The ratio of Funded Debt to Adjusted EBITDA shall be determined as described in the definition of
"Applicable Margin."
Apollomeans any one or more of the following: Apollo Advisors, L.P., a Delaware limited
partnership, or any fund, investment vehicle or account managed, advised or controlled by Apollo
Advisors, L.P., or any of its Affiliates,other thanthe Companies.
Bank of Americameans Bank of America, N.A., a national banking association, in its individual
capacity and not as Agent.
Base Ratemeans, for any day, the rate per annum equal to the higher of (a) thesumof the Federal
Funds Rate for such dayplus0.5%, and (b) the Prime Rate for such day. Any change in the Base Rate due
to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or Federal Funds Rate.
Base Rate Loanmeans a Loan bearing interest at thesumof the Base Rateplusthe Applicable
Margin.
BC Housing L/Cmeans the $9,232,709 irrevocable transferable L/C expiring June 15, 2002, issued
by Agent to Colorado National Bank and any successor thereto as Trustee under the 1997 Trust Indenture
with Eagle County, Colorado, as Issuer, relating to $9,100,000 of Eagle County, Colorado, Taxable Housing
Facilities Revenue Bonds (BC Housing, LLC Project) Series 1997A, under the terms of which such Trustee
will be entitled to draw, with respect to such Bonds, up to (a) an amount sufficient to pay (i) the principal of
such Bonds when due, or (ii) the portion of the purchase price of such Bonds tendered or deemed tendered
for purchase in accordance with such Indenture and not subsequently remarketed corresponding to the
principal amount of such Bonds,plus(b) an amount equal to approximately 35 days of accrued interest on
such Bonds (at up to 15% per annum), to pay (i) interest on such Bonds when due, or (ii) the portion of the
purchase price of such Bonds tendered or deemed tendered for purchase in accordance with such Indenture
and not subsequently remarketed corresponding to accrued interest.
Bond L/Csmeans the BC Housing L/C, the Smith Creek L/Cs, the Breckenridge Terrace L/C, the
Tarnes L/C, the Tenderfoot Housing, L/C, the Red Sky L/C, and any L/C issued by Agent on or after the date
hereof under this Agreement at the request of Borrower in support of revenue bonds or notes for municipal
infrastructure or housing projects.
Borroweris defined in the preamble to this Agreement.
Breckenridge Terrace L/Cmeans an irrevocable transferable L/C of up to $16,250,000 expiring
December 15, 2002, to be issued by Agent to U.S. Bank National Association and any successor thereto as
Trustee under the 1999 Trust Indenture with Breckenridge Terrace LLC as Issuer, relating to approximately
$16,000,000 of Breckenridge Terrace LLC Taxable Housing Facilities Revenue Notes (Breckenridge Terrace
Project), Series 1999A, under the terms of which such Trustee will be entitled to draw up to (a) an amount
sufficient to pay (i) the principal of such Notes when due, or (ii) the portion of the purchase price of such
Notes tendered or deemed tendered for purchase in accordance with such Indenture and not subsequently
remarketed corresponding to the principal amount of such Notes,plus(b) an amount equal to approximately
35 days of accrued interest on such Notes (at up to 15% per annum), to pay (i) interest on such Notes when
due, or (ii) the portion of the purchase price of such Notes tendered or deemed tendered for purchase in
accordance with such Indenture and not subsequently remarketed corresponding to accrued interest.
Business Daymeans any day,other thanSaturday, Sunday, and any other day that commercial
banks are authorized or required by Law to be closed in Texas or New York or, for purposes of any LIBOR
Loan, in London.
Capital Leasemeans any capital lease or sublease that has been (or under GAAP should be)
capitalized on a balance sheet.
Change of Control Transactionmeans the occurrence of any transaction or event,other thanthe
issuance and sale in a public offering of equity securities of VRI, as a result of which transaction or event
Apollo shall cease to possess, and some other Person shall obtain, in either case directly or indirectly, the
power to direct or cause the direction of the management or policies of VRI, whether through the ownership
of voting securities, by contract or otherwise.
Closing Datemeans the date on which counterparts of this Agreement have been executed and
delivered to Agent by each party hereto in accordance withSection 14.11.
Co-Agentmeans any syndication agent, documentation agent, or other co-agent under this
Agreement.
Codemeans theInternal Revenue Code of 1986, as amended from time to time, and related rules
and regulations from time to time in effect.
Collateralis defined inSection 5.2.
Commitment Usagemeans, at any time, thesumof (a) the aggregate Principal Debt,plus(b) the
L/C Exposure.
Committed Summeans the amount (as reduced and canceled under this Agreement) stated beside
a Lender's name for the Facility onSchedule 1as most recently amended under this Agreement.
Companiesmeans VRI and each of VRI's Restricted and Unrestricted Subsidiaries now or
hereafter existing.
Compliance Certificatemeans a certificate substantially in the form ofExhibit Dand signed by
Borrower's Chief Financial Officer, together with the calculation worksheet described therein.
Conversion Requestmeans a request substantially in the form ofExhibit E.
Current Financialsmeans, initially, the consolidated Financial Statements of the Companies for the
period ended July 31, 2001, and thereafter, the consolidated Financial Statements of the Companies most
recently delivered to Agent underSection 6.1, 8.1(a)or8.1(b), as the case may be.
Debtof any Person means at any date, without duplication (and calculated in accordance with
GAAP), (a) all obligations of such Person for borrowed money (whether as a direct obligation on a
promissory note, bond, zero coupon bond, debenture or other similar instrument, or as an unfulfilled
reimbursement obligation on a drawn letter of credit or similar instrument, or otherwise), including, without
duplication, all Capital Lease obligations (other thanthe interest component of such obligations) of such
Person, (b) all obligations of such Person to pay the deferred purchase price of property or services,other
than(i) obligations under employment contracts or deferred employee compensation plans and (ii) trade
accounts payable and other expenses or payables arising in the ordinary course of business, (c) all Debt of
others secured by a Lien on any asset of such Person (or for which the holder of the Debt has an existing
Right, contingent or otherwise, to be so secured), whether or not such Debt is assumed by such Person, and
(d) all guarantees and other contingent obligations (as a general partner or otherwise) of such Person with
respect to Debt of others.
Debtor Relief Lawsmeans theBankruptcy Reform Act of 1978, as amended from time to time,
and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments or similar Laws affecting creditors' Rights from time to
time in effect.
Defaultis defined inSection 11.
Default Ratemeans an annual rate of interest equal from day to day to thelesserof (a) the thenexisting
Base Rateplusthe Applicable Margin for Base Rate Loansplus2%, and (b) the Maximum Rate.
Distributionmeans, with respect to any shares of any capital stock or other equity securities issued
by a Person, (a) the retirement, redemption, purchase or other acquisition for value of those securities by such
Person, (b) the payment of any dividend on or with respect to those securities by such Person, (c) any loan
or advance by that Person to, or other investment by that Person in, the holder of any of those securities, and
(d) any other payment by that Person with respect to those securities.
EBITDAmeans Net Income before interest expense, Taxes based on or measured by income, and
Non-Cash Operating Charges, in each case to the extent deducted in determining Net Income, calculated on
a consolidated basis for the Companies in accordance with GAAP.
Eligible Assigneemeans (i) a Lender; (ii) an Affiliate of a Lender; and (iii) any other Person
approved by Agent and, unless a Default or Potential Default exists at the time any assignment is effected
in accordance withSection 14.12(c), Borrower, such approval not to be unreasonably withheld or delayed
by Borrower,provided, however, thatneither Borrower nor an Affiliate of Borrower shall qualify as an
Eligible Assignee.
Employee Planmeans an employee pension benefit plan covered byTitle IVof ERISA and
established or maintained by any Company.
Environmental Lawmeans any Law that relates to the pollution or protection of ambient air, water
or land or to Hazardous Substances.
ERISAmeans theEmployee Retirement Income Security Act of 1974, as amended, and related
rules and regulations.
Existing Agreementis defined in the Recitals of this Agreement.
Facilitymeans the revolving credit facility and L/C Subfacility made available to Borrower under
this Agreement.
Federal Funds Ratemeans, for any day, the annual rate (rounded upwards, if necessary, to the
nearest 0.01%) determined (which determination is conclusive and binding, absent manifest error) by Agent
to be equal to the weighted average of the rates on overnight federal funds transactions with member banks
of the Federal Reserve System arranged by federal funds brokers on that day, as published by the Federal
Reserve Bank of New York on the next Business Day, or, if those rates are not published for any day, the
average rate charged to Agent (in its individual capacity) on such day on such transactions as determined by
Agent.
Financial Hedgemeans a transaction between Borrower and any Lender or an Affiliate of any
Lender (or another Person reasonably acceptable to Agent), which is intended to reduce or eliminate the risk
of fluctuations in one or more interest rates, foreign currencies, commodity prices, equity prices, or other
financial measures, whether or not such transaction is governed by or subject to any master agreement, and
which is legal and enforceable under applicable Law.
Financial Statementsof a Person means balance sheets, profit and loss statements, reconciliations
of capital and surplus, and statements of cash flow prepared (a) according to GAAP, and (b)other thanas
stated inSection 1.3, in comparative form to prior year-end figures or corresponding periods of the preceding
fiscal year, as applicable.
Forest Service Permit Agreementsmeans (a) that certain Multiparty Agreement regarding Forest
Service Term Special Use Permit No. 4056-01; (b) that certain Multiparty Agreement regarding Forest
Service Special Use Permit Nos. 4149-01 and 4149-02; (c) any similar agreement or instrument relating to
any Forest Service Permit and authorized or contemplated by the provisions of the documents executed in
connection with the issuance of the Vail Bonds; and (d) all renewals, extensions and restatements of, and
amendments and supplements to, any of the foregoing.
Forest Service Permitsmeans (a) Ski Area Term Special Use Permit Holder No. 4056/01 issued
by the Service to Borrower for the Vail ski area on November 23, 1993, and expiring on October 31, 2031;
(b) Term Special Use Permit No. Holder 4065/03 issued by the Service to Borrower's wholly-owned
subsidiary, Beaver Creek Associates, Inc., for the Beaver Creek ski area on November 10, 1999, and expiring
on December 31, 2038; (c) Term Special Use Permit Holder No. 5289-01 for Keystone ski area issued by
the Service to Ralston Resorts, Inc., now known as Vail Summit Resorts, on December 31, 1996, and expiring
on December 31, 2032; (d) Term Special Use Permit Holder No. 5289-04 for Breckenridge ski area issued
by the Service to Ralston Resorts, Inc., now known as Vail Summit Resorts, on December 31, 1996, and
expiring on December 31, 2029; and (e) any replacements of any of the foregoing.
Funded Debtmeans the following, calculated on a consolidated basis for the Restricted Companies
and SSI (to the extent of Borrower's membership interests in SSI) in accordance with GAAP: (a) all
obligations for borrowed money (whether as a direct obligation on a promissory note, bond, zero coupon bond,
debenture or other similar instrument, or as an unfulfilled reimbursement obligation on a drawn letter of credit
or similar instrument, or otherwise),plus(but without duplication) (b) all Capital Lease obligations (other
thanthe interest component of such obligations) of SSI or any Restricted Company.
Funding Lossmeans any loss or expense that any Lender reasonably incurs because (a) Borrower
fails or refuses (for any reason whatsoever,other thana default by Agent or the Lender claiming such loss
or expense) to take any Loan that it has requested under this Agreement, or (b) Borrower pays any LIBOR
Loan or converts any LIBOR Loan to a Base Rate Loan, in each case, before the last day of the applicable
Interest Period.
GAAPmeans generally accepted accounting principles of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the Financial Accounting Standards Board that are
applicable from time to time.
Guarantymeans a guaranty substantially in the form ofExhibit B.
Hazardous Substancemeans any substance that is defined or classified as a hazardous waste,
hazardous material, pollutant, contaminant or toxic or hazardous substance under any Environmental Law.
Intellectual Propertymeans (a) common law, federal statutory, state statutory and foreign
trademarks or service marks (including, without limitation, all registrations and pending applications and the
goodwill of the business symbolized by or conducted in connection with any such trademark or service mark),
trademark or service mark licenses and all proceeds of trademarks or service marks (including, without
limitation, license royalties and proceeds from infringement suits), (b) U.S. and foreign patents (including,
without limitation, all pending applications, continuations, continuations-in-part, divisions, reissues, substitutions
and extensions of existing patents or applications), patent licenses and all proceeds of patents (including,
without limitation, license royalties and proceeds from infringement suits), (c) copyrights (including, without
limitation, all registrations and pending applications), copyright licenses and all proceeds of copyrights
(including, without limitation, license royalties and proceeds from infringement suits), and (d) trade secrets,
but does not include(i) any licenses (including, without limitation, liquor licenses) or any permits (including,
without limitation, sales tax permits) issued by a Tribunal and in which (y) the licensee's or permittee's
interest is defeasible by such Tribunal and (z) the licensee or permittee has no right beyond the terms,
conditions and periods of the license or permit, or (ii) trade names or "dba"s to the extent they do not
constitute trademarks or service marks.
Interest Periodis determined in accordance withSection 3.9.
ISP 98means the "International Standby Practices 1998" published by the Institute of International
Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).
Lawsmeans all applicable statutes, laws, treaties, ordinances, rules, regulations, orders, writs,
injunctions, decrees and judgments.
L/Cmeans (a) each of the Bond L/Cs and each existing letter of credit issued by Agent for the
account of any of the Companies and described on Part A ofSchedule 2.3, and (b) each other letter of credit
(in such form as shall be customary in respect of obligations of a similar nature and as shall be reasonably
requested by Borrower) issued by Agent under this Agreement and an L/C Agreement.
L/C Agreementmeans a letter of credit application and agreement (in form and substance
satisfactory to Agent in its reasonable discretion) submitted by Borrower to Agent for an L/C for the account
of any Company.
