Stock Option Letter


    STOCK
      OPTION LETTER

     

    


     

    Dear
      Mr.
      Jones:

     

    Vail
      Resorts, Inc. (the “Company”) is pleased to confirm its grant to you of an
      option on the terms set forth herein.

     

    Your
      Option was granted pursuant to the Company’s 2002 Long Term Incentive and Share
      Award Plan (the “Plan”), a copy of which is enclosed. Capitalized terms used and
      not defined herein have the meanings set forth in the Plan.

     

    1.  Option
      Terms.

     

    (a)  Grant.
      On
      September 30, 2005 (the “Grant Date”), you were granted an option (the “Option”)
      to purchase up to 100,000 shares of the Company’s Common Stock, having $.01 par
      value (the “Shares”), at an exercise price per Share equal to $28.08 (the
“Exercise Price”), payable upon exercise as set forth in Section 2 below. Your
      Option will expire at the close of business on the tenth anniversary of the
      Grant Date (the “Expiration Date”), subject to earlier expiration in connection
      with the termination of your employment as provided below. Your Option is not
      intended to be an “incentive stock option” within the meaning of Section 422 of
      the Internal Revenue Code of 1986, as amended.

     

    (b)  Exercisability/Vesting.
      Your
      Option will be exercisable only to the extent it has vested. Except as otherwise
      set forth in this Section 1(b) or in Sections 1(c) or (d) below, your
      Option will become vested with respect to 100% of the Option Shares on the
      third
      anniversary of the Grant Date, if and only if you have been continuously
      employed by the Company and/or its Subsidiaries from the date of this Agreement
      through such date. In the event of termination of your employment with the
      Company and its Subsidiaries by the Company or a Subsidiary not for Cause (as
      defined in the Amended and Restated Employment Agreement dated as of September
      29, 2004 by and between the Company and you (the “Employment Agreement”)) or by
      you for Good Reason (as defined in the Employment Agreement), a portion of
      the
      Option will become vested and exercisable at the time of such termination of
      employment determined by multiplying the number of Shares subject to the Option
      by a fraction, the numerator of which is the number of completed years from
      the
      Grant Date to the date of termination, and the denominator of which is three.
      Upon the termination of your employment other than as set forth in the
      immediately preceding sentence or in Section 1(d) below, all of your unvested
      Options shall expire and be of no further force or effect. Any such termination
      shall not affect your vested Options, which shall remain exercisable pursuant
      to
      paragraph 1(e) below.

     

    (c)  Exercise
      Upon Sale of the Company.

     

    (i)  As
      used
      in this Agreement, “Sale of the Company” shall mean the acquisition of 90% of
      the Company’s outstanding common stock pursuant to a merger, consolidation,
      business combination,

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    purchase
      of stock, or otherwise that is approved by the Company’s Board of
      Directors.

     

    (ii)  In
      connection with the Sale of the Company, the Company may, on not less than
      20
      days’ notice to you, provide that any portion of your vested Options which have
      not been exercised prior to or in connection with the Sale of the Company will
      be forfeited. In lieu of requiring such exercise, the Company may: (1) provide
      for the cancellation of the exercisable portion of your Option in exchange
      for a
      payment equal to the excess (if any) of the consideration per share of Common
      Stock receivable in connection with such Sale of the Company over the exercise
      price; and/or (2) provide for the cancellation of the non-vested portion of
      your
      Option in exchange for the creation of a cash escrow account in lieu thereof
      in
      an amount equal to the excess (if any) of the consideration per share of Common
      Stock receivable in connection with such Sale of the Company over the Exercise
      Price, which amount, plus accrued interest thereon, shall be paid to you
pro
      rata
      over the
      time periods and in the same percentages as such canceled unvested Options
      would
      have vested in accordance with the provisions of Sections 1(b) and (c) hereof
      and subject to the same termination and forfeiture provisions of Section 1(e)
      below and to the other terms and provisions of this Agreement.

