EXHIBIT 10.5
Execution Copy
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of October 1, 1996 by and between (i) VAIL
RESORTS, INC., a Delaware corporation ("Resorts"), and VAIL ASSOCIATES, INC., a
Colorado corporation and a wholly-owned subsidiary of Resorts ("Associates"
and, together with Resorts, "Vail"), and (ii) XXXXXX X. XXXX (hereinafter
referred to as "Xxxx").
RECITALS
1. Vail desires to employ Xxxx to render services to it for the period
and upon the terms and conditions provided for in this Agreement; and
2. Xxxx wishes to serve in the employ of Vail for its benefit for the
period and upon the terms and conditions provided for in this Agreement.
COVENANTS
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment.
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(a) Vail hereby employs Xxxx to serve as President of Resorts and
President and Chief Executive Officer of Associates on the terms and conditions
set forth herein. In such capacities, Xxxx shall have the responsibilities
normally associated with such positions, subject to the supervision and control
of the Board of Directors and chief executive officer of Resorts.
(b) Xxxx accepts employment by Vail and agrees that, during the term of
his employment, he will devote substantially all his time and best efforts to
the performance of his duties hereunder, which duties shall be performed in an
efficient and competent manner and to the best of his ability. Xxxx further
agrees that, during the term of this Agreement, he will not, without the prior
written consent of the Board of Directors of Resorts, directly or indirectly
engage in any manner in any business or other endeavor, either as an owner,
employee, officer, director, independent contractor, agent, partner, advisor, or
in any other capacity calling for the rendition of his personal services. This
restriction will not preclude Xxxx from having passive investments, and devoting
reasonable time to the supervision thereof (so long as such does not interfere
with Xxxx'x obligations hereunder), in any business or enterprise which is not
in competition with any business or enterprise of Vail or any of its
subsidiaries or affiliates (collectively the "Companies").
2. Compensation.
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For all services rendered by Xxxx to or on behalf of Vail and the
Companies, Associates shall pay to Xxxx, subject to any and all withholdings
and deductions required by law, the following compensation in accordance with
the normal payroll practices of Associates:
(a) Base Salary. Xxxx shall receive regular compensation at the initial
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rate of Three Hundred Fifty Thousand Dollars ($350,000) per year, subject to
increase as provided in the following sentence (the "Base Salary"). Xxxx'x Base
Salary shall be reviewed annually by the Board of Directors of Resorts, but any
increases in such Base Salary shall be at the discretion of the Board of
Directors and Xxxx acknowledges that the Board is not obligated to make any
increases. Xxxx'x Base Salary shall not be lowered from its highest amount
during the term of this Agreement without his consent.
(b) Bonuses, etc. Xxxx shall also be considered annually for bonuses,
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deferred compensation, and/or stock options based upon his performance in light
of objectives established by the Board of Directors of Resorts, it being
understood that any such awards are at the discretion of the Board of
Directors. Without limiting the generality of the foregoing, Xxxx shall be
eligible to participate in (i) the Long-Term Incentive Plan of Associates (the
"LTIP"), and (ii) any other bonus, incentive, deferred compensation and fringe
benefit plans as Vail shall make generally available to other employees in
senior management positions in accordance with the terms of the relevant
contracts, policies or plans providing such benefits, specifically including
health and dental insurance, any deferred incentive compensation plan and any
discretionary annual bonus plan, all on such terms as the Board may determine.
Xxxx'x annual target bonus under the LTIP shall be 40% of his Base Salary;
provided, however, that such target shall not create any obligation on the part
of Vail to declare any bonus to Xxxx in any amount or otherwise alter the
discretionary nature of the LTIP. If any such compensation or benefits are paid
or made available, it shall be at such time or times as the Board shall
determine, based upon such factors, if any, as the Board may establish.