L/C Exposuremeans, without duplication, thesumof (a) the aggregate face amount of all undrawn
and uncancelled L/Cs,plus(b) the aggregate unpaid reimbursement obligations of Borrower under drawings,
drafts or other forms of demand honored under any L/C.
L/C Requestmeans a request substantially in the form ofExhibit F.
L/C Subfacilitymeans a subfacility for the issuance of L/Cs, as described inSection 2.3.
Lendersmeans each of the lenders named on the attachedSchedule 1or on the most recently
amendedSchedule 1, if any, delivered by Agent under this Agreement, and, subject to this Agreement, their
respective successors and assigns (but not any Participant who is not otherwise a party to this Agreement).
LIBORmeans, with respect to any LIBOR Loan for any Interest Period therefor
(a) the rate per annum equal to the rate determined by the Agent to be the offered rate
that appears on the page of the Telerate screen (or any successor thereto) that displays an average
British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first
day of such Interest Period) with a term equivalent to such Interest Period, determined as of
approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest
Period, or
(b) if the rate referenced in the preceding subsection (a) does not appear on such page
or service or such page or service shall cease to be available, the rate per annum equal to the rate
determined by the Agent to be the offered rate on such other page or other service that displays an
average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on
the first day of such Interest Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest
Period, or
(c) if the rates referenced in the preceding subsections (a) and (b) are not available, the
rate per annum determined by the Agent as the rate of interest (rounded upward to the next 1/100th
of 1%) at which deposits in Dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the LIBOR Loan being made, continued or converted by Bank
of America and with a term equivalent to such Interest Period would be offered by Bank of
America's London Branch to major banks in the offshore Dollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest
Period.
LIBOR Loanmeans a Loan bearing interest at thesumof LIBORplusthe Applicable Margin.
Lienmeans, with respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such
asset.
Litigationmeans any action by or before any Tribunal.
Loanmeans any amount disbursed by any Lender to Borrower or on behalf of any Company under
the Loan Papers, either as an original disbursement of funds, the continuation of an amount outstanding, or
payment under an L/C.
Loan Dateis defined inSection 2.2(a).
Loan Papersmeans (a) this Agreement and the Notes, (b) each Guaranty, (c) all L/Cs and L/C
Agreements, (d) the Security Documents, (e) any Financial Hedge between Borrower and any Lender or an
Affiliate of any Lender, (f) the Post-Closing Agreement, and (g) all renewals, extensions and restatements
of, and amendments and supplements to, any of the foregoing.
Loan Requestmeans a request substantially in the form ofExhibit C.
Material Adverse Eventmeans any (a) material impairment of the ability of the Restricted
Companies as a whole to perform their payment or other material obligations under the Loan Papers or
material impairment of the ability of Agent or any Lender to enforce any of the material obligations of the
Restricted Companies as a whole under the Loan Papers, or (b) material and adverse effect on the financial
condition of the Restricted Companies as a whole.
Material Agreementmeans, for any Person, any agreement (excluding purchase orders for material,
services or inventory in the ordinary course of business) to which that Person is a party, by which that Person
is bound, or to which any assets of that Person may be subject, and that is not cancelable by that Person upon
30 or fewer days' notice without liability for further payment,other thannominal penalty, and that requires
that Person to pay more than $2,000,000 during any 12-month period.
Maximum AmountandMaximum Raterespectively mean, for a Lender, the maximum non-
usurious amount and the maximum non-usurious rate of interest that, under applicable Law, such Lender is
permitted to contract for, charge, take, reserve or receive on the Obligation held by such Lender.
Moody'smeans Moody's Investors Service, Inc.
Multiemployer Planmeans a multiemployer plan as defined inSections 3(37)or4001(a)(3)of
ERISA orSection 414(f)of the Code to which any Company (or any Person that, for purposes ofTitle IV
of ERISA, is a member of Borrower's controlled group or is under common control with Borrower within the
meaning ofSection 414of the Code) is making, or has made, or is accruing, or has accrued, an obligation
to make contributions.
Net Incomemeans, for any period, for the Companies on a consolidated basis, the net income of the
Companies from continuing operations after extraordinary items (excluding gains or losses from the disposition
of assets) for that period determined in accordance with GAAP.
Net Proceedsmeans (a) with respect to any sale, lease, transfer or other disposition of any asset by
any Person, the aggregate amount of cash and non-cash proceeds from such transaction received by, or paid
to or for the account of, such Person, net of customary and reasonable out-of-pocket costs, fees, and
expenses (other than costs, fees, and expenses paid to an Affiliate of such Person), and (b) with respect to
the issuance of equity securities, debt securities, Subordinated Debt, or similar instruments, or the incurrence
of Debt, the cash and non-cash proceeds received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants fees, underwriting discounts and commissions and other customary fees
and expenses actually incurred in connection with such issuance (other than fees, discounts, commissions, and
expenses paid to an Affiliate of such Person). Non-cash proceeds include any proceeds received by way
of deferred payment of principal pursuant to a note, installment receivable, purchase price adjustment
receivable, or otherwise, but only as and when received.
Non-Cash Operating Chargesmeans depreciation expense, amortization expense, and any other
non-cash charges determined in accordance with GAAP.
Notemeans a promissory note executed under this Agreement, in each case substantially in the form
ofExhibit A, as amended, supplemented or restated.
Obligationmeans all present and future indebtedness and obligations, and all renewals, increases and
extensions thereof, or any part thereof, now or hereafter owed to Agent and Lenders (and, with regard to any
Financial Hedge, to an Affiliate of any Lender) by the Companies under the Loan Papers,together withall
interest accruing thereon, fees, costs and expenses (including, without limitation, all attorneys' fees and
expenses incurred in the enforcement or collection thereof) payable under the Loan Papers or in connection
with the protection of Rights under the Loan Papers.
Original Agreementis defined in the Recitals to this Agreement.
Participantis defined inSection 14.12(b).
PBGCmeans the Pension Benefit Guaranty Corporation, or any successor thereof, established under
ERISA.
Permitted Debtmeans:
(a) the Obligation;
(b) Debt which is listed on Part B ofSchedule 2.3;
(c) Debt arising from endorsing negotiable instruments for collection in the ordinary
course of business;
(d) Subordinated Debt (and guarantees by Restricted Companies of Subordinated Debt
of other Restricted Companies, if such guarantees are subordinated to the payment and collection of
the Obligation on the same terms as such Subordinated Debt or otherwise upon terms satisfactory
to Agent);
(e) in addition to the foregoing, (i) Debt of Unrestricted Subsidiaries which is nonrecourse
to the Restricted Companies and their assets, (ii) fees and other amounts payable under the
Forest Service Permits in the ordinary course of business, and (iii) inter-Company Debt between
Restricted Companies;
(f) up to $12,975,000 of Debt arising under the guaranty by Borrower of amounts owed
by SSI under its Credit Agreement dated as of December 30, 1999, as amended, restated or
supplemented from time to time (with any remaining Debt under such guaranty included inclause
(g)below); and
(g) in addition to the foregoing, up to $100,000,000 of additional Debt of the Companies
in the aggregate at any point in time.
Permitted Liensmeans:
(a) Liens created by the Security Documents or other Liens securing the Obligation;
(b) Liens created by, or pursuant to, the Forest Service Permit Agreements for the
benefit of the holders of the Vail Bonds and Liens on the amounts in the Bond Fund established and
maintained in accordance with the provisions of the documents executed in connection with the
issuance of the Vail Bonds (and Liens created on all or any portion of the same assets in connection
with any refinancing of such bonds);
(c) Liens on the amounts in the Bond Fund, Redemption Fund and Rebate Fund
established and maintained in accordance with the provisions of the documents executed in
connection with the issuance of the Summit Bonds (and Liens created on all or any portion of the
same assets in connection with any refinancing of such bonds);
(d) Liens on assets of Unrestricted Subsidiaries securing Debt which is non-recourse
to the Restricted Companies and their assets;
(e) purchase money liens which encumber only the assets acquired;
(f) pledges or deposits made to secure payment of workers' compensation,
unemployment insurance or other forms of governmental insurance or benefits or to participate in any
fund in connection with workers' compensation, unemployment insurance, pensions or other social
security programs;
(g) good-faith pledges or deposits made to secure performance of bids, tenders,
contracts (other thanfor the repayment of borrowed money) or leases, or to secure statutory
obligations, surety or appeal bonds or indemnity, performance or other similar bonds in the ordinary
course of business;
(h) encumbrances and restrictions on the use of real property which do not materially
impair the use thereof;
(i) the following, if either (1) no amounts are due and payable and no Lien has been filed
or agreed to, or (2) the validity or amount thereof is being contested in good faith by lawful
proceedings diligently conducted, reserve or other provision required by GAAP has been made, levy
and execution thereon have been (and continue to be) stayed or payment thereof is covered in full
(subject to the customary deductible) by insurance: (i) Liens for Taxes; (ii) Liens upon, and defects
of title to, property, including any attachment of property or other legal process prior to adjudication
of a dispute on the merits; (iii) Liens imposed by operation of law (including, without limitation, Liens
of mechanics, materialmen, warehousemen, carriers and landlords, and similar Liens); and
(iv) adverse judgments on appeal;
(j) any interest or title of a lessor or licensor in assets being leased or licensed to a
Company;
(k) licenses, leases or subleases granted to third Persons which do not interfere in any
material respect with the business conducted by the Companies;
(l) any Lien on any asset of any entity that becomes a Subsidiary of VRI, which Lien
exists at the time such entity becomes a Subsidiary of VRI and is not created in contemplation
thereof;
(m) in respect of Water Rights, the provisions of the instruments evidencing such Water
Rights and any matter affecting such Water Rights which does not affect the Companies' rights to
sufficient quantity and quality of water to conduct business as in effect on the date hereof or any
expansion planned as of the date hereof (including, without limitation, any Lien of the Colorado Water
Conservation Board, or its successors and assigns, on stock owned by any Company in a Colorado
ditch and reservoir company formed in accordance with the Colorado Corporation Code, as
amended);
(n) in respect of the Forest Service Permits, the provisions of the instruments evidencing
such permits and all rights of the U.S. and its agencies with respect thereto or with respect to the
land affected thereby; and
(o) Liens on cash accounts not to exceed $250,000 in the aggregate at the FirstBank of
Vail established in connection with collateralizing a portion, if any, of certain second mortgage loans
made by such bank, and guaranteed by Borrower, as part of the Vail Associates Home Mortgage
Program for Borrower's employees.
Personmeans any individual, partnership, entity or Tribunal.
Pledge Agreementmeans a pledge agreement substantially in the form of attachedExhibit "H".
Post-Closing Agreementmeans the Post-Closing Agreement dated the same date as this Agreement
which is in a form reasonably acceptable to Borrower and Agent regarding the pledge of the capital stock
of Grand Teton Lodge Company and the capital stock or equity interests of any Restricted Company which
is not wholly-owned by another Restricted Company.
Potential Defaultmeans the occurrence of any event or existence of any circumstance that would,
upon notice or lapse of time or both, become a Default.
Prime Ratemeans the per annum rate of interest established from time to time by Agent as its prime
rate. Such rate is a rate set by Bank of America based upon various factors including Bank of America's
costs and desired return, general economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such rate. Any change in such rate announced
by Bank of America shall take effect at the opening of business on the day specified in the public
announcement of such change.
Principal Debtmeans, at any time, the unpaid principal balance of all Loans.
Pro RataandPro Rata Partmeans, when determined for any Lender, if no Default or Potential
Default exists, the proportion (stated as a percentage) that its Committed Sum bears to the Total Commitment,
or if a Default or Potential Default exists, the proportion (stated as a percentage) that the Principal Debt owed
to it bears to the aggregate Principal Debt owed to all Lenders.
Purchaseris defined inSection 14.12(c).
Quarterly Datemeans each January 31, April 30, July 31 and October 31.
Red Sky L/Cmeans an irrevocable transferable L/C of up to $12,140,000 expiring
December 15, 2002, issued by Agent to U.S. Bank National Association and any successor thereto as Trustee
under the Trust Indenture dated as of June 1, 2001 with Holland Creek Metropolitan District, pursuant to
which $12,000,000 in aggregate principal amount of the Holland Creek Metropolitan District, Eagle County,
Colorado, Variable Rate Revenue Bonds, Series 2001, are being issued and delivered by Holland Creek
Metropolitan District, a quasi-municipal corporation and political subdivision of the State of Colorado under
the terms of which such Trustee will be entitled to draw, with respect to such Bonds, up to (a) an amount
sufficient to pay (i) the principal of such Bonds when due, or (ii) the portion of the purchase price of such
Bonds tendered or deemed tendered for purchase in accordance with such Indenture and not subsequently
remarketed corresponding to the principal amount of such Bonds,plus(b) an amount equal to approximately
35 days of accrued interest on such Bonds (at up to 12% per annum), to pay (i) interest on such Bonds when
due, or (ii) the portion of the purchase price of such Bonds tendered or deemed tendered for purchase in
accordance with such indenture and not subsequently remarketed corresponding to accrued interest.
Representativesmeans representatives, officers, directors, employees, attorneys and agents.
Required Capital Expendituresmeans $30,000,000.
Required Lendersmeans Lenders holding more than (a) 50% of the Total Commitment, if no
Default or Potential Default exists, or (b) 50% of the outstanding Principal Debt, if a Default or Potential
Default exists.
Reserve Requirementmeans, with respect to any LIBOR Loan for the relevant Interest Period, the
maximum rate at which reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) by member banks of the Federal Reserve
System against "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by such
member banks with respect to (i) any category of liabilities which includes deposits by reference to which
LIBOR is to be determined, or (ii) any category of extensions of credit or other assets which include LIBOR
Loans. LIBOR shall be adjusted automatically on and as of the effective date of any change in the Reserve
Requirement.
