EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT (the “Agreement”) entered into as of February 28, 2006, by and between
Vail Resorts, Inc., a Delaware corporation with its principal office in Avon,
Colorado (the “Company”), and Xxxxxx X. Xxxx (“Executive”).
WHEREAS,
the Company wishes to employ Executive as its Chief Executive Officer and both
parties desire to enter into an employment agreement to reflect Executive’s new
capacity upon the terms and conditions set forth herein:
NOW,
THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as
follows:
1. Employment.
The
Company hereby employs Executive as its Chief Executive Officer. Executive
shall
also serve as a member of the Company’s Board of Directors (the “Board”) and its
Executive Committee. Executive shall also serve as Chairman of each of the
Company’s principal subsidiaries. Executive hereby accepts such employment and
agrees to perform his duties and responsibilities in accordance with the terms,
conditions and provisions hereinafter set forth. The Company may have a
non-executive Chairman of the Board.
1.1. Employment
Term.
The
term of Executive’s employment under this Agreement shall commence as of the
date hereof (the “Effective Date”) and shall continue until February 28, 2009;
provided,
however, that on and after March 1, 2007, the Agreement shall automatically
renew with the term of the Agreement always being at least two years.
Notwithstanding the foregoing, Executive’s employment and this Agreement may be
terminated in accordance with Section 5 hereof. The period commencing on the
Effective Date and ending on the date on which the term of Executive’s
employment under the Agreement shall terminate is hereinafter referred to as
the
“Employment Term.”
1.2. Duties
and Responsibilities.
Executive shall serve as the Company’s Chief Executive Officer and in such other
senior positions, if any, to which he may be elected by the Board during the
Employment Term. During the Employment Term, Executive shall perform all duties
and accept all responsibilities incident to, and not inconsistent with, such
positions as may be reasonably assigned to him by the Board.
1.3. Extent
of Service.
During
the Employment Term, Executive agrees to use his best efforts to carry out
his
duties and responsibilities under Section 1.2 hereof and, consistent with the
other provisions of this Agreement, to devote substantially all his business
time, attention and energy thereto except to the extent required by Executive’s
outside board directorships, civic or charitable activities. Executive agrees
not be become engaged in any other business, civic or charitable activity which,
in his reasonable judgment, is likely to materially interfere with his ability
to discharge his duties and responsibilities to the Company. Executive agrees
to
resign from or discontinue any other business, civic or charitable activity
which, in the reasonable judgment of the Board, is likely to materially
interfere with his ability to discharge his duties and responsibilities to
the
Company.
1.4. Base
Salary.
For all
the services rendered by Executive hereunder, the Company shall pay Executive
a
base salary (“Base Salary”), commencing on the Effective Date, at the annual
rate of $815,000, payable in installments at such times as the Company
customarily pays its other senior level executives (but in any event no less
often than monthly). Executive’s Base Salary for each fiscal year of the Company
commencing after the Effective Date (beginning with the first salary review
by
the Board in 2006) shall be reviewed for appropriate adjustment (but shall
not
be reduced in any case) by the Board pursuant to its normal performance review
policies for senior level executives. For services rendered by Executive to
the
Company prior to the Effective Date, the Company shall pay Executive the sum
of
$67,917, payable on the date the Executive receives the first installment
payment of Base Salary after the Effective Date.
1.5. Retirement
and Benefit Coverages.
During
the Employment Term, Executive shall be entitled to participate in all (a)
employee pension and retirement plans and programs (“Retirement Plans”) and (b)
welfare benefit plans and programs (“Benefit Coverages”), in each case as made
available to the Company’s senior level executives as a group or to its
employees generally and as such Retirement Plans or Benefit Coverages may be
in
effect from time to time. In addition, Executive shall be entitled to (i) the
Company’s regular holiday and vacation policy, (ii) annual membership in any
clubs owned or managed by the Company (which shall terminate concurrently with
the date of termination of the Employment Term), and (iii) at no cost to
Executive (A) an annual ski pass for Executive and his immediate family members
at each of the Company’s resorts, (B) the use of up to 2 ski instructors when
Executive or his immediate family members are at a Company ski resort; (C)
lodging in the Company’s hotels (up to 2 rooms) and condominiums (up to a
three-bedroom unit) for Executive and his immediate family members; and (D)
up
to $10,000 per year of discretionary spending at the Company’s properties for
Executive’s personal use.
1.6. [Reserved].
1.7. Annual
Incentive/Long-Term Incentive Program.
Executive shall be entitled to participate in a short-term or long-term
incentive compensation program established by the Company for its senior level
executives generally. Payments under such programs shall depend upon achievement
of certain business performance targets specified and approved annually in
advance by the Board (or a Committee thereof) in its sole discretion;
provided,
however, that Executive’s “target opportunity” under the annual bonus incentive
program for each year shall be at least 80% of the Executive’s Base Salary, if
the Company’s budget is fully achieved for such year. The parties hereto further
agree to negotiate annually in good faith a sliding scale of varying payouts
based on varying levels of performance. However, Executive acknowledges that
the
annual bonsuses shall depend upon achieving the specific business performance
targets set in advance of each fiscal year by the Board in its sole discretion,
or by the Committee acting in its stead. For fiscal year 2006 of the Company,
Executive will be entitled to a pro rated bonus for five months, and such pro
rated bonus shall be paid on the same basis as bonuses paid to other senior
executives of the Company. For the avoidance of doubt, no bonus shall be
guaranteed to the Executive. Executive’s short-term and long-term incentive
compensation shall be paid to him in the same form and at the same times that
such compensation is paid to the Company’s senior level executives generally.
