Document:

Exhibit
10.38

 

July
24, 2002

 

Mr.
Jim Lacey

2644
E. Chalet Circle

Sandy,
Utah 84093

 

Dear
Jim,

 

I
am delighted you have elected to join us at American Skiing Company.  I have modified the term sheet below to
reflect the adjustments we agreed to over the weekend.

 

	
  Position Title:

  	
   

  	
  Senior
  Vice President of Sales and Marketing

  
	
   

  	
   

  	
   

  
	
  Position
  Entails:

  	
   

  	
  Creating and implementing
  a corporate marketing vision that promotes ski vacations, learn to ski and
  snowboard programs, conference business and real estate sales.  Reengineer corporate marketing strategies,
  develop e-commerce marketing and sales strategy, have the ability to
  influence, direct and problem negotiate with large groups of staff.  Responsibilities include development of
  human capital, communication to groups of internal and external stakeholders
  along with approval and management of the company’s marketing budget.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Position will be responsible for the oversight and
  management of the Company’s partnership marketing program, database marketing
  efforts, public relations and communications.  Position will also be responsible for the strategic direction
  and development of the Resort sales and marketing plans.

  
	
   

  	
   

  	
   

  
	
  Position Reports To:

  	
   

  	
  William
  J. Fair, President and CEO

  
	
   

  	
   

  	
   

  
	
  Location:

  	
   

  	
  136
  Heber Avenue, #303, Park City, UT 84060

  

 

 

	
  Start Date:

  	
   

  	
  August
  19, 2002

  
	
   

  	
   

  	
   

  
	
  Annual Salary:

  	
   

  	
  $240,000

  
	
   

  	
   

  	
   

  
	
  Target
  Incentive Bonus:

  	
   

  	
  Level #4; 30% of
  base compensation, as part of the ASC Incentive Compensation Plan.  Maximum payment under this plan, based
  upon resort and company-wide over-performance, is equal to 150% of bonus
  potential, or 45% of base compensation. 
  Based upon your start date, you will be eligible for full
  participation in the incentive program for Fiscal Year 2003, which commences
  on August 1, 2002.

  
	
   

  	
   

  	
   

  
	
  Long
  Term Incentive Plan:

  	
   

  	
  Position is
  eligible for participation in the Company’s Phantom Equity Plan. The level of
  participation shall be at 7.5% of the total pool amount. Vesting of
  participation rights in the plan shall be on an annual basis in four equal
  increments of 25% commencing on the first anniversary of your hire date.  Terms of the Phantom Equity Plan shall be
  governed by the Phantom Equity Agreement approved by the Company’s Board of
  Directors.

  
	
   

  	
   

  	
   

  
	
  Contract
  Term:

  	
   

  	
  Two years with
  two options to extend for two years per extension.  Severance protection under the contract will be equal to six
  months of annual base salary.

  
	
   

  	
   

  	
   

  
	
  Other:

  	
   

  	
  Company will
  provide employee with a company car consistent with its then current
  automobile sponsorship agreement.

  

 

Along
with this offer, after satisfying the required eligibility periods, you will be
eligible to participate in the American Skiing Company’s benefit programs
including health, life and dental insurance, and 401(k) program.  You will also be entitled to participate in
other benefit programs including skiing/snowboarding privileges, Perfect Turn
clinics, vacation, and holiday pay, as well as discounts at ASC retail stores
and restaurants.

 

2

 

I
truly look forward to working with you. 
If this term sheet is consistent with our understanding, please sign and
return to me no later than July 26, 2002. 
Please feel free to contact me with any questions you may have at (435)
615-0384.

 

Sincerely,

 

	
  AMERICAN SKIING COMPANY

  
	
   

  
	
  /s/  William J. Fair

  
	
  William
  J. Fair

  
	
  President
  and CEO

  

 

WJF/pe

 

cc:           Personnel File

 

AGREED AND ACCEPTED

 

	
  /s/ James P. Lacey

  	
   

  
	
  Jim Lacey

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date

  	
   

  

 

3Exhibit
10.41

 

EXECUTION
COPY

 

AMERICAN
SKIING COMPANY

 

PHANTOM EQUITY PLAN

 

SECTION 1.                                Purpose.  The purpose of the American Skiing Company
Phantom Equity Plan (the “Plan”) is to attract, motivate and retain key
employees who are primarily responsible for the long-term performance of
American Skiing Company and to align their interest with that of the
shareholders of the Company.