Resort EBITDAmeans thetotalof EBITDA,plusinsurance proceeds (up to a maximum of
$10,000,000 in the aggregate in any fiscal year) received by the Restricted Companies under policies of
business interruption insurance (or under policies of insurance which cover losses or claims of the same
character or type),minusEBITDA related to real estate activities andminusany portion of EBITDA
attributable to Unrestricted Subsidiariesother thanSSI (to the extent of Borrower's membership interests
in SSI).
Responsible Officermeans the chairman, president, chief executive officer or chief financial officer
of Borrower.
Restricted Companymeans VRI, VHI, Borrower and all of VRI's other direct and indirect
Subsidiaries (other thanUnrestricted Subsidiaries).
Restricted Subsidiarymeans VHI, Borrower and all of VRI's other direct and indirect Subsidiaries
(other thanUnrestricted Subsidiaries).
Rightsmeans rights, remedies, powers, privileges and benefits.
S&Pmeans Standard & Poor's Ratings Group (a division of The McGraw Hill Companies, Inc.).
Security Documentsmeans, collectively, a Pledge Agreement, any security agreement, mortgage,
deed of trust or other agreement or document, together with all related financing statements and stock
powers, in form and substance reasonably satisfactory to Agent and its legal counsel, executed and delivered
by any Person in connection with this Agreement to create a Lien in favor of Lenders on any of its real or
personal property, as amended, supplemented or restated.
Senior Debtmeans Funded Debtother thanSubordinated Debt.
Senior Subordinated Debt Indenturemeans the Indenture dated as of May 11, 1999, between VRI,
as Issuer, United States Trust Company of New York, as Trustee, and certain of VRI's Subsidiaries, as
guarantors, as supplemented from time to time.
Servicemeans the U.S. Department of Agriculture Forest Service or any successor agency.
Shareholders' Equitymeans, as of any date of determination for the Restricted Companies on a
consolidated basis, shareholders' equity as of that date determined in accordance with GAAP.
Smith Creek L/Csmeans the $21,110,356 irrevocable transferable L/C and the $19,625,206
irrevocable transferable L/C, each expiring October 15, 2002, and issued by Agent to Colorado National Bank
and any successor thereto as Trustee under the 1995 Trust Indenture with Smith Creek Metropolitan District
as Issuer, as supplemented by the 1997 First Supplemental Trust Indenture, relating to the Smith Creek
Metropolitan District, Eagle County, Colorado, Variable Rate Revenue Bonds, Series 1995 (in the amount
of $26,000,000) and Series 1997 (in the amount of $18,500,000), under the terms of which such Trustee will
be entitled to draw, with respect to the applicable series of Bonds, up to (a) an amount sufficient to pay (i)
the principal of the "Outstanding Bonds" (as defined in such Indenture) when due, or (ii) the portion of the
purchase price of Outstanding Bonds tendered or deemed tendered for purchase in accordance with such
Indenture and not subsequently remarketed corresponding to the principal amount of such Bonds,plus(b)
an amount equal to approximately 185 days of accrued interest on the Outstanding Bonds (at 12% per annum
or such higher rate as such Trustee may designate in accordance with such Indenture), to pay (i) interest on
the Outstanding Bonds when due, or (ii) the portion of the purchase price of Outstanding Bonds tendered or
deemed tendered for purchase in accordance with such Indenture and not subsequently remarketed
corresponding to accrued interest.
Solventmeans, as to a Person, that (a) the aggregate fair market value of its assets exceeds its
liabilities, (b) it has sufficient cash flow to enable it to pay its Debts as they mature, and (c) it does not have
unreasonably small capital to conduct its businesses.
SSImeans SSI Venture LLC, a Colorado limited liability company doing business as Specialty Sports
Venture and an Unrestricted Subsidiary of Borrower.
Subordinated Debtmeans any unsecured indebtedness for borrowed money for which a Company
is directly and primarily obligated that (a) does not have any stated maturity before the latest maturity of any
part of the Obligation, (b) has terms that are no more restrictive upon the Company than the terms of the
Loan Papers, and (c) is subordinated, upon terms satisfactory to Agent, to the payment and collection of the
Obligation; and, in any event, "Subordinated Debt" includes notes, guarantees and all other obligations now
or hereafter arising under or pursuant to the Senior Subordinated Debt Indenture (or any other indenture that
contains the same material terms as the Senior Subordinated Debt Indenture).
Subsidiarymeans with respect to any Person, any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or indirectly owned by such Person.
Summit Bondsmeans (a) the Summit County, Colorado, Sports Facilities Refunding Revenue Bonds
(Keystone Resorts Management, Inc. Project) Series 1990, in the original principal amount of $20,360,000
(of which, approximately $19,000,000 is outstanding on the date hereof), (b) the Summit County, Colorado,
Sports Facilities Refunding Revenue Bonds (Keystone Resorts Management, Inc. Project) Series 1991, in
the original principal amount of $3,000,000 (all of which remains outstanding on the date hereof), and
(c) refinancings of any of the foregoing.
Total Assetsmeans, as of any date of determination for the Restricted Companies on a consolidated
basis, all assets of the Restricted Companies (as determined in accordance with GAAP).
Tarnes L/Cmeans an irrevocable transferable L/C of up to $8,250,000 expiring December 15, 2002,
to be issued by Agent to U.S. Bank National Association and any successor thereto as Trustee under the
1999 Trust Indenture with Eagle County, Colorado, as Issuer, relating to approximately $8,000,000 of Eagle
County, Colorado, Taxable Housing Facilities Revenue Bonds (The Tarnes at BC, LLC Project), Series
1999A, under the terms of which such Trustee will be entitled to draw up to (a) an amount sufficient to pay
(i) the principal of such Bonds when due, or (ii) the portion of the purchase price of such Bonds tendered or
deemed tendered for purchase in accordance with such Indenture and not subsequently remarketed
corresponding to the principal amount of such Bonds,plus(b) an amount equal to approximately 35 days of
accrued interest on such Bonds (at up to 15% per annum), to pay (i) interest on such Bonds when due, or
(ii) the portion of the purchase price of such Bonds tendered or deemed tendered for purchase in accordance
with such Indenture and not subsequently remarketed corresponding to accrued interest.
Taxesmeans, for any Person, taxes, assessments or other governmental charges or levies imposed
upon it, its income, or any of its properties, franchises or assets.
Tenderfoot Housing L/Cmeans an irrevocable transferable L/C of up to $5,783,125 expiring
December 15, 2002, issued by Agent to U.S. Bank National Association and any successor thereto as Trustee
under the Trust Indenture dated as of June 1, 2001 with Tenderfoot Seasonal Housing, LLC, pursuant to
which $5,700,000 in aggregate principal amount of the Tenderfoot Seasonal Housing, LLC Taxable Housing
Facilities Notes (Tenderfoot Seasonal Housing, LLC Project), Series 200A, are being issued and delivered
by Tenderfoot Seasonal Housing, LLC, a Colorado limited liability company, under the terms of which such
Trustee will be entitled to draw, with respect to such Notes, up to (a) an amount sufficient to pay (i) the
principal of such Notes when due, or (ii) the portion of the purchase price of such Notes tendered or deemed
tendered for purchase in accordance with such Indenture corresponding to the principal amount of such
Notes,plus(b) an amount not to exceed $83,125 of accrued interest on such Notes, to pay (i) interest on such
Notes when due, or (ii) the portion of the purchase price of such Notes tendered or deemed tendered for
purchase which corresponds to the accrued interest on the principal amount of such Notes.
Termination Datemeans the earlier of (a) November 13, 2004, and (b) the effective date that
Lenders' commitments to lend under this Agreement are otherwise canceled or terminated.
Total Commitmentmeans, at any time, thesumof all Committed Sums for all Lenders (as reduced
or canceled under this Agreement) then in effect.
Tribunalmeans any (a) local, state, or federal judicial, executive, or legislative instrumentality,
(b) private arbitration board or panel, or (c) central bank.
Trusteemeans any Trustee designated as the beneficiary of a Bond L/C.
Typemeans any type of Loan determined with respect to the applicable interest option.
UCPmeans The Uniform Customs and Practice for Documentary Credits, 1993 Revision,
International Chamber of Commerce Publication No. 500 (or any revision thereof).
Unrestricted Subsidiarymeans any existing Subsidiary or newly-formed Subsidiary created by
Borrower pursuant toSection 8.11(which may be a partnership, joint venture, corporation, limited liability
company or other entity) (a) which does not own any Forest Service Permit or the stock of any Restricted
Company or any of the assets described onSchedule 2, (b) which has (and whose other partners, joint
venturers, members or shareholders have) no Debt or other material obligation which is recourse to any
Restricted Company or to the assets of any Restricted Company (other thanwith respect to limited
guarantees or other recourse agreements of the Restricted Companies which are permitted to be incurred
under this Agreement underclauses (f)or(g)of the definition of "Permitted Debt"), and (c) which has been
designated by Borrower as an Unrestricted Subsidiary by notice to Agent. Subject toSection 14.10(b)(v),
Agent shall execute documentation reasonably required to release any Restricted Subsidiary which is
redesignated by Borrower as an Unrestricted Subsidiary from its Guaranty. As of the Closing Date the
Unrestricted Subsidiaries are Eagle Park Reservoir Company, SSI Venture LLC, Boulder/Beaver, LLC,
Colter Bay Corporation, Gros Ventre Utility Company, Jackson Lake Lodge Corporation, Jenny Lake Lodge,
Inc., Forest Ridge Holdings, Inc., Resort Technology Partners LLC, and RT Partners, Inc.
U.S.means the United States of America.
Vail Bondsmeans (a) the Eagle County, Colorado, Sports Facilities Revenue Refunding Bonds Series
1998, in the original principal amount of $41,200,000, and (b) refinancings of any of the foregoing.
Vail Summit Resortsmeans Vail Summit Resorts, Inc. (f/k/a "Ralston Resorts, Inc."), a Colorado
corporation and a wholly-owned Subsidiary of Borrower.
VHImeans Vail Holdings, Inc., a Colorado corporation and the direct owner of Borrower.
VRImeans Vail Resorts, Inc., a Delaware corporation and the indirect owner of Borrower.
Water Rightsmeans all water rights and conditional water rights that are appurtenant to real property
owned by the Companies or that have been used or are intended for use in connection with the conduct of
the business of the Companies, including but not limited to (a) ditch, well, pipeline, spring and reservoir rights,
whether or not adjudicated or evidenced by any well or other permit, (b) all rights with respect to groundwater
underlying any real property owned by the Companies, (c) any permit to construct any water well, water from
18 ::ODMA\PCDOCS\DOCS\409767\11
which is intended to be used in connection with such real property, and (d) all right, title and interest of the
Companies under any decreed or pending plan of augmentation or water exchange plan.
1.2 Number and Gender of Words. The singular number includes the plural where appropriate
andvice versa, and words of any gender include each other gender where appropriate.
1.3 Accounting Principles. Under the Loan Papers and any documents delivered thereunder,
unless otherwise stated, (a) GAAP in effect from time to time determines all accounting and financial terms
and compliance with financial covenants, (b) otherwise, all accounting principles applied in a current period
must be comparable in all material respects to those applied during the preceding comparable period, and (c)
while VRI has any consolidated Restricted Subsidiaries, all accounting and financial terms and compliance
with financial covenants must be on a consolidating and consolidated basis, as applicable.
SECTION 2 COMMITMENT.
2.1 Credit Facility. Subject to the provisions in the Loan Papers, each Lender hereby severally
and not jointly agrees to lend to Borrower its Pro Rata Part of one or more revolving Loans in an aggregate
principal amount outstanding at any time up to such Lender's Committed Sum, which Borrower may borrow,
repay, and reborrow under this Agreement. Loans are subject to the following conditions:
(a) Each Loan must occur on a Business Day and no later than the Business Day
immediately preceding the Termination Date;
(b) Each Loan must be in an amount not less than (i) $500,000 or a greater integral
multiple of $100,000 (if a Base Rate Loan), or (ii) $1,000,000 or a greater integral multiple of
$100,000 (if a LIBOR Loan); and
(c) When determined, (i) Commitment Usage may not exceed the Total Commitment,
and (ii) for any Lender, its Pro Rata Part of the Commitment Usage may not exceed such Lender's
Committed Sum.
2.2 Loan Procedure.
(a) Borrower may request a Loan by submitting to Agent a Loan Request, which is
irrevocable and binding on Borrower. It must be received by Agent no later than 1:00 p.m. on the
third Business Day preceding the date on which funds are requested (the "Loan Date") for any
LIBOR Loan or no later than 1:00 p.m. on the Business Day immediately preceding the Loan Date
for any Base Rate Loan. Agent shall promptly notify each Lender of its receipt of any Loan Request
and its contents.
(b) Each Lender shall remit its applicable Pro Rata Part of each requested Loan to
Agent's principal office in Dallas, Texas, in funds that are available for immediate use by Agent by
11:00 a.m. on the applicable Loan Date. Subject to receipt of such funds, Agent shall (unless to its
actual knowledge any of the applicable conditions precedent have not been satisfied by Borrower or
waived by Required Lenders) make such funds available to Borrower as directed in the Loan
Request.
(c) Absent contrary written notice from a Lender, Agent may assume that each Lender
has made its Pro Rata Part of the requested Loan available to Agent on the applicable Loan Date,
and Agent may, in reliance upon such assumption (but shall not be required to), make available to
Borrower a corresponding amount. If a Lender fails to make such Pro Rata Part of any requested
Loan available to Agent on the applicable Loan Date, Agent may recover the applicable amount on
demand (i) from that Lender, together with interest at the Federal Funds Rate during the period
commencing on the date the amount was made available to Borrower by Agent and ending on (but
excluding) the date Agent recovers the amount from that Lender, or (ii), if that Lender fails to pay
its amount upon demand, then from Borrower,together withinterest at an annual interest rate equal
to the rate applicable to the requested Loan during the period commencing on the Loan Date and
ending on (but excluding) the date Agent recovers the amount from Borrower. No Lender is
responsible for the failure of any other Lender to fund any part of any Loan.