Executive specifically acknowledges that a portion of such incentive
compensation may be deferred subject to subsequent year financial performance
of
the
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Company,
if such a provision is consistent with the Company’s then-existing compensation
program for other senior level executives.
1.8. Restricted
Stock.
Executive shall be entitled to receive, as of the Effective Date, 30,000
restricted shares of the Company’s common stock, $.01 par value (the “Restricted
Stock”). The certificates representing the Restricted Stock shall be retained by
the Company until such shares have vested. Except as provided in Sections 5
and
6 below, Executive’s right to such shares shall vest in 36 equal monthly
installments over 3 years, beginning on the first monthly anniversary of the
Effective Date. Prior to vesting, Executive shall be entitled to vote the shares
of Restricted Stock and to be credited with any dividends attributable to such
shares; provided,
however, that no payment of such dividends shall be made unless and until,
and
only to the extent that, the related shares are vested. Upon termination of
the
Employment Term for any reason, that portion of the Restricted Stock that is
not
vested (after giving effect to any acceleration of vesting pursuant to Sections
5 and 6) shall be forfeited by Executive. Executive will be eligible to receive
additional grants of restricted stock, as determined by the Board or
Compensation Committee from time to time.
1.9. Share
Appreciation Rights.
Executive shall receive, as of the Effective Date, share appreciation rights
with respect to 300,000 shares of the Company’s common stock (“SARs”) pursuant
to the Company’s 2002 Long Term Incentive and Share Award Plan (the “Plan”). The
exercise price of the SARs will be equal to the fair market value per share
of
the Company common stock on the date of grant, as determined under the Plan.
Except as provided in Sections 5 and 6 below, the SARs shall vest and become
exercisable in 36 equal monthly installments over 3 years, beginning on the
first monthly anniversary of the Effective Date. Upon exercise, the SARs will
be
settled with shares of Company common stock. Upon termination of the Employment
Term for any reason, unvested SARs (after giving effect to any acceleration
of
vesting pursuant to Sections 5 and 6) shall expire and be forfeited. The SARs
shall have a 10 year term; provided,
however, that in the event of earlier termination of the Employment Term, the
SARs shall expire 90 days after the date of such termination if such termination
is pursuant to Sections 5.3 or 5.6, and shall expire nine months after the
date
of such termination if such termination is for any other reason. Subject to
compliance with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), Executive shall be credited with any dividends attributable to
shares covered by the SARs other than regular dividends paid out of the
Company’s current earnings in accordance with a multi-year dividend policy
adopted and consistently applied by the Board (it being understood that, since
the Company’s current policy is not to pay regular dividends, the payment of
dividends under a new dividend policy that is intended in good faith to result
in periodic dividends over a multi-year period shall be deemed regular
dividends). Subject to compliance with Section 409A of the Code, payment of
such
credited dividends shall be made at the time of, and only if and to the extent
that, the SARs become vested and are exercised. Executive will be eligible
to
receive additional grants of SARs, as determined by the Board or Compensation
Committee from time to time.
1.10. Reimbursement
of Expenses.
Executive shall be reimbursed for customary travel, entertainment and other
out-of-pocket expenses reasonably incurred by him on behalf of the Company
in
the performance of his duties hereunder, which reimbursement shall be made
in
accordance with the Company’s normal reimbursement policies.
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2. Confidential
Information.
Executive recognizes and acknowledges that, by reason of his employment by
and
service to the Company before, during and, if applicable, after the Employment
Term, he has had and will continue to have access to certain confidential and
proprietary information relating to the Company’s business, which may include,
but is not limited to, trade secrets, trade “know-how”, customer information,
supplier information, cost and pricing information, marketing and sales
techniques, strategies and programs, computer programs and software and
financial information (collectively referred to as “Confidential Information”).
Executive acknowledges that such Confidential Information is a valuable and
unique asset of the Company and Executive covenants that he will not at any
time
during the course of his employment use any Confidential Information or divulge
or disclose any Confidential Information to any person, firm or corporation
except in connection with Executive’s good faith belief as to the proper
performance of his duties for the Company. Executive also covenants that, at
any
time after the termination of his employment, he will not directly or indirectly
use any Confidential Information for any purpose or divulge or disclose any
Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Executive or except
when
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or over Executive or
by
any administrative or legislative body (including a committee thereof) with
apparent jurisdiction to order him to divulge, disclose or make accessible
such
information, in which case Executive will inform the Company in writing promptly
of such required disclosure.
3. Non-Competition,
Non-Solicitation and Non-Disparagement.
(a) In
consideration for the agreements by the Company set forth in Sections 5.4,
5.5
and 6, during his employment by the Company and for a period of two years
thereafter, Executive will not, except with the prior written consent of the
Board, directly or indirectly own, manage, operate, join, control, finance
or
participate in the ownership, management, operation, control or financing of,
or
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit his name to
be
used in connection with, any business or enterprise that is engaged in a
“Competing Enterprise,” which is defined as an entity whose operations are
conducted within the ski industry in North America or in the real estate
development, lodging or hospitality industries in the State of Colorado.