 

SECTION 2.                                Definitions.  As used in the Plan, the following terms
shall have the meanings set forth below:

 

(a)                                  Award.  The award granted to a Participant by the
Committee on a specific date, the terms and conditions of which shall be set
forth in such Participant’s Award Agreement.

 

(b)                                 Award
Percentage.  The percentage of the
Total Plan Pool with respect to which a Participant may be entitled to payment
as set forth in the Award Agreement evidencing an Award granted to a
Participant pursuant to the Plan.

 

(c)                                  Award
Agreement.  The written agreement
evidencing an Award granted hereunder, which shall be executed or otherwise
acknowledged in writing by a Participant.

 

(d)                                 Board.  The Board of Directors of the Company.

 

(e)                                  Cause.  Cause shall have the meaning set forth in
any employment agreement in effect as of a specific date, entered into by and
between the Participant and the Company and in the event that no such
employment agreement has been entered into with respect to a Participant,
“Cause” means the Participant’s: 
(i) failure or refusal to satisfactorily perform or observe any of his
duties, responsibilities or obligations to the Company, (ii) gross negligence
in performing his duties or any willful and intentional act of the Participant
involving malfeasance, fraud, theft, misappropriation of funds, embezzlement or
dishonesty affecting the Company; or (iii) conviction of, or a plea of guilty
or nolo contendere to, an offense which is a felony in the jurisdiction
involved or any lesser crime involving Company property.

 

(f)                                    Change in
Control.  Unless otherwise defined
in the applicable Award Agreement, Change in Control means the occurrence of
any one of the following events:

 

(1)                                  The acquisition
(other than from the Company) by any person of fifty (50%) percent or more of
the combined voting power of the Company’s then outstanding voting securities,
other than any person, entity or entities holding fifty (50%) percent or more
of such combined voting power on the date hereof provided; however,
that the Participant and the Company hereby agree and acknowledge that Oak Hill
Capital Partners L.P. and/or 

 

 

its affiliates as of the Effective Date of the Plan owns at least 50%
of the combined voting power of the Company’s outstanding voting securities; or

 

(2)                                  The individuals who
were members of the Board (the “Incumbent Board”) during the previous twelve
(12) month period, cease for any reason to constitute at least a majority of
the Board; or

 

(3)                                  Approval by
stockholders of the Company, and the consummation by the Company of (a) a
merger or consolidation involving the Company in which the stockholders of the
Company, immediately before such merger or consolidation do not, as a result of
such merger or consolidation, own, directly or indirectly, more than sixty
percent (60%) of the combined voting power of the then outstanding voting
securities of the corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the combined voting
power of the securities of the Company outstanding immediately before such
merger or consolidation or (b) a complete liquidation or dissolution of the Company
or an agreement for the sale or other disposition of all or substantially all
of the assets of the Company.

 

(g)                                 Company.  The American Skiing Company, a Delaware
corporation.

 

(h)                                 Committee.  The Compensation Committee of the Board.

 

(i)                                     Effective
Date. 
[                         ,
2001].

 

(j)                                     Good
Reason.  Good Reason shall have the
meaning set forth in any written employment agreement entered into by and
between the Participant and the Company and if no such agreement has been
entered into, with such Participant, the applicable Award Agreement shall not
and shall not be deemed to contain any provisions related to Good Reason.

 

(k)                                  Participant.  Any current or prospective employee of the
Company who is eligible for, and is selected by the Committee to be granted, an
Award under the Plan and who has executed an Award Agreement.

 

(l)                                     Plan.  This American Skiing Company Phantom Equity
Plan.

 

(m)                               Total
Enterprise Value.  The total
purchase price paid for the Company (or in the absence of an acquisition of the
Company, the total value of the Company determined by an independent third
party selected in good faith by the Committee in its sole discretion) at the
time of a Valuation Event.

 

(n)                                 Total
Equity Pool Value.  The Total
Enterprise Value of the Company minus the value of outstanding debt of the
Company which shall be determined by the Committee in good faith.  For purposes of the Plan and any Awards
granted hereunder,

 

2

 

including without
limitation determining Total Equity Pool Value, the liquidation value of any
preferred stock of the Company, held by any stockholder shall not constitute
outstanding debt of the Company.