2.3 L/C Subfacility.
(a) Subject to the terms and conditions of this Agreement and applicable Law, Agent
agrees, in reliance upon the agreements of the other Lenders set out in thisSection 2.3, to issue L/Cs
denominated in U.S. Dollars under the Facility upon Borrower's delivery of an L/C Request and an
L/C Agreement, each of which must be received by Agent no later than 1:00 p.m. on the third
Business Day preceding the date on which the requested L/C is to be issued;provided that,
Commitment Usage may not exceed the Total Commitment after giving effect to the issuance of
such L/C. Each L/C (other thanthe Bond L/Cs) must expire no later than 13 months from its
issuance;provided thatany L/C (other thanthe Bond L/Cs) may, at Borrower's request, provide
that it is self-extending upon its expiration date for successive periods of 6 to 12 months each (as
selected by Borrower), unless Agent has given the beneficiary thereunder at least 30 days (but no
more than 120 days) prior written notice to the contrary (provided, however, thatsuch notice shall
in no event be given by Agent unless (i) Agent is directed so to do by Borrower, (ii) a Default exists,
or (iii) such extension would extend the expiration date beyond the Termination Date). Amounts
drawn under the Bond L/Cs are subject to reinstatement upon the terms set forth therein. In no event
may any L/C have an expiration date later than the Termination Date.
(b) Immediately upon Agent's issuance of any L/C, Agent shall be deemed to have sold
and transferred to each Lender, and each Lender shall be deemed irrevocably and unconditionally
to have purchased and received from Agent, without recourse or warranty, an undivided interest and
participation (to the extent of such Lender's Pro Rata Part) in the L/C and all applicable Rights of
Agent in the L/C (other thanRights to receive the fronting fees provided for inSection 4.3).Agent
shall provide copies of L/Cs to Lenders upon request and shall distribute quarterly schedules of the
outstanding L/Cs to each Lender.
(c) To induce Agent to issue and maintain L/Cs, and to induce Lenders to participate
in issued L/Cs, Borrower agrees to pay or reimburse Agent (i) on or before the date when any draft,
draw or other form of demand is presented under any L/C, the amount paid or to be paid by Agent
(subject to a credit, in the case of a Bond L/C, for any portion of such reimbursement received by
Agent directly from the relevant Trustee for the account of Borrower under the relevant Indenture)
and (ii) promptly, upon demand, the amount of any additional fees Agent customarily charges for the
application and issuance of an L/C, for amending L/C Agreements, for honoring drafts, draws or
other forms of demands, and taking similar action in connection with letters of credit. If Borrower
(or, in the case of a drawing under a Bond L/C, the relevant Trustee) has not reimbursed Agent for
any drafts or draws or other forms of demands paid or to be paid and Borrower has not requested
a Loan to fund such reimbursement obligations within 24 hours following Agent's demand for
reimbursement, Agent is irrevocably authorized to fund Borrower's reimbursement obligations as a
Loan under this Agreement (and the proceeds of the Loan shall be advanced directly to Agent to pay
Borrower's unpaid reimbursement obligations). If funds cannot be advanced because the Facility
has been terminated underSection 12.1, then Borrower's reimbursement obligation shall constitute
a demand obligation. Borrower's obligations under thisSection 2.3(c)are absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or defense (other than
payment) that Borrower may have at any time against Agent or any other Person. Agent shall
promptly distribute reimbursement payments received from Borrower to all Lenders according to
their Pro Rata Part. From the date due to the date paid, unpaid reimbursement amounts accrue
interest that is payable on demand at the Default Rate.
(d) Agent shall promptly notify Borrower of the date and amount of any draft, draw or
other form of demand presented for honor under any L/C and the date and amount of any payment
by Agent in connection therewith (but failure to give notice will not affect Borrower's obligations
under this Agreement). Agent shall pay the requested amount upon presentment of a draft, draw or
other form of demand, unless presentment on its face does not comply with the terms of the
applicable L/C. When making payment, Agent may disregard (i) any default or potential default that
exists under any other agreement and (ii) obligations under any other agreement that have or have
not been performed by the beneficiary or any other Person (and Agent is not liable for any of those
obligations). Borrower's reimbursement obligations to Agent and Lenders, and each Lender's
obligations to Agent, under thisSection 2.3are absolute and unconditional irrespective of, and Agent
is not responsible for, (i) the validity, enforceability, sufficiency, accuracy or genuineness of
documents or endorsements (even if they are in any respect invalid, unenforceable, insufficient,
inaccurate, fraudulent or forged), (ii) any dispute by any Company with or any Company's claims,
setoffs, defenses (other thanpayment), counterclaims or other Rights against Agent, any Lender
or any other Person, or (iii) the occurrence of any Potential Default or Default.
(e) If Borrower (or, in the case of a drawing under a Bond L/C, the relevant Trustee)
fails to reimburse Agent as provided inSection 2.3(c)within 24 hours after Agent's demand for
reimbursement, and funds cannot be advanced under this Agreement to satisfy the reimbursement
obligations, Agent shall promptly notify each Lender of Borrower's failure, of the date and amount
paid, and of each Lender's Pro Rata Part of the unreimbursed amount. Each Lender shall promptly
and unconditionally make available to Agent in immediately available funds such Pro Rata Part of the
unpaid reimbursement obligation. Funds are due and payable to Agent before the close of business
on the Business Day when Agent gives notice to each Lender of Borrower's reimbursement failure
(if notice is received by such Lender before 2:00 p.m.) (in the time zone where such Lender's office
listed onSchedule 1is located) or on the next succeeding Business Day (if received after 2:00 p.m.).
All amounts payable by any Lender accrue interest at the Federal Funds Rate from the day the
applicable draft, draw or other form of demand is paid by Agent to (but not including) the date the
amount is paid by the Lender to Agent.
(f) Borrower acknowledges that each L/C is deemed issued upon delivery to the
beneficiary or Borrower. If Borrower requests any L/C be delivered to Borrower rather than the
beneficiary, and Borrower subsequently cancels that L/C, Borrower agrees to return it to Agent
together with Borrower's written certification that it has never been delivered to the beneficiary. If
any L/C is delivered to the beneficiary under Borrower's instructions, Borrower's cancellation is
ineffective without Agent's receipt of the beneficiary's written consent and the L/C.Borrower
shall indemnify Agent for all losses, costs, damages, expenses and reasonable attorneys'
fees suffered or incurred by Agent resulting from any dispute concerning Borrower's
cancellation of any L/C.
(g) Agent agrees with each Lender that it will exercise and give the same care and
attention to each L/C as it gives to its other letters of credit. Each Lender and Borrower agree that,
in paying any draft, draw or other form of demand under any L/C, Agent has no responsibility to
obtain any document (other thanany documents expressly required by the respective L/C) or to
ascertain or inquire as to any document's validity, enforceability, sufficiency, accuracy or genuineness
or the authority of any Person delivering it. Neither Agent nor its Representatives will be liable to
any Lender or any Company for any L/C's use or for any beneficiary's acts or omissions. Any
action, inaction, error, delay or omission taken or suffered by Agent or any of its Representatives in
connection with any L/C, applicable draws, drafts, other forms of demand or documents, or the
transmission, dispatch or delivery of any related message or advice, if in good faith and in conformity
with applicable Laws and in accordance with the standards of care specified in the UCP or ISP 98,
as applicable, is binding upon the Companies and Lenders and does not place Agent or any of its
Representatives under any resulting liability to any Company or any Lender.Agent and its
Representatives are not liable to any Company or any Lender for any action taken or
omitted, in the absence of gross negligence or willful misconduct, by Agent or its
Representative in connection with any L/C.
(h) On the Termination Date, or during the continuance of any Default under
Section 11.3, or upon any demand by Agent during the continuance of any other Default, Borrower
shall provide to Agent, for the benefit of Lenders, cash collateral in an amount equal to the thenexisting
L/C Exposure. Any cash collateral provided by Borrower to Agent hereunder shall be
deposited by Agent in an interest-bearing cash collateral account maintained with Agent at the office
of Agent and invested in obligations issued or guaranteed by the U.S. and, upon cure of any Default
or upon the surrender of any L/C, Agent shall deliver the appropriate funds (together with interest
earned with respect thereto) on deposit in such collateral account to Borrower.
(i)Borrower shall protect, indemnify, pay and save Agent, each Lender and
their respective Representatives harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys'
fees) which any of them may incur or be subject to as a consequence of the issuance of any
L/C, any dispute about it, or the failure of Agent to honor a draft, draw or other form of
demand under any L/C, unless they arise as a result of Agent's failure to act in accordance
with the procedures of the UCP or ISP 98, as applicable, (as modified by any L/C
Agreement or other writing between Borrower and Agent).
(j) Although referenced in any L/C, terms of any particular agreement or other
obligation to the beneficiary are not incorporated into this Agreement in any manner. The fees and
other amounts payable with respect to each L/C are as provided in this Agreement, drafts and draws
and other forms of demands under each L/C are part of the Obligation, and the terms of this
Agreement control any conflict between the terms of this Agreement and any L/C Agreement.
(k) Unless otherwise expressly agreed by Agent and Borrower when an L/C is issued
(i) the rules of ISP 98 shall apply to each standby L/C, and (ii) the rules of the UCP shall apply to
each commercial L/C.
SECTION 3 TERMS OF PAYMENT.
3.1 Notes and Payments.
(a) The Principal Debt shall be evidenced by Notes, payable to each Lender in the stated
principal amount of its Committed Sum.
(b) Borrower must make each payment on the Obligation to Agent's principal office in
Dallas, Texas, in funds that will be available for immediate use by Agent by 12:00 noon on the day
due; otherwise, but subject toSection 3.8, those funds continue to accrue interest as if they were
received on the next Business Day. Agent shall pay to each Lender any payment to which that
Lender is entitled on the same day Agent receives the funds from Borrower if Agent receives the
payment before 12:00 noon, and otherwise before 12:00 noon on the following Business Day. If and
to the extent that Agent does not make payments to Lenders when due, unpaid amounts shall accrue
interest at the Federal Funds Rate from the due date until (but not including) the payment date.
3.2 Interest and Principal Payments; Voluntary Commitment Reductions.
(a) Accrued interest on each LIBOR Loan is due and payable on the last day of its
Interest Period. If any Interest Period with respect to a LIBOR Loan is a period greater than three
months, then accrued interest is also due and payable on the date three months after the
commencement of the Interest Period. Accrued interest on each Base Rate Loan is due and payable
on each Quarterly Date and on the Termination Date.
(b) The Principal Debt is due and payable on the Termination Date.
(c) If the Commitment Usage ever exceeds the Total Commitment, Borrower shall pay
Principal Debt in at least the amount of that excess,together with(i) all accrued and unpaid interest
on the principal amount so paid and (ii) any resulting Funding Loss.
(d) Borrower may voluntarily reduce or prepay the Facility as follows:
(i) Without premium or penalty and upon giving at least two Business Days
prior written and irrevocable notice to Agent, Borrower may terminate all or reduce part of
the unused portion of the Total Commitment. Each partial reduction (unless the remaining
portion of such commitment is less) must be in an amount of not less than $5,000,000 or a
greater integral multiple of $1,000,000, and shall be Pro Rata among all Lenders. Once
terminated or reduced, such commitments may not be reinstated or increased.
(ii) Borrower may voluntarily prepay all or any part of the Principal Debt at any
time without premium or penalty, subject to the following conditions:
(A) Agent must receive Borrower's written payment notice (which shall
specify (1) the payment date, and (2) the Type and amount of the Loan(s) to be
paid; such notice shall constitute an irrevocable and binding obligation of Borrower
to make a payment on the designated date) by 1:00 p.m. on (x) the third Business
Day preceding the date of payment of a LIBOR Loan and (y) the date of payment
of a Base Rate Loan;
(B) each partial payment must be in a minimum amount of at least
$500,000 if a Base Rate Loan or $1,000,000 if a LIBOR Loan or, in either case, a
greater integral multiple of $100,000;
(C) all accrued interest on the principal amount so to be prepaid must
also be paid in full on the date of payment; and
(D) Borrower shall pay any related Funding Loss upon demand.
3.3 Interest Options. Except where specifically otherwise provided, Loans bear interest at an
annual rate equal to thelesser of(a) the Base Rateplusthe Applicable Margin or LIBORplusthe
Applicable Margin for the Interest Period, if any, selected by Borrower (in each case as designated or
deemed designated by Borrower), as the case may be,and(b) the Maximum Rate. Each change in the Base
Rate and Maximum Rate is effective, without notice to Borrower or any other Person, upon the effective date
of change.
3.4 Quotation of Rates. A Responsible Officer of Borrower may call Agent before delivering
a Loan Request to receive an indication of the interest rates then in effect, but the indicated rates do not bind
Agent or Lenders or affect the interest rate that is actually in effect when Borrower delivers its Loan Request
or on the Loan Date.
3.5 Default Rate. If permitted by Law, all past-due Principal Debt, Borrower's past-due
payment and reimbursement obligations in connection with L/Cs, and past-due interest accruing on any of the
foregoing bears interest from the date due (stated or by acceleration) at the Default Rate until paid, regardless
whether payment is made before or after entry of a judgment.
