure, such Person shall be required to clearly mark the documents as “Confidential” prior to delivering or making them available to Landlord or the City. If the City, or Landlord if applicable, receives a request for the production or disclosure of documents so marked, it will decline disclosure and notify such Person of such request; provided, however, that if any action is commenced against City or Landlord under the Colorado Open Public Records Act or otherwise seeking to compel production or disclosure of the documents, the Person asserting the confidentiality of such documents shall immediately intervene in such action, and whether or not such intervention is permitted, shall defend, indemnify and hold City and Landlord harmless from any costs, damages, penalties or other consequences of City’s or Landlord’s refusal to disclose or produce such documents.
ARTICLE VIII
DELIVERY; CONDITION; QUITE ENJOYMENT AND INDEMNIFICATION
8.1 Delivery and Acceptance of the Leased Assets. Landlord and Tenant acknowledge that Landlord shall tender possession of the Leased Assets to Tenant on the Effective Date. Except for the representations and warranties made by Landlord pursuant to Article XIII, Tenant accepts the Leased Assets “AS IS”, and hereby acknowledges that Landlord is not obligated to do any improvements or modifications to the Leased Assets.
8.2 Indemnification.
(a) Tenant shall defend, indemnify, hold harmless and reimburse Landlord and the City (and for the purposes of this Section, Landlord and Tenant specifically acknowledge that the City is an intended third party beneficiary and shall have the right to enforce the provisions of this Section which Landlord and Tenant may not modify without the prior written consent of the City), and their elected and appointed officials, officers, agents and employees from, for and against any and all loss, liability, damages, penalties, expenses and costs of whatever nature, causes of action, suits, claims, penalties, expenses, costs, demands, judgments, costs of defense, awards and settlements including, without limitation, payments of claims or liability resulting from any injury or death of any person or damage to or other destruction of any property, in any way arising out of use of the Leased Assets and resulting directly or indirectly from: (i) the willful misconduct or the negligent or tortious act or omission of Tenant or any sublessee, licensee, concessionaire, guest, invitee, contractor or subcontractor of Tenant or any of them, or their respective employees; (ii) the negligent or willful misconduct of Tenant or any sublessee in their use or occupancy of the Winter Park Resort or the use, design, construction or operation of the Leased Assets; or (iii) the violation by Tenant of any agreement, covenant or condition of this Agreement (collectively, “Liabilities”); provided, however, that Tenant need not indemnify or save harmless Landlord or City, or their elected and appointed officials, officers, trustees, agents and employees, from, for and against any Liabilities resulting from the sole fraud, willful misconduct, negligence or breach of fiduciary duty of their elected and appointed officials, officers, trustees, agents and employees. The provisions of this Section are limited to indemnification for third party claims, and shall survive the termination of this Agreement.
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(b) Tenant agrees to defend, indemnify and hold harmless Landlord and the City, and their elected and appointed officials, officers, agents and employees, from and against any and all claims or liability for compensation under any workers’ compensation statute arising out of injuries sustained by any employee of Tenant, or any sublessee, licensee, concessionaire, contractor or subcontractor of Tenant or any of them, except to the extent caused by the willful misconduct or grossly negligent act or omission of Landlord or the City, or their elected and appointed officials, officers, agents, employees, licensees (other than Tenant), contractors or subcontractors. However, nothing in this Section is intended or shall be construed to obligate Tenant to defend, indemnify or hold harmless Landlord or the City from or against any claim or liability under any workers’ compensation statute arising out of any injury sustained by any employee of Landlord or the City in the course of his or her employment with Landlord or the City. Tenant covenants that it shall cause its sublessees, licensees, concessionaires, contractors and subcontractors to maintain in effect at all times workers’ compensation insurance as required by law.
(c) Tenant shall control the defense of any claim, action, proceeding or suit for which Tenant indemnifies Landlord or the City pursuant to this Section. Landlord and City shall be invited to attend and participate in all meetings (including those related to settlement) and to appear and participate in all judicial proceedings and the right to approve the terms of any settlement related to such claim, action, proceeding or suit. If such legal action will not create future liability for Landlord or the City in any respect, then Tenant shall not be required to involve Landlord or the City in any such meetings or proceedings and may settle any such matters without the requirement of obtaining the approval of Landlord or the City.
(d) Without limiting the generality of any other provision hereof, Tenant shall reimburse Landlord and City for reasonable attorneys’ fees, expert witness fees and investigation expenses, including utilizing City’s Law Department, incurred by them in the active defense and handling of any suits and claims against which Tenant is required to provide indemnification under this Article VIII and in enforcing the provisions of this Agreement; provided that City or Landlord and not Tenant shall absorb at its own expense those attorneys’ fees incurred for routine monitoring and other relatively passive activity.
8.3 Quiet Enjoyment. Subject to the terms and conditions of this Agreement and the Forest Service Permits, Landlord warrants that so long as this Agreement is in full force and effect, Tenant’s peaceable and quiet enjoyment of the Leased Assets shall not be disturbed by Landlord or any Person claiming through or under Landlord.
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ARTICLE IX
INSURANCE
9.1 Coverage. Without limiting any of the other obligations or liabilities of Tenant under this Agreement, Tenant shall maintain the following:
(a) Insurance for casualties affecting the Improvements and Tangible Personal Property on an All Risk Special Cause of Loss Form including Difference in Conditions/Flood and Earthquake Coverage. Coverage shall include Change in Building Ordinance resulting in increased costs after a covered cause of loss. Coverage shall also include demolition, increased cost of construction and loss to undamaged portions of the building caused by enforcement of any building, zoning or land use law after a covered cause of loss. The limits of insurance must be equal to the full replacement cost of the Improvements and Tangible Personal Property. In addition, insurance for casualties shall also include Boiler and Machinery Insurance insuring against loss or damage to boilers, pressure vessels and other machinery. Boiler and Machinery Coverage may be provided as a part of the property insurance form or separately. Tenant shall be named insured, with Landlord and City named as additional insureds, as their interests may appear on all applicable property insurance policies. Coverage shall also include Loss of Business Income Insurance covering loss of income, extra expense and loss of rents. Such coverage shall include loss caused by action of a civil authority that prohibits access to the Leased Assets. Coverage shall also be provided for contingent business interruption, off-premises services time element losses, and shall also cover leased property alterations and new structures. Business Income Time Element coverage shall also include an extended period of indemnity of 180 days or a peak season coverage form. Business Income Insurance coverages shall provide sufficient proceeds for continuing expenses to make full payments to Landlord of its rent based on the greater of $2,000,000 per Fiscal Year or the annual average amount of Rental Payments payable to Landlord for the previous three (3) Fiscal Years. All such insurance shall include a waiver of rights of subrogation against Tenant, Landlord and the City. Any coinsurance penalties shall be eliminated or coinsurance shall be waived via the use of an agreed value endorsement. Property coverage may be provided on a blanket basis or through separate policies and programs.
(b) Commercial General Liability Insurance on an occurrence basis, insuring against any and all claims for bodily injury, death, personal injury and property damage for all of Landlord’s and Tenant’s operations associated with Leased Assets. Policy limits of not less that $25,000,000 per occurrence shall be provided. Required limits may be provided via a combination of primary, excess and umbrella policy layers. Such liability insurance shall provide coverage for premises operations, products and completed operations, explosion and underground hazards, as well as contractual liability insurance specifically covering, but not limited to, the contractual obligations assumed by Tenant pursuant to this Agreement, liquor legal liability, independent contractors, employees as additional insureds, and cross-liability coverage. Landlord and the City shall be listed as additional insureds.
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(c) Business Automobile Liability Insurance, Symbol 1, insuring against liability arising from the operation, maintenance and use of all owned, non-owned, hired, leased and rented trucks, automobiles and other vehicles for bodily injury, death or property damage, with a combined single limit for each occurrence of not less than $10,000,000. The Landlord and the City must be listed as additional insureds. A waiver of rights of subrogation against Tenant, Landlord and the City shall be required. Coverage limits may be provided via a combination of primary, excess and umbrella policies.
(d) Colorado Worker’s Compensation Insurance with statutory limits including an All States Endorsement and Employer’s Liability Insurance with liability limits of no less that $1,000,000 covering persons employed by Tenant in connection with the occupancy, use or operation of the Leased Assets. Such insurance must contain a waiver of subrogation against Landlord, and the City.
(e) Comprehensive Crime Insurance including Computer Fraud and Fidelity Bonds or employee dishonesty coverage with reasonable limits acceptable to Landlord covering Tenant’s employees in job classifications normally bonded or in a money handling capacity.
(f) Director’s and Officers Liability Insurance covering the activities and operational decisions made by officials, executives and managers of Tenant with limits of no less that $2,000,000 per claim. Coverage may be written on a claims made basis, and coverage shall be concurrent throughout the Term of this Agreement. All preparatory work undertaken by officials and managers of Tenant shall be covered as part of prior acts coverage, and an extended reporting and discovery period of no less than two years shall survive this Agreement.
(g) Environmental Impairment/Pollution Liability Insurance coverage shall be provided with a per-incident limit of no less than $10,000,000. Coverages shall include claims for bodily injury and property damage, claims for contract damages, diminution of property values, environmental cleanup costs and civil fines/penalties. Coverage shall also be provided for non-owned disposal sites. Landlord and the City shall be listed as additional insureds. Such insurance shall include a waiver of subrogation against Tenant, Landlord and the City.
(h) Such other insurance in amounts as Landlord in its reasonable judgment deems advisable for protection against claims, liabilities, damages, risks or perils and as at the time are customarily insured against with respect to improvements similar in character, size, general location, use and occupancy to the Improvements.
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9.2 General Insurance Provisions.
(a) All insurance described in this Section shall be in a form and written by a company or companies with a Best Rating of A-VIII (A-VII or better for participating companies) or better and which lawfully can write insurance in the State of Colorado.
(b) Any deductibles or self-insured retention, including off-shore retention/insurance programs, greater than $10,000 associated with the above coverage requirements and policies shall be funded at the sole risk of Tenant. Further, deductible and or self-insured retention/off-shore insurance programs in excess of $10,000 shall be subject to review and approval by the City’s Director of Risk Management on an annual basis and/or when significant changes are made to such programs. Pertinent supporting certified financial reports shall be submitted for such approval along with an explanatory cover letter.
(c) During construction, contractors shall be included as additional insureds under the policies provided by the Tenant. Certificates of insurance shall be provided to the Landlord and the City as such construction projects arise.
(d) Tenant shall deliver certificates of insurance, within twenty (20) days after the Effective Date, to Landlord (with copies to the City’s Director of Risk Management or such other person who has that responsibility). The certificates must be reasonably satisfactory to the Landlord and the City’s Director of Risk Management. If such certificates are unavailable within such 20-day period, Tenant shall provide within such time a letter from a recognized insurance broker certifying the coverages and limits in effect applicable to this Agreement, and Tenant shall continue to diligently pursue the delivery of the certificates.
(e) Upon the Landlord’s or the City’s request, Tenant shall make available for review at the offices of the City’s Director of Risk Management certified copies of the insurance policies.
(f) Each such policy and certificate must contain a special endorsement providing that such policy will not be canceled or materially changed or altered without first giving forty-five (45) days prior notice to the City’s Director of Risk Management.
(g) Not less than sixty (60) days prior to the expiration or anniversary of such policies, Tenant shall deliver to Landlord confirmation that such policies are being renewed or replaced, in accordance with all of the provisions of this Section. An endorsement shall be included to each policy prohibiting cancellation of such policy without at least forty-five (45) days’ prior written notice to Landlord and the City. Tenant shall deliver to the City’s Director of Risk Management any renewal certificates for such insurance at least seven (7) days prior to the expiration of any such policies.
9.3 Settlement and Payment of Claims. Except as otherwise specified in this Section, the loss, if any, under any property policies provided for in this Article IX shall be adjusted with the insurance companies by Tenant, subject to the approval of the Landlord, Landlord’s approval shall not be unreasonably withheld or delayed so long as there is no Event of Default hereunder. Proceeds of insurance resulting from any property loss shall be paid to Tenant and disbursed for the purpose or paying for the cost of restoring the Improvements pursuant to Tenant’s obligations under this Agreement. Proceeds from any liability insurance shall be used to discharge the liability to which such proceeds pertain.
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9.4 Failure to Insure. Failure by Tenant to take out or maintain any insurance required hereunder shall not relieve Tenant from any liability under this Agreement, nor shall the insurance requirements hereof be construed to conflict with or otherwise limit any contractual obligations, including those of indemnification, of Tenant herein. If at any time Tenant fails or neglects to insure the Leased Assets as aforesaid, or to deliver such policies or certificates as aforesaid, the Landlord may, but shall not be obligated to, effect such insurance by obtaining policies issued by companies satisfactory to Landlord. The amount of the premium or premiums paid for such insurance by Landlord shall be payable by Tenant to Landlord immediately, with interest thereon at the Interest Rate from the date of payment of such premium or premiums by Landlord to the date of such reimbursement by Tenant.
9.5 Adjustment of Insurance Coverage. Notwithstanding the above, Tenant agrees that the City’s Director of Risk Management may at its election reevaluate the reasonableness of the amounts of insurance coverage required herein every three (3) years, and if such amounts have become inadequate, in such Director’s commercially reasonable judgment consistent with industry standards, to provide the coverage intended by this Agreement, the Director may require such additional insurance or policy amounts as necessary to provide such intended coverage. Any terms used in this Article IX that are terms of art within the insurance industry shall, as such terms change from time to time, be deemed to be replaced with any such changed term that is closest in meaning to the original term.
9.6 Prohibition on Acts Affecting Insurance Coverage. Tenant shall not do or permit to be done anything, either by act or failure to act, which shall cause the cancellation of any policy of property insurance for the Leased Assets or any part thereof. Further, if Tenant shall do or permit to be done anything, either by act or failure to act, that shall cause an increase in the premiums for property insurance for such property, then Tenant shall either pay the amount of such increase or purchase additional insurance with terms reasonably satisfactory to the City’s Director of Risk Management, and such increase costs shall be taken into account (by reducing EBITDA) in the amount of Cash Flow for Annual Payment.
9.7 Insurance Under Separate Contracts. All contracts and agreements between Tenant and any third parties relating to the design and construction of the Improvements which contain insurance and indemnification provisions in favor of Tenant shall also extend the protection afforded by such insurance and indemnification provisions in favor of Landlord and the City.
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ARTICLE X
INDEBTEDNESS
10.1 Agreed-Upon Indebtedness. To the extent arranged by Tenant at its expense and from time to time during the Term, Tenant may cause Landlord to incur or refinance Agreed-Upon Indebtedness on the condition that at no time during the Term shall the aggregate outstanding principal amount of Agreed-Upon Indebtedness exceed thirty-three million dollars ($33,000,000) over the Term, less principal payments required to be made by Landlord pursuant to Section 10.4 or otherwise voluntarily made by Landlord. Such maximum aggregate amount shall not be reduced to the extent Tenant or Landlord makes repayments of principal for the purpose of refinancing any then-existing Agreed-Upon Indebtedness or Tenant makes any other payments of principal that are required to be made pursuant to the terms of the Agreed-Upon Indebtedness Documents from time to time. Except for payments of principal that Landlord is required to make pursuant to Section 10.4 of this Agreement, Tenant is required to make all payments of principal and interest for the Agreed-Upon Indebtedness during the Term. Agreed-Upon Indebtedness may not be borrowed again in the manner of a revolving debt to the extent of principal payments made by or on behalf of the Landlord. The terms of the Agreed-Upon Indebtedness shall be subject to the approval of Landlord, which approval shall not be unreasonably withheld, delayed or conditioned, and Landlord shall execute, have acknowledged, and deliver such Agreed-Upon Indebtedness Documents as may be required by the Agreed-Upon Indebtedness Lender to evidence and otherwise document the Agreed-Upon Indebtedness from time to time and to provide the security for any Agreed-Upon Indebtedness specified in Section 10.3 of this Agreement, provided that the terms of such Agreed-Upon Indebtedness Documents are commercially reasonable and do not impose upon Landlord any obligations or requirements that are outside the scope of Landlord’s obligations and requirements under applicable laws or as set forth in this Lease, the Option Agreement or the First Loan Documents. Landlord agrees that it will not withhold, delay or condition its approval of Agreed-Upon Indebtedness Documents that have terms and conditions comparable in substance to the First Loan Documents that Landlord executes in connection with the Closing. Nothing in this Section shall restrict the right of Tenant to incur other indebtedness, which does not constitute Agreed-Upon Indebtedness, in accordance with Section 10.6 below.
10.2 Use of Agreed-Upon Indebtedness. Unless otherwise agreed between Landlord and Tenant, Landlord shall pay, or shall authorize each Agreed-Upon Indebtedness Lender to pay, promptly and directly to Tenant the net proceeds of Agreed-Upon Indebtedness that represent the increase over the amount of outstanding indebtedness of Landlord existing immediately prior to the Effective Date, which net proceeds Tenant shall use only to fund the amount of (a) the Current Capital Maintenance Items, (b) the Reimbursable Transaction Costs, (c) those certain long-term liabilities described on Exhibit R attached as a part hereof, and (d) the Transition Costs.
10.3 Security for Agreed-Upon Indebtedness. Landlord shall, at the request of Tenant, execute, have acknowledged and deliver such collateral instruments as the Agreed-Upon Indebtedness Lender may require to secure the repayment of the Agreed-Upon Indebtedness with a lien encumbering the Real Property that is “Development Parcels” (as defined in the Option Agreement) but not Real Property that is “Resort Operations Space”, “Resort Parcels”, “Lift Parcels” or “Resort Operations Core Area” (as those terms are defined in the Option Agreement); provided, however, Landlord shall have no obligation to execute any such collateral instrument if the terms of such collateral instrument, or the recording of such collateral instrument, would violate or result in a default under any Agreed-Upon Indebtedness that is secured by a senior lien on the Development Parcels. Landlord shall have no obligation to offer as collateral for Agreed-Upon Indebtedness any Resort Operations Space, Resort Parcels, Lift Parcels or “Resort Operations Core Area” (as defined in the Option Agreement) or any of its assets other than the Development Parcels. Upon request of the Agreed-Upon Indebtedness Lender, Tenant shall encumber its leasehold estate, rights, title and interest under this Agreement as security for the Agreed-Upon Indebtedness. The security or lien of any Affiliate Lender shall not be in the form of an instrument containing, and no Affiliate Lender shall have a right to, a power of sale. Notwithstanding the provisions of Section 16.1 of this Lease, Tenant at all times shall have the right, without Landlord’s consent, to encumber its leasehold estate, rights, title and interest under this Agreement as security for the Agreed-Upon Indebtedness or, subject to Article XVI of this Lease, any indebtedness separate from the Agreed-Upon Indebtedness.
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10.4 Repayment of Agreed-Upon Indebtedness. The Option Agreement sets forth the conditions upon which Intrawest Development Corp. or its affiliate or a successor permitted by the terms of the Option Agreement may, from time to time, exercise its option to purchase parcels of the Real Property and the price at which parcels of land may be purchased thereunder. Landlord shall apply no less than ninety percent (90%) of the net proceeds to be received by Landlord from the purchase by Intrawest Development Corp. or its affiliate or a successor permitted by the terms of the Option Agreement of parcels of the Real Property pursuant to the Option Agreement to the repayment of Agreed-Upon Indebtedness. If requested by Tenant, Landlord agrees that Intrawest Development Corp. may deliver the portion of the Development Parcel purchase price to be paid against the principal of the Agreed-Upon Indebtedness directly to the Agreed-Upon Indebtedness Lender, and further agrees to take such actions, and execute such instruments as may be necessary to authorize the Agreed-Upon Indebtedness Lender to accept such payments and apply such payments to the prepayment of the Agreed-Upon Indebtedness. Landlord reserves the right to make other payments of principal as it in its sole discretion may determine from time to time, and Tenant agrees not to enter into any loan agreement or document with respect to the Agreed-Upon Indebtedness that restricts or conditions that right, except as mutually agreed between Landlord and Tenant. If the Agreed-Upon Indebtedness has been paid in full at a time when Landlord is entitled to receive proceeds from the purchase by Intrawest Development Corp. of parcels of the Real Property pursuant to the Option Agreement, then all of such proceeds shall be paid directly to Landlord.
10.5 No Limitation on Tenant Right to Borrow. Nothing herein shall restrict the right of Tenant to obtain indebtedness separate from the Agreed-Upon Indebtedness, including without limitation the Permitted Equipment Financing, so long as neither the Landlord nor the City shall have any liability with respect to such other indebtedness (including the Permitted Equipment Financing), the payment of interest thereon does not affect Cash Flow for Annual Payment, and except to the extent required in connection with Permitted Equipment Financing as to certain Tangible Personal Property, such indebtedness is not secured by any Encumbrance on the Leased Assets (other than such Encumbrance by Tenant of its rights under this Agreement to its lenders).
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10.6 Rights of the Agreed-Upon Indebtedness Lender.
(a) No cancellation, surrender, or modification of this Agreement shall be effective as to any Agreed-Upon Indebtedness Lender unless notice has been provided to said Agreed-Upon Indebtedness Lender at least sixty (60) days prior to the effective date of said cancellation, surrender, or modification. With respect to any such cancellation or surrender, Agreed-Upon Indebtedness Lender shall have the rights given to it in this Section. With respect to a modification, such modification shall be effective after said sixty (60) days notice unless the Agreed-Upon Indebtedness Lender shall provide notice of its objection to Landlord and Tenant before the expiration of said sixty (60) day period, in which event the modification shall not be effective. It is acknowledged and agreed by Landlord and Tenant that Tenant shall have the sole obligation to obtain any consents that may be required by an Agreed-Upon Indebtedness Lender (which consents, at the discretion of such Agreed-Upon Indebtedness Lender, may be given to Landlord and Tenant in advance as to certain subjects or categories of modifications).
(b) Landlord, upon giving Tenant any notice of an Event of Default or termination of this Agreement, or notice of a matter on which Landlord may predicate or claim an Event of Default, shall, at the same time, provide a copy of such notice to the Agreed-Upon Indebtedness Lender. Any notice to be given by Landlord or Tenant to an Agreed-Upon Indebtedness Lender pursuant to any provision of this Section shall be deemed properly given if done so in accordance with the notice provisions of this Agreement. From and after the date such notice has been given to the Agreed-Upon Indebtedness Lender and prior to Landlord’s exercise of any rights or remedies hereunder, such Agreed-Upon Indebtedness Lender shall have the same period, after the giving of such notice, for remedying any Event of Default or acts or omissions which are the subject matter of such notice or for causing the same to be remedied, as is provided to Tenant herein, plus, in each instance, the additional periods of time specified below, if any, to remedy, commence remedying or cause to be remedied the Events of Default or acts or omissions which are the subject matter of such notice. Landlord shall accept such performance by or at the instigation of such Agreed-Upon Indebtedness Lender as if the same had been done by Tenant. Tenant hereby authorizes the Agreed-Upon Indebtedness Lender to take any such action at such Agreed-Upon Indebtedness Lender’s option and hereby authorizes entry in the Real Property and access to the Leased Property by the Agreed-Upon Indebtedness Lender for such purpose.
(c) Anything contained in this Agreement to the contrary notwithstanding, if any Event of Default shall occur which entitles Landlord to terminate this Agreement, Landlord shall have the right to terminate this Agreement only if Landlord shall notify the Agreed-Upon Indebtedness Lender of Landlord’s intent to so terminate at least sixty (60) days in advance of the proposed effective date of such termination, provided, however, that the provisions of subparagraph (d) below shall apply if, during such 60-day termination notice period the Agreed-Upon Indebtedness, Lender shall;
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(i) Notify Landlord of such Agreed-Upon Indebtedness Lender’s desire to cure such Event of Default;
(ii) Make or cause to be made to Landlord all Rental Payments and other payments then due and in arrears and which may become due during such 60-day period; and
(iii) Comply or in good faith, with reasonable diligence and continuity, commence to comply with all nonmonetary requirements of this Agreement then the subject of an Event of Default and reasonably susceptible of being complied with by such Agreed-Upon Indebtedness Lender.
(d) If Landlord elects to terminate this Agreement by reason of any Event of Default of Tenant, and if an Agreed-Upon Indebtedness Lender shall have proceeded in the manner provided for by subparagraph (c) above, the specified date for the termination of this Agreement as fixed by Landlord in its termination notice shall be extended to a period of time as may be required for the Agreed-Upon Indebtedness Lender, proceeding with reasonable diligence, to complete the acquisition or sale of Tenant’s interest in this Agreement by foreclosure or other appropriate means plus an additional sixty (60) days, provided that such Agreed-Upon Indebtedness Lender shall, during such period:
(i) Make or cause to be made the Rental Payments and other monetary obligations of Tenant under this Agreement as the same become due, and continue its good faith efforts to perform all of Tenant’s other obligations under this Agreement;
(ii) If not enjoined or stayed, take steps to acquire or sell Tenant’s interest in this Agreement by foreclosure or other appropriate means and procedures which shall be completed with due diligence; and
(iii) In good faith and with due diligence, and subject to any requirements or conditions of the Forest Service Permits, use its best efforts to maintain the continued operations of the Winter Park Resort by application for a receiver (and Landlord hereby consents to the appointment of a receiver), agreement with Tenant or other legal means.
(e) If at the end of such period described above in subparagraph (d) such Agreed-Upon Indebtedness Lender is complying with the foregoing requirements, this Agreement shall not then terminate, and the time for completion by such Agreed-Upon Indebtedness Lender of its foreclosure or other proceedings shall continue so long as such Agreed-Upon Indebtedness Lender is enjoined or stayed and thereafter for so long as such Agreed-Upon Indebtedness Lender proceeds to complete steps to acquire or sell Tenant’s interest in this Agreement by foreclosure or by other appropriate means with diligence and continuity, provided the Agreed-Upon Indebtedness Lender continues to comply with subparagraph (d) above. Nothing in this subparagraph, however, shall be construed to extend this Agreement beyond the Term nor to require an Agreed-Upon Indebtedness Lender to continue such foreclosure proceedings after any Event of Default has been cured.
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(f) If an Agreed-Upon Indebtedness Lender is complying with all of the terms of the Agreement, upon the acquisition of Tenant’s estate herein by such Agreed-Upon Indebtedness Lender or its designee or any other purchaser at a foreclosure sale or otherwise, this Agreement shall continue in full force and effect as if Tenant had not defaulted under this Agreement.
(g) The Agreed-Upon Indebtedness Lender, as such, shall not be required to assume the performance of any of the terms, covenants, or conditions on the part of Tenant to be performed hereunder; but the Agreed-Upon Indebtedness Lender upon foreclosure or any purchaser at any sale of this Agreement and of the leasehold estate hereby created in any proceedings for the foreclosure of any security interest in the Tenant’s rights under this Agreement, or the assignee or transferee of this Agreement and of the leasehold estate hereby created under any instrument of assignment or transfer in lieu of the foreclosure shall be deemed to have agreed to perform all of the terms, covenants, and conditions on the part of Tenant to be performed hereunder accruing from and after the date of such foreclosure, purchase and assignment, but only for so long as such purchaser or assignee is the holder of the leasehold estate.
(h) Any Agreed-Upon Indebtedness Lender or other acquirer of the leasehold estate of Tenant pursuant to foreclosure, assignment in lieu of foreclosure, or other proceedings may, upon acquiring Tenant’s leasehold estate, sell and assign the leasehold estate to such Persons as qualified assignees as provided in this Agreement. Upon any such sale and assignment by the Agreed-Upon Indebtedness Lender, such Agreed-Upon Indebtedness Lender shall be released from all liability under this Lease thereafter arising. Notwithstanding the terms of Section 16.1 of this Agreement, Landlord shall not unreasonably withhold or delay its consent to a proposed assignee, sublessee or transferee from the Agreed-Upon Indebtedness Lender or pursuant to a foreclosure of the Agreed-Upon Indebtedness so long as the proposed assignee, sublessee or transferee:
(i) Has, in the reasonable judgment of Landlord, the financial capacity and access to capital markets necessary to operate, maintain, develop and add to the Leased Assets being assigned, sublet or transferred in the manner and consistent with the standards set forth in this Agreement;
(ii) Is not “insolvent” within the meaning of the Colorado Uniform Commercial Code, and provides a certificate from its chief financial officer to the Landlord stating that such Person is not insolvent under the meaning of the federal bankruptcy law;
(iii) Has, in the reasonable judgment of Landlord, both adequate resort and real estate development experience, in operating, maintaining and developing regional and destination ski resorts, provided, however, that if circumstances have changed at the time of the proposed assignment, sublease or transfer such that skiing is not the predominant amenity at the Winter Park Resort, then the core business of the proposed assignee, sublessee or transferee shall be relevant to the predominant resort activity or activities then existing at the Winter Park Resort; and
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(iv) Has a good business and moral reputation as determined by the Landlord in its reasonable and informed judgment.
(i) Nothing contained in this Section 10.6 shall require any Agreed-Upon Indebtedness Lender, as a condition to its exercise of any of its rights hereunder, to cure any Event of Default of Tenant not reasonably susceptible of being cured, including without limitation, an assignment for the benefit of creditors by Tenant, the failure by Tenant to discharge a judgment or attachment, or the appointment of a receiver or trustee for Tenant or its assets, in order to comply with the provisions hereof. If this Agreement is deemed terminated by operation of law in connection with such an Event of Default, then Landlord agrees that with respect to an Agreed-Upon Indebtedness Lender this Agreement shall nevertheless be deemed to have continued in full force and effect on the same terms and conditions as set forth in this Agreement for the remainder of the Lease Term, and Landlord agrees to enter into a new Lease with such Agreed-Upon Indebtedness Lender or its assignee, subject to Agreed-Upon Indebtedness Lender fulfilling the requirements of this Section 10.6. Landlord and Tenant each acknowledges that Events of Default not reasonably susceptible of being cured by an Agreed-Upon Indebtedness Lender shall include but not be limited to (i) any assignment or attempted assignment by Tenant in violation of this Lease; (ii) any Event of Default which relates uniquely and specifically to Tenant as an entity (e.g., any dissolution or bankruptcy of Tenant); and (iii) any of the Events of Default specified in Sections 15.1 (d) through (k) and (n).
(j) If the Agreed-Upon Indebtedness Lender shall foreclose upon the Tenant’s interest in this Agreement or assumes the Agreement in lieu of foreclosure, the acquiring party shall be bound by the terms and conditions of this Agreement, and in the exercise of any of its remedies will have no greater rights than Tenant except as otherwise expressly provided in this Article X. Notwithstanding any contrary or inconsistent provision of this Agreement, if any Third Party Lender succeeds to Tenant’s estate, rights, title and interest under this Agreement, by a foreclosure, a conveyance or assignment in lieu of foreclosure, or otherwise, such Third Party Lender (but no other Person, such as a purchaser at any foreclosure sale or any Person succeeding to Tenant’s estate, rights, title and interest by any conveyance or assignment by such Third Party Lender) shall be relieved of, and have no obligation to pay or perform, Tenant’s obligations set forth in Section 5.3(b) of this Lease (but such Third Party Lender shall perform Tenant’s obligations set forth in Section 5.3(b) to the extent that there is sufficient Cash Flow for Annual Payment after payment of any Required Quarterly Payments) and 5.3(c) of this Lease. Any Person succeeding to the right, title and interest of Tenant by a conveyance or assignment by any Agreed-Upon Indebtedness Lender shall be bound by, and shall pay and perform, all of Tenant’s obligations under said Sections 5.3(b) (with such obligations accruing to the extent there is not sufficient Cash Flow for Annual Payment after payment of any Required Quarterly Payments during the time such Third Party Lender holds Tenant’s estate, rights, title and interests under this Agreement) and 5.3(c), but the deadlines for funding any deficiency in the Required Annual Capital Maintenance Amount under Section 5.3(b) and for achieving the specified levels of capital expenditures under Section 5.3(c) shall be delayed by a period equal to the length of time such Third Party Lender held Tenant’s estate, rights, title and interests under this Agreement.
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10.7 Affiliate Lenders. An Affiliate Lender may be an Agreed-Upon Indebtedness Lender, and in such event the Affiliate Lender shall have all of the rights of an Agreed-Upon Indebtedness Lender. At any time that an Affiliate Lender is an Agreed-Upon Indebtedness Lender, the terms of the Agreed-Upon Indebtedness shall be no more burdensome to Landlord than the terms of any Agreed-Upon Indebtedness Documents for the benefit of the most senior Third Party Lender, subject to the following conditions:
(a) The lien granted by Landlord according to Section 10.3 of this Agreement and any other security for the Agreed-Upon Indebtedness owed to any Affiliate Lender shall be subordinate to the lien and other security relating to any Agreed-Upon Indebtedness owed to any Third Party Lender.
(b) The Agreed-Upon Indebtedness Documents with respect to Agreed-Upon Indebtedness owed to an Affiliate Lender shall provide that, after (i) a default in the payment or performance of any then outstanding obligations owed to Landlord by Tenant, Intrawest Development Corp., Intrawest Holdings, Intrawest Corporation, or any of their affiliates, (ii) notice to the defaulting party describing the nature of such default, and (iii) the expiration of any period to cure such default provided under the agreements or documents creating, evidencing or securing such obligations, the Landlord shall have the right to set off a credit against the Agreed-Upon Indebtedness owed to such Affiliate Lender in an amount equal to any sums past due or otherwise then immediately payable with respect to any such outstanding obligations owed to Landlord by Tenant, Intrawest Development Corp., Intrawest Holdings, Intrawest Corporation, or any of their affiliates. Any amount so set off or credited shall be applied first to any costs and charges of enforcing Landlord’s rights and remedies, then to accrued interest, and last to principal.
(c) Any Agreed-Upon Indebtedness owed to an Affiliate Lender, if not refinanced at an earlier date with Agreed-Upon Indebtedness advanced by a Third Party Lender, shall be due and payable at the earlier of (i) immediately upon the ordinary expiration of the Term of this Agreement, as the same may be extended, or (ii) one (1) year after the date of any early termination of this Agreement.
(d) If, at the time an Affiliate Lender advances any Agreed-Upon Indebtedness, Landlord owes no Agreed-Upon Indebtedness to any Third Party Lender, the Agreed-Upon Indebtedness Documents relating to the Agreed-Upon Indebtedness owed to such Affiliate Lender shall be in substance the same as the First Loan Documents, except that (i) the lien of such Affiliate Lender shall not in any event be in the form of an instrument containing a power of sale, and (ii) the rate of interest in effect under such Agreed-Upon Indebtedness Documents (at all times other than after an Event of Default or after maturity) shall be equal to the average cost (expressed as a percentage) of all funds borrowed by Intrawest Corporation (or its permitted successor and assign) at the time of such advance.
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10.8 Permitted Equipment Financing.
(a) From time to time during the Term, Tenant may incur Permitted Equipment Financing in conjunction with financing the acquisition, repair, improvement or replacement of specific items of Tangible Personal Property other than Lifts and components of Lifts. The maximum principal amount of such Permitted Equipment Financing at any given time may not exceed, in the aggregate, $1,000,000, multiplied by the PPI Escalation. To the extent Permitted Equipment Financing is used to acquire, repair, improve or replace specific items of Tangible Personal Property, Tenant shall be permitted to retain ownership of and encumber such items of Tangible Personal Property. Upon expiration of the term and payment in full of the Permitted Equipment Financing, Tenant shall convey any such Tangible Personal Property free and clear of all Encumbrances to Landlord, and Landlord shall lease such Tangible Personal Property to Tenant as Additional Leased Assets.
(b) In negotiating the terms of any Permitted Equipment Financing, Intrawest shall ensure that pursuant to its terms, any Permitted Equipment Financing shall be due and payable by Intrawest prior to or immediately upon expiration or earlier termination of this Agreement.
(c) Any contrary or inconsistent provision of this Agreement notwithstanding, Tenant may lease assets (other than (i) Lifts, (ii) related equipment such as motors, chairs and cable, and (iii) improvements on National Forest System Lands if the leasing of such improvements is prohibited by the Forest Service Permits) from third parties under a true operating lease under GAAP, and may hold the lessee’s interest, and exercise the lessee’s rights, under any such leases during the Term. Upon the expiration or earlier termination of this Agreement, Tenant shall assign to Landlord any rights, title and interests held by Tenant under any such leases remaining unexpired or undetermined at that time if requested by Landlord.
(d) Neither Landlord nor the City shall have any liability whatsoever with respect to any Permitted Equipment Financing or any true operating leases in the name of Tenant, unless Landlord shall elect to assume the same upon termination of this Agreement.
(e) Landlord shall execute, have acknowledged, and deliver to Tenant at Tenant’s expense from time to time any certificates, documents and instruments reasonably requested by Tenant for the purpose of evidencing or confirming Landlord’s agreements and obligations under this Section 10.8. Landlord shall also execute, have acknowledged, and deliver any waivers, consents, acknowledgements and grants of access reasonably requested by the lessor under the lease of any Tangible Personal Property or Intangible Personal Property or any lender providing Permitted Equipment Financing for the limited purpose of permitting any such lessor or lender to enter upon the Leased Assets, to take possession of its leased property or the collateral for any such Permitted Equipment Financing or otherwise to exercise its rights and remedies under any such lease or the documentation evidencing or securing such Permitted Equipment Financing, and Landlord shall not charge any such lessor or lender (or Tenant) a rental or other fee for such waivers, consents, acknowledgements or grants.
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ARTICLE XI
NATIONAL FOREST SYSTEM LANDS OPERATING AGREEMENT
11.1 Maintenance of National Forest Service Permits
(a) Landlord is the current permittee under the Forest Service Permits. Concurrently herewith, Landlord and Tenant are going through the process of requesting that the United States approve the Tenant as the controlling operator (pursuant to 32 CFR 251.55(a)) of the improvements on the National Forest System Lands.
(b) Landlord and Tenant agree that during the term of the Forest Service Permits, as they may be extended or reissued from time to time, Tenant shall be maintained as the controlling operator of the National Forest System Lands to the maximum extent permitted by the United States applicable rules, regulations and policies. Tenant shall not cause to be made any expansion, contraction or other modification to the boundaries covered by the Forest Service Permits without the prior approval of Landlord, which approval shall be in its sole and absolute discretion. During the term of the Forest Service Permits, Landlord and Tenant agree to execute and deliver from time to time all other appropriate agreements and other instruments, and take any other actions not inconsistent with this Agreement as may be necessary to comply with the foregoing.
(c) Landlord and Tenant agree that they shall cooperate in requesting that any Forest Service Permits in effect upon expiration of the Term shall be reissued in the name of Landlord, or such other name as Landlord shall designate consistent with U.S. Department of Agriculture, Forest Service applicable rules, regulations and policies.
(d) Landlord and Tenant acknowledge that the Forest Service Permits do not convey an interest in land or establish a leasehold interest in National Forest System Lands.
11.2 Obligations With Respect to Forest Service Permits. Tenant shall take any and all actions necessary to maintain the Forest Service Permits in full force and effect in all respects, including without limitation compliance with their conditions and the payment of all applicable fees and charges. Tenant shall take all actions necessary to cause all renewals of the Forest Service Permits to be made when necessary. Nothing contained in this Agreement shall be construed to relieve Landlord from any obligations it may have to the United States through the Forest Service Permits or United States applicable rules, regulations and policies.
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11.3 Term. Notwithstanding the Term of the Lease, the term of the operating agreements contained in this Agreement with respect to the operation of the improvements to be conducted on National Forest System Lands shall not extend beyond the term of the Forest Service Permits, as they may be extended or reissued from time to time. Tenant shall make such applications and renewals and otherwise use its best efforts to continue the term of the Forest Service Permits at least to the Term of the Lease, and Landlord shall cooperate as may be required by U.S. Department of Agriculture, Forest Service applicable rules, regulations and policies. Nothing in this Lease shall be construed to obligate the United States in any way beyond the term of the Forest Service Permits existing from time to time.
11.4 Additional Obligations of Tenant to the United States. As the controlling party in possession and operator of the improvements on the National Forest System Lands:
(a) Tenant shall include the United States as an additional named insured under the insurance policies it is required to maintain under the Lease;
(b) With respect to the National Forest System Lands, Tenant shall indemnify the United States, for any and all injury, loss or damage, including fire suppression costs, the United States may suffer as a result of claims, demands, losses, or judgments caused by Tenant’s use or occupancy;
(c) Tenant acknowledges and agrees that, notwithstanding provisions of the Lease to the contrary, the Forest Service Permits and consents given pursuant thereto, are not assignable and may not be transferred except pursuant to U.S. Department of Agriculture, Forest Service applicable rules, regulations and policies.
11.5 Forest Service Master Plan. Underlying the Forest Service Permits is the Forest Service Master Plan. Tenant agrees that all Resort Operations shall at all times be conducted in conformance with the Forest Service Master Plan and that no expansion, contraction or other modification shall be made to the boundaries covered by the Forest Service Master Plan without the prior approval of Landlord and of the United States, which approvals shall be in their sole and absolute discretion. Tenant shall have the right to facilitate changes to the Forest Service Master Plan consented to by the United States without the consent or approval of Landlord, if such changes do not include the expansion, contraction or other modification to the boundaries covered by the Forest Service Permits. Furthermore, Tenant agrees that it shall have the obligation to propose revisions, updates or replacements of the Forest Service Master Plan as required by the United States applicable rules, regulations and policies and when required in accordance with Tenant’s planning for the development of the Winter Park Resort. Subject to the requirement that no expansion, contraction or other modification be made to the boundaries covered by the Forest Service Master Plan without the prior discretionary approval of Landlord and the United States, upon the request and at the expense of Tenant, Landlord shall cooperate in a reasonable manner with respect to other changes proposed by Tenant to the Forest Service Permits and in connection with Tenant’s revising, updating or replacing the Forest Service Master Plan. Tenant shall promptly deliver to Landlord a copy of all changes made to the Forest Service Master Plan.
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ARTICLE XII
CONDITIONS TO EFFECTIVENESS
12.1 Conditions. The effectiveness of this Agreement against any Party shall be subject to the satisfaction or waiver, on or before December 31, 2002, of the conditions set forth in Section 12.1, and if such conditions are not timely waived or satisfied then this Agreement shall not become effective and neither Party shall have any rights or obligations hereunder:
(a) Execution and Delivery of Transaction Documents. The execution of all documents and the doing of everything to be done pursuant to the terms of this Agreement on or before the Effective Date, including without limitation execution and delivery of the Option Agreement, the Additional Consideration Agreement, the Parent Guaranty, and the agreements assigning or licensing assets and assuming liabilities.
(b) Legal Opinions.
(i) Jacobs Chase Frick Kleinkopf & Kelley, LLC, legal counsel to Tenant, shall have delivered its opinion in form and substance satisfactory to the Landlord and the City.
(ii) Canadian legal counsel to Tenant shall have delivered its opinion in form and substance satisfactory to Landlord, addressed to the Landlord and the City, stating that the Parent Guaranty is the valid, binding and enforceable obligation of Intrawest Corporation, enforceable in accordance with its terms, subject only to standard defenses of a nature as would apply under Colorado law.
(iii) Ireland, Stapleton, Pryor & Pascoe, P.C., legal counsel to the Landlord and the City, shall have delivered its opinion in form and substance satisfactory to the Tenant and Tenant’s affiliates.
(c) Payments. Tenant shall have delivered to Landlord, by wire transfer or certified check, the initial payment required under Section 5.1(a) and Intrawest Holdings shall have delivered the initial Required Quarterly Payment required to be paid pursuant to the Additional Consideration Agreement.
(d) Leasehold Title Policy. Tenant shall have received the Leasehold Title Policy or a written agreement from the Title Company acknowledging that all requirements for the issuance of the Leasehold Title Policy (other than the payment of the premium) have been satisfied and committing to issue the Leasehold Title Policy, which Leasehold Title Policy shall include no exceptions to title to the Real Property that are unacceptable to Tenant in its reasonable judgment.
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(e) Evidence of Corporate Authorization.
(i) Landlord Authorization. Tenant shall have received a copy of resolutions duly adopted by the members (if any) and board of directors of Landlord authorizing the execution and delivery of this Agreement, the First Loan Documents, the other documents described in this Section 12.1, and any other related documents by Landlord and the consummation of the transactions herein and therein contemplated to be consummated by Landlord, duly certified, as of the Effective Date, by the secretary or any assistant secretary of Landlord; and
(ii) Tenant Authorization. Landlord shall have received a copy of resolutions duly adopted by the board of directors of Tenant authorizing the execution and delivery of this Agreement by Tenant and the related documents to which Tenant is a party and the consummation of the transactions herein and therein contemplated to be consummated by Tenant, duly certified, as of the Effective Date, by the secretary or any assistant secretary of Tenant.
(iii) Intrawest Corporation and Intrawest Holdings Authorizations. Landlord shall have received a copy of resolutions duly adopted by the board of directors of Intrawest Corporation authorizing the execution and delivery of the Parent Guaranty, duly certified, as of the Effective Date, by the secretary or any assistant secretary of Intrawest Corporation. Landlord shall have received a copy of resolutions duly adopted by the board of directors of Intrawest Holdings authorizing the execution and delivery of the Additional Consideration Agreement, duly certified, as of the Effective Date, by the secretary or any assistant secretary of Intrawest Holdings.
(iv) City Authorization. The City shall have duly adopted an ordinance approving an agreement between Landlord and the City that approves the execution by Landlord of this Agreement and the other documents related hereto.
(f) Tenant shall have approved the terms of the First Loan Documents (together with any terms relating to prepayment or refinancing of any existing indebtedness of Landlord) and Landlord shall have executed, had acknowledged, and delivered to the initial Agreed-Upon Indebtedness Lender the First Loan Documents, provided that the First Loan Documents are consistent with Article X above.
(g) Tenant shall have received an assignment of any and all rights (including without limitation any rights of first refusal, rights of first offer, non-compete rights or other rights or options) that Hines Interests Limited Partnership or any of its affiliates may have with respect to the Leased Assets or the Developable Land (as defined in the Option Agreement), in form and substance satisfactory to both Landlord and Tenant; and Landlord shall have consented to such assignment, and Landlord and Tenant shall have agreed to terminate all such assigned rights and assumed obligations.
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(h) The Forest Service Permits and approvals thereunder shall be issued by the United States in a manner that is satisfactory to Tenant and Landlord.
(i) No governmental agency shall have brought or threatened to bring any enforcement, injunctive or other action objecting to the transactions represented and contemplated by this Agreement and the transactions will not otherwise result in the violation of any Applicable Law.
(j) Landlord and Tenant shall have received from The Colorado Arlberg Club, a Colorado non-profit corporation, either an amendment or a waiver of any claim that this Agreement or the actions contemplated hereby cause a default under the terms of that certain Lease dated August 28, 1980, as amended, between Landlord as lessee and The Colorado Arlberg Club, as lessor, with such amendment or waiver being in form and substance satisfactoiy to both Landlord and Tenant.
(k) Landlord and Tenant shall have executed a certificate confirming the Effective Date of this Agreement.
(1) Landlord and Tenant shall have obtained all consents, approvals and other assurances as either Party may require so that the consummation of the transactions contemplated by this Agreement will not (i) result in the breach, termination, cancellation, acceleration or suspension of any agreement or contract; or (ii) result in the violation, termination, cancellation, suspension or revocation of any license, permit or consent; in either case resulting in a Material Adverse Effect on Resort Operations or otherwise materially and adversely affecting the ability for Tenant to perform its obligations under this Agreement.
ARTICLE XIII
REPRESENTATIONS AND WARRANTIES
13.1 Representations and Warranties of Tenant. Tenant hereby represents and warrants to Landlord that on the Effective Date:
(a) Organization. Tenant is a corporation duly organized, validly existing and in good standing under the laws of the state of its formation.
(b) Authorization. This Agreement has been duly authorized, executed and delivered by Tenant and constitutes a valid, legal and binding agreement, enforceable against Tenant in accordance with its terms, except to the extent that the enforcement of remedies herein provided may be limited under applicable bankruptcy and insolvency laws, public policy and equitable principles.
(c) Approvals and Consents. No approval, consent or withholding of objections is required from any Governmental Authority with respect to the entry into or performance by Tenant of this Agreement, except such as have already been obtained.
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(d) No Violation. Tenant has adequate power and capacity to enter into, and perform its obligations under, this Agreement. The entry into and performance by Tenant of this Agreement will not: (i) violate any judgment, order, law or regulation applicable to Tenant or any provision of Tenant’s certificate of incorporation or bylaws; or (ii) except as otherwise disclosed in writing from Tenant to Landlord, result in any breach of, constitute a default under, or result in the creation of any Encumbrance upon any Leased Asset pursuant to, any indenture, mortgage, deed of trust, bank loan or credit agreement or other contract, agreement or instrument (other than this Agreement) to which Tenant is a party.
(e) No Suits or Proceedings. There are no suits or proceedings pending or, to the knowledge of Tenant (except as Tenant has disclosed in writing to Landlord), threatened in court or before any commission, board or other administrative agency against or affecting Tenant, which will have a Material Adverse Effect.
13.2 Representations and Warranties of Landlord. For purposes of this Section 13.2, the phrase “to the best knowledge of Landlord” means only the actual conscious knowledge of Landlord’s President and CEO, Vice President of Operations, Vice President of Administration, Vice President of Finance, Vice President of Marketing, and Vice President, General Counsel, provided, however, that the individuals who hold such positions shall not be held personally liable for any errors or omissions they may make other than by fraud or willful misconduct. The contents of Exhibits mentioned in this Section 13.2 may be modified on or prior to the Effective Date with the mutual consent of the Parties. Landlord hereby represents and warrants to Tenant that on the Effective Date:
(a) Organization. Landlord is a non-profit corporation duly organized, validly existing and in good standing under the laws of the state of its formation.
(b) Authorization. This Agreement has been duly authorized, executed and delivered by Landlord and constitutes a valid, legal and binding agreement, enforceable against Landlord in accordance with its terms, except to the extent that the enforcement of remedies herein provided may be limited under applicable bankruptcy and insolvency laws, public policy and equitable principles.
(c) Approvals and Consents. No approval, consent or withholdings of objections is required from any Governmental Authority with respect to the entry into or performance by Landlord of this Agreement, except such as have already been obtained.
(d) No Violation. Landlord has adequate power and capacity to enter into, and perform its obligations under, this Agreement. The entry into and performance by Landlord of this Agreement will not: (i) violate any judgment, order, law or regulation applicable to Landlord or any provision of Landlord’s articles of incorporation or bylaws; or (ii) result in any breach of, constitute a default under, or result in the creation of, any Encumbrance upon any Leased Asset pursuant to any indenture, mortgage, deed of trust, bank loan or credit agreement or other contract, agreement or instrument (other than this Agreement) to which Landlord is a party.
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(e) Leasehold Interests. Exhibit S lists by title, date, parties and premises all leases for real property by which Landlord leases any real property from third parties.
(f) Tangible Personal Property. Exhibit U lists by title, date, parties and equipment all material leases (including conditional sales contracts) for motor vehicles, machines, machinery, Lifts, tows, snow grooming equipment, snowmaking equipment, component parts thereof, furniture, fixtures, equipment and all other items of Tangible Personal Property by which Landlord leases (as lessee) any such tangible personal property from third parties. Exhibit J lists all of the material Tangible Personal Property to which Landlord holds title.
(g) Intellectual Property. Exhibit V lists all of the Intellectual Property as of the date of this Agreement, owned or licensed by Landlord.
(h) Intangible Personal Property - Material Permits and Licenses. To the best knowledge of Landlord, Exhibit W lists all of the existing licenses, permits, consents, registrations and filings which, if not obtained, held or made would have a Material Adverse Effect on the Resort Operations or that are necessary for the execution or performance by Tenant of its obligations under this Agreement, including without limitation, the Forest Service Permits, special use permits, tramway registrations, child care licenses, liquor licenses, water permits, underground storage tank registrations, other environmental permits, and FCC permits.
(i) Intangible Personal Property - Material Agreements. Exhibit X lists all of the notes, guarantees, contracts and other agreements involving a present or future liability of at least ten thousand dollars ($10,000) to which Landlord is a party by title, date, and parties. To the best knowledge of Landlord, there are no other contracts (written or oral) involving a present or future liability of at least ten thousand dollars ($10,000) concerning the operation of Winter Park Resort that are not identified on Exhibit X. Exhibit T lists by title, date, parties and premises all leases for real property by which Landlord leases any real property to third parties.
(j) No Undisclosed Litigation or Arbitration. Except as set forth in a separate written disclosure previously delivered by Landlord to Tenant, there is no action, arbitration, claim, dispute, suit, inquiry, proceeding or investigation by or before any court, governmental agency or commission, or arbitration panel pending or, to Landlord’s knowledge as of the date of this Agreement, threatened (except as set forth in incident reports maintained by Landlord in the ordinary course of business to which Tenant has been given access by Landlord), against Landlord. Landlord is not subject to any judgment, order or decree entered in any lawsuit or proceeding that has not yet been satisfied or which is a continuing obligation of Landlord.
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(k) Compliance with Law. Landlord has not received written notice and, to the best knowledge of Landlord, there has been no assertion of any violation of law with respect to the Winter Park Resort.
(l) Current Assets and Current Liabilities. Exhibit Y lists all material Current Assets and all Current Liabilities with respect to the Winter Park Resort as of July 6, 2002.
(m) Compliance with ERISA. All payments to the Pension Benefit Guaranty Corporation with respect to the employee benefit pension plans have been paid, and, to the best knowledge of Landlord, all Employee Benefit Plans comply in all material respects to the requirements of ERISA and also are in compliance, in all material respects, with the Internal Revenue Code of 1986, as amended, and all applicable regulations and rulings thereafter. Each Employee Benefit Plan has been administered in accordance with the terms of the governing plan documents and has been maintained in all material respects, in form and in operation, in accordance with Applicable Laws, including the qualification requirements set forth in Section 401(a) of the Internal Revenue Code, as applicable. With respect to the form of the Pension Plan, Tenant acknowledges that the Pension Plan is currently under review by the Internal Revenue Service in connection with the plan’s request for a favorable determination letter and that the Internal Revenue Service may request additional amendments to the Plan as a condition to the Plan’s qualification. The Landlord has made all required contributions within the time period prescribed by Applicable Laws to each Employee Benefit Plan. To the best knowledge of the Landlord, there are no claims, either asserted or unasserted, against any Employee Benefit Plan by either a participant or government authority, or any breaches of any fiduciary duty or prohibited transactions that could potentially trigger liability on the part of the plan, the plan sponsor or the plan administrator or disqualify an Employee Benefit Plan, or cause “tax-qualified” benefits under an Employee Benefit Plan to become taxable.
(n) Labor Matters. (i) There are no union contracts or collective bargaining agreements applicable to any employee of Landlord; (ii) there is no unfair labor practice complaint against Landlord pending before the National Labor Relations Board; (iii) there is no labor strike, dispute, slowdown or stoppage actually pending or, to Landlord’s knowledge, threatened, against Landlord; and (iv) there is no current union representation question pending with respect to the employees of Landlord.
(o) Environmental Matters.
(i) Landlord has not received any written (or, to Landlord’s best knowledge, oral) notice, report or other information from any governmental agency or any environmental consultant regarding any actual or alleged violation of any Environmental, Health and Safety Requirements, or any liabilities or potential liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations, relating to any of them or to any of the Leased Assets arising under any Environmental, Health and Safety Requirements.
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(ii) Landlord has delivered to Tenant true and correct copies of all Phase I Environmental Assessment Reports with respect to the Winter Park Resort of which it has knowledge.
(p) Water Rights. To the best of its knowledge, Landlord has not abandoned any of its Water Rights. Upon execution of this Agreement, Landlord shall produce the original stock certificates for the shares it owns in Clinton Ditch, and a notation shall be made on the face of such shares that they are subject to this Agreement. Landlord shall notify the Clinton Ditch of the leasehold interests of Tenant in said shares.
(q) No Brokers or Finders. Landlord has not employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the transactions contemplated by this Agreement.
(r) No Federal Income Taxes. All Federal income taxes of Landlord that are due and payable as of the Effective Date have been paid.
ARTICLE XIV
DAMAGE, DESTRUCTION OR DEPRIVATION OF USE; EMINENT DOMAIN
14.1 Damage or Destruction of the Leased Assets.
(a) If the Improvements shall be destroyed or damaged in whole or in part by fire or other casualty (including any casualty for which insurance was not obtained or obtainable) of any kind or nature, ordinary or extraordinary, foreseen or unforeseen, Tenant shall give to Landlord prompt notice thereof. If Tenant does not have the right (because the damage does not constitute Major Damage) or otherwise elects not to exercise its right to terminate this Agreement pursuant to Section 14.1(b), then Tenant shall promptly repair, alter, restore, replace and rebuild the same at least to the extent of the value and the character of the Improvements existing immediately prior to such occurrence, but Tenant shall have no obligation to expend sums in excess of (i) any proceeds of insurance actually received by Tenant, (ii) if Tenant fails to carry any insurance it is required to carry under Article IX of this Agreement, the dollar equivalent of the proceeds of insurance that Tenant would have received if it had carried all such insurance required under said Article IX, (iii) deductibles and co-payment amounts under any insurance policies, (iv) the Required Annual Capital Maintenance Amount for each Fiscal Year, and (v) the capital expenditures that Tenant is required to make from time to time under Section 5.3(c) of this Agreement. Landlord shall in no event be called upon to repair, alter, replace, restore, or rebuild such Improvements, or any portion thereof, nor to pay any of the costs or expenses thereof; provided that any insurance proceeds paid to Landlord in connection therewith shall be made available by Landlord to Tenant.
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(b) In the event of Major Damage, Tenant may elect to terminate this Lease effective as of the date of such Major Damage by written notice to Landlord given within ninety (90) days after the date of such Major Damage. The phrase “Major Damage” shall mean any damage or destruction to the Improvements to the extent that it materially and adversely affects the practical ability for Tenant to resume operations of the Winter Park Resort on a commercially reasonable basis, taking into account all factors, including Tenant’s obligations under this Agreement, within three (3) years after the casualty event.
14.2 Eminent Domain. If so much of the Leased Assets shall be taken by right of eminent domain so as to materially and adversely affect the practical ability of Tenant to operate the Winter Park Resort as a resort area on a commercially reasonable basis, taking into account all factors, including Tenant’s obligations under this Agreement, then Tenant may elect to terminate this Lease effective as of the date of such taking by written notice to Landlord given within ninety (90) days after the date of such taking. As used herein, “taking by right of eminent domain” includes any condemnation or any conveyance in lieu of or under threat of any taking. If Leased Assets shall be taken by right of eminent domain but not so as to materially and adversely affect the practical ability of the Winter Park Resort to operate as a resort area on a commercially reasonable basis taking into account all factors, then the proceeds of such taking shall be paid to Landlord and Tenant, as their interests may appear.
14.3 Right to Terminate Due to Inadequate Snowfall. If, either for three (3) consecutive years or for five (5) years in any consecutive seven (7) year period, Tenant reasonably determines that, inadequate snowfall materially and adversely affects the practical ability of the Tenant to operate Winter Park Resort on a commercially reasonable basis, and, as a result, Tenant actually causes Winter Park Resort to be closed for the business of snowsliding for at least sixty (60) days during each such ski season (which for these purposes shall be deemed to be the period from Thanksgiving Day through Easter Day), then Tenant may elect to terminate this Agreement by giving written notice to Landlord (which termination shall be effective as of the date of such notice) within ninety (90) days after the last day of the ski season that gave rise to Tenant’s right to terminate.
14.4 Effect of Termination. In the event of termination of this Agreement pursuant to Section 14.1, 14.2 or 14.3, in addition to the provisions of Article XVII of this Agreement, Tenant shall surrender to Landlord the Leased Assets and all interest therein under this Agreement, and Landlord may re-enter and take possession of the Leased Assets and remove Tenant therefrom. Tenant shall make all Rental Payments hereunder, duly apportioned as of the date of such termination of this Agreement, and Landlord and Tenant shall be discharged from all obligations arising hereunder after the date of such termination. In the event of any such termination, any awards, compensation or insurance payments on account of such damage, destruction, deprivation of use or condemnation shall be assigned by Tenant to Landlord. Landlord and Tenant agree to take such actions and execute such documents as are reasonably necessary in the event of termination of this Agreement pursuant to Section 14.1,14.2 or 14.3.
14.5 No Abatem ent if Lease Is Not Terminated. In the event of any damage, destruction, deprivation of use or taking that does not result in the termination of this Agreement pursuant to Section 14.1, 14.2 or 14.3, there shall be no reduction, change or abatement of any payment payable by or on the part of Tenant hereunder or in the method of computing, accounting for, or paying the same, and in no event shall there be any reduction, change or abatement of any payment hereunder on the condition that all proceeds of any insurance or any condemnation proceeds pertaining to such damage, destruction, deprivation of use or taking shall be paid to or for the account of Tenant.
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ARTICLE XV
DEFAULT AND REMEDIES
15.1 Default by Tenant. The occurrence or existence of any one or more of the following events or circumstances shall constitute an Event of Default hereunder by Tenant and, subject to the provisions hereof and the rights of an Agreed-Upon Indebtedness Lender, shall give rise to the right of Landlord, by notice to Tenant, to exercise its remedies in accordance with Section 15.2:
(a) Tenant fails to pay when due any Required Interest Payments, and from and after October 1, 2012, any Required Quarterly Payments or, from and after September 30, 2013, any Revenue-Based Annual Payment, and does not cure such failure within five (5) business days after Landlord shall have given to Tenant written notice specifying such failure;
(b) Tenant fails in any material respect to perform or observe any of the material covenants or conditions to be performed or observed by Tenant under this Agreement or any of the related documents hereto so as to have a Material Adverse Effect on Landlord, and Tenant does not cure such failure within thirty (30) days after Landlord shall have given to Tenant written notice specifying such failure (or within such period, if any, as may be reasonably required to cure such failure if it is of such nature that it cannot be cured within such period, on the condition that Tenant commences to cure such default within such period and proceeds with reasonable diligence thereafter to cure such default fully);
(c) Intrawest Development Corp. or its successor or assignee is in default of the Option Agreement and all opportunities to cure the same have expired by the terms of such agreement;
(d) Tenant shall become insolvent (as such term is defined under Section 101 of the Federal Bankruptcy Code, 11 U.S.C. 101 et seq. (the “Federal Bankruptcy Code”), or any successor statute thereto); or shall fail to pay its debts generally as they mature; or shall seek the benefit of any present or future federal or state insolvency statute; or shall make a general assignment for the benefit of creditors, or file a voluntary petition in bankruptcy or a petition or answer seeking an arrangement of its indebtedness under the Federal Bankruptcy Code or under any other law or statute of the United States or of any state thereof, or consent to the appointment of a receiver, trustee, custodian, liquidator or other similar official, of all or substantially all of its property; or an order for relief shall be entered by or against Tenant under any chapter of the Federal Bankruptcy Code and shall not be dismissed or stayed within sixty (60) days after the entering of the order of appointment of receiver or trustee;
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(e) By order or decree of a court, Tenant shall be adjudged a debtor or bankrupt, or an order shall be made approving a petition filed by any of its creditors or by any of its stockholders, seeking its reorganization or the readjustment of its indebtedness under the Federal Bankruptcy Code or under any other law or statute of the United States or any state, and such adjudication, order or decree shall not be stayed or vacated within sixty (60) days of its issuance;
(f) A petition under any chapter of the Federal Bankruptcy Code or an action under any federal or state insolvency law or statute shall be filed against Tenant and shall not be dismissed or stayed within sixty (60) days after the filing thereof;
(g) By or pursuant to, or under authority of any legislative act, resolution or rule, or any order or decree of any court or governmental board, agency or officer, a receiver, trustee, custodian, liquidator or other similar official shall take possession or control of the Leased Assets or all or substantially all of the property of Tenant, and such possession or control shall continue in effect for a period of sixty (60) days;
(h) Except in conjunction with a permitted assignment pursuant to Section 16.2, Tenant shall become a Person in legal dissolution, liquidation or otherwise in termination;
(i) Except in conjunction with a permitted assignment pursuant to Section 16.2, the leasehold, license or other interest of or rights of Tenant hereunder shall be transferred to, pass to, or devolve upon, by operation of law or otherwise, any other person, firm, corporation or other entity, by, in connection with, or as a result of, any bankruptcy, insolvency, trusteeship, liquidation or other proceeding or occurrence;
(j) Except in conjunction with a permitted assignment pursuant to Section 16.2, Tenant shall become a merged corporation in a merger or a constituent corporation in a consolidation subsequent to which the surviving corporation does not comply with the requirements of an approved assignee or otherwise transfers its interest under this Agreement without the prior written consent of the Landlord if such consent is required;
(k) Intrawest Corporation, Tenant or any of Tenant’s subsidiaries, or any of their respective executive officers and directors, shall be or have been convicted of a felony or misdemeanor, in either case which involves dishonesty, misrepresentation, fraud, deceit, misappropriation or theft, and any such Person shall not have been removed from his position within ninety (90) days after Tenant or Intrawest Corporation has actual knowledge of the fact of such conviction;
(1) Tenant knowingly permits any Person to use for any illegal purpose any portion of the Leased Assets;
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(m) Unless otherwise contemplated in this Agreement because of casualty or condemnation or lack of snowfall, Tenant shall cease to occupy or use a material portion of the Leased Assets, or shall otherwise cease to operate with Winter Park Resort as a resort as contemplated by this Agreement, for a continuous period of six (6) consecutive months or longer or for eight (8) months in any consecutive twelve (12) month period; or
(n) Any representation or warranty of Tenant contained in this Agreement was false or incorrect in any material respect as of the date of such representation or warranty so as to have a Material Adverse Effect on Landlord.
15.2 Remedies of Landlord. If Tenant shall default under this Agreement as set forth in Section 15.1 above, Landlord shall have the following rights and remedies, in addition to all other rights and remedies at law or equity, and none of the following, regardless of whether exercised by Landlord, shall preclude the exercise of any other right or remedy whether herein set forth or existing at law or equity:
(a) Landlord shall have the right to terminate this Agreement by giving Tenant notice in writing at any time. No act by or on behalf of Landlord, such as entry onto, or repossession of, the Leased Assets by Landlord to perform maintenance and repairs and efforts to relet the Leased Assets, other than giving Tenant written notice of termination, shall terminate this Agreement. If Landlord gives such notice of termination, this Agreement and the Term hereof as well as the right, title and interest of Tenant under this Agreement shall wholly cease and expire in the same manner and with the same force and effect on the date specified in such notice as if such date were the expiration date of the Term without the necessity of re-entry or any other act on Landlord’s part (provided, however, Landlord may elect to exclude Tenant from the Leased Assets and enter into or repossess the Leased Assets, in all manner and methods allowable by law without liability by reason of such exclusion, entry or repossession), and without discharging any of Tenant’s obligations under this Agreement.
(b) In any calculation of actual damages payable to Landlord that is determined, in whole or in part, on the present value of future net Rental Payments, then, notwithstanding the fact that Rental Payments after the tenth Fiscal Year are based on a formula, Tenant and Landlord stipulate that in determining the present value of such future net Rental Payments, the parties shall make the conclusive presumption that Gross Revenue and Cash Flow for Annual Payment for the remaining Term would have been the same as the average of Gross Revenue and the average of Cash Flow for Annual Payment for the most recent five (5) Fiscal Years prior to the Event of Default, in each case annually increased over the balance of the Term at a reasonable rate of inflation, with the aggregate result discounted to a present value using a reasonable discount rate. Tenant shall be entitled to a reduction in the actual damages determined according to the foregoing provisions of this paragraph, which reduction shall be equal to the present value of any rent and other sums that Landlord can be reasonably expected to receive upon reletting the Leased Assets, whether or not Landlord actually attempts to relet the Leased Assets. Notwithstanding that Landlord shall have no obligation to relet the Leased Assets, Landlord shall otherwise be required to mitigate damages arising out of any Event of Default. If any law shall limit the amount of such damages to less than the amount agreed to herein, Landlord shall be entitled to the maximum amount allowable under such law. Nothing herein shall be construed to affect or prejudice Landlord’s right to prove, and claim in full, that unpaid rent accrued prior to termination of this Agreement.
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(c) Landlord
may, without demand or notice, re-enter and take possession of the Leased Assets or any part thereof, expel Tenant and those claiming
through or under Tenant, and remove the effects of any and all such Persons without being deemed guilty of any manner of trespass,
without prejudice to any remedies for arrears of Rental Payments or preceding breach of covenants and without terminating this
Agreement or otherwise relieving Tenant of any obligation hereunder. Should Landlord elect to re-enter as provided in this paragraph,
or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may, from
time to time, without terminating this Agreement, relet the Leased Assets or any part thereof for such term or terms and at such
rental or rentals, and upon such other conditions as Landlord may in its absolute discretion deem advisable, with the right to
make alterations and repairs to the Leased Assets. No such re-entry, repossession or reletting of the Leased Assets by Landlord
shall be construed as an election on Landlord’s part to terminate this Agreement unless a written notice of termination is
given to Tenant by Landlord. No such re-entry, repossession or reletting of the Leased Assets shall relieve Tenant of its liability
and obligation under this Agreement, all of which shall survive such
re-entry, repossession or reletting.
(d) If Tenant shall default in making any payment required to be made by Tenant (other than payments due to Landlord under this Agreement) or shall default in performing any other obligations of Tenant under this Agreement, Landlord may, but shall not be obligated to, make such payment or, on behalf of Tenant, expend such sum as may be necessary to perform such obligation. All sums so expended by Landlord shall be repaid by Tenant to Landlord on demand. No such payment or expenditure by Landlord shall be deemed a waiver of Tenant’s default, nor shall it affect any other right or remedy of Landlord by reason of such default.
(e) From time to time, take whatever action at law or in equity appears necessary or desirable to collect the Rental Payments and any other amounts payable by Tenant hereunder then due and thereafter to become due, and to enforce the performance and observance of any obligation, agreement or covenant of Tenant under this Agreement. Any suit or suits for the recovery of any such deficiency or damages, or a sum equal to any rent or additional amounts payable hereunder, may be brought by Landlord, from time to time at Landlord’s election, and nothing herein contained shall be deemed to require Landlord to await the date upon which this Agreement would have expired by limitation. Any suit brought by Landlord to enforce collection of such difference for any one month shall not prejudice Landlord’s right to enforce the collection of any difference for any subsequent month. In addition to the foregoing, and without regard to whether this Agreement has been terminated, Tenant shall pay to Landlord all costs incurred by Landlord, including reasonable attorneys’ fees, with respect to any successful lawsuit or successful action instituted or taken by Landlord to enforce any of the provisions of this Agreement. Landlord expressly waives all claims to consequential, exemplary or punitive damages. Tenant’s liability shall survive the institution of summary proceedings and the issuance of any warrant hereunder.
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(f) It is understood and agreed that, unless specifically waived in this Agreement, the remedies set forth in this Agreement shall be in addition to all other remedies which are or may be available to Landlord, as the case may be, at law or in equity. All the remedies herein given to Landlord and all rights and remedies given to Landlord by law shall be cumulative and concurrent. No termination of this Agreement or the taking or recovering of the Leased Assets shall deprive Landlord of any of its remedies or actions against Tenant for Rental Payments due for damages or for the breach of any covenant herein, nor shall the bringing of any action for Rental Payments due or breach of any covenant, or the resorting to any other remedy herein provided for the recovery of Rental Payments due be construed as a waiver of the right to obtain possession of the Leased Assets.
(g) As used in this Agreement the terms “re-enter,” “re-entry,” “take possession,” “repossess” and “repossession” are not restricted to their technical legal meanings.
15.3 Default by Landlord.
(a) The occurrence or existence of any one or more of the following events or circumstances shall constitute an Event of Default hereunder by Landlord and, subject to the provisions hereof, shall give rise to the right of Tenant, by notice to Landlord, to exercise its remedies in accordance with Section 15.4:
(i) If Landlord has breached any representation or warranty contained in this Agreement or any of the documents related hereto so as to have a Material Adverse Effect upon Tenant; or
(ii) If Landlord has breached any covenant contained in this Agreement or any of the documents related hereto in any material respect so as to have a Material Adverse Effect upon Tenant and such breach has continued without cure for a period of thirty (30) days after the notice of breach.
(b) The occurrence or existence of any one or more of the following events or circumstances shall constitute an Event of Default hereunder by Landlord and, subject to the provisions hereof, shall give rise to the right of Tenant, by notice to Landlord, to terminate this Agreement, in addition to all other rights that Tenant may exercise in accordance with Section 15.4:
(i) Landlord shall become insolvent (as such term is defined under Section 101 of the Federal Bankruptcy Code, 11 U.S.C. 101 et seq. (the “Federal Bankruptcy Code”), or any successor statute thereto); or shall fail to pay its debts generally as they mature; or shall seek the benefit of any present or future federal or state insolvency statute; or shall make a general assignment for the benefit of creditors, or file a voluntary petition in bankruptcy or a petition or answer seeking an arrangement of its indebtedness under the Federal Bankruptcy Code or under any other law or statute of the United States or of any state thereof, or consent to the appointment of a receiver, trustee, custodian, liquidator or other similar official, of all or substantially all of its property; or an order for relief shall be entered by or against Landlord under any chapter of the Federal Bankruptcy Code and shall not be dismissed or stayed within sixty (60) days after the entering of the order of appointment of receiver or trustee;
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(ii) By order or decree of a court, Landlord shall be adjudged a debtor or bankrupt, or an order shall be made approving a petition filed by any of its creditors or by any of its stockholders, seeking its reorganization or the readjustment of its indebtedness under the Federal Bankruptcy Code or under any other law or statute of the United States or any state, and such adjudication, order or decree shall not be stayed or vacated within sixty (60) days of its issuance;
(iii) A petition under any chapter of the Federal Bankruptcy Code or an action under any federal or state insolvency law or statute shall be filed against Landlord and shall not be dismissed or stayed within sixty (60) days after the filing thereof; or
(iv) By or pursuant to, or under authority of any legislative act, resolution or rule, or any order or decree of any court or governmental board, agency or officer, a receiver, trustee, custodian, liquidator or other similar official shall take possession or control of the Leased Assets or all or substantially all of the property of Landlord, and such possession or control shall continue in effect for a period of sixty (60) days.
15.4 Remedies of Tenant.
(a) Upon an Event of Default under subparagraph (a) of Section 15.3 above that remains uncured by Landlord, then Tenant shall have the right to seek such remedies as may exist in equity and, in addition, shall have the right to the recovery of such damages as may exist at law, provided, however, that Tenant expressly waives all claims to consequential, exemplary or punitive damages. In addition to the foregoing, and without regard to whether this Agreement has been terminated, Landlord shall pay to Tenant all costs incurred by Tenant, including reasonable attorneys’ fees, with respect to any successful lawsuit or successful action instituted or taken by Tenant to enforce any of the provisions of this Agreement. Notwithstanding the foregoing, Tenant shall not have the right to terminate this Agreement upon an Event of Default as described above in subparagraph (a) of Section 15.3, and the obligations of Tenant under this Agreement shall continue unabated.
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(b) Upon an Event of Default under subparagraph (b) of Section 15.3 above that remains uncured by Landlord, then Tenant shall have the right to seek such remedies and damages as may exist at law or in equity, provided, however, that Tenant expressly waives all claims to consequential, exemplary or punitive damages. In addition to the foregoing, and without regard to whether this Agreement has been terminated, Landlord shall pay to Tenant all costs incurred by Tenant, including reasonable attorneys’ fees, with respect to any successful lawsuit or successful action instituted or taken by Tenant to enforce any of the provisions of this Agreement. Included within the foregoing remedies, Tenant shall have the right to terminate this Agreement upon an Event of Default as described above in subparagraph (b) of Section 15.3.
15.5 No Implied Surrender or Waiver. The failure of Landlord or Tenant to seek redress for the other Party’s default under, or to insist upon the strict performance of, any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a default by Tenant or Landlord, from having all the force and effect of an original default by Tenant or Landlord. If it should be necessary or proper for a Party to bring any action under this Agreement or to place this Agreement with any attorney for the enforcement of any of such Party’s rights hereunder, then the prevailing Party agrees to pay to the other Party’s reasonable attorneys’ fees and all expenses and court costs. The acceptance by Landlord of payment for any period or periods after a violation or Event of Default of any of the terms, conditions and covenants of this Agreement shall not constitute a waiver or diminution of, nor create any limitation upon, any right of Landlord pursuant to this Agreement to terminate this Agreement for subsequent violation or Event of Default, or for continuation or repetition of the original violation or Event of Default.
15.6 No Default Resulting from Certain Failures. This Agreement contains certain references to (a) the desire of Landlord and Tenant for Winter Park Resort to be economically viable on a stand-alone basis upon expiration of the Term, and (b) Tenant investing resources to improve (or at least maintain) Winter Park Resort’s competitive position (and reputation). Those references are statements of the Parties’ desires and intentions (the “Stated Intentions”). The parties acknowledge that achievement of the Stated Intentions depends on a multitude of factors, some of which are beyond the control of Tenant. For that reason, the inability or failure of Winter Park Resort to achieve the Stated Intentions shall not imply that Tenant has failed to act in a manner consistent with sound business practices or high quality industry standards, and the inability or failure of Winter Park Resort to achieve the Stated Intentions itself shall not be a basis for deeming Tenant to be in breach or default under this Agreement.
15.7 Non-Binding Mediation. In the event of a dispute regarding Tenant’s performance of any non-monetary obligation pursuant to this Agreement, Landlord and Tenant will submit the dispute to non-binding mediation pursuant to the rules established for such proceedings by the American Arbitration Association. Both Parties shall include at least one senior-level person with decision-making authority on their teams. If such non-binding mediation is unsuccessful, then Landlord and Tenant will have all rights and remedies that are otherwise available to them under this Agreement.
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ARTICLE XVI
ASSIGNMENT, SUBLETTING AND OTHER TRANSFERS
16.1 Consent Required. Except as permitted in Section 16.2 below, Tenant may not voluntarily, by operation of law or otherwise, without Landlord’s prior written consent:
(a) Assign, convey, mortgage, encumber or otherwise transfer all or any part of its interest under this Agreement;
(b) Sublet or grant a license or concession with respect to all or any part of the Leased Assets in a transaction or series of related transactions that (i) including options to renew has a term equal to eighty percent (80%) or more of the useful life of the Leased Asset, or (ii) results in a transfer of title to a material asset for less than fair market value, or (iii) would produce annual gross revenue of more than five percent (5%) of total annual Gross Revenue;
(c) Enter into any agreement with any third party for the operation or management of all or any part of the Winter Park Resort except pursuant to a permitted sublease or license or concession; or
(d) Permit any change in the control of Tenant’s business, whether by sale of assets, transfer of stock or other equity interests, merger, consolidation, spin-off or otherwise.
Landlord shall not unreasonably withhold or delay its consent so long as there is pending no Event of Default or circumstance that with the passage of time or giving of notice would be an Event of Default, so long as the granting of such consent will not violate the terms of the Forest Service Permits or applicable United States laws, rules or regulations relating thereto, and so long as the proposed assignee, sublessee or transferee is also an affiliate of the position of the optionee under the Option Agreement (unless otherwise consented by Landlord in its sole and absolute discretion). Whether or not it is unreasonable for the Landlord to withhold its consent shall be based on all of the facts and circumstances, including without limitation the continuing obligations, if any, of Tenant or Intrawest Corporation.
16.2 When Consent Is Not Required.
(a) Notwithstanding anything to the contrary contained in Section 16.1 above, Tenant may, without Landlord’s consent so long as there is pending no Event of Default or circumstance that with the passage of time or giving of notice would be an Event of Default, so long as the granting of such consent will not violate the terms of the Forest Service Permits or applicable United States laws, rules or regulations relating thereto, and so long as the proposed assignee, sublessee or transferee is also an affiliate of the optionee under the Option Agreement (unless otherwise consented by Landlord in its sole and absolute discretion):
(i) Assign all or any portion of its interest under this Agreement;
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(ii) Sublet, license or grant licenses or concessions with respect to all or any portion of the Leased Assets; or
(iii) Permit a change in the control of Tenant’s business;
to (A) a Person that owns or controls, is owned or controlled by, or is under common ownership or control with Tenant, or (B) in conjunction with an amalgamation, consolidation, merger or any other similar corporate reorganization of Tenant or Intrawest Corporation, including, without limitation, a going private transaction of Tenant or Intrawest Corporation (but not including as a “similar corporate reorganization” one in which there is a spin off or split up of a significant part of the business or assets of the Tenant or Intrawest Corporation if following such spin-off or split-up there has been a change of control). Tenant shall also be permitted without Landlord’s consent, so long as there is pending no Event of Default or circumstance that with the passage of time or giving of notice would be an Event of Default and so long as Tenant’s actions will not violate the terms of the Forest Service Permits or applicable United States laws, rules or regulations relating thereto, to make any collateral assignment of the rights of Tenant under this Agreement to any lender or lenders of Tenant. As used in this Section 16.2, “ownership” and “control” mean direct or indirect ownership or control of more than fifty percent (50%) of all outstanding equity interests in a Person.