(c) Insurance. Xxxx shall also receive, at Vail's expense, long-term
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disability insurance which provides a benefit equal to 75% of Base Salary
through the end of the term of this Agreement, and term life insurance which
provides a death benefit of at least Three Million Dollars ($3,000,000),
subject in each case to the applicable underwriting limitations of such
programs.
(d) Expense Reimbursement; Country Club. Xxxx shall also be reimbursed
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for reasonable dues and assessments for business and service interests of Vail.
Xxxx shall have a travel and entertainment budget which is reasonable in light
of his position and responsibilities and shall be reimbursed for all reasonable
travel and entertainment expenses incurred by him thereunder upon submission of
appropriate documentation thereof. Vail will reimburse Xxxx for 50% of the cost
of his membership in Eagle Springs Country Club, which reimbursement shall
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be payable in equal monthly installments during the first 36 months of the term
of this Agreement.
(e) Loan Repayment. The maturity date of Xxxx'x $300,000 loan from
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Associates is hereby extended to October 1, l999 or, if earlier, the first
anniversary of the date on which this Agreement is terminated for any reason
other than (i) by Vail without "cause" or (ii) by Xxxx for "good reason" (in
either case as defined below).
3. Term and Termination.
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(a) Term and Renewal. The Effective Date of this Agreement shall be
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October 1, 1996. Unless terminated earlier, as hereinafter provided, the term of
this Agreement shall be for the period commencing with the Effective Date and
continuing through October 1, 1999; provided, however, that unless either Vail
or Xxxx gives written notice of non-renewal to the other not less than 120 days
prior to the then-current scheduled expiration date, this Agreement shall be
automatically renewed for successive one-year periods.
(b) Termination for Cause. Vail, acting through the Board of Directors
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of Resorts, may terminate this Agreement at any time for "cause" by giving Xxxx
written notice specifying the effective date of such termination and the
circumstances constituting such cause. For purposes of this Agreement, "cause"
shall mean (i) any conduct involving dishonesty, disloyalty or the unauthorized
disclosure of confidential information or trade secrets which has a material
detrimental impact on the reputation, goodwill or business position of Vail or
any of the Companies; (ii) gross obstruction of business operations or illegal
or disreputable conduct by Xxxx which materially impairs the reputation,
goodwill or business position of Vail or any of the Companies, including acts of
unlawful sexual harassment; or (iii) any action involving a material breach of
the terms of the Agreement including, after 15 days' written notice and
opportunity to cure to the Board's satisfaction, inattention to or neglect of
duties. In the event of a termination for cause, Xxxx shall be entitled to
receive his then-current Base Salary through the date of such termination.
(c) Termination Without Cause or Non-Renewal. Vail may terminate this
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Agreement at any time without cause, by giving Xxxx written notice specifying
the effective date of such termination. In the event of a termination without
cause, or if Vail gives notice of non-renewal of this Agreement as provided in
Section 3(a), Xxxx shall be entitled to receive (i) his then-current Base Salary
through the date of such termination or non-renewal, (ii) in the event that the
applicable performance targets for the year are achieved, a pro-rated bonus for
the portion of the year in which such termination or non-renewal occurs, which
prorated bonus shall be payable in the same form and at the same time as bonus
payments are made to senior executives generally, and (iii) continuation of his
then-current Base Salary through the first anniversary of the date of
termination or non-renewal. Notwithstanding the foregoing, should Vail and Xxxx
mutually agree to waive Xxxx'x compliance with the provisions of Section 4
hereof within 60 days of such termination or expiration, then Xxxx shall be
under an obligation to mitigate
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damages by seeking other employment and the Base Salary continuation shall be
reduced by compensation received by Xxxx from other employment or self-
employment following such waiver.
(d) Termination By Xxxx.