3.6 Interest Recapture. If the designated interest rate applicable to any Loan exceeds the
Maximum Rate, the interest rate on that Loan is limited to the Maximum Rate, but any subsequent reductions
in the designated rate shall not reduce the interest rate thereon below the Maximum Rate until the total
amount of accrued interest equals the amount of interest that would have accrued if that designated rate had
always been in effect. If at maturity (stated or by acceleration), or at final payment of the Notes, the total
interest paid or accrued is less than the interest that would have accrued if the designated rates had always
been in effect, then, at that time and to the extent permitted by Law, Borrower shall pay an amount equal to
the difference between (a) thelesserof the amount of interest that would have accrued if the designated
rates had always been in effectandthe amount of interest that would have accrued if the Maximum Rate
had always been in effect, and (b) the amount of interest actually paid or accrued on the Notes.
3.7 Interest Calculations.
(a) Interest will be calculated on the basis of actual number of days elapsed (including
the first day, but excluding the last day), but computed as if each calendar year consisted of 360 days
for LIBOR Loans (unless the calculation would result in an interest rate greater than the Maximum
Rate, in which event interest will be calculated on the basis of a year of 365 or 366 days, as the case
may be), and 365 or 366 days, as the case may be, for Base Rate Loans. All interest rate
determinations and calculations by Agent are conclusive and binding absent manifest error.
(b) The provisions of this Agreement relating to calculation of the Base Rate and
LIBOR are included only for the purpose of determining the rate of interest or other amounts to be
paid under this Agreement that are based upon those rates. Each Lender may fund and maintain its
funding of all or any part of each Loan as it selects.
3.8 Maximum Rate. Regardless of any provision contained in any Loan Paper or any document
related thereto, no Lender is entitled to contract for, charge, take, reserve, receive or apply, as interest on all
or any part of the Obligation any amount in excess of the Maximum Rate, and, if Lenders ever do so, then
any excess shall be treated as a partial payment of principal and any remaining excess shall be refunded to
Borrower. In determining if the interest paid or payable exceeds the Maximum Rate, Borrower and Lenders
shall, to the maximum extent permitted under applicable Law, (a) treat all Loans as but a single extension of
credit (and Lenders and Borrower agree that is the case and that provision in this Agreement for multiple
Loans is for convenience only), (b) characterize any nonprincipal payment as an expense, fee or premium
rather than as interest, (c) exclude voluntary payments and their effects, and (d) amortize, prorate, allocate
and spread the total amount of interest throughout the entire contemplated term of the Obligation. However,
if the Obligation is paid in full before the end of its full contemplated term, and if the interest received for its
actual period of existence exceeds the Maximum Amount, Lenders shall refund any excess (and Lenders
shall not, to the extent permitted by Law, be subject to any penalties provided by any Laws for contracting
for, charging, taking, reserving or receiving interest in excess of the Maximum Amount).
3.9 Interest Periods. When Borrower requests any LIBOR Loan, Borrower may elect the
applicable interest period (each an "Interest Period"), which may be, at Borrower's option, one, two, three
or six months, subject to the following conditions: (a) the initial LIBOR Interest Period commences on the
applicable Loan Date or conversion date, and each subsequent LIBOR Interest Period commences on the
day when the next preceding applicable Interest Period expires; (b) if any LIBOR Interest Period begins on
a day for which no numerically corresponding Business Day in the calendar month at the end of the Interest
Period exists, then the Interest Period ends on the last Business Day of that calendar month; (c) no LIBOR
Interest Period for any portion of Principal Debt may extend beyond the scheduled payment date for that
portion of Principal Debt; and (d) no more than 20 LIBOR Interest Periods may be in effect at one time.
3.10 Conversions. Subject to the dollar limits and denominations ofSection 2.1and the limitations
on LIBOR Interest Periods ofSection 3.9, Borrower may (a) convert all or part of a LIBOR Loan on the
last day of the applicable Interest Period to a Base Rate Loan, (b) convert all or part of a Base Rate Loan
at any time to a LIBOR Loan, and (c) elect a new Interest Period for all or part of a LIBOR Loan, in each
case by delivering a Conversion Request to Agent no later than 1:00 p.m. on the third Business Day before
the conversion date or the last day of the Interest Period, as the case may be (for conversion to a LIBOR
Loan or election of a new Interest Period), and no later than 1:00 p.m. one Business Day before the last day
of the Interest Period (for conversion to a Base Rate Loan). Absent Borrower's notice of conversion or
election of a new Interest Period, a LIBOR Loan shall be converted to a Base Rate Loan when the applicable
Interest Period expires.
3.11 Order of Application. If no Default or Potential Default exists, any payment shall be applied
to the Obligation in the order and manner as Borrower directs. If a Default or Potential Default exists or if
Borrower fails to give direction, any other payment (including proceeds from the exercise of any Rights
hereunder) shall be applied in the following order (a) to all fees, expenses and Funding Losses for which
Agent or Lenders have not been paid or reimbursed in accordance with the Loan Papers (and if such
payment is less than all unpaid or unreimbursed fees and expenses, then the payment shall be paid against
unpaid and unreimbursed fees and expenses in the order of incurrence or due date), (b) to accrued interest
on the Principal Debt, and (c) ratably to the remainder of the Obligation.
3.12 Sharing of Payments, Etc.. If any Lender (a "benefitted Lender") shall at any time receive
any payment of all or part of the Loans owing to it, or interest thereon, or receive any Collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, or otherwise), in a greater proportion than any such
payment to or Collateral received by any other Lender, if any, in respect of such other Lender's Loans owing
to it, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating
interest in such portion of each such other Lender's Loans owing to it, or shall provide such other Lenders
with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each
of the Lenders;provided, however, thatif all or any portion of such excess payment or benefits is thereafter
recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. Borrower agrees that any Lender so purchasing
a participation from a Lender pursuant to thisSection 3.12may, to the fullest extent permitted by Law,
exercise all of its Rights of payment (including the Right of set-off) with respect to such participation as fully
as if such Person were the direct creditor of Borrower in the amount of such participation.
3.13 Booking Loans. To the extent permitted by Law, any Lender may make, carry or transfer
its Loans at, to, or for the account of any of its branch offices or the office of any of its Affiliates. However,
no Affiliate is entitled to receive any greater payment underSection 3.15than the transferor Lender would
have been entitled to receive with respect to those Loans.
3.14 Basis Unavailable or Inadequate for LIBOR. If, on or before any date when LIBOR is to
be determined for a Loan, Agent or any Lender determines (and Required Lenders agree with that
determination) that the basis for determining the applicable rate is not available or that the resulting rate does
not accurately reflect the cost to Lenders of making or converting Loans at that rate for the applicable
Interest Period, then Agent shall promptly notify Borrower and Lenders of that determination (which is
conclusive and binding on Borrower absent manifest error) and the applicable Loan shall bear interest at the
sumof the Base Rateplusthe Applicable Margin. Until Agent notifies Borrower that those circumstances
no longer exist, Lenders' commitments under this Agreement to make, or to convert to, LIBOR Loans are
suspended.
3.15 Additional Costs.
(a) With respect to any LIBOR Loan, (i) if any present or future Law imposes, modifies,
or deems applicable (or if compliance by any Lender with any requirement of any Tribunal results
in) any Reserve Requirement, and if (ii) those reserves reduce any sums receivable by that Lender
under this Agreement or increase the costs incurred by that Lender in advancing or maintaining any
portion of any LIBOR Loan, then (iii) that Lender (through Agent) shall deliver to Borrower a
certificate setting forth in reasonable detail the calculation of the amount necessary to compensate
it for its reduction or increase (which certificate is conclusive and binding absent manifest error), and
(iv) Borrower shall promptly pay that amount to that Lender upon demand. This paragraph shall
survive the satisfaction and payment of the Obligation and termination of this Agreement. This
paragraph may be invoked by a Lender only if such Lender is generally invoking similar provisions
against other Persons to which such Lender lends funds pursuant to facilities similar to the Facility.
(b) With respect to any Loan or L/C, if any present or future Law regarding capital
adequacy or compliance by Agent (as issuer of L/Cs) or any Lender with any request, directive or
requirement now existing or hereafter imposed by any Tribunal regarding capital adequacy, or any
change in its written policies or in the risk category of this transaction, reduces the rate of return on
its capital as a consequence of its obligations under this Agreement to a level below that which it
otherwise could have achieved (taking into consideration its policies with respect to capital adequacy)
by an amount deemed by it to be material (and it may, in determining the amount, utilize reasonable
assumptions and allocations of costs and expenses and use any reasonable averaging or attribution
method), then (unless the effect is already reflected in the rate of interest then applicable under this
Agreement) Agent or that Lender (through Agent) shall notify Borrower and deliver to Borrower a
certificate setting forth in reasonable detail the calculation of the amount necessary to compensate
it (which certificate is conclusive and binding absent manifest error), and Borrower shall promptly
pay that amount to Agent or that Lender upon demand. This paragraph shall survive the satisfaction
and payment of the Obligation and termination of this Agreement. This paragraph may be invoked
by a Lender only if such Lender is generally invoking similar provisions against other Persons to
which such Lender lends funds pursuant to facilities similar to the Facility.
(c) Any Taxes payable by Agent or any Lender or ruled (by a Tribunal) payable by
Agent or any Lender in respect of any Loan Paper or any document related thereto shall, if permitted
by Law, be paid by Borrower, together with interest and penalties, if any (other thanfor Taxes
imposed on or measured by the overall net income of Agent or that Lender and interest and penalties
incurred as a result of the gross negligence or willful misconduct of Agent or any Lender). Agent
or that Lender (through Agent) shall notify Borrower and deliver to Borrower a certificate setting
forth in reasonable detail the calculation of the amount of payable Taxes, which certificate is
conclusive and binding (absent manifest error), and Borrower shall promptly pay that amount to
Agent for its account or the account of that Lender, as the case may be. If Agent or that Lender
subsequently receives a refund of the Taxes paid to it by Borrower, then the recipient shall promptly
pay the refund to Borrower.
3.16 Change in Laws. If any Law makes it unlawful for any Lender to make or maintain LIBOR
Loans, then that Lender shall promptly notify Borrower and Agent, and (a) as to undisbursed funds, that
requested Loan shall be made as a Base Rate Loan, and (b), as to any outstanding Loan, (i) if maintaining
the Loan until the last day of the applicable Interest Period is unlawful, the Loan shall be converted to a Base
Rate Loan as of the date of notice, and Borrower shall pay any related Funding Loss, or (ii) if not prohibited
by Law, the Loan shall be converted to a Base Rate Loan as of the last day of the applicable Interest Period,
or (iii) if any conversion will not resolve the unlawfulness, Borrower shall promptly pay the Loan, without
penalty, together with any related Funding Loss. Concurrently with any payment contemplated byclause (iii)
of the immediately preceding sentence, Borrower shall borrow a Base Rate Loan in an equal principal amount
from such Lender (on which interest and principal shall be payable contemporaneously with the related
LIBOR Loans of the other Lenders) and such Lender shall fund such Base Rate Loan.
3.17 Funding Loss.Borrower agrees to indemnify each Lender against, and pay to it upon
demand, any Funding Loss of that Lender.When any Lender demands that Borrower pay any Funding
Loss, that Lender shall deliver to Borrower and Agent a certificate setting forth in reasonable detail the basis
for imposing Funding Loss and the calculation of the amount, which calculation is conclusive and binding
absent manifest error. The provisions of and undertakings and indemnification set forth in this paragraph shall
survive the satisfaction and payment of the Obligation and termination of this Agreement.
3.18 Foreign Lenders. Each Lender that is organized under the Laws of any jurisdictionother
thanthe U.S. or any State thereof (a) represents to Agent and Borrower that (i) no Taxes are required to
be withheld by Agent or Borrower with respect to any payments to be made to it in respect of the Obligation
and (ii) it has furnished to Agent and Borrower two duly completed copies of U.S. Internal Revenue Service
Form W-8BEN or Form W-8ECI (wherein it claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments under the Loan Papers), or any other successor tax form acceptable
to Agent and Borrower, and (b) covenants to (i) provide Agent and Borrower a new tax form upon the
expiration, inaccuracy or obsolescence of any previously delivered form according to, and to the extent
permitted by, Law, duly executed and completed by it, and (ii) comply from time to time with all Laws with
regard to the withholding tax exemption. If any of the foregoing is not true or the applicable forms are not
provided, then Borrower and Agent (without duplication) may deduct and withhold from interest payments
under the Loan Papers U.S. federal income tax at the full rate applicable under the Code. In addition,
Borrower shall not be required to make any payments contemplated bySection 3.15(c)to the extent that
such payments would not have been payable if such Lender had furnished the appropriate form (properly and
accurately completed in all respects) which it was otherwise required to furnish in accordance with this
Section 3.18.
3.19 Affected Lender's Obligation to Mitigate. Each Lender agrees that, as promptly as
practicable after it becomes aware of the occurrence of an event or the existence of a condition which would
entitle it to exercise any rights underSections 3.15or3.16, it shall use commercially reasonable efforts to
make, fund or maintain the affected Loans of such Lender through another lending office of such Lender if
(a) as a result thereof the additional moneys which would otherwise be required to be paid in respect of such
Loans of such Lender would be reduced or the illegality or other adverse circumstances which would
otherwise affect such Loans of such Lender would cease to exist or the increased cost which would
otherwise be required to be paid in respect of such Loans would be reduced and (b) the making, funding or
maintaining of such Loans through such other lending office would not otherwise materially adversely affect
such Loans or such Lender.
3.20 Replacement Lender. In the event Borrower becomes obligated to pay any additional
amounts to any Lender pursuant toSections 3.15or3.16as a result of any event or condition described in
any of such Sections, then, unless such Lender has theretofore taken steps to remove or cure, and has
removed or cured, the conditions creating the cause of such obligation to pay such additional amounts,
Borrower may designate a substitute lender acceptable to Agent (such lender herein called a "Replacement
Lender") to purchase such Lender's rights and obligations with respect to its entire Pro Rata Part hereunder
with respect to the Facility as a whole, without recourse to or warranty by, or expense to, such Lender in
accordance withSection 14.12(c)for a purchase price equal to the outstanding principal amounts payable
to such Lender with respect to such Pro Rata Part,plusany accrued and unpaid interest and accrued and
unpaid fees and charges in respect of such Pro Rata Part and on other terms reasonably satisfactory to
Agent. Upon such purchase by the Replacement Lender and payment of all other amounts owing to the
Lender being replaced hereunder, such Lender shall no longer be a party hereto or have any rights or
obligations hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender
with respect to such Pro Rata Part hereunder.