Notwithstanding the foregoing, Executive may participate, own, finance, manage,
obtain employment or otherwise be connected with a larger regional, national
or
international business or enterprise (a “New Employer”) which owns or operates a
Competing Enterprise as a brand, branch, division, subsidiary or affiliate
provided that (i) the Competing Enterprise accounts for less than 10% of the
New
Employer’s annual revenues and annual net income on both a historical or pro
forma basis for the New Employer’s most recently completed fiscal year, and (ii)
Executive’s duties for the New Employer are not primarily related to the conduct
of such Competing Enterprise.
(b) The
foregoing restrictions shall not be construed to prohibit the ownership by
Executive of less than five percent (5%) of any class of securities of any
corporation which is engaged in any of the foregoing businesses having a class
of securities registered pursuant to the Securities Exchange Act of 1934 (the
“Exchange Act”), provided that such ownership represents a passive investment
and that neither Executive nor any group of persons including Executive in
any
way, either directly or indirectly, manages or exercises control of any such
corporation,
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guarantees
any of its financial obligations, otherwise takes any part in its business
(other than exercising his rights as a shareholder), or seeks to do any of
the
foregoing.
(c) In
consideration for the agreements by the Company set forth in Sections 5.4,
5.5
and 6, Executive further covenants and agrees that, during his employment by
the
Company and for the period of two years thereafter, Executive will not solicit
for another business or enterprise any person who is a managerial or higher
level employee of the Company at the time of Executive’s
termination.
(d) During
Executive’s employment and for a period of five years thereafter, Executive
agrees that he shall not make any public statements disparaging of the Company
or its subsidiaries, the Board, or the officers, directors, stockholders, or
employees of the Company or its subsidiaries. The Company shall similarly not
disparage Executive following such termination. Notwithstanding the foregoing,
the parties may respond truthfully to inquiries from governmental agencies
or
from prospective employers of Executive. Similarly, nothing in this provision
is
intended to prevent either party from seeking to enforce the provisions of
this
Agreement through appropriate proceedings.
4. Equitable
Relief.
(a) Executive
acknowledges and agrees that the restrictions contained in Sections 2 and 3
are
reasonable and necessary to protect and preserve the legitimate interests,
properties, goodwill and business of the Company, that the Company would not
have entered into this Agreement in the absence of such restrictions and that
irreparable injury will be suffered by the Company should Executive breach
any
of the provisions of those Sections. Executive represents and acknowledges
that
(i) he has been advised by the Company to consult his own legal counsel in
respect of this Agreement, and (ii) that he has had full opportunity, prior
to
execution of this Agreement, to review thoroughly this Agreement with his
counsel.
(b) Executive
further acknowledges and agrees that a breach of any of the restrictions in
Sections 2 and 3 cannot be adequately compensated by monetary damages. Executive
agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well
as
an equitable accounting of all earnings, profits and other benefits arising
from
any violation of Sections 2 or 3 hereof, which rights shall be cumulative and
in
addition to any other rights or remedies to which the Company may be entitled.
In the event that any of the provisions of Sections 2 or 3 hereof should ever
be
adjudicated to exceed the time, geographic, service, or other limitations
permitted by applicable law in any jurisdiction, it is the intention of the
parties that the provision shall be amended to the extent of the maximum time,
geographic, service, or other limitations permitted by applicable law, that
such
amendment shall apply only within the jurisdiction of the court that made such
adjudication and that the provision otherwise be enforced to the maximum extent
permitted by law.
5. Termination.
The
Employment Term shall terminate upon the occurrence of any one of the following
events:
5.1. Disability.
The
Company may terminate the Employment Term if Executive is unable substantially
to perform his duties and responsibilities hereunder to the full extent
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required
by the Board by reason of illness, injury or incapacity for six consecutive
months, or for more than nine months in the aggregate during any period of
12
calendar months (a “Disability”); provided,
however, that the Company shall continue to pay Executive his Base Salary until
the Company acts to terminate the Employment Term and Executive shall be
entitled to all Restricted Stock and SARs that are vested as of the date of
such
termination. In addition, in the event Executive executes a written release
in
connection with such termination (such release to be effective only if the
Company executes such release) substantially in the form attached hereto as
Annex I (the “Release”),
Executive shall be entitled to receive (i) upon the achievement of the Company’s
performance targets for such year, a pro rata portion of the incentive
compensation Executive would have received under the plans described in Section
1.7 for the year in which such termination occurred, which amounts shall be
payable in accordance with the terms of the applicable plan, (ii) all deferred
incentive compensation earned by Executive with respect to prior years, which
amounts shall be payable in accordance with the terms of the applicable plan,
(iii) all amounts (including accrued vacation pay but excluding severance
compensation) to which Executive is then entitled upon termination of employment
under applicable plans and programs of the Company then in effect, and (iv)
all
other amounts then due and payable to Executive pursuant to the terms of this
Agreement with respect to services rendered prior to termination of employment.
In addition, if Executive executes the Release, all unvested shares of
Restricted Stock and SARs (including grants of restricted stock, options, SARs
or other equity incentives made subsequent to the Effective Date) shall
automatically become 100% vested upon termination of the Employment Term
pursuant to this Section 5.1. The Company shall have no further liability or
obligation to Executive for compensation under this Agreement. In the event
of
any dispute under this Section 5.1 and to the extent determined by the Board
to
be job-related and consistent with business necessity, Executive shall submit
to
a physical examination by a licensed physician selected by the Board and
approved by Executive, such approval not to be unreasonably
withheld.