(b) Anything to the contrary in this Article XVI notwithstanding, if Tenant or Intrawest Corporation is a corporation whose voting shares are regularly and publicly traded on a recognized stock exchange, a change of control in Tenant’s or Intrawest Corporation’s business will not require Landlord’s consent as long as the voting shares continue to be so publicly traded, and as long as Landlord receives reasonably satisfactory assurances that Tenant’s business operations from the Leased Assets will not be adversely affected following the change of control.
(c) The provisions of Section 16.1 shall be subject to the applicable provisions of Article X of this Lease upon a foreclosure by the Agreed-Upon Indebtedness Lender of Tenant’s interest in this Lease or a conveyance of such interest in lieu of foreclosure.
16.3 Tenant to Furnish Information. All requests for Landlord’s consent to an assignment, subletting or other transfer under Section 16.1 above shall be in writing and specify in detail reasonably satisfactory to Landlord:
(a) The name, address and telephone number of the proposed assignee, sub-lessee or other transferee and, if it is not an individual, the names of the Persons that own or control the proposed assignee, sub-lessee or transferee;
(b) Details of the prior business experience of the proposed assignee, sub-lessee or other transferee (including experience in the business for which the Leased Assets may be operated pursuant to this Agreement) and the specific terms and conditions of the proposed assignment, subletting or other transfer;
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(c) Bank and other credit references, business reputation references, financial statements and such other information as Landlord may reasonably require to assess the business and financial responsibility and standing of the proposed assignee, sublessee or other transferee; and
(d) Any proposed changes to this Lease, the Option Agreement or the Parent Guaranty.
16.4 No Consideration. Unless, in connection with any assignment or sublease or any other permitted transfer by Tenant, there are changes to this Lease, the Option Agreement, the Additional Consideration Agreement, or the Parent Guaranty, Landlord shall not be entitled to any consideration in connection with any assignment or sublease or any other permitted transfer by Tenant, provided, however, that Tenant shall be responsible for Landlord’s costs as provided in Section 16.6.
16.5 Landlord’s Rights. If Tenant requests Landlord’s consent to an assignment, subletting or other transfer under Section 16.1 above, Landlord shall, within ninety (90) days after its receipt of such request, notify Tenant in writing that:
(a) Landlord grants its consent; or
(b) Landlord refuses to grant its consent, in which event Landlord shall set forth in detail the reasons (if Landlord’s withholding of consent is required by the terms of this Agreement to be reasonable) Landlord refuses to grant its consent.
16.6 Tenant Pays All Costs. Landlord’s consent to an assignment, subletting or other transfer under Section 16.1 above shall be subject to the requirement that all costs incurred in connection therewith and in connection with processing the application for consent (including any credit reports, and preparation and negotiation of any documentation) shall be paid by Tenant within thirty (30) days after invoicing by Landlord with reasonable detail of the costs incurred (whether or not Landlord consents to the proposed assignment, sublease or transfer), if it is within the right of Landlord to withhold consent).
16.7 Continuing Tenant Liability. Notwithstanding any assignment, conveyance, pledge, mortgage, sublease or any other transfer of the Leased Assets or any rights hereunder, Tenant shall remain fully liable for the payment of all amounts due hereunder and fully responsible for all liabilities hereunder and for the performance of all of its other obligations hereunder, unless Tenant is expressly released therefrom pursuant to the terms of the approved assignment, conveyance, pledge, mortgage, sublease or any other transfer of the Leased Assets or any rights hereunder. The provisions of Section 16.7 shall be subject to the applicable provisions of Article X of this Lease upon a foreclosure by the Agreed-Upon Indebtedness Lender of Tenant’s interest in this Lease or a conveyance of such interest in lieu of foreclosure.
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ARTICLE XVII
TERMINATION EVENTS
17.1 Termination Events. Immediately upon termination of this Agreement for any reason, whether upon the normal expiration of the Term or early termination as permitted by the terms of this Agreement by Landlord or Tenant, the following events shall occur (provided, however, that the failure of this Section to provide for a specific event that is otherwise required by the Terms of this Agreement shall not be deemed to waive such other requirement):
(a) Tenant shall pay to Landlord any outstanding financial obligations specified by the terms of this Agreement.
(b) To the extent not previously conveyed, Tenant shall convey to Landlord by special warranty deed, special warranty bill of sale and assignment or vehicle title transfer, as applicable, all real and personal (tangible and intangible) property that does or should constitute Leased Assets under the terms of this Agreement, and shall physically deliver the same to Landlord or its designee.
(c) Tenant shall transfer to Landlord the assets or, if appropriate, stock (at Landlord’s election) of any subsidiary entity of Tenant that holds Real Property, Tangible Personal Property, Intellectual Property, or Personal Property used in the Resort Operations, including without limitation any entity that holds a liquor license.
(d) Tenant shall claim no further interest in the Forest Service Permits or any other governmental licenses or permits (including without limitation liquor licenses) and shall execute such documents as Landlord may reasonably request to assist in effecting the removal of Tenant from (and, if necessary the reissuance to Landlord of) the Forest Service Permits and the transfer of other licenses and permits to Landlord or its designee.
(e) Tenant shall deliver to Landlord or its designee all books and records in the possession or under the control of Tenant relating to the Winter Park Resort, including without limitation financial records, contracts, incident reports, maintenance logs, depreciation schedules and engineering reports. To the extent that a specialized resource such as a proprietary computer program is required in order to view, copy or use such books and records, Tenant shall license the same to Landlord at no cost.
(f) Tenant shall permit all employees who work on a regular basis at least seventy-five percent (75%) of their time at the Winter Park Resort to be employed by Landlord or its designee, without condition or penalty.
(g) Landlord or its designee approved by the Agreed-Upon Indebtedness Lender shall cause Tenant and Intrawest Corporation to be released from any liability for the Agreed-Upon Indebtedness.
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(h) Tenant shall deliver to Landlord all cash or cash equivalents that represent the unexpended portion of the Required Annual Capital Maintenance Amount, provided, however, that all other cash assets shall remain the property of Tenant.
(i) Upon the expiration of the Term or other termination of this Lease, Tenant shall peaceably quit and surrender the Leased Assets to Landlord in good order, condition and repair, ordinary wear and tear and Landlord’s own acts of taking possession excepted, so that Landlord can repossess the Leased Assets no later than 5:00 p.m., MDT, of the day upon which this Agreement expires, without further notice. The Leased Assets shall be surrendered free and clear of any and all liens, encumbrances or charges, other than those that exist as of the Effective Date and as otherwise authorized or provided in this Agreement. Tenant expressly waives any notice to vacate at the expiration or other termination of this Agreement.
(j) If Tenant retains all or any material portion of the Leased Assets after the termination of this Agreement by lapse of time or otherwise, and continues to hold such Leased Assets for ten (10) days after receiving written notice from Landlord, such holding over shall constitute a tenancy at sufferance with respect to such retained portion, terminable by Landlord at any time upon notice to Tenant thereof, at a rental equal to a multiple of two times (2x) the rental rates described in Section 5.1(d) hereof paid by Tenant applicable in the Fiscal Year prior to the termination hereof. All other provisions of this Agreement shall remain in full force and effect during such holding over period.
17.2 Option. Tenant hereby grants to Landlord an option to purchase and, if Landlord exercises such option in accordance with this Section 17.2, agrees to sell, transfer, convey, assign and deliver to Landlord, and Landlord shall have the right to purchase and acquire from Tenant pursuant to such option, the Business Acquisition Property, subject to the following terms and conditions:
(a) Landlord may exercise such option only during the Business Acquisition Term.
(b) Landlord may exercise such option, if at all, only by one or more written notices to Tenant (each an “Exercise Notice”) from time to time during the Business Acquisition Term. Each Exercise Notice shall identify (i) the item or items of Business Acquisition Property for which the option is being exercised, (ii) the date (the “Closing Date”) for the consummation of the sale, transfer, conveyance, assignment and/or delivery of such Business Acquisition Property by Tenant to Landlord (the “Closing”), which date shall be not less than thirty (30) days after the date Landlord delivers such Exercise Notice to Tenant nor later than the twelve (12) months (if this Lease expires by the passage of time) or not later than eighteen (18) months (if this Lease terminates for any reason other than the passage of time) after the expiration or other termination of this Agreement, and (iii) the location of the Closing, which shall be within Grand County or Denver County, Colorado. Each Exercise Notice may exercise Landlord’s option under this Section 17.2 with respect to one, some or all of the Business Acquisition Property, and the delivery of an Exercise Notice with respect to any Business Acquisition Property shall not prevent Landlord from subsequently exercising such option with respect to any or all of the remaining Business Acquisition Property at any time during the Business Acquisition Term.
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(c) Landlord expressly acknowledges that Tenant shall have the unqualified right to sell, transfer, convey, assign any businesses, assets or real or personal property (including without limitation any business, asset or real or personal property which is, or may become, Business Acquisition Property), free and clear of Landlord’s option under this Section 17.2 and without any obligation to obtain Landlord’s consent or approval or to communicate in any way with Landlord with respect to such sale, transfer, conveyance or assignment, at any time before Landlord delivers an Exercise Notice with respect to any such business, asset or real or personal property constituting Business Acquisition Property. The option granted to Landlord under this Section 17.2 shall not constitute an interest in real property but shall constitute a contractual obligation of Tenant to Landlord. Such option shall not encumber, and shall not run with the land comprising, the Leased Assets, the Purchased Developable Land or any other real property. Upon Tenant’s request, Landlord shall execute, have acknowledged, and deliver to Tenant or any Person designated by Tenant any waiver, consent, certificate, document or instrument evidencing or confirming the terms of this Section 17.2(c) or any other provisions of this Section 17.2.
(d) If Landlord exercises its option under this Section 17.2, the purchase price for the Business Acquisition Property specified in the Exercise Notice shall be equal to the greater of one dollar ($1) or the Investment Return Deficiency, as determined by the Accountants in their sole and absolute discretion, absent bad faith (the “Purchase Price”). Tenant shall cause the Accountants to deliver to Landlord a certification of the Investment Return Deficiency and the Purchase Price with respect to any item of Business Acquisition Property within sixty (60) days after Tenant receives a written request from Landlord which states (i) a description of the Business Acquisition Property and (ii) a proposed Closing Date. Notwithstanding the foregoing, Landlord shall not be required to pay a Purchase Price that exceeds the fair market value of the Business Acquisition Property. If Landlord and Tenant cannot agree on the amount of the fair market value of the Business Acquisition Property, a duly qualified appraiser selected by the American Arbitration Association at the request and expense of Landlord shall select the fair market value from between that value as claimed by Landlord and that value as claimed by Tenant. Landlord shall pay the Purchase Price to Tenant at the Closing in immediately available funds.
(e) Landlord shall pay all costs and expenses, other than the fees of Tenant’s attorneys and the Accountants, related to the Closing, including without limitation (i) any stamp, excise or other tax payable on the recording of the deed, assignment or other documents transferring title to the Business Acquisition Property, (ii) all recording fees, and (iii) the cost of preparing a commitment for title insurance covering the Business Acquisition Property and the premium for the issuance of such title insurance.
(f) The following charges shall be prorated between Landlord and Tenant, on a daily basis, as of 12:01 a.m., Mountain Time, on the Closing Date: (i) rents, fees and other payments (including advance payments) prepaid or payable to Tenant under any lease, occupancy agreement or license affecting any interest in the Business Acquisition Property; and (ii) any charges customarily apportioned between sellers and buyers of commercial real estate in Colorado.
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(g) At the Closing, Tenant shall convey title to the Business Acquisition Property to Landlord by special warranty deed and special warranty bill of sale and/or assignment, but Tenant shall have the right to list as exceptions to the special warranty in such deed, bill of sale and/or assignment any Encumbrances (other than mortgages, deeds of trust and other monetary liens) that would constitute defects in, or breaches of, such special warranty. Landlord shall take title to, and possession of, the Business Acquisition Property in such condition, and subject to such Encumbrances, as existing of the Closing Date, without any representations or warranties whatsoever, expressed or implied (which representations and warranties Landlord shall be deemed to have waived), except that Tenant shall pay off, discharge and release all mortgages, deeds of trust and other monetary liens affecting the Business Acquisition Property.
(h) Landlord shall have the right, at any time before the delivery of such deed, bill of sale and/or assignment, to terminate the exercise of its option under this Section 17.2 with respect to any Business Acquisition Property.
(i) Tenant shall be subject to specific performance of its obligations under this Section.
ARTICLE XVIII
MISCELLANEOUS
18.1 Landlord - Tenant Relationship. Nothing contained in this Agreement creates any relationship between the parties other than the relationship of lessor and lessee. Whether under the provisions of this Agreement or otherwise, neither Tenant nor any agent, employee, representative, consultant, contractor, or subcontractor of Tenant shall have any power or authority to do any act or thing or to make any contract or agreement which will bind Landlord or the City, nor shall Landlord or the City nor any agent, employee, representative, consultant, contractor or subcontractor of Landlord or the City have any power or authority to do any act or thing or to make any contract or agreement which will bind Tenant. Neither Landlord nor the City shall have any responsibility to Tenant or to any consultant, contractor, subcontractor, supplier, materialmen, workman or other person, firm, or corporation who shall engage in or participate in any design and construction of any Improvements, or additions, alterations, changes or replacements thereto.
18.2 Release. Tenant hereby waives, releases and discharges any and all claims, whether contingent or absolute, whether known or unknown, Tenant or its affiliates might have against all current and prior Trustees and Officers of Landlord arising out of or relating to their actions as Trustees or Officers of Landlord and the operation, maintenance and development of the Winter Park Resort prior to the Effective Date; provided that, with respect to any Officer specifically referenced in Section 13.2 hereof, this release shall be ineffective to the extent of errors or omissions in the representations and warranties contained in such section which are a direct result of fraud or willful misconduct of such Officer.
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18.3 Dollar Value. Unless otherwise specifically provided in this Agreement, amounts specified in dollars shall not be adjusted for inflation or otherwise.
18.4 Captions. The captions and headings appearing in this Agreement have been inserted as a matter of convenience and for reference only and in no way define, limit or enlarge the scope or meaning of this Agreement or any of its provisions.
18.5 Partial Invalidity. If for any reason whatsoever, any term, obligation or condition of this Agreement, or the application thereof to any Person or circumstance, is to any extent held or rendered invalid, unenforceable or illegal, then:
(a) Such term, obligation or condition shall be deemed to be independent of the remainder of the Agreement and to be severable and divisible therefrom, and its invalidity, unenforceability or illegality shall not affect, impair or invalidate the remainder of the Agreement or any part thereof; and
(b) The remainder of the Agreement not affected, impaired or invalidated will continue to be applicable and enforceable to the fullest extent permitted by law against any Person and circumstance other than those as to which it has been held or rendered invalid, unenforceable and illegal.
18.6 Attorneys’ Fees. Notwithstanding anything to the contrary contained in this Agreement, if either Party institutes legal proceedings against the other with respect to the Agreement, or the use, occupancy or condition of the Leased Assets, the nonprevailing party shall pay to the prevailing party an amount equal to all reasonable attorneys’ fees and disbursements and all other reasonable costs and expenses incurred by the prevailing party in connection therewith.
18.7 Waiver of Breach. No waiver or breach of any covenant, condition or agreement herein contained shall operate as a waiver of the covenant, condition or agreement itself, or of any subsequent breach thereof.
18.8 Currency. All transactions referred to in this Agreement shall be made in the lawful money of the United States of America. All references to payment in this Agreement include reference to payments by cash, check, wire or electronic funds transfer and other methods of payment made and used from time to time in the United States of America.
18.9 Written Agreement. It is understood and agreed by and between the Parties hereto that this Agreement contains the final and entire agreement between said parties, and that they shall not be bound by any terms, statements, conditions or representations, oral or written, express or implied, not herein contained except for any prior agreement with respect to indemnification. This Agreement may not be modified orally or in any manner other than by written agreement signed by the Parties hereto.
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18.10 Further Assurances. The Parties shall execute, have acknowledged, deliver and/or record from time to time such other appropriate additional or supplemental agreements, certificates and other documents and instruments, and take such other actions as may be necessary to make this Agreement legally effective, binding and enforceable between them and against third Persons and as may otherwise be reasonably required to carry out the intent of this Agreement.
18.11 Notices. Any notice to be given to any party pursuant to any provision of this Agreement shall be in writing, shall be (a) hand-delivered to such party at the address(es) set forth below (or at such other address(es) as may be specified by notice as herein provided), (b) sent by telecopy to the facsimile number for such party listed below (or to such other number as may be specified by notice as herein provided, or (c) sent by FedEx or other nationally recognized overnight courier service to the address of such party; and, if hand-delivered, shall be deemed received when delivered; if sent by facsimile, shall be deemed received upon confirmation of receipt either by telephone or by facsimile; and if sent by FedEx or other nationally-recognized overnight courier service, shall be deemed received one business day after having been deposited with FedEx or such other nationally-recognized overnight courier service if designated for next day delivery, addressed as follows:
To Tenant: | Intrawest/Winter Park Operations Corporation | |
P.O. Box 5178 | ||
325 Lake Dillon Drive, Suite 205 | ||
Dillon, Colorado 80436 | ||
Facsimile No.: 970-468-1808 | ||
Confirmation No.: 970-468-1822 | ||
With copies to: | Intrawest Corporation | |
Suite 800,200 Burrard Street | ||
Vancouver, BC | ||
CANADA V6C 3L6 | ||
Attention: Gary L. Raymond | ||
AND | ||
Corporate Secretary | ||
Facsimile No.: (604) 669-0605 | ||
Confirmation No.: (604) 669-9777 | ||
And to: | Jacobs Chase Frick Kleinkopf & Kelley, LLC | |
1050 17th Street, Suite 1500 | ||
Denver, Colorado 80265 | ||
Attention: David D. Kleinkopf and Steven M. Cohen | ||
Facsimile No.: (303) 685-4869 | ||
Confirmation No.: (303) 685-4800 |
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To Landlord: | Winter Park Recreational Association | |
Attention: President c/o Richard C. Linquanti, Esq. | ||
Ireland, Stapleton, Pryor & Pascoe, P.C. | ||
1675 Broadway, Suite 2600 Denver, Colorado 80202 | ||
Facsimile No.: (303) 623-2062 | ||
Confirmation No.: (303) 623-2700 | ||
With copies to: | Denver City Attorney’s Office | |
1437 Bannock Street, Room 353 | ||
Denver, Colorado 80202-5375 | ||
Attention: Supervisor, Land Use and Revenue | ||
Facsimile No.: (720) 913-3180 | ||
Confirmation No.: (720) 913-3280 | ||
And to: | Ireland, Stapleton, Pryor & Pascoe, P.C. | |
1675 Broadway, Suite 2600 | ||
Denver, Colorado 80206 | ||
Attention: Richard C. Linquanti | ||
Facsimile No.: (303) 623-2062 | ||
Confirmation No.: (303) 623-2700 |
18.12 Governing Law. This Agreement shall be construed and governed by the laws of the State of Colorado and the United States, as applicable. Should any provision of this Agreement and/or its conditions be illegal or not enforced under the laws of said state, it or they shall be considered severable and the Agreement and its conditions shall remain in force and be binding upon the parties hereto as though the said provision had never been included.
18.13 Counterpart Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.
18.14 City as Beneficiary. The City is a third party beneficiary of the Landlord’s rights under this Agreement.
18.15 Time of the Essence. Time is of the essence for the performance of all obligations and the taking of all actions provided for in this Agreement.
18.16 Venue. The Parties agree that any litigation brought by either of them that relates to this Lease shall be brought in the state or federal courts in Denver, Colorado.
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Agreement to be executed by their duly authorized officers, as of the day and year first above written.
LANDLORD: | |||
WINTER PARK RECREATIONAL ASSOCIATION | |||
By: | /s/ Rick Pederson | ||
Name: | Rick Pederson | ||
Title: | President |
TENANT: | |||
INTRAWEST/WINTER PARK OPERATIONS CORPORATION | |||
By: | /s/ Gary L. Raymond | ||
Name: | Gary L. Raymond | ||
Title: | President |
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STATE OF COLORADO | ) | |||
) | ss. | |||
CITY AND COUNTY OF DENVER | ) |
The foregoing instrument was acknowledged before me this 20 day of December, 2002, by Rick Pederson as President of Winter Park Recreational Association, a Colorado non-profit corporation.
WITNESS my hand and official seal. | |||
/s/ Sharon Smith | |||
Notary Public | |||
My commission expires: 7-10-04. | [SEAL] |
STATE OF COLORADO | ) | |||
) | ss. | |||
CITY AND COUNTY OF DENVER | ) |
The foregoing instrument was acknowledged before me this 20 day of December, 2002 by Gary L. Raymond as President of Intrawest/Winter Park Operations Corporation, a Delaware corporation.
WITNESS my hand and official seal. | |||
/s/ Sharon Smith | |||
Notary Public | |||
My commission expires: 7-10-04.
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[SEAL] |
EXHIBIT A TO LEASE AND OPERATING AGREEMENT
ADDITIONAL CONSIDERATION AGREEMENT
This Agreement is entered into as of _________________, 2002, by and between INTRAWEST/WINTER PARK HOLDINGS CORPORATION, a Delaware corporation (Intrawest Holdings Corp), and WINTER PARK RECREATIONAL ASSOCIATION, a Colorado nonprofit corporation (WPRA).
WPRA, as Landlord, and INTRAWEST/WINTER PARK OPERATIONS CORPORATION, a Delaware corporation (together with its successors and assigns, Intrawest Ops Corp), as Tenant, wish to execute that certain Lease and Operating Agreement of even date herewith (the Lease), pursuant to which WPRA will lease or sublease to Intrawest Ops Corp certain real and personal property located in Grand County, Colorado used in the operation of the mountain resorts known, as of the date hereof, as Winter Park, Mary Jane and Vasquez (collectively, the Winter Park Resort). WPRA and INTRAWEST/WINTER PARK INTRAWEST DEVELOPMENT CORPORATION, a Delaware corporation (Intrawest Development Corp), wish to execute an Option Agreement of even date herewith (the Option) under which WPRA will grant to Intrawest Development Corp the option to purchase certain real property (Developable Real Property) in the immediate vicinity of the Winter Park Resort.
Intrawest Holdings Corp is the direct parent corporation of Intrawest Ops Corp and Intrawest Development Corp. In order to induce WPRA to enter into the Lease with Intrawest Ops Corp and the Option with Intrawest Development Corp, Intrawest Holdings Corp is willing to enter into this Agreement, which WPRA is willing to accept as a necessary and sufficient inducement to enter into the Lease and Option.
Intrawest Corporation, a corporation continued pursuant to the Canada Business Corporation Act (Intrawest Corp), is the ultimate parent corporation of Intrawest Holdings Corp. Intrawest Corp has guaranteed Intrawest Holding Corps payment obligations under this Agreement pursuant to a separate guaranty agreement that has been delivered to WPRA.
Now, therefore, in consideration of the covenants set forth in this Agreement, Intrawest Holdings Corp and WPRA agree as follows, for their mutual benefit and for the third-party benefit of Intrawest Ops Corp, Intrawest Development Corp and the CITY AND COUNTY OF DENVER, a Colorado municipal corporation (the City), as applicable.
1. As used in this Agreement, the term Required Quarterly Payment shall mean payments in the amount of $500,000 due and payable each July 1, October 1, January 1 and April 1 from October 1, 2002 and ending with the payment on July 1, 2012 (each a Required Quarterly Payment Date). On each Required Quarterly Payment Date, beginning effective October 1, 2002 and ending with the payment on July 1, 2012, Intrawest Holdings Corp shall pay to the City the Required Quarterly Payment without any abatement, diminution, or reduction of, setoff or deduction.
2. The term Cash Flow for Annual Payment when used in this Agreement shall have the same meaning as defined for such term in the Lease. The amount by which the aggregate of the Required Quarterly Payments exceeds Cash Flow for Annual Payment of Intrawest Ops Corp for a given Fiscal Year (July 1-June 30) shall be considered a prepayment and credited with respect to Intrawest Development Corps option to acquire parcels pursuant to and in accordance with the terms of the Option. The first Fiscal Year shall be a short year covering the period October 1, 2002 through June 30, 2003.
3. The occurrence or existence of any one or more of the following events or circumstances shall constitute a Default by Intrawest Holdings Corp under this Agreement and shall give rise to the right of WPRA or the City, by notice to Intrawest Holdings Corp, to exercise its remedies as set forth below in paragraph 4:
(a) Intrawest Holdings Corp fails to pay when due any Required Quarterly Payment, and does not cure such failure within five (5) business days after WPRA or the City shall have given to Intrawest Holdings Corp written notice specifying such failure; | |
(b) WPRA declares an Event of Default by Intrawest Ops Corp under the Lease and the default is not cured as therein provided, and WPRA has elected to exercise its right to accelerate future Rental Payments under the Lease as a result of such Event of Default; | |
(c) Intrawest Holdings Corp shall become insolvent (as such term is defined under Section 101 of the Federal Bankruptcy Code, 11 U.S.C. 101 et seq. (the Federal Bankruptcy Code), or any successor statute thereto); or shall fail to pay its debts generally as they mature; or shall seek the benefit of any present or future federal or state insolvency statute; or shall make a general assignment for the benefit of creditors, or file a voluntary petition in bankruptcy or a petition or answer seeking an arrangement of its indebtedness under the Federal Bankruptcy Code or under any other law or statute of the United States or of any state thereof, or consent to the appointment of a receiver, trustee, custodian, liquidator or other similar official, of all or substantially all of its property; or an order for relief shall be entered by or against Intrawest Holdings Corp under any chapter of the Federal Bankruptcy Code and shall not be dismissed or stayed within sixty (60) days after the entering of the order of appointment of receiver or trustee; | |
(d) By order or decree of a court, Intrawest Holdings Corp shall be adjudged a debtor or bankrupt, or an order shall be made approving a petition filed by any of its creditors or by any of its stockholders, seeking its reorganization or the readjustment of its indebtedness under the Federal Bankruptcy Code or under any other law or statute of the United States, and such adjudication, order or decree shall not be stayed or vacated within sixty (60) days of its issuance; | |
(e) A petition under any chapter of the Federal Bankruptcy Code or an action under any federal or state insolvency law or statute shall be filed against Intrawest Holdings Corp and shall not be dismissed or stayed within sixty (60) days after the filing thereof; | |
(f) By or pursuant to, or under authority of any legislative act, resolution or rule, or any order or decree of any court or governmental board, agency or officer, a receiver, trustee, custodian, liquidator or other similar official shall take possession or control of all or substantially all of the property of Intrawest Holdings Corp, and such possession or control shall continue in effect for a period of sixty (60) days; or |
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(g) Except in conjunction with a permitted assignment pursuant to Section 16.2 of the Lease, Intrawest Holdings Corp shall become a person in legal dissolution, liquidation or otherwise in termination. |
4. (a) For the purposes of this Paragraph 4, the following terms shall have the meanings hereinafter set forth:
(i) The Damages Calculation Date means the date as of which damages under this Paragraph 4 are calculated. | ||
(ii) The Default Period means the period from the occurrence of an uncured Default through (and including) September 30, 2012. | ||
(b) If a Default occurs under this Agreement and remains uncured, then WPRA or the City shall have the right to a claim for damages equal to (i) any and all Required Quarterly Payments which have accrued or which would accrue in the absence of a Default over the Default Period but which remain unpaid as of the Damages Calculation Date, plus (ii) all costs and expenses of collecting such damages, including reasonable attorneys fees. If WPRA declares a Default that is solely the occurrence of an Event of Default under the Lease that is not cured as therein provided, and WPRA has elected to exercise its right to accelerate future Rental Payments under the Lease as a result of such Event of Default, the amount payable under (b)(i) above shall be discounted to present value and shall be reduced by the then present value of any rent and other sums that WPRA can reasonably be expected to receive over the Default Period upon reletting the Leased Assets (as defined in the Lease), whether or not Landlord actually attempts to relet the Leased Assets, but only to the extent such rent and other sums have not been applied to reduce WPRAs actual damages in accordance with Section 15.2 of the Lease. Except as expressly provided above, all payments shall be made by Intrawest without any abatement, diminution, or reduction of, setoff, discount or deduction. Landlord shall have no obligation to relet the Leased Assets, but WPRA shall otherwise be required to mitigate damages arising out of a Default. | ||
(c) If any law shall limit the amount of such damages to less than the amount for which this Paragraph 4 provides, WPRA shall be entitled to the maximum amount allowable under such law, WPRA expressly waives all claims to consequential, exemplary or punitive damages. |
5. If the Lease terminates on or before September 1, 2012, for any reason other than as a result of an Event of Default under the Lease, then this Agreement, and all of the obligations of WPRA and Intrawest Holdings Corp under this Agreement, shall terminate as of the date of the termination of the Lease. Intrawest Holdings Corp shall pay the Required Quarterly Payments due from time to time up to and including such termination date, and, if such termination occurs on a date other than a Required Quarterly Payment Date, then the Required Quarterly Payment payable for the partial quarter immediately before such termination date shall be prorated at the daily rate at which the Required Quarterly Payments accrue under this Agreement for each day of such partial quarter falling on or before such termination date.
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6. Amounts specified in dollars shall mean U.S. Dollars, shall not be adjusted for inflation or otherwise, and shall not be discounted to present value or otherwise.
7. Intrawest Holdings Corp hereby waives, releases and discharges any and all claims, whether contingent or absolute, whether known or unknown, Intrawest Holdings Corp or its affiliates might have against all current and prior Trustees and Officers of WPRA arising out of or relating to their actions as Trustees or Officers of WPRA and the operation, maintenance and development of the Winter Park Resort prior to the Effective Date of the Lease; provided that, with respect to any Officer specifically referenced in Section 13.2 of the Lease, this release shall be ineffective to the extent of errors or omissions in the representations and warranties contained in such section which are a direct result of fraud or willful misconduct of such Officer.
8. If for any reason whatsoever, any term, obligation or condition of this Agreement, or the application thereof to any person or circumstance, is to any extent held or rendered invalid, unenforceable or illegal, then:
(a) Such term, obligation or condition shall be deemed to be independent of the remainder of the Agreement and to be severable and divisible therefrom, and its invalidity, unenforceability or illegality shall not affect, impair or invalidate the remainder of the Agreement or any part thereof; and | |
(b) The remainder of the Agreement not affected, impaired or invalidated will continue to be applicable and enforceable to the fullest extent permitted by law against any person and circumstance other than those as to which it has been held or rendered invalid, unenforceable and illegal. |
9. No waiver or breach of any covenant, condition or agreement herein contained shall operate as a waiver of the covenant, condition or agreement itself, or of any subsequent breach thereof.
10. It is understood and agreed by and between the parties hereto that this Agreement contains the final and entire agreement between said parties, and that they shall not be bound by any terms, statements, conditions or representations, oral or written, express or implied, not herein contained. This Agreement may not be modified orally or in any manner other than by written agreement signed by the parties hereto.
11. The parties shall execute, have acknowledged and deliver from time to time such other appropriate additional or supplemental agreements, certificates and other documents and instruments, and take such other actions as may be necessary to make this Agreement legally effective, binding and enforceable between them and against third persons and as may otherwise be reasonably required to carry out the intent of this Agreement,
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12. Any notice to be given to any party pursuant to any provision of this Agreement shall be in writing, shall be (a) hand-delivered to such party at the address(es) set forth below (or such other address(es) specified by notice as herein provided), (b) sent by telecopy to the facsimile number for such party listed below (or such other number specified by notice as herein provided), or (c) sent by FedEx or other nationally-recognized overnight courier service to the address of such party; and, if hand-delivered, shall be deemed received when delivered; if sent by facsimile, shall be deemed received upon confirmation of receipt either by telephone or by facsimile; and if sent by FedEx or other nationally-recognized overnight courier service, shall be deemed received one business day after having been deposited with FedEx or such other nationally-recognized overnight courier service if designated for next day delivery, addressed as follows:
To Intrawest Holdings Corp: | Intrawest Corporation | |
Suite 800, 200 Burrard Street | ||
Vancouver, BC | ||
CANADA V6C 3L6 | ||
Attention: Gary L. Raymond | ||
AND | ||
Corporate Secretary | ||
Facsimile No.: (604) 669-0605 | ||
Confirmation No.: (604) 669-9777 | ||
And to: | Jacobs Chase Frick Kleinkopf & Kelley, LLC | |
1050 17th Street, Suite 1500 | ||
Denver, Colorado 80265 | ||
Attention: David D. Kleinkopf | ||
and Steven M. Cohen | ||
Facsimile No.: (303) 685-4869 | ||
Confirmation No.: (303) 685-4800 | ||
To WPRA: | Winter Park Recreational Association | |
c/o Ireland, Stapleton, Pryor & Pascoe, P.C. | ||
1675 Broadway, Suite 2600 | ||
Denver, Colorado 80206 | ||
Attention: Richard Linquanti | ||
Facsimile No.: (303) 623-2062 | ||
Confirmation No.: (303) 623-2700 | ||
With copies to: | Denver City Attorneys Office | |
1437 Bannock Street, Room 353 | ||
Denver, Colorado 80202-5375 | ||
Attention: Supervisor, Land Use and Revenue | ||
Facsimile No.: (720) 913-3180 | ||
Confirmation No.: (720) 913-3280 |
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And to: | Ireland, Stapleton, Pryor & Pascoe, P.C. | |
1675 Broadway, Suite 2600 | ||
Denver, Colorado 80206 | ||
Attention: Richard Linquanti | ||
Facsimile No.: (303) 623-2062 | ||
Confirmation No.: (303) 623-2700 |
13. This Agreement shall be construed and governed by the laws of the State of Colorado.
14. This Agreement may be executed in counterparts, both of which shall be deemed an original but all of which together will constitute one and the same instrument.
15. The City is a third party beneficiary of WPRAs rights under this Agreement.
16. Time is of the essence for the performance of all obligations and the taking of all actions provided for in this Agreement.
17. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns.
IN WITNESS WHEREOF, Intrawest Holdings Corp and WPRA have caused this Agreement to be executed by their duly authorized officers, as of the day and year first above written.
WINTER PARK RECREATIONAL ASSOCIATION | ||||
By: | ||||
Name: | ||||
Title: | ||||
INTRAWEST/WINTER PARK HOLDINGS CORPORATION | ||||
By: | ||||
Name: | ||||
Title: |
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EXHIBIT B
TO LEASE AND OPERATING AGREEMENT
Current Capital Maintenance Items
ON MOUNTAIN CAPITAL
BUILDINGS | ||
a) | Replace Water Tanks as appropriate | |
b) | Upgrade FF&E for F&B facilities | |
LIFTS | ||
a) | Upgrades, improvements and replacements of various Lift systems | |
SKI TRAILS AND SNOWMAKING | ||
a) | Snowboard Park and Halfpipe | |
b) | Snowmaking Improvements | |
c) | Replace Compressors as appropriate | |
MOUNTAIN INFRASTRUCTURE | ||
a) | Switchgear and Transformer upgrades | |
VEHICLES AND EQUIPMENT | ||
a) | Reduce average age of Grooming fleet | |
b) | Reduce average age of Snowmobiles and Trucks | |
c) | Acquire new Grooming Equipment (winch, pipe, shaper) | |
SOFT COSTS | ||
a) | Surveying, mapping, engineering, planning, environmental, permits, legal, construction management, etc. |
EXHIBIT C
TO LEASE AND OPERATING AGREEMENT
EMPLOYEE BENEFIT PLANS - PENSION
Pension Plan (Defined Benefit) | WPRA Pension Plan (Amended and Restated June 1, 1997) | |
401 (k) Savings and Investment Plan | WPRA Savings & Investment Plan | |
Supplemental Executive Retirement Plan | WPRA Supplemental Executive Retirement Plan, Plan & Trust Documents Board Resolution, as of January 25, 1992 | |
• | First Amendment, May 1, 1994 | |
• | Second Amendment, September 1, 1996 |
CC-1 |
EXHIBIT D
TO LEASE AND OPERATING AGREEMENT
EMPLOYEE BENEFIT PLANS WELFARE
*Early Education Center (Low cost childcare for dependent ages 2 months to 6 years)
*Scholarship Program
*Jury Duty time off
*Dental Insurance (Employee Paid)
*Sick Leave
*Vacation
*Funeral Leave
*Holiday Flex Time (48 hours)
Life Insurance | Group Benefits Plan January 1, 2002 |
Voluntary Group Life Insurance | Group Benefits Plan January 1, 2002 |
Accidental Death and Dismemberment Insurance | Group Benefits Plan January 1, 2002 |
Short Term Disability | Group Benefits Plan January 1, 2002 |
Long Term Disability | Group Benefits Plan January 1, 2002 |
Health Insurance | Group Benefits Plan January 1, 2002 |
Flexible Spending Account Plan | Health Care Flexible Spending Account Plan WPRA January 1, 2002 |
Dependant Care Flexible Spending Account Plan WPRA January 1 2002 |
* Winter Park Resort 2001-2002 Employee Handbook
DD-1 |
EXHIBIT E
TO LEASE AND OPERATING AGREEMENT
EMPLOYEE BENEFIT PLANS - ADDITIONAL PLANS OR POLICIES
*Employee Assistance Program
*Employee Discounts (retail, repair, rental, and food in WPRA and tenant operated outlets)
*Fitness Program (using WPRA fitness center)
*Real Deal/Reciprocal Skiing/Riding
*Summer Program privileges (summer pass at no cost and discounted activity tickets)
*Employee Shuttle Service
*No cost and discounted Snowcat and Snowshoe Tours through WPRA Tour Center
*Direct Deposit
*Complimentary Employee Ski Passes
*Discounted Dependent
Ski Pass
OR Discounted one-day tickets
*Complimentary Ski or Ride Lessons
*Notary Service
*Credit Union Membership Available
*Emergency Service Volunteer Time Off
Senior Officer Physical Examinations | No document (historic company policy not reduced to writing) |
Severance Policy | Benefits Paid Out at Termination (Revised 4/19/01) (Policy Summary), |
VP Severance Plan adopted June 3, 2000 by Resolution of the WPRA Board. |
*Winter Park Resort 2001-2002 Employee Handbook
EE-1 |
EXHIBIT F
TO LEASE AND OPERATING AGREEMENT
Filed as Exhibit 10.4 to the Registration Statement
Date/Time of Last Edit
September 16, 2002 2:36 pm
EXHIBIT G
TO LEASE AND OPERATING AGREEMENT
WATER RIGHTS
WATER RIGHTS OWNED OR LEASED BY WINTER PARK RECREATIONAL ASSOCIATION | ||
Snowmaking Water |
Decree/Agreement | |
Denver Water Board Collection System (physical source) |
WPRA may divert 450 acre feet annually subject to snowmaking return flow recapture requirements | Per Clinton Reservoir-Fraser River Water Agreement dated 07/21/1992 |
Clinton Ditch & Reservoir Company (replacement water) |
WPRA is 8.63% shareholder. 90 acre feet (consumptive use) of Clinton Reservoir water is released annually to repay Denver Water Board | 92CW332 |
Bypass Water (Municipal Water) |
Decree/Agreement | |
Vasquez Wells (physical source) |
Vasquez Well No. B1 - 25 gpm conditional |
92CW333 |
Vasquez Well No. B2 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. B3 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. B4 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. B5 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. B6 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. M1 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. M2 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. M3 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. T1 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. T2 - 25 gpm conditional |
92CW333 | |
Vasquez Well No. T3 - 25 gpm conditional |
92CW333 | |
Denver Water Board Collection System/Points of Rediversion (physical source) | W.P. Base Diversion Point No. 1 - 0.67 cfs absolute (APD) | 92CW333 |
W.P. Base Diversion Point No. 2 - 0.67 cfs absolute (APD) | 92CW333 | |
Vasquez Mountain Canal Diversion Point (APD) | 92CW333 |
Date/Time of Last Edit
September 16, 2002 2:36 pm
Terms and Conditions Affecting Use of Bypass Water | (a) Annual diversions limited to 74 acre feet; 66.5 acre feet for Vasquez Wells and 7.5 acre feet for W.P. Base Diversion Nos. 1 and 2 |
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(replacement source) | ||
(b) 44 acre feet can be delivered yearly from 9/15 - 5/15 | ||
(c) 30 acre feet can be delivered year round (i.e. also available 5/16 - 9/14) | ||
(d) To be replaced with 9.27 acre feet of Windy Gap or Wolford Mountain Reservoir water obtained under Middle Park water allotment contracts | MPWCD/WPRA Water Allotment Contract dated 04/19/95; MPWCD/WPRA Standby Contract for Wolford Mountain Reservoir Water dated 02/14/02. | |
20% Water (Municipal Water) |
Decree/Agreement | |
Purchase of Original 20% Water from the City of Arvada | WPRA conveyed Arvada water to Denver Water Board. In exchange, WPRA may divert 16 acre feet annually from Winter Park and Mary Jane wells | DWB/WPRA Agreement Concerning 20% Water dated 02/27/92, as amended by Agreement dated 07/28/92 |
Purchase of Additional 20% Water from the City of Arvada | 25.44 acre feet of Additional 20% Water. WPRAs interests in certain additional “20% Water” which includes, without limitation, 0.3661 cfs of water from the Diamond Bar Tee No. 2 Ditch, said ditch having been adjudicated by decree dated August 11, 1906, under Priority No. 114, with an appropriation date of September 15, 1900, and having its source of supply Ranch Creek, a tributary of the Fraser River, together with a proportionate interest in that restrictive covenant recorded in the Grand County real property records at Reception No. 298702. WPRA is negotiating with Denver Water Board to arrange for deliveries of the water using Denvers delivery facilities and structures. | DWB/WPRA Temporary Delivery Agreement dated 10/30/00; no permanent agreement in place |
On-Mountain Wells at Winter Park and Mary Jane (physical source) | Sunspot Well No. 1 - 20 gpm absolute | 91CW240/98CW169 |
Sunspot Well No. 2 - 5 gpm absolute |
91CW240/98CW169 | |
Snoasis Well No. 1 - 10 gpm absolute |
91CW240 | |
Snoasis Well No. 2 - 10 gpm absolute |
91CW240 | |
Lunch Rock Well No. 1 - 25 gpm absolute |
91CW240/98CW169 | |
Lunch Rock Well No. 2 - 25 gpm conditional |
91CW240/98CW169 |
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Date/Time
of Last Edit
September 16, 2002 2:36 pm
Wilson Way Building Well No. 1 - 14 gpm absolute |
91CW240/98CW168/ 98CW169 | |
Mary Jane Maintenance Building Well No. 1 - 15 gpm absolute | 91CW240/98CW168 | |
Mary Jane Day Center Well DC No. 2 - 20 gpm absolute | 91CW240/98CW168 | |
Sunspot Well No. 4 - 25 gpm absolute | 92CW319 |
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Date/Time of Last Edit
September 16, 2002 2:36 pm
Terms and Conditions Affecting Use of On-Mountain Wells (replacement source) | (a) Total cumulative diversions not to exceed 16 acre feet annually | |
(b) To be replaced with 2.0 acre feet of Windy Gap or Wolford Mountain Reservoir water obtained under Middle Park Water Allotment Contracts | MPWCD/WPRA Water Allotment Contract dated 05/05/92; MPWCD/WPRA Standby Contract for Wolford Mountain Reservoir Water dated 02/14/02 | |
Base Area Domestic and Irrigation Water |
Decree/Agreement | |
Treated Domestic Water Supplied by the Winter Park Water and Sanitation District | ||
Raw Water for Irrigation of Winter Park Base Area | Provided by taps in the Denver Water Boards Siphon Nos. 1 and 1A. This irrigation water is accounted for out of WPRAs Bypass Water entitlement | 92CW333 |
Raw Water for Irrigation of Mary Jane Base Area |
Irrigation of less than one acre of landscaping adjacent to Mary Jane Day Center from Mary Jane Day Center Well DC #2 |
91CW240 |
USFS Special Use Permit Limitations |
||
The WPRA Special Use Permit contains the following language that may affect the ownership of water rights acquired by WPRA for use in the operation of the Winter Park Resort. Section 34. d. “... All water right acquired or claimed by the permittee during the term of this permit which involve diversions of water directly from National Forest System lands, to the extent the same are applied to beneficial use on National Forest System lands authorized under this permit, shall be acquired by the permittee and transferred to the United States. Such transactions are subject to the permit holders right of use.” |
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EXHIBIT H
TO LEASE AND OPERATING AGREEMENT
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is entered into as of _______________, 2002, between (i) INTRAWEST CORPORATION, a corporation duly continued under the Canada Business Corporations Act (the “Guarantor”), and (ii) WINTER PARK RECREATIONAL ASSOCIATION, a Colorado non-profit corporation (the “WPRA”), for itself and as agent for the City and County of Denver, a Colorado municipal corporation.
RECITALS
WPRA owns, leases and licenses certain real and personal property located in Grand County, Colorado used in the operation of the mountain resorts known, as of the date hereof, as Winter Park, Mary Jane and Vasquez (collectively, the “Winter Park Resort Area”).
Pursuant to a certain Lease of even date herewith (the “Lease”), between WPRA and Intrawest/Winter Park Operations Corporation, a Delaware corporation (the “Tenant”), WPRA has agreed to allow the Tenant to operate the Winter Park Resort Area, and in connection therewith, has agreed to lease or sublease certain assets to the Tenant in accordance with the terms and conditions of the Lease.
Pursuant to a certain Option Agreement of even date herewith (the “Option Agreement”), between WPRA and Intrawest/Winter Park Development Corporation, a Delaware corporation (the “Optionee”), the WPRA has granted to the Optionee an option to purchase certain developable land within the Winter Park Resort Area in accordance with the terms and conditions of the Option Agreement.
Pursuant to a certain Additional Consideration Agreement of even date herewith (the “Consideration Agreement”) between WPRA and Intrawest/Winter Park Holdings Corporation, a Delaware corporation (“Holdings”), which is the parent corporation to Tenant and Optionee, WPRA will receive certain quarterly payments from Holdings from October 1, 2002 through July 1, 2012, to induce WPRA to enter into the Lease and the Option Agreement.
Guarantor is the ultimate parent entity of Holdings, Tenant, and Optionee. It is a condition precedent to the effectiveness of the Lease and the Option Agreement that the Guarantor guarantee to the WPRA the payment of certain of the obligations of the Tenant to the WPRA under the Lease, of the Optionee to the WPRA under the Option Agreement and of Holdings under the Consideration Agreement.
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Accordingly, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and in order to induce the WPRA to enter into the Lease, the Option Agreement and the Consideration Agreement, the Guarantor agrees with the WPRA as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms. The following terms, when used in this Agreement, including the introductory paragraph and Recitals hereto, shall, unless the context otherwise requires, have the following meanings:
Agreement” or Guaranty” means this Guaranty Agreement.
Consideration Agreement” is defined in the introductory paragraphs hereto.
Guaranteed Obligations” is defined in Section 2.1 hereof.
Guarantor” is defined in the introductory paragraphs hereto.
Holdings” is defined in the introductory paragraphs hereto.
Lease” is defined in the introductory paragraphs hereto.
Option Agreement” is defined in the introductory paragraphs hereto.
Optionee” is defined in the introductory paragraphs hereto.
Proven Damages” means damages claimed by WPRA and not contested, or damages awarded after trial or arbitration, as applicable, on a disputed claim and no longer subject to appeal.
Tenant” is defined in the introductory paragraphs hereto.
WPRA” is defined in the introductory paragraph hereto.
Section 1.2 Lease and Option Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement that are defined in the Lease shall have the meanings given to such terms in the Lease. Terms used in this Agreement that are defined in the Option Agreement but not in the Lease shall have the meanings given to such terms in the Option Agreement.
Section 1.3 General Provisions Relating to Definitions. Terms for which meanings are defined in this Agreement shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “including” means including, without limiting the generality of any description preceding such term. Each reference herein to any person shall include a reference to such persons successors and assigns. References to any instrument defined in this Agreement refer to such instrument as originally executed or, if subsequently amended or supplemented from time to time, as so amended or supplemented and in effect at the relevant time or reference thereto.
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ARTICLE II
THE GUARANTY
Section 2.1 Guaranty of Guaranteed Obligations. The Guarantor hereby absolutely, unconditionally and irrevocably, guarantees, the punctual payment in full of all Guaranteed Obligations. The term “Guaranteed Obligations” means and includes (a) any and all of Tenants financial obligations under Article V of the Lease (including without limitation Tenants obligation to pay rent to WPRA, to reserve and expend the Required Annual Capital Maintenance Amount, and to pay to WPRA the Reimbursable Transaction Costs), (b) Tenants obligations under the Lease to pay to WPRA any Proven Damages (including without limitation any Proven Damages that consist of accelerated rent) due thereunder as a result of an Event of Default, (c) Tenants obligation under Article VIII of the Lease to indemnify WPRA as described therein, (d) Optionees obligation under Article III of the Option Agreement to pay for sufficient Development Parcels for the development of 570 Residential Units on the terms and conditions described in such Option Agreement, (e) Optionees obligation under Article V of the Option Agreement to pay the Actual Sales Price, and (f) Holdings obligation to make the payments to WPRA under the Consideration Agreement, whether any of the foregoing obligations now exist or arise after the Effective Date and whether such obligations are absolute or contingent, liquidated or unliquidated.
Section 2.2 Liability of Guarantor Absolute. The Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety, other than a defense based on payment in full of the Guaranteed Obligations, defenses that Tenant, Optionee or Holdings may properly assert based on the satisfaction or failure to satisfy conditions, or the occurrence of contingencies, set forth in the Lease, the Option Agreement or the Consideration Agreement, and any defense Tenant, Optionee or Holdings may properly assert arising from WPRAs failure to pay or perform its obligations under the Lease, the Option Agreement or the Consideration Agreement (collectively, the “Permitted Defenses”). In furtherance of the foregoing and without limiting the generality thereof, the Guarantor agrees as follows:
(a) WPRA shall not be required first to resort for payment of the Guaranteed Obligations to Tenant, Optionee or Holdings, before enforcing this Guaranty. | |
(b) The WPRA may enforce this Guaranty upon the occurrence and during the continuance of an Event of Default under the Lease, the Option Agreement or the Consideration Agreement. | |
(c) The obligations of the Guarantor hereunder are independent of the obligations of the Tenant under the Lease, of the Optionee under the Option Agreement, and of Holdings under the Consideration Agreement, and a separate action or actions may be brought and prosecuted against Guarantor whether or not any action is brought against the Tenant, Optionee or Holdings, and whether or not the Tenant, Optionee or Holdings, is joined in any such action or actions. |
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(d) The Guarantors payment of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge the Guarantors liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if the WPRA is awarded a judgment in any suit brought to enforce the Guarantors covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit. | |
(e) Subject to the terms of the Lease, the Option Agreement and the Consideration Agreement, the WPRA from time to time may, upon such terms as it deems appropriate, without notice to or demand upon the Guarantor and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of the Guarantors liability hereunder (i) change any payments, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment of this Guaranty or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, including, without limitation, any obligation of any person with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of the WPRA in respect of the Guaranty or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that the WPRA may have against any such security, including foreclosure on any such security pursuant to one or more judicial or non-judicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Tenant or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Lease, the Option Agreement and the Consideration Agreement and under any other related documents. |
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(f) This Guaranty and the obligations of the Guarantor hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than the Permitted Defenses), including without limitation the occurrence of any of the following, whether or not the Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce, or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including without limitation provisions relating to Events of Default) of the Lease, the Option Agreement or the Consideration Agreement, or of any other guaranty or security for the Guaranteed Obligations; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the WPRAs consent to the change, reorganization or termination of the corporate structure or existence of the Tenant, the Optionee or Holdings; (v) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vi) any defenses, set-offs or counterclaims which the Tenant, Optionee or Holdings may allege or assert against the Guarantor, or which the Guarantor may allege or assert against the Tenant, the Optionee or Holdings, including but not limited to failure of consideration, breach of warranty, statute of frauds, statute of limitations, accord and satisfaction and usury; and (vii) any other act or thing or omission, or delay to do any act or thing, other than Permitted Defenses, which may or might in any manner or to any extent vary the risk of the Guarantor as an obligor in respect of the Guaranteed Obligations. |
Section 2.3 Waivers by Guarantor. The Guarantor hereby waives to the fullest extent permitted by law, for the benefit of the WPRA:
(a) Any right to require the WPRA, as a condition of payment by such Guarantor, to (i) proceed against the Tenant, the Optionee, Holdings, or any other person, (ii) proceed against or exhaust any security held from the Tenant, the Optionee, Holdings, or any other person, or (iii) pursue any other remedy in the power of the WPRA whatsoever; | |
(b) Any defense arising by reason of the incapacity, lack of authority or any disability of the Tenant, the Optionee or Holdings, including, without limitation, any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of the Tenant, the Optionee or Holdings from any cause other than payment in full of the Guaranteed Obligations or any of the Permitted Defenses; | |
(c) Any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; | |
(d) Any defense based upon any of the WPRAs errors or omissions in the administration of the Guaranteed Obligations; | |
(e) (i) Any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of the Guarantors obligations hereunder, (ii) the benefit of any statute of limitations affecting the Guarantors liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence or any requirement that the WPRA protect, secure, perfect or insure any security interest or lien or any property subject thereto; |
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(f) Notices, demand, presentment, protest, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default under the Lease, the Option Agreement or the Consideration Agreement, notices of any extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to the Tenant, the Optionee or Holdings, and notices of any of the matters referred to in Section 2.2 and any right to consent to any thereof; and | |
(g) Any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Guaranty, other than Permitted Defenses. |
Section 2.4 Payment by Guarantor. The Guarantor hereby agrees that upon the failure of the Tenant, the Optionee or Holdings to pay any Guaranteed Obligations when and as the same shall become due, the Guarantor will forthwith upon demand pay, or cause to be paid, in cash, to the WPRA such Guaranteed Obligations.
Section 2.5 Expenses. The Guarantor agrees to pay, or cause to be paid, and to save the WPRA harmless against liability for, any and all reasonable costs and expenses (including reasonable fees and disbursements of counsel and allocated costs of internal counsel) incurred or expended by the WPRA in connection with the enforcement of or preservation of any rights under this Guaranty.
Section 2.6 Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full.
Section 2.7 Rights Cumulative. The rights, powers and remedies given to the WPRA by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to the WPRA by virtue of any statute or rule of law or any agreement between the Tenant, the Optionee or Holdings and the WPRA. Any forbearance or failure to exercise, and any delay by the WPRA in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or by construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.
Section 2.8 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty.
(a) The obligations of the Guarantor under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of the Tenant, the Optionee or Holdings, or by any defense which the Tenant, the Optionee or Holdings may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. |
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(b) The Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if said proceedings had not been commenced) shall be included in the Guaranteed Obligations. The Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay the WPRA, or allow the claim of the WPRA in respect of, any such interest accruing after the date on which such proceeding is commenced. | |
(c) The obligations of the Guarantor hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from the WPRA as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes under this Guaranty. |
ARTICLE III
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS
The Guarantor hereby represents and warrants to the WPRA that the following statements are true and correct:
Section 3.1Corporate Existence. The Guarantor is duly organized, validly existing and in good standing as a corporation continued under the Canada Business Corporations Act, has the corporate power to own its assets and to transact the business in which it is now engaged and is in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that would not in the aggregate have a material adverse effect on the operations or financial condition of the Guarantor.
Section 3.2 Corporate Power; Authorization; Enforceable Obligations. The Guarantor has the corporate power, authority and legal right to execute, deliver and perform this Guaranty, and all obligations required under this Guaranty, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Guaranty and all obligations required thereunder. No consent of any other person including, without limitation, stockholders and creditors of Guarantor, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by Guarantor in connection with this Guaranty or the execution, delivery, performance, validity or enforceability of this Guaranty and the obligations required thereunder except for such consents which have been validly obtained. This Guaranty has been executed and delivered by a duly authorized officer of the Guarantor, and this Guaranty constitutes the legally valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws or equitable principles relating to or limiting creditors rights generally.
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Section 3.3 No Legal Bar to this Guaranty. The execution, delivery and performance of this Guaranty will not violate any provision of any existing law or regulation binding on the Guarantor, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Guarantor, or the certificate of continuance or bylaws of the Guarantor, or any mortgage, indenture, lease, contract or other agreement, instrument or undertaking by which the Guarantor is a party or by which the Guarantor or any of its assets may be bound, and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Amendments, etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Guarantor herefrom shall in any event be effective unless the same shall be in writing and signed by the WPRA, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. This Guaranty shall be binding upon Guarantor and its successors and assigns and shall inure to the benefit of WPRA and its successors and assigns.
Section 4.2 Release. Guarantor hereby waives, releases and discharges any and all claims, whether contingent or absolute, whether known or unknown, Guarantor or its affiliates might have against all current and prior Trustees and Officers of WPRA arising out of or relating to their actions as Trustees or Officers of WPRA and the operation, maintenance and development of the Winter Park Resort prior to the Effective Date of the Lease; provided that, with respect to any Officer specifically referenced in Section 13.2 of the Lease, this release shall be ineffective to the extent of errors or omissions in the representations and warranties contained in such section which are a direct result of fraud or willful misconduct of such Officer.
Section 4.3 Illegality. Any invalidity or unenforceability of any provision or application of this Guaranty shall not affect other lawful provisions and applications thereof, and to this end the provisions of this Guaranty are declared to be severable.
Section 4.4 Consent to Jurisdiction. Guarantor (i) irrevocably agrees that any suit, action or other legal proceeding arising out of or relating to this Guaranty may be brought in the State Courts of the State of Colorado or in the United States District Court for the District of Colorado, (ii) consents to the jurisdiction of each such court in any suit, action or proceeding, (iii) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any such courts and any claim that any such suit, action or proceeding has been brought in an inconvenient forum, and (iv) agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
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Section 4.5 Governing Law. This Agreement shall in all respects be construed in accordance with and governed by the internal laws of the State of Colorado.
Section 4.6 Counterparts. This Agreement may be executed by the parties hereto in counterparts, each of which shall be deemed to be an original and both of which shall constitute together but one and the same agreement.
Section 4.7 Beneficiary. The City is a third party beneficiary of WPRAs rights under this Agreement.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty by its duly authorized officer on ___________, 2002.
GUARANTOR: | ||||
INTRAWEST CORPORATION, a corporation duly continued under the Canada Business Corporations Act | ||||
By: | ||||
Title: | ||||
The foregoing Guaranty Agreement is hereby accepted by the WPRA as of the date first above written.
WINTER PARK RECREATIONAL ASSOCIATION, a Colorado non-profit corporation | ||
By: | ||
Title: |
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EXHIBIT I
TO LEASE AND OPERATING AGREEMENT
Owned Real Property
The land, and all buildings, fixtures and other improvements on such land constituting real property in the State of Colorado, described as follows:
PARCEL A
The Village at Winter Park I,
THE VILLAGE AT WINTER PARK MINOR SUBDIVISION,
according to the plat recorded July 6, 1994 at Reception No. 94007421.
PARCEL B
The Village at Winter Park II,
THE VILLAGE AT WINTER PARK MINOR SUBDIVISION,
according to the plat recorded July 6, 1994 at Reception No. 94007421.
PARCEL C
West Parcel,
W.E. EVANS TRACT AT WINTER PARK SUBDIVISION EXEMPTION,
according to the plat filed for the record September 25, 1996 at Reception No. 96008223.
EXCEPT from the above described parcel that portion lying within Winter Park Drive.
PARCEL D
TOWNSHIP 2 SOUTH, RANGE 75 WEST OF THE 6TH P.M.
Tract 41
PARCEL E
TOWNSHIP 2 SOUTH, RANGE 75 WEST of the 6th P.M.
Tracts A and B and C of Exchange Survey No. 367
EXCEPT any portion lying within Winter Park Drive, also known as Grand County Road No. 70, as conveyed to the Town of Winter Park by instrument recorded February 10, 1998 at Reception No. 98001154, and as corrected by instrument recorded February 26, 1998 at Reception No. 98001777.
I-1 |
PARCEL F
TOWNSHIP 2 SOUTH, RANGE 75 WEST OF THE 6TH P.M.
Tracts 38A and 40
EXCEPT from Tract 40 that portion thereof conveyed to the Town of Winter Park for Old Town Drive by Warranty Deed recorded February 10, 1998 at Reception No. 98001153,
AND EXCEPT from Tract 40 that portion thereof conveyed to the Department of Transportation by Warranty Deed recorded February 4, 2002 at Reception No. 2002-001262.
PARCEL G
TOWNSHIP 2 SOUTH, RANGE 75 WEST OF THE 6TH P.M.
Section 10: Tracts 38B, 45 and 49
EXCEPT from Tract 38B that portion thereof conveyed to the Department of Transportation, State of Colorado, by Warranty Deed recorded August 1, 2002 at Reception No. 2002-008001.
AND EXCEPT from Tract 49 that portion thereof conveyed to the Town of Winter Park for Winter Park Drive by Deed recorded ___________________, 2002 at Reception No. 2002-___________________.
PARCEL H
Tracts 44A-1, 44A-2, 44A-3 and 44A-4,
MINOR SUBDIVISION PLAT OF TRACT 44A,
according to the plat recorded February 26, 1998 at Reception No. 98001776.
PARCEL I
Tract 8003, a tract of land located immediately east of Tract 44A, Township 2 South, Range 75 West of the 6th P.M., described by metes and bounds in Interchange Deed recorded January 9, 1997 at Reception No. 97000243 as follows:
Beginning at A.P. #1 S.T.A. 8003, a standard USFS monument on the westerly right-of-way of U.S. Highway 40; Thence S81°3144W, 48.76 feet to A.P. #2 identical with original corner #1 of Tract 44A, a standard USFS monument; Thence S21°2254E, 51.49 feet on the 1-9 line of Tract 44A to A.P. #3 identical with corner #9 of Tract 44A, a cross marked on a rock; thence S09°0457E, 178.56 feet on line 8-9 of Tract 44A, to A.P. #4, a standard USFS monument; Thence N 80°5716E, 69.13 feet to A.P. #5 being a point on the westerly right-of-way line of U.S. Highway No. 40, a standard USFS monument; Thence N16°1648W, 196.02 feet to A.P. #6, a standard USFS monument; Thence continuing along said right-of-way 34.60 feet along the arc of a curve to the left, having a radius of 1332.50 feet and a central angle of 01°2916, (chord bears N20°2320W, 34.60 feet) to A.P. #1, the point of beginning.
I-2 |
PARCEL J
All that portion of the following described parcel of land lying northeasterly of the northeasterly line of that certain parcel of land conveyed to Grand County, Colorado, by deed recorded in Book 232 at Page 187 of the records of Grand County, Colorado:
A portion of the Mary Jane Placer Mining claim (U.S. Mineral Survey No. 16378) in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., more particularly described as follows:
Commencing at Corner No. 1 of said Mining Claim;
Thence North 76°4615 West and along Line 1-4 of said Mining Claim, for a distance of 490.16 feet to a point on the Northerly boundary of Iron Horse Subdivision Second Replat;
Thence South 45°1800 East and along the Northeasterly boundary line of said subdivision, for a distance of 574.64 feet to a point on Line 2-1 of said Mining Claim;
Thence North 13°1415 East and along said Line 2-1, for a distance of 300.00 feet to the point of beginning.
PARCEL K
Lot 5,
FIRST REPLAT OF THE VILLAGE AT WINTER PARK,
according to the plat recorded June 3, 1998 at Reception No. 98005921,
AND
Lots 7, 8 and 9,
SECOND REPLAT OF THE VILLAGE AT WINTER PARK,
according to the plat recorded January 20, 2000 at Reception No. 2000-000625, and as amended by the plat recorded January 20, 2000 at Reception No. 2000-000626.
I-3 |
PARCEL L
A tract of land in the SW¼SE¼NW¼ Section 33, Township 1 South, Range 75 West of the 6th P.M., described as follows:
Beginning at the Northwest corner of said Lot 9, Block 2, Hide-Away Park; thence North 49°0531 East, 91.40 feet to a Northerly corner of said Lot 9; thence South 89°5758 East, 24.00 feet; thence South 03°2759 East, 205.51 feet to the South line of the tract conveyed to the Town of Winter Park by deed recorded in Book 334 at Page 199; thence North 79°5027 West, 83.22 feet to a point of curve; thence on a curve to the left having a radius of 230.44 feet and a length of 19.46 feet, to the TRUE POINT OF BEGINNING; thence continuing on the curve to the left having a radius of 230.44 feet and a length of 56.41 feet; thence South 39°5257 East, 91.49 feet to the west line of said Lot 9; thence North 01°5542 West, 71.91 feet along the West line of said Lot 9 to the True Point of Beginning.
AND
Lots 11 and 13,
Block 2,
HIDEAWAY PARK
AND
Lot 9,
Block 2,
HIDEAWAY PARK
EXCEPT that portion conveyed to Town of Winter Park, Colorado, a Colorado Home Rule Municipality, by instrument recorded August 17, 1983 in Book 334 at Page 199.
PARCEL M
All that portion of the SE¼NW¼ of Section 33, Township 1 South, Range 75 West of the 6th P.M., described as follows:
Beginning at the Northwesterly corner of Lot 9, Block 2, Hideaway Park from whence the Northeast corner of the SW½SE¼NW¼ of said Section 33 bears N 01°46 W, 78.00 feet; thence Southerly, along the West line of said Block 2 and said West line extended, 421.20 feet; thence N 42°07 W, 297.30 feet; thence N 42°55 E, 273.30 feet to the Point of Beginning.
EXCEPT that tract of land as conveyed by L. E. Hauptman to H. S. Nelson by instrument recorded December 21, 1949 in Book 100 at Page 11 and re-recorded October 11, 1982 in Book 141 at Page 325.
ALSO EXCEPT that tract of land as conveyed by Rule and Order of the Grand County District Court recorded May 24, 1984 in Book 351 at Page 57.
I-4 |
PARCEL N
A tract of land in the SW¼SE¼NW¼ and in the N½NW¼NE¼SW¼ of Section 33, Township 1 South, Range 75 West of the 6th P.M., described as follows:
Beginning at the most Southerly corner of Wintermoor Townhouses, First Filing;
thence North 43°0022 East, 100.16 feet;
thence North 13°5603 West, 119.22 feet;
thence North 46°5932 West, 174.73 feet to a point on the Southeasterly right of way line of Vasquez Creek Road;
thence North 43°0022 East, along said right of way line, 135.21 feet;
thence South 42°0723 East, 297.16 feet;
thence South 1°3248 East, 384.54 feet;
thence North 47°1314 West, 291.23 feet to the point of beginning.
PARCEL O
Condominium Unit 4,
Court 20,
MEADOW RIDGE LODGES - COURTS 14-22,
according to the maps filed for record and according to the Condominium Declaration for Meadow Ridge Lodges - Courts No. 14, 15, 16, 17, 18A, 18B, 19, 20, 21 and 22 recorded October 9, 1975 in Book 220 at Page 204, as amended by instrument recorded July 22, 1976 in Book 227 at Page 88, subject to the terms, conditions, provisions and obligations of said condominium declaration, as amended.
PARCEL P
Condominium Unit 5,
Court No. 12,
MEADOW RIDGE LODGES - Courts 9, 10, 11, 12, 13A and 13B,
according to the Maps filed for record as amended, and according to the Condominium Declaration for Meadow Ridge Lodges - Courts 9, 10, 11, 12 and 13, recorded May 11, 1973 in Book 196 at Page 699, as amended by instruments recorded June 18, 1975 in Book 217 at Page 9 and in Book 217 at Page 19.
PARCEL Q
Condominium Unit 6,
MEADOW RIDGE LODGES - COURT NO. 4,
according to the map thereof filed for record as amended and according to the Condominium Declaration for Meadow Ridge Lodges - Court No. 4 recorded October 11, 1972 in Book 191 at Page 278, subject to the terms, conditions, provisions and obligations of said Condominium Declaration.
I-5 |
PARCEL R
Condominium Unit 1,
Court No. 10,
MEADOW RIDGE LODGES - Courts 9, 10, 11, 12, 13A and 13B,
according to the Maps filed for record as amended, and according to the Condominium Declaration for Meadow Ridge Lodges - Courts 9, 10, 11, 12 and 13, recorded May 11, 1973 in Book 196 at Page 699, as amended by instruments recorded June 18, 1975 in Book 217 at Page 9 and in Book 217 at Page 19.
PARCEL S
Condominium Unit 16,
Court 8,
MEADOW RIDGE LODGES - COURTS NO. 7 and 8,
according to the map thereof filed for record as amended and according to the Condominium Declaration for Meadow Ridge Lodges - Courts No. 7 and 8 recorded May 25, 1973 in Book 197 at Page 237.
PARCEL T
Condominium Unit 2,
Court No. 12,
MEADOW RIDGE LODGES - Courts 9, 10, 11, 12, 13A and 13B,
according to the Maps filed for record as amended, and according to the Condominium Declaration for Meadow Ridge Lodges - Courts 9, 10, 11, 12 and 13, recorded May 11, 1973 in Book 196 at Page 699, as amended by instruments recorded June 18, 1975 in Book 217 at Page 9 and in Book 217 at Page 19.
PARCEL U
Condominium Unit 204,
Building F,
WINTER PARK LODGE II,
according to the Map filed for record, as amended, and according to the Condominium Declaration for Winter Park Lodge II recorded February 7, 1977 in Book 233 at Page 391, as amended by instruments recorded June 15, 1977 in Book 236 at Page 325; September 2, 1981 in Book 297 at Page 970; May 28, 1982 in Book 311 at Page 366; October 15, 1982 in Book 317 at Page 532; January 31, 1983 in Book 322 at Page 870; May 27, 1983 in Book 329 at Page 172; May 16, 1990 in Book 463 at Page 895 and January 29, 1996 at Reception No. 96000792.
I-6 |
PARCEL V
Condominium Unit 101,
Building C,
WINTER PARK LODGE II,
according to the Map filed for record, as amended, and according to the Condominium Declaration for Winter Park Lodge II recorded February 7, 1977 in Book 233 at Page 391, as amended by instruments recorded June 15, 1977 in Book 236 at Page 325; September 2, 1981 in Book 297 at Page 970; May 28, 1982 in Book 311 at Page 366; October 15, 1982 in Book 317 at Page 532; January 31, 1983 in Book 322 at Page 870; May 27, 1983 in Book 329 at Page 172; May 16, 1990 in Book 463 at Page 895 and January 29, 1996 at Reception No. 96000792.
PARCEL W
Condominium Unit 202,
Building D,
WINTER PARK LODGE II,
according to the Map filed for record, as amended, and according to the Condominium Declaration for Winter Park Lodge II recorded February 7, 1977 in Book 233 at Page 391, as amended by instruments recorded June 15, 1977 in Book 236 at Page 325; September 2, 1981 in Book 297 at Page 970; May 28, 1982 in Book 311 at Page 366; October 15, 1982 in Book 317 at Page 532; January 31, 1983 in Book 322 at Page 870; May 27, 1983 in Book 329 at Page 172; May 16, 1990 in Book 463 at Page 895 and January 29, 1996 at Reception No. 96000792.
PARCEL X
Condominium Unit 101,
Building B,
WINTER PARK LODGE II,
according to the Map filed for record, as amended, and according to the Condominium Declaration for Winter Park Lodge II recorded February 7, 1977 in Book 233 at Page 391, as amended by instruments recorded June 15, 1977 in Book 236 at Page 325; September 2, 1981 in Book 297 at Page 970; May 28, 1982 in Book 311 at Page 366; October 15, 1982 in Book 317 at Page 532; January 31, 1983 in Book 322 at Page 870; May 27, 1983 in Book 329 at Page 172; May 16, 1990 in Book 463 at Page 895 and January 29, 1996 at Reception No. 96000792.
PARCEL Y
Condominium Unit No. 1,
Building No. C,
THE DIVIDE AT FOREST MEADOWS,
as shown on the Condominium Maps for The Divide at Forest Meadows filed April 5, 1983, under Reception No. 202512 and October 5, 1983, under Reception No. 208433 and subject to the Condominium Declaration for The Divide at Forest Meadows recorded April 5, 1983 in Book 326 at Page 304, as amended by instrument recorded October 5, 1983, in Book 337 at Page 122 and any and all supplements or amendments to the Condominium Declaration and Maps as are or may be subsequently recorded.
I-7 |
PARCEL Z
Condominium Unit No. 3,
Building No. D,
THE DIVIDE AT FOREST MEADOWS,
as shown on the Condominium Maps for The Divide at Forest Meadows filed April 5, 1983, under Reception No. 202512 and October 5, 1983, under Reception No. 208433 and subject to the Condominium Declaration for The Divide at Forest Meadows recorded April 5, 1983 in Book 326 at Page 304, as amended by instrument recorded October 5, 1983, in Book 337 at Page 122 and any and all supplements or amendments to the Condominium Declaration and Maps as are or may be subsequently recorded.
PARCEL AA
Condominium Unit 303,
Building D,
SILVERCREST CONDOMINIUMS,
according to the maps filed for record and according to the Condominium Declaration recorded May 10, 1979 in Book 258 at Page 109 and as amended by instrument recorded December 3, 1979 in Book 268 at Page 775 and November 25, 1970 in Book 284 at Page 69.
PARCEL BB
Lots 13, 14, 15 and that part of Lot 16 lying South of the right-of-way of U.S. Highway 40, Block 7, TABERNASH,
TOGETHER WITH those portions of the alley in said Block 7, and those portions of 4th Street adjacent to said Block 7, as vacated by Resolution No. 1976-7-3 of the Board of County Commissioners of Grand County recorded in Book 227 at Page 351 under Reception No. 143026.
PARCEL CC
Lots 3, 4, 5, 6, 7, 8 and 32, Block 4, and
Lots 3, 4 and 8, Block 2,
GRAND MEADOWS SUBDIVISION, according to the plat recorded February 20, 1998 at Reception No. 98001466.
I-8 |
PARCEL DD
Condominium Unit 303,
and Garage Unit 3,
Building E,
WINTER PARK LODGE II,
according to the Map filed for record, as amended, and according to the Condominium Declaration for Winter Park Lodge II recorded February 7, 1977 in Book 233 at Page 391, as amended by instruments recorded June 15, 1977 in Book 236 at Page 325; September 2, 1981 in Book 297 at Page 970; May 28, 1982 in Book 311 at Page 366; October 15, 1982 in Book 317 at Page 532; January 31, 1983 in Book 322 at Page 870; May 27, 1983 in Book 329 at Page 172; May 16, 1990 in Book 463 at Page 895 and January 29, 1996 at Reception No. 96000792.
PARCEL EE
Condominium Unit 3,
Court No. 11
MEADOW RIDGE LODGES - Courts 9, 10, 11, 12, 13A and 13B,
according to the Maps filed for record as amended, and according to the Condominium Declaration for Meadow Ridge Lodges - Courts 9, 10, 11, 12 and 13, recorded May 11, 1973 in Book 196 at Page 699, as amended by instruments recorded June 18, 1975 in Book 217 at Page 9 and in Book 217 at Page 19.
Parcels FF and GG are not owned by WPRA as of 9-18-02 but are under contract pursuant to a letter agreement between LDM Development, Fru-Con Development Corp and winter Park Recreational Association dated August 3, 2001 with a closing scheduled to occur prior to 10-01-02. There are no assurances that the closing will occur prior to October 1 and closing may not occur until after execution of the Lease and Operating Agreement or may not occur at all.
PARCEL FF
Outlot B,
MINOR SUBDIVISION OF COMBINED BLOCK A, IRON HORSE SUBDIVISION - SECOND REPLAT, BEING A MINOR SUBDIVISION OF COMBINED BLOCK A, IRON HORSE SUBDIVISION - SECOND REPLAT, according the plat recorded __________________, 2002 at Reception No. 2002-__________________.
I-9 |
PARCEL GG
Outlot G,
BRIDGERS CACHE SUBDIVISION,
according to the plat recorded _________, 2002 at Reception No. 2002-_______________.