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(1) Xxxx shall be entitled to terminate this Agreement at any time for
"good reason" by giving Vail not less than ninety (90) days prior written
notice. For purposes of this Agreement, "good reason" shall mean (i) Vail shall
breach its obligations hereunder in any material respect and shall fail to cure
such breach within 60 days following written notice thereof from Xxxx, (ii)
Vail shall cease to operate a major ski resort in Colorado, (iii) Vail shall
effect a material change in Xxxx'x reporting responsibilities, titles, offices
or duties as in effect immediately prior to such change, or shall remove Xxxx
from, or fail to re-elect Xxxx to, any of such positions, which in either case
shall have the effect of materially reducing the responsibility or authority of
Xxxx as President of Resorts and President and Chief Executive Officer of
Associates, or shall otherwise be materially inconsistent with the
responsibility, authority or duties normally associated with such positions, or
(iv) during the first 12 months of the term of this Agreement, Xxxx shall
determine in good faith that he is unable to develop or maintain a satisfactory
working relationship with the chief executive officer of Resorts. In such
event, Xxxx shall be entitled to receive (i) his then-current Base Salary
through the date of such termination, (ii) in the event that the applicable
performance targets for the year are achieved, a pro-rated bonus for the
portion of the year in which such termination occurs, which pro-rated bonus
shall be payable in the same form and at the same time as bonus payments are
made to senior executives generally, and (iii) continuation of his then-current
Base Salary through the first anniversary of the date of such termination.
(2) Xxxx may also terminate this Agreement at any time without good
reason by giving Vail at least one hundred twenty (120) days prior written
notice. In such event, Xxxx shall be entitled to receive his then-current Base
Salary through the date of termination.
(e) Termination Due To Disability. In the event that Xxxx becomes
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permanently disabled (as determined by the Board of Directors of Resorts in
good faith), Vail shall have the right to terminate this Agreement upon written
notice to Xxxx; provided, however, that Xxxx shall be entitled to receive (i)
his then-current Base Salary through the date of such termination, and (ii)
continuation of his then-current Base Salary through the earlier of (x) the
scheduled expiration date of this Agreement (but in no event less than 12
months from the date of disability) or (y) the date on which his long-term
disability insurance payments commence.
(f) Termination Due To Death. This Agreement shall be deemed automatically
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terminated upon the death of Xxxx. In such event, Xxxx'x personal
representative shall be entitled to receive (i) his then-current Base Salary
through such date of termination, and (ii) in the event that the applicable
performance targets for the year are achieved, a pro-rated bonus for the
portion of the year in which such termination occurs, which pro-rated bonus
shall be
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payable in the same form and at the same time as bonus payments are made to
senior executives generally. In addition, Vail shall continue to provide such
health, dental or other medical insurance coverage to Xxxx'x surviving spouse
and dependents at Vail's expense as is made available to spouses and dependents
of other employees in similar positions through the first anniversary of such
termination.
(g) Change in Control. Notwithstanding the above, in the event that at any
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time after a change in control of Vail (i) this Agreement is terminated by Vail
without cause, (ii) this Agreement is terminated by Xxxx for good reason, or
(iii) Vail gives notice of non-renewal of this Agreement, then in any such case
Xxxx shall be entitled to receive (i) his then-current Base Salary through the
date of such termination or non-renewal, (ii) in the event that the applicable
performance targets for the year are achieved, a pro-rated bonus for the
portion of the year in which such termination occurs, which pro-rated bonus
shall be payable in the same form and at the same time as bonus payments are
made to senior executives generally, and (iii) continuation of his then-current
Base Salary for a period of 18 months from the date of termination or
nonrenewal. For purposes of this Agreement, a change in control" shall mean the
acquisition by any person or group of affiliated persons (other than Apollo Ski
Partners, L.P. and its affiliates) of equity securities of Resorts or Associates
representing either a majority of the combined ordinary voting power of all
outstanding voting securities of Resorts or Associates or a majority of the
common equity interest in Resorts or Associates.