5.2. Death.
The
Employment Term shall terminate in the event of Executive’s death. In such
event, the Company shall pay to Executive’s executors, legal representatives or
administrators, as applicable, an amount equal to the installment of his Base
Salary set forth in Section 1.4 hereof for the month in which he dies. In
addition, Executive’s estate shall be entitled to receive (i) previously vested
shares of Restricted Stock and SARs, (ii) upon the achievement of the Company’s
performance targets for such year, a pro rata portion of the incentive
compensation Executive would have received under the plans described in Section
1.7 for the year in which such termination occurred, which amounts shall be
payable in accordance with the terms of the applicable plan, (iii) all deferred
incentive compensation earned by Executive with respect to prior years, which
amounts shall be payable in accordance with the terms of the applicable plan,
(iv) all amounts (including accrued vacation pay but excluding severance
compensation) to which Executive is then entitled upon termination of employment
under applicable plans and programs of the Company then in effect, and (v)
all
other amounts then due and payable to Executive pursuant to the terms of this
Agreement with respect to services rendered prior to termination of employment.
In addition, all unvested shares of Restricted Stock and SARs (including grants
of restricted stock, options, SARs or other equity incentives made subsequent
to
the Effective Date) shall automatically become 100% vested upon termination
of
the Employment Term pursuant to this Section 5.2. The Company shall have no
further liability or obligation under this Agreement to his executors, legal
representatives, administrators, heirs or assigns or any other person claiming
under or through him.
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5.3. Cause.
The
Company may terminate the Employment Term at any time for “cause” upon written
notice to Executive, in which event all payments under this Agreement shall
cease, except for (i) Base Salary to the extent already earned or accrued,
(ii)
previously vested shares of Restricted Stock and SARs, (iii) all amounts
(including accrued vacation pay but excluding severance compensation) to which
Executive is then entitled upon termination of employment under applicable
plans
and programs of the Company then in effect, and (iv) all other amounts then
due
and payable to Executive pursuant to the terms of this Agreement with respect
to
services rendered prior to termination of employment. For purposes of this
Agreement, Executive’s employment may be terminated for “cause” if (i) Executive
is convicted of a felony, (ii) in the reasonable determination of the Board,
Executive has (x) committed an act of fraud, embezzlement, or theft in
connection with Executive’s duties in the course of his employment with the
Company, or (y) engaged in gross mismanagement or gross negligence in the course
of his employment with the Company or (iii) Executive has breached his
obligations under this Agreement, including inattention to or neglect of duties,
and shall not have remedied such breach within 30 days after receiving written
notice from the Board specifying the details thereof; provided,
however, that in any case under clause (ii) or (iii), the act or failure to
act
by Executive is materially harmful to the reputation, goodwill or business
position of the Company or its subsidiaries.
5.4. Termination
Without Cause.
(a) The
Company may terminate the Employment Term at any time without cause upon written
notice to Executive; provided, however, that in the event that such notice
is
given, Executive shall be under no obligation to render any additional services
to the Company and shall be allowed to seek other employment, subject to the
restrictions set forth in Section 3(a). Upon any such termination, except as
provided in Section 5.4(b) below, Executive shall be entitled to receive, as
liquidated damages for the failure of the Company to continue to employ
Executive, only the amount due to Executive under the Company’s then-current
severance pay plan for employees and (i) Base Salary to the extent already
earned or accrued, (ii) all deferred incentive compensation earned by Executive
with respect to prior years, which amounts shall be payable in accordance with
the terms of the applicable plans, (iii) previously vested shares of Restricted
Stock and SARs, (iv) all amounts (including accrued vacation pay) to which
Executive is then entitled upon termination of employment under applicable
plans
and programs of the Company then in effect, and (v) all other amounts then
due
and payable to Executive pursuant to the terms of this Agreement with respect
to
services rendered prior to termination of employment. The Company shall have
no
further liability or obligation to Executive for compensation under this
Agreement.
(b) Notwithstanding
the foregoing, upon such termination, in the event that Executive executes
the
Release, Executive shall be entitled to receive, in lieu of the payments
described in subsection (a) hereof, which Executive agrees to waive, as
liquidated damages for the failure of the Company to continue to employ
Executive, (i) two years’ of Executive’s Base Salary in accordance with Section
1.4 or, if greater, for the balance of the current Employment Term (without
regard to Executive’s removal), payable in accordance with the Company’s normal
payroll practices over such period, provided that, to the extent required by
Section 409A of the Code, amounts otherwise payable under this clause (i) within
six months after the Executive’s termination of employment shall be deferred to
and paid on the day following the six
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month
anniversary of such termination of employment, (ii) previously vested shares
of
Restricted Stock and SARs, (iii) upon the achievement of the Company’s
performance targets for such year, a pro rata portion of the incentive
compensation Executive would have received under the plans described in Section
1.7 for the year in which such termination occurred, which amounts shall be
payable in accordance with the terms of the applicable plan, (iv) all deferred
incentive compensation earned by Executive with respect to prior years, which
amounts shall be payable in accordance with the terms of the applicable plan,
(v) all amounts (including accrued vacation pay but excluding severance
compensation) to which Executive is then entitled upon termination of employment
under applicable plans and programs of the Company then in effect, and (vi)
all
other amounts then due and payable to Executive pursuant to the terms of this
Agreement with respect to services rendered prior to termination of employment.
In addition, if Executive executes the Release, all unvested shares of
Restricted Stock and SARs (including grants of restricted stock, options, SARs
or other equity incentives made subsequent to the Effective Date) shall
automatically become 100% vested upon termination of the Employment Term
pursuant to this Section 5.4. The Company shall have no further liability or
obligation to Executive for compensation under this Agreement.