NOTE: | For the purposes of this Exhibit I, recorded means recorded with the office of the Clerk and Recorder of Grand County, Colorado. |
I-10 |
EXHIBIT J
TO LEASE AND OPERATING AGREEMENT
TANGIBLE PERSONAL PROPERTY
List of Assets |
Buildings |
Snoasis (On USFS Property) |
Sunspot Patrol Headquarters (On USFS Property) |
Mary Jane Maintenance Buildings (On USFS Property) |
Utah Junction (On USFS Property) |
Bullfrog Patrol Building (On USFS Property) |
Iron Horse Lift Restrooms (On USFS Property) |
Vasquez Patrol HQ/Sundance Cafe (On USFS Property) |
Lunch Rock Warming House (On USFS Property) |
Sunspot Restaurant (On USFS Property) |
Olympia/Looking Glass Comfort Station (On USFS Property) |
Lunch Rock Patrol Building (On USFS Property) |
Discovery Park Rest Rooms (On USFS Property) |
NASTAR Start/Finish Building (On USFS Property) |
Moose Wallow Log Cabin (On USFS Property) |
Explosive Cache (On USFS Property) |
Cold Storage Building (On USFS Property) |
Sunspot Water Treatment w/Equipment (On USFS Property) |
Lifts |
Eskimo |
Prospector Express |
Looking Glass |
Gemini |
Olympia Express |
Arrow Triple Chair |
Outrigger Triple Chair |
Hand Car Tow |
Zephyr Express |
Discovery |
High Lonesome Express |
Pioneer Express |
Endeavour |
Discovery Park Carpet |
Mount Maury Carpet |
List of Assets |
Sorenson Park Carpet |
Mary Jane |
Summit Express |
Iron Horse |
Pony Express |
Challenger |
Galloping Goose |
Sunnyside |
Timberline |
Snow Vehicles | |
1982 | LMC 1200C Spryte |
1991 | LMC 3700CF With Tiller & Lite Bar |
1985 | Kassbohrer PB 270 With Attachments |
1986 | LMC 3700C with Attachments |
1989 | LMC 3700C with Attachments |
1990 | LMC 3700C with Attachments |
1990 | LMC 3700C with Attachments |
1991 | LMC 3700C with Attachments |
1991 | LMC 3700C with Attachments |
1993 | LMC 3700C with Attachments |
1993 | LMC 3700C with Attachments |
1993 | LMC 3700C with Attachments |
1993 | LMC 3700C with Attachments |
1993 | LMC 3700C with Attachments |
1994 | LMC 3700C with Attachments |
1994 | Bombardier 400T with Attachments |
1995 | LMC 3700C with Attachments |
1996 | Bombardier MP2 Plus with Attachments |
1996 | Bombardier MP2 Plus with Attachments |
1990 | LMC 3700C with Attachments/Winch |
1998 | Piston Bully with Attachments |
1998 | Bombardier BR180 with Attachments |
1992 | Haul Trailers-4 |
1992 | People Sled |
1983 | Highway Sander |
Snowmobiles | |
1995- | Polaris Indy 440 Tran Sport (black) |
1995- | Polaris Indy 440 Tran Sport (black) |
1995- | Polaris Indy Wide Track 500 GT |
2000- | Polaris Wide Track 500 LX |
1997- | Polaris Indy 440 Tran Sport |
2000- | Polaris Wide Track 500 LX |
List of Assets | |
2000- | Polaris 550 Sport Touring |
1999- | Polaris 440 Tran Sport |
1999- | Polaris 440 Sport Touring |
1999- | Polaris 440 Tran Sport |
1999- | Polaris 440 Sport Touring |
1999- | Polaris 440 Tran Sport |
1998- | Polaris 440 Sport Touring |
1999- | Polaris 440 Tran Sport |
2001- | Polaris 340 Touring |
1998- | Polaris 440 Tran Sport Touring |
1998- | Polaris 440 Tran Sport Touring |
1997- | Polaris Indy 440 Tran Sport |
1995- | Polaris Indy 440 Tran Sport (black) |
2000- | Polaris 550 Sport Touring |
1996- | Polaris Indy Wide Track 500 GT |
1997- | Polaris Indy 440 Tran Sport |
2000- | Polaris Wide Track 500 LX |
1999- | Polaris 440 Tran Sport |
1998- | Polaris 440 Sport Touring |
2000- | Polaris Wide Track 500 LX |
1997- | Polaris Indy 440 Tran Sport |
1995- | Polaris Indy 440 Sport (black) |
1999- | Polaris 440 Tran Sport |
1998- | Polaris 440 Sport Touring |
1998- | Polaris 440 Sport Touring |
1998- | Polaris 440 Tran Sport |
1998- | Polaris 440 Sport Touring |
1998- | Polaris 440 Sport Touring |
1998- | Polaris 440 Sport Touring |
1998- | Polaris 440 Sport Touring |
2000- | Polaris Wide Track 500 LX (FS-6) |
1998- | Polaris 440 Tran Sport (FS-4) |
1994- | Polaris Indy Wide Track 500 LX (FS-3) |
1995- | Polaris Indy 440 Tran Sport (CP-1) |
1998- | Polaris 440 Tran Sport (SM-1) |
Vehicles | |
1981 | Blue Bird Bus |
1982 | Ford Pickup |
1983 | Chevy Flatbed |
1984 | Bronco II |
1984 | Ford Ranger |
1984 | GMC Bus |
1985 | Ford Bus |
List of Assets | |
1985 | Ford F800 Van |
1985 | Ford Pickup |
1985 | Thomas Bus-2 |
1986 | Ford Pickup-7 |
1986 | Ford Flatbed-2 |
1986 | Ford Dump Truck |
1986 | Ford F250 Pickup |
1986 | GMC 28 Passenger Bus-2 |
1986 | GMC Pickup |
1987 | Ford Pickup |
1987 | Nissan Pickup |
1987 | Versa Lift-Cherry Picker |
1988 | Ford Club Wagon-2 |
1989 | Ford F350 Pickup |
1989 | Chevrolet S10 Pickup |
1989 | Chevrolet Pickup |
1989 | Subaru GL Wagon |
1990 | Chevrolet Pickup-2 |
1990 | KW K130 Truck |
1990 | AFBI Terrtrac TT-Hill Tractor |
1991 | Ford Ranger Pickup |
1991 | Chevrolet 1 Ton |
1991 | Nissan Pickup |
1991 | Ford Pickup |
1992 | Ford Explorer XL |
1992 | Ford Pickup |
1993 | Ford 15 Passenger Van |
1993 | Ford Mini Coach |
1993 | Ford F150 Pickup |
1993 | Ford F250 Pickup |
1993 | Chevrolet 3/4 Ton Truck |
1993 | Chevrolet Pickup |
1994 | Dodge Caravan(Denver) |
1993 | Asphalt Sweepster |
1994 | Dodge Pickup |
1994 | Dodge Ram Pickup |
1994 | Ford F150 Pickup |
1994 | Chevrolet Blazer |
1994 | GMC Pickup |
1994 | Ford F350 Pickup |
1995 | Dodge Pickup |
1995 | Ford Aerostar Van |
1995 | Ford F150 Pickup |
1995 | Freightliner Dump |
1996 | Ford E350 Van-2 |
List of Assets | |
1996 | Ford F150 Pickup-2 |
1996 | Homemade Trailer |
1997 | Ford E350 Van |
1997 | Winch Cable |
1997 | Clark Mdl. TW40 36 Volt Electric Forklift |
1997 | Super Haul Snow Box |
1999 | Melore Bobcat |
2000 | Chevrolet Pickup |
Snowmaking |
Booster Pumphouse |
Control Building |
Primary Pumphouse |
Sleeper Pumphouse |
MJ Pump Vault |
Drainage Valve Bldg-Upper Block House |
Drainage Valve Bldg-Lower Block House |
Sleeper Snowmaking Expansion |
Hydrants |
Guns |
Pipes |
Compressors |
Weather Station |
Utility Equipment |
AT&T Lease |
Cathodic Protection System |
Electrical Systems/Power Feeds/Power Lines |
Energy Savings/Control Program |
Fuel Management System |
Fuel Storage Tanks/Pumps |
Lighting |
Sound Systems |
Landscaping (Including lights, signage, banners, trash recepticals, fencing, etc.) |
Base of Ski Area |
List of Assets |
Base Village |
Mary Jane |
Railroad Containment Berm |
Alpine Slide |
Sleds (237) |
Alpine Slide Track |
Arrow Lift Modification |
Landscape |
Ramps & Walkway |
Sled Mover Bottom |
Sled Mover Top |
Storage Building-Alpine Slide |
Equipment |
Audio Visual Equipment |
Bar Code Scanners |
Base Operations Equipment/Tools |
Bike Stands/Barriers |
Carpet |
Childrens Center Rental Equipment |
Competition Center Equipment |
Comptrol Ticketing/Season Pass System |
Computer Equipment |
Credit Card/Cash Registers/POS Systems |
Disc Golf Baskets |
Employee Housing Furniture/Fixtures |
Fleet Maintenance Program |
Food & Beverage Equipment/Furniture |
Front Range Sales Office - furnishings and fixtures |
Kronos Software |
Local Area Network |
Lockers |
Marketing/Advertising Equipment |
Messaging System |
Microsoft Office Software |
Mini Golf Course |
Office Equipment/Furniture |
Outdoor Climbing Wall |
Patrol Equipment |
Playground Equipment |
Radio Equipment |
Rental Bikes/Scooters |
List of Assets |
Rental Equipment |
Retail Equipment |
Security System |
Signage |
Snowblowers |
Special Events Equipment |
Sports Science Equipment |
Tents |
Uniforms |
Weather Station |
Y2K Hardware/Software |
3 Portable Marketing backdrops for shows, sales, etc. |
Various Original Artwork |
Webcam Equipment (Camera, Cables, etc.) |
Balcony House |
Childrens Center |
Mary Jane (2) |
Mountain Cam |
Video and Transmitting equipment located at |
Winter Park Mountian Lodge |
EXHIBIT K
TO LEASE AND OPERATING AGREEMENT
Transition Costs
(a) | Vacation and Sick Payout |
(b) | Funding of SERP Benefits, Accrued SERP Liability and Deferred Compensation Liability |
(c) | Existing Management Contracts and Severance Costs (including associated costs) |
(d) | Pension Plan Consultants |
(e) | Ongoing Administrative Costs re: Pension Plan |
(f) | Pension Termination Costs |
(g) | 401k Termination Costs |
(h) | Continued Provision of Benefits to Seasonal Employees |
(i) | Continued Provision of Retiree Medical Coverage |
(j) | Benefits Consultants – Rollover to Intrawest Plans |
(k) | Compensation Review Costs |
(l) | Training and Other Integration Costs |
EXHIBIT L
TO LEASE AND OPERATING AGREEMENT
ASSIGNMENT AND
ASSUMPTION AGREEMENT
(Intangible Personal Property)
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this Agreement) is made as of _________________, 2002 between Winter Park Recreational Association, a Colorado nonprofit corporation (WPRA) for itself and as agent for the City and County of Denver and Intrawest/Winter Park Operations Corporation, a Delaware corporation (Intrawest).
A. WPRA, as landlord, entered into that certain Lease and Operating Agreement, dated _________, 2002, with Intrawest as tenant (the Lease) concerning the Winter Park Resort as described therein.
B. WPRA desires to assign to Intrawest all of WPRAs right, title and interest in and to all contracts to which WPRA is a party, not including (i) the Lease and any document described therein to which Intrawest or an affiliate is a party, (ii) those items that are being separately licensed to Intrawest pursuant to that certain License Agreement between the parties of even date herewith, (iii) contracts that constitute real property as defined under Colorado law that is being separately leased or subleased to Intrawest pursuant to the Lease, (iv) any governmental rights not transferable as a matter of law, and (v) any other agreement now or hereafter existing for the operation of WPRA as contrasted to operation of the Winter Park Resort (Assigned Contracts); and Intrawest desires to assume all of WPRAs obligations under the Assigned Contracts.
NOW THEREFORE, in consideration of the Lease and the promises and agreements made therein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Assignment. WPRA hereby sells, assigns, sets over, transfers and conveys to Intrawest all of WPRAs right, title and interest in and to the Assigned Contracts.
2. Assumption. Intrawest hereby assumes all of the obligations and liabilities of WPRA under the Assigned Contracts.
3. Termination. Upon termination of the Lease for any reason, Intrawest shall immediately execute an agreement by which all Assigned Contracts contemplated in this Agreement that are still in effect at the time of such termination, as well as all agreements entered into by Intrawest following the date of execution of this Agreement, which constitute Leased Assets (defined in the Contract), shall be assigned to and assumed by WPRA, or such other party as WPRA shall designate in writing. All such agreements which are assigned to WPRA upon termination of this Agreement shall be free and clear of any and all liens or encumbrances.
1 |
Executed as of the date first written above.
WPRA: | |||
Winter Park Recreational Association, a Colorado nonprofit corporation | |||
By: | |||
INTRAWEST: | |||
Intrawest/Winter Park Operations Corporation, a Delaware corporation | |||
By: |
2 |
EXHIBIT M
TO LEASE AND OPERATING AGREEMENT
LICENSE AGREEMENT
(Intellectual Property)
THIS LICENSE AGREEMENT (Agreement) is entered into and effective as of __________, 2002 by and between Winter Park Recreational Association, a Colorado nonprofit corporation (WPRA) for itself and as agent for the City and County of Denver and Intrawest/Winter Park Operations Corporation, a Delaware corporation and Intrawest/Winter Park Development Corporation, a Delaware corporation (collectively, Intrawest).
Recitals:
A. WPRA is the owner of certain trademarks, service marks, trade names, patents, licenses, permits and copyrights, which are described or listed on Exhibit A attached hereto (Intellectual Property).
B. WPRA wishes to grant, and Intrawest wishes to receive, a license to use WPRAs Intellectual Property on the terms set forth below.
Agreement:
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in the Lease and Option Agreement (defined below), and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Grant of License. WPRA hereby grants to Intrawest and Intrawest hereby accepts, subject to the terms and conditions of this Agreement, an exclusive, royalty-free license (the License) to use the Intellectual Property in connection with all of Intrawests operations and activities undertaken by Intrawest with respect to the Winter Park Resort pursuant to that certain Lease and Operating Agreement (the Lease) and that certain Option Agreement (the Option Agreement) between WPRA and Intrawest. WPRA hereby grants to Intrawest the right to sublicense its rights hereunder, so long as such sublicensee agrees to be bound by the terms of this Agreement. Intrawest will notify WPRA of the terms of any such sublicense as well as the identity of the sublicensee, promptly after entering into any such sublicense.
1 |
2. Ownership of Licensed Mark.
2.1. Intrawest acknowledges WPRAs exclusive right, title and interest in and to the Intellectual Property, all goodwill associated therewith and all rights relating thereto, and will not at any time do or cause to be done any act or thing contesting or in any way impairing or tending to impair any part of the Intellectual Property, or WPRAs rights in and to such Intellectual Property. Any use of the Intellectual Property by Intrawest or sublicensee will inure to the benefit of WPRA.
2.2. Intrawest will take any and all reasonable and necessary actions to protect the validity and strength of the Intellectual Property. Such action may include without limitation, (i) assuming responsibility for the defense of any lawsuit challenging or affecting rights to the Intellectual Property, and/or (ii) instituting litigation to protect its rights to the Intellectual Property. WPRA shall cooperate with Intrawest (at Intrawests expense) in connection with any such lawsuit or litigation if reasonably requested to do so by Intrawest. Should Intrawest choose to or be required to take any action with respect to the Intellectual Property, all reasonable costs and expenses of such action will be borne by Intrawest, and Intrawest will indemnify, defend and hold WPRA harmless from and against any and all such costs and expenses (including, without limitation, attorneys fees and disbursements). All damages, profits, penalties, attorneys fees and other consideration, compensation or reimbursement, which may be recovered, will be accounted for as provided in the Lease.
3. Right of Inspection of Materials Upon reasonable notice, WPRA will have the right to inspect at any time any materials being used by Intrawest in order to determine if the use of the Intellectual Property on or in such materials is consistent with the terms of this Agreement. Upon notice from WPRA that any materials do not, in its reasonable judgement, comply with the terms of this Agreement, Intrawest agrees to amend such materials, prior to further use, to the reasonable satisfaction of WPRA.
4. Term This Agreement will terminate immediately upon termination of the Lease for any reason. Upon termination, Intrawest will immediately cease use of the Intellectual Property. Any remaining inventory of products using the Intellectual Property, as well as all rights in and to the Intellectual Property, will be surrendered and assigned, if necessary, to WPRA free and clear of any liens, encumbrances or charges. At termination, the term Intellectual Property shall include any and all items of the type listed on Exhibit A attached hereto, which were created by Intrawest in connection with its obligations under the Lease and Option Agreement subsequent to the date of execution of this Agreement and which are unique, exclusive and specifically related to Winter Park Resort.
2 |
5. Miscellaneous This Agreement may not be modified other than by a written amendment executed by each of the parties hereto. This Agreement will be construed in accordance with, and be governed by, the laws of the State of Colorado. If any provision or part thereof in this Agreement is held invalid, illegal or unenforceable for any reason, the remainder of this Agreement will nonetheless remain in full force and effect. This Agreement will benefit and be binding upon the parties hereto and their respective heirs, representatives, successors and assigns. This Agreement constitutes the entire understanding and agreement of the parties hereto with respect to the subject matter covered in it and supersedes all prior agreements and understandings, written or oral, among any of the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.
Winter Park Recreational Association
a Colorado nonprofit corporation
By: |
Intrawest/Winter Park Operations Corporation
a Delaware corporation
By: |
Intrawest/Winter Park Development Corporation,
a Delaware corporation
By: |
3 |
Exhibit A
Intellectual Property
1. All copyrights
2. All patents
3. All licenses and permits which give WPRA rights to the Intellectual Property
4. Goodwill
5. All trademarks, trade names and service marks, including but not limited to those listed on the pages attached hereto including, without limitation, those described on the following
pages.
4 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
COLORADOS FAVORITE (Words) | Winter Park Recreational Association |
Clothing (Intl 25) Ski Resort Services (Intl 41)
|
Federal | 1,999,321 (Federal) | September 10, 2006 |
COLORADOS FAVORITE (Stylized) | Winter Park Recreational Association | Clothing (Intl, State 25) Ski Resort Services (Intl, State 41) | Federal & State | 1,999,322 (Federal) 951015689 (State) 951015640 (State) |
September 10, 2006 (Federal)
|
COLORADOS FAVORITE SKI RESORT (Words) |
Winter Park Recreational Association
|
Clothing (Intl 25) | Federal | 2,013,187 (Federal) | November 5, 2006 |
COLORADOS FAVORITE SKI RESORT (Stylized) | Winter Park Recreational Association | Clothing (Intl, State 25) Ski Resort Services (Intl 41) | Federal & State | 2,020,248 (Federal) 941135081 (State) |
December 3, 2006 (Federal)
|
COLORADOS FAVORITE SKI RESORT (Stylized) | Winter Park Recreational Association |
Education & Entertainment (State 41)
|
State | 941135080 | December 6, 2004 |
COME PEDAL THE PARK (Words) | Winter Park Recreational Association |
Education & Entertainment (State 41)
|
State | 941135076 | December 6, 2004 |
5 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
COME PEDAL THE PARK (Words) | Winter Park Recreational Association |
Utensils & Containers (State 21)
|
State | 941135077 | December 6, 2004 |
COME PLAY AT THE PARK (Words) | Winter Park Recreational Association |
Education & Entertainment (State 41)
|
State | 941135075 | December 6, 2004 |
DISCOVERY PARK (Words) | Winter Park Recreational Association |
Education & Entertainment (State 41)
|
State | 941135078 | December 6, 2004 |
JANE GANG (Words) | Winter Park Recreational Association |
Education & Entertainment (State 41)
|
State | 951015688 | February 7, 2005 |
NO PAIN NO JANE (Words) | Winter Park Recreational Association | Clothing (State 25) | State | 941135070 | December 6, 2004 |
NO PAIN NO JANE (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135071 | December 6, 2004 |
PARSENN BOWL (Words) | Winter Park Recreational Association | Clothing (State 25) (State 41) | State | 951100533 95110532 |
August 9, 2005 August 9, 2005 |
PARSENN BOWL (Words & Design) | Winter Park Recreational Association | Clothing (State 41) | State | 941135079 | December 6, 2004 |
PERFORMANCE LAB (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 961141501 | October 30, 2006 |
POWDER EXPRESS (Stylized) | Winter Park Recreational Association | Clothing (State 25) | State | 941143805 | December 27, 2004 |
POWDER EXPRESS (Stylized) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941143806 | December 27, 2004 |
6 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
POWDER PLUS (Stylized) | Winter Park Recreational Association | Education & Entertainment (State 41) | State Renewal | 911097560 20011204412C |
December 2, 2001 October 23, 2001 |
THE JANE GANG | Winter Park Recreational Association | APPLICATION FILED | |||
THE JANE GANG | Winter Park Recreational Association | APPLICATION FILED | |||
PREFERENCE PRICING (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State Renewal | 911097561 200112044130 |
December 2, 2001 October 31, 2011 |
RIDER IMPROVEMENT CENTER (Words & Design) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 971001561 | January 6, 2007 |
RIDER IMPROVEMENT CENTER (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 961141500 | October 30, 2006 |
SKIER IMPROVEMENT CENTER (Words & Design) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 961141499 | October 30, 2006 |
SNOWBALL EXPRESS (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135074 | December 6, 2004 |
SPRING SPLASH (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135073 | December 6, 2004 |
SUNSPOT (Words) | Winter Park Recreational Association | Restaurant Services (Intl 42) | Federal | 1,800,300 | October 19, 2003 |
SUNSPOT (Words & Design) | Winter Park Recreational Association | Jewelry, Jewelry Pins (Intl 14); Water Bottles and Mugs (Intl 21); Clothing (Intl 25) | Federal | 1,864,634 | November 29, 2004 |
THE LODGE AT SUNSPOT (Words) | Winter Park Recreational Association | Restaurant Services (Intl 42) | Federal | 1,800,302 | October 19, 2003 |
THE LODGE AT SUNSPOT (Words & Design) | Winter Park Recreational Association | Restaurant Services (Intl 42) | Federal | 1,800,301 | October 19, 2003 |
WE GUARANTEE YOULL NOTICE THE DIFFERENCE (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135072 | December 6, 2004 |
MARY JANE (Words & Design) | Winter Park Recreational Association | Clothing (State 25) | State | 941143807 | December 27, 2004 |
MARY JANE (Words & Design) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941143808 | December 27, 2004 |
7 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
MARY JANE (Words) | Winter Park Recreational Association | Ski Instruction & Providing Facilities for Skiing (Intl 41) | Federal | 1,189,581 | February 9, 2002 Renewed/good through 2/9/2022 |
MARY JANE (Stylized) | Winter Park Recreational Association | Stationery (Intl 16); T-shirts (Intl 25); Ski Resort Services (Intl 41) | Federal | 1,990,886 | August 6, 2006 ABANDONED – NO LONGER IN USE |
GUEST CENTERED TEACHING | Winter Park Recreational Association | State 41 | State | 961141498 | October 30, 2006 |
WINTER PARK ‘N RIDE (Words & Design) | Winter Park Recreational Association | Transport of Passengers by Bus (Intl 39) | Federal | 2,444,337 | April 17, 2011 |
THE LIFT RESORT SHUTTLE (Words & Design) | Winter Park Recreational Association | Transport of Passengers by Bus (Intl 39) | Federal (APPLICATION FILED 3/17/2000) | Serial No. 2,546,036 | March 12, 2012 |
WINTER PARK RESORT (Words & Design) | Winter Park Recreational Association | Education & Entertainment (State 107) | State | T29456 | March 17, 2005 |
WINTER PARK RESORT (Words & Design) | Winter Park Recreational Association | Providing Facilities for Skiing, Lessons, Tennis Facilities (Intl 41); Arranging for Lodging & Meals at Ski Resort (Intl 42) | Federal | 1,401,619 | July 15, 2006 |
WP (Stylized) | Winter Park Recreational Association | Ski, Ski Equipment Rental, Restaurant Services, Restaurant Services (Intl 42); Ski Instruction, Providing Facilities for Skiing (Intl 41) | Federal | 961,726 | June 19, 2003 |
WINTER PARK RESORT (Stylized & Design) | Winter Park Recreational Association | Stationery, Postcards, Photographic Prints, Playing Cards (Intl 16); Clothing (Intl 25); Golf Balls, Board Games (Intl 28) | Federal | 2,000,722 | September 17, 2006 |
WINTER PARK RECREATIONAL ASSOCIATION (Trade Name) | Winter Park Recreational Association | Registered Trade Name | State | L01-08092-000 |
8 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
EXTREMELY COLORADO (Words) | Winter Park Recreational Association | Stationery (Intl 16); T-shirts (Intl 25); Ski Resort Services (Intl 41) | Federal | 2,002,327 | September 24, 2006 |
EXTREMELY COLORADO (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941143810 | December 27, 2004 |
ROCKFEST AT WINTER PARK (Words) | Winter Park Recreational Association | Promoting Musical Concerts of Others (Intl 35) | Federal (SUPPLEMENTAL REGISTER) | 2,367,265 | July 11, 2010 |
EXTREMELY COLORADO (Words) | Winter Park Recreational Association | Clothing (State 25) | State | 941143809 | December 27, 2004 |
FANCIFUL DESIGN OF V AND MOUNTAIN (Design) | Winter Park Recreational Association | Marketing, Advertising, Promotional Services for Retail, Residential, Resort Complex (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | Serial No. 76003101 | |
THE VILLAGE AT WINTER PARK (Word) | Winter Park Recreational Association | Ski Resort Lodge (Intl 42) | Federal (SUPPLEMENTAL REGISTER) | 2,572,300 | May 21, 2012 |
WEST PORTAL OUTFITTERS AND STAR (Design) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | Serial No. 76003017 | |
WEST PORTAL RENTALS AND REPAIRS (Stylized) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | 2,566,564 | May 7, 2002 |
WEST PORTAL BOOTS + BOARDS (Words & Design) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal | 2,438,461 | March 27, 2011 |
SLOPESIDE GEAR & SPORTS (Words & Design) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | Serial No. 76003020 | |
BASE CAMP 9000 AND COMPASS (Words & Design) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | 2,544,030 | March 5, 2012 |
WINTER PARK CENTRAL RESERVATIONS | Winter Park Recreational Association | Marketing, promotions, travel | State | 378052 | |
ROCKFEST AT WINTER PARK | Winter Park Recreational Association | Entertainment services, promotion, sponsorship of music festivals | Federal | 2367265 (Serial No. 751701806) | July 11, 2010 |
9 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
WINTER PARK RESORT TRAVEL SERVICES | Winter Park Recreational Association | Travel agency | State | 278486 | N/A |
10 |
EXHIBIT N
TO LEASE AND OPERATING AGREEMENT
SERP Liabilities
Retiree No. 1 | $242,243 | As of June 30, 2002 | ||
Current Mgmt SERP | $320,700 | As of August 1, 2002 | ||
$562,943 |
EXHIBIT O
TO LEASE AND OPERATING AGREEMENT
Deferred Compensation Arrangements
Retiree No. 2 | $52,500 | As of Sept 1, 2002 | ||
Retiree No. 3 | $43,700 | As of Sept 1, 2002 | ||
$96,200 |
Date/Time
of Last Edit
August 28, 2002 12:48 pm
EXHIBIT P
TO LEASE AND OPERATING AGREEMENT
TERMS FOR PROGRAM - LIFETIME SKI PASS HOLDERS
A. | All Except Trustees |
Holders shall be entitled to lift privileges for themselves for their natural lives. | |
B. | Vested Trustees |
Holders shall be entitled to lift privileges for themselves and their immediate families for their natural lives. Immediate families consist of: (a) spouse or significant other; (b) children (c) spouses of children. Holders will be provided lift privileges through the issuance of bar-coded photo passes which shall be valid for lift. These privileges are assigned specifically to the individual to whom it is issued and abuse of the privilege will result in its loss. Grandchildren, through the age of 18, will be issued photo passes upon the request of the Holder. | |
C. | Unvested Trustees |
Holders shall be entitled to lift privileges for themselves and their spouse or significant other for their natural lives, and the holders children through the age of 18. Holders will be provided lift privileges through the issuance of bar-coded photo passes which shall be valid for lift. These privileges are assigned specifically to the individual to whom it is issued and abuse of the privilege will result in its loss |
EXHIBIT Q
TO LEASE AND OPERATING AGREEMENT
SKI RUN NAMES TO BE RETAINED
Hughes |
Larry Sale |
Little Pierre |
Mulligans Mile |
Balch |
Bradleys Bash |
Cranmer |
Cranmer Cutoff |
Allen Phipps |
Over-n-Underwood |
Engle Dive |
Butchs Breezeway |
Jack Kendrick |
Bill Wilsons Way |
Ski Papa |
Groswold Discovery Park |
Sorensen Park |
Bellmar Bowl |
Johnstones Junction |
Willetts Way |
Brians Run |
Rettas Run |
Baldys Chute |
Jeffs Chute |
Norwegian |
Drunken Frenchman |
Feebleminded |
Tophers Trees |
Swedes Ridge |
EXHIBIT R
TO LEASE AND OPERATING AGREEMENT
Long-Term Liabilities
Winter Park Recreational Association
Description | Balance 09/28/02 | |||
County Note | ||||
Principal (4/15 payment) | 3,164,840.77 | |||
Interest (4/15 payment) | ||||
Interest (10/15 payment) | ||||
Total | ||||
Long Term Note | ||||
Principal (5/1 payment) | 14,596,625.00 | |||
Interest (5/1 payment) | ||||
Interest (10/30 payment) | ||||
Total | ||||
Totals | 17,761,465.77 | |||
EXHIBIT S
TO LEASE AND OPERATING AGREEMENT
Real Property Landlord Leases from Third Parties
PARCEL HH
The leasehold estate and all other rights, title and interests created or granted under the Second Amended and Restated Ground Lease Agreement between The Colorado Arlberg Club, a Colorado nonprofit corporation, as lessor, and Winter Park Recreational Association, a Colorado nonprofit corporation, as lessee, and evidenced by Memorandum of Second Amended and Restated Ground Lease Agreement dated December 20, 2002 and recorded ___________________, which leasehold estate covers those certain parcels of land described as follows:
Parcel HH-1:
That portion of the Mary Jane Placer Mining Claim (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Beginning at Corner No. 2 of said Mary Jane Placer Mining
Claim;
thence N13°1415E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°5956W, 152.00 feet;
thence S80°0943W, 300.00 feet;
thence S57°4749W, 480.30 feet;
thence S13°1415W, parallel with Line 1-2 of said Mary Jane Placer Mining Claim, 523.6 feet to Line 3-2 thereof;
thence S76°4600E, along Line 3-2 of said Mary Jane Placer Mining Claim, 765.00 feet to the Point of Beginning.
Parcel HH-2:
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Beginning at Corner No. 2 of said Mary Jane Placer Mining
Claim;
thence N13°1415E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°5956W, 152.00 feet;
thence S80°0943W, 300.00 feet;
thence S57°4749W, 480.30 feet to the TRUE POINT OF BEGINNING;
thence S13°1415W, parallel with Line 1-2 of said Mary Jane Placer Mining Claim, 523.6 feet to Line 3-2 thereof;
S-1 |
thence N76°4600W, along Line 2-3 of said
Mary Jane Placer Mining Claim, 865.00;
thence N13°1415E, parallel with Line 2-1 of said Mary Jane Placer Mining Claim, 523.60 feet to a point that bears
N76°4600W from the True Point of Beginning;
thence S76°4600E, parallel with Line 3-2 of said Mary Jane Placer Mining Claim, 865.00 feet to the TRUE POINT
OF BEGINNING.
Parcel HH-3:
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Beginning at Corner No. 4 of said Mary Jane Placer Mining
Claim;
thence S76°4615E, along Line 4-1 of said Mary Jane Placer Mining Claim, 250.00 feet;
thence S13°1400W, parallel with Line 4-3 of said Mary Jane Placer Mining Claim, 1,150.00;
thence N76°46l5W, parallel with Line 1-4 of said Mary Jane Placer Mining Claim, 250.00 feet to Line 3-4 thereof;
thence N13°1400E, along Line 3-4 of said Mary Jane Placer Mining Claim 1.150.00 feet to the Point of Beginning.
Parcel HH-4:
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Commencing at Corner No. 2 of said Mary Jane Placer; thence N13°1415E, 984.00 feet; thence N76°5956W, 152.00 feet; thence S80°0943W, 81.85 feet to the TRUE POINT OF BEGINNING;
Thence continuing S80°0943W, 218.15 feet;
Thence N06°4842W, 231.45 feet;
Thence S57°4704E, 139.13 feet to a point of curve to the right
Thence Southeasterly, 53.69 feet along the arc of said curve to the right to a point tangent, said arc having a radius of 230.00 feet, a delta angle of 13°2228 and being subtended by a chord that bears S51°0550E, 53.57 feet;
Thence S44°2436E, 118.62 feet to the TRUE POINT OF BEGINNING.
S-2 |
PARCEL II
Leasehold estate and all other rights, title and interests created or granted under the Master Lease and Purchase Option Agreement between The Vailco Group, LLC, a Colorado limited liability company, and Winter Park Services, Inc., a Colorado corporation, a Memorandum of which was recorded on September 28, 2000 under Reception No. 2000-009066, which covers the real property described as follows:
Lot 3 Block B of the Indian Meadows Golf Course and Subdivision First Filing according to the plat recorded February 23, 1999 at Reception No. 99001600 and a Replat of Lot 3, Block a Indian Meadows Golf Course and Subdivision on First Filing, Filed July 22, 1999 at Reception No. 99007661 of the Records of the Clerk and Recorder of the County of Grand, State of Colorado
NOTE: | For the purposes of this Exhibit S, recorded means recorded with the office of the Clerk and Recorder of Grand County, Colorado. |
S-3 |
EXHIBIT S
TO LEASE AND OPERATING AGREEMENT
SCHEDULE OF LEASES
Winter Park Recreational Association (WPRA) as Lessee
Lessor | Property | Date of Lease | ||||||
Columbine West, LLC (Front Range Ticket Office) |
620 SF, Suite 209, 400 S. McCaslin Boulevard, Boulder, Colorado |
10/1/98 | ||||||
Crestview at Winter Park Limited Partnership (Central Reservations) |
6000 SF (including 5 into interior mall) and 2 parking spaces in garage | 11/21/97 | ||||||
Mercy Services Corporation, a Nebraska non-profit corporation | Part of first floor of 505 Willow Lane (Wapiti Meadows), Fraser, Colorado for Child Development Center (Day Care) | 11/4/98 | ||||||
Zephyr Mountain Development, LLC | 5326 SF at 201 Zephyr Way | 11/1/99 | ||||||
USFS | Sunspot Communications Site | 7/11/2000 | ||||||
USFS | Bullfrog Communications Site | 9/6/1997 |
EXHIBIT T
TO LEASE AND OPERATING AGREEMENT
REAL PROPERTY LANDLORD LEASES TO THIRD PARTIES
Lessee | Property | Date of Lease | ||||||
ALTA Colorado, L.L.C., a Utah limited partnership (Vintage Hotel) | Land lease at base of Winter Park for 124-room hotel | 9/1/98 | ||||||
Amaze Venture, Inc. | Space located in main base area to operate a outdoor maze during the summer. | 7/1/93] | ||||||
Andrew L. Arnold, M.D. d/b/a 7 Mile Medical Clinic | Total of 2494 SF in Childrens Center Building | 6/1/99 | ||||||
Invisible, Inc., a Colorado Corporation (Coffee Tea Market) | 1203 SF on Second level of Balcony House | 5/1/97 | ||||||
National Sports Center for the Disabled, Inc., a Colorado non-profit corporation | 1900 SF on first floor of Balcony House 266 SF in basement of Balcony House 2985 SF on first floor of West Portal Station 324 SF in basement of West Portal Station 260 SF on 2nd floor of WPRA Administration Building Licenses to use: West Parcel of Evans Tract Tract 41 Village at Winter Park I Parcels leased from Arlberg Club Land under easement created by quitclaim to WPRA as grantee, Book 280, Page 676 Land used by WPRA under Special Use Permit #1019 from Forest Service All WPRA parking facilities (tenant pays for use on same basis as public) |
10/1/2000 | ||||||
Proloc, Inc. (now known as TAK Enterprises per WPRA) | Space in Balcony House (ski storage) | 11/1/2000 | ||||||
SharpShooter/Spectrum Venture, LLC | Space in Balcony House | 11/1/2000 | ||||||
Winter Park Restaurant Company | Any within boundaries of Forest Service Permit land as well as the space located at 6827 County Road 5, Fraser | 7/7/1997 | ||||||
Eskimo Ski Club | Balcony House Lower Level | 11/1/2001 | ||||||
National Weather Service | Space on Tract 38B for weather monitor site | 7/28/01 | ||||||
Winter Park Restaurant Company | All food service facilities owned by WPRA i | 7/7/1997 | ||||||
Denver Water Dept. | Tract 38B Admin Site | 9/28/2001 |
EXHIBIT T
TO LEASE AND OPERATING AGREEMENT
COMMUNICATION SITE LEASES
BULLFROG COMMUNICATION SITE | ||
Union Cellular | 1994 | |
Comnet Cellular | 1996 | |
(Verizon Wireless) | ||
MetroCall | 1997 | |
Air Touch Paging | 1998 | |
(Verizon Wireless Messaging Services) | ||
Fraser Valley Rec. District | 1988 | |
SUNSPOT DIGITAL COMMUNICATION SITE | ||
Colorado CallCom | 1997 | |
(Western Paging) | ||
Nextel | 1998 | |
Sprint | 2000 | |
Qwest | 2001 | |
Voicestream | 2001 | |
Denver Water (in negotiations) |
EXHIBIT U
TO LEASE AND OPERATING AGREEMENT
LEASED TANGIBLE PERSONAL PROPERTY
Snowcat Leases One Master Lease Lessor = CIT Group/Equipment Financing, Inc. | ||
Description | Start Date | |
7 Pisten Bully 200 “C” w/Accessories |
12/21/1999 | |
1 Bombardier BR-180 w/Accessories |
12/21/1999 | |
2 Pisten Bully 200 w/ Accessories and cabins |
12/07/2000 | |
Pitney Bowes mail machine | ||
Ski rack lease from Keelan |
EXHIBIT U (cont)
LEASED TANGIBLE PERSONAL PROPERTY
(Honda Sponsorship Leased Vehicles)
Unit # | VIN # | Model | Year | Department | Tab # | Plate # | Title # | Expires(Month/Year) | Status | |||||||||
301 | 4S6DM58W9Y4418463 | Passport | 2000 | Front Range | G383241 | 476CSB | 53E149627 | Feb-03 | Registered | |||||||||
302 | 4S6DM58W5Y4410795 | Passport | 2000 | Front Range | B235108 | 984CSA | 53E148863 | Dec-02 | Registered | |||||||||
303 | JHLRD1865YS018216 | CRV | 2000 | Mail Car/Finance | G382101 | 293CSB | 53E149212 | Jan-03 | Registered | |||||||||
304 | JHLRD1840YC060138 | CRV | 2000 | Security | B235109 | 985CSA | 53E148292 | Dec-02 | Registered | |||||||||
305 | JHLRD174XYC056518 | CRV | 2000 | Security | F389906 | 986CSB | 53E149487 | May-03 | Registered | |||||||||
306 | 4S6DM58W6Y4419067 | Passport | 2000 | Security | G382102 | 171CSB | 53E149035 | Jan-03 | Registered |
EXHIBIT V
TO LEASE AND OPERATING AGREEMENT
WINTER PARK RECREATIONAL ASSOCIATION
INTANGIBLE PERSONAL PROPERTY
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
COLORADOS FAVORITE (Words) | Winter Park Recreational Association | Clothing (Intl 25) Ski Resort Services (Intl 41) | Federal | 1,999,321 (Federal) | September 10, 2006 |
COLORADOS FAVORITE (Stylized) | Winter Park Recreational Association | Clothing (Intl, State 25) Ski Resort Services (Intl, State 41) | Federal & State | 1,999,322 (Federal) 951015689 (State) 951015640 (State) |
September 10, 2006 (Federal) February 7, 2005 (State) February 7, 2005 (State) |
COLORADOS FAVORITE SKI RESORT (Words) | Winter Park Recreational Association | Clothing (Intl 25) | Federal | 2,013,187 (Federal) | November 5, 2006 |
COLORADOS FAVORITE SKI RESORT (Stylized) | Winter Park Recreational Association | Clothing (Intl, State 25) Ski Resort Services (Intl 41) | Federal & State | 2,020,248 (Federal) 941135081 (State) |
December 3, 2006 (Federal) December 6, 2004 (State) |
COLORADOS FAVORITE SKI RESORT (Stylized) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135080 | December 6, 2004 |
COME PEDAL THE PARK (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135076 | December 6, 2004 |
COME PEDAL THE PARK (Words) | Winter Park Recreational Association | Utensils & Containers (State 21) | State | 941135077 | December 6, 2004 |
COME PLAY AT THE PARK (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135075 | December 6, 2004 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
DISCOVERY PARK (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135078 | December 6, 2004 |
JANE GANG (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 951015688 | February 7, 2005 |
NO PAIN NO JANE (Words) | Winter Park Recreational Association | Clothing (State 25) | State | 941135070 | December 6, 2004 |
NO PAIN NO JANE (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135071 | December 6, 2004 |
PARSENN BOWL (Words) | Winter Park Recreational Association | Clothing (State 25) (State 41) | State | 951100533 95110532 |
August 9, 2005 August 9, 2005 |
PARSENN BOWL (Words & Design) | Winter Park Recreational Association | Clothing (State 41) | State | 941135079 | December 6, 2004 |
PERFORMANCE LAB (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 961141501 | October 30, 2006 |
POWDER EXPRESS (Stylized) | Winter Park Recreational Association | Clothing (State 25) | State | 941143805 | December 27, 2004 |
POWDER EXPRESS (Stylized) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941143806 | December 27, 2004 |
POWDER PLUS (Stylized) | Winter Park Recreational Association | Education & Entertainment (State 41) | State Renewal | 911097560 20011204412C |
December 2, 2001 October 23, 2001 |
THE JANE GANG | Winter Park Recreational Association | APPLICATION FILED | |||
THE JANE GANG | Winter Park Recreational Association | APPLICATION FILED | |||
PREFERENCE PRICING (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State Renewal | 911097561 200112044130 |
December 2, 2001 October 31, 2011 |
RIDER IMPROVEMENT CENTER (Words & Design) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 971001561 | January 6, 2007 |
RIDER IMPROVEMENT CENTER (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 961141500 | October 30, 2006 |
SKIER IMPROVEMENT CENTER (Words & Design) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 961141499 | October 30, 2006 |
SNOWBALL EXPRESS (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135074 | December 6, 2004 |
2 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
SPRING SPLASH (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135073 | December 6, 2004 |
SUNSPOT (Words) | Winter Park Recreational Association | Restaurant Services (Intl 42) | Federal | 1,800,300 | October 19, 2003 |
SUNSPOT (Words & Design) | Winter Park Recreational Association | Jewelry, Jewelry Pins (Intl 14); Water Bottles and Mugs (Intl 21); Clothing (Intl 25) | Federal | 1,864,634 | November 29, 2004 |
THE LODGE AT SUNSPOT (Words) | Winter Park Recreational Association | Restaurant Services (Intl 42) | Federal | 1,800,302 | October 19, 2003 |
THE LODGE AT SUNSPOT (Words & Design) | Winter Park Recreational Association | Restaurant Services (Intl 42) | Federal | 1,800,301 | October 19, 2003 |
WE GUARANTEE YOULL NOTICE THE DIFFERENCE (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941135072 | December 6, 2004 |
MARY JANE (Words & Design) | Winter Park Recreational Association | Clothing (State 25) | State | 941143807 | December 27, 2004 |
MARY JANE (Words & Design) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941143808 | December 27, 2004 |
MARY JANE (Words) | Winter Park Recreational Association | Ski Instruction & Providing Facilities for Skiing (Intl 41) | Federal | 1,189,581 | February 9, 2002 Renewed/good through 2/9/2022 |
MARY JANE (Stylized) | Winter Park Recreational Association | Stationery (Intl 16); T-shirts (Intl 25); Ski Resort Services (Intl 41) | Federal | 1,990,886 | August 6, 2006 ABANDONED – NO LONGER IN USE |
GUEST CENTERED TEACHING | Winter Park Recreational Association | State 41 | State | 961141498 | October 30, 2006 |
WINTER PARK ‘N RIDE (Words & Design) | Winter Park Recreational Association | Transport of Passengers by Bus (Intl 39) | Federal | 2,444,337 | April 17, 2011 |
THE LIFT RESORT SHUTTLE (Words & Design) | Winter Park Recreational Association | Transport of Passengers by Bus (Intl 39) | Federal (APPLICATION FILED 3/17/2000) | Serial No. 2,546,036 | March 12, 2012 |
WINTER PARK RESORT (Words & Design) | Winter Park Recreational Association | Education & Entertainment (State 107) | State | T29456 | March 17, 2005 |
3 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
WINTER PARK RESORT (Words & Design) | Winter Park Recreational Association | Providing Facilities for Skiing, Lessons, Tennis Facilities (Intl 41); Arranging for Lodging & Meals at Ski Resort (Intl 42) | Federal | 1,401,619 | July 15, 2006 |
WP (Stylized) | Winter Park Recreational Association | Ski, Ski Equipment Rental, Restaurant Services, Restaurant Services (Intl 42); Ski Instruction, Providing Facilities for Skiing (Intl 41) | Federal | 961,726 | June 19, 2003 |
WINTER PARK RESORT (Stylized & Design) | Winter Park Recreational Association | Stationery, Postcards, Photographic Prints, Playing Cards (Intl 16); Clothing (Intl 25); Golf Balls, Board Games (Intl 28) | Federal | 2,000,722 | September 17, 2006 |
WINTER PARK RECREATIONAL ASSOCIATION (Trade Name) | Winter Park Recreational Association | Registered Trade Name | State | L01-08092-000 | |
EXTREMELY COLORADO (Words) | Winter Park Recreational Association | Stationery (Intl 16); T-shirts (Intl 25); Ski Resort Services (Intl 41) | Federal | 2,002,327 | September 24, 2006 |
EXTREMELY COLORADO (Words) | Winter Park Recreational Association | Education & Entertainment (State 41) | State | 941143810 | December 27, 2004 |
ROCKFEST AT WINTER PARK (Words) | Winter Park Recreational Association | Promoting Musical Concerts of Others (Intl 35) | Federal (SUPPLEMENTAL REGISTER) | 2,367,265 | July 11, 2010 |
EXTREMELY COLORADO (Words) | Winter Park Recreational Association | Clothing (State 25) | State | 941143809 | December 27, 2004 |
FANCIFUL DESIGN OF V AND MOUNTAIN (Design) | Winter Park Recreational Association | Marketing, Advertising, Promotional Services for Retail, Residential, Resort Complex (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | Serial No. 76003101 | |
THE VILLAGE AT WINTER PARK (Word) | Winter Park Recreational Association | Ski Resort Lodge (Intl 42) | Federal (SUPPLEMENTAL REGISTER) | 2,572,300 | May 21, 2012 |
4 |
Trademark | Owner | Goods/Services & Class Number |
Federal or State (Colorado) |
Registration Number |
Expiration/Renewal Date |
WEST PORTAL OUTFITTERS AND STAR (Design) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | Serial No. 76003017 | |
WEST PORTAL RENTALS AND REPAIRS (Stylized) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | 2,566,564 | May 7, 2002 |
WEST PORTAL BOOTS + BOARDS (Words & Design) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal | 2,438,461 | March 27, 2011 |
SLOPESIDE GEAR & SPORTS (Words & Design) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | Serial No. 76003020 | |
BASE CAMP 9000 AND COMPASS (Words & Design) | Winter Park Recreational Association | Retail Store Services (Intl 35) | Federal (APPLICATION FILED 3/17/2000) | 2,544,030 | March 5, 2012 |
WINTER PARK CENTRAL RESERVATIONS | Winter Park Recreational Association | Marketing, promotions, travel | State | 378052 | |
ROCKFEST AT WINTER PARK | Winter Park Recreational Association | Entertainment services, promotion, sponsorship of music festivals | Federal | 2367265 (Serial No. 751701806) | July 11, 2010 |
WINTER PARK RESORT TRAVEL SERVICES | Winter Park Recreational Association | Travel agency | State | 278486 | N/A |
5 |
EXHIBIT V (cont.)
Additional Intangible Personal Property |
WPRA Development |
Access Road Study |
ADA Study of W.P. Facilities |
Admin. & Balcony House Programing Design |
Beavers-Cooper Creek Gondola Eng. |
City Land-Planned Urban Development |
East Side Pumpback Engineering |
Economic Studies |
Environment Assessment-Environmental Impact Studies |
Fraser River Trail Engineering |
Highway Alignment Project Arch., Eng., Legal |
Jim Creek Boreal Toad Habitat Enhancement Study 00-01 |
L.V. Creek Habitat Enhancement 00-01 |
Leland Creek Access-Leland Gulch Road Survey |
Looking Glass Replacement Planning |
Mapping 82-87 City Land |
Maps (Various) |
Parking Structure Design |
Seasonal Employee Housing Plans |
Sewer Engineering |
Snowmaking Cathotic Protection Study |
Snowmaking Expansion Study SE Group |
Special Studies |
Transportation Study Base Area |
Vasquez Ridge Expansion Planning |
Master Plan Update - Winter Park-Mary Jane-Vasquez |
Water Engineering (Various) |
Winter Park Mary Jane Preliminary PUD |
Winter Park Village – Resort Ops Planning Study – 97 |
Zephyr Italian Grill Planning |
WP Village Development |
Base Area Consulting |
Base Area FDP including Vested Rights Agreement |
EXHIBIT V (cont.)
Base Area Economic Survey & Development |
Base Area Land Surveys |
Base Area Planning & Development |
Base Village Design/Legal Service/Architecture |
Base Village Phase II Environmental Services |
Hotel Study |
Property Tax |
Small Tracts Act – Tract 8003 |
Transport Study |
Water & Sewer Planning |
Copyrights |
Various Copyrighted Materials |
Including Brochures, Trail Maps, |
Promotional Material, Training Manuals, etc. |
Date/Time of Last Edit
August 8, 2002 12:41 pm
EXHIBIT W
TO LEASE AND OPERATING AGREEMENT
WINTER PARK RECREATIONAL ASSOCIATION
SCHEDULE OF MATERIAL PERMITS AND LICENSES
Party | Term | Purpose |
Winter Park Restaurant Association (Licensee) | 6/12/01 – 6/12/03 (renews annually unless cancelled) | To allow WPRA to offer food for events held on the Plaza (Lot 3). |
Denver Water Board (Licensor) | 2/28/97- | Evans Tract |
Denver Water Board (Licensor) | 12/30/80 | Vasquez-St. Louis Collection Conduit |
Denver Water Board (Licensor) | 10/14/86 | Allows WPRA to construct, utilize, maintain, repair and replace Alpine Slide Recreational facility. |
Denver Water Board (Licensor) | Allows use of bypass water for irrigation at Winter Park base | |
Denver and Rio Grande Western Railroad (Licensee) | 10/14/96 | WPRA allowed to use right-of-way on the East Parcel; Rio Grande has right to relocate west roadbed. |
Town of Winter Park (Licensor), Winter Park Restaurant Co., West Portal Station(Licensee) | Expires 12/2/2002 | Liquor license with optional premises. |
Town of Winter Park (Licensor), Winter Park Restaurant Co., Mary Jane Day Center(Licensee) | Expires 12/2/2002 | Liquor license with optional premises. |
Town of Winter Park (Licensor), Winter Park Restaurant CoThe Lodge at Sunsport(Licensee) | Expires 9/23/2002 | Liquor license with optional premises. |
Town of Winter Park (Licensor), Winter Park Restaurant Snoasis (Licensee) | Expires 12/2/2002 | Liquor license with optional premises (3 locations). |
Town of Winter Park (Licensor), Winter Park Restaurant CoLunch Rock Restaurant (Licensee) | Expires 12/26/2002 | Liquor license. |
U.S. Forest Service | 12/8/83 – annually | Annual Special Use Permit |
U.S. Forest Service | 12/8/83 – 12/31/2013 | Term Special Use Permit |
Date/Time of Last Edit
August 8, 2002 12:41pm
Winter Park Village Company Master Association (Licensor) | 11/1/2000 – 10/31/2003 | Snowmaking and Grooming of Lot 3, including great lawn and plaza north of Zephyr Mountain Lodge |
Winter Park/Mary Jane PUD – Town of Winter Park | To be renewed 11/02 | PUD for Mary Jane Base Area |
Winter Park Resort Master Development Plan – USFS | Renewal December 2005 | USFS Approved Development Plan |
Winter Park Village FDP and Vesting Rights Agreement – Town of Winter Park | July 2012 | FDP for Development South of Balcony House, at Winter Park Base |
CDOT US 40 Highway Access Permit | Renewal is October annually | |
WPPY981 FCC License | 3/23/2000-3/23-2005 | 2 way radio system YB trunked business |
FCC License WPFD 902 | 7/16/1999-6/28/2004 | Scanning frequency IB business |
FCC License KKM-882 | 2001 | Secondary operation frequency |
Exhibit W (cont.)
Material Licenses
Party | Term | Purpose | ||
Hazardous Materials | ||||
Permit No. HMP-11032 | 5/6/02-5/6/03 | Transportation of Hazardous Materials | ||
Explosives Permit No. 5-CO-049-20-3J-02100 |
Exp. 9/1/03 | 20-Manufacturer of High Explosives | ||
Lodge at Sunspot ID No. 471701 |
Exp. 4/30/02 | Certificate of Inspection Elevator License | ||
Snoasis ID No. 572144 |
Exp. 4/30/02 | Certificate of Inspection Elevator License | ||
West Portal Passenger ID No.E026202 |
Exp. 4/30/02 | Certificate of Inspection Elevator License | ||
West Portal Freight ID No. E026201 |
Exp. 4/30/02 | Certificate of Inspection Elevator License | ||
Childrens Center ID No. E88591 |
Exp. 4/30/02 | Certificate of Inspection Elevator License | ||
Mary Jane Lodge Freight ID No. E54088 |
Exp. 4/30/02 | Certificate of Inspection Elevator License | ||
Mary Jane Club Car Rest. ID No. 13533 |
Exp. 4/30/02 | Certificate of Inspection Elevator License | ||
Mary Jane Catering ID No. 13631 |
Exp. 4/30/02 | Certificate of Inspection Elevator License | ||
Wapiti Child Care Lie. No. 31019 |
Exp. 11/01 | State of CO Child Care License | ||
WPRA Empl. Nursery Lie. No.45487 |
Exp. 9/02 | State of CO Child Care License | ||
Looking Glass WP-004 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Outrigger WP-005 |
11/02/01 | State of Colorado CPTSB Lift Licenses |
Arrow WP-007 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Challenger WP-008 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Discovery WP-009 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Galloping Goose WP-010 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Iron Horse WP-013 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Hand Car WP-017 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Sunnyside WP-020 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Zephyr Express WP-021 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Gemini Express WP-022 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Endeavor WP-023 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Prospector WP-024 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Sorenson Park WP-025 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Mt. Maury WP-026 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Olympia Express WP-027 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Eskimo Express WP-029 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Summit Express WP-018 |
11/02/01 | State of Colorado CPTSB Lift Licenses |
High Lonesome WP-012 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Pioneer Express WP-015 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Pony Express WP-016 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Conveyor WP-028 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
Timberline(3P) SC-005 |
11/02/01 | State of Colorado CPTSB Lift Licenses | ||
PUC No. 8572 | Certificate of Convenience & Necessity | |||
West Portal Food & Beverage | 7/1/02-6/30/03 | Town of Winter Park License to do business | ||
Slopeside Gear & Sport | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
West Portal Retail | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
Mary Jane Restaurant | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
Mary Jane Cafeteria | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
Snoasis | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
Sunspot | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
Winter Park/Mary Jane Ski Area | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
Central Reservations | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
Lunch Rock Café | 7/1/02-6/30/2003 | Town of Winter Park License to do business |
Sundance Café | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
The Jane Shop | 7/1/02-6/30/2003 | Town of Winter Park License to do business | ||
West Portal Station | 12/31/02 | License to Operate a Retail Food Establishment | ||
Mary Jane Day Center | 12/31/02 | License to Operate a Retail Food Establishment | ||
The Lodge at Sunspot | 12/31//02 | License to Operate a Retail Food Establishment | ||
Snoasis | 12/31/03 | License to Operate a Retail Food Establishment | ||
Lunch Rock | 12/31/02 | License to Operate a Retail Food Establishment | ||
Sundance Café | 12/31/02 | License to Operate a Retail Food Establishment | ||
Boxcar Deli | 12/31/02 | License to Operate a Retail Food Establishment | ||
Club Car/Pepperonis | 12/31/02 | License to Operate a Retail Food Establishment | ||
American Society of Composers, Authors and Publishers – Club Car |
Either party may terminate | to allow recorded music to be played | ||
American Society of Composers, Authors and Publishers – Derailer |
Either party may terminate | to allow recorded music to be played | ||
BMI Music License – Club Car | 12/31/02 | License to play recorded music | ||
BMI Music License – Club Car | 12/31/02 | License to play recorded music | ||
BMI Music License – Derailer | 12-31/02 | License to play recorded music |
Primary Water Board Easements and Licenses
1. | Exclusive Dominant Easements between the Board and WPRA, dated December 13, 1996 (the “Exclusive Easement”) |
2. | Non-Exclusive Utility Easements between the Board and WPRA, dated December 13, 1996 (the “Utility Easement”) |
3. | Non-Exclusive Road Easements between the Board and WPRA, dated December 13, 1996 (the “Road Easement”) |
4. | Easement Agreement dated June 15, 1994, between WPRA and DWB, for the purpose of maintaining telemetering lines across Tract 41. |
5. | Amendment to Easement Agreement between the Board and WPRA, dated December 13, 1996 (the “Easement Agreement”) |
6. | Partial Relinquishment executed by the Board, dated December 13, 1996 (the “Relinquishment”) |
7. | License Agreement between the Board and WPRA, dated February 28, 1997, including Attachment A, “Termination of Existing Licenses” (the “License Agreement”) |
8. | Siphon 1 Exclusive Dominant Easement between the Board and WPRA, dated June 30, 1998. |
9. | Siphon !A Exclusive Dominant Easement between the Board, WPRA and Winter Park Village, Inc., dated June 30, 1998. |
10. | Non-Exclusive Road Easement Agreement between the Board, WPRA and WPV, dated June 30, 1998. |
11. | Non-Exclusive Utility Easements Agreement between the Board, WPRA and WPV, dated June 30, 1998. |
12. | Amended Exclusive Dominant Easements between the Board and WPRA, dated June 30, 1998. |
Exhibit X
TO LEASE AND OPERATING AGREEMENT
Intangible Personal Property –Material Agreements
Contract Name | Date of Contract |
Utilities/Transportation | |
Carrier | 5/01/021 |
CDOT | Annual |
Copy Concepts (copier) | 10/30/98 |
Corridor Agreement | 8/3/01 |
Dover | 1/11/93 |
East Grand Water Quality Control Board | Annual |
Fones West (T-3 Lines Partnership) | 2001 |
Gray Oil Company | 3/12/98 |
Ivara Software | 7/12/99 |
License Agreement (parking ZML) | 2000 |
License and Concessionaire Agreement (Winter Park Restaurant Company) | 6/12/01 |
Middle Park Water Conservancy District (Windy Gap) | Annual |
Middle Park Water Conservancy District (Wolford) | Annual |
Mountain Parks Electric Agreement for electric service. | 8/8/97 |
MPE, Light lease | Month to month |
Orkin Pest Control | Month to month |
Tiger Natural Gas | 11/01/01 |
W&S Parking lease | 11/1/99 |
Winter Park Water & Sanitation District – P.I.L.O.T. (payment in lieu of taxes) | Annual |
Employee Housing | |
Steve Kleinman – Deed of Trust | 7/01 |
Tabernash Sewer Tap | 6/26/01 |
Communications Site | |
Legacy Communications, Inc. | 4/1/99 |
Food & Beverage | |
Campbell Soup Branding Partnership Agreement | 10/27/00 |
Einstein/Noah Bagel Corp. | 10/31/00 |
Good Times Drive Thru | 10/24/00 |
Harney & Sons Teas, Inc. | 12/00 |
Nobel/SYSCO | 11/26/01 |
Peak Amusements | 10/29/00 |
Seattles Best/Equipment Loan Agreement | 9/12/00 |
Tolin Mechanical Systems | 11/8/01 |
Vend Equipment Buyer Agreement | 5/2/97 |
Exhibit X
TO LEASE AND OPERATING AGREEMENT
Intangible Personal Property –Material Agreements
Competition Center | |
Kaleidoscope Sports & Entertainment LLC, (Nastar Membership) | 2002-03 ski season |
Miller Storage, Inc. | 10/10/00 |
Retail | |
Bianchi USA Inc. | 4/27/95 |
Merchant Card Management Systems, Inc. (MCMS) | 8/21/00 |
Rossignol Ski Company, Inc. | 6/29/00 |
Sport Select | 10/13/98 |
Lifts | |
Keystone Resorts Management Inc. | 7/13/93 |
Poma of America, Inc. | 2/28/99 |
Equipment | |
Snowcats (5) | 4/23/02 |
Snowmobiles (25) | 3/26/02 |
Bank Loan Documents | |
Assignment of Leases and Rents and Other Income | 9/30/93 |
Collateral Trust Agreement | 9/30/93 |
Deed of Trust and Security Agreement | 9/30/93 |
Financing Agreement | 9/30/93 |
Intellectual Property Security Agreement | 9/30/93 |
Revolving Credit Agreement | 9/30/93 |
Sports Facilities Financing Agreement | 9/30/93 |
Term Loan Agreement | 9/30/93 |
IT | |
ARIN ASN | Annual |
Cisco smartnet (Cisco 7500 Router) | Annual |
Datalink Contract 9730 Tape Library | Annual |
Internet Domain Names owned by WPRA | Annual |
ISP Customer Contracts | Annual |
McAfee Anti-Virus | Monthly |
Microsoft License Agreement | Bi-Annually |
Pinnacle Access | Annual |
SNMPc License | Annual |
Sprint ISP | Monthly |
SurfControl | Annual |
T-1 Data Circuits | Monthly |
Verisign SSL Keys | Annual |
Veritas | 08/07/01 |
Central Reservations | |
Alamo Rent a Car | 11/01/01 |
Amtrak | 9/30/01 |
Exhibit X
TO LEASE AND OPERATING AGREEMENT
Intangible Personal Property –Material Agreements
Apollo/Galileo | 6/1/02 |
Aspect Customer Agreement | 7/6/01 |
Aspect Professional Services Agreement | 7/6/01 |
AT&T Phone Contract | 1/28/99 |
AT&T Tariff & Service Contract | Month to month |
Avis | “evergreen” |
Centennial (Front Range office space) | 9/24/98 |
Central Reservations Subscribers | May/June 2002 |
Crestview (Central Res office Space) (Now Winter Park Station) | 11/21/97 |
Continental Airlines | Annual |
Frontier Airlines | Annual |
Hertz | Annual |
Radixx (Central Res. Software) | 11/4/98 |
Travel Guard Trip Insurance | 6/01/01 |
WORLDRES | 10/1/01 |
Marketing | |
Alpen Glow Magazine | 9/26/00 |
Anytime Weather | 3/1/01 |
AT&T | 1/01 |
Barnhart Advertising | 2/15/00 |
Byron Hetzler Photography | 2/24/00 |
Certified Brochure Distribution | 8/1/02 |
Clear Channel Concerts (BGP) | 5/1/02 |
ClearChannel Interactive | 4/15/02 |
Cliff Bar, Inc. | 10/31/01 |
CollegeClub | 4/1/02 |
Colorado College | 9/02 |
Colorado Rockies (advertising) | 3/17/00 |
Colorado.com | 4/15/02 |
Colorado-Directory.com | 1/29/03 |
Coloradofishing.net | 5/1/02 |
ColoradoResortNet.com | 4/1/02 |
Continental Airlines | “evergreen” |
Central Reservations Subscriber Agreement | annual |
CTM Brochure Distribution | 01/02 |
CU Recreation Guide | 9/1/02 |
David Pahl Photography | 04/01 |
Delta Airlines, Inc. | 1/1/01 |
Denver Newspaper Agency | 4/2/01 |
DIA advertising display | 6/1/02 |
DU Sponsorship | 7/01/02 |
Entertainment | 4/1/02 |
Exhibit X
TO LEASE AND OPERATING AGREEMENT
Intangible Personal Property –Material Agreements
Expedia, Inc | 7/31/01 |
Grand County Brochure Delivery, Inc. | 5/02 |
Granton Marketing | 9/02 |
Gregg Adams, Photographer | |
Guest Guide Advertising | Winter 2001 |
Hertz | 11/13/00 |
Honda (RPAlpha Group) | 11/00 |
Ken Redding Photography | 03/01 |
Lease for space (WPML Mtn Cam) | 11/1/00 |
Luce Press Clippings | 6/14/02 |
McGraw-Hill Broadcasting | 11/1/00 |
Media Authorization | 6/1/02 |
Medialinq.com | |
Menu Guide (advertising) | Summer 2002 |
National Sales Team, LLC | 05/02 |
Nuggets agreement | 5/1/02 |
Pepsi | 7/1/98 |
Rod Walker Photography | 04/00 |
RSN.com | |
Sister Mountain Agreement | 2002 |
SkiCentral.com | 4/15/02 |
Sno Country Mountain Reports | Annual |
Snow Ski Mailing | 6/11/02 |
Snowreport.com | 4/15/02 |
The AMI Group (internet snow report) | Annual |
The Weather Channel (tv snow report) | Annual |
Ticketing contracts | 5/1/02 |
Tiga Advertising (busses) | 1/1/00 |
TripStream.com | |
United Airlines, Inc | 6/11/01 |
Weather.com | |
Wholesaler Agreements 2001-2002 (Various, see attached list) | |
Winter Park Station | 6/1/03 |
World Wide Ski Corp (Budweiser) | 10/01/99 |
Miscellaneous | |
City Agreement | Nov., 1950 |
Monticello | 11/1/96 |
Monticello | 3/19/97 |
Option and Master Development agreement | 11/4/97 |
Snowmaking and Grooming License Agreement (AML) | 11/00 |
Town of Winter Park (P.I.L.O.T.) | Annual |
Exhibit X
TO LEASE AND OPERATING AGREEMENT
Intangible Personal Property –Material Agreements
Town of Winter Park (Fraser River Trail) | Unspecified |
Trust Agreement – Wells Fargo | |
Savings and Investment Plan – Wells Fargo | 9/1/00 |
National Ski Areas Association | Annual |
Mountain States Employers Council | Annual |
Colorado Ski Country | Annual |
Grand Lake Chamber of Commerce | Annual |
Insurance | |
Aon Agent – Chubb Group of Insurance Companies | 5/28/02 |
Aon Agent – Chubb Group of Insurance Companies | 6/10/02 |
Aon Agent – Genesis Insurance Co. | 5/1/02 |
Aon Agent – Hartford Steam Boiler | |
Aon Agent – Royal Indemnity Co. | 5/1/02 |
Aon Agent – Safety National | 11/1/01 |
Aon Agent – CNA (Columbia Casualty Company Non Admitted) | 7/2/02 |
Aon Agent – Great American California, UT; Federal Insurance Co.; New York Marine and General Insurance Co. | 5/1/02 |
CEMMI | 1/1/02 |
Dry Creek Surgery | 6/1/02 |
Reliance Standard Life | 8/1/01 |
ReliaStar Life Insurance Co./ING Employee Benefits | 1/1/02 |
Standard Insurance Company | 1/1/99 |
United Dental Care of Colorado, Inc. | 1/1/02 |
Colorado West Regional Mental Health | 8/1/01 |
Denman, Gray & Co | 1/1/02 |
Mountain States Administration | 1/1/02 |
Mountain Medical Affiliates | 1/1/02 |
Protective Dental Care | 1/1/02 |
Royal Indemnity Co | 6/1/02 |
Exhibit X
TO LEASE AND OPERATING AGREEMENT
Intangible Personal Property –Material Agreements
Royal Indemnity Co | |
Any Mountain Tours | |
Apple Vacations | |
Arke Reizen | |
Aspen Ski Tours | |
Carolina Tours, Inc. | |
Colorado Hosts | |
Crossroad Adventures | |
Crystal Holidays | |
D&D Ski Vacations | |
Education Overland | |
Expedia Inc. | |
Gogo Liberty Tours | |
Group Trips Unlimited | |
High Point Travel | |
Holiday World | |
JTM Tours | |
Kincaid Coachlines | |
Kingdom Tour & Travel | |
Lynx Ski Travel | |
Mark Travel | |
Mogul Ski & Snowboard Tours | |
Mountain Escapes | |
Mountain Sports Travel | |
Neilson Ski Holidays | |
Ripleys Mountain Adventure | |
RMA Ski Tours | |
Rocky Mountain Vacations | |
Sitzmark Travel | |
Ski Celebration | |
Ski Independence | |
Ski the Rockies of Colorado | |
Snowball Tours | |
Snowtime | |
Sport America Tours | |
Sportours | |
Sports Travel | |
Target Sport Adventures | |
Whitewood Tours | |
Winter Ski & Sports |
In addition, those Leases detailed in Exhibits S and T as well as the various Agreements concerning water rights detailed in Exhibit E are incorporated herein by reference.
EXHIBIT Y
CURRENT ASSETS AND CURRENT LIABILITIES
As of 7/06/02
Winter Park Recreational Association | ||||
07/06/02 $ |
||||
Current Assets | ||||
Cash Balances | $ | 121,116.77 | ||
Temporary Investments | 1,458,292.68 | |||
Investment Reserve | 2,879,063.79 | |||
Accounts Receivable | 712,158.23 | |||
Inventories | 837,197.19 | |||
Prepaid Expenses | 342,676.09 | |||
Total Current Assets | 6,350,504.75 | |||
Current Liabilities | ||||
Accounts Payable | 657,715.50 | |||
Deposits from Customers | 25,883.28 | |||
Salaries Payable | 1,268,899.86 | |||
Accrued Payroll Taxes | 121,246.92 | |||
Accrued Fringe Benefits | 1,052,806.12 | |||
Deferred Income | 2,088,330.67 | |||
Sales Tax Payable | 18,347.01 | |||
Accrued Expenses | 191,655.92 | |||
Long Term Debt - Current Portion | 4,055,661.66 | |||
Total Current Liabilites | 9,480,546.94 |
OPTION AGREEMENT
BETWEEN
WINTER PARK RECREATIONAL ASSOCIATION
AND
INTRAWEST/WINTER PARK DEVELOPMENT CORPORATION
TABLE OF CONTENTS
PAGE NO. | ||
RECITALS | 1 | |
ARTICLE I - DEFINITIONS AND USAGE | 1 | |
1.1 | Definitions | 1 |
1.2 | Usage | 13 |
ARTICLE II - PREPARATION OF MASTER PLANS; IDENTIFICATION OF DEVELOPMENT PARCELS; CORE AREA DECLARATION | 13 | |
2.1 | Preparation of Master Plan | 13 |
2.2 | Identification of Development Parcels | 16 |
ARTICLE III - GRANT OF OPTION | 16 | |
3.1 | Grant of Option; Exercise Sequence | 16 |
ARTICLE IV - OPTION: TERM, EXERCISE AND TERMINATION | 18 | |
4.1 | Term of Option | 18 |
4.2 | Exercise of Option | 18 |
4.3 | Conditions Precedent to Exercise of Option | 18 |
4.4 | Termination of the Option by Intrawest | 19 |
4.5 | As-Is Where-Is Notice of Sale | 19 |
ARTICLE V - DETERMINATION AND PAYMENT OF PURCHASE PRICE | 19 | |
5.1 | Estimated Purchase Price | 19 |
5.2 | Actual Sales Price | 20 |
5.3 | Appraisals | 21 |
5.4 | Credit for Development Parcel Prepayments Pursuant to Lease Agreement | 21 |
5.5 | Application of Debt Repayment Portions to Agreed-Upon Indebtedness | 21 |
5.6 | Guaranty by Intrawest Corporation | 22 |
ARTICLE VI - PURCHASE OF DEVELOPMENT PARCELS | 22 | |
6.1 | Development Parcel Closing | 22 |
6.2 | No Obligation by Intrawest to Purchase a Development Parcel | 22 |
6.3 | Conditions Precedent to the Obligation of WPRA to Convey a Development Parcel | 22 |
6.4 | Deliveries by WPRA in Respect of Each Development Parcel Closing | 23 |
6.5 | Deliveries by Intrawest in Respect of Each Development Parcel Closing | 24 |
6.6 | Further Assurances | 24 |
6.7 | Transaction Costs and Filings | 24 |
6.8 | Release of Development Parcel from this Agreement | 25 |
ARTICLE VII CORE DECLARATION AND OTHER BENEFICIAL ENCUMBRANCES | 25 | |
7.1 | Core Declaration and Creation of Core Association | 25 |
7.2 | Beneficial Easements, Restrictions and Covenants | 26 |
7.3 | Declaration of Transfer and Rental Fee | 26 |
ARTICLE VIII - AGREEMENTS OF WPRA AND INTRAWEST PENDING DEVELOPMENT PARCEL CLOSINGS | 26 | |
8.1 | Affirmative Agreements of WPRA and Intrawest Pending Development Parcel Closings | 26 |
8.2 | Easement for Encroachments | 27 |
8.3 | Negative Agreements of WPRA Pending Development Parcel Closings | 27 |
8.4 | Delivery or Transfer of Resort Operations Space | 28 |
8.5 | Agreement to Cooperate in Good Faith | 28 |
x |
ARTICLE IX - CONDEMNATION OF DEVELOPMENT PARCELS | 29 | |
9.1 | Condemnation of Development Parcels | 29 |
ARTICLE X - DEFAULTS AND REMEDIES | 29 | |
10.1 | Event of Default by WPRA | 29 |
10.2 | Default by Intrawest | 31 |
10.3 | Repurchase Right | 32 |
10.4 | Specific Performance | 33 |
ARTICLE XI - INDEMNITY | 34 | |
11.1 | Intrawests Obligation to Indemnify | 34 |
11.2 | Procedure for Indemnification | 34 |
ARTICLE XII - ASSIGNMENT | 34 | |
12.1 | Consent Required | 34 |
12.2 | When Consent Is Not Required | 35 |
12.3 | Intrawest to Furnish Information | 36 |
12.4 | No Consideration | 36 |
12.5 | WPRAs Rights | 36 |
12.6 | Intrawest Pays All Costs | 36 |
12.7 | Continuing Intrawest Liability | 36 |
ARTICLE XIII - MISCELLANEOUS | 37 | |
13.1 | Notices | 37 |
13.2 | Waiver of Compliance | 38 |
13.3 | Third-Party Beneficiaries | 38 |
13.4 | Amendments | 38 |
13.5 | Headings and Captions for Convenience | 38 |
13.6 | Exhibits Incorporated | 38 |
13.7 | Counterparts and Facsimile Delivery | 38 |
13.8 | Recording of Option Agreement; Partial Releases | 39 |
13.9 | Entire Agreement | 39 |
13.10 | Governing Law | 39 |
13.11 | Approvals | 39 |
13.12 | Attorneys Fees | 39 |
13.13 | Further Assurances | 39 |
13.14 | No Partnership or Joint Venture Created | 39 |
13.15 | Time of the Essence | 40 |
xi |
SCHEDULE OF EXHIBITS
Exhibit A - | Legal Description of Developable Land |
Exhibit A-l | Plan of Development Areas |
Exhibit B - | Form of Agreement and Covenant to Convey and Lease Resort Operations Space |
Exhibit C - | Form of Declaration of Transfer and Rental Fee |
Exhibit D - | Form of Statutory Special Warranty Deed (With Reservation of Right to Repurchase and Covenant for Payment of Sales Price Balance) |
Exhibit E - | Relevant Covenants |
Exhibit F - | Permitted and Prohibited Uses in Each Core Area |
xii |
Date/Time Last Edit
September 17, 2002, 6:10 p.m.
OPTION AGREEMENT
This OPTION AGREEMENT (this Agreement) is dated as of ____________ , 2002, by and between INTRAWEST/WINTER PARK DEVELOPMENT CORPORATION, a Delaware corporation (Intrawest), and WINTER PARK RECREATIONAL ASSOCIATION, a Colorado nonprofit corporation (WPRA), for itself and as agent for the City and County of Denver, a Colorado municipal corporation (the City), under the Agency Agreement (as herein defined). Intrawest and WPRA are referred to collectively herein as the Parties.
RECITALS
A. WHEREAS, WPRA owns, leases and licenses certain real and personal property located in Grand County, Colorado, used in the operation of the mountain resorts known, as of the date hereof, as Winter Park, Mary Jane and Vasquez (collectively, the Winter Park Resort); and
B. WHEREAS, WPRA and Intrawest/Winter Park Operations Corporation, a Delaware corporation (Intrawest Operations), have entered into that certain Lease and Operating Agreement of even date herewith (the Lease Agreement), pursuant to which WPRA agreed, among other things, to lease to Intrawest Operations certain Leased Assets (as defined in the Lease Agreement); and
C. WHEREAS, a portion of the Leased Assets consists of certain developable land, which is legally described on Exhibit A attached hereto and depicted on Exhibit A-1 attached hereto (the Developable Land); and
D. WHEREAS, WPRA desires to grant to Intrawest and Intrawest desires to obtain from WPRA, an option to purchase all or portions of the Developable Land, subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the covenants contained herein and for other good and valuable consideration, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
1.1 Definitions. As used in this Agreement, the following terms have the meanings given to them in this Section 1.1.
Accountants means a nationally-recognized and respected firm of independent certified public accountants selected and regularly employed by Intrawest from time to time as its primary accounting firm.
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Actual Sales Price means, with respect to each Development Parcel, 3.5% of the aggregate Sales Price, as determined or calculated by a Qualified Appraiser as of the Determination Date, of all Residential Units and Commercial Units on such Development Parcel.
Additional Consideration Agreement means the Additional Consideration Agreement of even date herewith between WPRA and Intrawest Holdings.
Additional Development Area means that portion of the Developable Land depicted on Exhibit A-1 attached to this Agreement and identified as the Additional Development Area.
Additional Development Area Master Plan means that plan for the proposed development of buildings and improvements in the Additional Development Area, prepared in accordance with the procedures, and conforming to the requirements, set forth in Section 2.1 of this Agreement, as amended from time to time in accordance with said Section 2.1.
Additional Development Area Permitted Uses means those facilities, activities and uses of real property specified as Permitted Uses under the heading Additional Development Area on Exhibit H attached to this Agreement.
Additional Development Area Prohibited Uses means those facilities, activities and uses of real property specified as Prohibited Uses under the heading Additional Development Area on Exhibit H attached to this Agreement.
Affected Development Parcel means all or a portion of a Development Parcel that is to be taken (or is threatened to be taken) under any power of eminent domain or similar power.
Affiliate Lender means Parent Corporation or any affiliate of Parent Corporation that extends credit from time to time that constitutes Agreed-Upon Indebtedness.
Agency Agreement means the Supplemental Agreement No. VII dated as of ________________, 2002, between WPRA and the City.
Agreed-Upon Indebtedness means, as of any measurement date, the outstanding principal amount of debt of WPRA existing as of the Effective Date, plus the amount of additional debt to be incurred as additional Agreed-Upon Indebtedness for the limited purposes specified in the Lease Agreement with respect to the Winter Park Resort. The maximum principal amount of Agreed-Upon Indebtedness shall not, at any time during the Term, exceed $33,000,000 less the amount of any Debt Repayment Portions and other principal payments voluntarily made by WPRA in repayment of the Agreed-Upon Indebtedness. Such maximum aggregate amount shall not be reduced to the extent Intrawest Operations or WPRA make repayments of principal for the purpose of refinancing any then-existing Agreed-Upon Indebtedness or Intrawest Operations otherwise makes any other payments of principal that are required to be made pursuant to the terms of the Agreed-Upon Indebtedness Documents from time to time.
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Agreed-Upon Indebtedness Documents means all notes, liens, security agreements, collateral assignments and other agreements, certificates, documents or instruments executed by WPRA in favor of any Agreed-Upon Indebtedness Lender to create, evidence, secure or otherwise document any Agreed-Upon Indebtedness.
Agreed-Upon Indebtedness Lender means the lender or lenders from time to time extending the credit constituting the Agreed-Upon Indebtedness, and may include an Affiliate Lender.
Agreement means this Option Agreement.
Agreement and Covenant to Convey and Lease Resort Operations Space means an agreement substantially in the form of Exhibit B hereto.
Applicable Law means any law, rule, regulation, order, decree or other requirement having the force of law and, where applicable, any interpretation thereof by any authority having jurisdiction with respect thereto or charged with the administration thereof.
Cancellation Notice means the written notice by Intrawest to WPRA that it is canceling its Notice of Exercise of Option to purchase a Development Parcel as set forth in Section 6.2 below. A Cancellation Notice is not a permanent termination of Intrawests option to purchase the Development Parcel for which such notice was given.
CCIOA means the Colorado Common Interest Ownership Act, CRS § 38-33.3-101, et seq., as it may be amended from time to time.
City means the City and County of Denver, a Colorado municipal corporation.
Code means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.
Commence Construction or Commenced Construction (or any other variation thereof) means, with respect to the building to be located on a Purchased Development Parcel, obtaining a building permit and having completed (a) the footings of the building if it will include a parking garage or (b) the foundation of the building if it will not include a parking garage.
Commercial Unit means any entire Developed Building, a portion of a Developed Building constituting a unit of a condominium, or a portion of a Developed Building constituting another form of property which may legally be owned in fee separate from other portions of such Developed Building, including hotels (but not including condominium-hotel units) intended for transient or short-term occupancy, together with any legally appurtenant interests (including parking spaces), whether exclusive or non-exclusive, divided or undivided, in any common or exclusive elements, areas, facilities and amenities of any common interest community, excluding Residential Units, Resort Operations Space, Core Common Areas and any such condominium units or other separate properties intended for ownership by an owners association for such common interest community.
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Common Areas Dedication means the instrument by which Intrawest shall submit any Core Common Areas to the control of a Core Association under the terms of the applicable Core Declaration.
Core Association means each association that will be formed by Intrawest, in connection with the creation and recording of the respective Core Declarations, to govern, manage and operate the common interest community to be established under each respective Core Declaration for each Development Area, whose members will be the owners of properties on the Purchased Development Parcels that have been submitted to the terms of such respective Core Declarations.
Core Common Areas means those areas and facilities on Purchased Development Parcels that the Core Associations will hold and control, by easement, lease, license or ownership in fee and subject to the Relevant Covenants, which areas and facilities shall consist of public, non-profit facilities and structures such as open spaces, parks, restrooms, bandstands, auditoriums, concert halls, conference centers, gazebos, skating rinks, swimming pools, biking, walking, running and cross-country skiing trails, ball fields, and tennis courts.
Core Declaration means each separate declaration of covenants, conditions and restrictions that will be recorded in the records of the Office of the Clerk and Recorder of Grand County, Colorado and that will create a common interest community pursuant to CCIOA for each Development Area for the purpose of managing, operating, developing, maintaining and governing the Core Common Areas in such Development Area. Each Core Declaration will include the Relevant Covenants.