     

    (d)  Change
      in Control.
      Notwithstanding any provision of this Agreement to the contrary, in the event
      of
      a Change in Control (as defined in Annex A hereto), the Option, if not
      already vested and exercisable under Section 1(b) above, will vest and become
      exercisable in full at the time of the Change in Control; provided,
      however,
      the
      vesting and exercisability of this Option shall not accelerate pursuant to
      this
      Section 1(d) if (i) there is no Control Party with respect to the Company
      after the Change in Control and you remain as the chief financial officer of
      the
      Company, or (ii) there is a publicly traded Control Party with respect to the
      Company after the Change in Control and you are the chief financial officer
      of
      such Control Party; provided
      further, however,
      if your
      employment is terminated by the Company or such Control Party, as the case
      may be, not for Cause after a Change in Control, the Option shall
      immediately vest in full upon such termination.  "Control Party" is defined
      as a "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
      of
      the Exchange Act, 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) that is the "beneficial
      owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more
      than
      40% 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.

     

    (e)  Termination
      of Option.
      In no
      event shall any part of your Option be exercisable after the Expiration Date
      set
      forth in Section 1(a). If your employment with the Company and/or its
      Subsidiaries terminates for any reason (other than as provided in Section 1(d)),
      that portion of your Option that is not vested and exercisable on the date
      of
      termination of your employment shall expire and be forfeited. The portion of
      your Option that is vested and exercisable on the date of such termination
      shall, to the extent not theretofore exercised, expire on the 90th
      day
      after
      such date of termination.

     

    2.  Procedure
      for Option Exercise.

     

    You
      may,
      at any time or from time to time, to the extent permitted hereby, exercise
      all
      or any portion of the vested portion of your Option by delivering, to the
      attention of the Company’s General Counsel at the address set forth in Section 8
      below, written notice to the Company accompanied by payment in full, in a manner
      acceptable to the Company, of an amount equal to the product of the Exercise
      Price and the number of Shares to be acquired on exercise (the “Exercise
      Amount”). In addition, you may exercise all or any portion of your vested Option
      by pro-

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    viding
      notice of exercise to the attention the Company’s General Counsel at the address
      set forth in Section 8 below, and electing to pay the exercise price of the
      Option by having the Company withhold from the Shares received on exercise
      a
      number of Shares having a Fair Market Value equal to the Exercise Amount. The
      Company may also require that any exercise of your vested Option be in
      accordance with the procedure set forth in the immediately preceding sentence.
      The Company may delay effectiveness of any exercise of your Option for such
      period of time as may be necessary to comply with any legal or contractual
      provisions to which it may be subject relating to the issuance of its
      securities, it being understood that such exercise shall be effective
      immediately upon completion of such compliance notwithstanding the occurrence
      of
      the Expiration Date.

     

    3.  Option
      Not Transferable.

     

    Your
      Option is personal to you and is not transferable by you, other than by will
      or
      by the laws of descent and distribution. During your lifetime, only you (or
      your
      guardian or legal representative) may exercise your Option. In the event of
      your
      death, your Option may be exercised only by the executor or administrator of
      your estate or the person or persons to whom your rights under the Option shall
      pass by will or by the laws of intestate succession.

     

    4.  Conformity
      with Plan.

     

    Your
      Option is intended to conform in all respects with, and is subject to, all
      applicable provisions of the Plan, the terms and conditions of which are
      incorporated herein by reference. Any inconsistencies between this Agreement
      and
      the Plan shall be resolved in accordance with the Plan. By executing and
      returning a copy of this Agreement, you acknowledge your receipt of this
      Agreement, the Plan and the Plan Prospectus and agree to be bound by all the
      terms of this Agreement and the Plan.