5.5. Constructive
Termination Without Cause.
(a) Resignation
by Executive for good reason (“Constructive Termination Without Cause”) shall
mean a termination of Executive’s employment at his initiative following the
occurrence, without Executive’s written consent, of (i) a material diminution in
Executive’s duties, responsibilities, authority, or status (including the
appointment of an executive Chairman of the Board), (ii) a reduction in
Executive’s Base Salary below $815,000 per year or such higher amount as
increased by the Board in future years or failure to pay Executive’s bonus or
incentive compensation in violation of Section 1.7, (iii) a failure to convey,
within 10 business days after written request of Executive, any vested
Restricted Shares or any shares owed to Executive upon the exercise of any
SARs,
(iv) the assignment to Executive of duties or obligations despite his stated
written objection to the Board which would require Executive to violate any
law,
or interpretation thereof, of any governmental body of the United States or
the
state of Colorado, (v) an involuntary relocation of Executive’s office outside
of the Denver metropolitan area or away from the Company’s principal executive
offices, (vi) a failure of the Company to comply with any of the material terms
of this Agreement, or (vii) the occurrence of a Change of Control (as defined
below).
(b) In
the
event of a Constructive Termination Without Cause, if Executive executes the
Release, Executive shall be entitled to receive (i) two years’ of Executive’s
Base Salary in accordance with Section 1.4 or, if greater, for the balance
of
the current Employment Term (without regard to Executive’s removal), payable in
accordance with the Company’s normal payroll practices over such period,
provided that, to the extent required by Section 409A of the Code, amounts
otherwise payable under this clause (i) within six months after the Executive’s
termination of employment shall be deferred to and paid on the day following
the
six month anniversary of such termination of employment, (ii) previously vested
shares of Restricted Stock and SARs, (iii) upon the achievement of the Company’s
performance targets for such year, a pro rata portion of the incentive
compensation Executive would have received under the plans described in Section
1.7 for the year in which such termination occurred, which amounts shall be
payable in accordance with the terms of the applicable plan, (iv) all deferred
incentive compen-
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sation
earned by Executive with respect to prior years, which amounts shall be payable
in accordance with the terms of the applicable plan, (v) all amounts (including
accrued vacation pay but excluding severance compensation) to which Executive
is
then entitled upon termination of employment under applicable plans and programs
of the Company then in effect, and (vi) all other amounts then due and payable
to Executive pursuant to the terms of this Agreement with respect to services
rendered prior to termination of employment. In addition, if Executive executes
the Release, all unvested shares of Restricted Stock and SARs (including grants
of restricted stock, options, SARs or other equity incentives made subsequent
to
the Effective Date) shall automatically become 100% vested upon termination
of
the Employment Term pursuant to this Section 5.5. In the event Executive refuses
to execute the Release, he shall receive, as liquidated damages for the failure
of the Company to continue to employ Executive, only the amount due to Executive
under the Company’s then current severance pay plan for employees and (i) Base
Salary to the extent already earned or accrued, (ii) all deferred incentive
compensation earned by Executive with respect to prior years, which amounts
shall be payable in accordance with the terms of the applicable plans, (iii)
previously vested shares of Restricted Stock and SARs, (iv) all amounts
(including accrued vacation pay) to which Executive is then entitled upon
termination of employment under applicable plans and programs of the Company
then in effect, and (v) all other amounts then due and payable to Executive
pursuant to the terms of this Agreement with respect to services rendered prior
to termination of employment. The Company shall have no further liability or
obligation to Executive for compensation under this Agreement.
(c) Prior
to
resigning under this Section, Executive shall give written notice to the Board
and offer a 30-day period for the Company to cure. If, and only if, the Company
cures an issue raised by the Executive under this Section, and Executive again
feels it necessary to resign under this Section, Executive shall again given
written notice to the Board and offer a new 30-day period for the Company to
cure. If no cure has been effected by the end of the applicable cure period,
Executive may resign immediately in accordance with the provisions of
subsections (a) and (b) above. After two such cure periods, only written notice
must be given but no cure period will be required.
5.6. Voluntary
Termination.
Executive may voluntarily terminate the Employment Term upon 30 days’ prior
written notice for any reason. In such event, Executive shall be entitled only
to (i) Base Salary to the extent already earned or accrued, (ii) previously
vested shares of Restricted Stock and SARs, (iii) all amounts (including accrued
vacation pay but excluding severance compensation) to which Executive is then
entitled upon termination of employment under applicable plans and programs
of
the Company then in effect, and (iv) all other amounts then due and payable
to
Executive pursuant to the terms of this Agreement with respect to services
rendered prior to termination of employment. The Company shall have no further
liability or obligation to Executive for compensation under this Agreement.
A
voluntary termination under this Section 5.6 shall not be deemed a breach of
this Agreement.
6. Acceleration
of Vesting Upon a Change of Control.