Debt Repayment Portions means (a) ninety percent (90%) of the net proceeds of the Estimated Sales Price attributable to any Development Parcel (after subtracting from the Estimated Sales Price the amount of any Sales Price Credit or Development Parcel Prepayment applied to the Estimated Sales Price for such Development Parcel in accordance with Article V of this Agreement), and (b) ninety percent (90%) of the net proceeds of any Sales Price Balance applicable to any Development Parcel (after subtracting from such Sales Price Balance the amount of any Sales Price Credit or Development Parcel Prepayment applied to such Sales Price Balance for such Development Parcel in accordance with said Article V).
Declaration of Transfer and Rental Fee means the declaration of covenants, substantially in the form attached to this Agreement as Exhibit C, that shall impose the obligation to pay the Transfer and Rental Fee as an obligation running with the Developable Land.
Defects of Title means any Exception arising out of any act of WPRA, other than (a) Exceptions existing as of the Effective Date, (b) Exceptions created or imposed by this Agreement, (c) any plat or plan by which Intrawest shall subdivide the Developable Land into Development Parcels or otherwise effecting the purposes of the applicable Master Plans, (d) the applicable Core Declarations, (e) the Declaration of Transfer and Rental Fee, (f) any declaration of a common interest community established by Intrawest or a Successor and located on the applicable Development Parcel, including easements, restrictions, reservations and covenants for the exclusive or common benefit of one or more owners of units in such common interest community, (g) the Lease Agreement, (h) Monetary Exceptions securing any Agreed-Upon Indebtedness, and (i) Exceptions created by either Intrawest or WPRA with the consent or approval of the other.
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Determination Date means, for each Developed Building, the earliest to occur of (a) the sale to third parties of all of the Residential Units and Commercial Units to be constructed in such Developed Building, or (b) the date that is one (1) year after the issuance by the Town of a certificate of occupancy for (i) such Developed Building, if such Developed Building is devoted entirely to either residential or commercial uses, or (ii) at least one Commercial Unit and one Residential Unit in such Developed Building, if such Developed Building is devoted to both residential and commercial uses.
Developable Land shall have the meaning set forth in Recital C of this Agreement. The Parties may, by a subsequent written agreement between the Parties, substitute for Exhibits A and A-1 attached to this Agreement a corrected legal description and depiction, respectively, of the Developable Land based upon one or more surveys approved by the Parties, so long as (a) such substitutions are made within one year after the Effective Date and (b) the corrected legal description does not increase or decrease by more than ten percent the total acreage of property described on the Exhibit A attached hereto as of the execution of this Agreement.
Developed Building means each building contemplated by the Master Plan, as it may be amended from time to time, after it has been constructed. Each Development Parcel shall have only one Developed Building on it unless WPRA otherwise consents, in its sole and absolute discretion.
Development Area means the Resort Operations Core Area, the Village Core Area or the Additional Development Area, as the case may be.
Development Parcel Closing means the consummation of the sale and purchase of each Development Parcel in respect of which Intrawest has exercised its Option in accordance with this Agreement.
Development Parcel Closing Date means the date specified in the Option Exercise Notice for such Development Parcel or such other date as may be agreed upon by the Parties or as may be recognized under this Agreement.
Development Parcel Prepayment means any payment made by Intrawest Holdings pursuant to the Additional Consideration Agreement that, according to said Additional Consideration Agreement and Section 5.4 of this Agreement, is treated as a prepayment to be applied against amounts payable by Intrawest to WPRA Sections 3.1(b), 5.1 and/or 5.2 of this Agreement.
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Development Parcels means the separate parcels of land, comprising in the aggregate the Developable Land, which are to be identified in conjunction with Intrawests preparation of the Master Plans, as set forth in Article II below. Each of the Development Parcels may be individually referred to herein as a Development Parcel. Each Development Parcel shall include the buildings, structures, improvements and fixtures located thereon and any licenses, leases, contracts, easements, assignments, covenants, agreements, conditions or restrictions legally appurtenant to, or directly benefiting title to or development of the Development Parcel, but not the Mineral Rights (which shall be retained by WPRA) and not any water rights owned by WPRA. Each Development Parcel shall have only one Developed Building on it unless WPRA otherwise consents, in its sole and absolute discretion. The Resort Parcels are not Development Parcels.
Effective Date shall have the meaning ascribed to that term in the Lease Agreement.
Estimated Sales Price means, with respect to each Development Parcel, 3.5% of the aggregate Sales Price, as determined or estimated by a Qualified Appraiser as of the date of the Option Exercise Notice for such Development Parcel, of all Residential Units and Commercial Units to be developed on such Development Parcel.
Event of Default by Intrawest shall have the meaning ascribed to that term in Section 11.2(a) of this Agreement.
Event of Default by WPRA shall have the meaning ascribed to that term in Section 11.1(a) of this Agreement.
Event of Force Majeure means labor disputes, fire, unusual delay in transportation, adverse weather conditions, utility shortages, construction material shortages, acts of war, unavoidable casualties, laws, regulations and other acts of government that have the effect of imposing extraordinary delays or requirements, or other causes beyond the reasonable control of Intrawest which by the exercise of reasonable efforts Intrawest is unable to overcome, and which Intrawest was not able with reasonable diligence to foresee or avoid. However, Force Majeure Events shall specifically exclude any financing incapabilities or burdens of Intrawest, or a mere failure of performance by any agent or contractor of Intrawest.
Exception means any matter, document or instrument that encumbers or burdens title to any Developable Land, including without limitation any Monetary Exception and any license, lease, contract, easement, assignment, covenant, agreement, condition or restriction burdening or affecting title to or development of such Developable Land.
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Fair Market Value of any property or assets at any date, means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby buyer and seller are typically motivated, both parties are well informed or well advised and acting in what they consider their best interests, a reasonable time is allowed for exposure in the open market, payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto, and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. With respect to any building that contains multiple Residential Units but which is intended to be operated by a single owner or manager under time-sharing arrangements or as a facility for periodic use by members of a vacation club or association, the Fair Market Value of such building or space shall be determined based on the assumption that the units contained in such building are each a Residential Unit available for purchase by a single purchaser. With respect to any Residential Units that are permanently deed restricted to employee housing and are not designated as Resort Operations Space, the Fair Market Value shall take into account such permanent deed restrictions.
Fiscal Year means any period commencing on July 1st and ending on the next ensuing June 30th, except for the first Fiscal Year, which shall mean the period commencing on the Effective Date and ending on the next ensuing June 30th.
Governmental Authority means any nation or government, any state or other political subdivision thereof, any municipal corporation, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government, excluding the City and WPRA.
Intrawest means Intrawest/Winter Park Development Corporation, a Delaware corporation, or any successor to Intrawests rights, title, interests and obligations under this Agreement permitted under Article XII of this Agreement.
Intrawest Holdings means Intrawest/Winter Park Holdings Corporation, a Delaware corporation, or any permitted assignee or successor of such corporations rights, title, interests and obligations under the Additional Consideration Agreement (as defined in the Lease Agreement).
Intrawest Operations means Intrawest/Winter Park Operations Corporation, a Delaware corporation, or any successor to the tenants rights, title, interests and obligations under the Lease Agreement permitted under Article XVI of the Lease Agreement.
Intrawest Termination Notice means the notice given by Intrawest which terminates this Agreement with respect to a particular Development Parcel.
Lease Agreement means the Lease and Operating Agreement between WPRA and Intrawest Operations of even date herewith.
Lift shall have the meaning ascribed to that term in the Lease Agreement.
Lift Parcels means any land, around the base of any Lifts located on or immediately adjacent to the Development Areas which is necessary for the effective operation of such Lifts including without limitation the circulation of persons to, from and around such Lifts. The Lift Parcels are not Development Parcels. After Lift Parcels are released from this Agreement in accordance with Section 2.1(d) below, and conveyed to WPRA if located on a Purchased Development Parcel, Lift Parcels shall be Resort Parcels.
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Master Plan means the Resort Operations Core Master Plan, the Village Core Master Plan or the Additional Development Area Master Plan, as the case may be.
Material Adverse Effect means (a) a materially adverse effect on the business, condition (financial or otherwise), prospects, operations, performance or properties of a Party at the Winter Park Resort, or (b) a material impairment of the ability of a Party to perform its obligations under or to remain in compliance with this Agreement.
Mineral Rights means the following if owned by WPRA: all oil and oil rights, gas and gas rights, coal and other solid fuel minerals, metallic minerals and ores thereof of whatever grade, and all other minerals and mineral rights on, under or legally appurtenant to the Developable Land. Mineral Rights, for the purpose of this Agreement, shall exclude sand and gravel and the rights to excavate, remove, use, dispose of or sell any sand and gravel within the Development Parcels which rights shall be conveyed to Intrawest at the time of Closing of each Development Parcel.
Monetary Exception means any mortgage, deed of trust, chattel mortgage, pledge, attachment, mechanics lien, judgment lien, charge, hypothecation, conditional sales contract, security interest or other monetary liens and financial encumbrances.
Notice of Actual Sales Price means the notice, signed by an officer of Intrawest or its Successor, of the Actual Sales Price for a Development Parcel, containing (a) detailed calculations and substantiation of such Actual Sales Price, including without limitation appraisals, settlement sheets or contracts, as the case may be, (b) the amount of any Sales Price Balance or Sales Price Credit associated with such Development Parcel, and (c) whether Intrawest elects to apply any Development Parcel Prepayment or Sales Price Credit (to the extent not previously applied) to any such Sales Price Balance.
Notice of Estimated Sales Price means the notice, included in the Option Exercise Notice under Section 4.2 of this Agreement, signed by an officer of Intrawest, of the Estimated Sales Price for a Development Parcel, containing (a) detailed calculations and substantiation of such Estimated Sales Price, including without limitation appraisals, settlement sheets or contracts, as the case may be, and (b) whether Intrawest elects to apply any Development Parcel Prepayment or Sales Price Credit to the Estimated Sales Price in accordance with Section 5.1 or 5.4 of this Agreement.
Option means the option granted by WPRA to Intrawest herein to purchase Development Parcels pursuant to the Article III of this Agreement.
Option Exercise Notice means the written notice delivered by Intrawest to WPRA that Intrawest desires to exercise its Option with respect to any Development Parcel.
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Option Notice Date means the date on which the Option Exercise Notice is delivered to WPRA.
Option Term means the term of Intrawests Option, which commences on the Effective Date and, as to Development Parcels with respect to which Intrawest has not yet exercised its Option, terminates as described in Section 4.1 below.
Parent Corporation means Intrawest Corporation, a corporation continued pursuant to the Canada Business Corporations Act and the ultimate parent corporation of Intrawest and Intrawest Operations.
Parent Guaranty means that certain guaranty attached as Exhibit D to the Lease Agreement, pursuant to which Parent Corporation has guaranteed certain obligations of Intrawest under this Agreement, as specified in such guaranty.
Parties means Intrawest and WPRA, each being a Party.
Permitted Exceptions means, with respect to each Development Parcel, (a) Exceptions existing as of the Effective Date, (b) if Intrawest elects to consummate the purchase of any Development Parcel, any Exceptions affecting such Development Parcel appearing of record in the Office of the Clerk and Recorder of Grand County, Colorado, as of the applicable Development Parcel Closing Date for such purchase, (c) Exceptions created or imposed by this Agreement, (d) any plat or plan by which Intrawest shall subdivide the Developable Land into Development Parcels or otherwise effecting the purposes of the Master Plan, (e) the applicable Core Declaration, (f) the Declaration of Transfer and Rental Fee, (g) any declaration of a common interest community established by Intrawest or a Successor and located on such Development Parcel, including easements, restrictions, reservations and covenants for the exclusive or common benefit of one or more owners of units in such common interest community, (h) the Lease Agreement, (i) Monetary Exceptions securing any Agreed-Upon Indebtedness, and (j) Exceptions created by either Intrawest or WPRA with the consent or approval of the other.
Person means any natural person, Governmental Authority, corporation, partnership, limited liability company, joint venture, association, or other entity of any kind.
Purchased Development Parcels means those Development Parcels acquired by Intrawest from time to time under this Agreement.
Qualified Appraiser means an independent MAI-certified real estate appraiser, licensed in Colorado (if then required by Colorado law) with at least ten (10) years of experience in appraising mountain resort development properties in Colorado and that has been approved by WPRA and Intrawest in advance, which approval shall not be unreasonably withheld or delayed. WPRA and Intrawest shall agree from time to time on a list of acceptable Qualified Appraisers.
Real Property shall have the meaning set forth in the Lease Agreement.
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Related Documents means the Lease Agreement, all agreements, documents and instruments required by this Agreement to be executed and delivered in connection with the transactions contemplated by this Agreement and all other documents executed and delivered in connection with the Lease Agreement or this Agreement.
Relevant Covenants means covenants, terms and provisions required to be contained in the Core Declarations set forth in Exhibit E attached hereto.
Repurchase Right shall have the meaning set forth in Section 10.3 of this Agreement.
Repurchase Right Commencement Date shall have the meaning set forth in Section 10.3 of this Agreement.
Repurchase Right Closing shall have the meaning set forth in Section 10.3(a) of this Agreement.
Repurchase Right Price shall have the meaning set forth in Section 10.3(b) of this Agreement.
Repurchase Right Termination Date shall have the meaning set forth in Section 10.3 of this Agreement.
Required Quarterly Payments shall have the meaning ascribed to that term in the Additional Consideration Agreement.
Residential Unit means any residential dwelling unit (whether a unit in a condominium (including condominium-hotel units), a time-share unit or a fractional ownership unit, but excluding hotels (other than condominium-hotel units) intended for transient or short-term occupancy) that is constructed (or is to be constructed) on a Development Parcel, together with any legally appurtenant interests (including parking spaces), whether exclusive or non-exclusive, divided or undivided, in any common elements or exclusive areas, facilities and amenities of any condominium or other facility of which such space is a part.
Resort Operations Core Area means that portion of the Developable Land depicted on Exhibit A-1 attached to this Agreement and identified as the Resort Operations Core Area.
Resort Operations Core Master Plan means that plan for the proposed development of buildings and improvements in the Resort Operations Core Area, prepared in accordance with the procedures, and conforming to the requirements, set forth in Section 2.1 of this Agreement, as amended from time to time in accordance with said Section 2.1.
Resort Operations Core Permitted Uses means those facilities, activities and uses of real property specified as Permitted Uses under the heading Resort Operations Core on Exhibit F attached to this Agreement.
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Resort Operations Core Prohibited Uses means those facilities, activities and uses of real property specified as Prohibited Uses under the heading Resort Operations Core on Exhibit F attached to this Agreement.
Resort Operations Space means those portions of the buildings, facilities and improvements located on Purchased Development Parcels that are designated as Resort Operations Space in the Resort Operations Core Master Plan (or, if WPRA consents in its sole discretion, in the Village Core Master Plan or the Additional Development Area Master Plan) and approved by WPRA in accordance with Section 2.1 of this Agreement, together with any exclusive or non-exclusive easements and rights of way necessary for access and the provision of utilities and services to such buildings, facilities and improvements. Such buildings, facilities, and improvements shall be conveyed in fee simple title by Intrawest or its Successor to WPRA, along with a grant of any easements and rights-of-way, and shall simultaneously be leased by WPRA back to Intrawest Operations in accordance with Section 8.4 of this Agreement and the Lease Agreement.
Resort Parcels means all of the Real Property other than the Developable Land, and shall include, among other property, Lift Parcels.
Sales Price means:
(a) With respect to a Sold Residential Unit (other than a Sold Residential Unit developed for use as a vacation club or time-share unit) or Sold Commercial Unit, (i) the gross purchase price paid to Intrawest by a bona fide third-party purchaser in an arms-length transaction, if the transaction has closed, or (ii) the purchase price as set forth in a contract for sale to a bona fide third-party purchaser in an arms-length transaction, if the transaction under such contract has not then closed; | |
(b) With respect to (i) a Sold Residential Unit developed for use as a vacation club or time-share unit or (ii) an Unsold Commercial Unit or Unsold Residential Unit that is not under contract as of the Determination Date, the Fair Market Value of such Sold Residential Unit developed (or to be developed) for use as a vacation club or time-share unit, Unsold Commercial Unit or Unsold Residential Unit, as determined by a Qualified Appraiser; |
Sales Price Balance shall have the meaning ascribed that term in Section 5.2(b) of this Agreement.
Sales Price Credit shall have the meaning ascribed that term in Section 5.2(b) of this Agreement.
Sold Commercial Unit means (a) a Commercial Unit with respect to which title has transferred to a bona fide third party other than an affiliate of Intrawest in an arms-length transaction and gross proceeds have been paid or are payable to Intrawest or its affiliate or (b) a Commercial Unit that is under contract for sale to a bona fide third party purchaser in an arms- length transaction.
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Sold Residential Unit means (a) a Residential Unit with respect to which title has transferred to a bona fide third party other than an affiliate of Intrawest in an arms-length transaction and gross proceeds have been paid or are payable to Intrawest or its affiliate or (b) a Residential Unit that is under contract for sale to a bona fide third party purchaser in an arms-length transaction.
Successor means a person or entity other than Intrawest that ultimately completes the development of the Developed Building on a Development Parcel and is obligated to pay to WPRA any Sales Price Balance for such Developed Building as described in Section 5.2 below.
Title Company means Grand County Title and Escrow Company, Inc., or another Person authorized as an agent to issue policies of title insurance in the State of Colorado chosen by Intrawest and acceptable to WPRA, exercising reasonable judgment.
Town means the Town of Winter Park, Colorado.
Transfer and Rental Fee means (a) a fee equal to 0.25% of the gross sales price payable upon the sale or transfer of any real property comprising all or any portion of a Development Parcel or the buildings or other improvements on a Development Parcel and (b) a fee of 0.25% of the gross base and percentage rents payable under all leases of Residential Units or Commercial Units on any Development Parcel that are (i) for terms, including renewal options, of thirty (30) years or more, or (ii) with an option to purchase the leased premises at the end of the term, of whatever length, if the option price is less than the fair market value of the leased premises, which fee shall be payable on the terms and conditions set forth in the Declaration of Transfer and Rental Fee.
Unsold Commercial Unit means a Commercial Unit that is not a Sold Commercial Unit.
Unsold Residential Unit means a Residential Unit that is not a Sold Residential Unit.
Village Core Area means that portion of the Developable Land depicted on Exhibit A-1 attached to this Agreement and identified as the Village Core Area.
Village Core Master Plan means that plan for the proposed development of buildings and improvements in the Village Core Area, prepared in accordance with the procedures, and conforming to the requirements, set forth in Section 2.1 of this Agreement, as amended from time to time in accordance with said Section 2.1.
Village Core Permitted Uses means those facilities, activities and uses of real property specified as Permitted Uses under the heading Village Core on Exhibit F attached to this Agreement.
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Village Core Prohibited Uses means those facilities, activities and uses of real property specified as Prohibited Uses under the heading Village Core on Exhibit F attached to this Agreement.
Winter Park Resort means the mountain resorts known, as of the date hereof, as Winter Park, Mary Jane and Vasquez, located in Grand County, Colorado.
WPRA means Winter Park Recreational Association, a Colorado nonprofit corporation, for itself and as agent for the City under the Agency Agreement, or any successor to WPRAs rights, title, interests and obligations under this Agreement.
1.2 Usage. Terms defined in the singular in Section 1.1 above may be used in the plural. Similarly, terms defined in the plural may be used in the singular. Unless the context of this Agreement clearly requires otherwise: (a) references to any Person include such Persons successors and assigns but, if applicable, only if such successors and assigns, are permitted by this Agreement; (b) references to one gender include all genders; (c) including is not limiting; (d) the words hereof, herein, hereby, hereunder and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) references to any Article, Section, clause, paragraph, Schedule and Exhibit are to the terms of this Agreement unless otherwise specified; (f) reference to any breach or default shall not include any immaterial breach or default, taking into account all facts and circumstances; (g) reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, and (h) if any date for performance due falls on a weekend or holiday observed by the City, the date for performance shall be due on the next following business day.
ARTICLE II
PREPARATION OF MASTER PLANS; IDENTIFICATION
OF DEVELOPMENT PARCELS; CORE DECLARATION
2.1 Preparation of Master Plan. | |
(a) Preparations. Intrawest shall prepare the Resort Operations Core Master Plan, the Village Core Master Plan and the Additional Development Area Master Plan. | |
(b) General Description. Each Master Plan shall, for its Development Area, include, among other things, the following: (i) a roof form plan, (ii) a ground floor plan, (iii) a parking floor plan, (iv) an emergency circulation plan, (v) a grading plan, (v) cross-sections and elevations, (vii) sunshine diagrams, (viii) infrastructure plans and proposed easements, (ix) superimposition of legal ownership, (x) a skier, vehicular and pedestrian circulation plan, (xi) parking spaces for the buildings, and (xii) a landscape concept plan. |
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(c) Resort Operations Space. All Resort Operations Space, except for parking (which may be located in any Development Area), shall be located in the Resort Operations Core Area and be shown and described on the Resort Operations Core Master Plan, unless WPRA, in its sole and absolute discretion, consents to development of Resort Operations Space in another Development Area. The Master Plans shall provide for (i) Resort Operations Space having a minimum aggregate floor area at least equal to the floor area of the space owned and operated by WPRA on the Developable Land as of the day before the Effective Date and (ii) day-skier parking spaces at least equal to the number of day-skier parking spaces at the Winter Park Resort as of the Effective Date, and WPRA shall have no right to request or require Resort Operations Space having floor area or day-skier parking having parking spaces greater than such minimum; provided, however, Intrawest may, at its sole option, construct and develop more floor area devoted to Resort Operations Space and/or more day-skier parking spaces. All other aspects of the Master Plan relating to the Resort Operations Space, including without limitation the architectural design, location, types and mix of uses, proportions of the total Resort Operations Space devoted to any particular use or uses, and physical and functional relationships between spaces, shall be subject to WPRAs prior written approval, in accordance with Section 2.1(g) below. | |
(d) Lifts. In conjunction with the preparation of the Master Plans, and any amendments thereto, Intrawest shall identify the location and boundaries of any Lift Parcels, including (i) any Lift Parcels around the base of any Lifts existing as of the Effective Date which, according to the applicable Master Plan, will remain at the same location, (ii) any Lift Parcels to which will be relocated any Lifts existing as of the Effective Date but which need to be relocated according to the applicable Master Plan, and (iii) any new Lifts and Lift Parcels shown on the applicable Master Plan. All bases of Lifts must be on Lift Parcels. Any contrary or inconsistent provision of this Agreement notwithstanding, the Lift Parcels are not Development Parcels and cannot be purchased by Intrawest under this Agreement. If the Master Plans identify any Lift Parcels within the boundaries of the Developable Land, then Intrawest shall, after the final approval of the applicable Master Plan and subdivision allowing separate transfer of such Lift Parcel, if necessary, (Y) deliver to WPRA written instruments, executed and acknowledged by Intrawest and in recordable form, which instruments shall release such Lift Parcels from this Agreement and (Z) if the Development Parcel on which the Lift Parcel is located is a Purchased Development Parcel, convey to WPRA by special warranty deed the Lift Parcel, free of all Monetary Exceptions but subject to (i) Defects of Title, (ii) Permitted Exceptions (other than clause (i) thereof relating to Monetary Exceptions for Agreed-Upon Indebtedness), and (iii) all other Exceptions as may be reasonably required (in Intrawests reasonable business judgment) for development of such Purchased Developable Parcel in accordance with the applicable Master Plan. All aspects of the Master Plans having a direct impact on the Resort Parcels and Lift Parcels shall be subject to WPRAs prior written approval, in accordance with Section 2.1(g) below. |
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(e) Permitted/Prohibited Uses. Exhibit F attached to this Agreement sets forth the uses permitted and prohibited in each Development Area. Without WPRAs prior written consent, which WPRA may grant, withhold or condition in its sole discretion, (i) the Resort Operations Core Master Plan shall provide for uses of the Resort Operations Core for the Resort Operations Core Permitted Uses and shall not provide for the use of the Resort Operations Core for any Resort Operations Core Prohibited Uses; (ii) the Village Core Master Plan shall provide for uses of the Village Core Area for the Village Core Permitted Uses and shall not provide for the use of the Village Core Area for any Village Core Prohibited Uses; and (iii) the Additional Development Area Master Plan shall provide for uses of the Additional Development Area for the Additional Development Area Permitted Uses and shall not provide for the use of the Additional Development Area for any Additional Development Area Prohibited Uses. Uses not specifically listed as a permitted use in a Development Area, shall be deemed prohibited uses. | |
(f) WPRA Participation. Intrawest agrees that WPRA is entitled to have, or delegate to others, up to five people participate in the planning process conducted by Intrawest in its preliminary development of the Master Plans. Intrawest agrees it will consult with WPRA from time to time as the Master Plans are developed and presented for comment to the Town and the Town community. | |
(g) WPRA Approval. Prior to publishing each Master Plan to the general public or submitting each Master Plan to the Governmental Authorities, Intrawest shall deliver each Master Plan to WPRA for its comment or approval, as applicable. Intrawest shall deliver to WPRA the complete proposed Resort Operations Core Master Plan, including all maps and attachments thereto, within one year from the Effective Date unless otherwise extended by WPRA, which extension may be granted in WPRAs sole discretion. Intrawest shall deliver to WPRA the complete proposed Village Core Master Plan and the Additional Development Area Master Plan, including all maps and attachments thereto, within eighteen months from the Effective Date unless otherwise extended by WPRA, which extension may be granted in WPRAs sole discretion. WPRA may provide comments on the Master Plans to Intrawest, but WPRA shall have the right to approve only (i) the Resort Operations Core Master Plan, (ii) Resort Operations Space identified on any Master Plan, (iii) any aspects of the Master Plans having a direct impact on Lift Parcels or Resort Parcels (subject to Section 2.1(c) above), and (iv) the deviations from the permitted and prohibited uses as set forth in Section 2.1(e) above. If WPRA fails to provide its approval within thirty business days after the proposed Master Plan is delivered to WPRA, then such proposed Master Plans shall be deemed approved by WPRA. If WPRA disapproves any aspect of a Master Plan, it shall set forth in writing specific reasons for its objection. | |
(h) Master Plan Amendments. From time to time, as Intrawest shall deem appropriate, it may propose amendments to the Master Plans. Intrawest shall deliver any proposed amendments to the Master Plans to WPRA before publishing them to the general public or submitting them to Governmental Authorities. WPRA may provide comments on such proposed amendments to Intrawest, but WPRA shall have the right to approve or disapprove only (i) proposed amendments to the Resort Operations Core Master Plan, (ii) amendments affecting Resort Operations Space identified on any Master Plan (iii) any aspects of an amendment to a Master Plan having a direct impact on Lift Parcels or Resort Parcels (subject to Section 2.1(c) above), and (iv) the deviations from the permitted and prohibited uses as set forth in Section 2.1(e). If WPRA fails to provide its approval within thirty business days after a proposed amendment is delivered to WPRA, then such proposed amendment shall be deemed approved by WPRA. If WPRA disapproves any proposed amendment, it shall set forth in writing specific reasons for its objection. |
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(i) Land Use Submittals. All zoning, subdivision and other land use or building applications submitted to the Town of Winter Park or other land use approving authorities must substantially conform to the Master Plans. | |
(j) Assignment. Intrawest shall have the right to assign its responsibility to prepare the Master Plans, subject to the prior approval of WPRA which approval will not be unreasonably withheld if the proposed assignee has experience in the preparation of master plans. |
2.2 Identification of Development Parcels. In conjunction with the preparation of the Master Plans, Intrawest shall identify the location and boundaries of the Development Parcels with respect to which Intrawest desires to be able to separately exercise its Option. The parties agree that WPRA will cooperate with, and support, any subdivision proposal that is consistent with the approved Master Plan, or any amendment thereto, but that WPRA will have no obligation to pay any expense in connection with the subdivision approvals and other entitlements from the Town for the Development Parcels.
ARTICLE III
GRANT OF OPTION
3.1 Grant of Option; Exercise Sequence.
(a) Grant of Option. Subject to the terms and conditions of this Agreement, WPRA hereby grants to Intrawest an option to purchase the Developable Land and agrees to sell, transfer, convey, assign and deliver the Development Parcels to Intrawest, and Intrawest shall have the right to purchase and acquire the Development Parcels, which shall include any rights of WPRA to develop such parcels, but which shall be subject to the obligation of Intrawest to pay the sales price as set forth in Article V of this Agreement. Intrawest shall have the right to cause the Developable Land to be subdivided into separate Development Parcels, and Intrawest may not exercise its option under this Agreement with respect to any portion of the Developable Land in any Development Area, until, pursuant to Section 2.2 of this Agreement, Intrawest (i) delineates the Development Parcels in such Development Area in the applicable Master Plan and (ii) subdivides the Developable Land in a Development Area into Development Parcels that comply with said Master Plan. |
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(b) Mandatory Exercise for 570 Residential Units. On or before the tenth (10th) anniversary of the Effective Date of this Agreement (as such period may be extended due to an Event of Force Majeure, but in no event shall such extension be longer than one year), Intrawest shall purchase Development Parcels chosen by Intrawest on which the Master Plans provide for at least 570 Residential Units. The failure of Intrawest to do so shall be an Event of Default by Intrawest (except as set forth in Section 3.1(c) below). Intrawest shall have the option to satisfy fully its obligations under this Section 3.1(b) by paying the Estimated Sales Price for Development Parcels chosen by Intrawest on which the Master Plans provides for at least 570 Residential Units, without accepting WPRAs deed for, or taking title to, such Development Parcels. Intrawest may exercise such option by giving written notice of such exercise to WPRA, along with payment of such Estimated Sales Price, at any time before Intrawest accepts a deed for such Development Parcels, either voluntarily or pursuant to a judgment for specific performance. Concurrently with such payment, Intrawest shall deliver its Intrawest Termination Notice with respect to such Development Parcels. Intrawests obligation to purchase Development Parcels on which the Master Plans provide for at least 570 Residential Units is not limited to only certain Development Parcels. | |
(c) Relief from Mandatory Exercise. Any contrary or inconsistent provision of this Agreement notwithstanding, if, despite Intrawests commercially reasonable and diligent efforts, WPRA prevents Intrawest from purchasing enough Development Parcels to satisfy its obligations under Section 3.1(b) above, then the obligation shall be extended or modified as follows: (i) if WPRA wrongfully fails to approve in a timely manner any Master Plan, then relief shall be restricted to an extension of time to purchase such Development Parcels (beyond the tenth anniversary of the Effective Date of this Agreement) equal to the number of days that WPRA delayed its timely approval of any Master Plan; (ii) if WPRA fails to convey any of the Development Parcels chosen by Intrawest as the site for some or all of such 570 Residential Units and no Development Parcels remain on which such 570 Residential Units can otherwise be developed, relief shall be limited to a reduction in the Development Parcels that Intrawest is required to acquire under Section 3.1(b) above in proportion to the fraction of such 570 Residential Units that are to be developed on such Development Parcels chosen by Intrawest, or (iii) if the Lease Agreement terminates due solely to an Event of Default by WPRA, and such termination results in a termination of this Option, then Intrawest shall be relieved of any further obligations under Section 3.1(b) above. | |
(d) Exercise Sequence. Intrawest may exercise its Option and acquire the Development Parcels in any order without any requirement that any one of the Development Parcels be acquired before or after any other of the Development Parcels and without any requirement that any one Development Parcel be acquired in conjunction with any other Development Parcel. |
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ARTICLE IV
OPTION: TERM, EXERCISE AND TERMINATION
4.1 Term of Option.
(a) Term. The Option Term will commence on the Effective Date and shall terminate (a) at WPRAs option, upon an uncured Event of Default by Intrawest, or (b) on the date that the Lease Agreement expires or otherwise terminates in accordance with its terms. | |
(b) Savings Clause. Provisions contained in this Agreement, if any, which are subject to the laws or rules sometimes referred to as the rule against perpetuities or the rule prohibiting unreasonable restraints on alienation shall continue and remain in full force and effect for the period of 21 years following the death of Wellington E. Webb and the now living children and grandchildren of said person, or until this Agreement is terminated as herein provided, whichever occurs first. |
4.2 Exercise of Option. Intrawest may exercise its Option as to any Development Parcel by delivering its Option Exercise Notice, provided that all of the conditions set forth in Section 4.3 below have been satisfied (or waived in writing by WPRA) with respect to such Development Parcel prior to the delivery of the Option Exercise Notice. Each Option Exercise Notice shall identify (a) the Development Parcel or Development Parcels for which the Option is being exercised; (b) the Development Parcel Closing Date for such Development Parcel or Development Parcels, which date shall be not less than thirty (30) days nor more than ninety (90) days after the date Intrawest delivers such Option Exercise Notice to WPRA; and (c) the Notice of Estimated Sales Price for such Development Parcel or Development Parcels.
4.3 Conditions Precedent to Exercise of Option. Intrawests right to exercise its Option with respect to any Development Parcel shall be subject to the satisfaction of each and all of the following conditions as of the Option Notice Date, unless such conditions are waived in writing by WPRA:
(a) No Default. There shall not be an Event of Default by Intrawest nor an event which with the passage of time or giving of notice, would constitute an Event of Default by Intrawest under this Agreement or any of the Related Documents. | |
(b) No Contest. No suit, action, governmental investigation, or legal, administrative or other proceeding that challenges the validity or legality of the conveyance or development of the subject Development Parcel shall have been instituted against Intrawest, WPRA, or the City. |
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4.4 Termination of the Option by Intrawest.
(a) Option Exercise Notice. At any time, and from time to time, prior to closing on a Development Parcel for which Intrawest has delivered an Option Exercise Notice, Intrawest shall have the right permanently to terminate its Option as to such Development Parcel by delivering to WPRA an Intrawest Termination Notice, which notice shall identify the Development Parcel or Development Parcels in respect of which Intrawest is terminating its Option. | |
(b) Termination on Delivery Date. Upon the date of delivery of an Intrawest Termination Notice to WPRA, the Option automatically shall terminate as to the Development Parcel or Development Parcels identified in the Intrawest Termination Notice, and thereafter Intrawest shall have no Option rights with respect to such Development Parcel. | |
(c) No Affect on Requirement for Minimum Purchase. Termination of the Option as to one or more Development Parcels shall not reduce or modify Intrawests obligations except as set forth in Sections 3.1(b) and 3.1(c) above. | |
(d) WPRAs Rights After Intrawest Termination Notice. At any time following an Intrawest Termination Notice for any Development Parcel, WPRA shall have the right to sell that Development Parcel to another Person, free and clear of the Lease Agreement and this Agreement, and Intrawest agrees, within seven days after a written request from WPRA, to execute a written instrument, in recordable form, to evidence the termination of Intrawests rights under this Agreement with respect to such Development Parcel, but no such document is necessary to make the termination effective. |
4.5 As-Is Where-Is Notice of Sale. Except for agreements of WPRA set forth elsewhere in this Agreement and the documents to be delivered by WPRA at a Development Parcel Closing, the sale of the Development Parcels and the rights granted to Intrawest, as provided for herein, shall be made on an AS-IS condition and basis with all faults, and Intrawest hereby acknowledges that WPRA is not obligated to make or perform any improvements or modifications to any portion of the Development Parcels or incur any costs for the installation or provision of utilities or other infrastructure for the Development Parcels.
ARTICLE V
DETERMINATION AND PAYMENT OF SALES PRICE
5.1 Estimated Sales Price. With respect to each Development Parcel, Intrawest shall pay the Estimated Sales Price at the Development Parcel Closing, minus the amount of any Sales Price Credit or Development Parcel Prepayments that Intrawest elects to apply to the Estimated Sales Price and of which it notified WPRA in its Option Exercise Notice. The aggregate amount of any such Sales Price Credit and Development Parcel Prepayments shall not exceed the Estimated Sales Price for any Development Parcel.
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5.2 Actual Sales Price.
(a) Notice of Actual Sales Price. Within 60 days after the Determination Date for any Development Parcel, Intrawest (or its Successor) shall deliver to WPRA the Notice of Actual Sales Price for such Development Parcel. | ||
(b) Sales Price Balance/Credit. | ||
(i) If, according to the Notice of Actual Sales Price for any Development Parcel, the Actual Sales Price for such Development Parcel exceeds the Estimated Sales Price paid by Intrawest with respect to such Development Parcel, Intrawest (or its Successor) shall, at the time of the delivery of the Notice of Actual Sales Price to WPRA, pay to WPRA the amount of such excess (the Sales Price Balance), less the amount of any Development Parcel Prepayment and/or Sales Price Credit (to the extent not previously applied) that Intrawest elects to apply to such Sales Price Balance in such Notice of Actual Sales Price. | ||
(ii) If, according to the Notice of Actual Sales Price for any Development Parcel, the Estimated Sales Price paid by Intrawest with respect to such Development Parcel exceeds the Actual Sales Price for such Development Parcel, Intrawest shall have the right to receive a credit in the amount of such excess (the Sales Price Credit), which credit Intrawest may apply, at its option, from time to time, against any Estimated Sales Price or Sales Price Balance payable by Intrawest to WPRA at any future time with respect to any other Development Parcel, but WPRA shall not be liable to repay to Intrawest any Sales Price Credit if no future Estimated Sales Price or Sales Price Balance is due. | ||
(c) Binding on Successors. Intrawest and WPRA acknowledge that Intrawest may choose to convey one or more Development Parcels to others prior to development contemplated by the Master Plan for each such Development Parcel. The obligation under this Agreement to pay to WPRA any Sales Price Balance attributable to a Development Parcel so conveyed shall run with the land comprising the underlying Development Parcel pursuant to a covenant, substantially in the form set forth in the deed attached to this Agreement as Exhibit D, and shall bind each Successor purchasing such Development Parcel until any Sales Price Balance attributable to such Development Parcel has been paid to WPRA. By accepting a deed of any Development Parcel, each such Successor purchasing any such Development Parcel shall be deemed to have accepted and assumed the obligation under such covenant to pay any Sales Price Balance attributable to such Developed Building, which obligation shall be joint and several with Intrawest. Within ten business days after (i) payment by Intrawest or any Successor of any Sales Price Balance due under Section 5.2 of this Agreement with respect to any Development Parcel or (ii) delivery to WPRA of a Notice of Actual Sales Price indicating that no Sales Price Balance is so due with respect to any Development Parcel, WPRA shall deliver to Intrawest or such Successor a written release of such covenant and obligation, executed and acknowledged by WPRA and in recordable form. |
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(d) Copies of Certificates of Occupancy to WPRA. Within ten (10) days after Intrawest or its Successor receives a certificate of occupancy for the entire Developed Building it shall send a copy of such certificate (or certificates) of occupancy to WPRA. |
5.3 Appraisals. Intrawest shall pay the costs of the services of the Qualified Appraiser who is engaged in connection with determining the Estimated Sales Price, and WPRA shall pay the costs of the Qualified Appraiser who is engaged in connection with determining the Actual Sales Price for a Development Parcel. Intrawest and WPRA at any time may mutually agree on the amount of any Estimated Sales Price or Actual Sales Price without being required to engage a Qualified Appraiser to assist in making any such determination.
5.4 Credit for Development Parcel Prepayments Pursuant to Lease Agreement. Pursuant to the Additional Consideration Agreement, for each Fiscal Year during the period beginning on October 1, 2002, and ending on June 30, 2012, Intrawest Holdings is obligated to pay certain Required Quarterly Payments, on the condition that the amount by which the aggregate of the Required Quarterly Payments in a Fiscal Year exceeds the amount of Cash Flow for Annual Payment (as defined in the Lease Agreement) during such Fiscal Year shall be treated as a Development Parcel Prepayment to be applied against the amounts of any Estimated Sales Price or Sales Price Balance payable by Intrawest to WPRA with respect to any Development Parcel. Intrawest shall have the right, in its sole and absolute discretion, to apply any such Development Parcel Prepayment to reduce the amount of any Estimated Sales Price or Sales Price Balance that Intrawest otherwise is required to pay under Section 3.1(b), 5.1 or 5.2 of this Agreement. If the sum of the Development Parcel Prepayments exceeds the Estimated Sales Price or Sales Price Balance for any Development Parcel, Intrawest may, in its sole and absolute discretion, apply such excess as a credit against any Estimated Sales Price or Sales Price Balance subsequently payable by Intrawest to WPRA under this Agreement.
5.5 Application of Debt Repayment Portions to Agreed-Upon Indebtedness. Pursuant to Section 10.4 of the Lease Agreement, WPRA has agreed to apply no less than the Debt Repayment Portions to repayment of the Agreed-Upon Indebtedness, until the Agreed-Upon Indebtedness has permanently been repaid in full. Intrawest shall pay directly to the Agreed-Upon Indebtedness Lender (A) any Debt Repayment Portions of any Estimated Sales Price payable by Intrawest under Section 3.1(b) or 5.1 of this Agreement and (B) if Intrawest is the developer of the Developed Building on a Development Parcel, the Debt Repayment Portions of any Sales Price Balance payable under Section 5.2 of this Agreement with respect to such Development Parcel; the amount of any such Estimated Sales Price or Sales Price Balance otherwise payable by Intrawest to WPRA pursuant to said Section 3.1(b), 5.1 or 5.2 shall be reduced dollar-for-dollar by the amount of such Debt Repayment Portions paid by Intrawest to the Agreed-Upon Indebtedness Lender. If the developer of the Developed Building is Intrawests Successor, then the Successor shall pay to WPRA any Sales Price Balance due under said Section 5.2, and WPRA shall pay the Debt Repayment Portions attributable to such Sales Price Balance to the Agreed-Upon Indebtedness Lender. Intrawest shall deliver to WPRA evidence of any payment of Debt Repayment Portions that Intrawest pays directly to the Agreed-Upon Indebtedness Lender at such time as such amounts are paid to the Agreed-Upon Indebtedness Lender. If the Agreed-Upon Indebtedness has been completely paid, then Intrawest shall pay to WPRA the entire Estimated Sales Price or Sales Price Balance due under Section 3.1(b), 5.1 or 5.2 of this Agreement, as the case may be.
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5.6 Guaranty by Intrawest Corporation. Pursuant to the terms and conditions of the Parent Guaranty, Parent Corporation has guaranteed certain obligations of Intrawest under this Agreement, as more specifically provided in the Parent Guaranty.
ARTICLE VI
PURCHASE OF DEVELOPMENT PARCELS
6.1 Development Parcel Closing. Subject to the conditions precedent to the sale and purchase of the Development Parcels as set forth in this Agreement, the Development Parcel Closing shall occur at 10:00 a.m. Denver time at the offices of the Title Company (or such other time and place mutually agreed upon by Intrawest and the WPRA) on the Development Parcel Closing Date. Notwithstanding anything to the contrary herein, the Development Parcel Closing Date with respect to any Development Parcel shall be extended pending satisfaction or waiver by the appropriate Party of any of the conditions precedent to a Development Parcel Closing as set forth in Section 6.3 below, for a period not exceeding thirty (30) days after satisfaction or waiver of such conditions precedent.
6.2 No Obligation by Intrawest to Purchase a Development Parcel. Intrawest has no obligation to purchase any Development Parcel with respect to which it has exercised its Option. Without terminating permanently its rights to exercise its Option as to a Development Parcel, Intrawest may cancel without cause any pending exercise of its Option by giving WPRA its Cancellation Notice at any time before Intrawest accepts the deed for such Development Parcel from WPRA. Cancellation of the Option as to one or more Development Parcels shall not reduce or modify Intrawests obligation to exercise the Option for the Development Parcels chosen by Intrawest on which the Master Plans provide for at least 570 Residential Units in accordance with Section 3.1(b) above, except as set forth in Section 3.1(c) above.
6.3 Conditions Precedent to the Obligation of WPRA to Convey a Development Parcel. The obligation of WPRA to convey a Development Parcel shall be subject to the satisfaction of each and all of the following conditions, unless the failure to meet a condition has been waived in writing by WPRA on or before the Development Parcel Closing:
(a) No Default. On the Development Parcel Closing Date, there shall not be an Event of Default by Intrawest nor an event which, with the passage of time or giving of notice, would constitute an Event of Default by Intrawest under this Agreement or any of the Related Documents. | |
(b) No Contest. On the Development Parcel Closing Date, no suit, action, governmental investigation, or legal, administrative or other proceeding that challenges the validity or legality of the conveyance or development of the subject Development Parcel shall have been instituted against Intrawest, WPRA, or the City. |
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(c) Deliveries. On the Development Parcel Closing Date, Intrawest shall have delivered each of the items required to be delivered by it in connection with the Development Parcel Closing pursuant to this Agreement. | |
(d) Partial Release of Agreed-Upon Indebtedness. On or before the Development Parcel Closing Date, Intrawest shall have provided satisfactory evidence either that (i) the Agreed-Upon Indebtedness Lender will release the Development Parcel from any lien under the Agreed-Upon Indebtedness Documents upon payment of the applicable Debt Repayment Portions, or (ii) the conveyance of the Development Parcel without such release shall not result in a default under the Agreed-Upon Indebtedness Documents. | |
(e) Lease in Effect. The Lease Agreement is in full force and effect. |
6.4 Deliveries by WPRA in Respect of Each Development Parcel Closing. In connection with each Development Parcel Closing, WPRA shall execute or cause to be executed, have acknowledged, and deliver or cause to be delivered to Intrawest, as appropriate and to the extent applicable to the Development Parcel being conveyed, each of the following:
(a) Deed. A special warranty deed, substantially in the form attached hereto as Exhibit D, conveying fee title to such Development Parcel to Intrawest, together with all easements, rights-of-way and other rights legally appurtenant to such Development Parcel, but reserving such rights and covenants as are shown on Exhibit D attached hereto. | |
(b) Assignment of Declarants Rights. One or more assignments, in form and substance reasonably acceptable to WPRA and Intrawest, of any applicable declarant or grantor rights created and held by WPRA as the declarant of covenants (except the Declaration of Transfer and Rental Fee) with respect to such Development Parcel. | |
(c) Agreement and Covenant to Convey and Lease Resort Operations Space. The Agreement and Covenant to Convey and Lease Resort Operations Space described in Section 8.4 below, substantially in the form attached as Exhibit B, if any Resort Operations Space will be located on such Development Parcel. | |
(d) FIRPTA. A non-foreign affidavit to assure compliance with Section 1445 of the Code. | |
(e) Corporate Assurances. Such assurances as the Title Company may request to evidence the authority of WPRA and the due authorization and execution, by or on behalf of WPRA, of the documents required to be delivered by it at a Development Parcel Closing. | |
(f) Other Documents. All other documents, such as settlement sheets and lien affidavits, reasonably necessary or appropriate to complete the transaction contemplated hereby. |
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6.5 Deliveries by Intrawest in Respect of Each Development Parcel Closing. In connection with each Development Parcel Closing, Intrawest shall make, execute or cause to be executed, have acknowledged, and deliver or cause to be delivered to WPRA each of the following:
(a) Estimated Sales Price. Unless otherwise paid by Intrawest to the Agreed-Upon Indebtedness Lender in accordance with Section 5.5 above, the Estimated Sales Price for such Development Parcel, less any credits for Development Parcel Prepayments and/or Sales Price Credits applied against such Estimated Sales Price in accordance with Section 5.1, 5.2 and/or 5.4 of this Agreement. | |
(b) Agreement and Covenant to Convey and Lease Resort Operations Space. The Agreement and Covenant to Convey and Lease Resort Operations Space described in Section 8.4 below, if any Resort Operations Space will be located on the Development Parcel. | |
(c) Other Documents. All other documents, such as settlement sheets and lien affidavits, reasonably necessary or appropriate to complete the transaction contemplated hereby. |
6.6 Further Assurances. After each Development Parcel Closing, WPRA and Intrawest shall from time to time, at the request of each other, and without further cost or expense to the requesting Party, execute and deliver such other instruments of conveyance and transfer and take such other actions as may be reasonably necessary in order to consummate the transactions contemplated hereby and to preserve the interests and rights of the Parties contemplated hereby.
6.7 Transaction Costs and Filings. In connection with each Development Parcel Closing, the Parties shall pay the following transaction costs, as appropriate:
(a) Attorneys Fees. Each party shall pay its own attorneys fees. | |
(b) Other costs. Intrawest shall: |
(i) Pay to the Title Company all premiums, fees, charges and other costs owed to the Title Company with respect to the policy of title insurance for such Development Parcel; | |
(ii) Pay all state and local sales, use, recording, filing, excise and documentary, transfer and related taxes and fees resulting from the conveyance of such Development Parcel; | |
(iii) Pay to the Title Company all of the Title Companys fees for acting as escrow agent and providing services in connection with such Development Parcel Closing; and |
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(c) Miscellaneous Customary Closing Costs. All other customary closing costs associated with the Development Parcel Closing shall be paid by Intrawest. |
6.8 Release of Development Parcel from this Agreement. Upon the acceptance by Intrawest of a deed for a Development Parcel from WPRA, which acceptance shall be deemed to occur upon the recording of such deed with the Office of the Clerk and Recorder of Grand County, Colorado, such Development Parcel shall be released from the terms of this Option Agreement and any encumbrance created under this Option Agreement, but shall remain subject to the covenants, conditions and restrictions set forth in the deed for such Development Parcel attached to this Agreement as Exhibit D, the Declaration of Transfer and Rental Fee attached to this Agreement as Exhibit B, the Agreement and Covenant to Convey and Lease Resort Operations Space attached to this Agreement as Exhibit C (if any Resort Operations Space will be located on such Development Parcel) and any other documents, such as easements, recorded in the records of the Clerk and Recorder of Grand County, Colorado, after the date of this Agreement and before the date of each respective deed for a Development Parcel; provided, however, no such acceptance or recording of any such deed, and no such release of a Development Parcel, shall release Intrawest from its obligations, or terminate Intrawests rights under this Agreement.
ARTICLE VII
CORE DECLARATION AND OTHER BENEFICIAL ENCUMBRANCES
7.1 Core Declaration and Creation of Core Association. Concurrently with its preparation of each Master Plan, Intrawest shall prepare the Core Declaration for the Development Area covered by such Master Plan. Intrawest shall provide WPRA with a draft of such Core Declaration and the documents creating the corresponding Core Association for review and comment by WPRA. Each Core Declaration shall contain the Relevant Covenants described in Exhibit E attached to this Agreement. WPRA shall not be entitled to object to the form or substance of such Core Declaration or such documents so long as they contain the Relevant Covenants; provided, however, WPRA shall have the right to approve any provisions of the Core Declarations that affect any Resort Operations Space, which approval shall not be unreasonably withheld, delayed or conditioned. Intrawest shall execute, have acknowledged and record such Core Declaration prior to the consummation of the sale by Intrawest of a sale of the Development Parcel to its Successor or the sale by Intrawest of the first Residential Unit or Commercial Unit on the Developable Land within each Core Area.
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7.2 Beneficial Easements, Restrictions and Covenants. Within ten business days after receiving a written request from Intrawest, which must include sufficient drawings and explanations to support the request, WPRA shall deliver to Intrawest such easements, agreements, documents and instruments, executed and acknowledged by WPRA, in form and substance reasonably acceptable to WPRA and Intrawest, and in recordable form, as Intrawest and WPRA reasonably deem necessary or desirable for the development of the Developable Land. Pursuant to such easements, agreements, documents and instruments, WPRA shall grant to Intrawest and other necessary third parties, and Intrawest and such third parties shall grant to WPRA, as appropriate, such non-exclusive easements, rights-of-way and licenses over, across, through and under their respective properties, including the Developable Land and the Resort Parcels, in locations reasonably acceptable to Intrawest, WPRA and such third parties, for the purposes of permitting, facilitating, and providing for (a) access to such properties and the buildings and other improvements contemplated by the Master Plan, (b) development, construction, maintenance and repair of buildings, facilities, roadways, walkways, grading, landscaping, infrastructure and other improvements contemplated by the Master Plan, and (c) the provision of water, sewer, electricity, telecommunications, gas and other utilities and services to such buildings and other improvements. All such easements, rights-of-way and licenses on the Development Parcels and Resort Parcels must not have a Material Adverse Affect on Resort Operations (as defined in the Lease Agreement), must run with the land and must, where appropriate, benefit the Resort Parcels and any applicable Core Common Areas. All easements, rights-of-way and licenses granted or created under this Section 7.2 shall be Permitted Exceptions.
7.3 Declaration of Transfer and Rental Fee. At the Development Parcel Closing for the first Development Parcel acquired by Intrawest under this Agreement, WPRA shall deliver to Intrawest the Declaration of Transfer and Rental Fee, duly executed and acknowledged by WPRA and in recordable form. Intrawest shall cause the Declaration of Transfer and Rental Fee to be recorded before the deed for such first Development Parcel. WPRA shall not be liable for payment of a Transfer and Rental Fee at the time of its transfer of a Development Parcel to Intrawest under this Agreement.
ARTICLE VIII
AGREEMENTS OF WPRA AND INTRAWEST PENDING DEVELOPMENT PARCEL CLOSINGS
8.1 Affirmative Agreements of WPRA and Intrawest Pending Development Parcel Closings. With respect to each Development Parcel, from the Effective Date of this Agreement until the Development Parcel Closing Date for such Development Parcel (unless this Agreement is sooner terminated), WPRA and Intrawest shall perform the following obligations:
(a) Information. WPRA shall provide Intrawest or Intrawest affiliates with all written information received by WPRA regarding the Development Parcels that Intrawest would not otherwise know. Intrawest shall keep WPRA reasonably informed of its process and progress with Governmental Authorities regarding land use and other development actions and approvals of the Developable Land. | |
(b) Organizational Approvals. In connection with each Development Parcel Closing, WPRA shall expeditiously obtain in writing such assurances as the Title Company may request to evidence the authority of WPRA and the due authorization and execution, by or on behalf of WPRA, of the documents required to be delivered by it at a Development Parcel Closing. Intrawest shall expeditiously obtain in writing all organizational approvals, authorizations, and consents required for Intrawest to consummate the transactions contemplated hereby and deliver to WPRA copies, reasonably satisfactory in form and substance to WPRA, of such approvals, authorizations and consents. |
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(c) Approvals and Cooperation. WPRA shall reasonably cooperate with Intrawest with respect to Intrawests efforts to obtain approvals from the Town, any other Governmental Authority, and Winter Park Water and Sanitation District for all matters submitted to the Town, any other Governmental Authority, and Winter Park Water and Sanitation District for approval related to the development or construction of any buildings or other improvements on the Developable Land, so long as there is not substantial cost to WPRA or Intrawest agrees to pay any such substantial cost. WPRAs cooperation shall include without limitation: (i) cooperating in the filing of subdivision plans and plats relating to the Development Parcels; and (ii) execution and filing of any other applications, approvals, permits, licenses or other documents necessary or desirable to accomplish the foregoing. WPRAs obligations under this paragraph are applicable only so long as the matter for which Intrawest is seeking WPRAs cooperation is substantially in conformance with the Master Plan. WPRA shall not submit any application or request to any Governmental Authority that will affect the potential development of any Development Parcel unless requested to do so by Intrawest. |
8.2 Easement for Encroachments. Upon request by Intrawest WPRA agrees to execute, have acknowledged and deliver to Intrawest one or more easement agreements for inadvertent encroachments of any buildings or improvements constructed on any Development Parcel that encroach upon a Resort Parcel, a Lift Parcel or any Development Parcel that has not yet been conveyed to Intrawest, provided that Intrawest has used best efforts to avoid such inadvertent encroachments, such as obtaining surveys and using reputable contractors, and so long as the encroachment is not greater than 24 inches.
8.3 Negative Agreements of WPRA Pending Development Parcel Closings. From the Effective Date until the Development Parcel Closing for each Development Parcel, WPRA shall not do any of the following, unless permitted pursuant to the terms of the Lease Agreement or otherwise requested by Intrawest, or without Intrawests prior written consent or request:
(a) No Transfers. Dispose of any interest in the Development Parcel, except the foregoing negative covenant shall not apply to any Development Parcel for which there has been issued an Intrawest Termination Notice or any interest in the Development Parcel that is transferred by WPRA in accordance with and in compliance with Section 2.7 of the Lease Agreement. | |
(b) No Exceptions. Enter into, amend or terminate any license, lease, contract, easement, assignment, covenant, agreement, condition or restriction burdening, affecting, legally appurtenant to, or directly benefiting the Development Parcels without the prior written consent of Intrawest, which consent shall not be unreasonably withheld if it will not have a Material Adverse Affect on the Development Parcels. | |
(c) No Defects of Title. Take any action that will result in the creation or imposition of a Defect of Title. |
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(d) No Land Use Changes. Seek any zoning or other change from a Governmental Authority affecting the use of the Development Parcel, or seek any subdivision of the Development Parcel. |
8.4 Delivery or Transfer of Resort Operations Space. At each Development Parcel Closing for any Development Parcel on which Resort Operations Space will be constructed, Intrawest and WPRA shall deliver an Agreement and Covenant to Convey and Lease Resort Operations Space with respect to such Development Parcel, and WPRA, at its sole expense, may record such Agreement and Covenant to Convey and Lease Resort Operations Space in the Office of the Clerk and Recorder of Grand County, Colorado. With regard to the construction of improvements on any portion of the Development Parcels that constitute Resort Operations Space, such Resort Operations Space shall be of quality construction using good quality materials with work performed in a good and workmanlike manner. Upon the issuance of a certificate of occupancy for any Resort Operations Space, for no additional monetary consideration, (a) Intrawest shall transfer the Resort Operations Space to WPRA by special warranty deed, (b) such special warranty deed shall transfer title to such Resort Operations Space, free and clear of all Exceptions other than Permitted Exceptions (except clause (i) thereof for Monetary Exceptions securing any Agreed-Upon Indebtedness) and Defects of Title, (c) and Intrawest shall provide an owners policy of title insurance to WPRA for the Resort Operations Space at Intrawests expense, which policy shall insure title to such Resort Operations Space free and clear of all Exceptions other than Permitted Exceptions (except clause (i) thereof for Monetary Exceptions securing any Agreed-Upon Indebtedness) and Defects of Title. WPRA shall immediately lease or sublease such Resort Operations Space back to Intrawest Operations pursuant to the Lease Agreement and shall deliver to Intrawest a written, recordable instrument evidencing such lease or sublease. Upon the conveyance of such Resort Operations Space to WPRA and lease of such Resort Operations Space to Intrawest Operations, the parties shall promptly execute, have acknowledge and (if the Agreement and Covenant to Convey and Lease Resort Operations Space was recorded) record in the Office of the Clerk and Recorder of Grand County, Colorado, an instrument releasing or terminating the Agreement and Covenant to Convey and Lease Resort Operations Space for the Development Parcel on which such Resort Operations Space is located.
8.5 Agreement to Cooperate in Good Faith. In performing their respective obligations and complying with and enforcing the terms and conditions of this Agreement, Intrawest and WPRA agree to cooperate in good faith with each other so as to not unreasonably interfere with (a) WPRAs ownership of the (i) Resort Parcels, (ii) the Development Parcels in respect of which Intrawest has not yet exercised its Option, and (iii) Resort Operations Space, and (b) Intrawest Operations operation of the Leased Assets pursuant to the Lease Agreement and (c) the development, construction and sales activities of Intrawest on or in connection with the Development Parcels in respect of which Intrawest has exercised its Option.
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ARTICLE IX
CONDEMNATION OF DEVELOPMENT PARCELS
9.1 Condemnation of Development Parcels.
(a) If, prior to the Development Parcel Closing for a Development Parcel, either Party learns that an Affected Development Parcel is to be taken (or is threatened to be taken) under any power of eminent domain, that Party shall give the other Party written notice thereof and, so long as the Lease Agreement is not terminated due to the adverse affect on the practical ability of the Winter Park Resort to operate as a resort area on a commercially reasonable basis because of such taking, Intrawest may elect to either: | ||
(i) Have the Affected Development Parcel continue to be subject to the terms of this Agreement except for the portion taken, in which case WPRA shall retain its rights to any and all condemnation awards and the Estimated Sales Price with respect to such Affected Development Parcel shall be recalculated (if previously calculated), or | ||
(ii) Exclude such Affected Development Parcel from the transactions contemplated hereby, in which case Intrawest shall deliver the Intrawest Termination Notice in accordance with Section 4.4, and this Agreement shall terminate as to the Affected Development Parcel. | ||
(b) If the condemnation of the Affected Development Parcel renders other Development Parcels in respect of which Intrawest has not yet exercised its Option inadequate for the purposes contemplated herein, Intrawest may elect to exclude such other Development Parcels from the transactions contemplated hereby in which case Intrawest shall deliver the Intrawest Termination Notice in accordance with Section 4.4, and this Agreement shall terminate as to the Affected Development Parcel. |
ARTICLE X
DEFAULTS AND REMEDIES
10.1 Event of Default by WPRA.
(a) Event of Default. Each of the following shall be an Event of Default by WPRA under this Agreement: | ||
(i) WPRA wrongfully (which, for the purposes of this Section 10.1(a) shall mean that an action or omission is not permitted pursuant to the terms of the Lease Agreement or this Agreement, is without Intrawests prior written consent and is not otherwise requested by Intrawest) fails to deliver the agreements, certificates, documents and instruments described in Section 6.4 of this Agreement, and such failure to perform continues for a period of ten (10) business days after written notice from Intrawest, unless such failure to perform cannot be reasonably cured in such period and the cure is immediately commenced and continuously prosecuted, in which case the cure period shall be extended as reasonably required necessary to effect such cure with diligence and continuity; or |
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(ii) WPRA wrongfully seeks any zoning or other land use decision from a Governmental Authority affecting the use of a Development Parcel, or seeks any subdivision of the Development Parcel and fails to stop seeking such zoning, other land-use decision or subdivision within five days after written demand from Intrawest; | ||
(iii) If WPRA fails to perform substantially any of its other covenants or agreements under this Agreement or any Related Documents, and such failure to perform continues for a period of thirty (30) days after written notice from Intrawest, unless such failure to perform cannot be reasonably cured in such period and the cure is immediately commenced and continuously prosecuted, in which case the cure period shall be extended as reasonably required; or | ||
(iv) WPRA shall (A) be adjudged insolvent, bankrupt or a debtor under any bankruptcy, insolvency or reorganization law, (B) fail to pay its debts generally as they become due, (C) seek the benefit of any present or future federal or state bankruptcy, insolvency or reorganization law, (D) make an assignment of all or a substantial part of its property for the benefit of creditors, (E) apply for, consent to, or acquiesce in the appointment of a receiver, trustee, custodian, liquidator or other similar official for WPRA or for all or a substantial part of its property or its interest under this Agreement, (F) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an readjustment of its indebtedness under any bankruptcy, insolvency or reorganization law, or (G) be adjudged a bankrupt; or a petition seeking a reorganization of WPRA or the readjustment of its indebtedness under any bankruptcy, reorganization or insolvency law shall be filed against WPRA; and, in connection with such event, this Agreement shall be rejected, disclaimed, terminated, rendered void, compromised or otherwise materially and adversely affected. | ||
(b) Remedies. In the event of a Event of Default by WPRA under this Agreement, Intrawest shall have the following remedies: | ||
(i) The right of specific performance, which Intrawest must seek before making a claim for damages, and |
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(ii) If the right of specific performance is not available to Intrawest, then Intrawest shall have the right to damages, but in no event shall Intrawest be entitled to claims for consequential or punitive damages; provided, however, Intrawest agrees (A) not to pursue an action for damages if such an action would cause a default under any Agreed-Upon Indebtedness Documents or the acceleration of the Agreed-Upon Indebtedness and (B) not to create a judgment lien against or execute the judgment upon the Development Parcels, Lift Parcels or Resort Parcels; provided, further, if Intrawest receives an award of damages from a court of competent jurisdiction, then (X) Intrawest Holdings shall have the right to an offset or credit against Required Quarterly Payments due under the Additional Consideration Agreement, and (Y) to the extent such offset or credit fails to discharge fully such award for damages, Intrawest Operations shall have the right to an offset or credit against rent, additional rent and other charges payable by Intrawest Operations under the Lease Agreement, but only if and to the extent permitted by any Agreed-Upon Indebtedness Documents then in effect (and Intrawest Holdings and Intrawest Operations shall be third-party beneficiaries of this Section 10.1(b)(ii)). |
10.2 Default by Intrawest.
(a) Event of Default. Each of the following shall be an Event of Default by Intrawest under this Agreement: | ||
(i) If Intrawest or any Successor, with respect to each Development Parcel, fails to make any payment to (A) the Agreed-Upon Indebtedness Lender on behalf of WPRA of any Debt Repayment Portions if there is outstanding Agreed-Upon Indebtedness, or (B) to WPRA of any Estimated Sales Price or any Sales Price Balance payable hereunder, and does not cure such failure within ten business (10) days after WPRA has given Intrawest and any such Successor written notice specifying such failure; | ||
(ii) If Intrawest fails to substantially perform any of its other covenants or agreements under this Agreement or any Related Documents, and such failure to perform continues for a period of thirty (30) days after written notice from WPRA, unless such failure to perform cannot be reasonably cured in such period and the cure is immediately commenced and continuously prosecuted, in which case the cure period shall be extended as reasonably required; or | ||
(iii) Intrawest shall (A) be adjudged insolvent, bankrupt or a debtor under any bankruptcy, insolvency or reorganization law, (B) fail to pay its debts generally as they become due, (C) seek the benefit of any present or future federal or state bankruptcy, insolvency or reorganization law, (D) make an assignment of all or a substantial part of its property for the benefit of creditors, (E) apply for, consent to, or acquiesce in the appointment of a receiver, trustee, custodian, liquidator or other similar official for Intrawest or for all or a substantial part of its property or its interest under this Agreement, (F) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or a readjustment of its indebtedness under any bankruptcy, insolvency or reorganization law, or (G) be adjudged a bankrupt; or a petition seeking a reorganization of Intrawest or the readjustment of its indebtedness under any bankruptcy, reorganization or insolvency law shall be filed against Intrawest; and, in connection with such event, this Agreement shall be rejected, disclaimed, terminated, rendered void, compromised or otherwise materially and adversely affected. |
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(iv) An Event of Default (as defined in the Lease Agreement) occurs under the Lease Agreement. | ||
(b) Remedies. In the event of any Event of Default by Intrawest under this Agreement, WPRA shall have all rights and remedies available hereunder or at law or in equity arising from such Event of Default by Intrawest, but WPRA shall have or assert no claims for consequential or punitive damages. |
10.3 Repurchase Right. If Intrawest or its Successor fails to Commence Construction on the building proposed for development on a Development Parcel before the date that is four years after the Development Parcel Closing Date for such Development Parcel, subject to a day-for-day extension, not to exceed one year, for delays caused by Events of Force Majeure (a Repurchase Right Commencement Date), then WPRA shall have the right to repurchase such Development Parcel on the following terms and conditions (the Repurchase Right):
(a) Exercise of Repurchase Right. WPRA may exercise the Repurchase Right with respect to any Development Parcel by giving written notice of such exercise to Intrawest (or to the Successor holding title to such Development Parcel, if WPRA has received written notice of the identity and address of such Successor) at any time on or after the Repurchase Right Commencement Date and before the date on which Intrawest or its Successor Commences Construction of the applicable building (a Repurchase Right Termination Date), which notice shall specify the applicable Development Parcel and a date, time and location for the delivery of the deed for such Development Parcel (the Repurchase Right Closing). The date of the Repurchase Right Closing shall be a business day not less than 30 nor more than 60 days after the date of such notice. The location of the Repurchase Right Closing shall be in the City and County of Denver. If WPRA fails to exercise its Repurchase Right arising from the failure to Commence Construction of any building on a Development Parcel before the Repurchase Right Termination Date, the Repurchase Right relating to such building shall expire. A condominium map (as defined in CCIOA) or a land survey plat showing the existence of the foundation of the building to be constructed shall be conclusive proof that the Repurchase Right for that building has expired. | |
(b) Repurchase Right Price. The price for WPRA to exercise the Repurchase Right (the Repurchase Right Price) shall be equal to sum of (i) the Estimated Sales Price for the Development Parcel and (ii) costs and expenses incurred by Intrawest or its Successor for studies, investigations, tests, reports, surveys, plans, specifications, legal documents (including declarations of condominiums or easements, restrictions and/or covenants), permits, linkage payments, exactions, utility connection fees, labor and materials relating to the construction or development of any building on such Development Parcel that will be transferred and delivered to WPRA and continue to benefit such Development Parcel, unless WPRA expressly commits, in a binding written agreement with Intrawest or its Successor, to develop such Development Parcel in a manner that will prevent WPRA from deriving any benefit from such costs and expenses. |
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(c) Repurchase Right Closing. At the Repurchase Right Closing, WPRA shall pay the Repurchase Right Price to Intrawest or its Successor, and Intrawest or its Successor shall deliver to WPRA a special warranty deed, which shall convey to WPRA title to such Development Parcel free of all Monetary Exceptions (other than those securing any Agreed-Upon Indebtedness) but subject to (i) Defects of Title, (ii) Permitted Exceptions, and (iii) all other Exceptions as may be reasonably required (in Intrawests reasonable business judgment) for development of the Development Parcel in accordance with the applicable Master Plan. | |
(d) Revocation. WPRA shall have the right, at any time before it accepts the deed for any Development Parcel, to revoke the exercise of its Repurchase Right by written notice to Intrawest or its Successor. If WPRA so revokes the exercise of a Repurchase Right, such Repurchase Right shall expire. | |
(e) No Obligation to Commence Construction. This Section 10.3 shall not be construed to create any obligation or covenant on the part of Intrawest to Commence Construction on any building before the Repurchase Right Commencement Date for such building. | |
(f) Reservation in Deed. The Repurchase Right set forth in this Section 10.3 shall be reserved in WPRAs special warranty deed to Intrawest with respect to each Development Parcel. The form of such reservation shall be substantially as set forth in the deed attached to this Agreement as Exhibit D. |
10.4 Specific Performance. If Intrawest fails wrongfully (which means it is not permitted under the terms of this Agreement or the Lease Agreement, or is without WPRAs prior written consent or is not otherwise requested by WPRA), by the tenth (10th) anniversary of the Effective Date (or as such period may be extended due to an Event of Force Majeure, but in no event shall such extension for an Event of Force Majeure be longer than one year, or an extension of time as set forth in Section 3.1(c) above) to exercise its option with respect to Development Parcels chosen by Intrawest on which the Master Plans provide for at least 570 Residential Units, subject to any reduction in Development Parcels as set forth in Section 3.1(c) above, WPRA shall be entitled to specific performance by Intrawest; provided, however, Intrawest shall have the option to pay the Estimated Sales Price for the Development Parcels chosen by Intrawest on which the Master Plans provide for at least 570 Residential Units, without accepting WPRAs deed for, or taking title to, such Development Parcels, either voluntarily or pursuant to a judgment for specific performance. Concurrently with such payment and refusal to take title, Intrawest shall deliver its Intrawest Termination Notice with respect to such Development Parcels.
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ARTICLE XI
INDEMNITY
11.1 Intrawests Obligation to Indemnify. Intrawest agrees to indemnify, defend and hold harmless WPRA and its respective successors and assigns from and against all demands, claims, actions, losses, damages, liabilities, costs and expenses, including reasonable attorneys fees, but not including punitive damages incurred by WPRA, resulting from (a) the willful misconduct or the negligent or tortious acts or omissions of Intrawest or its guests, invitees, contractors and subcontractors, or any of their respective employees on the Purchased Developable Land, (b) the negligent or willful misconduct of Intrawest in its use, design, construction or operation of the Purchased Developable Land, (c) the violation by Intrawest of any agreement, covenant or condition of this Agreement (collectively, the Liabilities); provided, however, that Intrawests obligation to provide an indemnification under this Section 11.1 for Liabilities arising from the causes set forth in clauses (a) and (b) above shall terminate with respect to each Purchased Development Parcel one year after the Determination Date for such Purchased Development Parcel; provided, further, that Intrawest shall have no obligation to provide an indemnity for Liabilities resulting from the sole negligence of WPRA or its agents, employees, invitees, guests, contractors or subcontractors.
11.2 Procedure for Indemnification. Intrawest and WPRA shall each give notice to the other each time that, and within ten (10) days after, either Intrawest or WPRA becomes aware of any fact or circumstance that would reasonably be expected to give rise to an obligation to indemnify under this Article, which notice shall be accompanied by a copy of any claim made that may result in such obligation to indemnify. Intrawest shall have the right and obligation to assume the defense or settlement of any such claim and shall proceed diligently to commence to defend or settle such claim, provided that Intrawest shall not settle or compromise any such claim without WPRAs prior written consent thereto, unless the terms of such settlement or compromise discharge and release WPRA from any and all liabilities and obligations thereunder. Notwithstanding the foregoing, if Intrawest fails to provide the indemnification and defense against any claim required under Section 11.1 of this Agreement or fails to pursue such defense with diligence and continuity, WPRA shall have the right, but not the obligation, to undertake the defense or settlement of such claim for the account and at the risk of Intrawest, and Intrawest shall be bound by any defense or settlement that WPRA makes to such claim. The Parties agree that, for the purpose of enforcing any right of indemnity hereunder, WPRA may join Intrawest in any third-party claim as to which such right of indemnity would or might apply. The Parties shall cooperate fully in defending or settling any third-party claim.
ARTICLE XII
ASSIGNMENT
12.1 Consent Required. Except as permitted in Section 12.2 below, Intrawest may not voluntarily, by operation of law or otherwise, without WPRAs prior written consent, assign, convey, mortgage, encumber or otherwise transfer all or any part of its interest under this Agreement or permit any change in the control of Intrawest, whether by sale of assets, transfer of stock or other equity interests, merger, consolidation, spin-off or otherwise.
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12.2 When Consent Is Not Required. | |||
(a) Notwithstanding anything to the contrary contained in Section 12.1 above, so long as (1) there is pending no Event of Default by Intrawest or circumstance that, with the passage of time or giving of notice, would be an Event of Default by Intrawest, (2) the Parent Guaranty is in full force and effect, and (3) the Lease Agreement is in full force and effect, Intrawest may, without WPRAs consent: | |||
(1) | Assign all or any portion of its interest under this Agreement; or | ||
(2) | Permit a change in the control of Intrawest; | ||
(i) to a Person that owns or controls, is owned or controlled by, or is under common ownership or control with Intrawest, (ii) to an affiliate of the tenant under the Lease Agreement, (iii) in conjunction with an amalgamation, consolidation, merger or any other similar corporate reorganization of Intrawest or the Parent Corporation or any affiliate of Parent Corporation including, without limitation, a going private transaction of the Parent Corporation (but not including as a similar corporate reorganization one in which there is a spin off or split up of a significant part of the assets of Intrawest or Parent Corporation if following such spin-off or split-up there has been a change of control of Intrawest or Parent Corporation), or (iv) in any collateral assignment of the rights of Intrawest under this Agreement to any lender or lenders of Intrawest. As used in this Article XIII, ownership and control mean direct or indirect ownership or control of more than fifty percent (50%) of all outstanding equity interests in a Person. | |||
(b) If the Parent Corporation is a corporation whose voting shares are regularly and publicly traded on a recognized stock exchange, a change of control in the Parent Corporations business will not require WPRAs consent as long as the voting shares continue to be so publicly traded, and as long as WPRA receives reasonably satisfactory assurances that Intrawests obligations under Section 3.1(b) of this Agreement will not be adversely affected following the change of control. | |||
(c) Any contrary provision of this Agreement notwithstanding, Intrawest shall have the right to convey Development Parcels (together with any buildings and other improvements on such Development Parcels) to Successors. | |||
(d) Any assignee under this Section 12.2 shall be deemed to have assumed all of Intrawests obligations under this Agreement. |
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12.3 Intrawest to Furnish Information. All requests for WPRAs consent to an assignment or other transfer under Section 12.1 above shall be in writing and specify in detail reasonably satisfactory to WPRA:
(a) The name, address and telephone number of the proposed assignee or other transferee and, if it is not an individual, the names of the Persons that own or control the proposed assignee or transferee; | |
(b) Details of the prior land development experience of the proposed assignee or other transferee and the specific terms and conditions of the proposed assignment or other transfer; | |
(c) Bank and other credit references, business reputation references, financial statements and such other information as WPRA may reasonably require to assess the business and financial responsibility and standing of the proposed assignee or other transferee; and | |
(d) Any proposed changes to the Lease Agreement, this Agreement or the Parent Guaranty. |
12.4 No Consideration. Unless there are changes to the Lease Agreement, this Agreement or the Parent Guaranty, WPRA shall not be entitled to any consideration in connection with any assignment or any other permitted transfer by Intrawest, provided, however, that Intrawest shall be responsible for WPRAs costs as provided in Section 12.6.
12.5 WPRAs Rights. If Intrawest requests WPRAs consent to an assignment or other transfer under Section 12.1 above, WPRA shall, within ninety (90) days after its receipt of such request, notify Intrawest in writing whether WPRA grants or withholds its consent.
12.6 Intrawest Pays All Costs. WPRAs consent to an assignment or other transfer under Section 12.1 above shall be subject to the requirement that all costs incurred in connection therewith and in connection with processing the application for consent (including any credit reports, and preparation and negotiation of any documentation) shall be paid by Intrawest within thirty (30) days after invoicing by WPRA with reasonable detail of the costs incurred (whether or not WPRA consents to the proposed assignment or transfer if it is within the right of WPRA to withhold consent).
12.7 Continuing Intrawest Liability. Notwithstanding any assignment, conveyance, pledge, mortgage or any other transfer of Intrawests rights hereunder, Intrawest shall remain fully liable for the payment of all amounts due hereunder and fully liable for all liabilities hereunder and for the performance of all its other obligations hereunder, unless Intrawest is expressly released therefrom pursuant to the terms of the approved assignment, conveyance, pledge, mortgage or other transfer under this Agreement.
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ARTICLE XIII
MISCELLANEOUS
13.1 Notices. Any notice to be given to any Party pursuant to any provision of this Agreement, including any notice of change of address for any Party, shall be in writing given to the respective Parties and shall be (a) hand-delivered to such Party at the address of such Party set forth below, (b) sent by telecopy to the facsimile number for such Party listed below, or (c) sent by Federal Express or other nationally-recognized overnight courier service to the address of such Party set forth below, and, if hand-delivered, shall be deemed received when delivered, if sent by facsimile, shall be deemed received upon confirmation of receipt either by telephone or by facsimile, and, if sent by Federal Express or other nationally-recognized overnight courier service, shall be deemed received one business day after having been deposited with Federal Express or such other nationally-recognized overnight courier service if designated for next day delivery, addressed as follows:
If to Intrawest: | Intrawest/Winter Park Development Corporation | ||
P.O. Box 5178 | |||
325 Lake Dillon Drive, Suite 205 | |||
Facsimile No.: 970-468-1822 | |||
Confirmation No.: 970-468-1808 | |||
With copies to: | Intrawest Corporation | ||
Suite 800, 200 Burrard Street | |||
Vancouver, BC | |||
CANADA V6C 3L6 | |||
Attention: Gary L. Raymond and the Corporate Secretary | |||
Facsimile No.: (604) 669-0605 | |||
Confirmation No.: (604) 669-9777 | |||
AND | |||
Jacobs Chase Frick Kleinkopf & Kelley, LLC | |||
1050 Seventeenth Street, Suite 1500 | |||
Denver, Colorado 80265 | |||
Attention: David D. Kleinkopf and Steven M. Cohen | |||
Facsimile No.: (303) 685-4869 | |||
Confirmation No.: (303) 685-4800 | |||
If to WPRA: | Winter Park Recreational Association | ||
Attention: President | |||
c/o Ireland, Stapleton, Pryor & Pascoe, P.C. | |||
1675 Broadway, Suite 2600 | |||
Denver, CO 80202 | |||
Attention: Richard C. Linquanti | |||
Facsimile No.: (303) 623-2062 | |||
Confirmation No.: (303) 623-2700 |
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With copies to: | Ireland, Stapleton, Pryor & Pascoe, P.C. | ||
1675 Broadway, Suite 2600 | |||
Denver, CO 80202 | |||
Attention: Richard C. Linquanti | |||
Facsimile No.: (303) 623-2062 | |||
Confirmation No.: (303) 623-2700 | |||
Denver City Attorneys Office | |||
1437 Bannock Street, Room 353 | |||
Denver, Colorado 80202-5375 | |||
Attention: Supervisor | |||
Land Use and Revenue |
13.2 Waiver of Compliance. Any failure of WPRA or Intrawest to comply with any obligation, covenant, agreement or condition herein may be expressly waived in writing by Intrawest and WPRA, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure, except as otherwise specifically provided in this Agreement.