     

    5.  Rights
      of Participants.

     

    Nothing
      in this Agreement shall interfere with or limit in any way the right of the
      Company and/or its Subsidiaries to terminate your employment at any time (with
      or without Cause), or confer upon you any right to continue in the employ of
      the
      Company and/or its Subsidiaries for any period of time or to continue to receive
      your current (or other) rate of compensation. Nothing in this Agreement shall
      confer upon you any right to be selected to receive additional awards under
      the
      Plan or otherwise.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    6.  Withholding
      of Taxes.

     

    The
      Company may, if necessary or desirable, withhold from any amounts due and
      payable to you by the Company or a Subsidiary (or secure payment from you in
      lieu of withholding) the amount of any withholding or other tax due from the
      Company or Subsidiary with respect to the issuance or exercise of your Option,
      and the Company may defer such issuance or exercise unless indemnified by you
      to
      its satisfaction against the payment of any such amount. You may elect to have
      the Company withhold Shares to pay any applicable withholding taxes resulting
      from the Award, in accordance with any rules or regulations of the Committee
      then in effect. 

     

    
      	7.  	
              Adjustments.

            


    

     

    In
      the
      event that the Committee shall determine that any dividend in Shares,
      recapitalization, Share split, reverse split, reorganization, merger,
      consolidation, spin-off, combination, repurchase, share exchange, or other
      similar corporate transaction or event affects the Shares such that an
      adjustment is appropriate in order to prevent dilution or enlargement of your
      rights under this Option, then the Committee shall make such equitable changes
      or adjustments as it deems appropriate and adjust, in such manner as it deems
      equitable, any or all of: (i) the number and kind of Shares, other securities
      or
      other consideration issued or issuable with respect to this Option; and (ii)
      the
      exercise price of this Option.

     

    
      	8.  	
              Notice.

            


    

     

    Any
      notice required or permitted to be given to the Company under this Agreement
      shall be in writing and shall be deemed to have been given when delivered
      personally or by courier, or sent by certified or registered mail, postage
      prepaid, return receipt requested, duly addressed to the Company as
      follows:

     

    
      	
              If
                by mail:

            	
              Vail
                Resorts, Inc.

              Post
                Office Box 7

              Vail,
                Colorado 81658

              Attention:
                General Counsel

               

            
	
              If
                by hand delivery:

            	
              Vail
                Resorts, Inc.

              137
                Benchmark Road

              Avon,
                Colorado 81620

              Attention:
                General Counsel

            


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
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    9.  Governing
      Law.

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Colorado without reference to the principles of conflict of
      laws.

     

    To
      confirm your understanding and acceptance of the terms and provisions set forth
      in this Agreement, please execute the extra copy of this Agreement in the space
      below and return it to the attention of the Company’s General Counsel at the
      address set forth in Section 8 above.

     

     

    Very
      truly yours,

     

    VAIL
      RESORTS, INC.

     

                                                                           
      

    By:  
      /s/ Martha Dugan Rehm        

    Martha
      Dugan Rehm

    Executive
      Vice President and

    General
      Counsel

     

     

    Date:
      March 2, 2006

     

    The
      undersigned hereby acknowledges that he or she has read this Agreement and
      has
      received a copy of the Plan and the Plan Prospectus and hereby agrees to be
      bound by all the provisions set forth in this Agreement and in the
      Plan.

     

     

    /s/
      Jeffrey W. Jones        

    Jeffrey
      W. Jones

    Date:
      March 2, 2006

    


    

       

    


    
      
        
          


        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    



    Annex
      A

     

    Definition
      of Change in Control

     

    For
      purposes of this Agreement, “Change in Control” shall mean an event or series of
      events by which:

     

    (a)  any
      “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
      Exchange Act, 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 Exchange Act), directly or
      indirectly, of 40% 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

     

    (b)  during
      any period of twenty four (24) consecutive months, a majority 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); or

     

    (c)  any
      person or two or more persons acting in concert shall have acquired, by contract
      or otherwise, control over 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 (and taking into account all such securities that such
      person or group has the right to acquire pursuant to any option right)
      representing 51% or more of the combined voting power of such
      securities.