In the
event of a Change of Control of the Company, all of Executive’s rights under the
SARs and to the Restricted Stock shall immediately vest. For purposes hereof,
“Change of Control” means
an
event or series of events by which:
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(I)
any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of
such
person or its subsidiaries, and any person or entity acting in its capacity
as
trustee, agent, or other fiduciary or administrator of any such plan) becomes
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934), directly or indirectly, of 35% or more of the equity
securities of the Company entitled to vote for members of the Board or
equivalent governing body of the Company on a fully diluted basis;
or
(II) during
any period of 24 consecutive months, 35% of the members of the Board or other
equivalent governing body of the Company cease to be composed of individuals
(i)
who were members of that Board or equivalent governing body on the first day
of
such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause
(i)
above
constituting at the time of such election or nomination at least a majority
of
that Board or equivalent governing body, or (iii) whose election or nomination
to that Board or other equivalent governing body was approved by individuals
referred to in clauses
(i)
and
(ii)
above
constituting at the time of such election or nomination at least a majority
of
that Board or equivalent governing body (excluding, in the case of both
clause
(ii)
and
clause
(iii),
any
individual whose initial nomination for, or assumption of office as, a member
of
that Board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal
of
one or more directors by any person or group other than a solicitation for
the
election of one or more directors by or on behalf of the Board).
7. Survivorship.
The
respective rights and obligations of the parties hereunder shall survive any
termination of Executive’s employment and the Employment Term to the extent
necessary to the intended preservation of such rights and
obligations.
8. No
Mitigation.
Executive shall not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking other employment or otherwise and
there shall be no offset against amounts due Executive under this Agreement
on
account of any remuneration attributable to any subsequent employment that
he
may obtain. All payments to be made by the Company to Executive hereunder shall
be made without any offset or deduction for any amounts owed by Executive to
the
Company.
9. Arbitration;
Expenses.
(a) In
the
event of any dispute under the provisions of this Agreement other than a dispute
in which the primary relief sought is an equitable remedy such as an injunction,
the parties shall be required to have the dispute, controversy or claim settled
by arbitration in the City of New York, New York in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and Executive, respectively, and the third of whom
shall be selected by the other two arbitrators. Any award entered by the
arbitrators shall be final, binding and nonappealable and judgment may be
entered thereon by either
-10-
party
in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. The Company shall be responsible
for all of its own legal fees and other expenses relating to such arbitration.
The fees of the American Arbitration Association and the legal fees and expenses
of Executive relating to such arbitration shall be borne in the manner
determined by order of the arbitrators.
(b) The
Company shall, upon receipt of an invoice from Executive, reimburse Executive
for all reasonable legal fees and expenses incurred by Executive in connection
with the negotiation and execution of this Agreement.
10. Notices.
All
notices and other communications required or permitted hereunder or necessary
or
convenient in connection herewith shall be in writing and shall be deemed to
have been given when hand delivered or mailed by registered or certified mail,
as follows (provided that notice of change of address shall be deemed given
only
when received):
If
to the
Company, to:
Vail
Resorts, Inc.
X.X.
Xxx
0
Xxxx,
XX
00000
Attention:
General Counsel
If
to
Executive, to:
Xxxxxx
X.
Xxxx
c/x
Xxxx
Resorts, Inc.
X.X.
Xxx
0
Xxxx,
XX
00000
or
to
such other names or addresses as the Company or Executive, as the case may
be,
shall designate by notice to each other person entitled to receive notices
in
the manner specified in this Section.
11. Contents
of Agreement; Amendment and Assignment.
(a) This
Agreement supersedes all prior agreements and sets forth the entire
understanding between the parties hereto with respect to the subject matter
hereof and cannot be changed, modified, extended or terminated except as
provided herein or upon written amendment approved by the Company and executed
on its behalf by a duly authorized officer and by Executive.
(b) All
of
the terms and provisions of this Agreement shall be binding upon and inure
to
the benefit of and be enforceable by the respective heirs, executors,
administrators, legal representatives, successors and assigns of the parties
hereto, except that the duties and responsibilities of Executive hereunder
are
of a personal nature and shall not be assignable or delegatable in whole or
in
part by Executive. The Company shall require any successor (whether
-11-
direct
or
indirect, by purchase, merger, consolidation, reorganization or otherwise)
to
all or substantially all of the business or assets of the Company, by agreement
in form and substance satisfactory to Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the extent the Company
would
be required to perform if no such succession had taken place, and upon request
by the Company Executive shall acknowledge, by agreement in form and substance
reasonably acceptable to such successor, that this Agreement may be enforced
against Executive by such successor.
12. Severability.
If any
provision of this Agreement or application thereof to anyone or under any
circumstances is adjudicated to be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect any other provision or
application of this Agreement which can be given effect without the invalid
or
unenforceable provision or application and shall not invalidate or render
unenforceable such provision or application in any other jurisdiction. If any
provision is held void, invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect in all
other circumstances.
13. Remedies
Cumulative; No Waiver.
No
remedy conferred upon a party by this Agreement is intended to be exclusive
of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to any other remedy given hereunder or now or hereafter existing
at law or in equity. No delay or omission by a party in exercising any right,
remedy or power hereunder or existing at law or in equity shall be construed
as
a waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary
by
such party in its sole discretion.
14. Beneficiaries/References.
Executive shall be entitled, to the extent permitted under any applicable law,
to select and change a beneficiary or beneficiaries to receive any compensation
or benefit payable hereunder following Executive’s death by giving the Company
written notice thereof. In the event of Executive’s death or a judicial
determination of his incompetence, references in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or
other
legal representative.
15. Miscellaneous.
All
section headings used in this Agreement are for convenience only. This Agreement
may be executed in counterparts, each of which is an original. It shall not
be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.