13.3 hird-Party Beneficiaries. The City is a third party beneficiary of WPRAs rights under this Agreement. Intrawest Holdings and Intrawest Operations are third-party beneficiaries of Intrawests rights and remedies under Section 10.1(b)(ii) of this Agreement. Except for the City, Intrawest Holdings and Intrawest Operations, there are no third party beneficiaries of this Agreement.
13.4 Amendments. Except as otherwise provided in this Agreement, no amendments or modifications to this Agreement shall be made or deemed to have been made unless in writing executed by the Parties and delivered by the Party to be bound thereby.
13.5 Headings and Captions for Convenience. The headings and captions contained in this Agreement are for reference and convenience only and shall not be considered in interpreting the provisions of this Agreement.
13.6 Exhibits Incorporated. All Exhibits referred to in this Agreement shall be deemed incorporated in this Agreement by reference.
13.7 Counterparts and Facsimile Delivery. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, all of which together shall constitute one and the same instrument. Execution copies of this Agreement may be delivered by facsimile.
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13.8 Recording of Option Agreement; Partial Releases. On or after the Effective Date, Intrawest shall record a fully executed and acknowledged counterpart of this Agreement in the Office of the Clerk and Recorder of Grand County, Colorado. Within ten (10) days after delivery of an Intrawest Termination Notice, the parties shall record in the real property records of the Office of the Clerk and Recorder of Grand County, Colorado, a partial release from this Option Agreement of the Development Parcels identified in such Intrawest Termination Notice, but such recording is not required for the effectiveness of the Intrawest Termination Notice.
13.9 Entire Agreement. This Agreement (including the Exhibits attached hereto) and the Related Documents represent the entire agreement between the parties hereto with respect to the subject matter hereof, and all prior agreements, understandings or negotiations shall be deemed merged herein. No representations, warranties, promises or agreements, express or implied, shall exist between the parties, except as stated in this Agreement (including the Exhibits attached hereto) or the Related Documents.
13.10 Governing Law. This Agreement and the legal relations among the parties hereto shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to its principles of conflicts of law. Venue shall be in the District Court of Grand County, Colorado.
13.11 Approvals. | |
(a) Intrawest agrees and acknowledges that, in any instance in this Agreement WPRA is required or has the right to review or give its approval or consent to any construction or development related plan, document, drawing or other material, no such review, approval or consent shall imply or be deemed to constitute an opinion by WPRA, nor impose upon it any responsibility for the design or construction of building elements, including but not limited to the structural integrity, safety requirements, adequacy of budgets or financing, or compliance with any Applicable Law. All reviews, approvals and consents by WPRA under the terms of this Agreement are for the sole and exclusive benefit of Intrawest, and no other person or parties shall have the right to rely thereon. | |
(b) Unless expressly stated otherwise, no approval or consent required of Intrawest or WPRA under this Agreement shall be unreasonably withheld, conditioned or delayed and shall be in writing. |
13.12 Attorneys Fees. Notwithstanding anything to the contrary in the Agreement, if either Party institutes legal proceedings against the other with respect to the Agreement, the non-prevailing party shall pay to the prevailing party an amount equal to all reasonable attorneys fees and disbursements and all other reasonable costs and expenses incurred by the prevailing party in connection therewith.
13.13 Further Assurances. Each Party shall provide to each other, from time to time, upon the reasonable request of the other Party, information as to the status of any item or action required under the Agreement.
13.14 No Partnership or Joint Venture Created. WPRA and Intrawest shall not be deemed or constituted partners, joint venturers or agents of one another. Neither WPRA nor
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The Parties have executed this Agreement to be effective the day and year first above written.
INTRAWEST/WINTER PARK DEVELOPMENT CORPORATION, a Delaware corporation |
|||||
By: | |||||
Name: | |||||
Title: | |||||
WINTER PARK RECREATIONAL ASSOCIATION, a Colorado nonprofit corporation | |||||
By: | |||||
Name: | |||||
Title: |
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STATE OF COLORADO | ) |
) ss | |
COUNTY OF DENVER | ) |
The foregoing instrument was acknowledged before me this ____ day of ____________, 2002 by _______________________________, the ___________________ of INTRAWEST/WINTER PARK DEVELOPMENT CORPORATION, a Delaware corporation.
WITNESS my hand and official seal.
My commission expires: |
Notary Public |
STATE OF COLORADO | ) |
) ss | |
COUNTY OF DENVER | ) |
The foregoing instrument was acknowledged before me this ______ day of ______________, 2002 by ________________________, the ______________________of WINTER PARK RECREATIONAL ASSOCIATION, a Colorado nonprofit corporation.
WITNESS my hand and official seal.
Notary Public |
My commission expires:
EXHIBIT C
TO SUPPLEMENTAL AGREEMENT NO. VII
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
WINTER PARK RECREATIONAL ASSOCIATION
A Colorado Nonprofit Corporation
Pursuant to § 7-130-106, Colorado Revised Statutes (C.R.S.), the Board of Trustees of the Winter Park Recreational Association, through its Chairman, causes these Amended and Restated Articles of Incorporation to be delivered to the Colorado Secretary of State for filing. These Amended and Restated Articles of Incorporation supersede the original Articles of Incorporation and all amendments thereto:
FIRST: The name of the corporation is Winter Park Recreational Association.
SECOND: The address of the principal office of the corporation is c/o Ireland, Stapleton, Pryor & Pascoe, P.C. (attention Richard C. Linquanti, Esq.), 1675 Broadway, Suite 2600, Denver, Colorado 80202.
THIRD: The name and address of the registered agent of the corporation is Richard C. Linquanti, Esq., 1675 Broadway, Suite 2600, Denver, Colorado 80202.
FOURTH: The corporation will not have voting members.
FIFTH: The corporation is organized exclusively for the charitable purpose of lessening the burdens of the government of the City and County of Denver (City) by serving as agent for the City in facilitating the operation of the Winter Park Resort (Winter Park). The corporation shall facilitate the operation of Winter Park by performing all functions of the Association under that certain Supplemental Agreement No. VII to Agreement between Winter Park Recreational Association and the City and County of Denver, by entering into and administering a lease and operating agreement and an option agreement with Intrawest Corporation, a corporation continued pursuant to the Canadian Business Corporations Act (Intrawest) and Intrawests subsidiaries, successors and assigns as permitted under such agreements, and by doing all things incidental to the foregoing.
SIXTH: The Association shall at all times take such actions as may be necessary, and shall refrain from taking such actions as may be detrimental, to preserve its status as a nonprofit corporation that qualifies as a tax exempt entity under Section 501(c) of the Internal Revenue Code (or its successor provision).
SEVENTH: The period of duration of the Association shall expire at 11:59 p.m., Denver time, on June 30, 2079.
EIGHTH: Upon dissolution of the corporation, the corporations assets shall be distributed to the City or the Citys designee, subject to the debts and contractual, leasehold and other obligations of the corporation.
NINTH: No director of the corporation shall be liable to the corporation or to its members for monetary damages for breach of fiduciary duty as a director, except that this provision shall not eliminate or limit the liability of a director to the corporation or to its members for monetary damages for (i) any breach of the directors duty of loyalty to the corporation or to its members, (ii) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) acts specified in Sections 7-128-403 or 7-128-501, C.R.S., or (iv) any transaction from which the director directly or indirectly derived an improper personal benefit.
TENTH: A copy of this document may be sent by the Colorado Secretary of State upon completion of the filing to Richard C. Linquanti, Esq., Ireland, Stapleton, Pryor & Pascoe, P.C., 1675 Broadway, Suite 2600, Denver, Colorado 80202.
ELEVENTH: The name and mailing address of the individual who causes this document to be delivered for filing, and to whom the Secretary of State may deliver notice if filing of this document is refused, is: William Mosher c/o Richard C. Linquanti, Esq., at Ireland, Stapleton, Pryor & Pascoe, P.C., 1675 Broadway, Suite 2600, Denver, CO 80202.
TWELFTH: These Amended and Restated Articles of Incorporation were adopted by the vote of its board of trustees at a meeting duly called and held on ______________, 2002, without member action and member action was not required.
DATED: __________________________________
OPTIONAL. The electronic mail and/or Internet address for this entity is/are: e-mail ________________________________ Website _______________________________________. The Colorado Secretary of State may contact the following authorized person regarding this document: name __________________________________ address _______________________________________________voice ___________________________ fax _______________________ e-mail ___________________________
CERTIFICATE
I hereby certify that the foregoing Amended and Restated Articles of Incorporation constitute the Amended and Restated Articles of Incorporation of WINTER PARK RECREATIONAL ASSOCIATION, as of the _____ day of _______________, 2002.
SIGNED: | |
William Mosher, Chairman Board of Trustees, Winter Park Recreational Association |
EXHIBIT D
TO SUPPLEMENTAL AGREEMENT NO. VII
WINTER PARK RECREATIONAL ASSOCIATION
AMENDED AND RESTATED BYLAWS
Adopted _______________, 2002
TABLE OF CONTENTS
Page | |||
ARTICLE I - NAME | 1 | ||
ARTICLE II - PURPOSE | 1 | ||
2.1 | Purpose | 1 | |
ARTICLE III - BOARD OF DIRECTORS | 1 | ||
3.1 | Directors | 1 | |
3.2 | Vacancies | 2 | |
3.3 | Meetings; Quorum; Voting | 2 | |
3.4 | Action Without a Meeting | 3 | |
3.5 | Electronic Notice, Participation in Meetings and Other Communications | 3 | |
ARTICLE IV - RESPONSIBILITIES OF THE ASSOCIATION | 4 | ||
4.1 | Authority | 4 | |
4.2 | 501(c)(3) Status | 4 | |
4.3 | Records | 4 | |
4.4 | Termination of Agency Agreement | 5 | |
4.5 | Amendments | 5 | |
ARTICLE V - OFFICERS | 5 | ||
5.1 | Officers | 5 | |
5.2 | Vacancies | 5 | |
5.3 | President | 5 | |
5.4 | Secretary | 6 | |
5.5 | Treasurer | 6 | |
ARTICLE VI - FIDUCIARY MATTERS | 6 | ||
6.1 | Indemnification | 6 | |
6.2 | Annual Audit | 7 | |
6.3 | Conflicts of Interest | 7 | |
6.4 | Self-Dealing Transactions | 7 | |
6.5 | Liability of Directors for Unlawful Distributions | 7 | |
6.6 | Loans to Directors Prohibited | 8 |
AMENDED AND RESTATED
BYLAWS
WINTER PARK RECREATIONAL ASSOCIATION
Adopted _______________, 2002
ARTICLE I
NAME
1.1 The name of this organization shall be WINTER PARK RECREATIONAL ASSOCIATION, hereafter referred to as the Association.
ARTICLE II
PURPOSE
2.1 Purpose. The Association is organized exclusively for the charitable purpose of lessening the burdens of the government of the City and County of Denver (City) by serving as agent for the City in facilitating the operation of the Winter Park Resort (Winter Park) pursuant to the terms of an agreement between the Association and the City dated November 22, 1950 as amended (Agency Agreement). The Association shall facilitate the operation of Winter Park by entering into and administering a lease and operating agreement (Lease) and an option agreement (Option Agreement) with Intrawest Corporation, a corporation continued pursuant to the Canadian Business Associations Act (Intrawest) and Intrawests subsidiaries, successors and assigns as permitted under such agreements.
ARTICLE III
BOARD OF DIRECTORS
3.1 Directors. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Association managed under the direction of a Board of Directors (referred to individually as a Director or collectively as the Board) of five (5) persons, who shall be selected and shall serve as follows:
3.1.1 First Appointee. The Mayor (the Mayor) of the City and County of Denver shall appoint a Director for a term of four (4) years (First Appointee). The First Appointee shall be an individual who, at the time of the appointment, occupies a senior-level policy-making position with the City, including without limitation as an appointee of the Mayor or as a member of the City Council. The Mayor shall have the right to remove and replace the First Appointee at any time during such Appointees term with a person possessing similar qualifications to those set forth in the preceding sentence.
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3.1.2 Second Appointee. The Mayor shall appoint a Director for a term of five (5) years (Second Appointee and together with the First Appointee, the Appointees). The Second Appointee shall be an individual who, at the time of the appointment, occupies a senior-level policy-making position with the City, including without limitation as an appointee of the Mayor or as a member of the City Council. The Mayor shall have the right to remove and replace the Second Appointee at any time during such Appointees term with a person possessing similar qualifications to those set forth in the preceding sentence.
3.1.3 First Citizen Director. The Mayor shall appoint a Director for a term of three (3) years (First Citizen Director). Upon expiration of the initial First Citizen Directors term, the new First Citizen Director shall be elected by the four remaining Directors. The First Citizen Director shall: 1) serve a term of five (5) years, 2) be a resident of the City of Denver, and 3) have professional experience in commercial business, real estate, law, or finance.
3.1.4 Second Citizen Director. The Mayor shall appoint a Director for a term of six (6) years (Second Citizen Director). Upon expiration of the initial Second Citizen Directors term, the new Second Citizen Director shall be elected by the four remaining Directors. The Second Citizen Director shall: 1) serve a term of five (5) years, 2) be a resident of the City of Denver, and 3) have professional experience in commercial business, real estate, law, or finance.
3.1.5 Third Citizen Director. The Mayor shall appoint a Director for a term of seven (7) years (Third Citizen Director and together with the First and Second Citizen Directors, the Citizen Directors). Upon expiration of the initial Third Citizen Directors term, the new Third Citizen Director shall be elected by the four remaining Directors. The Third Citizen Director shall: 1) serve a term of five (5) years, 2) be a resident of the City of Denver, and 3) have professional experience in commercial business, real estate, law, or finance.
All Citizen Directors shall serve no more than one term. Upon the expiration of the term of a Citizen Director, if the four remaining Directors cannot agree to the election of the new Citizen Director by a majority vote, they shall each submit the name of their candidates to the Citizen Director whose term is expired, who shall elect one of such candidates.
3.2 Vacancies. Vacancies on the Board of Directors shall be filled in the same manner in which new Directors are elected or appointed, or in the case of the Citizen Directors if an election is not possible then in the manner in which the initial Citizen Directors were appointed, pursuant to the previous section of these Bylaws.
3.3 Meetings; Quorum; Voting. The Board of Directors may meet as determined by mutual agreement, but not less than four (4) times a year, at a time and place agreeable to all Directors. Two Citizen Directors and one Appointee present at a meeting of the Board of Directors shall constitute a quorum. All votes shall be by a majority of the quorum, provided, however, that the following shall be undertaken by the Association only with the approval of two votes of the Citizen Directors and two votes of the Appointees authorizing such action, and provided, further that no such action shall violate the terms of the Agency Agreement:
3.3.1 Any material change to the boundaries of the Forest Service Permits or Forest Service Master Plan (defined in the Lease); |
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3.3.2 Any assignment, sublease or other transfer by Intrawest under the Lease that requires the consent of the Association; | |
3.3.3 Any sale, transfer, pledge, loan, mortgage or other encumbrance of the Leased Assets (defined in the Lease) except as provided for in the Lease; | |
3.3.4 Any waiver of a material right of the Association or material obligation of Intrawest under the Lease, Option Agreement, that certain Additional Consideration Agreement between the Association and Intrawest/Winter Park Holdings Corporation (the Additional Consideration Agreement), that certain Guaranty by Intrawest Corporation (the Guaranty), or related documents; | |
3.3.5 Adopting a budget; and | |
3.3.6 Amending the Lease, the Option Agreement, the Additional Consideration Agreement, the Guaranty, the Articles of Incorporation of the Association and these Bylaws. |
3.4 Action Without a Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting. Each and every member of the Board in writing must either vote for such action, or vote against such action or abstain from voting and waive the right to demand that action not be taken without a meeting. Action is taken without a meeting with the affirmative vote of all then-serving Directors. Any writing may be received by mail or personal delivery or by electronically transmitted facsimile or other form of wire or wireless communication providing a complete copy of the document, including a copy of the signature on the document.
3.5 Electronic Notice, Participation in Meetings and Other Communications. Meetings of the Board of Directors may be held by means of telephone conference or other electronic communications equipment by which all persons participating in the meeting can communicate with each other at relatively the same time, which participation shall constitute presence in person at a meeting. Any notice or other communications contemplated in these Bylaws shall be effective if sent by electronic equipment establishing a written record, such as telecopy transmission or e-mail.
3.6 No Compensation. No Director shall receive compensation from the Association, provided, however, that the Association may reimburse actual out-of-pocket expenses reasonably incurred in discharging the duties of being a Director.
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ARTICLE IV
RESPONSIBILITIES OF THE ASSOCIATION
4.1 Authority The Association shall:
4.1.1 Enter into the Lease, the Option Agreement, the Additional Consideration Agreement, and the Guaranty;
4.1.2 Hold the title as agent for the City to the assets that are leased pursuant to the Lease;
4.1.3 Execute any and all documents referenced in, attached to, or now or hereafter relating to the Lease and the Option Agreement and implement the actions contemplated thereby;
4.1.4 Be the borrower of the Agreed Upon Indebtedness (as defined in the Lease) and execute all documents necessary or appropriate in connection therewith;
4.1.5 Take all actions required to be taken by the Landlord pursuant to the Lease in accordance with the terms of the Lease and related documents;
4.1.6 Take all actions required to be taken by the WPRA pursuant to the Option Agreement in accordance with the terms of the Option Agreement and related documents; and
4.1.7 Take no action that is inconsistent with or results in a breach of the terms of the Agency Agreement.
4.2 501(c) Status. The Association shall at all times take such actions as may be necessary, and shall refrain from taking such actions as may be detrimental, to preserve its status as a nonprofit corporation that qualifies as a tax exempt entity under Section 501(c) of the Internal Revenue Code (or its successor provision).
4.3 Records. The Association shall maintain its books and records in the City and County of Denver at a place known at all times to the City. Representatives of the City, including without limitation, the Citys Auditor, shall have the right to inspect and copy such books and records from time to time on one (1) business days notice to the Association. The Association shall maintain its financial records in accordance with generally accepted accounting principles consistently applied. At any time after five (5) business days prior notice to the Association of its intention to do so, the City may cause to be made a complete audit of the records of the Association for any fiscal period within the preceding ten (10) years. The acceptance of payments by the City computed on the basis of statements furnished by the Association shall be without prejudice to the Citys rights to inspect and/or audit the records of the Association. The Association agrees to abide by the Colorado Open Public Records Law described in CRS Title 24, Article 72, or successor provisions.
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4.4 Termination of Agency Agreement. Termination of the Agency Agreement shall not terminate the Lease, the Option Agreement, the Additional Consideration Agreement, or the Guaranty, and shall not affect the liability of the Association under or the collateral given by the Association to secure the Agreed-Upon Indebtedness (as defined in the Lease). In the event that the Agency Agreement is terminated for any reason, the Association shall:
4.4.1 provide for the payment or satisfaction of all liabilities (debts and other obligations) of the Association, which shall be by actual payment or by a transfer of assets of the Association subject to an assumption of some or all of the liabilities of the Association, or a combination thereof; | |
4.4.2 subject to the provisions of subparagraph 4.4.1 above and provided that the following action does not result in a default under any Agreed-Upon Indebtedness, donate, give, grant, convey, assign, set-over, and deliver to the City or its governmental or non-profit corporate designee, by good and sufficient instruments of transfer, for the use and benefit of the people of the City, all right, title and interest of the Association in and to the land, leases, permits, licenses, buildings, improvements, facilities, and all other property, real and personal, tangible and intangible, including all money and accounts receivable and all contract rights and choices in action, which the Association then owns or has or may later acquire; and | |
4.4.3 promptly dissolve the Association in accordance with the requirements and responsibilities of Colorado law. |
4.5 Amendments. The Board may amend the Articles of Incorporation and the Bylaws of the Association upon a unanimous vote of the Directors and approval from the Mayor.
ARTICLE V
Officers
5.1 Officers. The officers of the Association shall be a president, a secretary, and a treasurer. The officers shall be natural persons eighteen years of age or older. Any two or more offices may be held by the same person. These officers shall be elected annually by the Board of Directors at the first meeting of the Board in each calendar year. The Board of Directors or an officer or officers authorized by the Board of Directors shall from time to time determine the procedure for the appointment of officers, their terms of office, their authorities, their duties, and their compensation. Each officer shall hold office until the first of the following to occur: the time at which a successor shall have been duly elected and shall have qualified; or the death of the officer.
5.2 Vacancies. A vacancy in any office, however occurring, may be filled by a majority vote of the Board of Directors.
5.3 President. Subject to the control of the Board of Directors, the president shall have general charge and control of all of the business and affairs of the Association and shall perform all duties incident to the office of president. The president shall preside at all meetings and shall have such powers and perform such other duties as from time to time may be determined by the Board of Directors.
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5.4 Secretary. The secretary shall (a) prepare and maintain as permanent records the minutes of the proceedings of the Board of Directors, a record of all actions taken by the Board of Directors without a meeting, and a record of all waivers of notice of meetings of the Board of Directors, (b) see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law, (c) serve as custodian of the corporate records and of the seal of the Association and affix the seal to all documents when authorized by the Board of Directors, (d) maintain at the Associations principal office the originals or copies of the Associations articles of incorporation, bylaws, minutes of all meetings and records of all action taken without a meeting for the past three years, a list of the names and business addresses of the current Directors and officers, a copy of the Associations most recent corporate report filed with the Secretary of State, and financial statements, if any, showing in reasonable detail the Associations assets and liabilities and results of operations for the last three years, (e) authenticate records of the Association, and (f) in general, perform all duties incident to the office of secretary and such other duties as from time to time may be assigned by the president or the Board of Directors. The Board of Directors may designate a person other than the secretary to keep the minutes of their meetings.
5.5 Treasurer. The treasurer shall: (a) take any necessary actions to cause the Association to be in compliance with Section 4.3 of these Bylaws; (b) have custody of, and when proper may pay out, disburse or otherwise dispose of, all funds and securities of the Association which may have come into his hands; (c) receive and give receipts for moneys due and payable to the Association, and deposit all such moneys in the name of the Association in such banks, trust companies or other depositaries as shall be selected in accordance with these Bylaws; (d) enter or cause to be entered regularly in the books of the Association kept for that purpose full and accurate accounts of all moneys received or paid or otherwise disposed of by him; and (e) in general perform all duties incident to the office of treasurer and such other duties as may be assigned to him from time to time by the Board of Directors or the president.
ARTICLE VI
FIDUCIARY MATTERS
6.1 Indemnification.
6.1.1 Indemnity. The Association shall indemnify the City, its agents and employees against any and all liability arising from the future acts or omissions of the Association pursuant to this Agreement. The Association shall indemnify the Directors in their capacities as Directors pursuant to the procedures set forth in, and to the fullest extent authorized by, Colorado law as the same exists or may hereafter be amended. The right to indemnification provided herein shall be a contract right and shall include the right to be paid by the Association in accordance with Colorado law for expenses incurred in advance of any proceedings final disposition. The Association shall indemnify and advance expenses to the fullest extent permitted by Colorado law. The Association may indemnify and advance expenses to fiduciaries and agents of the Association to the fullest extent permitted by Colorado law. No indemnification of a Director shall be made without the prior unanimous approval of the Board of Directors and the determination by the Board of Directors that indemnification is permissible. |
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6.1.2 Insurance. The Association shall purchase and maintain insurance for itself and on behalf of any person who is or was a Director, officer, employee, fiduciary or agent of the Association against any liability asserted against or incurred by him or her in any capacity arising from his or her status. | |
6.1.3 Non-Exclusivity of Rights. The foregoing rights of indemnification and insurance shall not be exclusive of, or in any manner limit, other rights to which any Director, officer, employee, agent or fiduciary may be entitled as a matter of law, or to the extent not prohibited by law, by a contract approved by the Board of Directors. |
6.2 Annual Audit. There shall be an annual audit of the financial statements of the Association, conducted by an independent firm of certified public accountants selected by the Board of Directors.
6.3 Conflicts of Interest. Any Director who has or contemplates having any interest that may conflict or appear to conflict with the interests of the Association shall make prompt and full disclosure to the other Directors. Upon review, if the other Directors determine that a conflict of interest exists, they will adopt a recommended plan of action to resolve the conflict. In the event that the other Directors cannot agree on a course of action, then they will select an independent arbitrator who will make the final determination. The Association shall not enter into an arrangement with a Director or affiliated or related person that would be considered to have a substantial negative impact on the Association when viewed by a reasonable person. Willful and knowing failure to make the required disclosure shall result in the conflict not being approved.
6.4 Self-Dealing Transactions. The Board of Directors may authorize the Association to enter into a self-dealing business transaction between the Association and a Director or affiliated or related person. A self-dealing business transaction includes, without limitation, sales, leases, exchanges, loans, the provision of goods, services or facilities, and any use of Association income or assets that constitutes a material financial interest of the associated Director. The associated Director shall not vote, participate in decisions or use personal influence on the matter in any meeting of the Board of Directors or a committee thereof where the matter is discussed. The following criteria shall apply to all approved self-dealing transaction: (a) the goods or services are provided at a fair price; (b) the terms of the contract are reasonable; and (c) the contract is primarily for the Associations benefit.
6.5 Liability of Directors for Unlawful Distributions. A Director who votes for or assents to a distribution unlawfully made in violation of the applicable statutes or the Articles of Incorporation of the Association shall be personally liable to the Association for the amount of the distribution that exceeds what could lawfully have been distributed if it is established that the Director did not perform his or her duties in compliance with the general standards of conduct set forth in these Bylaws. A Director who is liable to reimburse the Association for an unlawful distribution shall be entitled to contribution from every other Director who could be liable for the unlawful distribution and from each person who accepted the distribution knowing that it was unlawful, to the extent that the distribution is unlawful.
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6.6 Loans to Directors Prohibited. No loans shall be made by the Association to any of the Directors. Any Director who assents to or participates in the making of a prohibited loan shall be liable to the Association for the amount of the loan until it is repaid in full.
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CERTIFICATE
I hereby certify that the foregoing Amended and Restated Bylaws constitute the Amended and Restated Bylaws of WINTER PARK RECREATIONAL ASSOCIATION, as of the _____ day of _______________, 2002.
Secretary |
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SECOND AMENDED AND RESTATED
GROUND LEASE AGREEMENT
THIS SECOND AMENDED AND RESTATED GROUND LEASE AGREEMENT, which amends and restates the Ground Lease Agreement hereinafter defined, is made and executed this 20th day of December 2002 (the “Effective Date”), by and between THE COLORADO ARLBERG CLUB, a Colorado nonprofit corporation (“Lessor”), and WINTER PARK RECREATIONAL ASSOCIATION, a Colorado nonprofit corporation, as agent (“Lessee”) for the City and County of Denver, a municipal corporation, under a certain Supplemental Agreement No. VII dated as of October 4, 2002, to Agreement Between Winter Park Recreational Association and the City and County of Denver, dated November 22, 1950 (as previously supplemented), under which Lessee owns and facilitates the operation, maintenance and development of the Winter Park Resort (the “Agency Agreement”).
Recitals
A. The parties hereto entered into a certain Ground Lease Agreement dated April 18, 1974, a certain Short Form Lease dated April 18, 1974, and recorded July 1, 1974, in Book 209 at Page 51 of the records of the Clerk and Recorder for Grand County, Colorado, and a certain Amendment to Ground Lease Agreement dated April 23, 1979, (collectively, the “Ground Lease Agreement”).
B. In conjunction with the preparation and implementation of a Final Planned Unit Development Plan for West Portal Village at Winter Park, which was approved by the Board of County Commissioners of Grand County, Colorado, on July 7, 1980 (the “Final P.U.D. Plan”), the parties entered into an Amended and Restated Ground Lease Agreement dated August 28, 1980 (the “First Amended and Restated Lease”), and a certain Amended and Restated Short Form Lease dated August 28, 1980, and recorded on September 5, 1980, in Book 280, Page 600 of the records of said Clerk and Recorder.
C. Lessee has entered into certain agreements with affiliates of Intrawest Corporation, a corporation continued pursuant to the Canada Business Corporations Act (collectively “Intrawest”), pursuant to which Lessee, as landlord, has agreed to lease, sublease, assign and transfer to Intrawest certain assets, inc1uding Lessee’s rights and interest under this Second Amended and Restated Ground Lease Agreement, used in the operation of the mountain resorts known, as of the date hereof, as Winter Park, Mary Jane and Vasquez (collectively, the “Winter Park Resort”) to allow Intrawest to develop, operate and improve the Winter Park Resort (the “Intrawest Transaction”).
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D. Lessor and Lessee have agreed to enter into this Second Amended and Restated Ground Lease Agreement (the “Second Amended and Restated Lease”, the “Lease” or the “Agreement”), which continues the First Amended and Restated Lease in effect as of the date hereof as herein amended and restated. As part of the Intrawest Transaction, and subject to the terms and provisions of a certain Consent and Agreement of even date among Lessor, Lessee and Intrawest/Winter Park Operations Corporation (“IWPOC”), Lessee will sublease the Leased Premises (as defined in Article I below) to IWPOC under a certain Lease and Operating Agreement dated on or about the date of this Lease (the “Operating Lease”).
E. In consideration of the mutual covenants contained in this Second Amended and Restated Ground Lease Agreement and other good and valuable consideration, the receipt and sufficiency of which Lessor and Lessee hereby acknowledge, Lessor and Lessee hereby agree that, effective as of the Effective Date, the First Amended and Restated Lease shall be amended and restated in its entirety and shall hereafter contain the following covenants, agreements, terms nd conditions:
ARTICLE I
THE PROPERTY
Lessor hereby leases and demises unto the Lessee, and the Lessee hereby leases and acknowledges the demise from the Lessor, of those certain parcels of real property situate, lying and being within the Mary Jane Placer Mining Claim (U.S. Mineral Survey No. 16378) located in the Fraser Mining District and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., Grand County, Colorado more particularly described in the Exhibit “A” attached hereto and by this reference incorporated herein, and designated as Parcel I (hereinafter referred to as “base area”), Parcels II-A and II-B (hereinafter referred to as the “ski trail parcels”) and those portions of Parcel III-A also depicted in Exhibit A-1 attached hereto (hereinafter referred to as the “lower parcels”) (collectively the “Leased Premises”). Lessor expressly reserves, and Lessee has no interest in, any water rights, oil and gas and other mineral rights in or under the soil or otherwise appurtenant to the Leased Premises. Lessee accepts the physical condition of the Leased Premises “as is”on the date of this Lease.
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ARTICLE II
TERM OF LEASE
This Second Amended and Restated Lease continues the term of the First Amended and Restated Lease which commenced on August 28, 1980, and shall terminate on the thirtieth day of April 2078.
Notwithstanding the foregoing, if the Operating Lease terminates for any reason before the end of the term of this Lease, Lessee shall have a period of twenty-four (24) months from and after the date of termination of the Operating Lease to cause itself to qualify as a Qualified Operator (as hereinafter defined) or contract with a third party who is a Qualified Operator (and to enter into a sublease of the Leased Premises with such third party), to operate the Winter Park Resort consistent with the level of operation contemplated under the Intrawest Transaction. In the absence of such qualification of Lessee or the Lessee’s execution of such contract and sublease with such qualified third party within such 24-month period, thereafter Lessor shall have the right to terminate this Lease upon delivery of written notice to Lessee at any time before such qualification or the execution of such contract and sublease occurs. For purposes of this Lease, Lessee shall be deemed to be a Qualified Operator if it employs or otherwise contracts with individuals or companies that have the experience required of a Qualified Operator. During such 24-month period and until this Lease has been terminated, Lessee shall continue to be bound by all the terms and provisions of this Lease and shall perform all of its obligations hereunder. Lessee shall notify Lessor, in writing, of the termination of the Operating Lease within ten (10) days after such termination.
ARTICLE III
LEASE PAYMENTS
Section 1. Annual Rental Payments.
The annual rental payment to be made by the Lessee to the Lessor under this Second Amended and Restated Lease shall be One Hundred Sixty-Five Thousand Dollars ($165,000) for the calendar year 2003, payable on or before April 15, 2003; and One Hundred Sixty-Five Thousand Dollars ($165,000) on or before April 15 of each and every year thereafter during the term of this Lease, subject, however, to adjustment as provided in Section 2 of this Article III. The rental payment (in addition to the rental previously paid pursuant to the First Amended and Restated Lease for calendar year 2002) for the period commencing as of the date of this Lease through December 31, 2002, shall be Two Thousand One Hundred Thirteen Dollars ($2,113) and shall be paid upon the mutual execution and delivery of this Second Amended and Restated Lease. The rental payment for any partial calendar year during the term shall be prorated based upon the number of days during the term occurring in such partial calendar year.
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Section 2. Rental Increases.
Commencing as of calendar year 2008 and continuing every five calendar years thereafter, the annual rentals payable under this Second Amended and Restated Lease shall be increased in accordance with any increases in the 1988 Revised Consumer Price Index, All Item Figures for Urban Wage Earners and Clerical Workers (1982-84 = 100) for Denver, Colorado, as published by the United States Department of Labor, Bureau of Labor Statistics (the “Index”). The base month shall be January 2003. The annual rental for calendar years 2008 through 2012, payable commencing April 15, 2008, shall be the annual rental payable during the preceding five-calendar-year period, increased by an amount based on the percentage of increase in such Index between the base month of January 2003, and January 2008. The annual rental shall be adjusted in like manner each and every five (5) years thereafter. Should the Index be discontinued by the Department of Labor, the adjustment shall be based upon any index which replaces the discontinued Index and is generally accepted in the Colorado business community as such replacement.
As of January 1, of each of the years 2018, 2033, 2048 and 2063, Lessor shall have the right to request that appraisers be engaged to determine the Annual Fair Rental Value of the Leased Premises pursuant to the Appraisal Instructions attached hereto as Exhibit “C”. If the Annual Fair Rental Value as so determined is 25% (or more) greater than the annual rental determined after implementation of the adjustment, using the Index, in accordance with the provisions of the prior paragraph, the annual rental for such subsequent five (5) calendar years shall be equal to such Annual Fair Rental Value; provided, however, that the annual rental after any such appraisal adjustment shall never exceed 150% of the adjusted annual rental amount determined prior to such appraisal adjustment. In no event shall the annual rentals payable in any five-year period be less than the annual rentals payable during the preceding five-year period. If the Annual Fair Rental Value as so determined does not cause a rental adjustment hereunder, Lessor shall pay directly or promptly reimburse Lessee for all out-of-pocket costs incurred by Lessee pursuant to the Appraisal Instructions.
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ARTICLE IV
LAND USE AND IMPROVEMENTS
Section 1. Base Area and Lifts.
Lessee shall develop (or redevelop), operate and maintain or cause to be developed (or redeveloped), operated and maintained, a base area, including but not limited to the existing Mary Jane Day Center, lift terminals and other amenities previously constructed by the Lessee (or replacements thereof in connection with any redevelopment), upon Parcel I of the Leased Premises. The construction, development, reconstruction and redevelopment of base area facilities shall continue to be in accordance with the Master Plan for the Winter Park Ski Area which was approved by the Regional Forester for the United States Forest Service on July 26, 1985 as amended and updated on December 31, 1995, as the same may be modified or amended from time to time, in accordance with Article VI, Section 1 hereof (the “FS Master Plan”). Lessee covenants and agrees that during the term of this Lease the operator of the Winter Park Resort shall be a Qualified Operator and that the Winter Park Resort shall be operated at least at a level consistent with such operation during the last five (5) years of the term of the First Amended and Restated Lease. Except for the existing two (2) apartments and ten (10) temporary dormitory-style accommodations customarily maintained by the Lessee for its managers and caretakers in the Mary Jane Day Center and the replacement thereof in a renovated or redeveloped Mary Jane Day Center, Lessee agrees that no additional dwelling units will be constructed upon Parcel I of the Leased Premises during the term of this Lease.
Section 2. Ski Trail Parcels.
Parcels II-A and II-B described in the attached Exhibit “A” may be used by the Lessee for snowsliding lifts, tows and trails and for hiking and biking trails, including but not limited to the trails currently known as the Meadows and Upper Hughes and the Mary Jane, slope maintenance, and access by snow and track vehicles. The snowsliding lifts, tows and trails and hiking and biking trails have been (and may in the future continue to be) developed and shall be maintained in accordance with the FS Master Plan; any portions of the ski trail parcels not utilized in accordance with the FS Master Plan shall remain under the control of the Lessor. Lessee agrees that, without first obtaining Lessor’s written consent (which consent may be withheld in the sole and absolute discretion of Lessor), (a) no part of any snowsliding lifts, tows, trails or access roads will cross that certain tract of land designated as Development Parcel “A” on the Final P.U.D. Plan and more particularly described on Exhibit “B” attached hereto and by this reference incorporated herein (the “Club Facilities Site”) or any other property owned by Lessor at the Winter Park Resort which is not part of the Leased Premises, and (b) Lessee shall not obstruct access to and from the Club Facilities Site.
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Section 3. Default by Lessee.
a. The following events shall be deemed to be events of default by Lessee under this Second Amended and Restated Lease (each, a “default” or “event of default” herein):
(1) Lessee fails to timely pay any rent or any other amount due to Lessor hereunder and such failure continues for a period of twenty (20) days after receipt by Lessee of written notice thereof;
(2) Lessee fails to comply with any provision of this Lease not requiring the payment of money, all of which terms, provisions and covenants shall be deemed material, and such failure continues for a period of thirty (30) days after written notice of such failure is delivered to Lessee or, if such failure cannot reasonably be cured within such thirty (30) day period, Lessee fails to commence to cure such failure within such thirty (30) day period and/or thereafter fails to prosecute such cure diligently and continuously to completion; provided, however, that Lessee’s failure to satisfy its performance obligations (but not its payment obligations) under Article V, Section 7 hereof shall never constitute or be deemed to constitute a default by Lessee hereunder;
(3) Lessee takes any action to, or notifies Lessor that Lessee intends to file a petition under any section or chapter of the United States Bankruptcy Code, as amended from time to time, or under any similar law or statute of the United States or any state thereof, or a petition shall be filed against Lessee under any such statute and not be dismissed within ninety (90) days thereafter;
(4) a receiver or trustee is appointed for Lessee’s leasehold interest in the Leased Premises or for all or a substantial part of the assets of Lessee;
(5) Lessee ceases to operate its business upon the Leased Premises, or to cause that portion of the Winter Park Resort located on the Leased Premises to be operated, for at least nine (9) consecutive months, or abandons any substantial portion of the Leased Premises, whether or not rent continues to be paid; provided, however, that, in the event of any such abandonment, Lessor’s only remedy shall be the right to terminate this Lease with respect to the portion of the Leased Premises so abandoned; or
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(6) Lessee causes or permits the filing of a mechanic’s lien, levy, attachment or other charge against Lessor’s interest in the Leased Premises which is not discharged, released or bonded over to the reasonable satisfaction of Lessor within thirty (30) days after Lessee receives notice of any such filing, or, if such discharge, release or bonding cannot reasonably be accomplished within such thirty (30) day period, Lessee fails to commence such discharge, release or bonding within such thirty (30) day period and/or thereafter fails to prosecute such action diligently and continuously to completion.
(7) Lessee breaches any representation and warranty to Lessor as set forth herein.
b. Upon the occurrence of any event of default and subject to the provisions of Article XII hereof, Lessor may, at its option and without further notice to Lessee, in addition to all other remedies given hereunder or by law or equity (but subject to the limitation provided in subsection 3(a) (5) above), do any one or more of the following: (1) terminate this Lease, in which event Lessee shall immediately surrender possession of the Leased Premises to Lessor; and (2) enter upon and take possession of the Leased Premises and expel or remove Lessee therefrom, with or without having terminated this Lease.
c. Exercise by Lessor of any one or more remedies hereunder shall not constitute forfeiture or an acceptance of surrender of the Leased Premises by Lessee, it being understood that such surrender can be effected only by the written agreement of Lessor and Lessee.
d. If Lessor terminates this Lease, in whole or in part, by reason of an event of default, Lessee shall pay to Lessor the sum of (1) the cost of recovering the Leased Premises (or any part of the Leased Premises affected by such termination), (2) the unpaid rent and any other indebtedness of Lessee to Lessor under this Lease accrued hereunder to the date of such termination, (3) an amount equal to the present value (discounted at the rate of 8% per annum) of the aggregate annual rental payments due under this Lease over the balance of the stated term remaining after the date of such termination, based upon the annual rental then in effect, less the present value (discounted at the same rate) of the amount of rent that Lessee proves Lessor could have received during such period had Lessor mitigated its damages to the extent required by Colorado law, and (4) any other damages or relief which Lessor may be entitled to at law or in equity.
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e. If Lessor repossesses the Leased Premises without terminating this Lease, then Lessee shall pay to Lessor (1) the cost of recovering the Leased Premises, (2) the unpaid rent and any other indebtedness of Lessee to Lessor under this Lease accrued to the date of such repossession, and (3) the total rent which Lessor would have received under this Lease for the remainder of the term of this Lease minus any net sums thereafter received by Lessor through reletting the Leased Premises during said period, after deducting expenses incurred by Lessor in connection with such reletting. If Lessor repossesses the Leased Premises, Lessor agrees to use commercially reasonable efforts to satisfy its obligation to mitigate its damages to the extent required under Colorado law and agrees that nothing in this Lease shall be construed to relieve Lessor from such obligation. Re-entry by Lessor will not affect the annual rental payment obligations of Lessee for the unexpired term of this Lease. Lessee shall not be entitled to any rent obtained by reletting ally portion of the Leased Premises for amount(s) in excess of the amount of rent herein reserved. Actions to collect any amounts due hereunder from Lessee may be brought on one or more occasions, without the necessity of Lessor’s waiting until the expiration of the term of this Lease. In addition, Lessor may, at any time following repossession of the Leased Premises without termination of the Lease, elect to terminate the Lease and pursue the remedies available to Lessor pursuant to subsection d above in lieu of the remedies available to Lessor pursuant to this subsection e.
f. If Lessee should fail to cure any non-monetary default hereunder within thirty (30) days after receipt of written notice thereof, Lessor, without obligation to do so and without thereby waiving such failure or default, may remedy such default for the account of Lessee (and enter the Leased Premises for such purpose), and Lessee shall, within ten (10) days following written demand, pay all costs, expenses and disbursements (including attorneys’ fees) incurred by Lessor in taking such remedial action.
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g. In the event any installment of rent is not received within ten (10) days after the date due (without in any way implying Lessor’s consent to such late payment), Lessee, to the extent permitted by law, agrees to pay, in addition to said installment of rent, a late payment charge equal to five percent (5%) of the installment of rent due, it being understood that said late payment charge shall be for the purpose of reimbursing Lessor for the additional costs and expenses which Lessor presently expects to incur in connection with the handling and processing of late payments. In the event of any such late payment(s) by Lessee, the additional costs and expenses so resulting to Lessor will be difficult to ascertain precisely and the foregoing charge constitutes a reasonable and good faith estimate by the parties of the extent of such additional costs and expenses. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s default with respect to such overdue amount, nor prevent Lessor from exercising any other rights or remedies granted hereunder, unless such default is otherwise cured within the time period provided in this Lease.
h. In addition to the late payment charge contained in subsection g above, all rent and any other amount due to Lessor hereunder, if not paid within thirty (30) days after the date due, shall, at the option of Lessor, and to the extent permitted by law, thereafter bear interest from the date due until paid at the greater of (i) the published prime lending rate of the largest (as measured by total assets) national banking association having an office in Denver, Colorado, plus 4%, and (ii) ten percent (10%) (the “Default Rate”); provided however that the Default Rate shall never exceed the maximum rate of interest permissible under the laws of the State of Colorado.
i. If Lessor or Lessee should find it necessary to employ an attorney to recover any rent due, to enforce any of its rights under this Lease, to assert or defend any action arising out of the breach of any term, covenant or provision of this Lease, or to bring legal action for the unlawful detainer of the Leased Premises, the prevailing party shall be entitled to recover from the non-prevailing party attorneys’ fees and costs of suit incurred in connection therewith. For purposes of this subsection i, a party shall be considered to be the “prevailing party” to the extent that (i) such party initiated the litigation and substantially obtained the relief which it sought (whether by judgment, voluntary agreement or action of the other party, trial, or alternative dispute resolution process), (ii) such party did not initiate the litigation and did not receive judgment in its favor, but the party receiving the judgement did not substantially obtain the relief which it sought, or (iii) the other party to the litigation withdrew its claim or action without having substantially received the relief which it was seeking.
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Section 4. Termination.
Upon the termination of this Second Amended and Restated Lease, the Lessor shall have the option to purchase any improvements now existing or hereafter constructed upon the Leased Premises by the Lessee at the depreciated cost of the improvements as shown on the books of the Lessee at the time of such termination. The depreciated cost of improvements shall be determined in accordance with generally accepted accounting principles used by corporations formed for profit. Should the Lessor elect not to exercise its option to purchase the improvements, the Lessee shall remove the improvements and restore the Leased Premises, except for those trees which have been removed. Any improvements not so removed by Lessee on or before the first anniversary of the termination date of this Lease shall be deemed abandoned by Lessee, and Lessee shall reimburse Lessor for costs reasonably incurred by Lessor to remove such improvements.
ARTICLE V
DEVELOPMENT BY LESSOR
Section 1. Lessor’s Reservations.
The Lessor reserves the right and privilege to construct, operate and maintain its club facilities upon that certain parcel of real property designated as Development Parcel “A” on the Final P.U.D. Plan and more particularly described on the attached Exhibit “B”. It is also understood and agreed that the Lessor shall also have the right and privilege to develop, or to sell or lease for development, any of the ski trail parcels described as Parcels II-A and II-B on Exhibit “A” attached to this Lease, subject, however, to (a) the terms, agreements, provisions, conditions and obligations contained in this Article V, and (b) the Lessee’s rights to develop, use and maintain snowsliding lifts, tows, trails, hiking and biking trails and to have access thereto for utility, snow and track vehicles, and slope maintenance and improvement purposes established in Section 2 of Article IV of this Lease. As to Parcel I and those portions Parcel III-A described on the attached Exhibits “A” and “A-1”, the Lessor shall have the right to sell and convey the same to third persons or parties for investment, but not development purposes, subject, however, to all of the terms, agreements, provisions, conditions and obligations contained in this Second Amended and Restated Lease, including but not limited to the Lessee’s right of first refusal established in Section 8 of this Article V.
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Section 2. Lessor’s Covenants, Conditions and Restrictions.
The Lessor hereby declares, covenants and agrees to and with the Lessee that Development Parcel “A”, as shown on the Final P.U.D. Plan and more particularly described on the attached Exhibit “B”, is and shall henceforth be held, conveyed, encumbered, leased, improved, used, occupied and enjoyed as a private club facility, a lodge or a multi-family site containing single-family detached or semi-attached dwelling units, apartment house dwelling units, sleeping rooms, condominium units or townhouses, each of which is designed to accommodate no more than a single family and its servants and occasional guests, and including garages and such recreational and other improvements as are necessary or customarily incident thereto. The covenants, conditions, restrictions and equitable servitudes contained in this Section 2 shall run with Development Parcel “A” and all parts thereof; shall be binding upon all persons having or acquiring any interest therein or any part thereof; shall inure to the benefit of, be binding upon, and be enforceable by the Lessor and the Lessee and their respective successors in interest with respect to the Leased Premises; and, shall continue and remain in full force and effect until the date of termination of this Lease, whether by the passage of time or otherwise.
Section 3. Off-Site Improvements.
As additional consideration to the Lessor, the Lessee, at its own cost and expense, has heretofore installed utility main distribution lines (but not utility feeder/service lines) for water, sewer, gas, electric and telephone services to serve Development Parcels “A”, “B”, “C” and “D.” For the purposes of this Lease, the term “utility main distribution lines” shall mean only those utility lines presently installed within those portions of Parcels III-A and III-B described in the Ground Lease Agreement; such term shall not include, nor be construed to mean or imply, any utility feeder/service lines from the utility main distribution lines to those certain tracts of land designated as Development Parcels “A”, “B”, “C”or “D” on the Final P.U.D. Plan and more particularly described on the attached Exhibit “B”, or to any other portion of the Mary Jane Placer Mining Claim. Except as expressly provided in this Article V,the installation, upgrade or replacement of any utility feeder/service lines, and any and all costs and expenses associated therewith, shall be and remain the responsibility of the respective owner and developers of said Development Parcels “A”, “B”, “C” and “D”, and not the responsibility of the Lessee. It is understood and agreed that all utility main distribution lines shall be underground. Lessor hereby acknowledges that the utility main distribution lines installed as of the date of this Lease are adequate to serve the number of existing residential units shown and authorized upon Development Parcel “A” of the Final P.U.D. Plan.
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Section 4. Development Parcel A - Utility Main Distribution Lines.
Notwithstanding anything contained herein to the contrary, the Lessor acknowledges that the Final P.U.D. Plan authorizes the ultimate construction of facilities to accommodate 125 people upon Development Parcel “A”, rather than the 75 people initially envisioned by the parties hereto. It is understood and agreed that, should this increase necessitate an oversizing of any one or more of the utility main distribution lines (including the appurtenances, fixtures and devices related thereto) which have been installed by the Lessee as is provided in Section 3 of this Article V, and which would not have otherwise been necessary, the Lessee shall have no obligation to complete the oversizing or to pay any of the construction and installation costs resulting therefrom or attributable thereto.
Section 5. Ownership of utility Lines.
It is also understood and agreed that both (a) the utility main distribution lines and (b) the utility feeder/service lines for water, sewer, gas, electric and telephone services to the Club Facilities Site, as well as their related appurtenances, fixtures and devices, once constructed and installed, shall be and remain the property of the Lessee or the utility that installed or now owns such facilities, and that nothing contained herein or in the relationship of the parties hereto shall be deemed to give the Lessor or its successors in interest any proprietary interest therein. Any contrary or inconsistent provision of this Lease notwithstanding, the Lessee shall, upon such terms and conditions as it deems appropriate, assign or convey such utility main distribution lines and such utility feeder/service lines to the Winter Park Water and Sanitation District or any other appropriate public or quasi-public authority or utility franchise, at which time Lessee shall be relieved of all obligations, if any, to maintain, and any other liabilities associated with, the utility main distribution lines and such utility feeder/service lines; provided, however, that the Lessor’s privilege to use and be served by such utility lines will not be precluded thereby.
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Section 6. Maintenance of utility Lines.
Until such time as the Lessee might assign or convey the utility main distribution lines or such utility feeder/service lines as is provided in Section 5 of this Article V, the Lessor, for itself and its successors and assigns, covenants to reimburse the Lessee for its proportionate share of the costs and expenses in maintaining the utility main distribution lines and such utility feeder/service lines, which obligation shall run with the land comprising the Club Facilities Site and Development Parcels “B”, “C” and “D”. This obligation of the Lessor or its successors and assigns to reimburse the Lessee commenced upon the provision of utility service to the Club Facilities Site or to Development Parcels “B”, “C”, and “D”, as the case may be, and shall be that proportion of the total costs and expenses attributable to the maintenance thereof as follows (or as otherwise determined by agreement of Lessor, the owners of Development Parcels B, C and D and the Winter Park Water and Sanitation District):
a. With respect to the utility main distribution lines, the ratio of the Lessor’s utility usage or that of its successors and assigns, as the case may be, to total utility usage, and
b. With respect to the utility feeder/service lines, the ratio of the length (in feet) thereof on Development Parcel “A” to the total length (in feet) of both the utility main distribution lines and utility feeder/service lines upon the land covered by the Final P.U.D. Plan.
Notwithstanding the foregoing, Lessor shall not be liable to reimburse Lessee for its proportionate share of maintenance costs if it is reasonably determined that the incurrence of such maintenance costs are attributable solely to the negligent act or omission of a person other than Lessor.
The Lessor was released from its obligation to reimburse the Lessee for its proportionate share of such maintenance costs attributable to Development Parcels “B”, “C” and “D” at such time as the same were sold and conveyed to third persons or parties, it being understood and agreed that such third persons or parties became and shall remain responsible for their proportionate share of such maintenance costs.
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Section 7. Maintenance of Access Road.
The Lessee, at its sole cost and expense, shall keep the access road open and plowed to the Club Facilities Site, and shall keep the parking area to be designated by the Lessor, at or upon the Club Facilities Site, open and plowed to assure access from U.S. Highway 40 to the Club Facilities Site served by the access road and a usable parking area at all reasonable times during the year. If at any time Lessee does not keep the access road and parking lot open to vehicular traffic and plowed, and thereafter fails to cure such failure of performance within two (2) hours after receipt of telephone notification by the General Manager of the Winter Park Resort, (a) Lessor shall have the right to perform or cause to be performed such obligations and to obtain full reimbursement from Lessee of all costs incurred within ten (10) days after delivery to Lessee of documentary evidence of the incurrence of such costs by Lessor; and (b) if such failure of performance and cure occurs on more than five (5) occasions during any calendar year during the term hereof, Lessee shall in addition to any costs reimbursable under clause (a) hereof, pay to Lessor Five Thousand Dollars ($5,000) for each such additional occurrence; it being understood that such payment(s) shall be for the purpose of reimbursing Lessor for the additional administrative costs and expenses which Lessor presently expects to incur in connection with assuring its members access to the Club Facilities Site and parking. Lessee and Lessor acknowledge that the actual costs and expenses resulting to Lessor will be difficult to ascertain precisely and that the foregoing charge constitutes a reasonable and good faith estimate by the parties of the extent of such additional costs and expenses.
Section 8. Right of First Refusal.
a. In the event the Lessor shall desire to sell or otherwise dispose of the Leased Premises or any portion thereof, and shall have received a bona fide offer therefor from a prospective purchaser, the Lessee shall be given written notice thereof, together with an executed copy of the offer and the terms thereof. Provided that Lessee is not then in default of its obligations under this Lease, Lessee shall have the right and option to purchase the Leased Premises or applicable portion thereof upon the same terms and conditions as set forth in the offer therefor; provided, however, that written notice of such election to purchase and a matching down payment or deposit is given by the Lessee to the Lessor during the fifteen (15)-day period immediately following delivery to the Lessee of the notice of the bona fide offer to purchase and an executed copy thereof. If Lessee elects to purchase the Leased Premises or applicable portion thereof, Lessor and Lessee shall, in good faith, cooperate and otherwise act in a commercially reasonable manner in the negotiation and execution of a definitive contract that sets forth the terms of the purchase and sale and contains such other provisions as are customarily included in real estate contracts in Grand County, Colorado; provided, however, that if such definitive contract is not executed by Lessee, within fifteen (15) business days after delivery to Lessor of Lessee’s notice of election to purchase, Lessee shall be deemed to have failed to timely deliver such notice of election.
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b. For purposes hereof, a letter of intent shall be considered a bona fide offer; provided, however, if Lessee elects not to purchase the Leased Premises or portion thereof pursuant to the terms of the letter of intent, Lessor shall be required to provide to Lessee a copy of the contract signed pursuant to said letter of intent (the “Signed Contract”), which Lessee shall keep confidential. If any material economic or substantive provision of the Signed Contract varies from the terms of the letter of intent, the Signed Contract shall provide that Lessee shall have the option to elect, within ten (l0) business days following its receipt of the Signed Contract, to purchase the Leased Premises or portion thereof pursuant to the terms of such Signed Contract. If Lessee so elects to purchase the Leased Premises or portion thereof, Lessee agrees to execute and deliver to Lessor a definitive purchase contract in form and substance equivalent to the Signed Contract within twenty (20) days following Lessee’s receipt of the Signed Contract.
c. If Lessee purchases a portion of the Leased Premises, Lessor and Lessee shall negotiate in good faith to determine an appropriate reduction in the annual rental payment due hereunder or, in the absence of such agreement, a mechanism for determining the amount of such reduction. Lessee’s rights and obligations under this Section 8 shall be fully assignable by Lessee to Intrawest and, subject to Lessor’s consent, any successor operator of the Winter Park Resort, and Lessor shall accept performance hereunder by any such assignee, sublessee or designee of Lessee; provided, however, that no assignment of Lessee’s right and obligations under this Section 8 shall be effective until execution and delivery to Lessor of an assignment in form and content reasonably acceptable to Lessor.
d. In the event the Lessee acquires the Lessor’s title to, or interest in, the Leased Premises or any portion thereof pursuant to this Section 8, it is the intention of the parties that this Lease, and all subleases of all or any portion of the Leased Premises, shall remain in effect and the right, title and interest of the lessee and the lessor in and to the Leased Premises shall not merge. Notwithstanding the foregoing, Lessee’s rental and other obligations hereunder shall terminate upon its acquisition of Lessor’s title to the Leased Premises.
ARTICLE VI
MASTER PLAN, ARCHITECTURAL CONTROL AND ANNEXATION
Section 1. FS Master Plan.
The parties hereto acknowledge that the FS Master Plan includes, but is not limited to, the Leased Premises. The Lessor and the Lessee agree that the FS Master Plan, as the same was approved by the Regional Forester for the United State Forest Service, as it relates to the Leased Premises, shall be considered a part of this Second Amended and Restated Lease. It is further understood and agreed that the FS Master Plan, as it relates to the Leased Premises, may be amended from time to time with the mutual written agreement of the Lessor and the Lessee, and that the consent to or approval of any amendments thereto shall not be unreasonably withheld by either the Lessor or the Lessee. If any such consent or approval or affirmative denial thereof is not received from either Lessor or Lessee within thirty (30) days after receipt of the request therefor, such consent or approval shall be deemed to have been given.
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Section 2. Architectural Control Committee.
With respect to Parcel I of the Leased Premises and the real property described on Exhibit “D” attached hereto and by this reference incorporated herein, and in furtherance of their general plan of development under the FS Master Plan and the Final P.U.D. Plan, the Lessor and the Lessee do hereby establish an Architectural Control Committee, (the “Committee”), which shall always consist of four members. The following persons are hereby designated as members of the Committee:
Frank Traylor | - | Designated by the Lessor |
Stephen Secor | - | Designated by the Lessor |
Gary DeFrange | - | Designated by the Lessee |
David Barry | - | Designated by the Lessee |
Upon notice to the other party, the Lessor shall have the right to appoint and replace two members of the Committee as often as it wishes; and, the Lessee shall have the right to appoint and replace two members of the Committee as often as it wishes.
Section 3. Review of Proposed Construction.
The Committee shall have the right to consider all the plans and specifications for, and all other facts which in its sole discretion it deems relevant to, each and every structure and all appurtenances thereto which are to be constructed or erected upon Parcel I of the Leased Premises, and the real property described in the attached Exhibit “D”. Prior to the commencement of any construction of any structure or appurtenances thereto, the plans and specifications therefor shall be submitted to the Committee, and construction thereof may not commence unless and until the Committee has approved such plans and specifications in writing. The Committee shall approve plans and specifications submitted for its approval only if it deems that the construction, alterations or additions contemplated thereby in the locations indicated will not be detrimental to the surrounding area as a whole, and that the appearance of any structure affected thereby will be in harmony and compatible with the surrounding structures and environment. The Committee may condition its approval of plans and specifications on such changes therein as it deems appropriate, and may require submission of additional plans and specifications or other intonation prior to approving or disapproving the proposed construction.
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Section 4. Meetings of the Committee.
The Committee shall meet from time to time as necessary to perform its duties hereunder. The Committee may from time to time by resolution unanimously adopted by its voting members in writing, designate one of its members to take any action or perform any duties for and on behalf of the Committee. In the absence of such designation, the vote of a majority of all of the voting members of the Committee, or the written consent of the majority of all of the voting members of the Committee taken without a meeting, shall constitute an act of the Committee. Whenever the approval of the Committee is required with respect to any improvement or proposal within or upon Parcel I of the Leased Premises, one of the two members of the Committee appointed by the Lessor shall be considered ex-officio and without the right to vote; and, whenever the approval is required with respect to an improvement or proposal within or upon the parcel of real property described on the attached Exhibit “D”, one of the two members of the Committee appointed by the Lessee shall be considered ex-officio and without the right to vote.
Section 5. No Waiver of Future Approvals.
The approval or consent of the Committee to any plans or specifications for any work done or proposed on Parcel I of the Leased Premises or on the real property described on Exhibit “D,” or in connection with any other matter requiring the approval or consent of the Committee, shall not be deemed to constitute a waiver of any right to withhold approval or consent as to any plans or specifications or other matter whatever subsequently submitted to the Committee for approval or consent by the same or a different person.
Section 6. Non-Liability of Committee Members.
Neither the Committee nor any member thereof, nor the boards of directors or trustees of the Lessor or the Lessee nor any member thereof, shall be liable to any owner or to any other person for any loss, damage or injury arising out of or in any way connected with the performance of the Committee’s duties under this Second Amended and Restated Lease unless due to the willful misconduct or bad faith of the Committee or its members, or the Board of Directors or their members, as the case may be. The Committee shall review and approve or disapprove all plans and specifications submitted to it for any proposed improvement, including the construction, alteration or addition thereofor thereto, solely on the basis of aesthetic considerations, the harmony and compatibility of external design and appearance with existing improvements in the surrounding area, and the overall benefit or detriment which would result to the surrounding areas generally. The Committee shall take into consideration the aesthetic aspects of the architectural designs, placement of buildings, landscaping, color schemes, exterior finishes and materials and similar features, but shall not be responsible for reviewing any plans or specifications from the standpoint of structural safety, engineering soundness, or conformance with applicable building or other codes, nor shall its approval of any plans or specifications be deemed approval thereof.
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ARTICLE VII
INSURANCE
Section 1. Insurance Requirements.
a. Lessee shall maintain a policy or policies of all risk extended coverage insurance on the improvements and all of its personal property, including removable trade fixtures, located on the Leased Premises, in an amount equal to full replacement cost and endorsed to provide that Lessee’s insurance is primary in the event of any overlapping coverage with the insurance carried by Lessor. Such insurance shall be maintained at the expense of Lessee and payment for losses thereunder shall be made solely to Lessee or the Leasehold Lender (as hereinafter defined), as their interests shall appear. Lessee shall, at Lessor’s request from time to time, provide Lessor with a current certificate of insurance evidencing Lessee’s compliance with this Article VII. Lessee shall obtain the agreement of Lessee’s insurers to notify Lessor that a property insurance policy is due to be canceled or expire at least thirty (30) days prior to such cancellation or expiration.
b. Lessee shall maintain a policy or policies of commercial general liability insurance covering the Leased Premises and Lessee’s use thereof against claims for personal or bodily injury or death or property damage occurring upon, in or about the Leased Premises (including contractual indemnity and liability coverage) with the premiums thereon fully paid on or before the due date, issued by and binding upon an insurance company licensed to do business in the State of Colorado and having an A.M. Best Rating of “A-VI” or better. Such insurance
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shall provide minimum protection of not less than $3,000,000 combined single limit primary coverage per occurrence of bodily injury, property damage or combination thereof; provided, however, that Lessee shall maintain such higher limit as Lessor, acting reasonably, in accordance with Colorado ski industry standards for resorts comparable in size to the Winter Park Resort, may require from time to time, or as may be required due to the activities and/or operations of Lessee upon the Leased Premises. Lessee’s insurance shall contain an endorsement that Lessee’s insurance is primary for claims arising out of an incident or event occurring within the Leased Premises. Lessee’s insurance shall contain a provision naming Lessor (and any mortgagee designated by Lessor) as an additional insured and include coverage for the contractual liability of Lessee to indemnify Lessor pursuant to the provisions of the Lease. Lessee shall, upon Lessor’s request, from time to time, provide Lessor with a current certificate of insurance evidencing Lessee’s compliance with this Article VII. Lessee shall obtain the agreement of Lessee’s insurers to notify Lessor that a liability insurance policy is due to be canceled or expire at least thirty (30) days prior to such cancellation or expiration.
c. In addition to the foregoing, Lessee shall maintain such other policies of insurance with such limits as Lessor, acting reasonably, in accordance with Colorado ski industry standards for resorts comparable in size to the Winter Park Resort, may require from time to time, or as may be required due to the activities and/or operations of Lessee upon the Leased Premises.
Section 2. No Obligation to Rebuild.
If, during the last five years of the term hereof or any extensions thereof, the improvements located on the Leased Premises shall be totally destroyed or damaged to the extent that the same are untenantable for use by Lessee in the manner that the same were being used immediately prior to such damage or destruction, Lessee may elect to either repair and rebuild the then remaining improvements to a condition substantially similar to the improvements immediately prior to such damage or destruction or to not rebuild and to terminate this Lease. The notice of election by Lessee shall be given in writing to Lessor within sixty (60) days after the date of the total damage or destruction, and if no notice shall be given by Lessee within said time period, then it shall be deemed that Lessee has elected to not rebuild and to terminate this Lease. If Lessee elects to rebuild, construction shall be performed in a good and workmanlike manner and shall be completed with due diligence.
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ARTICLE VIII
ARBITRATION
Section 1. Submission to Arbitration.
Upon the request of Lessor or Lessee, any dispute related to this Lease (the “Dispute”) shall be resolved by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then in effect, except as modified herein. Notwithstanding the foregoing, arbitration shall not be required with respect to a default by Lessee under Article IV, Section 3(a)(1) hereof and the exercise by Lessor of its remedies resulting from any such default.
Section 2. Selection of Arbitrators.
The arbitration shall occur in Denver, Colorado. Either party may commence the arbitration by written demand to AAA with a copy to the other party. AAA shall provide to the parties, within twenty (20) days after the demand, a list containing art odd number of the names of at least five (5) potential arbiters. The arbiters shall be attorneys with at least ten (10) years of experience as attorneys and/or judges and shall have experience as arbitrators. The parties, beginning with the party demanding arbitration, shall each strike one name in turn only until one (1) name remains on the list. If it is one party’s turn and that party does not strike a name within three (3) business days, then that turn is forfeited, and the other party shall strike the next name, before taking its next turn. When only one (1) name remains, the remaining person shall be the single arbiter. Once the arbiter is selected, an arbitration hearing shall be commenced in no more than one hundred twenty (120) days.
Section 3. Rules of Arbitration.
a. Such arbitration shall be held in accordance with the AAA Commercial Arbitration Rules, unless otherwise provided herein. Unless the parties otherwise agree, discovery shall be limited to no more than two depositions per party and an informal exchange of documents related to the subject matter of the arbitration as the arbiter may direct. The arbiter shall express its decision in a writing to be delivered to each of the parties, which writing shall explain the reasons for the decision. The arbiter shall render a written decision on and deliver the decision to the parties within fifteen (15) days after the close of the hearing. Each of the parties to arbitration hereunder shall bear its own costs and fees and an equal share of the fees and expenses of the arbiter and administrative fees of the arbitration.
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b. Any party to the arbitration conducted hereunder may seek reconsideration of all or any part of the original decision of the arbiter by filing a written request thereof with the arbiter and serving the same on all the other parties to the arbitration within ten (10) days after the date of delivery of the arbiter’s original decision. Any other party may file a written response to such request within ten (10) days after receipt of the request for reconsideration. No further replies will be permitted. The arbiter shall consider any such request either based solely on the documents filed or after a hearing, as he or she may determine in his or her sole discretion. The arbiter shall issue a written decision on any such request within fifteen (15) days after the submission of any response hereunder or within twenty-five (25) days after the submission of the request for reconsideration if no response is submitted. There shall be no right to appeal from the final decision of the arbitrator in any arbitration conducted hereunder, except on those grounds set forth in the Federal Arbitration Act or where the arbitrators have failed to follow the applicable law. The decision shall be final and binding on the parties, and judgment upon any decision rendered by the arbitrator may be entered in any court having jurisdiction and enforced in the manner that judgments of said court are normally enforced.
ARTICLE IX
TITLE AND POSSESSION
Subject only to (i) those exceptions to coverage presently contained in Transamerica Title Insurance Company Policy No. CO-462431-0 previously issued to Lessee, a copy of which is attached hereto as Exhibit E, (ii) those additional exceptions set forth on Exhibit “F” attached hereto and by this reference incorporated herein, (iii) any claim or matter arising from the actions or inactions of Lessee or its assignees, sublessees and agents, and (iv) any matter that an accurate survey of the Leased Premises would disclose, the Lessor warrants that it has fee title to the Leased Premises (except for a portion of Parcel III-A owned and/or controlled by the Iron Horse Condominium Association) and, provided that Lessee is not in default in the performance of its obligations under this Lease, agrees to warrant and defend the Lessee in the quiet enjoyment and possession of the Leased Premises during the term of this Second Amended and Restated Lease.
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ARTICLE X
BANKRUPTCY
Notwithstanding anything to the contrary contained herein, if Lessee, as a debtor-in-possession (the “DIP”), or a trustee for the estate in bankruptcy of Lessee (the “Trustee”), assumes this Lease and proposes to assign this Lease, or sublet the Leased Premises (or any portion thereof), pursuant to the provisions of the Federal Bankruptcy Code, 11 U.S.C. Sections 101 et seq. (the “Bankruptcy Code”) to any person, partnership, corporation or other entity (the “Proposed Assignee”), then such assumption of this Lease and any such assignment or sublease shall be subject to all of the following:
a. If the rental agreed upon between the DIP or the Trustee, as the case may be, and the Proposed Assignee under any proposed assignment or sublease of the Leased Premises (or any part thereof) is greater than the rental rate that Lessee must pay Lessor hereunder for that portion of the Leased Premises that is subject to such proposed assignment or sublease, or if any consideration shall be received by the DIP or the Trustee, as the case may be, in connection with any such proposed assignment or sublease, then all such excess rental or such consideration shall be paid or delivered to Lessor, and shall not constitute property of the DIP, the Trustee, or of the estate of Lessee, as the case may be, within the meaning of the Bankruptcy Code; and
b. Any Proposed Assignee or sublessee of this Lease from the DIP or the Trustee, as the case may be, pursuant to provisions of the Bankruptcy Code shall comply with the provisions of Article XII, Section 2 hereof. In addition, any Proposed Assignee shall pay all rent not previously paid under this Lease including all payments which have been suspended, mitigated, nullified or reduced to a claim of any kind against Lessee or the Lessee’s property, by operation of law or otherwise; and any Proposed Assignee shall assume Lessee’s obligation to pay Lessor’s attorneys’ fees pursuant to Article IV, Section 3(i) hereof.
This Article X shall not apply to any assignment or sublease other than pursuant to the provisions of the Bankruptcy Code, nor shall it in any way limit Lessor’s rights to damages or other relief in a proceeding under the Bankruptcy Code.
ARTICLE XI
RECORDATION OF LEASE
The parties hereto agree that this Second Amended and Restated Lease shall be executed by the parties hereto and recorded in the records of the Clerk and Recorder for Grand County, Colorado.
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ARTICLE XII
MORTGAGE OF LEASEHOLD
Section 1. Conditions to Security Instruments.
Notwithstanding anything to the contrary contained in this Second Amended and Restated Lease, provided Lessee is not in default hereunder, Lessee shall have the right to encumber Lessee’s rights and interests under this Lease and in or to the Leased Premises and Lessee’s interest in the buildings, structures, fixtures and improvements on the Leased Premises (“Improvements”), with two leasehold mortgages or deeds of trust, collateral assignments, financing statements and other security instruments, interests, and any extensions, modifications, renewals or replacements thereof (collectively, a “Leasehold Mortgage”) and may assign this Lease as evidence of such Leasehold Mortgage provided that:
a. The Lessee provides Lessor with prior notice of any proposed Leasehold Mortgage and a true copy of the recorded Leasehold Mortgage reflecting the name and address of the beneficiary of the Leasehold Mortgage (the “Leasehold Lender”);
b. The Leasehold Mortgage by its terms is made expressly subject and subordinate to the Lessor’s rights under this Lease and as owner of the real property and is not a lien or encumbrance on the Lessor’s real property;
c. The proceeds of the loan secured by the Leasehold Mortgage shall be used solely for the purpose of payment or refinancing of the cost of (or reimbursing the Lessee for the cost of) the operation of the Winter Park Resort and/or the construction or installation of buildings, structures, fixtures or improvements on the Winter Park Resort as such area may be modified or expanded from time to time;
d. The date of maturity of the bond, debenture, note or other evidence of indebtedness (herein called the “evidence of indebtedness”) secured by the Leasehold Mortgage shall not be later than the date of expiration of the term of this Lease;
e. Upon termination of this Lease for any reason whatsoever, Lessee (or its successors), as obligor under the evidence of indebtedness and the security instruments (the “Obligor”), will satisfy and discharge the security instruments and will surrender possession of the Leased Premises to Lessor free and clear of the lien of the Leasehold Mortgage;
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f. The Leasehold Lender shall notify Lessor in the event of any default under the Leasehold Mortgage or the evidence of indebtedness, and Lessor shall have the right, but not the obligation, to cure such default, or at·its election, to discharge the Leasehold Mortgage and evidence of indebtedness in their entirety and to receive an assignment of such Mortgagee’s interest therein, which curing or which discharge shall be accomplished, if at all, within 90 days after Lessor’s receipt of any such notice from the Mortgagee.
g. In the event of any assignment of the Leasehold Mortgage or in the event of a change of address of the Leasehold Lender or of an assignee of the Leasehold Lender, notice of the new name and address shall be provided to the Lessor;
h. The Lessee shall provide Lessor with copies of any amendment or other modification or supplement to the Leasehold Mortgage.
Section 2. Notice to and Consent of Leasehold Lender to Modifications.
Except for any adjustment to the annual rental pursuant to the provisions of Article II, the Lessor and the Lessee will not, alone or by agreement between them, modify or amend this Lease unless notice has been provided to the Leasehold Lender at least thirty (30) days prior to the effective date of said modification or amendment. Such modification shall be effective after said thirty (30) days notice unless the Leasehold Lender shall provide notice of its objection to the Lessor and the Lessee before the expiration of said thirty (30) days period, in which event the modification shall not be effective. It is acknowledged and agreed by the Lessor and the Lessee that the Lessee shall have the sole obligation to obtain any consents that may be required by a Leasehold Lender (which consents, at the discretion of such Leasehold Lender, may be given to the Lessor and the Lessee in advance as to certain subjects or categories of modifications).
The Lessor shall have no obligation to notify the Leasehold Lender of its consent to any sublease or assignment made by the Lessee, and a subleasing or assignment shall not be considered a modification of the Lease.
Section 3. Notice of Default and Cure Rights.
Notwithstanding anything in this Lease to the contrary, if a Leasehold Mortgage has been properly granted in accordance with this Article XII, then if any event of default occurs which entitles the Lessor to terminate this Lease, the Lessor shall have the right to terminate this Lease only if the Lessor notifies the Leasehold Lender of the Lessor’s intent to terminate at least sixty (60) days in advance of the proposed effective date of such termination; provided, however, that the provisions of Section 4 below shall apply if, during such 60-day termination notice period, the Leasehold Lender:
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a. Notifies Lessor of the Leasehold Lender’s desire to cure the event of default;
b. Pays or causes to be paid all annual rental and other payments then due and in arrears and which may become due during such 60-day period; and
c. Complies or in good faith, with reasonable diligence and continuity, commences to comply with all nonmonetary requirements of this Lease then the subject of an event of default and reasonably susceptible of being complied with by such Leasehold Lender.
Section 4. Performance of Lessee’s Obligations by Leasehold Lender. If the Lessor has given notice of its intent to terminate this Lease by reason of any event of default of Lessee, and the Leasehold Lender has proceeded in the manner provided for in Section 3 above, the specified date for the termination of this Lease as fixed by the Lessor in its termination notice shall be extended for a period as shall be reasonably necessary for the Leasehold Lender, proceeding with reasonable diligence and continuity, to complete the acquisition or sale of the Lessee’s interest in this Lease by foreclosure of the Leasehold Mortgage or other appropriate means, provided that the Leasehold Lender, during such period:
a. Pays or causes to be paid the annual rental and other monetary obligations of the Lessee under this Lease as the same become due, and continues its good faith efforts to perform all of Lessee’s other obligations under this Lease, including but not limited to retaining a Qualified Operator to operate the Winter Park Resort; and
b. If not enjoined or stayed, takes reasonable steps to acquire or sell Lessee’s interest in this Lease by foreclosure of the Leasehold Mortgage or other appropriate means.
If at the end of such period described above such Leasehold Lender is complying with this Section 4, this Lease shall not then terminate, and the time for completion by such Leasehold Lender of its foreclosure or other proceedings shall continue so long as such Leasehold Lender is not enjoined or stayed and thereafter for so long as such Leasehold Lender proceeds to complete steps to acquire or sell the Lessee’s interest in this Lease by foreclosure of the Leasehold Mortgage or by other appropriate means with diligence and continuity. Nothing in this Section 4, however, shall be construed to extend this Lease beyond the Term of this Lease nor to require the Leasehold Lender to continue foreclosure proceedings after any event of default has been cured.
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Section 5. Successors by Foreclosure.
The Leasehold Lender or other acquirer of the leasehold estate of Lessee under this Lease pursuant to foreclosure, assignment in lieu of foreclosure, or other proceedings may, upon acquiring such leasehold estate, sell, assign or sublease such leasehold estate to any person provided such proposed purchaser, assignee or subtenant:
a. Has, in the reasonable judgment of Lessor, the financial capacity and access to capital necessary to operate, maintain and develop the Winter Park Resort, in the manner and consistent with the standards set forth in the Operating Lease and other documents governing the Intrawest Transaction;
b. Is not “insolvent” within the meaning of the Colorado Uniform Commercial Code, and provides a certificate from its chief financial officer to the Lessor stating that such person is not insolvent under the meaning of the Bankruptcy Code;
c. Has, in the reasonable judgment of Lessor, both adequate resort and real estate development experience in operating, maintaining and developing regional and destination ski resorts; provided, however, that if circumstances have changed at the time of the proposed sale, assignment or sublease such that skiing is not the predominant amenity at the Winter Park Resort, then the core business of the proposed purchaser, assignee or sublessee shall be relevant to the predominant resort activity or activities then existing at the Winter Park Resort; and
d. Has a good business and moral reputation as determined by the Lessor in its reasonable and informed judgment.
Any person satisfying the foregoing conditions is herein referred to as a “Qualified Operator”.
ARTICLE XIII
NOTICES
All notices permitted or required to be given by this Second Amended and Restated Lease shall be given in writing by personal delivery, overnight courier or by certified mail, return receipt request, postage prepaid, to the other party at the following addresses:
If the notice is to be given to the Lessor, such notice should be addressed to:
The Colorado Arlberg Club
c/o Ronald S. Loser, Esq.
1700 Lincoln Street, Suite 1300
Denver, CO 80203
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With a copy to:
John C. Mitchell, III, Esq.
3900 E. Mexico Avenue, Suite 955
Denver, CO 80210
If the notice is to be given to the Lessee, such notice shall be addressed to:
Winter Park Recreational Association
c/o Rick Pederson, President
717 Seventeenth Street, Suite 2000
Denver, CO 80202
With a copy to:
Mayor, City and County of Denver
1473 Bannock Street, Room 350
Denver, CO 80202-5375
In either case, while the Operating Lease remains in effect, a copy of such notice shall be addressed and delivered to:
Intrawest/Winter Park Operations Corporation
221 Corporate Circle, Suite Q
Golden, CO 80401
Attention: David Barry
with copies to:
Intrawest Corporation
Suite 800, 200 Burrard Street
Vancouver, BC
CANADA, V6C 3L6
Attention: Gary L. Raymond and Corporate Secretary
and to:
Jacobs Chase Frick Kleinkopf & Kelley, LLC
1050 17th Street, Suite 1500
Denver, CO 80265
Attention: David D. Kleinkopf, Esq. and Steven M. Cohen, Esq.
Either party may change its notice address by written notice to the other party as provided for in this Article XIII.
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ARTICLE XIV
MISCELLANEOUS
Section 1. Purchase of Lift Tickets.
During the term of this Lease, Lessee shall cause any sublessee or assignee of its interest hereunder to sell lift tickets to Lessor for use only by its members, their immediate families and bona fide guests of such members, at a price equal to $1.00 less than the lowest group discounted price offered publicly at ticket outlets located in the Denver Metropolitan Area at the time such tickets are purchased.