 

(o)                                 Total
Plan Pool.  The total amount of cash
to be paid to all Participants on a Valuation Event.  The Total Plan Pool shall be no less than $2 million and no
greater than $32 million determined as follows:

 

Total Plan Pool = $2 million + (A x B)

 

Where “A” equals “Total Equity Value” and “B” equals “Total Pool
Percentage”, each as set forth in the following chart:

 

	
  (A) Total Equity Value

  	
   

  	
  (B) Total
  Pool Percentage

  	
   

  
	
  $1.00

  	
   

  	
  0.00

  	
  %

  
	
  $50 million

  	
   

  	
  1.50

  	
  %

  
	
  $100 million

  	
   

  	
  2.00

  	
  %

  
	
  $150 million

  	
   

  	
  2.25

  	
  %

  
	
  $200 million

  	
   

  	
  2.50

  	
  %

  
	
  $250 million

  	
   

  	
  3.00

  	
  %

  
	
  $300 million

  	
   

  	
  3.50

  	
  %

  
	
  $400 million

  	
   

  	
  5.00

  	
  %

  
	
  $500 million and above

  	
   

  	
  6.00

  	
  %

  

 

(p)                                 Valuation
Event.  (1) a sale or disposition of
a significant Company operation or property as determined by the Board; (2) a
merger, consolidation or similar event of the Company other than one (i) in
which the Company is the surviving entity or (ii) where no Change of Control
has occurred; (3) a public offering of equity securities by the Company that
yields net proceeds to the Company in excess of $50 million; or (4) a Change of
Control.

 

(q)                                 Vested
Percentage.  The extent to which an
Award is vested on any given date pursuant to the terms of the applicable Award
Agreement.

 

SECTION 3.                                Administration.

 

(a)                                  The
Plan shall be administered by the Committee. 
The majority of the members of the Committee shall constitute a quorum.  The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.

 

(b)                                 Subject
to the provisions of the Plan and applicable law, the Committee shall have the
power, in addition to other express powers and authorizations conferred on the
Committee by the Plan, to:  (i)
designate Participants; (ii) determine the type or types of Awards 

 

3

 

to be granted to a Participant;
(iii) determine rights, payments and how other matters are to be calculated in
connection with Awards; (iv) determine the terms and conditions of any Awards,
including, without limitation, vesting; (v) determine whether, to what extent,
and under what circumstances Awards and other amounts payable with respect to
an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret, administer, reconcile any inconsistency,
correct any default and/or supply any omission in the Plan and any instrument
or agreement relating to, or Awards granted under the Plan; (viii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and (ix)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.

 

(b)                                 Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any
Award or any documents evidencing any and all Awards shall be within the sole
discretion of the Committee, and shall be final, conclusive, and binding upon
all parties, including, without limitation, the Company, any Participant, any
holder or beneficiary of any Awards, and any shareholder.

 

(c)                                  No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Award hereunder.

 

SECTION 4.                                Eligibility.  Any employee (including any prospective
employee) of the Company and/or its subsidiaries shall be eligible to be
designated as a Participant in the Plan by the Committee and to be granted an
Award hereunder.

 

SECTION 5.                                Awards.

 

(a)                                  Grant.  Subject to the provisions of the Plan, the
Committee shall determine the Participants to whom Awards shall be granted and
the conditions and limitations applicable to the Award, including, without
limitation, the Award Percentage, and any vesting requirements associated
therewith.

 

(b)                                 Payment.  Unless otherwise provided in the applicable
Award Agreement, Payment under each Award shall be as follows:

 

(i)                                     in
the form of cash and shall be made as soon as practicable, but in no event more
than 30 days following a Valuation Event; and

 

(ii)                                  equal
to an amount determined as follows:  the
product of (A) the Vested Percentage and (B) the Award Percentage multiplied by
the Total Plan Pool (“Payment Amount”).

 

(c)                                  Notwithstanding
the foregoing, in the event that the Board determines in good faith that
payment of any Payment Amount in cash would have a material detrimental 

 

4

 

effect on the Company or is
prohibited under the terms of any legal or contractual restriction to which the
Company is subject, then the Company shall be entitled to make all or any
portion of such payments in the form of notes, equity securities or a
combination thereof.

 

(d)                                 The
Award Agreement may, but shall not be required, to contain provisions related
to vesting on a termination of employment.