16. Withholding.
The
Company may withhold from any payments under this Agreement all federal, state
and local taxes as the Company is required to withhold pursuant to any law
or
governmental rule or regulation. Executive shall bear all expense of, and be
solely responsible for, all federal, state and local taxes due with respect
to
any payment received hereunder.
17. Indemnification
and Insurance.
Executive shall be indemnified with respect to his services hereunder to the
full extent provided in the Company’s by-laws, and the Company agrees during the
Employment Term to maintain directors’ and officers’ liability insurance with
coverage and other terms that are customary for similarly situated
companies.
-12-
18. Section
409A.
It is
intended that this Agreement will comply with Section 409A of the Code (and
any
regulations and guidelines issued thereunder) to the extent the Agreement is
subject thereto, and the Agreement shall be interpreted on a basis consistent
with such intent. If an amendment of the Agreement is necessary in order for
it
to comply with Section 409A, the parties hereto will negotiate in good faith
to
amend the Agreement in a manner that preserves the original intent of the
parties to the extent reasonably possible.
19. Excise
Tax.
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it shall
be determined
that any payment, award, benefit or distribution (including, without limitation,
the acceleration of any payment, award, distribution or benefit), by the Company
or its subsidiaries to or for the benefit of the Executive (whether pursuant
to
the terms of this Agreement or otherwise, but determined without regard to
any
additional payments required under this Section 19) (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Code or any
corresponding provisions of state or local tax law, or any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise
tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by the Executive of all taxes (including any Excise Tax, income
tax or employment tax) imposed upon the Gross-Up Payment and any interest or
penalties imposed with respect to such taxes, the Executive retains from the
Gross-Up Payment an amount equal to the excess, if any, of (i) the Excise Tax
imposed upon the Payments, and (ii) the Excise Tax, if any, that would have
been
imposed on the Payments if the Executive had not served as a nonemployee
director of the Company prior to the Effective Date (and, therefore, the
Executive’s nonemployee director compensation had not been taken into account in
the Excise Tax computation). The payment of a Gross-Up Payment under this
Section 19(a) shall not be conditioned upon the Executive’s termination of
employment. Notwithstanding the foregoing provisions of this Section 19, if
it shall be determined that the Executive is entitled to a Gross-Up Payment,
but
that the portion of the Payments that would be treated as “parachute payments”
under Section 280G of the Code does not exceed the Safe Harbor Amount (as
defined in the following sentence) by more than $100,000, then no Gross-Up
Payment shall be made to the Executive and the amounts payable under this
Agreement shall be reduced so that the Payments, in the aggregate, are reduced
to the Safe Harbor Amount. The “Safe Harbor Amount” is the greatest amount of
payments in the nature of compensation that are contingent on a Change in
Control for purposes of Section 280G of the Code that could be paid to the
Executive without giving rise to any Excise Tax. The reduction of the amounts
payable hereunder, if applicable, shall be made by reducing the cash payments
under Section 5. For purposes of reducing the payments to the Safe Harbor
Amount, only amounts payable under this Agreement (and no other Payments) shall
be reduced. If the reduction of the amounts payable under this Agreement would
not result in a reduction of the Payments to the Safe Harbor Amount, no amounts
payable under this Agreement shall be reduced pursuant to this
Section 19(a).
(b) Subject
to the provisions of Section 19(c), all determinations required to be made
under
this Section 19, including the determination of whether a Gross-Up Payment
is
required and of the amount of any such Gross-up Payment, shall be made by the
Company's independent auditors or such other accounting firm agreed by the
parties hereto (the “Accounting
-13-
Firm”),
which shall provide detailed supporting calculations to the Company within
15
business days after the receipt of notice from the Company that the Executive
has received a Payment, or such earlier time as is requested by the Company,
provided that any determination that an Excise Tax is payable by the Executive
shall be made on the basis of substantial authority. The Company will promptly
provide copies of such supporting calculations to the Executive. The initial
Gross-Up Payment, if any, as determined pursuant to this Section 19(b), shall
be
paid to the Executive (or for the benefit of the Executive to the extent of
the
Company’s withholding obligation with respect to applicable taxes) no later than
the later of (i) the due date for the payment of any Excise Tax, and
(ii) the receipt of the Accounting Firm’s determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall furnish
the Company with a written opinion that substantial authority exists for the
Executive not to report any Excise Tax on his Federal income tax return and,
as
a result, the Company is not required to withhold Excise Tax from payments
to
the Executive. The Company will promptly provide a copy of any such opinion
to
the Executive. Any determination by the Accounting Firm meeting the requirements
of this Section 19(b) shall be binding upon the Company and the Executive.
As a
result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it
is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 19(c) and the Executive thereafter is required
to
make a payment of Excise Tax, the Accounting Firm shall determine the amount
of
the Underpayment, if any, that has occurred and any such Underpayment shall
be
promptly paid by the Company to or for the benefit of the Executive. The fees
and disbursements of the Accounting Firm shall be paid by the
Company.
(c) The
Executive shall notify
the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of a Gross-Up Payment.