Section 2. Trespass Prevention.
During the term of this Lease, Lessee shall use commercially reasonable good faith efforts to prevent its employees, agents and invitees, including skiers and other persons participating in activities or programs at the Winter Park Resort, from trespassing on the Club Facilities Site and other real property at the Winter Park Resort owned by Lessor that is not part of the Leased Premises (the “Other Club Property”). If and so long as Lessee meets the foregoing standard and complies with applicable laws governing trespass prevention, neither Lessee nor its assignee or sublessee shall have any liability to Lessor as the result of any such trespass or the consequences thereof; provided, however, that Lessee shall be liable for the acts of its employees and agents committed on the Club Facilities Site or Other Club Property during the scope of employment or at the direction of Lessee.
Section 3. Eminent Domain.
If all of the Leased Premises or a portion of the Leased Premises so significant as to materially interfere with the operation of the Leased Premises as a part of the Winter Park Resort shall be taken by right of eminent domain, Lessee may elect to terminate this Lease effective as of the date of such taking by written notice to Lessor given within ninety (90) days after the date of any such taking. If Lessee so terminates this Lease, then (a) the annual rental payable by Lessee to Lessor under this Lease for the calendar year during which such taking occurs shall be prorated based on the number of days of such year before the date of such taking, and (b) Lessor and Lessee shall have no obligation to pay or perform any terms or conditions of this Lease (including the payment of annual rental) which arise or accrue after the date of such taking. If less than the entire Leased Premises shall be taken by right of eminent domain, or if all or any portion of the Leased Premises shall be taken by right of eminent domain for less than the then remaining the term of this Lease, but if, in either such case, Lessee does not so terminate this Lease, then the annual rental and all other charges payable by Lessee to Lessor under this Lease shall abate equitably according to the nature and extent of such taking. As used herein “taking by right of eminent domain” includes any condemnation or any conveyance in lieu of or under threat of any taking. The entire proceeds pertaining to any such taking shall be paid to Lessor with the exception of any portion of the award allocated to the taking of the Improvements. Lessee acknowledges and agrees that it shall not receive any award for the value of the leasehold interest in the Leased Premises but shall receive only the amount of an award specifically attributable to the Improvements.
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Section 4. Mutual Representations and Warranties.
Lessor and Lessee each represents and warrants to the other that:
a. It is duly incorporated, validly existing and in good standing under Colorado law;
b. Its execution, delivery and performance of this Lease has been duly authorized by all requisite corporate action by its board of directors;
c. Its execution, delivery and performance of this Lease does not and will not create a default under any other agreement to which it is or may become a party, which default materially impairs Lessee’s ability to perform its obligations under this Lease;
d. This Lease is binding on it and enforceable against it in accordance with its terms.
Section 5. Governing Law.
This Agreement shall be construed under and governed by the laws of the State of Colorado. Should any provision of this Agreement be illegal or not enforced under the laws of said state, it shall be considered severable, and the Agreement shall remain in force and be binding upon the parties hereto as though such provision had never been included.
Section 6. Venue.
The parties agree that any litigation brought by either of them that relates to this Lease shall be brought in the state court in Grand County, Colorado, and each party hereby· submits to the jurisdiction of such court.
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Section 7. Estoppel.
Within ten (10) days after the receipt of any written request by Lessor or Lessee from the other party, such other party shall deliver to the requesting party a written and acknowledged statement of an authorized officer certifying that this Lease is in full force and effect, that this Lease constitutes the entire agreement between Lessor and Lessee, without modifications (or setting forth any modifications to this Agreement), that there are no defaults or events which with the giving of notice or passing of time could become defaults under this Lease, that such party has no claim against the other party except as noted, the dates to which the rental and other charges hereunder have been paid, and such other information as such party may reasonably request, it being intended that any such statement delivered pursuant to this Section 7 may be relied upon by any prospective assignee, subtenant, purchaser or mortgagee of the Leased Premises.
Section 8. Attornment.
Upon request of Lessor or a mortgagee or other owner of the Leased Premises, Lessee shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under, any mortgage made by Lessor covering the Leased Premises, attorn to the mortgagee or purchaser of the Leased Premises upon any such foreclosure or sale and recognize such mortgagee or purchaser as Lessor under this Lease, so long as any such mortgagee or purchaser, in a binding written agreement, recognizes Lessee’s rights and interests (including without limitation Intrawest’s interests under the Operating Lease) and assumes all of Lessor’s obligations under this Lease arising after the date of the transfer of ownership of the Leased Premises to such mortgagee or purchaser.
Section 9. Subordination.
So long as (i) Lessee, (ii) at any time before the Operating Lease expires or terminates, Intrawest (or its successor with respect to the tenant’s rights, interests and obligations under the Operating Lease), and (iii) Leasehold Lender receives a non-disturbance agreement from any mortgagee, beneficiary under a deed of trust or holder of any other lien resulting from any other method of financing or refinancing (a “Fee Mortgagee”), Lessee agrees to subordinate this Lease to the lien of any such mortgage, deed of trust or lien now or hereafter encumbering or affecting the Leased Premises (a “Fee Mortgage”). A “non-disturbance agreement” shall mean an agreement, binding on the Fee Mortgagee and its successors acquiring any interest in the Leased Premises by or through such Fee Mortgagee, including without limitation by way of a foreclosure of the Fee Mortgage or a deed or other transfer in lieu of foreclosure (the “Mortgagee’s Successors”), and in recordable form, under which agreement the Fee Mortgagee shall agree that, in the event of a foreclosure of the Fee Mortgage, a deed or other transfer in lieu of foreclosure, or the taking by Fee Mortgagee or any Mortgagee’s Successor of title to, or possession of, the Leased Premises in accordance with the Fee Mortgage, the Fee Mortgagee and the Mortgagee’s Successors shall recognize Lessee’s, Intrawest’s (or its successor’s) and any such Mortgagee’s respective rights and interests with respect to this Lease or the Operating Lease, as the case may be, not disturb their respective possession of the Leased Premises, and assume Lessor’s obligations under this Lease arising after the date of the transfer of ownership of the Leased Premises to such mortgagee or purchaser.
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Section 10. Environmental Matters.
a. Lessee agrees that it shall comply with all local, state and federal laws, rules and regulations dealing with the manufacture, generation, use, storage, treatment, transportation, disposal, release or removal of hazardous substances, materials, pollutants, contaminants, wastes, including but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. 9601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. 1231, et seq., the Emergency Planning and Community Right to Know Act, 33 U.S.C., 11000 et seq., the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. 6901 et seq., the Clean Air Act, 42 U.S.C. 7401 et seq., as such laws maybe amended or modified, whether such laws are presently in existence or promulgated during the Lease term, and all rules and regulations promulgated thereunder (“Environmental Laws”). Without limiting the foregoing, Lessee agrees that, except with respect to the use, storage, transportation or removal of Hazardous Substances (as hereinafter defined) in the normal course of business at the Leased Premises and in accordance with all applicable Environmental Laws, it shall (i) give written notice to Lessor at least seven (7) days in advance of any manufacture, generation, use, storage, treatment, transportation, disposal, release or removal of Hazardous Substances from or on the Leased premises, (ii) give written notice to Lessor within seven (7) days after receipt of any notice of violation, claim suit or investigation relating to Hazardous Substances upon the Leased Premises, (iii) immediately notify Lessor of any Hazardous Substance spill, release or discharge at or affecting the Leased Premises and immediately clean up any such spill, release or discharge in compliance with all applicable Environmental Laws, (iv) not use or employ the Leased Premises or facilities, equipment or services of the Leased Premises to manufacture, generate, use, transport, store, treat or dispose of or release Hazardous Substances, whether or not they were generated or produced on the Leased Premises, and (v) defend, indemnify and hold harmless Lessor against any and all claims, damage, liability and costs (including reasonable attorney and expert fees and cleanup costs) which Lessor may suffer, incur or pay resulting from or arising out of any manufacture, generation, use, storage, treatment, transportation, disposal, release or threat of release of Hazardous Substances from or on the Leased Premises as a result of Lessee’s actions or actions of Lessee’s agents, assignees, sublessees, employees, guests or invitees. “Hazardous Substances” means and includes all toxic or hazardous substances, materials, chemicals, contaminants, pollutants, and wastes of whatever kind or nature, regulated under, defined in, or listed in any Environmental Laws. Hazardous Substances include, without limitation, asbestos, PCBs, CFCs, petroleum and lead-based paint.
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Section 11. Property Taxes.
Lessor and Lessee acknowledge and agree that:
a. Lessor shall be responsible for the payment of all real property taxes and assessments attributable to its ownership of the Leased Premises; and
b. Lessee shall be responsible for the payment of all real property taxes and assessments, to the extent that any exist, attributable to its ownership of Improvements now or hereafter placed upon the Leased Premises.
Section 12. Holdover.
If Lessee or anyone claiming under Lessee holds over on the Leased Premises after the end of the term of this Lease without the express written consent of Lessor, Lessee shall be deemed to be illegally retaining possession and shall pay to Lessor monthly during the entire holdover period, as liquidated damages for loss of use of the Leased Premises, an amount equal to 150% of one twelfth of the annual rental payable immediately prior to the end of the term. No such holding over and no acceptance by Lessor of payments of liquidated damages shall be construed to extend the term of this Lease or to constitute Lessee a tenant of the Leased Premises on any basis whatsoever.
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Section 13. Titles of Articles.
The titles of Articles throughout this Lease are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify or aid in the interpretation, construction or meaning of the provisions of this Lease.
Section 14. Relationship of Parties.
Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent or of partnership or of joint venture or of any association whatsoever between Lessor and Lessee, it being expressly understood and agreed that neither the computation of rent nor any other provisions contained in this Lease nor any act or acts of the parties hereto shall be deemed to create any relationship between Lessor and Lessee other than the relationship of landlord and tenant.
Section 15. Operating Lease.
Lessee represents and warrants to Lessor that Lessee has all necessary power, authority and legal right to execute and deliver the Operating Lease and has taken all action necessary to authorize execution, delivery and performance of the Operating Lease. Lessee agrees to perform its obligations under the Operating Lease and to use reasonable efforts to enforce the performance of Intrawest’s obligations under the Operating Lease. Lessee shall deliver copies to Lessor of any written notification sent or received by Lessee claiming that any party to the Operating Lease is in default in the performance of its obligations thereunder.
Section 16. Survival of Provisions.
Lessee’s obligations under Article XIV, Section 10 and its obligations to make any payments to Lessor and remove any Improvements from the Leased Premises shall survive any expiration or termination of this Lease.
Section 17. Lessor’s Transfer.
Lessor may transfer any portion of the Leased Premises and any of its rights under this Lease in a bona fide transaction. If Lessor assigns its rights under this Lease, then Lessor shall thereby be released from any further obligations hereunder.
Section 18. Lessor’s Liability.
The liability of Lessor to Lessee for any default by Lessor under the terms of this Lease shall be limited to Lessee’s actual direct, but not consequential, damages therefor and shall be recoverable only from the interest of Lessor in the Leased Premises, free and clear of any Fee Mortgage, and Lessor shall not be personally liable for any deficiency.
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ARTICLE XV
ENTIRE AGREEMENT
This Second Amended and Restated Lease contains all of the agreements, understandings and conditions now made and existing between the Lessor and Lessee, all previous agreements and understandings, including but not limited to the Ground Lease Agreement, and the First Amended and Restated Lease being deemed merged in this Second Amended and Restated Lease. This Second Amended and Restated Lease shall be binding upon the parties hereto and their respective successors and assigns.
ARTICLE XVI
ASSIGNMENT, SUBLEASES AND LEASEHOLD MORTGAGES
Except as otherwise provided in this Article XVI and in Article XII of this Lease, it is understood that the Lessee may not assign or otherwise transfer its rights, interests or obligations under this Lease, or sublease the Leased Premises or any portion thereof, without first obtaining the prior written consent of Lessor, which consent shall not be unreasonably, withheld, delayed or conditioned, provided such assignee, transferee or sublessee is a Qualified Operator. In addition, except as permitted under said Article XII, no such assignment, transfer or sublease shall be permitted if Lessee is then in default hereunder. Any such assignee, transferee or sublessee must satisfy the qualifications set forth in Section 5 of said Article XII, and any such assignee, transferee or sublessee must assume and agree to be bound by all the terms and provisions of this Lease. The agreements and other instruments effecting any such assignment, transfer or sublease shall be subject to Lessor’s prior approval, which shall not be unreasonably withheld, delayed or conditioned. Lessee agrees to reimburse Lessor promptly for all out-of-pocket costs reasonably incurred by Lessor (including reasonable attorney’s fees) in considering any proposed assignment, sublease or other transfer of this Lease or any interest therein by Lessee and the negotiation and preparation of any documentation pertaining thereto.
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IN WITNESS WHEREOF, the parties hereto have caused their respective corporate names to be hereunto subscribed by their duly authorized officers, and their respective corporate seals to be hereunto affixed, attested by their secretaries, the day and year first above written.
LESSOR: | |||
(SEAL) | THE COLORADO ARLBERG CLUB, a nonprofit Colorado corporation, | ||
Attest: |
By: | /s/ Ronald S. Loser | |
Ronald S. Loser, President | |||
/s/ Brian E. McGee | |||
Brian E. McGee, Assistant Secretary | |||
STATE OF COLORADO | ) | ||
) ss. | |||
CITY AND COUNTY OF DENVER | ) |
The foregoing Second Amended and Restated Ground Lease Agreement consisting of 35 typewritten pages, inclusive of this page, was acknowledged before me this 20th day of December 2002, by Ronald S. Loser, as President, and by Brian E. McGee, as Assistant Secretary of The Colorado Arlberg Club, a nonprofit Colorado corporation.
Witness my hand and official seal.
My Commission expires: March 5, 2006
/s/ Paul A. Jacqes | |||
Notary Public |
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LESSEE: | |||
WINTER PARK RECREATIONAL ASSOCIATION, a nonprofit Colorado corporation | |||
(SEAL) | By: |
/s/ Rick Pederson | |
Rick Pederson, President | |||
STATE OF COLORADO | ) | ||
) ss. | |||
CITY AND COUNTY OF DENVER | ) |
The foregoing Second Amended and Restated Ground Lease Agreement consisting of 36 typewritten pages, inclusive of this page, was acknowledged before me this 22nd day of December 2002, by Rick Pederson as President, of Winter Park Recreational Association, a nonprofit Colorado corporation.
Witness my hand and official seal.
My Commission expires: March 22, 2006
/s/ Michael A. Smith | |||
Notary Public |
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EXHIBIT A
TO
SECOND AMENDED AND RESTATED
GROUND LEASE
LEGAL DESCRIPTION
PARCEL FF-1. (aka Parcel I)
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Beginning at Corner No. 2 of said Mary Jane Placer Mining Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00 feet;
thence S57°47’49”W, 480.30 feet;
thence S13°14’15”W, parallel with Line 1-2 of said Mary Jane Placer Mining Claim, 523.6 feet to Line 3-2 thereof;
thence S76°46’00”E, along Line 3-2 of said Mary Jane Placer Mining Claim, 765.00 feet to the Point of Beginning.
PARCEL FF-2 (aka Parcel II-A)
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of sections 10 and 15, suspended, Township 2 south, Range 75 west of the 6th P.M., described as follows:
Beginning at Corner No. 2 of said Mary Jane Placer Mining
Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence
N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00 feet;
thence
S57°47’49”W, 480.30 feet to the TRUE POINT OF BEGINNING;
thence S13°14’15”W, parallel
with Line 1-2 of said Mary Jane Placer Mining Claim, 523.6 feet to Line 3-2 thereof:
thence N76°46’00”W,
along Line 2-3 of said Mary Jane Placer Mining Claim, 865.00;
thence N13°14’15”E, parallel with Line 2-1
of said Mary Jane Placer Mining Claim, 523.60 feet to a point that bears N76°46’00”W from the True Point of
Beginning;
thence S76°46’00”E, parallel with Line 3-2 of said Mary Jane Placer Mining Claim, 865.00 feet
to the TRUE POINT OF BEGINNING.
PARCEL FF-3 (aka Parcel II-B)
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Beginning at Corner No. 4 of said Mary Jane Placer Mining Claim;
thence S76°46’15”E, along Line 4-1 of said Mary Jane Placer Mining Claim, 250.00 feet;
thence S13°14’00”W, parallel with Line 4-3 of said Mary Jane Placer Mining Claim, 1,150.00;
thence N76°46’15”W, parallel with Line 1-4 of said Mary Jane Placer Mining Claim, 250.00 feet to Line 3-4 thereof;
thence N13°14’00”E, along Line 3-4 of said Mary Jane Placer Mining Claim 1.150.00 feet to the Point of Beginning.
PARCEL FF-4 (aka as a portion of Parcel III-A)
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of sections 10 and 15, suspended, Township 2 South, Range 75 west of the 6th P.M., described as follows:
Beginning at Corner No. 2 of said Mary Jane Placer Mining Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 81.85 feet to the TRUE POINT OF BEGINNING;
thence continuing S80°09’43”W, 218.15 feet;
thence N06°48’42”W, 231.45 feet;
thence S57°47’04”E, 139.13 feet to a point of curve to the right;
thence Southeasterly, 53.69 feet along the arc of said curve to the right to a point tangent, said arc having a radius of 230.00
feet, a delta angle of 13°22’28” and being subtended by a chord that bears S51°05’50”E, 53.57 feet;
thence S44°24’36”E, 118.62 feet to the TRUE POINT OF BEGINNING.
PARCEL FF-5 (Utility Corridor through Iron Horse):
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral survey No.16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Commencing at Corner No. 2 of said Mary Jane Placer Mining Claim;
thence N13°14’15”E., along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00 feet;
thence N06°48’42”W, 515.52 feet;
thence S83°10’04”W, 200.00 feet;
thence N06°49’55”W, 903.71 feet;
thence N83°10’05”E, along the most southerly line of Development Parcel “D” as described in Agreement
Designating Development Parcels recorded September 5, 1980 in Book 280 at Page 651, a distance of 338.67 feet;
thence S34°31’01”E, along the Southwesterly line of Development Parcel “C” as described in said Agreement
Designating Development Parcels, 45.16 feet to the TRUE POINT OF BEGINNING;
thence N38°42’50”E, 60.00.feet;
thence N30°24’06”E, 133.00 feet;
thence N47°55’34”E, 292.19 feet to Line 4-1 of said Mary Jane Placer Mining Claim;
thence S76°46’15”E, along Line 4-1 of said Mary Jane Placer Mining Claim, 29.75 feet;
thence S45°18’00”E, along Northeasterly line of said Development Parcel “D”, 35.60 feet;
thence S47°55’34”W, 311.08 feet;
thence S38°42’50”W, 194.09 feet to the southwesterly line of said Development Parcel “C”;
thence N34°31’0l”W, along the southwesterly line of said Development Parcel “C”, 41.78 feet to the
TRUE POINT OF BEGINNING.
EXHIBIT A–1
TO
SECOND AMENDED AND RESTATED
GROUND LEASE
EXHIBIT “B”
TO
SECOND AMENDED AND RESTATED GROUND LEASE AGREEMENT
BETWEEN THE COLORADO ARLBERG CLUB, AS LESSOR,
AND WINTER·PARK RECREATIONAL ASSOCIATION, AS LESSEE
Development Parcel “A”:
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Commencing at Corner No.2 of said Mary Jane Placer Mining Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00 feet to a point from which a point hereinafter referred to as Point “A”
bears S57°47’49”W and the TRUE POINT OF BEGINNING;
thence N06°48’42”W, 515.52 feet;
thence S83°10’04”W, 200.00 feet;
thence N06°49’55”W, 500.00 feet;
thence S83°10’05”W, 394.81 feet;
thence S13°14’15”W, parallel with Line 2-1 of said Mary Jane Placer Mining Claim, 1,092.07 feet to a point that
bears N76°46’00”W from said Point “A”;
thence S76°46’00”E, parallel with Line 3-2 of said Mary Jane Placer Mining Claim, 570.00 feet to said Point “A”;
thence N57°47’49”E, 480.30 feet to the TRUE POINT OF BEGINNING.
Development Parcel “B”:
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Commencing at Corner No. 2 of said Mary Jane Placer Mining Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00 feet;
thence N06°48’42”W, 515.52 feet to the TRUE POINT OF BEGINNING:
thence S83°10’04”W, 200.00 feet;
thence N06°49’55”W, 705.00 feet;
thence N83°10’04”E, 200.00 feet;
thence S51°49’55”E, 282.84 feet;
thence S06°49’55”E, 505.00 feet to a point that bears N83°10’04”E from the True Point of Beginning;
thence S83°10’04”W, 200.00 feet to the TRUE POINT OF·BEGINNING.
Development Parcel “C”:
That Portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th·P.M., described as follows:
Commencing at Corner No.1 of said Mary Jane Placer Mining
Claim; thence S13°14’15”W, along Line 1-2 of said Mary Jane Placer Mining Claim, 300.00 feet to the TRUE
POINT OF BEGINNING;
thence N45°18’00”W, 346.53 feet;
thence Southwesterly, along the arc of a curve
concave to the Northwest (said arc having a radius of 200.00 feet, a delta angle of 26°56’56”, and being
subtended by a chord that bears S74°51’11”W, 93.20.feet), an arc distance of 94.07 feet to a point
tangent;
thence S88°19’39”W, 206.00 feet to a point of curve to the right;
EXHIBIT “B”
TO
AMENDED AND RESTATED GROUND LEASE AGREEMENT
BETWEEN THE COLORADO ARLBERG CLUB, AS LESSOR,
AND WINTER·PARK RECREATIONAL ASSOCIATION, AS LESSEE
Development Parcel “A”:
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Commencing at Corner No. 2 of said Mary Jane Placer Mining
Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00
feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00 feet to a point
from which a point hereinafter referred to as Point “A” bears S57°47’49”W and the TRUE POINT OF
BEGINNING;
thence N06°48’42”W, 515.52 feet;
thence S83°10’04”W, 200.00
feet;
thence N06°49’55”W, 500.00 feet;
thence S83°10’05”W, 394.81 feet;
thence
S13°14’15”W, parallel with Line 2-1 of said Mary Jane Placer Mining Claim, 1,092.07 feet to a point
that bears N76°46’00”W from said Point “A”;
thence S76°46’00”E, parallel with
Line 3-2 of said Mary Jane Placer Mining Claim, 570.00 feet to said Point “A”;
thence
N57°47’49”E, 480.30 feet to the TRUE POINT OF BEGINNING.
Development Parcel “B”:
That portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Commencing at Corner No. 2 of said Mary Jane Placer Mining Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00 feet;
thence N06°48’42”W, 515.52 feet to the TRUE POINT OF BEGINNING:
thence S83°10’04”W, 200.00 feet;
thence N06°49’55”W, 705.00 feet;
thence N83°10’04”E, 200.00 feet;
thence S51°49’55”E, 282.84 feet;
thence S06°49’55”E, 505.00 feet to a point that bears N83°10’04”E from the True Point of Beginning;
thence S83°10’04”W, 200.00 feet to the TRUE POINT OF BEGINNING.
Development Parcel “C”:
That Portion of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Sections 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
Commencing at Corner No. 1 of said Mary Jane Placer Mining
Claim; thence S13°14’15”W, along Line 1-2 of said Mary Jane Placer Mining Claim, 300.00 feet to the TRUE
POINT OF BEGINNING;
thence N45°18’00”W, 346.53 feet;
thence Southwesterly, along the arc of a curve
concave to the Northwest (said arc having a radius of 200.00 feet, a delta angle of 26°56’56”, and being
subtended by a chord that bears S74°51’11”W, 93.20 feet), an arc distance of 94.07 feel to a point
tangent;
thence S88°19’39”W, 206.00 feet to a point of curve to the right;
EXHIBIT C
APPRAISAL INSTRUCTIONS
I. Definitions. The Colorado Arlberg Club (“CAC”)
Winter Park Recreational Association (“WPRA”)
Second Amended and Restated Ground Lease Agreement dated December 20, 2002
between The Colorado Arlberg Club as Lessor and Winter Park Recreational Association as Lessee (the “Lease”)
Master Plan for Winter Park Ski Area approved by the Regional Forester in March 1980, as amended (the “Master Plan”)
Final Planned Unit Development Plan for West Portal Village at Winter Park as approved by the Board of County Commissioners of Grand County on July 7, 1980 (the “Final P.U.D. Plan”)
Premises currently leased by CAC to WPRA pursuant to the Lease (the “Leased Premises”)
II. Purpose. The purpose of the appraisal is to determine the Annual Fair Rental Value (as defined below) of the Leased Premises subject to all provisions (except the annual rental provisions) of the Lease, including the respective rights and obligations of the parties and permitted uses of the Leased Premises.
III. Annual Fair Rental Value. The Annual Fair Rental Value of the Leased Premises shall mean the most probable rent in terms of the money which the Leased Premises would bring as of the relevant appraisal date set forth in the Lease if exposed for rental in a competitive and open market, in an all cash transaction, under all conditions requisite to a fair rental, the lessor and lessee each acting prudently and knowledgeably, and assuming the rental is not affected by undue stimulus.
IV. Assumptions and Requirements. The determination of the Annual Fair Rental Value shall be a complete appraisal presented in a self-contained appraisal report, according to the Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation. The Leased Premises are to be appraised under its highest and best use. Requirements of the appraisal are as follows.
a. Each appraiser will value the Leased Premises in its current condition, as encumbered by the Lease and all other governing documents.
b. Each appraiser will address and evaluate market conditions for the allowable uses of the Leased Premises in its current condition, as encumbered by the Lease and all other governing documents.
c. Each appraiser will arrive at its own opinion of highest and best use, and will value the Leased Premises under such conclusion. The conclusion of highest and best use must account for physical constraints, legal constraints, and market considerations.
d. Each appraiser will consider at least two independent methods of valuation.
V. Materials to be Provided to the Appraisers. Each appraiser will be provided copies of the Lease, the Master Plan, the Final P.U.D. Plan, the existing survey, a recent title insurance commitment (including all exception documents referenced therein) and such other documents as either CAC or WPRA considers relevant to the appraisal. All such available materials shall be provided to each of the appraisers as soon as both appraisers have been retained. All materials shall be held in confidence by the appraisers and used solely by them and solely for the purposes of preparing the appraisals. Further, each appraiser shall obtain such other and additional information as he or she deems appropriate. The appraisers shall be free to compare and exchange data.
VI. Briefing Session. A briefing session, shall be held on a day and at a time and place mutually acceptable to CAC, WPRA and the appraisers. At such session, both such appraisers shall be present and each shall be entitled to ask such questions of CAC’s and WPRA’s designated representative(s) as such appraiser deems necessary or appropriate to assist him or her in preparing the appraisal. Further, CAC and WPRA acknowledge that the appraisers may have follow-up questions that arise during the course of the appraisal process, and CAC and WPRA agree to make its designated representative(s) available at all reasonable times to respond to any follow-up inquiries the appraisers may have. Regardless of who initiates the inquiry, both appraisers shall be given the responsive materials and information.
VII. Reliance. The appraisers shall have the right to assume the accuracy and completeness of all materials and information provided pursuant to these Appraisal Instructions.
VIII. Appraisal Methodology. WPRA and CAC shall jointly select a Qualified Appraiser to make a determination as to the Annual Fair Rental Value of the Leased Premises. WPRA and CAC shall share equally the costs of any such appraisal. If the parties cannot agree on a Qualified Appraiser, then WPRA and CAC each shall select a Qualified Appraiser, and each such Qualified Appraiser shall determine the Annual Fair Rental Value of the Demised Premises. Notwithstanding the foregoing, neither WPRA nor CAC shall disclose to the appraisers by which party each was selected. WPRA and CAC shall share equally the costs of such appraisal costs of their respective appraisals.
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If only one Qualified Appraiser is chosen, the Annual Fair Rental Value shall be the amount as determined by such appraisal. If two Qualified Appraisers are chosen, and if the lower appraised value is at least ninety percent (90%) of the higher appraised value, the appraised values shall be averaged, which average shall be the Annual Fair Rental Value of the Leased Premises. If the lower appraised value is less than ninety percent (90%) of the higher appraised value, the two Qualified Appraisers shall choose a third Qualified Appraiser who shall determine the Annual Fair Rental Value of the Leased Premises. WPRA and CAC shall share equally the costs of any such third appraisal. The Annual Fair Rental Value then shall be the average of this third Qualified Appraiser’s appraised value and the appraised value of the other of the two Qualified Appraisers that is closer in value to the third Qualified Appraiser’s appraised value. The Annual Fair Rental Value of the Leased Premises determined in accordance with this mechanism shall be final, conclusive and binding on Intrawest and Arlberg for purposes of determining the Annual Fair Rental Value of the Leased Premises.
“Qualified Appraiser” means an independent MAI certified real estate appraiser with at least ten (10) years of experience in appraising mountain resort development properties in Colorado.
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EXHIBIT “D”
TO
SECOND AMENDED AND RESTATED GROUND LEASE AGREEMENT
BETWEEN THE COLORADO ARLBERG CLUB, AS LESSOR,
AND WINTER PARK RECREATIONAL ASSOCIATION, AS LESSEE
All of the MARY JANE PLACER MINING CLAIM (U.S. Mineral Survey No. 16378) located in the Fraser Mining District, and embracing portions of Section 10 and 15, suspended, Township 2 South, Range 75 West of the 6th P.M., described as follows:
EXCEPT that portion of said Mary Jane Placer Mining Claim described as follows:
Commencing at Corner No. 2 of said Mary Jane Placer
Mining Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet to the TRUE POINT OF BEGINNING;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00 feet;
thence N06°48’42”W, 515.52 feet;
thence S83°10’04”W, 200.00 feet;
thence N06°49’55”W, 1,443.71 feet to Line 4-1 of said Mary Jane Placer Mining Claim;
thence S76°46’15”E, along Line 4-1 of said Mary Jane Placer Mining Claim, 1,288.00 feet to Corner No.1 thereof;
thence S13°14’15”W, along Line 1-2 of said Mary Jane Placer Mining Claim, 1,653.66 feet to the TRUE POINT OF BEGINNING,
AND EXCEPT that portion of said Mary Jane Placer Mining Claim described as follows:
Beginning at Corner No. 2 of said Mary Jane
Placer Mining Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim,
984.00 feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 300.00
feet;
thence S57°47’49”W, 480.30 feet;
thence S13°14’15”W, parallel with the Southerly line
of said Mary Jane Placer Mining Claim, 523.6 feet to Line 3-2 thereof;
thence S76°46’00”E, along Line 3-2
of said Mary Jane Placer Mining Claim, 765.00 feet to the point of Beginning.
AND TOGETHER WITH
That portion of the said Mary Jane Placer Mining Claim described as follows:
Commencing at Corner No. 2 of said Mary Jane Placer Mining Claim;
thence N13°14’15”E, along Line 2-1 of said Mary Jane Placer Mining Claim, 984.00 feet;
thence N76°59’56”W, 152.00 feet;
thence S80°09’43”W, 81.85 feet to the TRUE POINT OF BEGINNING;
thence continuing S80°09’43”W, 218.15 feet;
thence N06°48’42”W, 231.45 feet;
thence S57°47’04”E, 139.13 feet to a point of curve to the right;
thence Southeasterly, along the arc of said curve to the right (said arc having a radius of 230.00 feet, a delta angle of 13°22’28”,
and being subtended by a chord that bears S51°05’50”E, 53.57 feet), an arc distance of 53.69 feet to a point tangent;
thence S44°24’36”E, 118.62 feet to the TRUE POINT OF BEGINNING.
ALL SITUATE, LYING AND BEING IN THE COUNTY OF GRAND, STATE OF COLORADO.
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INDEMNIFICATION AGREEMENT
AGREEMENT, dated as of [ ], 2014 (this “Agreement”), between Intrawest Resorts Holdings, Inc., a Delaware corporation (the “Company”), and [ ] (“Indemnitee”).
WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today’s environment;
WHEREAS, the Company’s Restated Certificate of Incorporation, as amended from time to time (“Certificate of Incorporation”) and Amended and Restated Bylaws, as amended from time to time (“Bylaws”) require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted by law and the Indemnitee has been serving and continues to serve as a director and/or officer of the Company in part in reliance on such Certificate of Incorporation and Bylaws;
WHEREAS, uncertainties as to the availability of indemnification created by recent court decisions may increase the risk that the Company will be unable to retain and attract as directors and officers the most capable persons available;
WHEREAS, the board of directors of the Company (“Board of Directors”) has determined that the inability of the Company to retain and attract as directors and officers the most capable persons would be detrimental to the interests of the Company and that the Company therefore should seek to assure such persons that indemnification and insurance coverage will be available in the future;
WHEREAS, the parties intend that any rights the Indemnitee may have from Indemnitee-Related Entities (as defined herein) shall be secondary to the primary obligation of the Company to indemnify and hold harmless the Indemnitee under this Agreement; and
WHEREAS, in recognition of Indemnitee’s need for protection against personal liability, and in part to provide Indemnitee with specific contractual assurance that the protection promised by the Company’s Certificate of Incorporation and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Certificate of Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and for the continued coverage of Indemnitee under the directors’ and officers’ liability insurance policy of the Company.
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NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to serve the Company directly or, at its request, another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement:
(a) | Change in Control: shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than Fortress Investment Group LLC and its affiliates and other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of shares of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 20% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors and any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other entity other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all of the Company’s assets. | |
(b) | Claim: means any threatened, asserted, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or other, including any arbitration or other alternative dispute resolution mechanism, or any appeal of any kind thereof, or any inquiry or investigation, whether instituted by (or in the right of) the Company or any governmental agency or any other person or entity, in which Indemnitee was, is, may be or will be involved as a party, witness or otherwise. | |
(c) | ERISA: means the Employee Retirement Income Security Act of 1974, as amended. | |
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(d) | Expenses: include attorneys’ fees and all other direct or indirect costs, expenses and obligations, including judgments, fines, penalties, interest, appeal bonds, amounts paid in settlement with the approval of the Company, and counsel fees and disbursements (including, without limitation, experts’ fees, court costs, retainers, appeal bond premiums, transcript fees, duplicating, printing and binding costs, as well as telecommunications, postage and courier charges) paid or incurred in connection with investigating, prosecuting, defending, being a witness in or participating in (including on appeal), or preparing to investigate, prosecute, defend, be a witness in or participate in, any Claim relating to any Indemnifiable Event, and shall include (without limitation) all attorneys’ fees and all other expenses incurred by or on behalf of an Indemnitee in connection with preparing and submitting any requests or statements for indemnification, advancement or any other right provided by this Agreement (including, without limitation, such fees or expenses incurred in connection with legal proceedings contemplated by Section 2(d) hereof). | |
(e) | Indemnifiable Amounts: means (i) any and all liabilities, Expenses, damages, judgments, fines, penalties, ERISA excise taxes and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such liabilities, Expenses, damages, judgments, fines, penalties, ERISA excise taxes or amounts paid in settlement) arising out of or resulting from any Claim relating to an Indemnifiable Event, (ii) any liability pursuant to a loan guaranty or otherwise, for any indebtedness of the Company or any subsidiary of the Company, including, without limitation, any indebtedness which the Company or any subsidiary of the Company has assumed or taken subject to, and (iii) any liabilities which an Indemnitee incurs as a result of acting on behalf of the Company (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the United States Internal Revenue Service, penalties assessed by the Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise). | |
(f) | Indemnifiable Event: means any event or occurrence, whether occurring before, on or after the date of this Agreement, related to the fact that Indemnitee is or was a director and/or officer or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, manager, member, partner, tax matter partner, trustee, agent, fiduciary or similar capacity, of another company, corporation, limited liability company, partnership, joint venture, employee benefit plan, trust or other entity or enterprise, or by reason of anything done or not done by Indemnitee in any such capacity (in all cases whether or not Indemnitee is acting or serving in any such capacity or has such status at the time any Indemnifiable Amount is incurred for which indemnification, advancement or any other right can be provided by this Agreement). The term “Company,” where the context requires when used in this Agreement, may be construed to include such other company, corporation, limited liability company, partnership, joint venture, employee benefit plan, trust or other entity or enterprise. | |
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(g) | Indemnitee-Related Entities: means any company, corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity or enterprise (other than the Company or any other company, corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity or enterprise Indemnitee has agreed, on behalf of the Company or at the Company’s request, to serve as a director, officer, employee or agent and which service is covered by the indemnity described in this Agreement) from whom an Indemnitee may be entitled to indemnification or advancement of Expenses with respect to which, in whole or in part, the Company may also have an indemnification or advancement obligation. | |
(h) | Independent Legal Counsel: means an attorney or firm of attorneys (following a Change in Control, selected in accordance with the provisions of Section 3 hereof) who is experienced in matters of corporate law and who shall not have otherwise performed services for the Company or Indemnitee within the last five years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements). | |
(i) | Jointly Indemnifiable Claim: means any Claim for which the Indemnitee may be entitled to indemnification from both an Indemnitee-Related Entity and the Company pursuant to applicable law, any indemnification agreement or the certificate of incorporation, by-laws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or comparable organizational documents of the Company and an Indemnitee-Related Entity. | |
(j) | Reviewing Party: means any appropriate person or body consisting of a member or members of the Board of Directors or any other person or body appointed by the Board of Directors who is not a party to the particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel. | |
(k) | Voting Securities: means any securities of the Company which vote generally in the election of directors. |
2. Basic Indemnification Arrangement; Advancement of Expenses.
(a) | In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee, or cause Indemnitee to be indemnified, to the fullest extent permitted by law as soon as practicable but in any event no later than thirty (30) days after written demand is presented to the Company, and hold Indemnitee harmless against any and all Indemnifiable Amounts. | |
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(b) | If so requested by Indemnitee, the Company shall advance, or cause to be advanced (within two business days of such request), any and all Expenses incurred by Indemnitee (an “Expense Advance”). The Company shall, in accordance with such request (but without duplication), either (i) pay, or cause to be paid, such Expenses on behalf of Indemnitee, or (ii) reimburse, or cause the reimbursement of, Indemnitee for such Expenses. Subject to Section 2(d), Indemnitee’s right to an Expense Advance is absolute and shall not be subject to any prior determination by the Reviewing Party that the Indemnitee has satisfied any applicable standard of conduct for indemnification. | |
(c) | Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification or advancement of Expenses pursuant to this Agreement in connection with any Claim initiated by Indemnitee unless (i) the Company has joined in or the Board of Directors has authorized or consented to the initiation of such Claim or (ii) the Claim is one to enforce Indemnitee’s rights under this Agreement. | |
(d) | Notwithstanding the foregoing, (i) the indemnification obligations of the Company under Section 2(a) shall be subject to the condition that the Reviewing Party shall not have determined (in a written legal opinion, in any case in which the Independent Legal Counsel is involved as required by Section 3 hereof) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an Expense Advance pursuant to Section 2(b) shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines (in a written legal opinion, in any case in which the Independent Legal Counsel is involved as required by Section 3 hereof) that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid (it being understood and agreed that the foregoing agreement by Indemnitee shall be deemed to satisfy any requirement that Indemnitee provide the Company with an undertaking to repay any Expense Advance if it is ultimately determined that the Indemnitee is not entitled to indemnification under applicable law); provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). Indemnitee’s undertaking to repay such Expense Advances shall be unsecured and interest-free. If there has not been a Change in Control, the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control, the Reviewing Party shall be the Independent Legal Counsel referred to in Section 3 hereof. If there has been no determination by the Reviewing Party within thirty (30) days after written demand is presented to the Company or if the Reviewing Party determines that Indemnitee would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York or the State of Delaware having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. |
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3. Change in Control. The Company agrees that if there is a Change in Control then with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any provision of the Company’s Certificate of Incorporation or the Bylaws now or hereafter in effect, the Company shall seek legal advice only from Independent Legal Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably delayed, conditioned or withheld). Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Legal Counsel and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
4. Indemnification for Additional Expenses. The Company shall indemnify, or cause the indemnification of, Indemnitee against any and all Expenses and, if requested by Indemnitee, shall advance such Expenses to Indemnitee subject to and in accordance with Section 2(b), which are incurred by Indemnitee in connection with any action brought by Indemnitee for (i) indemnification or an Expense Advance by the Company under this Agreement or any provision of the Company’s Certificate of Incorporation or the Bylaws now or hereafter in effect and/or (ii) recovery under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, Expense Advance or insurance recovery, as the case may be; provided that Indemnitee shall be required to reimburse such Expenses in the event that a final judicial determination is made (as to which all rights of appeal therefrom have been exhausted or lapsed) that such action brought by Indemnitee, or the defense by Indemnitee of an action brought by the Company or any other person, as applicable, was frivolous or in bad faith.
5. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses or other Indemnifiable Amounts in respect of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.
6. Burden of Proof, Etc. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder the Reviewing Party, court, any finder of fact or other relevant person shall presume that the Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification, and the burden of proof shall be on the Company (or any other person or entity disputing such conclusions) to establish, by clear and convincing evidence, that Indemnitee is not so entitled.
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7. Reliance as Safe Harbor. For purposes of this Agreement, Indemnitee shall be deemed to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company if Indemnitee’s actions or omissions to act are taken in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports or statements furnished to Indemnitee by the officers or employees of the Company in the course of their duties, or by committees of the Board of Directors, or by any other person (including legal counsel, accountants and financial advisors) as to matters Indemnitee reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. In addition, the knowledge and/or actions, or failures to act, of any director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnity hereunder.
8. No Other Presumptions. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under applicable law shall be a defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief.
9. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Certificate of Incorporation, the Bylaws or the Delaware General Corporation Law or otherwise. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Company’s Certificate of Incorporation, the Bylaws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. To the extent that there is a conflict or inconsistency between the terms of this Agreement, the Company’s Certificate of Incorporation or the Bylaws, it is the intent of the parties hereto that the Indemnitee shall enjoy the greater benefits regardless of whether contained herein or in the Company’s Certificate of Incorporation or the Bylaws. No amendment or alteration of the Company’s Certificate of Incorporation or the Bylaws or any other agreement shall adversely affect the rights provided to Indemnitee under this Agreement.
10. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing directors’ and officers’ liability insurance, the Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for the Company’s directors and officers. If the Company has such insurance in effect at the time the Company receives from Indemnitee any notice of the commencement of an action, suit or proceeding, the Company shall give prompt notice of the commencement of such action, suit or proceeding to the insurers in accordance with the procedures set forth in the policy. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policy.
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11. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern.
12. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
13. Subrogation. Subject to Section 14 hereof, in the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers reasonably required and shall do everything that may be reasonably necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. The Company shall pay or reimburse all Expenses actually and reasonably incurred by Indemnitee in connection with such subrogation.
14. Jointly Indemnifiable Claims. Given that certain Jointly Indemnifiable Claims may arise due to the relationship between the Indemnitee-Related Entities and the Company and the service of the Indemnitee as a director and/or officer of the Company at the request of the Indemnitee-Related Entities, the Company acknowledges and agrees that the Company shall be fully and primarily responsible for the payment to the Indemnitee in respect of indemnification and advancement of expenses in connection with any such Jointly Indemnifiable Claim, pursuant to and in accordance with the terms of this Agreement, irrespective of any right of recovery the Indemnitee may have from the Indemnitee-Related Entities. Under no circumstance shall the Company be entitled to any right of subrogation or contribution by the Indemnitee-Related Entities and no right of recovery the Indemnitee may have from the Indemnitee-Related Entities shall reduce or otherwise alter the rights of the Indemnitee or the obligations of the Company hereunder. In the event that any of the Indemnitee-Related Entities shall make any payment to the Indemnitee in respect of indemnification or advancement of Expenses with respect to any Jointly Indemnifiable Claim, the Company agrees that such payment or advancement shall not extinguish or affect in any way the rights of the Indemnitee under this Agreement and further agrees that the Indemnitee-Related Entity making such payment shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee against the Company. Each of the Indemnitee-Related Entities shall be third-party beneficiaries with respect to this Section 14, entitled to enforce this Section 14 against the Company as though each such Indemnitee-Related Entity were a party to this Agreement.
15. No Duplication of Payments. Subject to Section 14 hereof, the Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, or any provision of the Company’s Certificate of Incorporation or the Bylaws or otherwise) of the amounts otherwise indemnifiable hereunder.
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16. Defense of Claims. The Company shall be entitled to participate in the defense of any Claim relating to an Indemnifiable Event or to assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee believes, after consultation with counsel selected by Indemnitee, that (i) the use of counsel chosen by the Company to represent Indemnitee would present such counsel with an actual or potential conflict of interest, (ii) the named parties in any such Claim (including any impleaded parties) include both the Company, or any subsidiary of the Company, and Indemnitee and Indemnitee concludes that there may be one or more legal defenses available to him or her that are different from or in addition to those available to the Company or any subsidiary of the Company, or (iii) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, then Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Claim) at the Company’s expense. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any Claim relating to an Indemnifiable Event effected without the Company’s prior written consent. The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any Claim relating to an Indemnifiable Event which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of Indemnitee from all liability on all claims that are the subject matter of such Claim. Neither the Company nor Indemnitee shall unreasonably withhold, condition or delay its or his or her consent to any proposed settlement; provided that Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of Indemnitee. In no event shall Indemnitee be required to waive, prejudice or limit attorney-client privilege or work-product protection or other applicable privilege or protection.
17. No Adverse Settlement. The Company shall not seek, nor shall it agree to, consent to, support, or agree not to contest any settlement or other resolution of any Claim(s), or settlement or other resolution of any other claim, action, proceeding, demand, investigation or other matter that has the actual or purported effect of extinguishing, limiting or impairing Indemnitee’s rights hereunder, including without limitation the entry of any bar order or other order, decree or stipulation, pursuant to 15 U.S.C. § 78u-4 (the Private Securities Litigation Reform Act), or any similar foreign, federal or state statute, regulation, rule or law.
18. Binding Effect, Etc. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, (including any direct or indirect successor or continuing company by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee and his or her counsel, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer and/or director of the Company or of any other entity or enterprise at the Company’s request.
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19. Security. To the extent requested by Indemnitee and approved by the Board of Directors, the Company may at any time and from time to time provide security to Indemnitee for the obligations of the Company hereunder through an irrevocable bank line of credit, funded trust or other collateral or by other means. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of such Indemnitee.
20. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to the terms of this Agreement.
21. Specific Performance, Etc. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue.
22. Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written document delivered in person or sent by facsimile, nationally recognized overnight courier or personal delivery, addressed to such party at the address set forth below or such other address as may hereafter be designated on the signature pages of this Agreement or in writing by such party to the other parties:
(a) | If to the Company, to: |
Intrawest | Resorts Holdings, Inc. |
1621 | 18th St., Suite 300 |
Denver, | Colorado 80202 |
Fax: | [●] |
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Attn: Chief General Counsel
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Fax: (212) 735-2000
Attn: Gregory Fernicola, Esq.
(b) | If to the Indemnitee, to the address set forth on Annex A hereto. |
All such notices, requests, consents and other communications shall be deemed to have been given or made if and when received (including by overnight courier) by the parties at the above addresses or sent by electronic transmission, with confirmation received, to the facsimile numbers specified above (or at such other address or facsimile number for a party as shall be specified by like notice). Any notice delivered by any party hereto to any other party hereto shall also be delivered to each other party hereto simultaneously with delivery to the first party receiving such notice.
23. Counterparts. This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
24. Headings. The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.
25. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
INTRAWEST RESORTS HOLDINGS, INC. | |||
By: | |||
Name: | |||
Title: | |||
[Indemnitee] | |||
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ANNEX A
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THE YEAR TWO THOUSAND
the twenty-eighth day of January;
BEFORE Mtre. Pierre Dupré, notary, practicing in the city of Saint-Jovite, province of Québec:
APPEARING:
The Société de la faune et des parcs du Québec, created by An Act respecting the Société de la faune et des parcs du Québec (S.Q. 1999, c. 36), having its principal place of business in Québec City, represented herein by Mr. André Magny, its chief executive officer, duly authorized herein pursuant to the By-Law respecting the delegation of signature, powers and functions of the Société de la faune et des parcs du Québec adopted pursuant to resolution 99-05 of December three nineteen thousand ninety-nine (December 3, 1999) of the board of directors of the Société, which is still in force having been neither amended nor revoked, a certified copy of which remains joined to the original minute number twelve thousand and forty-seven (12,047) of the undersigned notary.
(hereinafter called the “FAPAQ”)
AND:
STATION MONT TREMBLANT, LIMITED PARTNERSHIP, a limited partnership duly constituted pursuant to the laws of the Province of Québec, having its principal place of business at 3005, chemin Principal, Mont-Tremblant, Québec, J0T 1Z0, represented herein by its sole general partner, Station Mont Tremblant Inc., represented by Michel Aubin, its president, and Charles Massicotte, its vice-president, duly authorized for the purposes hereof pursuant to a resolution adopted by the unanimous consent of the directors taking effect December six nineteen thousand ninety-one (December 6, 1991), which is still in force having been neither amended nor revoked, a copy of which is annexed to minute number seven thousand sixty-five (7065) of the undersigned notary, a copy of which is registered at the registry office for the registration division of Terrebonne (now, the land registry office for the registration division of Terrebonne) (the “Office”) under number 1017835.
(hereinafter called the “Company”)
WHICH PARTIES make the following declarations:
CONSIDERING THAT the Government of Québec (the “Government”) has concluded a lease with Station Mont Tremblant Inc. pursuant to the terms of an act signed before Mtre. Raymond Boily, notary, on March 8, 1984, bearing number 7622 of his minutes, relating to the leased territory described therein, which lease has been modified by an act signed before Mtre. Pierre Bolduc, notary, on May 12, 1987, bearing number 553 of his minutes, between the Government and Station Mont Tremblant Lodge Inc. (previously known as Station Mont Tremblant Inc.) (acts collectively designated as the “Initial Lease”);
CONSIDERING THAT the Company has purchased substantially all of the assets of Station Mont Tremblant Lodge Inc. (“SMTL”) in relation to its ski and vacation business, notably all buildings, installations, improvements (including ski trails), works and equipment erected by or for SMTL on the leased territory pursuant to the Initial Lease as well as all the rights and obligations of SMTL pursuant to the Initial Lease, and that the Company has accepted these rights and has assumed these obligations.
CONSIDERING THAT the Government has transferred the Initial Lease to the Company and that the Government and the Company have amended and consolidated the Initial Lease pursuant to the terms of an act intervened on August 31st, 1991 before Mtre. Louis Desjardins, notary, registered at the Office under number 965473 (the “Act of Transfer and Consolidation”);
CONSIDERING THAT several real servitudes were constituted pursuant to the Act of Transfer and Consolidation in favour of the leased territory pursuant to this act as dominant land, and against certain immovables of the Company, as servient land;
CONSIDERING THAT the Government and the Company have amended the Act of Transfer and Consolidation to modify the coverage of certain of the servitudes pursuant to (i) an act of modification of servitude signed before the undersigned notary on December 22, 1994, rights of which were published at the Office under number 1076314, (ii) an act of modification of servitude signed before the undersigned notary on July 4, 1995, the rights of which were published at the Office under number 1090408, and (iii) an act of modification of servitude signed today (collectively, the “Act of Modification of Servitudes”) (the Act of Transfer and Consolidation as modified pursuant to the terms of the Act of Modification of Servitudes being hereinafter called the “Lease”);
CONSIDERING THAT the FAPAQ has succeeded the Government and that it therefore controls and administers the entire territory included within a park pursuant to the terms of Section 6 of the Parks Act (R.S.Q., c. P-9) as amended by Section 143 of the Act Respecting the Société de la Faune et des Parcs du Québec (S.Q. 1999, c. 36);
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CONSIDERING THAT the FAPAQ and the Company wish to amend the Lease in order to modify the limits of the territory that is leased thereunder to recognize a zoning principle for the leased territory and to establish a partnership relative to a part of the territory carved out from the leased territory;
THEREFORE, in light of the preamble and the reciprocal undertakings contained herein, the FAPAQ and the Company agree as follows:
PRELIMINARY PROVISION – CONDITIONAL ACT
This act and all of the associated rights, notably all amendments to the Lease provided for herein, are conditional and will only take effect with:
i) | the adoption and the coming into force of the regulation (the “regulation amending zoning”) amending the Regulation respecting parks in order to establish new zoning of the Mont-Tremblant recreational park, a bill of which was published in Part 2 of the Gazette Officielle du Québec on April 28, 1999; and |
ii) | the adoption and the coming into force of the regulation amending the Regulation Respecting the Mont-Tremblant Recreational Park in order to permit the modification of the limits of the leased territority pursuant to the terms of the Lease. |
Until these conditions have been met, the Lease will continue and remains in force without the amendments provided for herein. In case the conditions mentioned at paragraph iii) (sic), above, is not realized within the period mentioned above, this act will become null and without effect.
Certain expressions used in this act, particularly with respect to immovables, are defined at Article 35 of this act.
ARTICLE 1 - CONSOLIDATION OF THE LEASE
The parties agree, in light of the modifications already made to the Lease and in light of those agreed to by the parties hereby, to consolidate, by virtue of this act, all the provisions. The following text therefore includes all of its provisions that will, as of the date hereof, govern the parties.
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The FAPAQ hereby waives all of the rights of servitude constituted pursuant to the Lease but only insofar as these rights are in favor of the Liberated Territory.
The Company declares that, to the best of its knowledge, no Improvements (as defined hereinbelow) belong to it on the Liberated Territory. Nevertheless, to the extent that same may exist, the FAPAQ becomes the owner thereof without indemnity.
ARTICLE 2 - LOCATION
The FAPAQ leases to the Company, which accepts, the Leased Territory located within the limits of Mont-Tremblant Park, in the regional county municipality of the Laurentians.
The Company declares that it has visited the Leased Territory, and that it is satisfied therewith.
ARTICLE 3 - TELECOMMUNICATIONS
3.1 | The Telecommunications Site is composed of Site I (managed by the Minister of Culture and Communications, on the authorization of the Government and now of the FAPAQ) and of a second site (“Site II”) (comprising part of the Leased Territory which is under lease (the “Radio-Canada Lease”) in favor of Société Radio-Canada pursuant to order in council number 1388 of June 9, 1961, amended by the order in council number 2171 of November 1st, 1961). The Telecommunications Site is used for purposes of telecommunications. |
3.2 | The FAPAQ recognizes that the Company may negotiate an agreement for the purposes of redeveloping or replacing the current telecommunications facilities and equipment, the whole at the cost and expenses of the Company. To the extent that the facilities and equipment on Site I can be integrated into the immovables of the Company, Site I, subject to the management rights of the Minister of Culture and Communications, may become part of the Leased Territory as long as the rights and interests of the persons served by this Site I are respected. The Company recognizes that its rights pursuant to the terms of this Lease are subject to the rights of Société Radio-Canada pursuant to the Radio-Canada lease and undertakes to respect the rights and interests of the persons served by Site II. |
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3.3 | The Leased Territory is subject to the right of passage by the trail named “NANSEN” by the users of the Telecommunications Site for the purpose of repairs and maintenance of the facilities and equipment. The Company must agree, at the request of the Minister of Culture and Communications, to the terms of exercise of this right of way. The Company may negotiate an agreement with the Minister of Culture and Communications for the purposes of changing the location of this right of way to a place as convenient for its exercise as at present, the whole at the cost and expenses of the Company. Any agreement in this regard is subject and under reserve of the authorization of FAPAQ. |
ARTICLE 4 - TERM
This lease is consented to for a term of fifty (50) years beginning on the first (1st) day of April, 1983, and ending on the thirty-first (31st) day of March, 2033, and, from August 31st, 1991, being the date of the signature of the Act of Transfer and Consolidation, it is extended from the first (1st) day of April, 2033 until the thirtieth (30th) day of June, 2051.
ARTICLE 5 - RENTAL
5.1 | The rental having been paid until December 31st, 1991, the Company must pay to the Government for each year of rental, starting from the year beginning January 1st, 1992, the rental of FIVE THOUSAND DOLLARS ($5,000), which rental will be increased every five (5) years beginning January 1st, 1997. Beginning January 1st, 2000, the rental will become payable to the FAPAQ. |
5.2 | The rental will be increased by a percentage equal to the percentage of the increase in the consumer price index of Canada (CPI) over the sixty (60) month period preceding the day of the increase, calculated according to the following formula: |
Percentage of increase in = the CPI |
CPI of the previous November | CPI of November 5 years earlier | X 100 | ||
CPI of November 5 years earlier |
The data used in this respect will be that of the month of November published by Statistics Canada on or about the 15th day of the month of December or any other equivalent method which would replace it.
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5.3 | This rental will be payable in advance on the first day of January of each year, the first payment being due and payable on January 1st, 1992. Furthermore, for each year in which this rental is increased, the amount corresponding to the increase will be payable, for each of the years in which there is an increase, on the first day of July following the date of the increase. |
In each year in which the rental is to be increased, the FAPAQ will inform the Company in writing of the amount corresponding to the increase and of the data used to calculate this amount.
5.4 | All rental must be payable to FAPAQ by cheque to the order of the Minister of Finance, payable in Canadian legal tender and transmitted to the address of the head office of FAPAQ or its successors. |
5.5 | The Company hereby waives its right to compensation for all and any claims or indemnities, present and future, against any rental or any other amount due hereunder. The Company agrees to pay the rental and these other amounts irrespective of any claim, restitution or compensation that it may revendicate or that a third party may claim in its name, without any reduction or deduction. |
5.6 | Each time that the Company is in default to pay when due any rental or any other amount due to the FAPAQ pursuant to this lease, the Company must pay interest at the rate applicable at that time for which the Government charges on claims for unpaid income taxes, from the day at which the amount was normally due until complete payment, the whole under reserve of all rights and recourses of the FAPAQ. |
ARTICLE 6 - UsE OF LEASED TERRITORY
6.1 | The Leased Territory, subject to the authorizations required by the Parks Act which may be provided by the FAPAQ by way of the Master Development Plan or the Immovable Program provided for at Section 7 of this Lease is only used: |
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6.1.1 | for the portion of the Leased Territory bordered in blue on the plan annexed hereto as Schedule A (the “Service Zone”) only for the purposes of developing, erecting, building, modifying, exploiting, maintaining and repairing a ski and sports and recreational activity center including structures, buildings, facilities, improvements, developments (including ski trails), works and equipment required for the practice of downhill skiing, cross-country skiing and ski touring, recreational tourism, back packing, cycling and for the operation of other sport and leisure activities, in conformity with the Master Development Plan in force from time to time; and |
6.1.2 | for the portion of the Leased Territory outlined in green on the plan annexed hereto as Schedule A (the “Ambient Zone”), all the uses permitted pursuant to Article 6.1.1 except that it will not be permitted to develop, erect, build and operate mechanical chairlifts, artificial snowmaking systems, nor any other related equipment or Improvement (as defined herein below) intended for the practice of downhill skiing, and the development, erection, building and operation of any Improvement intended for other sport or leisure activities must respect the regulations set out pursuant to the Parks Act and applying to an Ambient Zone (in the sense of the Regulation Respecting Parks enacted by Decree 567-83 of March 23, 1983 (G.O.Q.II, 1645) as subsequently amended (administrative reference, P-9, r.7)). In the future, if an amendment to the Regulation Respecting Parks is enacted by the Government and substantially changes the rules applying to an Ambient Zone at the time of the signature of this act, FAPAQ undertakes to indemnify the Company for the damage which may be caused to it. |
For these purposes, and subject to the restrictions of Article 6.1.2, the Company may at its costs, develop, erect, build, modify, operate, maintain and repair on the Leased Territory mechanical chairlifts, artificial snowmaking systems and related equipment, as well as other structures, buildings, facilities, improvements, developments (including ski trails), works and equipment, structures and material (hereinafter collectively called the “Improvements”) used or required for the operation of a ski center and its facilities and sport and leisure activities.
6.2 | Notwithstanding paragraph 6.1, the Company does not have the right to organize or operate a camping ground on the Leased Territory. |
6.3 | During the term of this lease, the Company shall operate its business and carry on its activities in the Leased Territory pursuant to the Master Development Plan in effect from time to time and following good practice. |
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6.4 | No provision of this lease limits the right of the Company to modify or cease operating its business or carrying on its activities in the Leased Territory from time to time, subject to the Company continuing to operate its ski and ski school business during the ski season from December to March if permitted by the climatic and snow conditions. Subject to the foregoing, during the term of this lease, the Company does not have the right to abandon or evacuate the Leased Territory in whole or in part. |
ARTICLE 7 - MASTER DEVELOPMENT PLAN AND CAPITAL PROGRAM
7.1 | Throughout the entire term of this Lease, the Company must prepare and submit for approval by the FAPAQ long term master development plans for the Leased Territory and the Land subject to the servitude belonging to the Company, which is mentioned at Article 10 (hereinafter called the “Master Development Plan(s)”) and annual capital programs following the terms below. |
7.2 | The FAPAQ recognizes that the Company has submitted to it and that it has approved the Master Development Plan for the Leased Territory and the Land subject to servitude for the period ending December 31st, 2001. Given the important amendments to the Lease pursuant to the terms hereof, the Company may submit and the FAPAQ may review a modified Master Plan for the period ending December 31st, 2001. |
7.3 | By no later than January 1st, 2002, the Company must submit for the approval by the FAPAQ a Master Development Plan covering the period beginning on that date and ending on December 31st, 2006. This Master Plan must include notably all development projects, a study relating to the continued recreational potential of the park as well as a land use plan for the land in the Leased Territory and the Land subject to servitude. The Master Development Plan must also include a pro forma capital budget reflecting a detailed program of scheduling of works and investments to be realized throughout the period beginning January 1st, 2002, and ending December 31st, 2006. |
7.4 | Then, the Company must submit for the approval by the FAPAQ such a Master Development Plan for each subsequent period of five (5) years, being the first day of January of the years 2007, 2012, 2017, 2022, 2027, 2032, 2037, 2042, and 2047, this last one covering a period of four (4) years and six (6) months. |
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7.5 | The Company undertakes to conform to the Master Development Plan submitted pursuant to the terms of this Article and approved by the FAPAQ, respecting the objectives, the general principles and the strategy provided for therein. |
7.6 | By no later than March 1st, 1999, the Company must submit for the approval by the FAPAQ the program of capital expenditures that it plans to realize for the period beginning January 1st, 1999 and ending December 31st, 1999. Then, each year, by not later than March 1st, beginning March 1st, 2000, the Company must, unless exempted by the FAPAQ, submit for approval by the FAPAQ the program of capital expenditures (the “Capital Program”) that it plans to realize for the period beginning January 1st and ending December 31st of that year, which must notably include the description of each project, the valuation of their costs and a demonstration of their conformity with the Master Development Plan in force at that time. |
7.7 | If the FAPAQ does not approve any Master Development Plan or annual Capital Program, the Company must submit anew, for approval by FAPAQ, within the prescribed time by the latter, a Master Development Plan or a revised Capital Program to meet the requirements of the FAPAQ. With respect to investments concerned by such Master Development Plan or such Capital Program, requirements of the FAPAQ may not exceed the investment undertakings provided for at Article 9 until December 31st, 2006. Thereafter, these requirements may include investments relating to obligations of maintenance and repair provided for at Article 12. |
7.8 | Once the Capital Program has been approved by the FAPAQ, the Company must undertake and follow out its realization according to the timeline provided therein until completion, in a diligent manner and according to good practice, unless otherwise authorized by the FAPAQ. However, any default by the Company to respect the timeline provided for because of any delay caused by force majeure or beyond the control of the Company is not considered as a default pursuant to this lease. |
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7.9 | A Master Development Plan or a Capital Program may be amended at any time, with the authorization of the FAPAQ. |
ARTICLE 8 - WORKS IN THE PARK
8.1 | The FAPAQ, as provided for in the Parks Act, authorizes the Company to undertake on the Leased Territory in the Mont-Tremblant Recreational Park, all maintenance or repair works limited to the maintenance or restoration of capacity or efficiency of an improvement. |
8.2 | The Company cannot proceed with the erection, building or modification of the Improvements, including the planning of the land or modification of the natural environment (waterways, tree cutting, etc.) on the Leased Territory, without the prior authorization of the FAPAQ as provided for in the Parks Act, which may be given by way of the Master Development Plan or the Capital Program and must include written approval of the plans and specifications of the works to be undertaken. These works must be executed without major modifications, in conformity with the authorization given and with the plans and specifications approved, unless otherwise authorized. |
8.3 | The approval of the plans and specifications submitted by the Company in the context of a Capital Program shall not be interpreted as a declaration of conformity of these plans and specifications with the applicable laws and regulations or as having the effect of exempting the Company from seeking a permit or an authorization otherwise required pursuant to applicable law, a government regulation, a municipal by-law or otherwise. |
ARTICLE 9 - Investment undertakings
9.1 | The Company engages and obligates itself towards the Government that the real property investments for the period beginning at the date hereof and ending December 31st, 1996, provided for in the first Master Development Plan made for the period beginning at the date hereof and ending December 31st, 2001, and approved by the Government, will total a minimum amount of fifteen million dollars ($15,000,000), and will be realized before December 31st, 1996. The FAPAQ acknowledges that the Company has respected these undertakings and obligations. |
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9.2 | Furthermore, the Company obligates itself to the FAPAQ that the real estate investments on the Leased Territory and the Land subject to servitude provided for in the Master Development Plans approved by the FAPAQ and covering the period beginning on the date hereof and ending on December 31st, 2006, amount to a total of at least thirty million dollars ($30,000,000), and will be realized before December 31st, 2006. |
Notwithstanding anything contained in this lease, the Company will not be in default pursuant to this lease if the Company does not fulfill the global undertaking provided for by this paragraph 9.2, to the extent that the Company is justified in its decision by the market conditions existing from time to time or by its financial performance in the operation of the Leased Territory and the Land subject to servitude, the whole which nevertheless will not prevent the FAPAQ from addressing the courts to enforce this undertaking in the event that the Company abuses the discretion provided to it by this paragraph.
9.3 | The value of any sale of a Real Estate Asset (as defined herein below) being part of the Improvements, acquired after the acquisition of the Improvements pursuant to the Purchase Agreement (as this term is defined in the Act of Transfer and Consolidation), will be added to the investment undertaking. |
9.4 | For the purposes of Article 9 and of each Inventory of Real Estate Assets approved pursuant to Article 21: |
9.4.1 | the amount of any non-refundable government financial aid received by the Company in relation to the acquisition of an asset making up the Improvements will be deducted from the cost of acquisition of this asset; and |
9.4.2 | the cost of acquisition of any asset making up the Improvements and acquired with any governmental loan will be reduced by an amount equal to the difference between 1) the amount of this government loan used to acquire this asset, and 2) the present value of the total amount of payments in capital and interest to be paid in the context of this government loan, established by discounting this total amount at the preferential rate of the National Bank of Canada in effect at the time of the disbursement of this governmental loan. |
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9.5 | The value of the acquisitions and dispositions of assets and financial aid received for the purposes of the undertaking of investments provided for in paragraphs 9.1 and 9.2, is established based on the values recorded respectively for the items in the Inventory of Real Estate Assets prepared in conformity with what is provided for to that effect in the present lease for each year comprising the undertaking for investment. |
ARTICLE 10 - SERVITUDE
10.1 | The Company recognizes that certain lands belonging to it are part of the infrastructures related to the operation of a skiable domain on the Leased Territory, are situated outside of the Leased Territory, and are used in conjunction therewith. |
10.2 | Therefore, the Company constitutes on the servient Land – south face, as a servient land, in favour of the Leased Territory, as a dominant land, a real and perpetual servitude for the purposes of installing, maintaining, operating thereon trails and related facilities for sports and leisure activities and all necessary equipment, notably waterwork systems and the power transmission lines as well as for the purposes of ensuring passage by foot, by car or otherwise as well as car parking. |
10.3 | The FAPAQ acknowledges that the Company, with the agreement of the FAPAQ which may not be refused without a valid reason, may change the site of the servient land for the servitudes established pursuant to Article 10.2 to a location as convenient for its exercise as the site of the servient land described herein, the whole at the cost and expenses of the Company and according to any Master Development Plan and Capital Program in place from time to time. |
10.4 | The Company constitutes on the Northern Camp Estate, as a servient land, in favour of the Leased Territory, as a dominant land, a real and perpetual servitude for the following purposes: |
10.4.1 | the installation, maintenance, and operation of ski trails and related facilities for sport and leisure activities and all necessary equipment, notably, waterwork systems and power transmission lines as well as for the purposes of insuring passage by foot, by car or otherwise as well as car parking. This servitude must be exercised at the locations provided for this purpose from time to time (collectively, the “Trail”), at the sole discretion of the owner of the servient land acting reasonably. The Trail must include the base of any mechanical chairlift that is situated partly on the Leased Territory and partly on the servient estate, as well as any part of the servient land developed for the purposes of skiing. The Trail must also include any part of the servient land required for the purpose of allowing skiers to conveniently access said bases of mechanical chairlifts from the ski trails on the Leased Territory adjacent to the servient land; |
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10.4.2 | the installation, maintenance, repair and replacement of a road (the “Road”) having a right of way of at least fifteen (15) meters and otherwise in conformity with the applicable municipal by-laws to allow access between the public road, on one hand, and the Trail or the Leased Territory, on the other hand; |
10.4.3 | the installation, maintenance, repair and replacement of one or several parking areas including at least five hundred (500) parking spaces in conformity with the applicable municipal by-laws and which are not allocated to specific real estate projects for the purposes of building permits; |
10.4.4 | the installation, maintenance, repair and replacement of a high-voltage power distribution line linking the trail with the public road; |
10.4.5 | the installation, the maintenance, the repair and the replacement of water pipes, sewer pipe and artificial snow lines (supply and waste) on a strip of at least six (6) meters linking the Trail to the point of origin or destination. |
10.5 | The Company constitutes on the Valley Land, as a servient land, in favour of the Leased Territory, as a dominant land, a real and perpetual servitude for the following purposes: |
10.5.1 | the installation, maintenance, repair and operation of ski trails and related facilities for sport and leisure activities and any necessary equipment, notably waterwork systems and power transmission lines as well as to ensure passage by foot, by car or otherwise as well as car parking. This servitude must be exercised in locations provided for this purpose from time to time (collectively the “Trail”), to the sole discretion of the owner of the servient land acting reasonably. The Trail must include the base of any mechanical chairlift that is situated in part on the Leased Territory and in part on the servient land, as well as any part of the servient land developed for the purposes of skiing. The Trail must also include any part of the servient land required in order to allow skiers to conveniently access said bases of mechanical chairlifts from the ski trails on the Leased Territory adjacent to the servient land; |
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10.5.2 | the installation, maintenance, repair and replacement of a road (the “Road”) having a right of way of at least fifteen (15) meters and otherwise in conformity with applicable municipal by-laws to allow access between the public road, on the one hand, and the Trail or the Leased Territory on the other hand; |
10.5.3 | the installation, maintenance, repair and replacement of one or several parking areas including at least five hundred (500) parking spaces in conformity with applicable municipal by-laws and which are not allocated to specific real estate projects for the purposes of building permits; |
10.5.4 | the installation, maintenance, repair and replacement of a high-voltage power transmission line connecting the trail with the public road; |
10.5.5 | the installation, maintenance, repair and replacement of water pipes, sewer pipes and artificial snow lines (supply and waste) on a strip of at least six (6) meters connecting the Trail to their point of origin or destination; |
The rights of servitude constituted under the terms of each of Articles 10.4.1 to 10.4.5 and 10.5.1 to 10.5.5 must be exercised in the locations provided for this purpose from time to time at the choice of the owner of the servient land, acting reasonably and with the consent or the deemed consent of the owner of the dominant land. The consent of the owner of the dominant land will be deemed given in the case where the owner of the dominant land does not respond, either positively or negatively, within thirty (30) days, to the request from the owner of the servient land to consider a proposal for the location of exercise. At any time and by unilateral act, the owner of the servient land may cancel said rights or some of them relating to specific parcels, but only to the extent that (i) location of exercise of the servitudes is not on these parcels and (ii) it remains possible to conveniently exercise all the rights in question on other parts of the servient land. The owner of the servient land must specify to the owner of the dominant land within a period of thirty (30) days from a request to this effect, the locations where all the rights of servitude mentioned above are exercised. If the owner of the servient land modifies the location of exercise of these servitudes, he alone must assume the costs resulting from such modification.
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ARTICLE 11 - SURETYSHIP
11.1 | The Company may confide to third parties the erection, building or modification of the Improvements including the development of the land, roads or the modification of the natural environment in the Leased Territory, provided however prior submission of evidence to FAPAQ that the Company is the beneficiary of the following suretyship issued by companies legally entitled to act as sureties in Québec: |
11.1.1 | suretyship for the payment of labour and material, pursuant to which the third party contractor and the guaranteeing company will be jointly and solidarily liable for the payment of the labour and the material required for such erection, building, modification or development, for up to an amount equal to half of the total cost estimated for such works; |
11.1.2 | suretyship for execution pursuant to which (i) the third party contractor and the guaranteeing company will be jointly and solidarily liable for the complete execution according to the plans and specifications approved by FAPAQ as stipulated above, of such erection, building, modification or development up to an amount equal to half the total cost estimated for such works; (ii) the guaranteeing company will consent that the contract for such works may be modified and/or delayed; (iii) in the case of the non-execution of such works, the guaranteeing company will undertake and do the works required pursuant to the plans and specifications approved by the FAPAQ as stipulated above, failing which the Company may complete them at the expenses of the guaranteeing company, the latter of which not being at any time called upon to pay more than an amount equal to half the total cost estimated for the works. |
11.2 | However, if the works that the Company has undertaken by these contractors does not exceed or should not exceed, according to reasonable estimates, the amount of ONE HUNDRED THOUSAND dollars ($100,000.00) for one contract, this obligation to require such suretyship will not be imposed. |
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11.3 | However, if the Company is acting as general contractor, the Company is not obligated to provide suretyship if the Company, for the purposes of guaranteeing the payment of labour and materials, deposits in trust with a trustee, an amount equal to ten percent (10%) of the total cost estimated for such works in cash or by irrevocable bank letter of credit, which sum may not be discharged until the expiry of prescribed periods provided for by law for the publication of legal hypothecs, if no legal hypothec is published, or for the purposes of paying and cancelling legal hypothecs which may have been legally published, the balance of which, if any, being remitted to the Company. |
11.4 | Furthermore, the Company is not obligated to provide the suretyships required at paragraph 11.1 nor the deposit required at paragraph 11.3 if the financial institution providing loans for the execution of the works requires, for the execution of these works, a hold back of at least ten percent (10%) of the total cost estimated for such works in the manner provided for by paragraph 11.3 until the expiry of the prescribed periods provided for by law for the publication of legal hypothecs. |
ARTICLE 12 - MAINTENANCE AND REPAIR
12.1 | At all times during the term of this lease, and at its own costs, the Company must maintain the Leased Territory in good condition, and repair and maintain the Improvements belonging the Company, situated on the Leased Territory; and maintain the whole in good condition as would a careful owner, except with respect the deterioration due to normal usage which does not impede the suitable usage and enjoyment of these Improvements. The Company undertakes to do this maintenance, to make these repairs at its own costs when necessary or when reasonably required by the FAPAQ, the whole until the end of this lease. This obligation does not apply to the Improvements that, during the term of the lease, are recognized to be in disuse, unnecessary or non-profitable by the FAPAQ and the Company, by way of the Master Development Plan provided for at Article 7; in the latter case, the Master Development Plan must provide measures for preservation and security or destruction or alienation of these Improvements by the Company, at the expenses of the Company. |
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12.2 | Notwithstanding paragraph 12.1, during the last ten (10) years of the term of this lease, the Company will not be required to undertake maintenance and repairs to the Improvements that are in disuse, unnecessary or non-profitable as long as the Company identifies them as such in the Master Development Plan provided for by Article 7, nor to undertake repairs to Improvements that are damaged or destroyed in whole or in part, as long as such damages or destructions are not caused its gross negligence, if the Company exercises its rights to terminate this lease before the expiry of the term as provided for at paragraph 14.9. |
12.3 | The FAPAQ, through its employees, representatives or agents, will have the right, at any time, during normal business hours, to enter the Leased Territory and the Improvements belonging to the Company, and to examine the state in which they are maintained, repaired, developed and kept. The FAPAQ in the context of the Company’s obligations pursuant to paragraph 12.1, may send to the Company a notice requiring that the latter execute this maintenance or undertake repairs deemed necessary following such examination. However, failure by the FAPAQ to provide a notice does not release the Company from its obligations. If the Company does not conform to the request by the FAPAQ to undertake such maintenance, or to make such repairs within the prescribed limits set by the FAPAQ, the latter may undertake these repairs or maintenance at the costs of the Company. |
ARTICLE 13 - INSURANCE
13.1 | The Company must, at its own costs, take out and maintain in force throughout the entire term of this lease: |
13.1.1 | insurance for the Improvements erected on the Leased Territory for their entire replacement value for any loss or damage caused by fire, smoke, wind, storms, hail, lightning, flooding, explosions, riots, shocks by airplane or vehicle, acts of vandalism, collapse, earthquakes, and other risks covered by an “all risks” rider applying to all fire insurance policies and for all other risks which are customarily insured under the terms of the supplementary guarantees rider of the Association of insurers of Canada. |
13.1.2 | general and civil liability insurance for the mutual benefit of the FAPAQ and the Company, for all claims, for bodily injury, death, or material damages and events taking place on the Leased Territory in the amount of at least five million dollars ($5,000,000) in the case of bodily injury, death, material damages or any other events for which the FAPAQ and the Company may be held severally or solidarily liable. Beginning January 1st, 1997 and, thereafter, every five (5) years, the amount of this general and civil liability insurance may, after consultation with the Company, be increased by the FAPAQ, taking into account the practices of insuring these risks of insurers in similar situations and subject to the FAPAQ advising the Company at least six (6) months before the date of the expiry of each five (5) year period. |
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13.2 | Subject to paragraph 13.1, the amounts and the form of these insurance policies must be to the satisfaction of the FAPAQ. Each and all of these policies must designate the FAPAQ as a co-insured to the extent of its interests and, in the case of civil liability insurance, the policy must contain a provision insuring claims between co-insureds, between the FAPAQ and the Company. Each and all of these policies must stipulate that the insured will have no right of subrogation against the FAPAQ with respect to any loss or damage covered by such insurance or with respect to payments made to settle any claims against the FAPAQ or the Company covered by this insurance or to relieve FAPAQ or the Company of their liability covered by such insurance. Notwithstanding any provisions herein, in the event that this insurance does not completely cover any loss or damage, because of provisions providing for deductibles (premium clause), or because the amount of the loss or damage exceeds the coverage of the policy, the FAPAQ will not be liable and the Company must relieve the FAPAQ from any liability and indemnify it and hold it harmless with respect to any claims for the portion of the amount of the loss or damage that is not covered. The Company must obtain the undertaking from the insurers under these policies to advise the FAPAQ in writing at least sixty (60) days before any cancellation of these policies. The Company agrees that, in the event that it does not take out or maintain in force any of these insurances, the FAPAQ will have the right to do so in its place and to pay the premium and the Company must then reimburse the FAPAQ, upon the initial request, the amount paid for the premium. On or before January 1st of each year, the Company must provide the FAPAQ a certificate establishing that the insurance is in force, as provided for herein. |
13.3 | These policies may contain a clause relating to hypothecary guarantees in favor of hypothecary creditors having rights in the Improvements erected on the Leased Territory. The Company may, at the request of any hypothecary creditor or power of attorney acting for the bondholders, include in the insurance policy or policies over the Improvements built on the Leased Territory, a rider pursuant to which the hypothecary creditors or the powers of attorney on behalf of the bondholders will receive any insurance payments ahead of any persons, including the FAPAQ and only for the hypothecary creditors or the powers of attorney for the bondholders, up to the amount of the sums due to them under the regime of the act or acts creating hypothecs or trust. |
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13.4 | If the hypothecary creditor or creditors or the power or powers of attorney on behalf of the bondholders demand payment of insurance benefits and if any insurance benefits remain after payment to hypothecary creditors or powers of attorney acting on behalf of bondholders, this excess must be deposited by insurance company or companies with a chartered bank designated by the FAPAQ, in a joint account, bearing interest, in the name of the FAPAQ and the Company both of whom agree that this excess will be used solely for the restoration or the replacement of the Improvements erected on the Leased Territory, according to the provisions stipulated at Article 14. |
ARTICLE 14 - TOTAL OR PARTIAL LOSS
14.1 | If fire or any other cause damages or destroys, in whole or in part, the Improvements of the Company on the Leased Territory, this lease will remain in effect and the Company must restore or reconstruct the Improvements so damaged or destroyed, or replace them. The Company, to the extent that additional delays are not caused by force majeure or by events outside of its control, must undertake the necessary work within a period of one hundred and eighty (180) days and must follow through and complete its work with diligence, except on the consent of the parties. |
14.2 | Notwithstanding any contrary provisions herein, the Company is not required to undertake the restoration, construction or replacement of the Improvements where the Improvements were, at the time of their loss or damage, already in disuse, unnecessary or non profitable as provided for in paragraph 12.1. |
14.3 | The Company will obtain and maintain new insurance policies with respect to the repairs, restorations and replacements in order to conform to the preceding Article 13. |
14.4 | The insufficiency of insurance benefits following any loss may not be invoked by the Company in relation to its obligation to restore, build, or replace the Improvements damaged or destroyed by the loss nor in relation to its other obligations pursuant to the terms of this lease. |
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14.5 | When the monies have been deposited by an insurer in a bank account controlled jointly by the FAPAQ and the Company, as provided above at paragraph 13.4, the FAPAQ will allow, subject to paragraph 14.6, that these amounts be given and paid to the Company by the banker as the works for restoration, rebuilding or replacement of the damaged or destroyed Improvements progress if the Company shows the availability of other sufficient funds to complete the restoration, rebuilding or replacement and provided that it satisfies the requirements of the FAPAQ as stipulated hereinbelow. |
14.6 | If it is established that the total cost of the works and material required for the restoration, rebuilding or replacement of the damaged or destroyed Improvements will probably exceed the total availabilities of the Company as represented by the joint bank account described above and any promise of loan satisfactory to the FAPAQ: |
14.6.1 | the FAPAQ will not be obligated to allow the amounts in the bank account described above to be remitted and paid to the Company until the latter has conducted the works or incorporated the materials that it will have paid so that the Improvements being rebuilt, restored or replaced following damage or destruction are ready in a state in which the Company’s cash available represented by the bank account and promises of loan described above are deemed reasonably satisfactory and sufficient to complete this restoration, rebuilding or replacement; |
14.6.2 | the FAPAQ may choose to allocate these amounts deposited in this bank account to the building by the Company of new Improvements, but without these new Improvements exceeding the amount deposited in this bank account and any hypothecary loan or other amount which may be obtained for this purpose. |
14.7 | In the event that the insurance indemnities paid by the insurance companies exceed the cost of restoration, rebuilding, or replacement of the Improvements that were damaged or destroyed, the FAPAQ undertakes to authorize the payment or to distribute the surplus to the Company after the completion of the restoration, rebuilding or replacement works. |
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14.8 | The provisions relating to the erection, building or modification of the Improvements or the development, provided for at Article 8, apply to restorations, replacements or rebuildings pursuant to this article. |
14.9 | Notwithstanding any provisions to the contrary contained in this lease, if the Improvements of the Company on the Leased Territory are damaged or destroyed, in whole or in part, during the last ten (10) years of the term of this lease, the Company may, at its choice, choose to terminate this lease by way of a notice to this effect transmitted to the FAPAQ within ninety (90) days of the loss which caused the damage or the destruction, and then: |
14.9.1 | this lease will be terminated at the date that is one hundred and eighty (180) days following the date of the loss which caused the damage or the destruction; |
14.9.2 | the Company will not be required to restore, rebuild or replace the Improvements that were damaged or destroyed; and |
14.9.3 | the Company must use the insurance benefits for the destroyed or damaged Improvements on the Leased Territory by first paying the amounts due to the Company’s hypothecary creditors and to powers of attorney on behalf of the bondholders of the Company who hold a hypothec or another charge on the Improvements so destroyed or damaged in order to liberate these Improvements from such hypothec or other charge and, then, if any balance on the insurance benefits remains after payment of these creditors, deducting from this balance the residual value of these Improvements established pursuant to article 21 of this lease immediately before the date of the destruction or the damage and, finally, if any balance remains, the Company must remit it to the FAPAQ. |
ARTICLE 15 - TAXES
15.1 | The Company is obligated to pay all general and special, municipal and school taxes and all other land impositions charged against the Leased Territory and its Improvements belonging to the Company, including the subscriptions and compensation that the FAPAQ must or may hold to a legally constituted authority, relative to the Leased Territory and to all its Improvements belonging to the Company. |
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15.2 | Without limiting the generality of the foregoing, the Company will pay all business, rental, water, garbage removal, moveable personal property taxes, permits, contributions and other charges levied or imposed on, concerning or in relation with the Company’s businesses carried on the Leased Territory and the Improvements and other property and assets of the Company found on the Leased Territory, whether these taxes, permits or charges are imposed against the FAPAQ or the Company. |
ARTICLE 16 - LEGAL HYPOTHECS
16.1 | The Company must reasonably do all that is necessary to minimize the possibility of the publication of any legal hypothec resulting from articles 2726 and following of the Civil Code of Quebec against the Improvements erected on the Leased Territory. In the case in which such legal hypothec is published, the Company must immediately liberate it and obtain its cancellation at its own costs, it being agreed that the Company will not be required to obtain the cancellation of these legal hypothecs if the Company contest them in good faith. |
16.2 | The Company must advise the FAPAQ forthwith of any action on the legal hypothecs or of any proceeding of seizure or seizure before judgment instituted against it which may affect the Improvements of the Company on the Leased Territory. |
ARTICLE 17 - EXEMPTION FROM LIABILITY AND INDEMNIFICATION
17.1 | Unless by the gross negligence of the FAPAQ, the latter is not liable for any damages, of whatever nature, that may be suffered by the Company, or by one of its employees, agents or clients or by any other persons which may be found on the Leased Territory; furthermore, except in the case of gross negligence by the FAPAQ, the latter is not liable for any loss or damage to the property, moveables or immoveables, belonging to the Company, to its employees or to any other person, where such property is on the Leased Territory. The Company must take up the defense of the FAPAQ, in any judicial proceedings, in first instance or in appeal, commenced against the FAPAQ in relation to such loss or damage. |
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17.2 | The Company must indemnify the FAPAQ and hold it harmless in relation to any fines, any liability, any damages, any proceedings, claims, demands and actions of any sort for which the FAPAQ will or may be liable, or that it will or may be subject to because of default to execute, violation or non execution by the Company of any undertaking, term or provision hereof or because of any injury (including any death that may result at any time) or damages to property suffered by or caused to any person, including the FAPAQ, because of any such default to execute, violation or non execution or any act causing damage, any negligence or any default on the part of the Company or anyone of its employees, directors, officers, agents or independent contractors engaged by the Company, and with respect to and against all costs, attorneys’ fees, expenses and obligations incurred relating to one or any of the preceding events. |
This undertaking of the Company to indemnify the FAPAQ and to hold it harmless will survive the end of this lease in relation to any events having taken place before the end of the lease, the whole notwithstanding any contrary provisions herein.