SECTION 4 FEES.
4.1 Treatment of Fees. The fees described in thisSection 4(a) are not compensation for the
use, detention, or forbearance of money, (b) are in addition to, and not in lieu of, interest and expenses
otherwise described in this Agreement, (c) are payable in accordance withSection 3.1(b), (d) are nonrefundable,
and (e) to the fullest extent permitted by Law, bear interest, if not paid when due, at the Default
Rate.
4.2 Fee Letter. Borrower shall pay the fees described in the letter agreements between
Borrower and Agent dated November 19, 1997, April 30, 1999 and August 29, 2001.
4.3 L/C Fees.
(a) L/C Fees. Borrower shall pay to Agent for the account of each Lender in
accordance with its Pro Rata Part (i) a fee for each commercial L/C equal to 1/8 of 1% per annum
times the actual daily maximum amount available to be drawn under each such L/C, and (ii) a fee for
each standby L/C equal to the Applicable Margin for LIBOR Loans times the actual daily maximum
amount available to be drawn under each such L/C. Such fee for each L/C shall be due and payable
quarterly in arrears on each Quarterly Date, commencing with the first such date to occur after the
issuance of such L/C, and on the expiration date of such L/C. If there is any change in the
Applicable Margin during any quarter, the actual daily amount of each standby L/C shall be computed
and multiplied by the Applicable Margin separately for each period during such quarter that such
Applicable Margin was in effect.
(b) Fronting Fee and Documentary and Processing Charges Payable to Agent. The
Borrower shall pay directly to the Agent for its own account a fronting fee in an amount (i) with
respect to each commercial L/C, equal to 1/8 of 1% of the amount of such L/C, due and payable
upon the issuance thereof, and (ii) with respect to each standby L/C, equal to 1/8 of 1% per annum
on the daily maximum amount available to be drawn thereunder, due and payable quarterly in arrears
on each Quarterly Date, commencing with the first such date to occur after the issuance of such L/C,
and on the expiration date of such L/C. In addition, the Borrower shall pay directly to the Agent for
its own account the customary issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the Agent relating to letters of credit as from time to time in
effect. Such fees and charges are due and payable on demand and are nonrefundable.
(c) Calculation of L/C Fees. Each L/C (other than a fee payable upon the issuance of
the L/C) shall be calculated on the basis of a year of 360 days and the actual number of days
elapsed.
4.4 Commitment Fee. Borrower shall pay to Agent for the ratable account of Lenders a
commitment fee, payable as it accrues on each Quarterly Date and on the Termination Date, equal to the
Applicable Percentage (per annum), of the amount by which the Total Commitment exceeds the average daily
Commitment Usage, in each case during the calendar quarter (or portion thereof) ending on such date,
calculated on the basis of the actual number of days elapsed (including the first day, but excluding the last
day) in a calendar year of 365 or 366 days, as the case may be.
SECTION 5 GUARANTY AND SECURITY.
5.1 Guaranty. Full and complete payment of the Obligation under the Loan Papers shall be
guaranteed in accordance with a Guaranty executed by each Restricted Company (other than Borrower).
5.2 Collateral. Full and complete payment of the Obligation under the Loan Papers shall be
secured by (collectively, the "Collateral") (a) all capital stock or other equity interests issued to a Restricted
Company by any Restricted Subsidiary organized under the laws of the United States (or any state thereof),
(b) 65% of all capital stock or other equity interests issued to a Restricted Company by any other Restricted
Subsidiary, and (c) a pledge by Borrower of its membership interests in SSI.
5.3 Additional Collateral and Guaranties. Agent may, without notice or demand and without
affecting any Person's obligations under the Loan Papers, from time to time (a) receive and hold additional
collateral from any Person for the payment of all or any part of the Obligation and exchange, enforce or
release all or any part of that collateral (in accordance withSection 13.9(e)), and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligation and release any endorser or
guarantor, or any Person who has given any other security for the payment of all or any part of the Obligation,
or any other Person in any way obligated to pay all or any part of the Obligation (in accordance withSection
13.9(f)).
5.4 Additional Documents or Information. Each Company will execute, or cause to be executed,
financing statements, stock powers, or other writings in the form and content reasonably required by Agent.
Borrower shall pay all costs of (a) filing any financing, continuation, amendment or terminations statements,
or (b) other actions taken by Agent relating to the Collateral, including, without limitation, costs and expenses
of any Lien search required by Agent.
SECTION 6 CONDITIONS PRECEDENT.
6.1 Initial Advance. Lenders will not be obligated to fund the initial Loan, and Agent will not be
obligated to issue the initial L/C, unless Agent has received each of the items in (a) - (g) and the conditions
in items (h) - (i) have been satisfied:
(a) the Promissory Notes;
(b) a Guaranty executed by each Restricted Company (other thanBorrower) or, for
any Restricted Company which has previously executed a Guaranty, at Agent's election, a consent
or ratification by such Restricted Company of its existing Guaranty;
(c) a Pledge Agreement executed by the holder of the capital stock or other equity
interests of each Restricted Company, other than those set out in the Post-Closing Agreement,
pledging that capital stock or those interests, and a Pledge Agreement (or a ratification agreement)
executed by Borrower in respect of its interest in SSI;
(d) an Officers' Certificate for each Restricted Company, relating to articles of
incorporation or organization, bylaws, regulations, or agreements, resolutions, and incumbency;
(e) Certificates of Existence and Good Standing (Account Status) for each Restricted
Company from its state of organization and each other state where it does business, each dated after
September 15, 2001;
(f) Legal opinions of Martha Dugan Rehm, General Counsel of VRI, and Cahill Gordon
& Reindel, special New York counsel to Borrower;
(g) Borrower's audited consolidated and consolidating Financial Statements for 2001;
(h) Payment in full of all amounts then due Agent underSection 8.7or the fee letters
described inSection 4; and
(i) Since July 31, 2001, no change has occurred in the business, assets, liabilities,
operations, conditions (financial or otherwise) or prospects of the Companies and no Litigation or
other proceeding or investigation in respect of any Company has been initiated or threatened, which,
in either case, would constitute a Material Adverse Event.
6.2 Each Advance. Lenders will not be obligated to fund any Loan (including the initial Loans),
continue any LIBOR Loan (as opposed to continuing any Base Rate Loan), or convert any Base Rate Loan
into a LIBOR Loan (as opposed to converting any LIBOR Loan into a Base Rate Loan), and Agent will not
be obligated to issue (as opposed to extend) any L/C (including the initial L/Cs), unless on the applicable date
(and after giving effect to the requested Loan or L/C): (a) Agent shall have timely received a Loan Request
or L/C Request (together with the applicable L/C Agreement), as the case may be; (b) Agent shall have
received any applicable L/C fee; (c) all of the representations and warranties of the Companies in the Loan
Papers are true and correct in all material respects (unless they speak to a specific date or are based on facts
which have changed by transactions contemplated or permitted by this Agreement); (d) no Material Adverse
Event, Default or Potential Default exists; and (e) the funding of the Loan or issuance of the L/C is permitted
by Law. Upon Agent's reasonable request, Borrower shall deliver to Agent evidence substantiating any of
the matters in the Loan Papers that are necessary to enable Borrower to qualify for the Loan or L/C. Each
condition precedent in this Agreement is material to the transactions contemplated by this Agreement, and
time is of the essence with respect to each condition precedent. Subject to the prior approval of Required
Lenders, Lenders may fund any Loan, and Agent may issue any L/C, without all conditions being satisfied,
but, to the extent permitted by Law, that funding and issuance shall not be deemed to be a waiver of the
requirement that each condition precedent be satisfied as a prerequisite for any subsequent funding or
issuance, unless Required Lenders specifically waive each item in writing.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Agent and Lenders as follows:
7.1 Regulation U. No Company is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any "margin stock" within the meaning
ofRegulations T or Uof the Board of Governors of the Federal Reserve System, as amended.
7.2 Corporate Existence, Good Standing, Authority and Compliance. Each Company is duly
organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated
or organized as identified onSchedule 7.2(or any revisedSchedule 7.2delivered by Borrower to Lenders
pursuant toSection 8.11, 9.10or9.11). Except where failure is not a Material Adverse Event, each
Restricted Company (a) is duly qualified to transact business and is in good standing as a foreign corporation
or other entity in each jurisdiction where the nature and extent of its business and properties require due
qualification and good standing as identified onSchedule 7.2(or any such revisedSchedule 7.2), and (b)
possesses all requisite authority, permits and power to conduct its business as is now being, or is contemplated
by this Agreement to be, conducted.
7.3 Subsidiaries. VRI has no Subsidiaries,other thanas disclosed onSchedule 7.2(or on any
revisedSchedule 7.2delivered by Borrower to Lenders pursuant toSection 8.11, 9.10or9.11). All of the
outstanding shares of capital stock (or similar voting interests) of the Companies are duly authorized, validly
issued, fully paid and nonassessable. All of the outstanding shares of capital stock of the Companies other
than VRI are owned of record and beneficially as set forth thereon, free and clear of any Liens, restrictions,
claims or Rights of another Person,other thanPermitted Liens, and are not subject to any warrant, option
or other acquisition Right of any Person or subject to any transfer restriction,other thanrestrictions imposed
by securities Laws and general corporate Laws.
7.4 Authorization and Contravention. The execution and delivery by each Company of each
Loan Paper or related document to which it is a party and the performance by it of its obligations thereunder
(a) are within its organizational power, (b) have been duly authorized by all necessary action, (c) require no
action by or filing with any Tribunal (other thanany action or filing that has been taken or made on or before
the date of this Agreement), (d) do not violate any provision of its organizational documents, (e) do not violate
any provision of Law or any order of any Tribunal applicable to it,other thanviolations that individually or
collectively are not a Material Adverse Event, (f) do not violate any Material Agreements to which it is a
party, or (g) do not result in the creation or imposition of any Lien on any asset of any Company.
7.5 Binding Effect. Upon execution and delivery by all parties thereto, each Loan Paper which
is a contract will constitute a legal and binding obligation of each Company party thereto, enforceable against
it in accordance with its terms,exceptas enforceability may be limited by applicable Debtor Relief Laws and
general principles of equity.
7.6 Financial Statements; Fiscal Year. The Current Financials were prepared in accordance with
GAAP and, together with the notes thereto, present fairly, in all material respects, the consolidated financial
32 ::ODMA\PCDOCS\DOCS\409767\11
condition, results of operations, and cash flows of the Companies as of, and for the portion of the fiscal year
ending on the date or dates thereof (subject only to normal year-end adjustments). Except for transactions
directly related to, or specifically contemplated by, the Loan Papers, no subsequent material adverse changes
have occurred in the consolidated financial condition of the Companies from that shown in the Current
Financials. The fiscal year of each Company ends on July 31.
7.7 Litigation. Except as disclosed onSchedule 7.7(or on any revisedSchedule 7.7delivered
by Borrower to Lenders), (a) no Company (other thanas a creditor or claimant) is subject to, or aware of
the threat of, any Litigation that is reasonably likely to be determined adversely to any Company and, if so
adversely determined, is a Material Adverse Event, (b) no outstanding or unpaid judgments against any
Company exist, and (c) no Company is a party to, or bound by, any judicial or administrative order, judgment,
decree or consent decree relating to any past or present practice, omission, activity or undertaking which
constitutes a Material Adverse Event.
7.8 Taxes. All Tax returns of each Company required to be filed have been filed (or extensions
have been granted) before delinquency,other thanreturns for which the failure to file is not a Material
Adverse Event, and all Taxes shown as due and payable in such returns have been paid before delinquency,
other thanTaxes for which the criteria for Permitted Liens (as specified inclause (i)of the definition of
"Permitted Liens") have been satisfied or for which nonpayment is not a Material Adverse Event.
7.9 Environmental Matters. Except as disclosed onSchedule 7.9(or any revisedSchedule 7.9
delivered by Borrower to Lenders) and except for conditions, circumstances or violations that are not,
individually or in the aggregate, a Material Adverse Event, no Company (a) knows of any environmental
condition or circumstance adversely affecting any Company's properties or operations, (b) has, to its
knowledge, received any written report of any Company's violation of any Environmental Law, or (c) knows
that any Company is under any obligation imposed by a Tribunal to remedy any violation of any Environmental
Law. Except as disclosed onSchedule 7.9(or any such revisedSchedule 7.9), each Company believes that
its properties and operations do not violate any Environmental Law,other thanviolations that are not,
individually or in the aggregate, a Material Adverse Event. No facility of any Company is used for, or to the
knowledge of any Company has been used for, treatment or disposal of any Hazardous Substance or storage
of Hazardous Substances,other thanin material compliance with applicable Environmental Laws.
7.10 Employee Plans. Except where occurrence or existence is not a Material Adverse Event,
(a) no Employee Plan has incurred an "accumulated funding deficiency" (as defined in section 302 of
ERISA or section 412 of the Code), (b) no Company has incurred liability under ERISA to the PBGC in
connection with any Employee Plan (other thanrequired insurance premiums, all of which have been paid),
(c) no Company has withdrawn in whole or in part from participation in a Multiemployer Plan, (d) no
Company has engaged in any "prohibited transaction" (as defined in section 406 of ERISA or section 4975
of the Code), and (e) no "reportable event"(as defined in section 4043of ERISA) has occurred with
respect to an Employee Plan, excluding events for which the notice requirement is waived under applicable
PBGC regulations.