(h) Other Benefits. During any period in which Xxxx is entitled to Base
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Salary continuation following termination or expiration of this Agreement under
the terms of this Section 3, Xxxx shall also be entitled to continuation of
then-current health, dental and other insurance benefits for Xxxx and his
dependents at Vail's expense. Except as expressly set forth in this Section 3,
Xxxx shall not be entitled to receive any compensation or other benefits in
connection with termination of his employment; provided, however, that
termination of Xxxx'x employment hereunder shall not affect his right to
receive deferred compensation earned prior to such termination (which amounts
shall be payable at Vail's option either in a lump sum within 30 days of
termination or in accordance with the terms of the applicable plan) or his
rights to vested retirement benefits in accordance with the terms of the
applicable plan. Notwithstanding the foregoing, all deferred compensation shall
be forfeited by Xxxx in the event of termination of employment pursuant to
Section 3(b) or Section 3(d)(2) of this Agreement.
(i) Payment of Salary Continuation. Payment of Base Salary following
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termination of this Agreement as required by this Section 3 shall be made in
accordance with Associates' normal payroll practices; provided, however, that
in the event of a breach by Xxxx of the provisions of Sections 4 through 7,
Vail shall be entitled to cease all such payments. No termination of this
Agreement shall affect any of the rights and obligations of the parties hereto
under Sections 4 through 7, but such rights and obligations shall survive such
termination in accordance with the terms of such Sections.
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4. Non Competition.
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The provisions of this Section 4 shall apply for a period of one (1)
year beginning with the date of the termination of Xxxx'x employment with Vail
for any reason. During such period, Xxxx will not, without the prior written
consent of the Board, directly or indirectly, become associated, either as
owner, employee, officer, director, independent contractor, agent, partner,
advisor or in any other capacity calling for the rendition of personal services,
with any individual, partnership, corporation, or other organization (i) in
Eagle County, Colorado whose business or enterprise is competitive in any way
with any of the businesses or enterprises of Vail and/or the Companies or (ii)
in the states of Colorado and Utah whose business or enterprise is alpine or
nordic ski area operation; provided, however, that the foregoing shall not
preclude Xxxx from having passive investments in less than five percent (5%) of
the outstanding capital stock of a competitive corporation which is listed on a
national securities exchange or regularly traded in the over-the-counter market
or which have been approved in writing by the Board.
(c) If, for any reason, any portion of this covenant shall be held to be
unenforceable it shall be deemed to be reformed so that it is enforceable to
the maximum extent permitted by law.
5. Document Return; Resignations.
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Upon termination of Xxxx'x employment with Vail for any reason, Xxxx
agrees that he shall promptly surrender to Vail or the Companies all letters,
papers, documents, instruments, records, books, products, and any other
materials owned by Vail or the Companies or used by Xxxx in the performance of
his duties under this Agreement. Additionally, upon termination of Xxxx'x
employment with Vail for any reason, Xxxx agrees to immediately resign from, and
execute appropriate resignation letters relating to, all management or Board
positions he may have by reason of his employment or involvement with Vail,
specifically including but not limited to Vail, any of the Companies, the Beaver
Creek Resort Company of Colorado and the various condominium associations in
which Xxxx serves at the direction of Vail (the "Associations").
6. Confidentiality.
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During the term of this Agreement, and at all times following the
termination of Xxxx'x employment with Vail for any reason, Xxxx shall not
disclose, directly or indirectly, to any person, firm or entity, or any
officer, director, stockholder, partner, associate, employee, agent or
representative thereof, any confidential information or trade secrets of Vail
or any of the Companies, the Beaver Creek Resort Company of Colorado or the
Associations.
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7. Nondisparagement.
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For a period of five (5) years following the termination of Xxxx'x
employment with Vail for any reason, Xxxx agrees that he shall not make any
statements disparaging of Vail or the Companies, the Board, and the officers,
directors, stockholders, or employees of Vail or the Companies, the Beaver
Creek Resort Company of Colorado or the Associations. Vail shall similarly not
disparage Xxxx following such termination, it being understood that, subject to
the terms of this Section 7, Vail and Xxxx, as appropriate, may respond
truthfully to inquiries from prospective employers of Xxxx, the press and other
relevant parties.