17.3 | Except in the case of gross negligence, the FAPAQ, its agents, representatives, employees will not be liable for any damage cause in the Leased Territory, to the Improvements of the Company situated therein or to their content by reason of the fact that the FAPAQ, its agents, representatives, employees entered the Leased Territory, the Improvements of the Company situated therein, to proceed with a verification or with any works or in the case of an emergency. |
17.4 | It is agreed between the parties that the FAPAQ will in no way be pursued in liability, in its capacity as owner of the Leased Territory subject to the rights of surface in favor of the Company, for any damage, accident or incident which may take place on the immoveables affected by rights of surface and for which the Company is obligated pursuant to the terms of this lease to take out the appropriate liability insurance. |
17.5 | The liability of the Company pursuant to this article will be reduced by an amount equal to the benefits received by the FAPAQ from any insurance taken by or for the Company in relation to the risks at issue. |
ARTICLE 18 - LAWS AND REGULATIONs
The Company undertakes to conform to the laws and regulations, governmental and municipal, which may apply to it.
Without limiting the generality of the foregoing, the Company undertakes to conform to the Parks Act (R.S.Q., c. P-9) and to the Regulation respecting parks and to their subsequent amendments.
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ARTICLE 19 - ROADS AND LANES
19.1 | The Company must maintain and is solely responsible for the maintenance of roads and parking grounds built or that will be built on the Leased Territory. |
19.2 | After having obtained the written approval of the FAPAQ on the layout and the plans and specifications of any new secondary roads or lanes, the Company may, at its own costs, proceed with the construction of such secondary roads or lanes and must then maintain them as provided for in this article. |
ARTICLE 20 - SIGNS AND BILLBOARDS
The Company may not install on the Leased Territory or the Improvements any billboards, posters or signs unless they are in conformity with the Company’s signage program, approved by the FAPAQ. This program must be submitted for approval before October 1st, 1992 and will be valid for five (5) years; at its expiry it may be renewed, with or without modification, or it may be replaced, for a term of five (5) years and thereafter every five (5) years until the end of this Lease. The Company is obligated to respect the signage program as approved by the FAPAQ.
This program must be designed in a manner to preserve the integrity of the territory as a Park established pursuant to the Parks Act. The Company is allowed to identify itself as doing business in the Mont-Tremblant recreational park, or to identify its activities, or its sponsors or franchises, if any.
ARTICLE 21 - INVENTORY OF IMMOVEABLE ASSETS
21.1 Initial Inventory of Immoveable Assets
The Initial Inventory of Immoveable Assets as at August 31st, 1991 will be established by the Government with the Inventory of Immoveable Assets of SMTL, the former tenant, which are annexed to certified financial statements dated April 30, 1990, furnished to the Government by the former tenant, which will be updated with the list immoveable investments made since this date and provided by the former tenant to the Government, copies of which have been submitted to the Company, who declares itself to be satisfied. The follow up of this inventory is now under the responsibility of the FAPAQ.
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21.2 Annual Inventory of Immoveable Assets
21.2.1 | Within one hundred and twenty (120) days following the financial year-end, the Company must submit to the FAPAQ for approval, an inventory of the Company’s Immoveable Assets on the Leased Territory and the Territory subject to servitude, at such financial year-end (the “Inventory of Immoveable Assets”). This Inventory of Immoveable Assets will notably be destined for establishing the value of the investments provided for at article 9 hereof as well as to establish the residual value of the Immoveable Assets for the purpose of the articles entitled respectively “End of Lease” and “Defaults” of this lease. |
21.2.2 | The Inventory of Immoveable Assets include all Improvements of the Company to the Leased Territory and to the Land subject to servitude as well as any moveable property which may be considered as immoveable by destination under the Civil Code of Lower Canada but it may not include any other moveable property or any incorporeal asset (each such Improvement being a “Immoveable Asset”). The Immoveable Assets which are not mentioned in the Master Development Plan or in a Capitalization Program approved by the Government or the FAPAQ, or which were not authorized by the FAPAQ and its predecessors, pursuant to the provisions of article 8.2 of the Lease must not be included in the Inventory of Immoveable Assets. |
21.2.3 | The Inventory of Immoveable Assets must use the same nomenclature for assets and the same classification by category of assets as the previous inventory approved by the FAPAQ and its predecessors. |
21.2.4 | The Inventory of Immoveable Assets must be presented in duplicate in the form of the document “INVENTORY OF Immoveable Assets” and in conformity with the provisions of the document “SPECIFICATIONS RELATIVE TO THE USE OF THE INVENTORY FORM OF Immoveable Assets”, which documents are annexed as Schedule E to the Act of Transfer and Consolidation, after having been recognized as true and signed by the parties with and in the presence of the undersigned notary. The manner of presentation of the Inventory or Immoveable Assets may be modified by the Company conditional upon obtaining the prior written agreement of the FAPAQ. |
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21.2.5 | The Inventory of Immoveable Assets must include a specific document for the Immoveable Assets acquired or disposed of during the year in question. This document must provide, for each project, the following precisions with respect to the transactions having been effected: |
1. | The date of any acquisition or disposition of Immoveable Assets; |
2. | The name of the supplier or the acquirer; |
3. | The nature of the transaction; |
4. | The amount of the transaction; |
5. | A reconciliation of the cost of the Immoveable Assets added and the cost of the Immoveable Assets disposed of with the financial statements, as the case may be. |
21.2.6 | The Inventory of Immoveable Assets and all documents comprising a part thereof must be verified by a chartered accountant. The Company undertakes to conserve and to give access to the FAPAQ all books and supporting documents for the reports submitted pursuant to Article 21 for at least sixty (60) months after their submission to the FAPAQ. Notwithstanding the provision to the FAPAQ and its acceptance of these reports, the Company recognizes that the FAPAQ has the right to require an independent audit of the accounting books and other items of the Company. This audit will be undertaken at the expense of the FAPAQ. |
21.2.7 | Any Government financial assistance in relation to the acquisition of an immoveable asset must be deducted from the cost of acquisition of this immoveable asset for the purpose of establishing it net residual value. |
For the purposes of this article, the value of financial assistance that will be deducted from the cost of acquisition of a real estate asset will be calculated in same manner as for the purposes of article 9.
21.2.8 | The annual amortization of the value of Immoveable Assets will be established according to the straight line method, in conformity with generally accepted accounting principles but the amortization rates used may not be less than the respective minimal rates applicable to each category of assets in the list of amortization rates, which is annexed as Schedule F to the Act of Transfer and Consolidation, after having been recognized as true and signed by the parties with and in the presence of the undersigned notary. |
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21.2.9 | An Immoveable Asset must remain entered in the Inventory of Immoveable Assets even after the expiry of its useful life, as long as it had not been disposed of. The residual value of an Immoveable Asset will be zero once its value has been entirely amortized. |
ARTICLE 22 - RIGHT OF surface
22.1 | To the extent that it has acquired them, the FAPAQ recognizes that the Company is the owner of all Improvements on the Leased Territory which belonged to its predecessor in title, SMTL, and it provides the Company with a right of surface therein. Subject to the provisions of this lease, the Company has a right of surface in the Leased Territory throughout the term of the lease for all Improvements of the Company on the Leased Territory, for the purposes provided for at article 6, whether they are held by the Company as owner, as tenant or in another capacity. |
22.2 | Therefore, the FAPAQ hereby waives the rule of accession for all Improvements referred to in paragraph 22.1, such that the Company may alienate them, subject to the rights of the FAPAQ becoming the owner thereof as provided for by this lease. |
22.3 | Therefore, the FAPAQ hereby provides to the Company all the necessary authorizations it needs for the full exercise of these rights of surface pursuant to the terms of the lease. These authorizations affect the Leased Territory and are granted in favor of the Improvements of the Company on the Leased Territory. |
22.4 | The rights of surface granted by the present article are so granted without any consideration other than the obligations assumed hereunder by the Company. |
ARTICLE 23 - END OF LEASE
23.1 | At the expiry of the term of this lease or at its renewal, as the case may be, or at the time of any termination before the term of this lease, excluding in the case of a default, in conformity with the dispositions hereof, the Company, upon payment to the Company by the FAPAQ of an amount equal to the residual value, at that date and then, if necessary, proceeding with adjustments required since the final annual inventory of Immoveable Assets, the Improvements of the Company on the Leased Territory, established in conformity with article entitled “Inventory of Immoveable Assets” of the lease, will assign to the FAPAQ all of these Improvements. |
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23.2 | The provisions of paragraph 23.1 apply mutatis mutandis in a case of a default provided for in this lease except where the amount to be paid to the FAPAQ is equal to eighty percent (80%) of the amount obtained under paragraph 23.1 |
23.3 | The Company grants to the FAPAQ the option to acquire the totality of the Lands subject to the servitude and the Improvements of the Company that are found thereon at the expiry of the term of the lease or at its renewal, as the case may be, or at the time of any termination before the expiry of the term of this lease in conformity with one of the provisions of this lease, for the price of one dollar ($1) for the Lands subject to servitude and for a price equal to the residual value of these Improvements for these Improvements. The FAPAQ must exercise its option to acquire these Lands subject to servitude and these Improvements by giving prior notice to the Company: |
23.3.1 | no later than two (2) years before the expiry of the terms of this lease, |
23.3.2 | no later than thirty (30) days after having received notice from the Company provided for in paragraph 14.9 that the Company wishes to terminate the lease before the end of term in the circumstances mentioned in this paragraph 14.9, or |
23.3.3 | in any case, at least thirty (30) days before the termination of this lease, failing which the FAPAQ will lose its rights to acquire the Lands subject to the servitude and these Improvements pursuant to the terms of the present option. |
23.4 | The assignments and transfers of the Improvement of the Company on the Leased Territory as well as of the Lands subject to servitude and the Improvements of the Company on the Lands subject to servitude, as the case may be, pursuant to this Article 23, will be effected by notarial act which must be signed by the FAPAQ and by the Company no later than ninety (90) days after the end of this lease, unless additional delays are caused by events out of the control of the FAPAQ. |
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The FAPAQ must pay the costs and the expenses of the act, the publication thereof and the necessary copies. The FAPAQ will take possession of the Lands subject to servitude and the Improvements of the Company that are situated thereupon at the date of the execution of the notarial act.
23.5 | If the FAPAQ exercises the option stipulated at paragraph 23.3 within the period provided, the FAPAQ must have the Lands subject to servitude surveyed at the costs of the FAPAQ within a time period necessary to proceed with the assignments and transfers by notarial act, as provided for by paragraph 23.4. |
23.6 | At the expiry of the lease or at its renewal, at the case may be, or at the time of any termination of the lease before the expiry of its term for any reason whatsoever, the Company must provide the FAPAQ with the immediate possession and enjoyment of the Leased Territory and the Improvements of the Company on the Leased Territory in good condition, except: |
23.6.1 | with respect to normal wear that does not impede the use and enjoyment of the Leased Territory and its Improvements. |
23.6.2 | with respect to the Improvements that are disused, useless or not profitable, as provided at paragraph 12.1, and |
23.6.3 | with respect to the Improvements that are damaged or that have been destroyed in whole or in part over the course of the final ten (10) years of the lease, if the Company exercises its rights to terminate the lease before the expiry of the terms pursuant to paragraph 14.9. |
23.7 | At the expiry of the term of the lease, or at its renewal, as the case may be, or at the time of any termination before the expiry of the term of this lease, pursuant to any provisions hereof, the Company will have the right to remove, within reasonable periods, its accessories and equipment which are moveable property but it must in so doing, repair any damaged caused by their installation or their removal. If the Company fails to proceed with such removal, or to repair any damage caused by such removal, the FAPAQ may conserve as owner of these accessories and equipment which are the moveable property of the Company, or have them remove itself at the costs of the Company, which must pay the costs of the repairs of damages caused by such removal. |
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23.8 | The FAPAQ may deduct from any amounts due to the Company pursuant to paragraphs 23.1 and 23.2: a) the amounts necessary for the restoration and the repair of the Improvements in poor working condition or poorly maintained, to the extent that the Company has not respected its obligations pursuant to article 12, b) the amounts required to release the Leased Territory and, as the case may be, the Lands subject to servitude, from any charges, rights or liens whatsoever created by the Company or by reason of its act or assumed by it for which they or the Improvements may be charged or affected, c) the amount due to the FAPAQ as reimbursement for loans granted to the Company or which it is in default. |
ARTICLE 24 - ASSIGNMENT
24.1 | The Company may assigned this lease or dispose of the Improvements of the Company on the Leased Territory or sublease in whole or in part the Leased Territory or its Improvements subject to the rights of surface, as long as it has given a written prior notice to the FAPAQ of its intention to do so, with details about the proposed assignee, sub-lessee or acquirer and that the FAPAQ within sixty (60) days following the receipt of this prior notice, consent thereto. The FAPAQ will use this right to consent in a reasonable manner, according to the financial capacity of the proposed person to realize and maintain the objectives and the use provided for by this lease and according to the capacity of this person to carry out the activities of the nature of those provided for by this lease. |
If this lease is assigned in conformity with the provisions of the present paragraph and if the Company has, at the date of the assignment, realize the investments provided for at paragraphs 9.1 and 9.2, the Company will thereby be released of all of its obligations pursuant to this lease.
The consent of the FAPAQ when given does not constitute in anyway a waiver to the necessity of such consent for any subsequent assignment of the lease, subsequent sublease of the Leased Territory, or subsequent disposition of the Improvements.
24.2 | The Company, as real owner of the Improvements, may, without the consent of the FAPAQ, give all securities provided for at article 26 on the collaterals, the whole under the terms of its rights of as a superficiary as established at article 22. |
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24.3 | The Company may without the consent of the FAPAQ, assign this lease or dispose of the Improvements of the Company on the Leased Territory or sublease the Leased Territory in whole or in part to a person who is an affiliate (as defined in the Canada Business Corporations Act) of the general partner of the Company, however subject to giving the FAPAQ notice of such a situation within fifteen (15) days following the occurrence thereof. |
24.4 | Notwithstanding any assignment of this lease, sublease of the Leased Territory or disposition of the Improvements of the Company on the Leased Territory, the Company, subject to the provisions at paragraph 24.1, will remain jointly and solidarily obligated by the present lease and will not be relieved of its obligations to execute the terms, agreements and conditions hereof. |
ARTICLE 25 - CORPORATE CHANGES
At all times during this lease, if, following the sale or other disposition of the securities of the general partner of the Company, currently held by Corporation Intrawest, the control of the general partner of the Company changes hands, the Company will be obligated to advise the FAPAQ of such change of control within fifteen (15) days following such sale or other disposition and to provide the name and the address of the new acquirers. This article also applies to any subsequent change of corporate control of the general partner of the Company, with the necessary changes.
ARTICLE 26 - GUARANTEED ASSETS
26.1 | As provided by article 24, the Company has the right to offer securities in good faith as guarantee for the reimbursement of amounts that it may borrow for the purpose of financing the acquisition provided by the Purchase Agreement, its activities provided by this lease and the operation of its business at Mont-Tremblant. To this end, the Company may hypothecate, pledge, encumber, assign and transfer or otherwise give as a guarantee the Improvements on the Leased Territory or its rights in this lease, including its rights of surface and the related authorizations to its lenders, financial institutions or other funders or creditors providing financing or to a power of attorney acting for bondholders for the purpose of providing a guarantee. In such a case, the Company is obligated to inform the FAPAQ in writing of the name and the address of the secured creditor, within thirty (30) days following the date upon which the guarantee is given. The Secured creditor may also provide such information. |
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26.2 | If, through cancelling its rights, a secured creditor of the Company provided for at paragraph 26.1 steps into the rights of the latter, this creditor will enjoy and hold all of the rights of the Company arising from this lease but must also respect all of the obligations, conditions and restrictions imposed on the Company to the extent provided for at paragraph 28.4. |
ARTICLE 27 - APPROVAL BY THE FAPAQ
Except in the case stipulated at article 10.5.5 hereof, each time the approval of the FAPAQ is required by this lease, the Company must submit a written request to the FAPAQ, with all supporting documentation. The FAPAQ will then have sixty (60) calendar days from the receipt of the request, and the supporting documentation, to grant or refuse the requested approval.
Failure by the FAPAQ to refuse the requested approval within the sixty (60) day period, such approval will be considered to have been granted without any other formality.
ARTICLE 28 - defaults
28.1 | Each of the following events constitute an event of default under the terms of this lease (event of default): |
28.1.1 | if the rental stipulated in this lease or any other amount that the Company has undertaken to pay pursuant to any of the provisions of this lease is not paid within thirty (30) days following the date it becomes due; |
28.1.2 | if the Company does not operate the Leased Territory in conformity with article 6 or abandons or evacuates it; |
28.1.3 | if the Company does not realize a capital program approved by the FAPAQ according to the timetable provided for, within a delay of six (6) months from the date of a notice to this effect provided by the FAPAQ to the Company; |
28.1.4 | if an attachment or a garnishment is undertaken by a third party, other than a hypothecary creditor or a power of attorney acting on behalf of the bondholders of the Company, against the Improvements of the Company situated on the Leased Territory and if this attachment is not lifted within thirty (30) days or contested in good faith by the Company within thirty (30) days following this attachment; |
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28.1.5 | if the Company becomes bankrupt, becomes insolvent or makes an assignment for the benefit of its creditors, or if, having become bankrupt or insolvent, it takes advantage of any law which may apply to bankrupt or insolvent debtors, or it makes a proposal pursuant the Bankruptcy and Insolvency Act (Canada); |
28.1.6 | if the Company does not file an initial Master Development Plan and subsequent master development plans by no later than the six (6) months following the dates provided for at paragraphs 7.3 and 7.4 of this lease; |
28.1.7 | if the Company does not respect, execute or fulfill, within a delay of sixty (60) days after receipt of a written request from the FAPAQ to this effect, specifying the Company’s default, any other undertakings, agreements, provisions, stipulations or conditions contained in this lease. |
28.2 | In case of default, other than those established pursuant to paragraph 28.1.5, the FAPAQ may, at its option, terminate this lease and the Company’s rights hereunder by giving the Company a written notice of its intention to terminate this lease and detailing the Company’s default. The Company may prevent the termination of this lease by the FAPAQ by remedying this default before the expiry of a period of sixty (60) days following receipt of the notice. If the Company has not remedied this default within this sixty (60) day period, the FAPAQ may choose, upon advising the Company, for the lease to be automatically terminated, and the FAPAQ may then enter the Leased Territory, take possession thereof, and become owner of all the Improvements belonging to the Company on the Leased Territory upon payment to the Company of any amount established pursuant to article 23. |
Nevertheless, if the event of default cannot conveniently be corrected within this sixty (60) day period, this default will be deemed to be corrected to the satisfaction of the FAPAQ and the lease will not be terminated if during this sixty (60) day period, if the Company begins correcting this default and pursues this correction with reasonable diligence, the whole subject to the rights of the FAPAQ to transmit, after this period, a notice pursuant to the previous subparagraph in the event that the Company does not respect its obligations to correct as provided in this subparagraph.
-33- |
28.3 | If the event of default established pursuant to paragraph 28.1.5 occurs, subject to the provisions of paragraph 28.4, this lease will automatically terminate, the FAPAQ may enter the Leased Territory, and take possession, and become owner of all the Improvements belonging to the Company on the Leased Territory upon payment of any amount established pursuant to article 23. |
28.4 | The FAPAQ must send a copy of any notice provided pursuant to the terms of this article to secured creditors holding securities described at paragraph 26.1 the address of whom will be provided to it as per this paragraph, in which case: |
28.4.1 | if the Company has not remedied the default identified in the notice pursuant to the terms of paragraph 28.2, within the prescribed time, the FAPAQ, after having acquired the right to terminate pursuant to terms of paragraph 28.2 or the expiry of the lease pursuant to the terms of paragraph 28.3 must allow any such secured creditor, if it is interested in conserving its rights to, following reception of a notice from the FAPAQ to this effect, remedy the default of the Company, take possession of the Leased Territory and the Improvements of the Company, and choose to replace the Company for the execution of the obligations, conditions and restrictions stipulated herein with respect to the Company; |
28.4.2 | if in the sixty (60) days following receipt by these secured creditors of the aforementioned notice, these creditors have not remedied the Company’s default, taken possession of the Leased Territory and the Improvements of the Company on the Leased Territory, and replaced the Company for the execution of the Company’s obligations pursuant to the terms of this lease, the FAPAQ may terminate this lease against everyone, and this lease will thus be terminated, the FAPAQ may therefore take possession of the Leased Territory and will become the owner of all of the Improvements of the Company on the Leased Territory in exchange for payment of any amount established pursuant to the provisions of article 23; |
28.4.3 | notwithstanding the terms of paragraph 28.4.2, if the right to terminate the lease pursuant to this article 28 arises: |
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28.4.3.1 | from a default under the terms of paragraph 28.1.4 and if any such secured creditor is able to lift the seizure discussed by this paragraph pursuant to the priority rights that it may hold, from a default pursuant paragraph 28.1.5 or from a default to respect a purely personal obligation of the Company which may not be corrected by a third party, any such secured creditor will not called upon to remedy such default, if this secured creditor respects the other provisions of paragraph 28.4.2 in the prescribed time. |
28.4.3.2 | from a default mentioned at paragraph 28.1.3, any such secured creditor will not be called upon to remedy such default if such creditor respects the other provisions of paragraph 28.4.2 within the periods prescribed therein, if its seeks an acquirer for this lease and the Improvements in a diligent manner and assigns this lease and the Improvements on the Leased Territory as well as the Lands subject to the servitude and the Improvements found thereon to a third party according to the provisions of paragraph 24.1 within sixty (60) days from the approval of the FAPAQ or any other reasonable delay in the circumstances. This third party acquirer will not be in default pursuant to paragraph 28.1.3 if it remedies the default within the course of the year following its acquisition. |
28.4.4 | Notwithstanding the terms of paragraphs 28.4.2 and 28.4.3, when such secured creditor cannot reasonably remedy a default of the Company pursuant to this lease within the prescribed time in paragraph 28.4.2, such default may deemed to be corrected to the satisfaction of the FAPAQ and this lease will not be resiliated against such a secured creditor if, within the prescribed time under paragraph 28.4.2, such secured creditor begins correcting the default and pursues such correction with reasonable diligence or institutes within this period and pursues with reasonable diligence judicial proceedings required for the realization of its guarantees or taking of possession, the whole on the condition that, during this period, any such secured creditor may operate or cause to be operated the ski business from December to March if permitted by the climatic conditions and the snow. The Company is obligated to allow such a secured creditor to fulfill this condition subject to all the rights and recourses that the Company may assert, have or exercise against such secured creditor. |
-35- |
28.4.5 | If more than one secured creditor has the right to avail itself of the provisions of paragraph 28.4, subject to any agreement between these secured creditors, the creditor whose security has priority of rank pursuant to the law will be privileged in relation to paragraph 28.4. |
28.4.6 | If such secured creditor does not respect or fulfill the obligations and conditions provided for at paragraphs 28.4.2, 28.4.3, 28.4.4 or 28.4.5, the FAPAQ, at its discretion, will have the absolute right to terminate this lease against everyone upon notice to this effect given to such secured creditor and this lease will thereby be resiliated against every one. |
28.5 | The Company recognizes that any violation on its part of any of its obligations pursuant to the terms of articles 6, 7, 8, 9.1, 11, 12 and 24 of this lease is for all legal purposes presumed to cause serious or irreparable prejudice to the FAPAQ and is presumed to be a violation which may not be remedied by a judgment in damages. Therefore, the Company agrees that the FAPAQ will have the right to an injunctive recourse or recourse in execution in order to prevent or to stop the violation of any obligations assumed by the Company pursuant to these articles or in order to force the Company to execute its obligations. |
28.6 | The fact that the FAPAQ has pardoned, excused or overlooked at any moment a default, violation or non-execution on the part of the Company in relation to any of the conventions, stipulations, or conditions provided for herein, will in no way have the effect of a waiver of the rights of the FAPAQ in relation to any default, violation or non-execution, present or future, or the effect of cancelling or affecting in any way the rights of the FAPAQ under the terms hereof in relation to any such default, violation or non-execution, present or future; and no waiver of a right may be presumed or inferred from any action or omission of the FAPAQ except in the case where it arises from an express waiver in writing. |
28.7 | The mention in this lease of a particular recourse of the FAPAQ in relation to any default by the Company will not prevent the FAPAQ from exercising any other recourse in relation to such default, whether such recourse is available in law, in equity or under law or it is expressly provided herein. No recourse will exclude another recourse nor depend on another recourse, but the FAPAQ may from time to time exercise one or several of these recourses separately or together, cumulatively and non-alternatively. |
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ARTICLE 29 - NON EMPHYTeUTIC LEASE
This lease is not and must not be interpreted as being an emphyteutic lease nor a constitut in a sense of the repealed Constitut or Tenure System Act (R.S.Q., chapter C-64).
ARTICLE 30 - COSTS AND FEES
The Company will pay all of the costs and fees of this lease, the registration and the copies.
ARTICLE 31 - ARBITRATION
The FAPAQ or the Company may, but is not obligated to, submit for arbitration any dispute resulting from the interpretation of this lease following the provisions of articles 940 to 951 inclusively of the Code of Civil Procedure of the province of Quebec.
The preceding paragraph must not be interpreted as a being an arbitration clause and in no way limits the rights of the FAPAQ of the Company to institute proceedings before the courts in order to obtain a decision in a litigious matter, however subject to such contentious procedures being served either before an arbitrator has been requested by the other party, or after the arbitrators have rendered their decision.
ARTICLE 32 - SKI TICKETS
The price of ski tickets destined for clients of the hotels in the Laurentians must be uniformed, guaranteed and communicated to the Association Touristique des Laurentides (“ATL”) or its successors, by no later than the 1st of April of each year, for the following season. The Company must provide evidence to the FAPAQ that it has fulfilled its obligation pursuant to this article.
If the price of ski tickets is not communicated by this date, the price of these tickets of the previous will be automatically renewed.
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ARTICLE 33 - RIGHT OF PREEMPTION
33.1 | During the term of this lease and its renewals, if the FAPAQ would like to enhance (as defined hereinbelow) the Liberated Territory or a part thereof (the “applicable immoveable”) either itself, with the participation of a third party (the “proposed participant”) or by authorizing to this effect a proposed participant, the FAPAQ must first offer to the Company participation in the increase in value of the applicable immoveable by giving it written notice of its desire and by annexing a summary of the highlights of the offer received from the proposed participant (the “offer”). The Company will then have the option to participate in the enhancement of the applicable immoveable on the conditions indicated in the offer for a period of thirty (30) days following the receipt of such notice, which option must be exercised in writing. If the Company does not exercise the aforementioned option within this thirty (30) day period, at any time within a delay of a hundred and eighty (180) days following the expiry of the option, the FAPAQ may begin the enhancement of the applicable immoveable with the participation in such enhancement of the proposed participant under the conditions contained in the offer. If this enhancement is not commenced within this one hundred and eighty (180) day period, the right to enhance the applicable immoveable with the participation in the enhancement of a third party will again be subject to the provision of this article 33. |
33.2 | “participation in the enhancement” means (i) the participation by a person other than the Société des établissements de plein air du Québec (R.S.Q., c. S-13.01) in any kind of legal structure allowing it to participate in the economic benefits resulting from the enhancement of a project or a business in the applicable immoveable, notably through lease, sale, license or any other means, or (ii) the participation of such person with the FAPAQ as a partner in any partnership, as a general partner or limited partner in any limited partnership, as a shareholder in any corporation or company, as a participant in any joint venture or as an undivided co-owner. |
33.3 | Subject to an Act respecting access to documents held by public bodies and the protection of personal information (R.S.Q., c. A-2.1), for an offer to be considered for the purposes of the present article 33, the notice to the Company must be accompanied by all the details relating to the offer and the personal and financial situation of the proposed participant or participants; if the offer is presented or signed by an agent or representative, the notice must identify the principal. The FAPAQ will exercise reasonable efforts to obtain any consent necessary to allow this information to be disclosed. |
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33.4 | The offer must provide that the commencement of the enhancement project of the applicable immoveable will take place not less than thirty (30) days and not more than sixty (60) days from the signature of the offer and does not contain any consideration other than the participation in the enhancement of the applicable immoveable and a representation that it is not connected to any other transaction. |
ARTICLE 34 - NOTICE
Any notice that must be given by one party to the other pursuant to the terms of this lease must be given in writing and is deemed as having been received either the day of its service by bailiff or the day of its personal delivery or, is sent by mail, the third (3rd) business day after its mailing by registered mail, to the addresses mentioned below:
The FAPAQ:
La Société de la faune et des parcs du Québec
Édifice Marie-Guyart, 10th floor
675 René-Lévesque Blvd. East
Québec (Québec)
G1R 5V7
The COMPANY :
Station Mont Tremblant société en commandite
c/o Station Mont Tremblant Inc.
3005, chemin Principal
Mont-Tremblant (Québec)
J0T 1Z0
To the attention of : Vice President, Real Estate Development.
or any place in Quebec that each party may designate to the other in writing that is duly served.
ARTICLE 35 - DESIGNATION OF CERTAIN IMMOVEABLES
35.1 | The “Liberated Territory” is the Old Territory other than the Leased Territory. |
35.2 | The “Old Territory” is described as follows: |
[Designation of the old territory omitted]
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35.3 The “Leased Territory” is described as follows:
[Designation of the Leased Territory omitted]
35.4 The « Site I » is described as follows :
[Designation of Site I is omitted]
35.5 The “Servient Land – south face” is described as follows:
[Designation of the Servient Land – south face” is omitted]
35.6 The “North Camp Grounds” is described as follows:
[Designation of the North Camp Grounds is omitted]
35.7 The “Valley Grounds” is described as follows:
[Designation of the Valley Grounds is omitted]
ARTICLE 36 - mentions required pursuant to article 9 of AN ACT RESPECTING DUTIES ON TRANSFERS OF IMMOVABLEs (R.S.Q., c. D-15.1)
a) Name and address of the Lessor:
La Société
de la faune et des parcs du Québec
Ministère responsable de la Faune et des Parcs
675, boul. René-Lévesque Est, 10e étage
Québec (Québec)
G1R 5V7
b) Name and address of the Lessee:
Station Mont Tremblant
société en commandite
a/s Station Mont Tremblant Inc.
3005, chemin Principal
Mont-Tremblant (Québec)
J0T 1Z0
c) | The leased terrain is situated in the municipalities of Mont-Trembant and Saint-Jovite. |
d) | The leased terrain is affected for the purpose of the public interest and is located in the Mont Tremblant Recreational Park created pursuant the Parks Act (R.S.Q. c. P-9) and has no market value. |
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e) The basic imposition amount is zero dollars ($0).
f) | No transfer taxes in relation to this leased terrain are payable pursuant to paragraph a) of Section 20 of this act. |
WHICH ACT in Mont-Tremblant, under number TWELVE THOUSAND FORTY-EIGHT (12,048) of the minutes of the undersigned notary.
HAVING READ the parties have signed in the presence of the undersigned notary in the following manner:
Made and signed in Quebec, on the twenty-eighth day of January two thousand (January 28, 2000)
LA SOCIÉTÉ DE LA FAUNE ET DES PARCS DU QUÉBEC
Made and signed in Mont-Tremblant, on the twenty-eighth day of January two thousand (January 28, 2000)
STATION MONT TREMBLANT SOCIÉTÉ EN COMMANDITE
By its only general partner
STATION MONT TREMBLANT INC.
[signed by Michel Aubin, president]
[signed by Charles Massicotte, vice president, Finance]
[signed by Pierre Dupré, notary]
41 |
Schedule A
42 |
BLUE MOUNTAIN RESORTS HOLDINGS INC.
-and-
INTRAWEST CORPORATION
-and-
BLUE MOUNTAIN RESORTS LIMITED
SHAREHOLDERS’ AGREEMENT
January 28, 1999
TABLE OF CONTENTS
ARTICLE 1 | ||||
DEFINITIONS AND INTERPRETATION | ||||
1.1 | Definitions | 2 | ||
1.2 | Sections and Headings | 9 | ||
1.3 | Gender, Etc. | 10 | ||
1.4 | Accounting Principles | 10 | ||
1.5 | Preamble | 10 | ||
1.6 | Approval | 10 | ||
1.7 | Unanimous Shareholders’ Agreement | 10 | ||
ARTICLE 2 | ||||
MANAGEMENT | ||||
2.1 | Board of Directors | 10 | ||
2.2 | Initial Nominees | 11 | ||
2.3 | Meetings | 11 | ||
2.4 | Officers | 12 | ||
2.5 | Auditors | 12 | ||
2.6 | Matters Requiring Approval | 12 | ||
2.7 | Shareholder Representatives | 15 | ||
2.8 | Investment in Village Core Commercial Space | 15 | ||
2.9 | Distribution Policy | 16 | ||
2.10 | Annual Budgets and Capital Expenditures Budgets | 16 | ||
2.11 | Implementation of Approved Budgets | 17 | ||
2.12 | Information | 17 | ||
2.13 | Head Office Services | 17 | ||
2.14 | Agreement to Act | 17 | ||
2.15 | Corporation to be Bound | 17 | ||
2.16 | Claims against the Corporation | 18 | ||
2.17 | Confidentiality | 18 | ||
ARTICLE 3 | ||||
RESTRICTIONS ON TRANSFER | ||||
3.1 | No Transfer of Shares | 19 | ||
3.2 | Endorsement on Certificates | 19 |
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3.3 | Permitted Encumbrances | 19 | ||
3.4 | Intrawest Permitted Transfers | 20 | ||
3.5 | Continuance or Amalgamation Permitted | 20 | ||
3.6 | Covenants re Intrawest Permitted Transferee | 20 | ||
3.7 | Holdings Permitted Transfers | 21 | ||
3.8 | Covenants re Holdings Permitted Transferee | 21 | ||
3.9 | Matters Relating to Holdings | 22 | ||
3.10 | Eligible Holdings Transferees | 22 | ||
3.11 | Covenants re Eligible Holdings Transferee | 23 | ||
ARTICLE 4 | ||||
ISSUANCES OF ADDITIONAL SHARES | ||||
4.1 | Pre-emptive Rights | 23 | ||
4.2 | Closing | 24 | ||
ARTICLE 5 | ||||
RIGHT OF FIRST OFFER | ||||
5.1 | Right of First Offer | 24 | ||
5.2 | Carryback Note and Non-Cash Consideration | 25 | ||
5.3 | Withdrawal of Offer | 25 | ||
5.4 | Offeree’s Right to Purchase Offered Shares | 25 | ||
5.5 | Notice of Intention to Purchase | 27 | ||
5.6 | Purchase of Offered Shares by Offerees | 27 | ||
5.7 | Sale to Third Party Offeror | 27 | ||
5.8 | Extension of Time | 27 | ||
5.9 | Outstanding Notices | 27 | ||
5.10 | Limitations | 27 | ||
5.11 | Limitations | 28 | ||
ARTICLE 6 | ||||
DRAW ALONG RIGHTS | ||||
6.1 | Draw Along Right | 28 | ||
6.2 | Draw Along Notice | 29 | ||
6.3 | Closing Procedures | 30 | ||
6.4 | Time Limit | 31 | ||
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ARTICLE 7 | ||||
TAG ALONG RIGHTS | ||||
7.1 | Tag Along Rights | 31 | ||
7.2 | Tag Along Offer | 31 | ||
7.3 | Election by Remaining Shareholder | 33 | ||
7.4 | Closing Procedures | 33 | ||
7.5 | Failure to Give Tag Along Notice | 33 | ||
7.6 | Time Limit | 34 | ||
ARTICLE 8 | ||||
PUT OPTIONS | ||||
8.1 | Put Options | 34 | ||
8.2 | Put Notice | 34 | ||
8.3 | Price | 35 | ||
8.4 | Holdings Indemnity | 35 | ||
8.5 | Closing | 36 | ||
8.6 | Call Notice | 36 | ||
8.7 | Suspension of Put Options | 36 | ||
ARTICLE 9 | ||||
INTRAWEST CALL OPTION | ||||
9.1 | Call Options | 37 | ||
9.2 | Call Notice | 37 | ||
9.3 | Price | 37 | ||
9.4 | Closing | 37 | ||
9.5 | Suspension of Call Option | 37 | ||
ARTICLE 10 | ||||
RESOLUTION OF DISPUTES BETWEEN HOLDINGS AND INTRAWEST | ||||
10.1 | Deadlock | 38 | ||
-iii- |
ARTICLE 11 | ||||
DEFAULT AND INVOLUNTARY TRANSFERS OF SHARES | ||||
11.1 | Default and Involuntary Transfers of Shares | 39 | ||
11.2 | Right to Purchase Pro Rata | 40 | ||
11.3 | Price | 40 | ||
11.4 | Exercise of Involuntary Transfer Option | 40 | ||
11.5 | Closing | 40 | ||
ARTICLE 12 | ||||
CLOSING PROCEDURES | ||||
12.1 | Closing Procedures | 40 | ||
12.2 | Time and Place of Closing | 40 | ||
12.3 | Consents | 41 | ||
12.4 | Payment and Delivery | 41 | ||
12.5 | Default of Selling Shareholder | 41 | ||
12.6 | Sale Effective | 42 | ||
12.7 | Non-Completion by Intrawest | 42 | ||
12.8 | Power of Attorney | 42 | ||
12.9 | Consent to Transfer | 42 | ||
12.10 | Entitlement to Purchase Price | 43 | ||
ARTICLE 13 | ||||
GENERAL | ||||
13.1 | Conflict | 43 | ||
13.2 | Transferees to be Bound by Agreement | 43 | ||
13.3 | No Partnership | 43 | ||
13.4 | Time of the Essence | 44 | ||
13.5 | Benefit of the Agreement | 44 | ||
13.6 | Entire Agreement | 44 | ||
13.7 | Amendments and Waivers | 44 | ||
13.8 | Assignment | 44 | ||
13.9 | Termination | 44 | ||
13.10 | Severability | 44 | ||
13.11 | Notices | 44 | ||
13.12 | Governing Law | 45 |
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13.13 | Counterparts | 46 | ||
13.14 | Further Acts | 46 | ||
13.15 | Business Day | 46 | ||
13.16 | Legal Fees | 46 | ||
ARTICLE 14 | ||||
EXECUTION | ||||
14.1 | Execution | 46 |
SCHEDULE A - DETERMINATION OF MARKET VALUE
SCHEDULE B - HOLDINGS SHAREHOLDERS
SCHEDULE C - DIRECTORS’ REMUNERATION
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SHAREHOLDERS’ AGREEMENT
THIS AGREEMENT is made as of the 28th day of January, 1999
AMONG:
BLUE MOUNTAIN RESORTS HOLDINGS INC. an Ontario corporation
AND:
INTRAWEST CORPORATION, a British Columbia company
AND:
BLUE MOUNTAIN RESORTS LIMITED, an Ontario corporation
WHEREAS:
A. The Corporation is incorporated under the laws of the Province of Ontario;
B. The authorized capital of the Corporation consists of an unlimited number of Common Shares, of which 243,302 Common Shares are issued and outstanding to the Shareholders in the respective numbers set forth opposite their names as follows:
Shareholder | No. and Class of Shares | |
Holdings | 121,651 Common Shares | |
Intrawest | 121,651 Common Shares |
C. The parties hereto wish to set forth and declare herein their relationship towards each other in the Corporation and to provide, inter alia, for the operation and management of the Corporation’s business and affairs and the transfer and sale of shares in the capital of the Corporation and this Agreement supersedes all prior shareholders’ agreements entered into by the shareholders of the Corporation, as they apply to the Corporation, including, without limitation, the agreement made August 27,1982, as amended by the agreement made December 22,1993.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual covenants and agreements herein contained the parties hereto agree as follows:
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ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Agreement, unless something in the subject matter or context is inconsistent therewith:
“Act” means the Ontario Business Corporations Act as amended and in force from time to time;
“Additional Share” means any Share proposed to be issued by the Corporation;
“Agreement” means this agreement and all schedules attached hereto and all amendments made hereto and thereto by written agreement between the parties hereto;
“Annual Budget” means, in respect of any fiscal year of the Corporation, a budget and business plan for the Corporation and its subsidiaries for such fiscal year prepared by management of the Corporation in a form consistent with past practice, including a summary of projected consolidated net income of the Corporation for such fiscal year and projected EBITDA for such fiscal year (each determined in accordance with generally accepted accounting principles) and a summary of projected consolidated cash flow from operations of the Corporation for such fiscal year and changes in the consolidated financial position of the Corporation for such fiscal year (each determined in accordance with generally accepted accounting principles);
“Appraiser” has the meaning set out in section 5.2;
“Approved Budget” means, collectively, the Annual Budget or amended Annual Budget and the Capital Expenditures Budget or amended Capital Expenditures Budget, most recently approved pursuant to subsection 2.6(8);
“BMR Option” has the meaning given to it in the Real Estate Purchase Agreement;
“Board of Directors” means the directors of the Corporation from time to time;
“Business Day” means any day other than a Saturday, Sunday or statutory holiday in Ontario;
“Call Event” means the second anniversary of the date upon which the sales of 90% of the Commercial Resort Units and 50% of the aggregate of the Horizontally Attached Dwellings and the Multi Attached Dwellings contemplated by the Master Plan have closed;
“Call Notice” has the meaning set out in section 9.2;
“Call Option” has the meaning set out in section 9.1;
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“Call Shares” has the meaning set out in section 9.1;
“Capital Expenditures Budget” means, in respect of any fiscal year of the Corporation, a summary of the budgeted capital expenditures and dispositions of capital assets of the Corporation during such fiscal year prepared by management of the Corporation in a form consistent with past practice;
“Carryback Note” has the meaning set out in section 5.2;
“Carryback Note and Non-Cash Consideration Value” has the meaning set out in section 5.2;
“Cash Equivalent Purchase Price per Offered Share” means the aggregate of:
(a) | the amount of cash to be paid for the Offered Shares as set forth in the Notice divided by the number of Offered Shares; |
(b) | a cash amount equal to the fair market value of all Carryback Notes, if any, set forth in the Notice to be given in exchange for the Offered Shares divided by the number of Offered Shares; and |
(c) | a cash amount equal to the fair market value of all Non-Cash Consideration, if any, set forth in the Notice to be given in exchange for the Offered Shares divided by the number of Offered Shares; |
“Claim” has the meaning given to it in section 2.16;
“Commercial Resort Unit” has the meaning given to it in the Real Estate Purchase Agreement;
“Common Shares” means the common shares in the capital of the Corporation;
“Consent” has the meaning set out in section 12.3;
“Constating Documents” of the Corporation or any subsidiary of the Corporation means the articles of incorporation, continuance, amalgamation or arrangement and the bylaws, or other constating documents, as the case may be, of the Corporation or any subsidiary of the Corporation, as the same may be altered or amended in compliance with the terms hereof, and from time to time in effect and includes the memorandum and articles, articles of incorporation, continuance, amalgamation or arrangement or other constating documents of any Successor Corporation, as the same may be altered or amended in compliance with the terms hereof, and from time to time in effect;
“Corporation” means Blue Mountain Resorts Limited and any Successor Corporation;
-3- |
“Depositary” has the meaning set out in subsection 8.4;
‘‘Determined Sales Price” has the respective meanings set out in section 6.2 and section 7.2;
“Draw Along Notice” has the meaning set out in section 6.2;
“Draw Along Right” has the meaning set out in section 6.1;
“Draw Along Shareholder” has the meaning set out in subsection 6.1(1);
“EBITDA” means, for any period, the consolidated revenues less the consolidated expenses of the Corporation for such period determined in accordance with generally accepted accounting principles, plus (i) consolidated interest expense of the Corporation for such period, plus (ii) consolidated income tax expense of the Corporation for such period, plus (iii) consolidated depreciation expense of the Corporation for such period, plus (iv) consolidated amortization expense of the Corporation for such period, minus (v) consolidated interest income of the Corporation for such period, all as determined in accordance with generally accepted accounting principles; provided, however, that to the extent taken into account in determining such amount there shall be excluded therefrom all extraordinary or non-recurring items and all income taxes (either positive or negative) attributable to extraordinary or non-recurring gains or losses;
“Eligible Holdings Transferee” means (i) any Holdings Family Member, (ii) any one or more trusts, the only beneficiaries of which are one or more Holdings Family Members or (iii) any general or limited partnership, corporation or limited liability company which is wholly owned, directly or indirectly, by one or more Holdings Family Members or any trust of which they are the sole beneficiaries;
“Government Authority” means Canada and the Provinces of British Columbia and Ontario and includes any agency, department, commission, board, bureau or instrumentality thereof and any other Person exercising executive, legislative, judicial, regulatory or administrative functions thereof or pertaining thereto;
“Holdings” means Blue Mountain Resorts Holdings Inc.;
“Holdings Family Member” means, with respect to a Holdings Shareholder who is an individual, such individual and any one or more of the direct lineal descendants, natural or adoptive, of such Holdings Shareholder, or his or her current or future spouse, and with respect to any Holdings Shareholder that is a corporation, the individuals who directly or indirectly hold the shares of such corporation at the date hereof, and any one or more of their lineal descendants, natural or adoptive, and their current or future spouses;
“Holdings Permitted Transferee” has the meaning set out in section 3.7;
“Holdings Shareholders” means those Persons listed on Schedule B to this Agreement;
-4- |
“Holdings Shares” means any shares in the capital of Holdings;
“Horizontally Attached Dwellings” has the meaning given to it in the Real Estate Purchase Agreement;
“Indemnity Deposit” has the meaning set out in subsection 8.4(2)(a);
“Independent”, with reference to an appraiser for purposes of section 5.2 or a public chartered accountancy firm for purposes of sections 4 and 6 of Schedule A, means such Person (i) is in fact independent of each Shareholder involved in the relevant determination of fair market value, (ii) does not have any direct financial interest or material indirect financial interest in any Shareholder, (iii) deals at “arm’s length” with each Shareholder within the meaning of such expression in the Tax Act and (iv) does not have significant business dealings with any Shareholder or any of its directors who form part of management or its senior officers;
“Intrawest” means Intrawest Corporation;
“Intrawest Permitted Transferee” has the meaning set out in section 3.4;
“Involuntary Transfer” has the meaning set out in section 11.1;
“Involuntary Transferor” has the meaning set out in section 11.1;
“Involuntary Transferor Option” has the meaning set out in section 11.1;
“Involuntary Transferor Shares” has the meaning set out in section 11.1;
“Master Plan” has the meaning given to it in the Real Estate Purchase Agreement;
“Material Asset” means any asset of the Corporation or any subsidiary of the Corporation which is material to the business of the Corporation and its subsidiaries, taken as a whole, and has a fair market value of $100,000 or more;
“Material Contract” means any contracts to which the Corporation is a party:
(a) | which are not entered into in the ordinary and normal course of business and which involve an obligation of the Corporation to pay an amount of $25,000 or more in respect of any single transaction or series of transactions constituting part of an overall transaction; |
(b) | which affect ownership or possession of, or title to, or any interest in, or the right to use or occupy any Material Assets (other than by way of security for indebtedness in respect of borrowed monies), in each case in a manner material to the Corporation and its subsidiaries, taken as a whole; |
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(c) | which involve co-ownership, joint venture or partnership arrangement in respect of or affecting any Material Assets; |
(d) | which involve non-competition obligations of the Corporation or any subsidiary of the Corporation; |
(e) | which involve restrictive covenants of the Corporation or any subsidiary of the Corporation that limit the ability of the Corporation or such subsidiary to carry on its business or operations in a manner consistent with past practice or future planned activities; |
(f) | under which the Corporation or any subsidiary of the Corporation is required to pay any royalty, licence fee, management fee or the like to any Person of $100,000 or more in respect of any single transaction or series of transactions constituting part of an overall transaction; or |
(g) | the terms and conditions of which would conflict with, or be breached by, or result in the acceleration of any debts, liabilities or obligations of the Corporation or any subsidiary of the Corporation in the event of any Transfer of Common Shares expressly provided for in this Agreement; |
“Mediator” has the meaning set out in subsection 10.1(2);
“Multi Attached Dwellings” has the meaning given to it in the Real Estate Purchase Agreement;
“Non-Cash Consideration” has the meaning set out in section 5.2;
“Notice” has the meaning set out in section 5.1;
“Offer” has the meaning set out in section 5.1;
“Offered Shares” has the meaning set out in subsection 5.1(1);
“Offeree” has the meaning set out in section 5.1;
“Offeror” has the meaning set out in section 5.1;
“Other Shareholder” has the meaning set out in section 11.1;
“Person” includes an individual, a firm, a corporation, a partnership, a trust, an association, a joint venture, an unincorporated organization and every other legal or business entity whatsoever;
“Place of Closing” has the meaning set out in section 12.2;
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“Purchase Offer” has the meaning set out in subsection 6.2(1)(b);
“Purchase Price” has the meaning set out in section 12.4;
“Purchased Shares” has the meaning set out in subsection 12.4(1);
“Purchaser” has the meaning set out in section 12.4;
“Put Notice” has the meaning set out in section 8.2;
“Put Option” has the meaning set out in section 8.1;
“Put Shares” has the meaning set out in section 8.1;
“Real Estate Purchase Agreement” means the agreement of purchase and sale dated for reference December 31, 1998 among Intrawest, the Corporation and Craigleith Development Limited relating to the purchase and development of certain lands currently owned by the Corporation and Craigleith and known as the “Village Core”, as amended from time to time;
“Related Party” of the Corporation or any subsidiary of the Corporation means any Person that is:
(a) | a corporation of which the Corporation or such subsidiary beneficially owns or controls, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all voting securities of such corporation for the time being outstanding; |
(b) | a Person that beneficially owns or controls, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all voting securities of the Corporation for the time being outstanding; |
(c) | a partner of the Corporation or such subsidiary, other than; |
(i) | a limited partner in a limited partnership of the Corporation or such subsidiary; and |
(ii) | a partner of the Corporation or such subsidiary holding less than a 20% interest in a partnership the business of which is not related to the business of the Corporation; |
(d) | a current or former director, officer or shareholder of the Corporation or such subsidiary or of any corporation or business enterprise in which the Corporation or such subsidiary has a material interest; |
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(e) | a trust or estate in which the Corporation or such subsidiary or any Person referred to in paragraphs (a) to (d) above has a material interest or as to which the Corporation or such subsidiary or any such Person serves as trustee or in a similar capacity; |
(f) | a beneficiary of any trust or estate referred to in paragraph (e) above; |
(g) | a relative of any Person referred to in paragraphs (a) to (f) above; |
(h) | a Person to whom any Person referred to in paragraphs (a) to (f) above is married or with whom any such Person is living in a conjugal relationship outside marriage; |
(i) | a relative of a Person mentioned in paragraph (h) above who has the same home as any Person referred to in paragraphs (a) to (f) above; or |
(j) | any Person not dealing at “arm’s length” with the Corporation or such subsidiary within the meaning of those expressions in the Tax Act; |
“Remaining Shareholder” has the meaning set out in sections 6.1 and 7.1;
“Share Purchase Agreement” means the Share Purchase Agreement dated as of January 8, 1999 between the Corporation and Intrawest;
“Shareholder Representative” has the meaning set out in section 2.7;
“Shareholders” means Holdings and Intrawest, together with such other Persons as may become parties to this Agreement pursuant to section 13.2 and the other provisions hereof who are holders of Shares, and “Shareholder” means any of them (provided that any such party will cease to be a Shareholder following the Transfer by such party of all of its right, title and interest in all Shares and such Person ceasing to be registered as the owner of any Shares);
“Shares” means any shares in the capital of the Corporation and “Share” means any of them;
“subsidiary” has the meaning given to the term “subsidiary” in the Act;
“Successor Corporation” means any successor corporation to Blue Mountain Resorts Limited following an amalgamation, reorganization or reconstruction of Blue Mountain Resorts Limited or statutory arrangement between Blue Mountain Resorts Limited and its shareholders (or any class thereof);
“Tag Along Block Shareholder” has the meaning set out in subsection 7.1(1);
“Tag Along Notice” has the meaning set out in section 7.3;
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“Tag Along Offer” has the meaning set out in section 7.1;
“Tax Act” means the Income Tax Act (Canada), R.S.C. 1985, c.l (5th Supp.), as amended from time to time;
“Third Party Offer” has the respective meanings set out in subsections 6.1(1) and 7.1(1);
“Third Party Offeror” means a Person acting as principal and dealing at arm’s length with the Offeror within the meaning of such expression in the Tax Act;
“Time of Closing” has the meaning set out in section 12.2;
“Transfer” of any Share means any sale, exchange, transfer, assignment, gift, pledge, encumbrance, hypothecation, alienation, disposition or other transaction, whether voluntary, involuntary or by operation of law (as upon a court order or declaration or execution sale or otherwise), by which the legal or beneficial ownership of, or any security interest or other interest in, such Share passes from one Person to another, or to the same Person in a different capacity, whether or not for value, including any sale, assignment, transfer, mortgage, pledge, charge, disposition or other encumbrance of any interest in or control over any Share by any assignee of a bankrupt or insolvent Shareholder, execution creditor, liquidator, receiver, mortgagee, pledgee or other security holder of a Shareholder other than a transmission of the Share from a deceased or incompetent Shareholder to the estate or legal personal representative of the Shareholder or a transfer of the Share to a beneficiary of the estate of the Shareholder, for so long as the Share continues to be held by such estate or legal personal representative or by such beneficiary, and “Transfer” includes any corporate reorganization a significant result of which is to achieve indirectly that which is not permitted directly hereunder, and “to Transfer”, “Transferred” and similar expressions have corresponding meanings;
“Vendor” has the meaning set out in section 12.4; and
“Withdrawal Notice” has the meaning set out in section 5.3;
and the terms defined in Schedule A have the meanings assigned to such terms therein.
1.2 Sections and Headings. The division of this Agreement into Articles and sections and the insertion of headings are for the convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms “this Agreement”, “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular Article, section or other portion hereof and include any agreement or instrument supplemental or ancillary hereto. The expressions “Article”, “section”, “subsection” and “paragraph” followed by a number or a letter mean and refer to the specified article, section, subsection or paragraph of this Agreement.
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1.3 Gender, Etc. Except where the context requires otherwise, any reference in this Agreement to gender includes all genders, words used herein importing the singular number include the plural and vice versa, words importing Persons shall include individuals, partnerships, associations, trusts, unincorporated organizations and companies and vice versa, the word “or” is not exclusive and the word “including” is not limiting (whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto).
1.4 Accounting Principles. Wherever in this Agreement reference is made to generally accepted accounting principles, such reference shall be deemed to be to the generally accepted accounting principles from time to time approved by the Canadian Institute of Chartered Accountants or any successor thereto, applicable as at the date on which a calculation is made or required to be made hereunder in accordance with generally accepted accounting principles. All accounting terms not otherwise defined herein shall have the meanings assigned to them, and all computations made pursuant to this Agreement, except as expressly provided, otherwise shall be made in accordance with generally accepted accounting principles.
1.5 Preamble. The preamble hereto is hereby incorporated into this Agreement and forms a part hereof.
1.6 Approval. Unless the context otherwise requires or except as is otherwise provided, any reference to “approval”, “authorization” or “consent” of a Shareholder means the written approval, written authorization or written consent of the Shareholder.
1.7 Unanimous Shareholders’ Agreement. This Agreement is entered into between all the Shareholders of the Corporation and, accordingly, is a unanimous shareholders’ agreement for the purposes of section 108(3) of the Act.
ARTICLE 2
MANAGEMENT
2.1 Board of Directors. The Board of Directors will consist of eight directors. Each Shareholder will vote or cause its Shares to be voted at each meeting of the shareholders of the Corporation at which directors of the Corporation are elected or appointed (or execute or cause to be executed one or more consent resolutions in lieu thereof) so:
(1) | during the time when Holdings holds greater than 90% of the issued and outstanding Common Shares, seven Persons nominated by Holdings and one Person nominated by Intrawest for election to the Board of Directors will be elected or appointed as directors of the Corporation; |
(2) | during the time when Holdings holds greater than 75% and no more than 90% of the issued and outstanding Common Shares, six Persons nominated by Holdings and two Persons nominated by Intrawest for election to the Board of Directors will be elected or appointed as directors of the Corporation; |
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(3) | during the time when Holdings holds greater than 50% and no more than 75% of the issued and outstanding Common Shares, five Persons nominated by Holdings and three Persons nominated by Intrawest for election to the Board of Directors will be elected or appointed as directors of the Corporation; |
(4) | during the time when each of Intrawest and Holdings holds 50% of the issued and outstanding Common Shares, four Persons nominated by Intrawest and four Persons nominated by Holdings for election to the Board of Directors will be elected or appointed as directors of the Corporation; |
(5) | during the time when Intrawest holds greater than 50% and no more than 75% of the issued and outstanding Common Shares, five Persons nominated by Intrawest and three Persons nominated by Holdings for election to the Board of Directors will be elected or appointed as directors of the Corporation; |
(6) | during the time when Intrawest holds greater than 75% and no more than 90% of the issued and outstanding Common Shares, six Persons nominated by Intrawest and two Persons nominated by Holdings for election to the Board of Directors will be elected or appointed as directors of the Corporation; and |
(7) | during the time when Intrawest holds greater than 90% of the issued and outstanding Common Shares, seven Persons nominated by Intrawest and one Person nominated by Holdings for election to the Board of Directors will be elected or appointed as directors of the Corporation; |
and no Shareholder will vote or suffer or permit any of its Shares to be voted in favour of any Person for the office of director of the Corporation (or execute or suffer or permit to be executed any consent resolution by which any Person is to be elected or appointed as a director of the Corporation) except Persons nominated in accordance with this section 2.1.
2.2 Initial Nominees. The initial director nominees of Intrawest shall be Gary Raymond, Hugh Smythe, Roger McCarthy and Lorne Bassel and the initial director nominees of Holdings shall be Gordon Canning, George Weider, Don McGillivray and Urban Joseph. If a director vacates his or her position, the vacancy shall be filled with a nominee of the nominator of such director within 30 days of the occurrence of such vacancy.
2.3 Meetings. Meetings of the Board of Directors shall be held at least once every three months. At least five Business Days’ prior notice shall be given for each meeting unless the giving of such notice is waived by all directors before, during or after the meeting. Such notice shall set out in reasonable detail the business to be considered at the meeting. Any director may participate in a meeting by telephone. A quorum for the transaction of business at any meeting of the Board of Directors shall be a majority present in person or by conference telephone, provided that such majority includes at least one nominee of Intrawest and one nominee of Holdings; provided that if a meeting of the Board of Directors is called and a quorum is not achieved, the meeting shall be postponed to the date which is one week after the date of such meeting, to be held at the same time
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and place, and the postponed meeting shall be deemed to be duly constituted even if there is not one nominee of Intrawest and one nominee of Holdings present thereat. Subject to section 2.6, all matters or questions requiring action or decision at any meeting of the Board of Directors shall be determined by a majority of votes cast at such meeting. Any business to be conducted at a meeting of the Board of Directors may, in lieu of a meeting, be conducted by resolution in writing signed by all of the directors. The Corporation shall reimburse each of the directors for any reasonable travel costs incurred by him or her in the course of fulfilling his or her responsibilities as director.
2.4 Officers. The officers of the Corporation shall be:
Name | Office or Offices to be Held | |
George Weider | Chairman of the Board | |
Gordon Canning | President and Chief Executive Officer | |
Donald McGillivray | Vice-President | |
Harold Abbotts | Vice-President, Finance | |
William Skelton | Vice-President, Recreation Services | |
Alvard Petten | Vice-President, Hospitality Services | |
Bev Philp | Vice-President, Marketing | |
David Sinclair | Vice-President, Human Resources |
The officers of the Corporation shall be fully responsible for the day-to-day operations of the Corporation, subject at all times to the provisions of section 2.6, and shall report to the Board of Directors as required.
2.5 Auditors. The auditors of the Corporation shall be Gaviller & Company, or such other firm of chartered accountants as may be appointed from time to time by the Shareholders pursuant to subsection 2.6(17).
2.6 Matters Requiring Approval. During the time Intrawest or Holdings holds at least 25% of the issued and outstanding Common Shares, in addition to any other approval that may be required by law, by this Agreement or pursuant to the Corporation’s Constating Documents, neither the Corporation nor any subsidiary of the Corporation shall take any of the following actions, and none of the parties to this Agreement shall authorize, take part in or permit any of the following actions to be taken by the Corporation or any subsidiary, unless such action is approved by each of the Shareholders:
(1) | the redemption or purchase for cancellation or acquisition or other retirement for value of any Shares, or any other distribution of the assets of the Corporation to its shareholders other than lawful distributions in accordance with the distribution policy referred to in section 2.9; |
(2) | the transfer or issuance by the Corporation or any subsidiary of the Corporation of any shares in the capital of, or right, title or interest in, the Corporation or any subsidiary of the Corporation or any corporation or other business entity other than the Corporation which carries on a material part of its overall business, including the making of an allotment of, or the issuance or granting of any option, right or warrant to subscribe for, purchase or otherwise acquire, any Share or any security convertible into or exchangeable for any Share; |
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(3) | the conversion, exchange, reclassification, redesignation, subdivision, consolidation or other change of or to any Shares or the amendment or variation of any rights, privileges, restrictions or conditions attaching to any such Shares; |
(4) | the amalgamation, merger, consolidation or reorganization of the Corporation or any subsidiary of the Corporation, or the approval or effecting of any compromise or arrangement between the Corporation or any subsidiary of the Corporation and its creditors or any class of them or its Shareholders or any class of them, in each case, whether statutory or otherwise; |
(5) | the filing of a voluntary petition under any bankruptcy laws or the making of a voluntary assignment for the benefit of the creditors of the Corporation or any subsidiary of the Corporation generally or the taking or institution of any proceedings for the winding-up, liquidation or dissolution of the Corporation or any subsidiary of the Corporation; |
(6) | the taking of any action to alter or amend or change the Constating Documents of the Corporation or any subsidiary of the Corporation; |
(7) | the entering into of any transaction, contract, commitment or agreement with any Related Party of the Corporation or of a subsidiary of the Corporation where the subject matter of the transaction, contract, commitment or agreement has a value in excess of, or such transaction, contract, commitment or agreement may involve the Corporation or any of its subsidiaries being, or becoming obligated to make payments or capital expenditures or incurring liabilities, in the aggregate over the term of such transaction, contract, commitment or agreement in excess of, $50,000 in respect of any single transaction or series of transactions constituting part of an overall transaction, provided that where the value of such transaction, contract, commitment or agreement is less than $50,000, such transaction, contract, commitment or agreement is on terms and at a cost or for a price or consideration to the Corporation or any of its subsidiaries which are no less advantageous to the Corporation or such subsidiary than would generally be available to the Corporation or such subsidiary from Persons acting as principal and dealing at arm’s length with the Corporation or such subsidiary within the meaning of such expression in the Tax Act; |
(8) | the adoption or approval of an Annual Budget, an amended Annual Budget, a Capital Expenditures Budget or an amended Capital Expenditures Budget; |
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(9) | except for indebtedness for or in respect of borrowed monies in an amount less than $15,000,000 in the aggregate for the Corporation and its subsidiaries and except as provided for in the Approved Budget, borrow any money, assume, incur or become liable upon any indebtedness for or in respect of borrowed money, give any security or assume, incur or become liable or undertake, commit or agree to assume, incur or become liable in respect of any indebtedness for borrowed monies of any Person; |
(10) | except as provided for in the Approved Budget, authorize or make any capital expenditures in excess of, or purchase or otherwise acquire or sell, transfer, lease, exchange or otherwise dispose of or encumber, or agree, absolutely or contingently, to purchase or otherwise acquire or sell, transfer, lease, exchange or otherwise dispose of or encumber any single asset, or property or right having a value in excess of $100,000 for any item or series of items constituting part of a single item, or $100,000 in the aggregate in any fiscal year for the Corporation and its subsidiaries; |
(11) | enter into, or make any material modification or material amendment to any Material Contract or waive (in whole or in part) any material rights under any Material Contract, other than as provided for in the Approved Budget; |
(12) | establish, adopt, enter into, make or amend any collective bargaining, bonus, profit sharing, compensation, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee of the Corporation or any of its subsidiaries, or make any award or payment to any director, officer or employee of the Corporation or any of its subsidiaries except in the ordinary course of business and consistent with past practice and except as provided for in the Approved Budget; provided, however, that compensation paid to the directors of the Corporation set out in Schedule C for all services rendered to the Corporation by them will remain at the levels set out in Schedule C until the first anniversary of the date of this Agreement; |
(13) | grant financial assistance to any Person, directly or indirectly, by way of loan, guarantee, the provision of security or otherwise, other than financial assistance where the amount or value of the loan, guarantee, security or other financial assistance provided to or for the benefit of any Person or in respect of any single transaction or series of transactions constituting part of an overall transaction, does not exceed $50,000 and the amount or value of the aggregate financial assistance in any financial year of the Corporation does not exceed $50,000; |
(14) | subscribe for, take, purchase, acquire or hold, or undertake, commit or agree to subscribe for, take, purchase, acquire or hold, shares or other securities of any Person or the whole or any substantial part of the assets and liabilities of any Person comprising a business; |
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(15) | enter into, create, dissolve or terminate any partnership, joint venture or any arrangement for the sharing of profits, co-ownership or reciprocal concession with any Person pursuant to which the Corporation and its subsidiaries is or may become obligated to make payments or incur liabilities, in the aggregate, over the term of the partnership, joint venture or profit sharing, co-ownership or reciprocal concession arrangement, in excess of $50,000; |
(16) | the taking of any action which would result in any material change in the nature of the business of the Corporation or the implementation of any other material change in the present business, affairs, capitalization, distribution policy or practice, or financial condition of the Corporation and its subsidiaries, taken as a whole, other than any change in general business conditions or any change in the markets or prices for the Corporation’s principal services; |
(17) | any change in the fiscal year end of the Corporation or of the auditors of the Corporation; or |
(18) | any change in the officers of the Corporation; |
provided that nothing contained in this section 2.6 shall prohibit the making of any non-discretionary expenditures or any expenditures necessary for the normal repair and maintenance of any asset or property owned or held under lease or licence by the Corporation or any subsidiary of the Corporation or to avoid the suspension of necessary services to or the provisions of necessary services by the Corporation or any subsidiary of the Corporation, The provisions of this section 2.6 do not apply to transactions between the Corporation and any of its wholly-owned subsidiaries or between any of its wholly-owned subsidiaries.
2.7 Shareholder Representatives. For the purposes of approving the matters set out in section 2.6, each of the Shareholders shall appoint two representatives (“Shareholder Representatives”) and the initial Shareholder Representatives shall be as follows:
Intrawest | Holdings | |
Gary Raymond | Gordon Canning | |
Hugh Smythe | George Weider |
Each of the Shareholder Representatives shall have full authority to act on behalf of and to bind the Shareholder who appointed him or her, and all decisions and determinations made by a Shareholder Representative in respect of matters under this Agreement shall be binding on the Shareholder who appointed him or her. Each of the Shareholders may at any time and from time to time by notice replace any one or both of its Shareholder Representatives and any Shareholder Representative so replaced shall cease to be a Shareholder Representative upon the delivery of a copy of such notice to the other Shareholder.
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2.8 Investment in Village Core Commercial Space. Notwithstanding any other provision of this Agreement, as long as Holdings owns at least 25% of the issued and outstanding Common Shares, Holdings will have the unfettered ability in its sole discretion to cause the Corporation to exercise the BMR Option.
2.9 Distribution Policy. Subject to the provisions of the Act in respect of the making of distributions, including the payment of dividends, and unless the making of a distribution, including the declaration and payment of dividends, causes a default in the Corporation’s loan agreements, each of the Shareholders acknowledges and agrees that the distribution policy of the Corporation shall be:
(1) | during each fiscal year of the Corporation, the Corporation shall distribute to the holders of its Common Shares an aggregate amount equal to $576,000; and |
(2) | in addition to the distributions set out in subsection (1) above, for each of the first two years following the date of this Agreement, the Corporation shall distribute to the holders of its Common Shares an aggregate amount equal to $300,000. |
2.10 Annual Budgets and Capital Expenditures Budgets. Management of the Corporation will prepare and submit to the Shareholders for approval pursuant to subsection 2.6(8): (i) no later than November 1 in each fiscal year an Annual Budget in respect of such fiscal year and the first 45 days of the immediately following fiscal year of the Corporation for approval pursuant to subsection 2.6(8) together with a draft Capital Expenditures Budget for such fiscal year for informational purposes only; and (ii) no later than February 15 in each fiscal year, a final Capital Expenditures Budget for such fiscal year for approval pursuant to subsection 2.6(8). In addition, if during any fiscal year of the Corporation following approval by the Shareholders of an Annual Budget in respect of such fiscal year management of the Corporation, in good faith, believes, or either of the Shareholders notifies the Corporation that it, in good faith, believes it is reasonably likely that EBITDA in respect of such fiscal year will be less than 75% of budgeted EBITDA in respect of such fiscal year as set out in such Approved Budget, as promptly as reasonably possible management of the Corporation will prepare and submit to the Shareholders for approval pursuant to subsection 2.6(8) an amended Annual Budget and an amended Capital Expenditures Budget in respect of such fiscal year. Promptly (and in any event within 30 days after the same is submitted to the Shareholders), a meeting of the Shareholders will be held at which the Shareholders will either approve pursuant to subsection 2.6(8) or disapprove any Annual Budget or Capital Expenditures Budget, as the case may be, submitted to the Shareholders pursuant to the foregoing provisions of this section 2.10, or an adjustment thereof. If any such Annual Budget or Capital Expenditures Budget, as the case may be, is not approved by the Shareholders pursuant to subsection 2.6(8) at such a meeting of the Shareholders, management of the Corporation will submit revisions of such Annual Budget or Capital Expenditures Budget, as the case may be, to the Shareholders within 15 days thereafter, which revised Annual Budget or Capital Expenditures Budget, as the case may be, will be subject to approval or disapproval at a further meeting of the Shareholders which will be held within 15 days after such revised Annual Budget or Capital Expenditures Budget, as the case may be, is submitted to the Shareholders. If an Annual Budget or Capital Expenditures Budget, as the case may be, or an adjustment thereof, is not approved by the Shareholders pursuant to subsection 2.6(8) at such further meeting of the Shareholders, thereafter, until an Annual Budget or Capital Expenditures Budget, as the case may be, is approved by the Shareholders pursuant to subsection 2.6(8), the Annual Budget or Capital Expenditures Budget, as the case may be, shall be deemed to be the Annual Budget or Capital Expenditures Budget, as the case may be, most recently approved by the Shareholders pursuant to subsection 2.6(8), mutatis mutandis, except that there shall be excluded therefrom any acquisition, expansion or disposition of any Material Assets.
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2.11 Implementation of Approved Budgets. Management of the Corporation will take all reasonable steps to implement and adhere to each Approved Budget for so long as such Approved Budget remains in effect, provided that management of the Corporation will be permitted to deviate from an Approved Budget to the extent management of the Corporation in good faith believes it is necessary or desirable to do so and such deviation is not material when viewed as part of such Approved Budget as a whole, or is otherwise made in accordance with section 2.6, and provided management of the Corporation notifies the Shareholders of such deviation within 15 days after the occurrence thereof.
2.12 Information. As promptly as reasonably possible (and, in any event, within 90 days following the end of each fiscal year of the Corporation), the Corporation will distribute to the Shareholders audited consolidated financial statements of the Corporation as at the last day of such fiscal year and for the fiscal year of the Corporation then ended, prepared in accordance with generally accepted accounting principles, together with a comparison of the actual operations and the Approved Budget for such fiscal year (if applicable, as most recently amended) prepared by management of the Corporation. Each Shareholder will have the right to request additional financial reports and information not expressly provided for herein in order to satisfy reporting or other requirements under any law, rule or regulation applicable to such Shareholder and the Corporation will provide any such additional financial reports and information to such Shareholder as promptly as reasonably possible after such request is made.
2.13 Head Office Services. Intrawest agrees that it shall provide, upon request by the Corporation and on terms agreed upon between Intrawest and the Corporation, head office services to the Corporation.
2.14 Agreement to Act. Subject as herein after provided, each of the parties covenants and agrees to execute and deliver, and to cause to be executed and delivered, all such instruments and other documents and, subject to the other provisions hereof, to exercise or cause to be exercised their influence and any and all voting rights held by them, respectively, from time to time, and to do or cause to be done all such other acts and things in order that all provisions of this Agreement shall be fully and effectively carried out, implemented and given effect to in accordance with the terms hereof and all such changes to the Constating Documents, resolutions and other documents governing the Corporation or any subsidiary of the Corporation as may be necessary or desirable to accurately reflect and give effect to the provisions of this Agreement will be made.
2.15 Corporation to be Bound. The Corporation confirms its knowledge of this Agreement and will carry out and be bound by the provisions of this Agreement to the full extent that it has the capacity and power at law to do so.