7.11 Properties and Liens.
(a) Each Company has good and marketable title to all its material property reflected
on the Current Financials (other thanfor property that is obsolete or that has been disposed of in the
ordinary course of business or, as otherwise permitted bySection 9.10orSection 9.11).
(b) Except for Permitted Liens, no Lien exists on any property of any Company
(including, without limitation, the Forest Service Permits and the Water Rights), and the execution,
delivery, performance or observance of the Loan Papers will not require or result in the creation of
any Lien on any Company's property.
(c) As of the date hereof, the Forest Service Permits constitute all of the material
licenses, permits or leases from the U.S. held by the Companies for use in connection with their
respective skiing businesses.
(d) Each of the Water Rights is, to the knowledge of the Companies, in full force and
effect and, to the knowledge of the Companies, there is no material default or existing condition
which with the giving of notice or the passage of time or both would cause a material default under
any Water Right that is material to the operation of the Companies. Subject to the available supply
and to the terms and conditions of the applicable decrees, the Companies' Water Rights provide a
dependable, legal and physical snowmaking, irrigation and domestic water supply for the operation
of the Companies' businesses.
7.12 Government Regulations. No Company is subject to regulation under theInvestment
Company Act of 1940, as amended, or thePublic Utility Holding Company Act of 1935, as amended.
7.13 Transactions with Affiliates. Except as set forth inSchedule 7.13and except for other
transactions which do not, in the aggregate, cost the Restricted Companies more than $2,000,000 in any fiscal
year, no Restricted Company is a party to any transaction with any Affiliate (other thananother Restricted
Company),exceptupon fair and reasonable terms not materially less favorable than it could obtain or could
become entitled to in an arm's-length transaction with a Person that was not its Affiliate.
7.14 Debt. No Company is an obligor on any Debt,other thanPermitted Debt.
7.15 Material Agreements. All Material Agreements to which any Restricted Company is a party
are in full force and effect, and no default or potential default exists on the part of any Restricted Company
thereunder that is a Material Adverse Event.
7.16 Labor Matters. There are no binding agreements of any type with any labor union, labor
organization, collective bargaining unit or employee group to which any Company is bound,other thanVail
Summit Resorts' collective bargaining agreements with the Breckenridge Professional Ski Patrol Association
and Keystone Professional Ski Patrol Association and agreements which may be entered into after the date
of this Agreement which do not constitute a Material Adverse Event. No actual or threatened strikes, labor
disputes, slow downs, walkouts, or other concerted interruptions of operations by the employees of any
Company that constitute a Material Adverse Event exist. Hours worked by and payment made to employees
of the Companies have not been in violation of theFair Labor Standards Act, as amended, or any other
applicable Law dealing with labor matters,other thanany violations, individually or collectively, that are not
a Material Adverse Event. All payments due from any Company for employee health and welfare insurance
have been paid or accrued as a liability on its books,other thanany nonpayments that are not, individually
or collectively, a Material Adverse Event.
7.17 Solvency. On each Loan Date, Borrower is, and after giving effect to the requested Loan
will be, Solvent.
7.18 Intellectual Property. Each Company owns (or otherwise holds rights to use) all material
Intellectual Property, licenses, permits and trade names necessary to continue to conduct its businesses as
presently conducted by it and proposed to be conducted by it immediately after the date of this Agreement.
To its knowledge, each Company is conducting its business without infringement or claim of infringement of
any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property
right of others,other thanany infringements or claims that, if successfully asserted against or determined
adversely to any Company, would not, individually or collectively, constitute a Material Adverse Event. To
the knowledge of any Company as of the date hereof, no infringement or claim of infringement by others of
any material Intellectual Property, license, permit, trade name, or other intellectual property of any Company
exists,other thanclaims which will not cause a Material Adverse Event.
7.19 Full Disclosure. Each material fact or condition relating to the Loan Papers or the financial
condition, business or property of any Company has been disclosed to Agent. All information furnished by
any Company to Agent in connection with the Loan Papers on or before the date of this Agreement was,
taken as a whole, true and accurate in all material respects or based on reasonable estimates on the date the
information is stated or certified.
SECTION 8 AFFIRMATIVE COVENANTS. So long as Lenders are committed to fund Loans and
Agent is committed to issue L/Cs under this Agreement, and thereafter until the Obligation is paid in full,
Borrower covenants and agrees as follows:
8.1 Items to be Furnished. Borrower shall cause the following to be furnished to each Lender:
(a) With respect to each fiscal year of the Companies:
(i) Promptly after preparation, unaudited Financial Statements showing the
consolidated financial condition and results of operations of the Companies as of the last day
of such fiscal year and for such fiscal year, accompanied by a Compliance Certificate with
respect to such Financial Statements (for purposes of adjusting the Applicable Margin and
the Applicable Percentage in accordance with the definitions of such terms); and
(ii) Promptly after preparation, and no later than 105 days after the last day of
each fiscal year of the Companies, Financial Statements showing the consolidated financial
condition and results of operations of the Companies as of, and for the year ended on, that
last day, accompanied by: (A) the unqualified opinion of a firm of nationally-recognized
independent certified public accountants, based on an audit using generally accepted auditing
standards, that the Financial Statements were prepared in accordance with GAAP and
present fairly, in all material respects, the consolidated financial condition and results of
operations of the Companies, (B) any management letter prepared by the accounting firm
delivered in connection with its audit, (C) a certificate from the accounting firm to Agent
indicating that during its audit it obtained no knowledge of any Default or Potential Default
or, if it obtained knowledge, the nature and period of existence thereof, and (D) a
Compliance Certificate with respect to the Financial Statements.
(b) Promptly after preparation, and no later than 60 days after the last day of each fiscal
quarter of the Companies, Financial Statements showing the consolidated financial condition and
results of operations of the Companies for the fiscal quarter and for the period from the beginning
of the current fiscal year to the last day of the fiscal quarter, accompanied by a Compliance
Certificate with respect to the Financial Statements.
(c) Promptly after receipt, a copy of each interim or special audit report and
management letter issued by independent accountants with respect to any Company or its financial
records.
(d) Notice, promptly after any Company knows or has reason to know, of (i) the
existence and status of any Litigation that, if determined adversely to any Company, would be a
Material Adverse Event, (ii) any change in any material fact or circumstance represented or
warranted by any Company in connection with any Loan Paper, (iii) the receipt by any Company of
notice of any violation or alleged violation of any Environmental Law or ERISA (which individually
or collectively with other violations or allegations is reasonably likely to constitute a Material Adverse
Event), or (iv) a Default or Potential Default, specifying the nature thereof and what action the
Companies have taken, are taking, or propose to take.
(e) Promptly after filing, copies of all material reports or filings filed by or on behalf of
any Company with any securities exchange or the Securities and Exchange Commission (including,
without limitation, copies of each Form 10-K, Form 10-Q and Form S-8 filed by or on behalf of VRI
with the Securities and Exchange Commission within 15 days after filing).
(f) Promptly upon reasonable request by Agent or Required Lenders (through Agent),
information (not otherwise required to be furnished under the Loan Papers) respecting the business
affairs, assets and liabilities of the Companies (including, but not limited to, seasonal operating
statistics, annual budgets, etc.) and opinions, certifications and documents in addition to those
mentioned in this Agreement;provided, however, thatAgent and Lenders shall not disclose to any
third Person any data or information obtained thereby in accordance with the provisions of this
paragraph (f), except (i) with the prior written consent of the appropriate Company, (ii) to the extent
necessary to comply with Law or the ruling of any Tribunal in which event, Agent and/or such
Lenders shall notify the appropriate Company as promptly as practicable (and, if possible, prior to
making such disclosure) and shall seek confidential treatment of the information desired, (iii) at the
request of any banking or other regulatory authority, or (iv) to their respective Representatives to the
extent such disclosure is necessary in connection with the transactions contemplated by the Loan
Papers.
8.2 Use of Proceeds. Borrower will use all of the proceeds of Loans and L/Cs for seasonal
working capital, to make advances and other investments permitted bySection 9.8, to make acquisitions
permitted underSection 9.11, and for other general corporate purposes and capital expenditures of the
Companies. No part of the proceeds of any L/C draft or drawing or of any Loan will be used, directly or
indirectly, for a purpose that violates any Law, including without limitation, the provisions ofRegulation U.
8.3 Books and Records. Each Company will maintain books, records and accounts necessary
to prepare financial statements in accordance with GAAP.
8.4 Inspections. Upon reasonable request, each Company will allow Agent (or its
Representatives) to inspect any of its properties, to review reports, files and other records and to make and
take away copies, to conduct tests or investigations, and to discuss any of its affairs, conditions and finances
with its other creditors, directors, officers, employees or representatives from time to time, during reasonable
business hours;provided, however, thatAgent and its Representatives shall not disclose to any Person any
data or information obtained thereby in accordance with the provisions of thisSection 8.4which is not a
matter of public knowledge,except(i) with the prior written consent of the appropriate Company, (ii) to the
extent necessary to comply with Law or the ruling of any Tribunal in which event, Agent and/or its
Representatives shall notify the appropriate Company as promptly as practicable (and, if possible, prior to
making such disclosure) and shall seek confidential treatment of the information desired, (iii) at the request
of any banking or other regulatory authority, or (iv) to their respective Representatives to the extent such
disclosure is necessary in connection with the transactions contemplated by the Loan Papers. Any of the
Lenders (or their Representatives) may accompany Agent during such inspections.
8.5 Taxes. Each Restricted Company will promptly pay when due any and all Taxes,other than
Taxes which are being contested in good faith by lawful proceedings diligently conducted, against which
reserve or other provision required by GAAP has been made;provided, however, thatall such Taxes shall,
in any event, be paid prior to any levy for execution in respect of any Lien on any property of a Restricted
Company.
8.6 Payment of Obligations. Each Company will pay (or renew and extend) all of its obligations
at such times and to such extent as may be necessary to prevent a Material Adverse Event (exceptfor
obligations,other thanFunded Debt, which are being contested in good faith by appropriate proceedings);
provided thatBorrower shall not and shall not permit any other Company to repay advances from Apollo,
other thanas provided inSection 9.9.
8.7 Fees and Expenses. Borrower shall promptly pay upon demand (a) all reasonable and
customary costs, fees, and expenses paid or incurred by Agent and its Affiliates, in connection with the
arrangement, syndication and negotiation of the Facility and the negotiation, preparation, delivery and
execution of the Loan Papers and any related amendment, waiver, or consent (including in each case, without
limitation, the reasonable fees and expenses of Agent's counsel) and (b) all reasonable costs and expenses
of Lenders and Agent incurred by Agent or any Lender in connection with the enforcement of the obligations
of any Company arising under the Loan Papers or the exercise of any Rights arising under the Loan Papers
(including, but not limited to, reasonable attorneys' fees and court costs), all of which shall be a part of the
Obligation and shall bear interest, if not paid upon demand, at the Default Rate until paid.
8.8 Maintenance of Existence, Assets, and Business.
(a) Except as otherwise permitted bySection 9.11, each Company will (i) maintain its
organizational existence and good standing in its state of organization and its authority to transact
business in all other states where failure to maintain its authority to transact business is a Material
Adverse Event; (ii) maintain all Water Rights, licenses, permits (including, without limitation, the
Forest Service Permits), and franchises necessary for its business where failure to maintain is a
Material Adverse Event; and (iii) keep all of its assets that are useful in and necessary to its business
in good working order and condition (ordinary wear and tear excepted) and make all necessary
repairs and replacements.
(b) Neither Borrower, VRI nor VHI will change its name in any manner (exceptby
registering additional trade names), unless such Company shall have given Agent prior notice thereof.
Borrower shall promptly notify Agent of any change in name of any other Company (except the
registering of additional tradenames).
8.9 Insurance. Each Company will maintain with financially sound, responsible, and reputable
insurance companies or associations (or, as to workers' compensation or similar insurance, with an insurance
fund or by self-insurance authorized by the jurisdictions in which it operates) insurance concerning its
properties and businesses against casualties and contingencies and of types and in amounts (and with
co-insurance and deductibles) as is customary in the case of similar businesses. At Agent's request, each
Company will deliver to Agent certificates of insurance for each policy of insurance and evidence of payment
of all premiums.
8.10 Environmental Laws. Each Company will (a) conduct its business so as to comply in all
material respects with all applicable Environmental Laws and shall promptly take required corrective action
to remedy any non-compliance with any Environmental Law,exceptwhere failure to comply or take action
would not be a Material Adverse Event, and (b) establish and maintain a management system designed to
ensure compliance with applicable Environmental Laws and minimize material financial and other risks to
each Company arising under applicable Environmental Laws or as the result of environmentally related
injuries to Persons or property,exceptwhere failure to comply would not be a Material Adverse Event.
Borrower shall deliver reasonable evidence of compliance with the foregoing covenant to Agent within 30
days after any written request from Required Lenders, which request shall be made only if Required Lenders
reasonably believe that a failure to comply with the foregoing covenant would be a Material Adverse Event.
8.11 Subsidiaries. Subject toSection 9.8, the Companies may create or acquire additional
Subsidiaries (including Unrestricted Subsidiaries);provided that(a) each Person that becomes a Restricted
Subsidiary after the date of this Agreement (whether as a result of an acquisition permitted under
Section 9.11, creation, or otherwise) shall execute and deliver to Agent a Guaranty within 30 days after
becoming a Restricted Subsidiary, (b) each Restricted Company that becomes the holder of the capital stock
or equity interest of each Person that becomes a Restricted Subsidiary after the date of this Agreement
(whether as a result of an acquisition permitted underSection 9.11, creation, or otherwise) shall execute and
deliver to Agent a Pledge Agreement, together with any related Security Documents reasonably required by
Agent, pledging such capital stock or equity interests within 30 days after such Person becomes a Subsidiary,
and (c) and Borrower shall deliver to Agent a revisedSchedule 7.2reflecting such new Subsidiary within
30 days after it becomes a Subsidiary. Subject toSection 14.10(b)(v), Agent shall execute documentation
reasonably required to release any Restricted Subsidiary which is re-designated by Borrower as an
Unrestricted Subsidiary from its Guaranty.