8. Injunctive Relief.
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The parties acknowledge that the remedy at law for any violation or
threatened violation of this Agreement will be inadequate and that,
accordingly, either party shall be entitled to injunctive relief in the event
of such a violation or threatened violation without being required to post bond
or other surety. The above stated remedies shall be in addition to, and not in
limitation of, any other rights or remedies to which either party is or may be
entitled at law, in equity, or under this Agreement.
9. Non-Assignability.
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It is understood that this Employment Agreement has been entered into
personally by the parties. Neither party shall have the right to assign,
transfer, encumber or dispose of any duties, rights or payments due hereunder,
which duties, rights and payments with respect hereto are expressly declared to
be non-assignable and non-transferable, being based upon the personal services
of Xxxx, and any attempted assignment or transfer shall be null and void and
without binding effect on either party; provided, however, that, subject to
Xxxx'x rights under Section 3(g) hereof, Vail may assign this Agreement to any
affiliate or to any successor corporation.
10. Complete Agreement.
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This Agreement constitutes the full understanding and entire employment
agreement of the parties, and supersedes and is in lieu of any and all other
understandings or agreements between Vail and Xxxx. Nothing herein is intended
to limit any rights or duties Xxxx has under the terms of any applicable
option, incentive or other similar agreements.
11. Arbitration.
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Any controversy or claim arising out of or in relation to this Agreement
or any breach thereof shall be settled by arbitration in Vail, Colorado in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (hereinafter "AAA Rules") before a panel of three
arbitrators, one of whom shall be selected by Vail, the second of whom shall be
selected by Xxxx and the third of whom shall be selected by the other two
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arbitrators; provided, however, that to the extent that any of the AAA Rules
or any portion thereof is inconsistent with the provisions of this Section 11,
the provisions of this Section shall govern. If for any reason the AAA Rules
cannot be followed or if any one of the parties fails or refuses to select an
arbitrator within thirty (30) days after the time of notification of demand for
arbitration by the other, or if the arbitrators selected by the parties to this
Agreement cannot agree on the selection of a third arbitrator within thirty
(30) days after such time as Vail and Xxxx have each been notified of the
selection of the other's arbitrator, the necessary arbitrator or arbitrators
shall be selected by the Chief Judge of the Fifth Judicial District or, if that
officer fails or refuses to make an appointment, by the President of the
Colorado Bar Association. In the event that any controversy or claim is
submitted for arbitration hereunder relating to the failure or refusal by Vail
or Xxxx to perform in full all of its obligations hereunder, Vail or Xxxx, as
applicable, shall have the burden of proof (as to both production of evidence
and persuasion) with respect to the justification for such failure or refusal.
Any award entered by the arbitrators shall be final, binding and non-appealable,
and judgment may be entered thereon by any party in accordance with the
applicable law in any court of competent jurisdiction. The arbitrators shall
award the prevailing party its reasonable attorneys' fees and costs. The
arbitrators shall not have the power to direct equitable relief.
12. Amendments.
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Any amendment to this Agreement shall be made only in writing and signed
by each of the parties hereto.
13. Governing Law.
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The internal laws of the State of Colorado law shall govern the
construction and enforcement of this Agreement.
14. Notices.
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Any notice required or authorized hereunder shall be deemed delivered
with deposited, postage prepaid, in the United States mail, certified, with
return receipt requested, addressed to the parties as follows:
Xxxxxx X. Xxxx
X.X. Xxx 0000
Xxxx, Xxxxxxxx 00000
Vail Resorts, Inc.
Vail Associates, Inc.
X.X. Xxx 0
Xxxx, Xxxxxxxx 00000
Attn: General Counsel
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of October, 1996.
EMPLOYER:
VAIL RESORTS, INC.
By:
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VAIL ASSOCIATES, INC.
By:
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EXECUTIVE:
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
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