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2.16 Claims against the Corporation. Notwithstanding any other provision of this Agreement, the parties agree that if Intrawest makes a claim against the Corporation for compensation or indemnity under the Share Purchase Agreement or the Real Estate Purchase Agreement, or any documents or agreements contemplated thereunder other than this Agreement, or any other claim against the Corporation for damages arising as a result of any of the transactions contemplated by any of those agreements or documents (a “Claim”), Holdings shall have the sole right to dispute and contest, and assume the defence of such Claim on behalf of the Corporation, the costs relating to such Claim to be borne by the Corporation. Intrawest agrees that notwithstanding any other provision of this Agreement, upon making a Claim, it shall have no further right to receive information with respect to such Claim from the Corporation, other than as the Corporation may be required to disclose in accordance with applicable law, that direction of the defence of such Claim on behalf of the Corporation shall be the sole responsibility of Holdings and that neither Intrawest nor any of its nominee directors shall have any further involvement with respect to the defence of such Claim on behalf of the Corporation.
2.17 Confidentiality. The Shareholders acknowledge that they may have access to and may be entrusted with information concerning the business of the Corporation and its subsidiaries (collectively, the “Information”). Accordingly, each of the Shareholders hereby covenants and agrees that it will not at any time disclose Information to any Person provided that:
(a) | each Shareholder may disclose such Information to consultants, legal advisors, auditors, insurance consultants, financial institutions, investment bankers and other third parties in accordance with prudent business practice as such Shareholder may reasonably consider to be necessary or desirable for the bona fide purposes of its business and affairs and having reasonable regard for the interests of the Corporation in the circumstances, provided that such Shareholder obtains reasonable assurances from the recipient of such Information that the Information will be kept confidential by such recipient; |
(b) | Intrawest may disclose such portions of the Information to financial analysts and shareholders of Intrawest in accordance with prudent business practice, provided (i) such disclosed Information shall not contain any personal information relating to the directors, officers or employees of the Corporation and its subsidiaries, including the salary or other terms of such Person’s employment, and (ii) with respect to any press release issued by Intrawest with respect to the business and affairs of the Corporation, Holdings shall approve the form of such press release prior to its release, such approval not to be unreasonably withheld; |
(c) | each Shareholder may disclose Information which is required to be disclosed by such Shareholder under any applicable law or regulation or any requirement of any judicial, administrative or governmental authority, including any applicable securities laws or regulations and the rules of any stock exchange applicable to such Shareholder; and |
(d) | each Shareholder may disclose any Information to the extent such disclosure has been approved by the other Shareholder. |
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ARTICLE 3
RESTRICTIONS ON TRANSFER
3.1 No Transfer of Shares. Except as expressly provided for in this Agreement, no Shareholder shall Transfer or suffer or permit any Transfer of, any Share unless, prior to the Transfer of such Share, all of the Shareholders have consented in writing to such Transfer and the transferee or Person acquiring any interest or control over the Share, is a Shareholder or complies with section 13.2.
3.2 Endorsement on Certificates. Share certificates of the Corporation shall bear the following legend either as an endorsement or on the face thereof:
“The shares represented by this certificate are subject to certain restrictions upon transfer and voting and all the other terms and conditions of that certain Shareholders’ Agreement dated January 28th, 1999 as the same may be amended from time to time, a copy of which is on file at the registered office of the Corporation. A holder of the shares represented by this certificate may obtain, upon written request and without charge, a copy of such Shareholders’ Agreement, as may be amended from time to time.”
3.3 Permitted Encumbrances. Notwithstanding section 3.1, a Shareholder may hypothecate, mortgage, pledge, charge or otherwise encumber any interest in any Shares held by such Shareholder to any chartered bank or other institutional lender provided that the bank or other institutional lender agrees with each other Shareholder that the exercise by it of any right or remedy that it is entitled to in connection therewith shall be subject to the following restrictions:
(1) | the bank or other lender shall not be entitled to demand that any Shares be Transferred on the register of the Corporation to the name of such bank or lender or any nominee of such bank or lender; |
(2) | the bank or other lender shall not be entitled to Transfer any interest in any Share except in accordance with the provisions of this Agreement; and |
(3) | the bank or other lender will assign absolutely all of its interest in such Shares to any Shareholder or Shareholders who may subsequently be entitled to acquire such Shares pursuant to this Agreement upon payment by such Shareholder or Shareholders to the bank or other lender of all amounts to which the Shareholder hypothecating, mortgaging, pledging, charging or otherwise encumbering such Shares is entitled pursuant to this Agreement in payment for such Shares, and each Shareholder hereby irrevocably authorizes and directs each other Shareholder to pay all such amounts to which such Shareholder is so entitled to any bank or other lender to which it may hypothecate, mortgage, pledge, charge or otherwise encumber any Shares held by such Shareholder. |
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3.4 Intrawest Permitted Transfers. Notwithstanding anything to the contrary contained herein, Intrawest may Transfer all or any of its Shares and rights under this Agreement to a corporation in which Intrawest owns, directly or indirectly, voting shares carrying more than 75% of the voting rights attached to all voting shares of such corporation then outstanding or a partnership or other non-corporate business entity in which Intrawest owns, directly or indirectly, more than 75% of the total equity interests therein and directly or indirectly controls the management thereof (an “Intrawest Permitted Transferee”) and any such Intrawest Permitted Transferee may Transfer all or any of its Shares or rights under this Agreement to Intrawest or to any other Intrawest Permitted Transferee at any time and from time to time, free of the restrictions otherwise applicable thereto under the terms of this Agreement on the condition that:
(1) | Intrawest provides prior written notice thereof to the Corporation and to each of the other Shareholders; |
(2) | the Intrawest Permitted Transferee executes such documents as may be reasonably required by any of the Shareholders to reflect such Transfer on and subject to the terms of this Agreement including any document required pursuant to section 13.2; |
(3) | Intrawest shall remain liable for the performance of all of its obligations hereunder, including, without limitation, those under Article 8; and |
(4) | if Holdings holds at least 25% of the issued and outstanding Common Shares at the time of such Transfer, Intrawest obtains the prior written consent of Holdings to such Transfer (such consent not to be unreasonably withheld). |
In the event of a Transfer pursuant to this section 3.4 of less than all of the Shares held by Intrawest to an Intrawest Permitted Transferee, Holdings and Intrawest shall promptly execute such documents as may be reasonably required to set forth new provisions in this Agreement or amend any existing provisions of this Agreement so that Intrawest and the Intrawest Permitted Transferee will be treated as one and the same Person for all purposes of this Agreement, mutatis mutandis.
3.5 Continuance or Amalgamation Permitted. Notwithstanding any other provision of this Agreement, nothing in this Agreement will restrict the continuance or amalgamation of Intrawest or any Intrawest Permitted Transferee and the acquisition or continued ownership by the Corporation continuing following such continuance or amalgamation of Shares held by Intrawest or such Intrawest Permitted Transferee.
3.6 Covenants re Intrawest Permitted Transferee. So long as any Intrawest Permitted Transferee continues to be a Shareholder, such Intrawest Permitted Transferee shall not, and Intrawest shall not permit such Intrawest Permitted Transferee, or any corporation or other entity holding securities of such Intrawest Permitted Transferee, to issue any securities or additional shares of any class or kind whatsoever, or permit the transfer of any of its securities or shares of any class or kind whatsoever, or take or omit to take, any action or permit any other circumstance to occur if, as a result thereof, Intrawest will cease to own, directly or indirectly, voting shares carrying more than 75% of the voting rights attached to all voting shares of such Intrawest Permitted Transferee if such Intrawest Permitted Transferee is a corporation, or cease to own, directly or indirectly, more than 75% of the total equity interests in, and directly or indirectly control the management of, such Intrawest Permitted Transferee if such Intrawest Permitted Transferee is a partnership or other non-corporate business entity.
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3.7 Holdings Permitted Transfers. Notwithstanding anything to the contrary contained herein, Holdings may Transfer any or all of its Shares and rights under this Agreement to a corporation in which Eligible Holdings Transferees own, directly or indirectly, all of the shares of such corporation then outstanding or a partnership or other non-corporate business entity in which Holdings owns, directly or indirectly, all of the total equity interests therein and directly or indirectly controls the management thereof (a “Holdings Permitted Transferee”) and any such Holdings Permitted Transferee may Transfer any or all of its Shares or rights under this Agreement to Holdings or to any other Holdings Permitted Transferee at any time and from time to time, free of the restrictions otherwise applicable thereto under the terms of this Agreement on the condition that:
(1) | Holdings provides prior written notice thereof to the Corporation and to each of the other Shareholders; |
(2) | the Holdings Permitted Transferee executes such documents as may be reasonably required by any of the Shareholders to reflect such Transfer on and subject to the terms of this Agreement, including any document required pursuant to section 13.2; |
(3) | Holdings shall remain liable for the performance of all of its obligations hereunder; and |
(4) | if Intrawest holds at least 25% of the issued and outstanding Common Shares at the time of such Transfer, Holdings obtains the prior written consent of Intrawest to such Transfer (such consent not to be unreasonably withheld). |
In the event of a Transfer pursuant to this section 3.7 of less than all of the Shares held by Holdings to a Holdings Permitted Transferee, Holdings and Intrawest shall promptly execute such documents as may be reasonably required to set forth new provisions in this Agreement or amend any existing provisions of this Agreement so that Holdings and the Holdings Permitted Transferee will be treated as one and the same Person for all purposes of this Agreement, mutatis mutandis.
3.8 Covenants re Holdings Permitted Transferee. So long as any Holdings Permitted Transferee continues to be a Shareholder, such Holdings Permitted Transferee shall not, and Holdings shall not permit such Holdings Permitted Transferee, or any corporation or other entity holding securities of such Holdings Permitted Transferee, to issue any securities or additional shares of any class or kind whatsoever, or permit the transfer of any of its securities or shares of any class or kind whatsoever, or take or omit to take, any action or permit any other circumstance to occur if, as a result thereof, Eligible Holdings Transferees will cease to own, directly or indirectly, all of the shares of such Holdings Permitted Transferee if such Holdings Permitted Transferee is a corporation, or cease to own, directly or indirectly, all of the total equity interests in, and directly or indirectly control the management of, such Holdings Permitted Transferee if such Holdings Permitted Transferee is a partnership or other non-corporate business entity.
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3.9 Matters Relating to Holdings.
(1) Covenants of Holdings
Holdings acknowledges that the identity of its shareholders is of substantial importance to Intrawest and covenants and agrees that it will not, without the prior consent in writing of Intrawest, such consent not to be unreasonably withheld:
(a) | issue any securities or additional shares of any class or kind whatsoever including, without limitation, Holdings Shares, except to a Holdings Shareholder or an Eligible Holdings Transferee; or |
(b) | permit the transfer of any of its securities or its shares of any class or kind whatsoever including, without limitation, Holdings Shares, except to a Holdings Shareholder or an Eligible Holdings Transferee. |
(2) Further Assurances by Holdings
From time to time as reasonably required by Intrawest, Holdings will provide to Intrawest:
(a) | a list of its shareholders, together with a description of the number of shares beneficially owned by each shareholder; and |
(b) | a copy of its articles of incorporation and bylaws and any amendments thereto; |
in each case, if required by Intrawest, certified to be correct by a duly elected or appointed officer of Holdings.
3.10 Eligible Holdings Transferees. Notwithstanding anything to the contrary contained herein, any Holdings Shareholder may transfer all or any of the shares of Holdings held by such Holdings Shareholder to any Eligible Holdings Transferee and any Eligible Holdings Transferee may transfer all or any of its shares of Holdings to any Holdings Shareholder or to any other Eligible Holdings Transferee at any time and from time to time. In addition, notwithstanding any other provision of this Agreement, the transmission of any shares of Holdings from a deceased or incompetent Holdings Shareholder to the estate or legal representative of such Holdings Shareholder or the transfer of any shares of Holdings to a beneficiary of the estate of such Holdings Shareholder will not constitute a breach of subsection 3.9(1) for so long as such shares of Holdings continue to be held by such estate or legal representative or by such beneficiary or if such estate or legal representative or such beneficiary transfers such shares of Holdings to any Holdings Shareholder or an Eligible Holdings Transferee.
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3.11 Covenants re Eligible Holdings Transferee. So long as any Eligible Holdings Transferee continues to hold any shares of Holdings, such Eligible Holdings Transferee shall not issue any securities or additional shares of any class or kind or other ownership interests in such Eligible Holdings Transferee or, where such Eligible Holdings Transferee is a trust, designate any additional beneficiaries of such Eligible Holdings Transferee, or permit the transfer of any of its securities or shares of any class or kind or other ownership interests in such Eligible Holdings Transferee or, where such Eligible Holdings Transferee is a trust, the designation of any additional beneficiaries of such Eligible Holdings Transferee, or take or omit to take any action or permit any other circumstance to occur if, as a result thereof:
(1) | all of the shares of or 100% of any other ownership interests in such Eligible Holdings Transferee will cease to be owned, directly or indirectly, by one or more Holdings Family Members; or |
(2) | all of the beneficiaries of such trusts will not be Eligible Holdings Transferees; |
provided that the foregoing provisions of this section 3.11 will not be breached by the transmission of any shares of or other ownership interest in, or, where the Eligible Holdings Transferee is a trust, any beneficial interest in, such Eligible Holdings Transferee from a deceased or incompetent shareholder of or holder of an ownership interest in, or beneficiary of, such Eligible Holdings Transferee to the estate or legal representative of such shareholder, holder or beneficiary or the transfer of any shares of or other ownership interest in or, where the Eligible Holdings Transferee is a trust, any beneficial interest in, such Eligible Holdings Transferee to a beneficiary of the estate of such shareholder, holder or beneficiary for so long as such shares of or other ownership interests in, or, where the Eligible Holdings Transferee is a trust, such beneficial interest in, such Eligible Holdings Transferee continue to be held by such estate or legal representative or by such beneficiary or if such estate or legal representative or such beneficiary transfers such shares of Holdings to any Holdings Shareholder or an Eligible Holdings Transferee.
ARTICLE 4
ISSUANCES OF ADDITIONAL SHARES
4.1 Pre-emptive Rights. If the Corporation is to issue any Additional Shares, the Corporation shall first offer such Additional Shares to all Shareholders by notice given to them of the Corporation’s intention to issue Additional Shares, the number thereof to be so issued and the issue price per Additional Share. The Shareholders shall have the right to purchase the Additional Shares so offered at the issue price per Additional Share set forth in such notice, pro rata based upon the number of Common Shares held by the Shareholders at the date such notice is given. Each Shareholder shall have 20 Business Days from the date such notice is given in which to notify the Corporation in writing that such Shareholder wishes to purchase all or any of the Additional Shares so offered at such issue price per Additional Share which notice will specify either that the Shareholder is electing to take up and pay for all of the Additional Shares offered to it or the number or portion of the Additional Shares offered to it that the Shareholder wishes to purchase and upon receipt of such notice by the Corporation a binding contract for the sale and purchase of the Shares
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referred to in such notice will be deemed to be formed between such Shareholder and the Corporation. If either Shareholder advises the Corporation in writing that it will not be exercising its right to acquire all of the Additional Shares offered to it, does not exercise such right to acquire all of the Additional Shares offered to it within the time stipulated in this section 4.1 or exercises such right in respect of less than all of the Additional Shares offered to it, the Corporation will, following expiry of the foregoing 20 Business Day period, offer by notice given to the Shareholder who elected to take up and pay for all of the Additional Shares initially offered to it, the Additional Shares in respect of which the other Shareholder has not exercised its rights to acquire, and such Shareholder shall have the right to purchase the Additional Shares so offered at such issue price per Additional Share. The Shareholder shall have 10 Business Days from the date such subsequent notice is given in which to notify the Corporation in writing that such Shareholder wishes to purchase all or any of the Additional Shares so offered at such issue price per Additional Share which notice will specify either that the Shareholder is electing to take up and pay for all of the Additional Shares offered to it or the number or portion of the Additional Shares offered to it that the Shareholder wishes to purchase and upon receipt of such notice by the Corporation a binding contract for the sale and purchase of the Shares referred to in such notice will be deemed to be formed between such Shareholder and the Corporation. After the expiration of such period of 20 Business Days or 10 Business Days, as applicable, the Additional Shares not so taken up by the Shareholders may be issued to such Persons who are not Shareholders of the Corporation at such issue price per Additional Share provided in the notice, provided that all such Additional Shares must be issued within 100 days from the date such notice is given and such Persons to whom Additional Shares are so issued agree to be bound by this Agreement and to become parties hereto.
4.2 Closing. The closing of a transaction contemplated in section 4.1 shall take place on the 10th Business Day following, as applicable, the expiry of the 20 Business Day period referred to in section 4.1, in respect of the purchase and sale of Additional Shares in response to an initial notice given by the Corporation offering to sell Additional Shares pursuant to section 4.1, or the expiry of the 10 Business Day Period referred to in section 4.1, in respect of the purchase and sale of Additional Shares in response to a subsequent notice under section 4.1.
ARTICLE 5
RIGHT OF FIRST OFFER
5.1 Right of First Offer. Any Shareholder (the “Offeror”) who desires to Transfer all or any of its Common Shares shall first give notice of such proposed Transfer (the “Notice”) to the other Shareholder (the “Offeree”) and to the Corporation and shall set out in the Notice:
(1) | the number of Common Shares that the Offeror desires to Transfer (the “Offered Shares”); and |
(2) | the terms upon which the Offeror desires to Transfer the Offered Shares, including the amount and form of consideration to be paid for the Offered Shares and all of the terms pursuant to which such consideration shall be paid (including, but not limited to, all payment terms and a description of the security for any debt to be issued). |
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If, prior to delivery of the Notice, the Offeror has received a bona fide offer (an “Offer”) from a Third Party Offeror to purchase the Offered Shares which Offer has been accepted or remains open for acceptance, or the Offeror has solicited or entered discussions or negotiations with a Third Party Offeror concerning a possible sale of the Offered Shares by such Third Party Offeror (unless such discussions or negotiations have been discontinued and at the time of delivery of the Notice the Offeror does not propose to resume discussions or negotiations with such Third Party Offeror concerning a possible sale of the Offered Shares or anticipate that discussions or negotiations with such Third Party Offeror concerning such a sale will be resumed by such Third Party Offeror), the Notice will contain the name and address of such Third Party Offeror and be accompanied by a copy of the Offer or a summary setting out in reasonable detail the details and status of such discussions or negotiations, as the case may be, and if, after delivery of the Notice but prior to the expiry of the period set out in section 5.5 below, the Offeror receives such an Offer, or solicits or enters such discussions or negotiations, the Offeror will promptly deliver to the Offeree such Offer or summary of the status of such discussions or negotiations, as the case may be.
5.2 Carryback Note and Non-Cash Consideration. If the Notice provides that any portion of the consideration to be paid for the Offered Shares is in the form of a promissory note (a “Carryback Note”) or any consideration other than cash or a Carryback Note (the “Non-Cash Consideration”), the fair market value (the “Carryback Note and Non-Cash Consideration Value”) of all Carryback Notes and Non-Cash Consideration may be determined by agreement of the Offeror and the Offeree. Unless the Carryback Note and Non-Cash Consideration Value has been determined by agreement of the Offeror and the Offeree, the Offeror or the Offeree shall be entitled, at any time, to require such fair market value to be determined by a qualified appraiser (an “Appraiser”) who has recognized competence in appraising property of the type the fair market value of which is to be determined and who is Independent, as agreed to by the Offeror and the Offeree within five Business Days of the date of the Notice, or, failing agreement within such five Business Day period, shall be determined by an Appraiser appointed by a judge of the superior court of Ontario on the application of either the Offeror or the Offeree. The fees and disbursements of any Appraiser shall be borne by the Corporation.
5.3 Withdrawal of Offer. Notwithstanding any other provision in this Article 5, the Offeror shall have the right to withdraw the Notice by giving notice (a “Withdrawal Notice”) on or before five Business Days after the determination by the Appraiser of the Carryback Note and Non-Cash Consideration Value to the Offeree. If the Offeror fails to deliver a Withdrawal Notice within such five Business Day period, this provision shall be deemed waived by the Offeror. Upon the delivery of a Withdrawal Notice, the Offeror shall not be permitted to Transfer any of the Offered Shares without once again complying with all the provisions of this Article 5.
5.4 Offeree’s Right to Purchase Offered Shares. Upon the Notice being given, the Offeree shall have the right to purchase all of the Offered Shares for a per share price equal to any of the following, as the Offeree may select in its sole and absolute discretion; provided, for greater certainty, that the Offeree shall only be entitled to select payment by way of Carryback Notes or Non-Cash Consideration to the extent the terms of the proposed Transfer as set out in the Notice also provide for the purchase price to be paid by Carryback Notes or Non-Cash Consideration, as the case may be, and in such case, only in respect of the portion of the purchase price so provided for in the Notice:
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(1) | the Cash Equivalent Purchase Price per Offered Share; |
(2) | the aggregate of: |
(a) | the amount of cash to be paid for the Offered Shares as set forth in the Notice divided by the number of Offered Shares; |
(b) | Carryback Notes, if any, to be given in exchange for the Offered Shares in accordance with the terms thereof set forth in the Notice and in the respective principal amounts therefor as set forth in the Notice divided by the number of Offered Shares; and |
(c) | the amount of Non-Cash Consideration, if any, to be given in exchange for the Offered Shares as set forth in the Notice divided by the number of Offered Shares; |
(3) | the aggregate of: |
(a) | the amount of cash to be paid for the Offered Shares as set forth in the Notice divided by the number of Offered Shares; |
(b) | Carryback Notes, if any, to be given in exchange for the Offered Shares in accordance with the terms thereof set forth in the Notice and in the respective principal amounts therefor as set forth in the Notice divided by the number of Offered Shares; and |
(c) | a cash amount equal to the fair market value of all Non-Cash Consideration, if any, set forth in the Notice to be given in exchange for the Offered Shares (determined as set forth in section 5.2) divided by the number of Offered Shares; or |
(4) | the aggregate of: |
(a) | the amount of cash to be paid for the Offered Shares as set forth in the Notice divided by the number of Offered Shares; |
(b) | a cash amount equal to the fair market value of all Carryback Notes, if any, set forth in the Notice to be given in exchange for the Offered Shares (determined as set forth in section 5.2) divided by the number of Offered Shares; and |
(c) | the amount of Non-Cash Consideration, if any, to be given in exchange for the Offered Shares as set forth in the Notice divided by the number of Offered Shares. |
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5.5 Notice of Intention to Purchase. Within either:
(1) | 25 Business Days after the date the Notice is given if no portion of the consideration to be given for the Offered Shares (as set forth in the Notice) consists of Carryback Notes or Non-Cash Consideration; or |
(2) | 20 Business Days after the date of determination of the Carryback Note and NonCash Consideration Value; |
as applicable, if the Offeree is willing to purchase all of the Offered Shares, it shall give notice thereof to the Offeror and to the Corporation, which notice shall specify whether the Offeree is selecting the consideration payable pursuant to subsection 5.4(1), (2), (3) or (4).
5.6 Purchase of Offered Shares by Offerees. If the Offeree gives notice in accordance with the provisions of section 5.5 that it is willing to purchase all of the Offered Shares, a binding contract of purchase and sale will exist between the Offeror and the Offeree, which contract will be subject to the provisions of, and be completed in accordance with the terms set out in the Notice as modified by this Article 5 and the provisions of Article 12. The closing of a transaction contemplated in this Article 5 shall take place on the fifth Business Day after the expiry of the applicable 25 or 20 Business Day period, as the case may be, specified in section 5.5.
5.7 Sale to Third Party Offeror. If the Offeree does not give notice in accordance with the provisions of section 5.5 that it is willing to purchase all of the Offered Shares, the rights of the Offeree, subject as hereinafter provided, to purchase the Offered Shares shall forthwith cease and terminate and, subject to compliance with sections 5.11 and 13.2, the Offeror may complete a Transfer of all but not less than all of the Offered Shares to any Third Party Offeror within 150 days after the expiry of the applicable 25 or 20 Business Day period, as the case may be, specified in section 5.5 for the consideration per Offered Share set forth in the Notice and on terms no more favourable than those set forth in the Notice. If the Offered Shares which the Offeree has not agreed to purchase are not Transferred by the Offeror within the 150 day period referred to above and otherwise in accordance with the foregoing provisions of this Article 5, the rights of the Offeree pursuant to this Article 5 shall again take effect and so on from time to time.
5.8 Extension of Time. Notwithstanding anything to the contrary contained in this Article 5, the Offeror may extend any of the time periods set forth in section 5.5 upon written notice to the Offeree. In no event shall such time periods be shorter than those currently set forth in such section, without the mutual agreement of the Offeror and the Offeree.
5.9 Outstanding Notices. At any time after (i) a Call Notice is delivered to Holdings pursuant to section 9.2, (ii) notice of any exercise of an Involuntary Transfer Option is delivered to a Shareholder pursuant to Article 11 or (iii) Holdings gives a Put Notice given pursuant to section 8.2, the Shareholder whose Common Shares are affected by such delivery will not be entitled to give a Notice pursuant to section 5.1.
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5.10 Limitations. Notwithstanding anything to the contrary herein, no Transfer may be made to any Person pursuant to section 5.7 or Article 6 or 7 if:
(1) | in connection with such Transfer, it is necessary to obtain any consent, approval, authorization, waiver, exemption or ruling from any Government Authority, the failure to obtain which would (i) result in such Transfer being prohibited by law or (ii) would otherwise have a material adverse effect on the condition (financial or otherwise) of the Corporation and its subsidiaries, taken as a whole; or |
(2) | such Transfer would, in the absence of any necessary third party consent or approval, be prohibited by the terms of any indenture, agreement or instrument to which the Corporation is a party or by which the Corporation is bound, or result in the acceleration of any indebtedness, liabilities or obligations of the Corporation or any subsidiary of the Corporation, unless (i) such consent or approval has been obtained and is in effect or (ii) the failure to obtain such consent or approval would not have a material adverse effect on the condition (financial or otherwise) of the Corporation and its subsidiaries, taken as a whole. |
If a proposed Transfer to a Third Party Offeror pursuant to section 5.7 or Article 6 or 7 is prohibited by the foregoing provisions of this section 5.10 in the absence of any necessary consent, approval, authorization, waiver, exemption, ruling or the like from any Government Authority or any necessary third party consent or approval, the Shareholders shall give all reasonable co-operation in order to obtain such consent, approval, authorization, waiver, exemption, ruling or the like or such third party consent or approval, as the case may be, as expeditiously as possible.
5.11 Limitations. Notwithstanding anything to the contrary contained herein,the Transfer by Holdings or Intrawest of any of its Common Shares to a Third Party Offeror pursuant to section 5.7 shall not be permitted unless prior to or contemporaneously with such Transfer such Third Party Offeror executes and delivers such agreements, instruments and documents as the other Shareholder may require, acting reasonably, so that such Third Party Offeror will be subject to and bound by the terms and conditions set out in this Agreement, mutatis mutandis, as if such Third Party Offeror were originally a party to this Agreement in place of Holdings or Intrawest, as the case may be, in respect of the Transferred Common Shares. In such event, the other Shareholder and the Corporation shall execute and deliver such agreements, instruments and documents as such Third Party Offeror may require, acting reasonably, to assure the right of such Third Party Offeror to enjoy the benefits and advantages of Holdings or Intrawest, as the case may be, under this Agreement. Notwithstanding any such Transfer by Intrawest, Intrawest will remain liable for the performance of its obligations under Article 8.
ARTICLE 6
DRAW ALONG RIGHTS
6.1 Draw Along Right. If:
(1) | a Shareholder holding more than two-thirds of the total issued Common Shares (“Draw Along Shareholder”) proposes to accept an Offer to purchase all of the Common Shares beneficially owned by the Draw Along Shareholder (the “Third Party Offer”); and |
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(2) | the Draw Along Shareholder has complied with the provisions of Article 5 with respect to the sale of its Common Shares; |
the Draw Along Shareholder shall have the right (the “Draw Along Right”), but not the obligation, to require the remaining Shareholder (the “Remaining Shareholder”) to sell all but not less than all of its Common Shares to the Third Party Offeror for an amount equal to the Determined Sales Price and otherwise on the terms and conditions as set out in this Article 6.
6.2 Draw Along Notice. The Draw Along Right may be exercised by the Draw Along Shareholder giving a written notice (a “Draw Along Notice”) to the Remaining Shareholder, which notice shall be:
(1) | accompanied by: |
(a) | a copy of the Notice delivered pursuant to section 5.1; and |
(b) | a written offer (the “Purchase Offer”) from the Third Party Offeror offering to purchase from the Remaining Shareholder all of the Common Shares owned by it for the Determined Sales Price, on the same terms and conditions as are contained in the Third Party Offer, including that the completion of the purchase by the Third Party Offeror of the Remaining Shareholder’s Common Shares will be at the same time, date and place as the time, date and place of the completion of the sale of Common Shares pursuant to the Third Party Offer, provided that, if any portion of the consideration to be paid for the Remaining Shareholder’s Common Shares is in the form of a Carryback Note or Non-Cash Consideration, the Purchase Offer shall provide that the Remaining Shareholder may select in its sole and absolute discretion to receive any of the following: |
(i) the aggregate of:
(A) | the amount of cash to be paid for the Common Shares owned by the Remaining Shareholder; |
(B) | a cash amount equal to the fair market value of such Carryback Note, if any, to be given in exchange for Common Shares owned by the Remaining Shareholder, determined as set forth in section 5.2; and |
(C) | a cash amount equal to the fair market value of such Non-Cash Consideration, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder, determined as set forth in section 5.2; |
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(ii) | the aggregate of: |
(A) | the amount of cash to be paid for the Common Shares owned by the Remaining Shareholder; |
(B) | such Carryback Note, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder; and |
(C) | the amount of Non-Cash Consideration, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder; |
(iii) | the aggregate of: |
(A) | the amount of cash to be paid for the Common Shares owned by the Remaining Shareholder; |
(B) | such Carryback Note, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder; and |
(C) | a cash amount equal to the fair market value of such Non-Cash Consideration, if any, to be given in exchange for Common Shares owned by the Remaining Shareholder, determined as set forth in section 5.2; or |
(iv) | the aggregate of: |
(A) | the amount of cash to be paid for the Common Shares owned by the Remaining Shareholder; |
(B) | a cash amount equal to the fair market value of such Carryback Note, if any, to be given in exchange for Common Shares owned by the Remaining Shareholder, determined as set forth in section 5.2; and |
(C) | the amount of Non-Cash Consideration, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder; |
(the “Determined Sales Price”);and |
(2) | given not less than 30 Business Days prior to the date fixed for the completion of the transaction provided for in the Purchase Offer, |
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6.3 Closing Procedures. No later than five Business Days after the expiry of the applicable 25 or 20 Business Day period specified in section 5.5 or, where the Draw Along Shareholder has complied fully with the provisions of Article 5, after the date of the Draw Along Notice, the Remaining Shareholder will duly execute the Purchase Offer and will deliver it to the Third Party Offeror in the manner contemplated by the Purchase Offer accompanied by a notice in writing specifying whether the Remaining Shareholder is selecting the consideration described in clause 6.2(1 )(b)(i), (ii), (iii) or (iv). At the closing of the sale of the Common Shares of the Remaining Shareholder pursuant to this Article 6, the Remaining Shareholder will deliver to the Third Party Offeror share certificates representing its Common Shares duly endorsed in blank for Transfer and all necessary documents required to Transfer to the Third Party Offeror, free and clear of all encumbrances, its Common Shares and to otherwise fully comply with the terms of the Purchase Offer and the Draw Along Shareholder shall, or shall cause the Third Party Offeror to, deliver to the Remaining Shareholder, consideration in an amount equal to the Remaining Shareholder’s Determined Sales Price in the form selected by the Remaining Shareholder.
6.4 Time Limit. If the sale of the Common Shares of the Draw Along Shareholder and the Remaining Shareholder pursuant to this Article 6 is not completed within 150 days of the date specified for such completion in the Third Party Offer and the Purchase Offer, the rights of the Draw Along Shareholder pursuant to this Article 6 shall again take effect and so on from time to time.
ARTICLE 7
TAG ALONG RIGHTS
7.1 Tag Along Rights. If
(1) | a Shareholder holding at least one-half of the total issued Common Shares (the “Tag Along Block Shareholder”) proposes to accept an Offer to purchase at least 75% of the Common Shares beneficially owned by the Tag Along Block Shareholder (the “Third Party Offer”); and |
(2) | the Tag Along Block Shareholder has complied with the provisions of Article 5 with respect to the sale of its Common Shares; |
the Tag Along Block Shareholder will not complete the transaction contemplated by the Third Party Offer unless either (i) the Draw Along Right is exercised in respect of the Third Party Offer or (ii) prior to the completion of the transaction contemplated by the Third Party Offer the Third Party Offeror offers (the “Tag Along Offer”) to purchase from the remaining Shareholder (the “Remaining Shareholder”) all of its Common Shares for an amount equal to the Determined Sales Price and otherwise on the terms and conditions in this Article 7. For greater certainty, the foregoing provisions of this section 7.1 will not apply to a purchase or sale of Common Shares pursuant to Article 8, 9 or 11.
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7.2 Tag Along Offer. The Tag Along Offer shall:
(1) | constitute an offer from the Third Party Offeror to purchase from the Remaining Shareholder all of the Common Shares owned by it for the Determined Sales Price, on the same terms and conditions as are contained in the Third Party Offer, including that the completion of the purchase by the Third Party Offeror of the Remaining Shareholder’s Common Shares will be at the same time, date and place as the time, date and place of the completion of the sale of Common Shares pursuant to the Third Party Offer, provided that, if any portion of the consideration to be paid for the Remaining Shareholder’s Common Shares is in the form of a Carryback Note or Non-Cash Consideration, the Tag Along Offer shall provide that the Remaining Shareholder may select in its sole and absolute discretion to receive any of the following: |
(a) | the aggregate of: |
(i) | the amount of cash to be paid for the Common Shares owned by the Remaining Shareholder; |
(ii) | a cash amount equal to the fair market value of such Carryback Note, if any, to be given in exchange for Common Shares owned by the Remaining Shareholder, determined as set forth In section 5.2; and |
(iii) | a cash amount equal to the fair market value of such Non-Cash Consideration, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder, determined as set forth in section 5.2; |
(b) | the aggregate of: |
(i) | the amount of cash to be paid for the Common Shares owned by the Remaining Shareholder; |
(ii) | such Carryback Note, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder; and |
(iii) | the amount of Non-Cash Consideration, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder; |
(c) | the aggregate of: |
(i) | the amount of cash to be paid for the Common Shares owned by the Remaining Shareholder; |
(ii) | such Carryback Note, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder; and |
(iii) | a cash amount equal to the fair market value of such Non-Cash Consideration, if any, to be given in exchange for Common Shares owned by the Remaining Shareholder, determined as set forth in section 5.2; or |
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(d) | the aggregate of; |
(i) | the amount of cash to be paid for the Common Shares owned by the Remaining Shareholder; |
(ii) | a cash amount equal to the fair market value of such Carryback Note, if any, to be given in exchange for Common Shares owned by the Remaining Shareholder, determined as set forth in section 5.2; and |
(iii) | the amount of Non-Cash Consideration, if any, to be given in exchange for the Common Shares owned by the Remaining Shareholder; |
(the “Determined Sales Price”); |
(2) | be open for acceptance by the Remaining Shareholder for a period of 30 days following delivery of the Tag Along Offer to it pursuant to section 7.1; and |
(3) | be given not less than 30 Business Days prior to the date fixed for completion of the transaction provided for in the Tag Along Offer. |
7.3 Election by Remaining Shareholder. Following receipt by the Remaining Shareholder of the Tag Along Offer, the Remaining Shareholder will have the right, but not the obligation, to elect to sell all of the Remaining Shareholder’s Common Shares to the Third Party Offeror pursuant to the terms and conditions contained in the Tag Along Offer and this Article 7, exercisable by delivering written notice (the “Tag Along Notice”) to the Tag Along Block Shareholder and the Third Party Offeror within 30 days of receipt of the Tag Along Offer pursuant to section 7.1, accompanied by a notice in writing specifying whether the Remaining Shareholder is selecting the consideration described in clause 7.2(1 )(a), (b), (c) or (d).
7.4 Closing Procedures. At the closing of the sale of the Common Shares of the Remaining Shareholder pursuant to this Article 7, the Remaining Shareholder will deliver to the Third Party Offeror share certificates representing its Common Shares duly endorsed in blank for Transfer and all necessary documents required to Transfer to the Third Party Offeror, free and clear of all encumbrances, its Common Shares and to otherwise fully comply with the terms of the Tag Along Offer and the Tag Along Block Shareholder shall, or shall cause the Third Party Offeror to, deliver to the Remaining Shareholder consideration in an amount equal to the Remaining Shareholder’s Determined Sales Price in the form selected by the Remaining Shareholder.
7.5 Failure to Give Tag Along Notice. If the Remaining Shareholder does not give a Tag Along Notice within the 30 day period referred to in section 7.3, the Remaining Shareholder will be deemed to have elected not to accept the Tag Along Offer.
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7.6 Time Limit. If the sale of the Common Shares of the Tag Along Block Shareholder and the Remaining Shareholder, if a Tag Along Notice has been given pursuant to this Article 7 are not completed within 150 days of the date specified for such completion in the Third Party Offer and the Tag Along Offer, the rights of the Remaining Shareholder pursuant to this Article 7 shall again take effect and so on from time to time.
ARTICLE 8
PUT OPTIONS
8.1 Put Options. Holdings shall have the option:
(1) | exercisable at any time during the period commencing September 1 and ending December 31 in any year, to sell to Intrawest all, but not less than all, of the Common Shares held by Holdings; and |
(2) | exercisable at any time during the period commencing September 1 and ending December 31 in any year, but not exercisable more than one time, to sell to Intrawest Common Shares representing not less than 10% and not more than 25% of the total number of issued and outstanding Common Shares; |
(each such option is called a “Put Option” and the Common Shares which are the subject of a Put Option are called “Put Shares”).
8.2 Put Notice. If Holdings wishes to exercise either of the Put Options, it shall give to Intrawest a notice (the “Put Notice”) which must:
(1) | indicate whether Holdings is exercising the Put Option set out in subsection 8.1(1) or (2); |
(2) | where Holdings is exercising the Put Option set out in subsection 8.1(2), indicate the number of Common Shares it wishes to sell to Intrawest pursuant thereto; |
(3) | stipulate the time, the date and the place of completion of the purchase of Holdings’ shares which time and date of completion will take into account the time periods required to determine the fair market value of the Put Shares and which, in any event, shall not be longer than 90 days after the date of the Put Notice; and |
(4) | be executed by Holdings. |
Promptly after a Put Notice is given to Intrawest (and in any event no later than five Business Days thereafter), Intrawest will duly execute the Put Notice acknowledging the terms thereof and Intrawest will deliver the Put Notice to Holdings.
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8.3 Price. The price per Put Share shall be 90% of the fair market value of the Put Shares calculated at the (date of the Put Notice in accordance with Schedule A, less the aggregate amount of any distributions made or to be made by the Corporation to Holdings in respect of the Put Shares pursuant to section 2.9, after the date of the Put Notice.
8.4 Holdings Indemnity.
(1) | If Holdings exercises the Put Option pursuant to subsection 8.1(l) prior to the Claims Expiry Date (as defined in the Share Purchase Agreement), Holdings hereby agrees and shall be deemed to have agreed, as of the date the Purchase Price in respect of the Put Shares is paid by Intrawest to Holdings, to indemnify and hold harmless Intrawest from any Losses (as defined in the Share Purchase Agreement), actions or causes of action in accordance with the terms of Article 12 of the Share Purchase Agreement subject in all respects to the limitations and restrictions set out in such Article 12, mutatis mutandis, in the place and stead of the Corporation, provided that the maximum aggregate obligation of Holdings pursuant to such indemnity shall not exceed $15,000,000 and provided that the indemnity shall expire on the Claims Expiry Date. In connection with such indemnity, Intrawest shall be entitled to deposit 20% of the Purchase Price with the Depositary to be held by the Depositary in accordance with the terms and conditions of subsection 8.4(2). |
(2) | (a) In
the event that funds are deposited by Intrawest with the Depositary pursuant to subsection 8.4(1), the
funds so deposited, together with any interest earned
thereon (the “indemnity Deposit”), shall be held by
the Depositary in trust in an interest bearing account and
disbursed only in accordance with the provisions of this subsection 8.4(2). |
(b) | The parties agree that, subject to paragraphs (c) and (d) below, the Depositary shall pay to Holdings on the Claims Expiry Date the entire amount of the Indemnity Deposit then remaining. |
(c) | Notwithstanding subsection 8.4(2)(b), the Depositary shall pay to Intrawest from the indemnity Deposit any and all amounts to which Intrawest is entitled pursuant to the indemnity obligations of Holdings pursuant to subsection 8.4(1). Such amounts shall be agreed upon by Intrawest and Holdings, failing which the matter will be determined by binding arbitration in such manner as the parties may agree or by a court of competent jurisdiction (which determination has been certified or otherwise authenticated to the satisfaction of the Depositary and which is final and is not itself subject to review or appeal). |
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(d) | Notwithstanding subsection 8.4(2)(b), in the event that Intrawest delivers to the Depositary a certificate of two senior officers of Intrawest certifying that Intrawest has a bona fide claim against Holdings pursuant to subsection 8.4(1I), the estimated amount of such claim and that it has provided notice to Holdings of such claim together with reasonable particulars of the factual basis for such claim, the Depositary shall only pay to Holdings pursuant to subsection 8.4(2)(b) the amount otherwise required to be paid to Holdings thereunder less a reasonable reserve for the amount that could reasonably be anticipated to be payable to Intrawest pursuant to subsection 8.4(1) in respect of such claim. The amount of such reserve shall be agreed upon by Intrawest and Holdings, failing which the matter will be determined by binding arbitration in such manner as the parties may agree or by a court of competent jurisdiction (which determination has been certified or otherwise authenticated to the satisfaction of the Depositary and which is final and is not itself subject to review or appeal); provided that until the amount of such reserve is so agreed upon or determined, the Depositary will be entitled to retain as such reserve the estimated amount of such claim specified in such certificate. Any reserve retained by the Depositary in accordance with the foregoing shall only be held until such time as the claim to which such reserve relates has been abandoned or the amount payable to Intrawest pursuant to the indemnity obligations of Holdings pursuant to subsection 8.4(1) has been agreed upon by Intrawest and Holdings or otherwise determined by binding arbitration in such manner as the parties may agree or by a court of competent jurisdiction (which determination has been certified or otherwise authenticated to the satisfaction of the Depositary and which is final and not itself subject to review or appeal). Forthwith upon such resolution, such reserve plus any interest accrued thereon shall be applied by the Depositary to the payment of the amount payable to Intrawest pursuant to subsection 8.4(1) in respect of such claim, if any, and the balance thereof, if any, shall be paid by the Depositary to Holdings. |
For purposes of this section 8.4, “Depositary” shall mean McCarthy Tetrault or, if for any reason McCarthy Tetrault is unwilling to act as a Depositary for purposes of this section 8.4, such other law firm as Intrawest and Holdings may agree, and Holdings and Intrawest will execute and deliver to the Depositary such confirmations as the Depositary may reasonably request for its protection in acting as the Depositary. Notwithstanding any other provision hereof (including section 13.9), this section 8.4 to the extent that it is applicable shall survive the termination of this Agreement.
8.5 Closing. Upon a Put Notice being given, a binding contract of purchase and sale for the Put Shares will be formed between Intrawest and Holdings, which contract will be subject to the provisions of, and completed in the manner provided in, Article 12.
8.6 Call Notice. At any time after a Call Notice is given to Holdings pursuant to section 9.2, Holdings will not be entitled to give a Put Notice under section 8.2.
8.7 Suspension of Put Options. The Put Options shall be suspended, and any outstanding Put Notices pursuant to, or contracts or agreements of purchase and sale arising under, this Article 8 which have not been completed shall be deemed to be terminated and of no further force and effect without prejudice to the rights of Holdings to deliver a further Put Notice in accordance with the terms of section 8.1, in the event that the Corporation makes an assignment for the benefit of creditors or is adjudicated bankrupt or insolvent or takes steps to wind up or terminate its existence, and thereafter the Put Options shall not be exercisable unless and until such assignment or adjudication has ceased or the Corporation abandons its steps to wind up or terminate its existence.
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ARTICLE 9
INTRAWEST CALL OPTION
9.1 Call Options. Upon the occurrence of the Call Event, Intrawest shall have the option (the “Call Option”) exercisable at any time during the period commencing September 1 and ending December 31 in any year, to purchase from Holdings all, but not less than all, of the Common Shares held by Holdings (the “Call Shares”).
9.2 Call Notice. If Intrawest wishes to exercise the Call Option, it shall give to Holdings a notice (the “Call Notice”) which must:
(1) | indicate that Intrawest is exercising its Call Option; |
(2) | stipulate the time, the date and the place of completion of the purchase of Call Shares, which time and date of completion will take into account the time periods required to determine the fair market value of the Call Shares and which, in any event, shall not be longer than 90 days after the date of the Call Notice; and |
(3) | be executed by Intrawest. |
Promptly after a Call Notice is given to Holdings (and in any event no later than five Business Days thereafter), Holdings will duly execute the Call Notice acknowledging the terms thereof and Holdings will deliver the Call Notice to Intrawest.
9.3 Price. The price per Call Share shall be 110% of the fair market value of the Call Shares, calculated at the date of the Call Notice in accordance with Schedule A, less the aggregate amount of any distributions made or to be made by the Corporation to Holdings pursuant to section 2.9, after the date of the Call Notice.
9.4 Closing. Upon a Call Notice being given to Holdings, a binding contract of purchase and sale will be formed between Intrawest and Holdings, which contract will be subject to the provisions of, and completed in the manner provided in, Article 12.
9.5 Suspension of Call Option. The provisions of section 8.7 shall apply to the Call Option and any outstanding Call Notice pursuant to, or a contract or agreement of purchase and sale arising under, this Article 9 which has not been completed, mutatis mutandis.
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ARTICLE 10
RESOLUTION OF DISPUTES BETWEEN
HOLDINGS AND INTRAWEST
10.1 Deadlock. In the event that there is a disagreement between Holdings and Intrawest regarding any matter referred to in subsection 2.6(8), Holdings and Intrawest shall attempt to resolve such disagreement in the manner and in accordance with the following procedures:
(1) | Holdings and Intrawest will attempt in good faith to resolve the disagreement by negotiation, including convening a meeting of their representatives for that purpose. All reasonable requests for relevant information relating to the disagreement made by either party will be honoured. |
(2) | If Holdings and Intrawest are unable to resolve the disagreement through negotiation, either one of them may give notice to the other requesting mediation of the disagreement. Following such notice being given, Holdings and Intrawest will agree on the appointment of a qualified, impartial and experienced individual (the “Mediator”) to serve as a mediator in connection with the disagreement. |
(3) | Should Holdings and Intrawest be unable to agree on the appointment of a mutually acceptable Mediator within 14 days of the notice referred to in subsection 10.1(2), they agree to refer the matter of the appointment of the Mediator to a judge of the superior court of Ontario. |
(4) | Within three days of the appointment of the Mediator in accordance with the provisions of subsection 10.1(2) or (3), Holdings and Intrawest will each provide the Mediator and each other with a written statement of their position in respect of the disagreement and a summary of the arguments supporting its position. |
(5) | The Mediator will meet with Holdings and Intrawest either together or separately as the Mediator in his or her sole discretion shall determine, in an attempt to resolve the disagreement through mediation. In connection with the mediation of the disagreement, the Mediator shall be permitted to request additional information from the parties, which requests shall not be unreasonably denied, and shall be permitted to engage experts. The costs of the Mediator and of any experts retained by the Mediator in the course of the mediation shall be borne by the Corporation. |
(6) | Holdings and Intrawest will each be entitled to retain legal counsel or other advisors in connection with the mediation. Each party shall be responsible for the costs of any counsel or advisors so retained. |
For the purposes of this section 10.1, a disagreement between Holdings and Intrawest regarding a matter referred to in subsection 2.6(8) will be deemed to exist if, but not until, an Annual Budget or Capital Expenditures Budget, as the case may be, submitted to the Shareholders pursuant to section 2.10 is not approved pursuant to subsection 2.6(8) at a meeting of the Shareholders held within 30 days after the same is submitted to the Shareholders pursuant to section 2.10 and a revised Annual Budget or Capital Expenditures Budget, as the case may be, submitted to the Shareholders pursuant to section 2.10 is not approved pursuant to subsection 2.6(8) at a meeting of the Shareholders held within 15 days after such revised Annual Budget or Capital Expenditures Budget, as the case may be, is submitted to the Shareholders pursuant to section 2.10.
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ARTICLE 11
DEFAULT AND INVOLUNTARY TRANSFERS OF SHARES
11.1 Default and Involuntary Transfers of Shares. In the event that:
(1) | any Shareholder contravenes section 3.1, 3.3, 3.6, 3.8, 3.9 or 3.11; |
(2) | any Shareholder makes an assignment for the benefit of creditors or is adjudicated bankrupt or insolvent or any Shareholder other than an individual Shareholder takes steps to wind up or terminate its existence; or |
(3) | any proceedings are commenced requesting the sale or transfer of, or a declaration of trust in relation to, any Common Shares of which the Shareholder is the registered owner, whether by operation of law or court order, and whether pursuant to the Family Law Act, R.S.O. 1990, c. F6, any statute of similar purport in any jurisdiction, or otherwise than by voluntary act of such Shareholder (other than the transmission of any Common Shares from a deceased or incompetent Shareholder to the legal representative of such Shareholder); |
(any such event being herein referred to as an “Involuntary Transfer” and any such Shareholder being herein referred to as an “Involuntary Transferor”), the other Shareholder (the “Other Shareholder”) will have the option (the “Involuntary Transferor Option”), exercisable at any time (i) with respect to (1) above, no sooner than 30 and no later than 60 days after notice by the Other Shareholder has been given to the Involuntary Transferor and only to the extent the relevant contravention has not been subsequently cured, and (ii) with respect to (2) and (3) above prior to the expiration of 30 days after the Other Shareholder has been notified, or has otherwise become aware, of such event, to purchase all or any of the Common Shares of which such involuntary Transferor is the registered owner immediately prior to the Involuntary Transfer (the “Involuntary Transferor Shares”) on the terms set out in this Article 11, provided that where any violation by Holdings of a provision referred to in section 3.9 or 3.11 which is caused by a Holdings Shareholder or an Eligible Holdings Transferee, the Other Shareholder shall only be entitled to purchase that number of Common Shares equal to (i) the number of Common Shares held by Holdings multiplied by (ii) the percentage obtained by dividing (A) the number of Holdings Shares owned by such Holdings Shareholder or Eligible Holdings Transferee immediately prior to the violation of such provision by (B) the number of issued and outstanding Holdings Shares at such time.
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11.2 Right to Purchase Pro Rata. The Other Shareholder shall have the right to purchase the Involuntary Transferor Shares at the price to be determined in accordance with the provisions of section.
11.3 Price. The price of the Involuntary Transferor Shares shall be:
(1) | in respect of an Involuntary Transfer referred to in subsection 11.1(1), 90%; and |
(2) | in respect of an Involuntary Transfer referred to in subsections 11.1(2) and (3), 100%; |
of the fair market value of the Involuntary Transferor Shares as determined pursuant to Schedule A as at the end of the fiscal quarter of the Corporation immediately preceding the fiscal quarter in which the event set out in subsection 11.1(1), (2) or (3) occurs, less the aggregate amount of any distributions made or to be made by the Corporation to the Involuntary Transferor after the end of such immediately preceding fiscal quarter.
11.4 Exercise of Involuntary Transfer Option. Within 10 Business Days of the fair market value of the Involuntary Transferor Shares having been determined, the Other Shareholder who desires to purchase all of the Involuntary Transferor Shares shall give notice thereof to the Involuntary Transferor and to the Corporation.
11.5 Closing. Upon the giving of notice pursuant to section 11.4, a binding contract of purchase and sale will exist between the Involuntary Transferor and the Other Shareholder which contract will be subject to the provisions of, and completed in the manner provided in, Article 12. The closing of a transaction contemplated in this Article 11 shall take place 10 Business Days after the date of the notice given pursuant to section 11.4.
ARTICLE 12
CLOSING PROCEDURES
12.1 Closing Procedures. The closing of (i) all purchases and sales of Offered Shares to an Offeree pursuant to Article 5, to the extent that the closing procedures contemplated in this Article 12 are not inconsistent with the terms stipulated in any Notice delivered pursuant to section 5.1; (ii) all purchases and sales of Put Shares or Call Shares pursuant to Articles 8 and 9; and (iii) all purchases and sales of Involuntary Transferor Shares pursuant to Article 11 shall take place in accordance with the provisions of this Article 12.
12.2 Time and Place of Closing. Closing shall take place at the head office of the Corporation (the “Place of Closing”) at 10:00 a.m. (Eastern Daylight or Standard Time, as the case may be) (the “Time of Closing”) on the dates for closing specified in or contemplated by each of Articles 5, 8, 9, or 11, respectively.
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12.3 Consents. If in connection with any purchase and sale transaction contemplated under Article 5 (where the purchaser of the Offered Shares is the Offeree), 8.9 or 11, it is necessary to obtain any consent, approval, authorization, waiver, exemption or ruling from any Government Authority, the failure to obtain which would have a material adverse effect on the condition (financial or otherwise) of the Corporation and its subsidiaries, taken as a whole, or would under applicable law prohibit completion of the purchase and sale transaction (a “Consent”), each of the Purchaser and the Vendor shall use all reasonable commercial efforts, and act together in good faith, to obtain such Consent as expeditiously as possible and in any event, prior to the Time of Closing. If despite such efforts of the parties, a Consent is not obtained prior to the Time of Closing and the Purchaser does not waive the obtaining of the Consent, the closing of the relevant transaction shall be delayed until such Consent is obtained provided that if such Consent cannot be obtained within 180 days of the date of the Put Notice or Call Notice, as the case may be, and the Purchaser does not waive the obtaining of the Consent the binding contract of purchase and sale formed pursuant to the Put Notice or Call Notice, as the case may be, shall be deemed to be terminated and of no force and effect, without prejudice to the relevant party’s right to deliver further Put Notices or Call Notices, as the case may be, in accordance with the terms hereof.
12.4 Payment and Delivery. At the Time of Closing, each Person who has exercised its right, or who is required, to purchase Common Shares (a “Purchaser”) shall deliver to the Person selling Common Shares (the “Vendor”) the consideration required to be paid pursuant to Article 5, 8, 9, or 11, as the case may be, (the “Purchase Price”). At the Time of Closing:
(1) | the Vendor shall deliver to the Purchaser share certificates representing the Common Shares required to be issued or Transferred to the Purchaser (the “Purchased Shares”); |
(2) | the Vendor shall deliver all necessary documents (which documents shall, as to form and content, be satisfactory in all respects to the Purchaser and its counsel, acting reasonably) required to Transfer to the Purchaser the Purchased Shares, free and clear of all mortgages, pledges, liens, charges, security interests, adverse claims and other encumbrances and to otherwise comply fully with the intent of this Agreement and to deliver a representation and warranty to the Purchaser in a form satisfactory to the Purchaser, acting reasonably, regarding the Vendor’s title to and ownership of the Purchased Shares and such other documents as may otherwise be required to comply with and to fulfil the intent of this Agreement; and |
(3) | each Consent required under section 12.3 shall be tabled by the party who obtained it. |
12.5 Default of Selling Shareholder. If the Vendor is not present at the Place of Closing at the Time of Closing or is present but fails for any reason whatsoever to comply with section 12.4, in addition to and without limitation to any other rights it may have at law, the Purchaser may make payment of the Purchase Price by depositing the same into a special interest-bearing account at a branch of the Corporation’s bankers in the name of and in trust for the Vendor. Such deposit shall constitute valid and effective payment of the Purchase Price to the Vendor even though the Vendor has voluntarily encumbered or disposed of any of the Purchased Shares and notwithstanding the fact that a certificate or certificates representing the Purchased Shares may have been delivered to any pledgee, transferee or other Person.
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12.6 Sale Effective. If the Purchase Price is deposited pursuant to section 12.5 into a special account at a branch of the Corporation’s bankers in the name of and in trust for the Vendor, then from and after the date of such deposit and even though the Purchased Shares have not been delivered to the Purchaser, the purchase and sale of such Purchased Shares shall be deemed to have been fully completed and all right, title, benefit and interest, both at law and at equity, in and to such Purchased Shares shall be conclusively deemed to have been Transferred and assigned to and become vested in the Purchaser and all right, title, benefit and interest, both at law and in equity, of the Vendor, or of any assignee or other Person having any interest, legal or equitable, therein or thereto, whether as shareholder or creditor of any Person in the Corporation or otherwise, shall cease and determine; provided, however, that the Vendor shall be entitled to receive the Purchase Price so deposited with interest thereon.
12.7 Non-Completion by Intrawest. If Intrawest fails to complete a purchase of any Common Shares under the Put Option or the Call Option on the later of the date provided for under subsection 8.2(3) or 9.2(2), as the case may be, and the date which is five Business Days after the determination of Market Value in accordance with the provisions of Schedule A, and provided that Holdings shall have complied with all of its obligations under section 12.4 with respect to such purchase and all relevant Consents shall have been obtained, Intrawest shall pay to Holdings, in addition to the Purchase Price, interest from such date on the amount of the Purchase Price, at a rate equal to the prime rate quoted by the Corporation’s principal banker plus 2% until such time as the relevant purchase transaction closes, without prejudice to any other right of Holdings at law or in equity, arising as a result of Intrawest’s failure to complete such purchase.
12.8 Power of Attorney. If the Vendor is not present at the Place of Closing at the Time of Closing or is present but fails for any reason whatsoever to comply with section 12.4 and provided that the Purchaser has complied with all of its obligations under section 12.4, the Vendor irrevocably constitutes and appoints the Purchaser as its true and lawful attorney in fact as agent for, in the name of and on behalf of the Vendor to execute and deliver in the name of the Vendor all such assignments, transfers, deeds and instruments as may be necessary effectively to Transfer and assign the Purchased Shares to the Purchaser or its nominee or nominees. Such appointment and power of attorney, being coupled with an interest, shall not be revoked by the insolvency, bankruptcy or incapacity of the Vendor and the Vendor hereby ratifies and confirms and agrees to ratify and confirm all that the Purchaser may lawfully do or cause to be done by virtue of the provisions of this section 12.8.
12.9 Consent to Transfer. All parties to this Agreement from time to time hereby irrevocably consent, including, without limitation, for the purposes of the restrictions on Transfer contained in the Constating Documents of the Corporation, to any Transfer of Shares made pursuant to the provisions of this Agreement and hereby agree to execute any and all such forms of consent, instruments and other documents as may be required from time to time to evidence or give effect to the foregoing and to cause the Board of Directors of the Corporation to pass such resolutions or to take such other action necessary to implement the same.
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12.10 Entitlement to Purchase Price. The Vendor shall be entitled to receive the Purchase Price deposited with the bankers of the Corporation on delivery to the Purchaser of the documents required by section 12.4 together with an indenture, in form satisfactory to the Purchaser, acting reasonably, ratifying and confirming all that the Purchaser has lawfully done or caused to be done by virtue of the provisions of section 12.8.
ARTICLE 13
GENERAL
13.1 Conflict. In the event of any conflict between the provisions of this Agreement and the Constating Documents of the Corporation or any subsidiary of the Corporation, the provisions of this Agreement shall govern to the extent permitted by law. Each of the Shareholders agrees to vote its Shares or cause its Shares to be voted and the Corporation agrees to take such acts so as to cause the Constating Documents of the Corporation or any subsidiary of the Corporation to be amended to the extent permitted by law in order to resolve such conflict in favour of the provisions of this Agreement.
13.2 Transferees to be Bound by Agreement. Notwithstanding anything to the contrary contained herein, no Common Share may be Transferred by any Shareholder or allotted or issued to any Person who has not agreed to be bound by all of the provisions of this Agreement including, without limitation, that any purchaser or other acquirer of Common Shares held by Intrawest will assume its obligations under Article 8 hereof, and no such Person who acquires any interest in or control over any Common Shares under this Agreement will be recognized or considered as a Shareholder under this Agreement and the Shareholders will not be required to consider any Person a Shareholder under this Agreement or afford any Person the rights afforded by this Agreement or any of the incidents connected with being a Shareholder under this Agreement until that Person agrees to be bound by this Agreement. Any Person who becomes a holder of Common Shares or rights under this Agreement after the date of this Agreement will agree to be bound by this Agreement and will signify its assent to the terms of this Agreement by signing this Agreement or by delivering an instrument in writing duly executed under seal to the Secretary of the Corporation and to the existing Shareholders indicating an intention and agreement to be bound by the terms of this Agreement. Each of the parties to this Agreement will be bound each to each other and, upon the subsequent assent to this Agreement by any Person, each of them will be bound to each and every such Person and, in like manner, each and every such Person will be bound to each party and to each and every subsequent Person who agrees to be bound by this Agreement thereafter. Each of the parties agrees that to the extent any Person to which it Transfers Common Shares hereunder fails to perform any obligation assumed by such transferee pursuant to this section 13.2, the transferring party shall remain fully obligated to the other Shareholders for the performance of such obligation.
13.3 No Partnership. Nothing in this Agreement or in the relationship of the parties hereto shall be construed as in any sense creating a partnership between the parties or as giving to any party any of the rights of, or subjecting any party to any of the creditors of, the other party.
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13.4 Time of the Essence. Time shall be of the essence of this Agreement
13.5 Benefit of the Agreement. This Agreement shall ensure to the benefit of and be binding upon the respective heirs, executors, administrators, successors and permitted assigns of the parties hereto.
13.6 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto. There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the parties other than those expressly set forth or contemplated in this Agreement and in the Share Purchase Agreement.
13.7 Amendments and Waivers. No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by all of the parties hereto. No waiver of any breach of any provision of this Agreement shall be effective or binding unless made in writing and signed by the party purporting to give the same and, unless otherwise provided in the written waiver, shall be limited to the specific breach waived. Failure by any party hereto to insist in any one or more instances upon the strict performance of any one of the covenants contained herein shall not be construed as a waiver or relinquishment of such covenant.
13.8 Assignment. Except as may be expressly provided in this Agreement, none of the parties hereto may assign its rights or obligations under this Agreement without the prior written consent of all of the other parties hereto.
13.9 Termination. This Agreement shall terminate upon:
(1) | the written agreement of all of the Shareholders; |
(2) | the dissolution of the Corporation; or |
(3) | one Shareholder becoming the beneficial owner of all of the issued and outstanding Common Shares. |
13.10 Severability. If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision and all other provisions hereof shall continue in full force and effect and the parties hereby undertake to renegotiate in good faith, with a view to concluding arrangements as nearly as possible the same as those herein contained.
13.11 Notices. Any demand, notice or other communication to be given in connection with this Agreement shall be given in writing and may be given by actual delivery, or by transmittal by facsimile transmission addressed to the recipient as follows:
-44- |
To Holdings:
Blue Mountain Resorts Holdings Inc.
R.R. #3
Collingwood, Ontario
L9Y 3Z2
Attention:
President
Facsimile No.: (705) 443-5520
To Intrawest:
Intrawest
Corporation
800 - 200 Burrard Street
Vancouver, British Columbia
V6C 3L6
Attention: President, Resort Development Group
Facsimile No.: (604) 669-0605
To the Corporation:
Blue
Mountain Resorts Limited
R.R. #3
Collingwood, Ontario
L9Y 3Z2
Attention:
President
Facsimile No.: (705) 443-5520
or such other address, telecopy number or individual as may be designated by notice by any party to the others. Any demand, notice or other communication given by actual delivery shall be conclusively deemed to have been given on the day of actual delivery thereof (or, if such day is not a Business Day, on the next Business Day) or on the day on which the party to which such demand, notice or other communication is transmitted received such transmission (or, if such day is not a Business Day, on the next Business Day).
13.12 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario applicable in the case of contracts made and to be wholly performed in such province and without application of the choice of law principles of such province. All disputes arising under this Agreement will be referred to the courts of the Province of Ontario which will have exclusive jurisdiction and, by execution and delivery of this Agreement, each party hereto irrevocably submits to the jurisdiction of such courts.
-45- |
13.13 Counterparts. This Agreement may be executed is any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.
13.14 Further Acts. Each of the parties to this Agreement shall at the request of any other party hereto, and at the expense of the Corporation, execute and deliver any further documents and do all acts and things as that party may reasonably require to carry out the true intent and meaning of this Agreement.
13.15 Business Day. Any obligations required to be performed by a party under this Agreement on a day, other than a Business Day, shall be properly discharged if performed by such party on the next following day which is a Business Day.
13.16 Legal Fees. If any party institutes legal proceedings with respect to this Agreement, the prevailing party shall be entitled to court costs and reasonable legal fees incurred by such party in connection with such legal proceedings.
ARTICLE 14
EXECUTION
14.1 Execution. This Agreement has been executed by the parties hereto on January 28, 1999.
BLUE MOUNTAIN RESORTS HOLDINGS INC. | |||||
By: | /s/ George Canning |
||||
Title: | President |
INTRAWEST CORPORATION | |||||
By: | /s/ Gary Raymond |
||||
Title: | Executive Vice President, Development and Acquisitions |
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BLUE MOUNTAIN RESORTS LIMITED | |||||
By: | /s/ George Weider |
||||
Title: | Chairman of the Board |
-47- |
SCHEDULE A
DETERMINATION OF MARKET VALUE
1. Definition of Market Value. “Market Value” shall mean fair market value as determined in accordance with section 2 of this Schedule A or, failing agreement under section 2, in accordance with the remaining provisions of this Schedule A.
2. Determination by Agreement. If the Market Value of any Common Shares is to be determined pursuant to this Schedule, the Market Value of such Common Shares may be determined by agreement of Holdings and Intrawest.
3. Determination by Valuator. Unless the Market Value of any Common Shares has been determined by agreement of Holdings and Intrawest in accordance with section 2, any party shall be entitled, at any time, to require such Market Value to be determined in accordance with the remaining provisions of this Schedule A, provided that such Market Value will be the fair market value with no minority discount or majority premium, and shall be calculated on a per share basis.
4. Selection of Valuator. Any party (the “Selecting Party”) that wishes to exercise the right referred to in section 3 shall provide notice in writing to the other party (the “Other Party”), Forthwith following such notice being given and in any event within three Business Days thereafter, the Selecting Party and the Other Party shall each engage an Independent internationally recognized public chartered accountancy firm or investment bank which has substantial offices in Canada and which has substantial experience in business valuation (in this Schedule A, the “First Valuator” and the “Second Valuator”) to determine the Market Value of the relevant Common Shares.
5. Cooperation and Delivery of Valuation. The Selecting Party and the Other Party shall, respectively, retain the First Valuator and the Second Valuator to determine the Market Value of the relevant Common Shares as at the date referred to in section 8.2, 9.2 or 11.3, as applicable (the “Relevant Date”) as required under this Agreement, without taking into account any liabilities of the Corporation in respect of any distributions made or to be made by the Corporation to the Shareholders pursuant to section 2.9 of the Shareholders’ Agreement after the Relevant Date, applying such principles of valuation as each of the First Valuator and the Second Valuator, respectively, considers appropriate in the circumstances. Each of the parties hereto shall in all respects cooperate with the First Valuator and the Second Valuator in the determination of such Market Value. In particular, each of the parties shall make available to the First Valuator and the Second Valuator all such documents and information with respect to the affairs of the Corporation and its subsidiaries or any other Person as either the First Valuator or the Second Valuator may reasonably require to make its determination of Market Value, and shall make their personnel available at all reasonable times to assist in such determination. Each of the parties shall use its best efforts to ensure that, within 30 Business Days following their appointment, the First Valuator and the Second Valuator shall provide the Selecting Party and the Other Party with their determinations of Market Value of the relevant Common Shares. If the First Valuator or Second Valuator specifies a range of values for Market Value, subject to section 6, such “Market Value” shall be the mid-point of the range.
-1- |
6. Market Value - Average. If the amount determined by the First Valuator in accordance with the provisions of section 5 (the “First Valuation”) and the amount determined by the Second Valuator in accordance with the provisions of section 5 (the “Second Valuation”) do not vary by more than 10% of the higher of the two, the Market Value of the relevant Common Shares shall be the arithmetic average of the First Valuation and the Second Valuation. If the First Valuation and Second Valuation vary by more than 10% of the higher of the two, the Selecting Party and the Other Party shall cause the First Valuator and the Second Valuator to engage a third Independent internationally recognized public chartered accountancy firm or investment bank which has substantial offices in Canada and which has substantial experience in business valuations (the “Third Valuator”) to determine the Market Value of the relevant Common Shares as at the Relevant Date without taking into account any liabilities of the Corporation in respect of any distributions made or to be made by the Corporation to the Shareholders pursuant to section 2.9 of the Shareholders’ Agreement. The Selecting Party and the Other Party shall jointly retain the Third Valuator to determine the Market Value of the relevant Common Shares as at the Relevant Date as required under this Agreement and the provisions of section 5 shall apply, mutatis mutandis, to such third determination (the “Third Valuation”). In these circumstances, the Market Value of the relevant Common Shares shall be:
(a) | the arithmetic average of the two of the First Valuation, Second Valuation and Third Valuation that are closest to one another, provided that the Third Valuation is higher than one of the First Valuation and the Second Valuation and lower than one of the First Valuation and the Second Valuation; |
(b) | if the Third Valuation is higher than both the First Valuation and the Second Valuation, the higher of the First Valuation and the Second Valuation; and |
(c) | if the Third Valuation is lower than both the First Valuation and the Second Valuation, the lower of the First Valuation and the Second Valuation. |
7. Fees and Disbursements. All fees, disbursements and other costs and expenses associated with the determination of Market Value by the Valuator, the Second Valuator or the Third Valuator shall be borne by the Corporation.
8. Determination by Board of Directors. In the event that any action required to be taken by the Selecting Party or the Other Party pursuant to this Schedule A shall not have been taken within the period of time provided for in this Schedule A, the Board of Directors may (but shall be under no obligation to) by resolution determine such matter or take such action on behalf of the Selecting Party or the Other Party.
-2- |
SCHEDULE B
HOLDINGS SHAREHOLDERS
A. Common Shares
Mr. Gordon Canning
Mrs. Barbara Weider
Mrs. Katherine Canning
Mr. George Weider
Dr. Donald McGillivray
Mrs. Helen Weider
Mrs. Helen McGillivray
Jozo Weider Limited*
Mrs. Anna Marik
B. Class “A” Shares
Mr. Gordon Canning
Mr. Gordon Canning, in Trust
* | All of the shares of Jozo Weider Limited are owned by certain of the Persons listed in this Schedule B. |
SCHEDULE C
DIRECTORS’ REMUNERATION
November 1, 1997 to October 31, 1998 | November 1, 1998 to October 31, 1999 | |||||||
Urban Joseph | $ | 23,058 plus $6,000 onetime bonus | $ | 23,750 (3% increase) | ||||
Don McGillivray | 33,619 | 34,628 (3% increase) | ||||||
George Welder | 53,403 | 54.285(1.6%increase) | ||||||
Total | $ | 110,080 | $ | 112,663 | ||||
-2- |
U.S. SUBSIDIARIES | |
Name of Company | Jurisdiction of Formation/Organization |
22 Station Development Corporation | California |
Alpine Helicopter Management, Inc. | Idaho |
Big Island Country Club Estates Limited Partnership | Hawaii |
Cheat Mountain Water Company, Inc | West Virginia |
Copper Mountain, Inc. | Delaware |
Copper/Union Creek Development Company, LLC | Delaware |
DPA, LLC | Colorado |
Eight Rivers Development Company, LLC | Delaware |
Extraordinary Escapes Corporation | Delaware |
First Ascent Development Corporation | California |
Founders Lodge Two Development Company, LLC | Vermont |
Gateway/Le Jardin Development Company, L.L.C. | Delaware |
Grand Sandestin Development Company, L.L.C. | Delaware |
ICRE, Inc. | Delaware |
1 |
U.S. SUBSIDIARIES | |
Name of Company | Jurisdiction of Formation/Organization |
Intrawest California Holdings, Inc. | California |
Intrawest Colorado Events Marketing Inc. | Colorado |
Intrawest Golf Holdings, Inc. | Delaware |
Intrawest Hawaii Partners | California |
Intrawest Hawaii, Inc. | Delaware |
Intrawest Honua Kai Hospitality Management, LLC | Delaware |
Intrawest Hospitality Management, Inc. | Delaware |
Intrawest Imagine Hospitality Management, LLC | Delaware |
Intrawest Marketing, Inc. | Delaware |
Intrawest Mexico Holdings, LLC | Delaware |
Intrawest Mountain Adventures, Inc. | Virginia |
Intrawest Napa Development Company, LLC | Delaware |
Intrawest Napa Riverbend Hospitality Management, LLC | Delaware |
Intrawest Operations Group, LLC | Delaware |
Intrawest Operations Group Holdings, LLC | Delaware |
2 |
U.S. SUBSIDIARIES | |
Name of Company | Jurisdiction of Formation/Organization |
Intrawest Resort Ownership U.S. Corporation | Delaware |
Intrawest Restaurants California, LLC | Delaware |
Intrawest Restaurants Hawaii, Inc. | Delaware |
Intrawest Restaurants Hawaii Holdings, Inc. | Delaware |
Intrawest Retail Group, Inc. | Colorado |
Intrawest Sandestin Company, L.L.C. | Delaware |
Intrawest Shared Services, Inc. | Delaware |
Intrawest Snowshoe Development, Inc. | West Virginia |
Intrawest Stratton Development Corporation | Vermont |
Intrawest Trading Company Inc. | Delaware |
Intrawest U.S. Commercial Property Management, Inc. | Delaware |
Intrawest U.S. Holdings Inc. | Delaware |
Intrawest Ventures, Inc. | Delaware |
Intrawest Waikoloa, Inc. | Delaware |
3 |
U.S. SUBSIDIARIES | |
Name of Company | Jurisdiction of Formation/Organization |
Intrawest/Eagle’s Nest, Inc. | Colorado |
Intrawest/Lake Las Vegas Development Corporation | Delaware |
Intrawest/Lodestar Development Company | California |
Intrawest/Lodestar Limited Partnership | California |
Intrawest/Winter Park Development Corporation | Delaware |
Intrawest/Winter Park Holdings Corporation | Delaware |
Intrawest/Winter Park Operations Corporation | Delaware |
Intrawest/Winter Park Restaurant Corporation | Delaware |
IRG Restaurant Company | Delaware |
IROC US Receivables Finance Corporation 2004-A | Delaware |
IW Mammoth Holdings, LLC | Delaware |
IW/WP Building Six-Vintage Development Company, LLC | Delaware |
IW/WP Four-Five Development Company, LLC | Delaware |
IW/WP Village Core Development Company, LLC | Delaware |
4 |
U.S. SUBSIDIARIES | |
Name of Company | Jurisdiction of Formation/Organization |
Juniper Properties Inc. | California |
LPIHGC, LLC | Delaware |
MBGC Limited Partnership | Delaware |
Mountain Community Management, LLC | Delaware |
Northwest Maui Corporation | Delaware |
Playground Advisory Services, LLC | Delaware |
Playground Destination Properties Inc. | Washington |
Playground Services, Inc. | Delaware |
Project Sierra Housing Two Development Company, LLC | Delaware |
Resort Ventures, L.P. | California |
Resort Reservations Network, Inc. | Delaware |
Sandestin Resort & Club, Inc. | Florida |
Sierra Star Four-Five Development Company, LLC | Delaware |
Snowshoe Mountain Homes, LLC | Delaware |
5 |
U.S. SUBSIDIARIES | |
Name of Company | Jurisdiction of Formation/Organization |
Snowshoe Mountain, Inc. | West Virginia |
South Minaret Development Company, LLC | Delaware |
SP MonteLago Development Company, LLC | Delaware |
Steamboat Acquisition LLC | Delaware |
Steamboat Ski & Resort Corporation | Delaware |
Stratton Three Development Company, LLC | Vermont |
The Stratton Corporation | Vermont |
Upper Bench Development Corporation | California |
Walton Pond Apartments, Inc. | Delaware |
Winter Park Development Company, LLC | Delaware |
6 |
CANADIAN SUBSIDIARIES | |
Name of Company | Home Jurisdiction |
0827965 B.C. Ltd. | B.C. |
1584041 Alberta ULC | Alberta |
2910942 Canada Inc. | Canada (Federal) |
379192 British Columbia Ltd. | British Columbia |
4023480 Canada Inc. | Canada (Federal) |
6068057 Canada Inc. | Canada (Federal) |
682523 Alberta Ltd. | Alberta |
Alpine Aerotech GP Ltd. | British Columbia |
Alpine Aerotech Limited Partnership | British Columbia |
Bugaboo Helicopter Skiing 1992 Inc. | Alberta |
Canadian Mountain Holidays GP Inc. | British Columbia |
Canadian Mountain Holidays Limited Partnership | British Columbia |
Canmore Heli Service Ltd. | Alberta |
7 |
CANADIAN SUBSIDIARIES | |
Name of Company | Home Jurisdiction |
CDAE Acquisitions Corporation / Corporation d’Acquisitions CDAE (f/k/a Intrawest Tremblant Development Inc. / Développement Intrawest Tremblant Inc. |
Canada (Federal) |
CDAE Acquisitions, Limited Partnership / Acquisitions CDAE, Société en Commandite (f/k/a Intrawest Tremblant Developments, Limited Partnership / Developpements Intrawest Tremblant Société en Commandite) | Quebec |
Gestion des Immeubles Le Sommet/Le Sommet Property Management Inc. | Canada (Federal) |
Intrawest ULC | Alberta |
IROC 2004-A Receivables Finance Corporation | Canada (Federal) |
IW Resorts Limited Partnership | British Columbia |
Johannsen-Deslauriers Limited Partnership/Société en commandite Johannsen-Deslauriers | Quebec |
Mont Tremblant Resort Inc./Station Mont Tremblant Inc. | Canada (Federal) |
Mont Tremblant Resorts and Company, Limited Partnership/Station Mont Tremblant Société en Commandite |
Quebec |
Playground Limited Partnership | British Columbia |
Playground Real Estate GP Ltd. | British Columbia |
Playground Real Estate Inc. | British Columbia |
8 |
CANADIAN SUBSIDIARIES | |
Name of Company | Home Jurisdiction |
Playground Real Estate Ltd. | Ontario |
Silvertip Lodge Inc. | British Columbia |
St-Bernard and Company, Limited Partnership/Société en commandite St-Bernard | Quebec |
Tower Ranch Development Partnership | British Columbia |
Tower Ranch Holding Corporation | British Columbia |
Westbrook Development Corporation | Ontario |
9 |
SUBSIDIARIES OUTSIDE U.S. AND CANADA | ||
Name of Company | Home Jurisdiction | |
Club Intrawest Management SRL de CV | Mexico | |
Club Intrawest Mexico Food and Beverage SRL de CV | Mexico | |
Playground Mexico, S. de R.L. de C.V. | Mexico | |
10 |
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Intrawest Resorts Holdings, Inc.:
We consent to the use of our report dated September 30, 2013, with respect to the balance sheet of Intrawest Resorts Holdings, Inc. as of September 24, 2013, included herein and to the reference to our firm under the heading “Experts” in the prospectus.
/s/ KPMG LLP
Denver, Colorado
January 9, 2014
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Intrawest Resorts Holdings, Inc.:
We consent to the use of our report dated September 30, 2013, with respect to the consolidated balance sheets of Intrawest Cayman L.P. and subsidiaries as of June 30, 2012 and 2013, and the related consolidated statements of operations, comprehensive loss, partners’ deficit, and cash flows for each of the years in the two-year period ended June 30, 2013, included herein and to the reference to our firm under the heading “Experts” in the prospectus.
/s/ KPMG LLP
Denver, Colorado
January 9, 2014
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Intrawest Resorts Holdings, Inc.:
We consent to the use of our report dated September 30, 2013, with respect to the consolidated statements of operations, comprehensive loss, partners’ deficit, and cash flows of Intrawest Cayman L.P. for the year ended June 30, 2011included herein and to the reference to our firm under the heading “Experts” in the prospectus.
/s/ KPMG LLP
Vancouver, Canada
January 9, 2014
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