Such
notification shall be given as soon as practicable but not later than ten
business days after the Executive receives written notice of such claim and
shall apprise the Company of the nature of such claim and the date on which
such
Claim is requested to be paid. The Executive shall not pay such claim prior
to
the expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
the
Executive in writing prior to the expiration of such period that it desires
to
contest such claim, the Executive shall:
(i)
give
the Company any information reasonably requested by the Company relating to
such
claim,
(ii)
take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii)
cooperate with the Company in good faith in order effectively to contest such
claim, and
(iv)
permit the Company to participate in any proceedings relating to such claim;
-14-
provided,
however,
that
the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest
and
shall indemnify and hold the Executive harmless, on an after-tax basis, for
any
Excise Tax, income tax or employment tax, including interest and penalties
with
respect thereto, imposed as a result of such representation and payment of
costs
and expenses. Without limitation on the foregoing provisions of this
Section 19(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with
the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest
the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided,
however,
that if
the Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on
an
after-tax basis, from any Excise Tax, income tax or employment tax, including
interest or penalties with respect thereto, imposed with respect to such advance
(except that if such a loan would not be permitted under applicable law, the
Company may not direct the Executive to pay the claim and xxx for a refund);
and
further provided
that any
extension of the statute of limitations relating to the payment of taxes for
the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the
Company’s control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall
be
entitled to settle or contest, as the case may be, any other issue raised by
the
Internal Revenue Service or any other taxing authority.
(d) If,
after
the receipt by the Executive of an amount advanced by the Company pursuant
to
Section 19(c), the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 19(c)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 19(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent
to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required
to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of the Gross-Up Payment required to be paid.
20. Governing
Law.
This
Agreement shall be governed by and interpreted under the laws of the State
of
New York without giving effect to any conflict of laws provisions.
-15-
IN
WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed
this Agreement as of the date first above written.
|
VAIL
RESORTS, INC.
By:
/s/ Xxxxxx X. Xxxx
Xxxxxx
X. Xxxx
Xx.
Vice President and
General
Counsel
|
EXECUTIVE
/s/
Xxxxxx X. Xxxx
Xxxxxx
X. Xxxx
|
-16-
MUTUAL
RELEASE
This
mutual release (this “Release”) is entered into as of this ____ day of ______,
____ (the “Release Date”) by Xxxxxx X. Xxxx (“Xxxx”), on the one hand and Vail
Resorts, Inc. (“VRI”) on the other hand.
1. Reference
is hereby made to the employment agreement dated February 28, 2006 (the
“Employment Agreement”) by the parties hereto setting forth the agreements among
the parties regarding the termination of the employment relationship between
Xxxx and VRI. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Employment Agreement.
2. Xxxx,
for
himself, his wife, heirs, executors, administrators, successors, and assigns,
hereby releases and discharges VRI and its respective direct and indirect
parents and subsidiaries, and other affiliated companies, and each of their
respective past and present officers, directors, agents and employees, from
any
and all actions, causes of action, claims, demands, grievances, and complaints,
known and unknown, which Xxxx or his wife, heirs, executors, administrators,
successors, or assigns ever had or may have at any time through the Release
Date. Xxxx acknowledges and agrees that this Release is intended to and does
cover, but is not limited to, (i) any claim of employment discrimination of
any
kind whether based on a federal, state, or local statute or court decision,
including the Age Discrimination in Employment Act with appropriate notice
and
recision periods observed; (ii) any claim, whether statutory, common law, or
otherwise, arising out of the terms or conditions of Xxxx’x employment at VRI
and/or Xxxx’x separation from VRI; enumeration of specific rights, claims, and
causes of action being released shall not be construed to limit the general
scope of this Release. It is the intent of the parties that by this Release
Xxxx
is giving up all rights, claims and causes of action occurring prior to the
Release Date, whether or not any damage or injury therefrom has yet occurred.
Xxxx accepts the risk of loss with respect to both undiscovered claims and
with
respect to claims for any harm hereafter suffered arising out of conduct,
statements, performance or decisions occurring before the Release
Date.
3. VRI
hereby releases and discharges Xxxx, his wife, heirs, executors, administrators,
successors, and assigns, from any and all actions, causes of actions, claims,
demands, grievances and complaints, known and unknown, which VRI ever had or
may
have at any time through the Release Date. VRI acknowledges and agrees that
this
Release is intended to and does cover, but is not limited to, (i) any claim,
whether statutory, common law, or otherwise, arising out of the terms or
conditions of Xxxx’x employment at VRI and/or Xxxx’x separation from VRI, and
(ii) any claim for attorneys’ fees, costs, disbursements, or other like
expenses. The enumeration of specific rights, claims, and causes of action
being
released shall not be construed to limit the general scope of this Release.
It
is the intent of the parties that by this Release VRI is giving up all of its
respective rights, claims, and causes of action occurring prior to the Release
Date, whether or not any damage or injury therefrom has yet occurred. VRI
accepts the risk of loss with respect to both undiscovered claims and with
respect to claims for any harm hereafter suffered arising out of conduct,
statements, performance or decisions occurring before the Release
Date.
-17-
4. This
Release shall in no event (i) apply to any claim by either Xxxx or VRI arising
from any breach by the other party of its obligations under the Employment
Agreement occurring on or after the Release Date, (ii) waive Xxxx’x claim with
respect to compensation or benefits earned or accrued prior to the Release
Date
to the extent such claim survives termination of Xxxx’x employment under the
terms of the Employment Agreement, or (iii) waive Xxxx’x right to
indemnification under the by-laws of the Company.
5. This
Mutual Release shall be effective as of the Release Date and only if executed
by
both parties.
IN
WITNESS WHEREOF, each party hereto, intending to be legally bound, has executed
this Mutual Release on the date indicated below.
|
______________________________________
Xxxxxx
X. Xxxx
Date:
_______________________________________
|
VAIL
RESORTS, INC.
By:
___________________________________________
Date:
__________________________________________
|
-18-