 

(e)                                  In
the event of a termination of the Participant’s employment, the Company shall
have the right, exercisable within sixty (60) days, or such other time period
as may be specified in the Award Agreement to cancel an Award in exchange for
the Payment Amount determined as if a Valuation Event had occurred on the date
of such termination.

 

SECTION 6.                                Confidentiality.  As a condition to each Participant’s right
to receive and retain any Award granted under the Plan, a Participant may be
required to sign the Company’s policy statement or agreement regarding
confidentiality as may be in effect generally for employees of the Company from
time to time.

 

SECTION 7.                                Amendment and
Termination.

 

(a)                                  Amendments
to the Plan.  The Committee may
amend, alter, suspend, discontinue, or terminate the Plan or any portion
thereof at any time; provided that any such amendment, alteration,
suspension, discontinuance, or termination that would materially adversely
affect the rights of any Participant with respect to any outstanding Award
granted under the Plan shall not to that extent be effective without the
written consent of the affected Participant.

 

(b)                                 Amendments
to Awards.  The Committee may waive
any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate, any Award theretofore granted, prospectively
or retroactively; provided that any such waiver, amendment, alteration,
suspension, discontinuance, cancellation or termination not expressly
contemplated by the Plan that would materially adversely affect the rights of
any Participant or other holder of an Award theretofore granted shall not to
that extent be effective without the written consent of the affected
Participant or holder.

 

SECTION 8.                                General Provisions.

 

(a)                                  Nontransferability.  No Award may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a Participant
other than by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company.

 

(b)                                 No
Rights to Awards.  No Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of
Awards.  The terms and conditions of
Awards and the Committee’s 

 

5

 

determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).

 

(c)                                  Tax
Withholding.  A Participant may be
required to pay to the Company and the Company shall have the right and is
hereby authorized to withhold from any payment due or transfer made under any
Award or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, securities, or other property) of any applicable
withholding taxes in respect of an Award, its vesting or settlement in cash or
in kind, or any payment or transfer under an Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes.

 

(d)                                 Other
Compensation Arrangements.

 

(i)                                     Nothing
contained in the Plan shall prevent the Company or any affiliate from adopting
or continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of options, securities and other types of awards,
and such arrangements may be either generally applicable or applicable only in
specific cases.

 

(ii)                                  Neither
the grant of Awards hereunder nor the payment of any amounts in respect of any
Awards shall be taken into account in determining a Participant’s right to
receive any additional benefits or compensation under any other plan or
arrangement.

 

(e)                                  No
Right to Service or Employment.  The
grant of an Award shall not be construed as giving a Participant the right to
be retained in the employ or service of the Company or any affiliate.  Further, the Company or its affiliates may
at any time terminate a Participant from any service relationship or
discontinue, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.

 

(f)                                    Awards
As An Unsecured Promise; Insolvency.

 

(i)                                     The
Company shall not be required to and shall not segregate any funds representing
Awards granted hereunder, and nothing in the Plan or any Award Agreement shall
be construed as providing for such segregation.

 

(ii)                                  Nothing
in the Plan or any Award Agreement, and no action taken pursuant to their
respective terms, shall create or be construed to create a trust or escrow
account of any kind, or a fiduciary relationship between the Company or its
affiliates, on the one hand, and any Participant, or any other person on the
other hand.

 

(iii)                               The Participants and
their beneficiaries and any other persons entitled to payment in respect of an
Award granted hereunder shall rely solely on the unsecured promise of the
Company to make the payments required under the terms of any Award, but shall
have the right to enforce such a claim in the same manner as any unsecured
general creditor of the Company. 
Neither the Participants shall have any preferred claim on, or any
beneficial 

 

6

 

ownership in, any assets of the
Company.  Any rights created under the
Plan or any Award shall be mere unsecured contractual rights of the
Participants against the Company.

 

(g)                                 Conflicts.  In the event of a conflict between the terms
of the Plan and any Award Agreement, the terms of the Plan shall prevail.

 

(h)                                 Governing
Law.  Unless otherwise provided in
the applicable Award Agreement, the validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan and any Award Agreement
shall be determined in accordance with the laws of the State of Utah applicable
to agreements made and to be performed entirely within such state without
regard to the choice of law principles thereof.

 

(i)                                     Headings.  Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan or any
provision thereof.

 

7

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