8.12 Indemnification.Borrower shall indemnify, protect and hold Agent and Lenders and
their respective Affiliates, Representatives, successors and assigns and attorneys (collectively,
the "indemnified parties") harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims and proceedings and all costs, expenses
(including, without limitation, all attorneys' fees and legal expenses whether or not suit is brought)
and disbursements of any kind or nature (the "indemnified liabilities") that may at any time be
imposed on, incurred by or asserted against the indemnified parties, in any way relating to or
arising out of (a) the direct or indirect result of the violation by any Company of any Environmental
Law, (b) any Company's generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence in connection with its properties of a Hazardous Substance
(including, without limitation, (i) all damages of any use, generation, manufacture, production,
storage, release, threatened release, discharge, disposal or presence, or (ii) the costs of any
environmental investigation, monitoring, repair, cleanup or detoxification and the preparation and
implementation of any closure, remedial or other plans), or (c) the Loan Papers or any of the
transactions contemplated therein. However, although each indemnified party has the Right to be
indemnified for its own ordinary negligence, no indemnified party has the Right to be indemnified
for its own fraud, gross negligence or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and payment of the
Obligation and termination of this Agreement.
SECTION 9 NEGATIVE COVENANTS. So long as Lenders are committed to fund Loans and Agent
is committed to issue L/Cs under this Agreement, and thereafter until the Obligation is paid in full, Borrower
covenants and agrees as follows:
9.1 Taxes. No Company shall use any portion of the proceeds of any Loan to pay the wages
of employees, unless a timely payment to or deposit with the U.S. of all amounts of Tax required to be
deducted and withheld with respect to such wages is also made.
9.2 Payment of Obligations. No Company shall voluntarily prepay principal of, or interest on, any
Funded Debt,other thanthe Obligation, if a Default or Potential Default exists (or would result from such
payment). No Company shall repay, repurchase, redeem or defease Subordinated Debt without the prior
written consent of Required Lenders.
9.3 Employee Plans. Except where a Material Adverse Event would not result, no Company
shall permit any of the events or circumstances described inSection 7.10to exist or occur.
9.4 Debt. No Company shall create, incur or suffer to exist any Debt,other thanPermitted
Debt.
9.5 Liens. No Company shall (a) create, incur or suffer or permit to be created or incurred or
to exist any Lien upon any of its assets,other thanPermitted Liens, or (b) enter into or permit to exist any
arrangement or agreement that directly or indirectly prohibits any Company from creating or incurring any
Lien,other thanthe Loan Papers, the documents executed in connection with the Vail Bonds (and any
documents relating to a refinancing of the Vail Bonds), the Senior Subordinated Debt Indenture as in effect
on May 11, 1999 (which does not prohibit the creation or incurrence of Liens securing "Senior Debt," as
defined therein), any other indenture that contains the same exception for liens securing "Senior Debt" as the
Senior Subordinated Debt Indenture, and leases or licenses that prohibit Liens on the leased or licensed
property.
9.6 Transactions with Affiliates. Except for transactions which do not, in the aggregate, cost the
Restricted Companies more than $2,000,000 in any fiscal year, no Restricted Company shall enter into or
suffer to exist any transaction with any Affiliate (other thananother Restricted Company), or guaranty,
obtain any letter of credit or similar instrument in support of, or create, incur or suffer to exist any Lien upon
any of its assets as security for, any Debt or other obligation of any Affiliate (other thanDebts or other
obligations of another Restricted Company) unless (a) such transaction is an advance or equity contribution
to an Unrestricted Subsidiary permitted bySection 9.8(j), (b) such transaction is described inSection 9.9or
onSchedule 7.13, or (c) such transaction is upon fair and reasonable terms not materially less favorable than
it could obtain or could become entitled to in an arm's-length transaction with a Person that was not its
Affiliate.
9.7 Compliance with Laws and Documents. No Company shall (a) violate the provisions of any
Laws or rulings of any Tribunal applicable to it or of any Material Agreement to which it is a party if that
violation alone, or when aggregated with all other violations, would be a Material Adverse Event, (b) violate
the provisions of its organizational documents if such violation would cause a Material Adverse Event, or (c)
repeal, replace or amend any provision of its organizational documents if that action would be a Material
Adverse Event.
9.8 Loans, Advances and Investments. Except as permitted bySection 9.9orSection 9.11, no
Restricted Company shall make or suffer to exist any loan, advance, extension of credit or capital contribution
to, make any investment in, or purchase or commit to purchase any stock or other securities or evidences of
Debt of, or interests in, any other Person,other than:
(a) expense accounts for and other loans or advances to its directors, officers and
employees in the ordinary course of business;
(b) marketable obligations issued or unconditionally guaranteed by the U.S. or issued by
any of its agencies and backed by the full faith and credit of the U.S., in each case maturing within
one year from the date of acquisition;
(c) short-term investment grade domestic and eurodollar certificates of deposit or time
deposits that are fully insured by the Federal Deposit Insurance Corporation or are issued by
commercial banks organized under the Laws of the U.S. or any of its states having combined capital,
surplus, and undivided profits of not less than $100,000,000 (as shown on its most recently published
statement of condition);
(d) commercial paper and similar obligations rated "P-1" by Moody's or "A-1" by S&P;
(e) readily marketable tax-free municipal bonds of a domestic issuer rated "A-2" or
better by Moody's or "A" or better by S&P, and maturing within one year from the date of issuance;
(f) mutual funds or money market accounts investing primarily in items described in
clauses (b)through(e)above;
(g) demand deposit accounts maintained in the ordinary course of business;
(h) current trade and customer accounts receivable that are for goods furnished or
services rendered in the ordinary course of business and that are payable in accordance with
customary trade terms;
(i) Financial Hedges existing on the date hereof which have previously been approved
by Agent and other Financial Hedges entered into after the date hereof under terms reasonably
acceptable to Agent;
(j) in addition to items covered elsewhere in this definition, but subject toSections 8.11
and9.14, investments in any Person (including purchases of stock or other securities or evidence of
Debt of, assets of, or loans, advances, extensions of credit or capital contributions to such Person,
but excluding capital appreciation and accrued interest),provided thatall such investments (when
added to those made by Unrestricted Subsidiaries) made in (i) Unrestricted Subsidiaries, (ii) Persons
that are not Affiliates of Borrower after such investment (excluding investments in
Keystone/Intrawest LLC existing on the date of this Agreement and the existing obligation of Vail
Summit Resorts to contribute to Keystone/Intrawest LLC additional land which had a book value as
of June 30, 1996, of $8,900,000), and (iii) Apollo, shall not in the aggregate exceed 15% of the
Companies' consolidated net worth at the time of determination; and
(k) the following investments:
(i) a secured loan of $300,000 made to Andrew P. Daly in 1991, a secured loan
of $438,750 made to Lucinda M. Daly in 1996, and a secured loan of $350,000 made to Mr.
and Mrs. James P. Thompson in 1996;
(ii) a capital contribution, in an amount not to exceed $650,000, in
Boulder/Beaver LLC; and
(iii) Workers compensation reserve account, established pursuant to a selfinsurance
permit from the State of Colorado Department of Labor, invested exclusively in
items described inclauses (b)through(f)above.
9.9 Management Fees and Distributions. No Company shall make any Distribution,exceptas
follows:
(a) if no Default or Potential Default exists (or would result therefrom), the Companies
may pay management fees to Apollo of up to $500,000 (in cash and/or services) in any fiscal year
of the Companies;
(b) VRI may make payments of approximately $100,000 accruing to certain option
holders;
(c) any Company may make Distributions to a Restricted Company;
(d) if VRI issues any Subordinated Debt which is subsequently converted to preferred
stock, VRI may, if no Default or Potential Default exists (or would result therefrom), pay dividends
on such stock at an annual rate which is less than or equal to the annual rate of interest payable on
such Subordinated Debt prior to its conversion; and
(e) if no Default or Potential Default exists (or would result therefrom), VRI may make
other Distributions to its shareholders (in addition to those described inclause (d)above), so long as
all of such other Distributions made during any four consecutive fiscal quarters of the Companies
(including any dividends on preferred stock which exceed the amount permitted underclause (d)
above) do not exceed 50% of the Restricted Companies' Net Income during such period.
9.10 Sale of Assets. No Company may sell, assign, lease, transfer or otherwise dispose of all or
any material portion of the assets described inSchedule 2, if the ratio described inSection 10.1would, on
apro formabasis (taking the disposition into account), increase as a result of such disposition.
9.11 Acquisitions, Mergers, and Dissolutions.
(a) Except as provided in thisSection 9.11, and subject toSections 8.11and9.8, a
Restricted Company may not (i) acquire all or any substantial portion of the capital stock (or other
equity or voting interests) of any other Person, (ii) acquire all or any substantial portion of the assets
of any other Person, (iii) merge or consolidate with any other Person, or (iv) liquidate, wind up or
dissolve (or suffer any liquidation or dissolution).
(b) Any Restricted Subsidiary may (i) acquire all or any substantial portion of the capital
stock (or other equity or voting interests) issued by any other Restricted Subsidiary, (ii) acquire all
or any substantial portion of the assets of any other Restricted Subsidiary, and (iii) merge or
consolidate with any other Restricted Subsidiary (and, in the case of such merger or consolidation or,
in the case of the conveyance or distribution of such assets, the non-surviving or selling entity, as the
case may be, may be liquidated, wound up or dissolved),provided thatif Borrower is a party to such
merger or consolidation, Borrower must be the surviving entity and if Borrower is not a party to such
merger or consolidation, a Restricted Subsidiary must be the surviving entity.
(c) Any Restricted Subsidiary may (i) acquire all or any substantial portion of the capital
stock (or other equity or voting interests) issued by any other Person, (ii) acquire all or any
substantial portion of the assets of any other Person, or (iii) merge or consolidate with any other
Person (and, in the case of such merger or consolidation, the non-surviving entity may be liquidated,
wound up or dissolved), if
(i) such other Person is organized under the laws of the United States,
(ii) in respect of any such transaction for which the sum of the cash
consideration paid and the Debt assumed by Borrower or any other Restricted Company
exceeds $25,000,000, at least 15 days before the transaction's closing date Borrower delivers
to Agent a written description of the transaction, including the funding sources and the total
investment or purchase price, and a calculation on apro formabasis (taking the transaction
into account) showing that no Default will occur as a result of such transaction,
(iii) such other Person is engaged in a business in which a Restricted Company
would be permitted to engage underSection 9.14;
(iv) with respect to a merger or consolidation, if Borrower is a party to such
merger or consolidation, Borrower must be the surviving entity and if Borrower is not a party
to such merger or consolidation, a Restricted Subsidiary must be the surviving entity and, to
the extent such surviving entity has not already done so, shall, concurrently with (and no later
than 30 days after) such merger or consolidation, execute and deliver to Agent a Guaranty,
(v) thesumof the cash consideration paid and the Debt assumed by Borrower
or any other Restricted Company in connection with such transaction does not exceed the
lesserof (A) Adjusted EBITDA for the four immediately preceding fiscal quarters, and (B)
$90,000,000, and
(vi) thesumof the cash consideration paid and the liabilities assumed by
Borrower or any other Restricted Company, in the aggregate, in connection with all such
transactions during the term of this Agreement does not exceed $250,000,000.
9.12 Assignment. No Company shall assign or transfer any of its Rights or cause to be delegated
its duties or obligations under any of the Loan Papers.
9.13 Fiscal Year and Accounting Methods. No Company shall change its fiscal year or its method
of accounting (other thanimmaterial changes in methods or as required by GAAP).
9.14 New Businesses. No Restricted Company shall engage in any business,exceptthe
businesses in which they are presently engaged and any other business reasonably related to the Companies'
current operations or the resort, leisure or ski business;provided, however, thatthe foregoing shall not be
construed to prohibit the cessation by any Company of its business activities or the sale or transfer of the
business or assets of such Company to the extent not otherwise prohibited by this Agreement.
9.15 Government Regulations. No Company shall conduct its business in a way that it becomes
regulated under theInvestment Company Act of 1940, as amended, or thePublic Utility Holding Company
Act of 1935, as amended.
SECTION 10 FINANCIAL COVENANTS. So long as Lenders are committed to fund Loans and Agent
is committed to issue L/Cs under this Agreement, and thereafter until the Obligation is paid and performed
in full (except for provisions under the Loan Papers expressly intended to survive payment of the Obligation
and termination of the Loan Papers), Borrower covenants and agrees as follows to comply with each of the
following ratios. For purposes of determining each such ratio, Adjusted EBITDA for any period shall include
on apro formabasis all EBITDA for such period relating to assets acquired (including Restricted
Subsidiaries formed or acquired) in accordance with this Agreement during such period, but shall exclude on
apro formabasis all EBITDA for such period relating to any such assets disposed of in accordance with
this Agreement during such period.
10.1 Maximum Leverage Ratios.
(a) Funded Debt to Adjusted EBITDA. As calculated as of the last day of each fiscal
quarter of the Companies, the Companies shall not permit the ratio of (i) the unpaid principal amount
of Funded Debt existing as of such last day to (ii) Adjusted EBITDA for the four fiscal quarters
ending on such last day to exceed 4.50:1.00.
(b) Senior Debt to Adjusted EBITDA. As calculated as of the last day of each fiscal
quarter of the Companies, the Companies shall not permit the ratio of (i) the unpaid amount of Senior
Debt existing as of such last day to (ii) Adjusted EBITDA for the four fiscal quarters ending on such
last day to exceed the following:
