<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 25, 1998
REGISTRATION NO. 333-45859
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PREMIER PARKS INC.
(Exact name of Registrant as specified in its charter)
------------------------
<TABLE>
<S> <C>
DELAWARE 73-6137714
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
------------------------
<TABLE>
<S> <C>
11501 NORTHEAST EXPRESSWAY KIERAN E. BURKE
OKLAHOMA CITY, OKLAHOMA 73131 11501 NORTHEAST EXPRESSWAY
TEL: (405) 475-2500 OKLAHOMA CITY, OKLAHOMA 73131
(Address, including zip code, and telephone number, including TEL: (405) 475-2500
area code, of Registrant's principal executive offices) (Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
------------------------
COPIES TO:
<TABLE>
<S> <C>
JAMES M. COUGHLIN, ESQ. THOMAS R. BROME, ESQ.
Baer Marks & Upham LLP Cravath, Swaine & Moore
805 Third Avenue Worldwide Plaza
New York, New York 10022 825 Eighth Avenue
Tel: (212) 702-5819 New York, New York 10019
Tel: (212) 474-1000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
(SEE FOLLOWING PAGE.)
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED(1)(2)(3) BE REGISTERED PRICE PER SHARE OFFERING PRICE(4) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $0.05(5)................. (6) (6) (6)
Convertible Preferred Stock...................... (6) (6) (6)
EqPINES(sm)(7)(8)................................ (6) (6) (6)
Total............................................ -- -- $1,183,781,250 $349,216(9)
</TABLE>
(1) This Registration Statement also pertains to certain rights (the "Rights")
attached to each share of Common Stock. Each Right entitles its registered
holder to purchase one one-thousandth of a share of a junior participating
series of Preferred Stock of the Registrant upon the occurrence of certain
prescribed events. Until the occurrence of such events, the Rights are not
exercisable, will be evidenced by the certificates for the Common Stock and
will be transferred along with and only with the Common Stock.
(2) Securities registered hereunder may be sold separately, together or as units
with other securities, registered hereunder. This Registration Statement
also covers such indeterminate amount of securities as may be issued upon
conversion of the Convertible Preferred Stock or EqPINES registered
hereunder or as dividends on the Convertible Preferred Stock.
(3) No separate consideration will be received for any securities registered
hereunder that are issued upon conversion of the Convertible Preferred Stock
or EqPINES registered hereunder.
(4) Estimated in accordance with Rule 457(o) solely for the purposes of
computing the registration fee.
(5) Includes shares of Common Stock which may be issued upon exercise of the
Underwriters' over-allotment options. See "Underwriting."
(6) Pursuant to Rule 457(o), the Amount to be Registered, Proposed Maximum
Offering Price Per Share and Proposed Maximum Aggregate Offering Price have
been omitted for each class of these securities.
(7) Such indeterminate number of EqPINES issued pursuant to a Deposit Agreement.
(8) Includes shares of EqPINES which may be issued upon exercise of the
Underwriters' over-allotment options. See "Underwriting."
(9) $319,447 of which has been previously paid.
<PAGE>
EXPLANATORY NOTE
The Prospectus relating to the Common Stock being registered hereby to be
used in connection with a United States offering (the "U.S. Prospectus") is set
forth following this page. The Prospectus to be used in connection with a
concurrent international offering of the Common Stock (the "International
Prospectus") will consist of alternate pages set forth following the U.S.
Prospectus and the balance of the pages included in the U.S. Prospectus for
which no alternate is provided. The Prospectus to be used in connection with a
concurrent offering of EqPINES, representing interests in the Company's
Mandatorily Convertible Preferred Stock (the "EqPINES Prospectus") will consist
of alternate pages set forth following the International Prospectus and the
balance of the pages included in the U.S. Prospectus for which no alternate is
provided. The U.S. Prospectus and the International Prospectus are identical
except that they contain different front and back cover pages and the
International Prospectus contains an additional section under the caption
"Certain United States Federal Tax Considerations to Non-United States Holders."
The U.S. Prospectus and the EqPINES Prospectus are identical except that they
contain different front and back cover pages, a different "Legal Matters"
section and to the extent, in each case, of references to the different
securities or the related offering, different "Prospectus Summary -- The
Offering" sections and different "Underwriting" sections. Alternate pages for
the International Prospectus and the EqPINES Prospectus are separately
designated.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Subject to Completion, dated March 25, 1998
PROSPECTUS
[LOGO]
13,000,000 SHARES
PREMIER PARKS INC.
COMMON STOCK
------------------
All of the shares of Common Stock offered hereby will be sold by Premier
Parks Inc. (collectively with its predecessor, the "Company" or "Premier"). Of
the 13,000,000 shares of Common Stock offered, 10,400,000 shares are being
offered initially in the United States and Canada in a United States offering
(the "U.S. Offering") by the U.S. Underwriters and 2,600,000 shares are being
offered outside the United States and Canada in a concurrent offering (the
"International Offering") by the International Managers (together with the U.S.
Underwriters, the "Underwriters"). These offerings are collectively referred to
herein as the "Offering" or the "Common Stock Offering." See "Underwriting."
The Offering is being made in connection with the acquisition (the "Six
Flags Acquisition") by the Company of all of the capital stock of Six Flags
Entertainment Corporation ("SFEC"). The Company is concurrently offering
$ million aggregate principal amount at maturity of its senior discount
notes due 2008, with estimated gross proceeds of $250.0 million, $280.0 million
aggregate principal amount of its senior notes due 2006, and 5,000,000 Premium
Income Equity Securities (the "EqPINES(SM)") representing interests in the
Company's mandatorily convertible preferred stock (the "Mandatorily Convertible
Preferred Stock") with estimated gross proceeds of $228.2 million (assuming the
underwriters' over-allotment option for 750,000 EqPINES is not exercised). SFEC
is concurrently offering $170.0 million aggregate principal amount of senior
notes due 2006 (collectively the "Concurrent Offerings" and, together with the
Offering, the "Offerings"). The Offerings will finance, in whole or in part, the
Six Flags Acquisition. The Company may also issue depositary shares (the "Seller
Depositary Shares") representing interests in up to $200.0 million of the
Company's convertible redeemable preferred stock to the current stockholders of
SFEC as part of the consideration for the Six Flags Acquisition. The Company may
reduce (but not below $100 million) or may eliminate the Seller Depositary
Shares by increasing the cash portion of the consideration for the Six Flags
Acquisition and may, if issued, redeem the Seller Depositary Shares for cash
within 90 days of the closing at the higher of the issuance price and market
value. If the Seller Depositary Shares are not issued, the additional cash
portion of the consideration for the Six Flags Acquisition will be funded from
the net proceeds of the Common Stock Offering. The closing of the Offering is
conditioned upon the closing of the Concurrent Offerings and the Six Flags
Acquisition.
The Common Stock is listed on the New York Stock Exchange (the "NYSE") under
the symbol "PKS." On March 23, 1998, the last sales price of the Common Stock,
as reported by the NYSE, was $57 3/16 per share. The Company has applied to list
the EqPINES on the NYSE. The Mandatorily Convertible Preferred Stock will not be
so listed and the Company does not expect that there will be any trading market
for the Mandatorily Convertible Preferred Stock except as represented by the
EqPINES.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 19 HEREIN FOR CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share..................................... $ $ $
Total(3)...................................... $ $ $
</TABLE>
(1) The Company and its operating subsidiaries have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted options to the Underwriters to purchase up to
1,950,000 additional shares of Common Stock on the same terms and conditions
as set forth herein solely to cover over-allotments, if any. If such options
were exercised in full, the total Price to Public, Underwriting Discounts
and Commissions and Proceeds to Company would be $ , $ and
$ , respectively. See "Underwriting."
------------------------
The shares of Common Stock offered by this Prospectus are offered by the
U.S. Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
U.S. Underwriters and to certain further conditions. It is expected that
delivery of the shares of Common Stock will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about , 1998.
------------------------
LEHMAN BROTHERS SALOMON SMITH BARNEY
FURMAN SELZ NATIONSBANC MONTGOMERY
<PAGE>
SECURITIES LLC
, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Proxy statements, periodic reports and other
information filed by the Company can be inspected and copied at the public
reference facilities of the Commission's principal office at Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and the regional
offices of the Commission at Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, 14th Floor, Chicago, Illinois 60661.
Copies of such material can be obtained from the public reference facilities of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. In addition, the Commission
maintains a Website (http://www.sec.gov) that also contains such reports, proxy
statements and other information filed by the Company. The Common Stock of the
Company is listed on the NYSE. In addition, application will be made to list the
EqPINES and the Common Stock issuable on conversion of the Mandatorily
Convertible Preferred Stock on the NYSE. Such reports, proxy statements and
other information concerning the Company can also be inspected at the offices of
the NYSE, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act") with respect to the securities offered hereby. For
purposes hereof, the term "Registration Statement" means the original
Registration Statement and any and all amendments thereto. In accordance with
the rules and regulations of the Commission, this Prospectus does not contain
all of the information set forth in the Registration Statement and the schedules
and exhibits thereto. Each statement made in this Prospectus concerning a
document filed as an exhibit to the Registration Statement is qualified in its
entirety by reference to such exhibit for a complete statement of its
provisions. For further information pertaining to the Company and the securities
offered hereby, reference is made to such Registration Statement, including the
exhibits and schedules thereto, which may be inspected or obtained as provided
in the foregoing paragraph.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference into this Prospectus and made a part hereof as of
their respective dates:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997.
2. The audited financial statements of Kentucky Kingdom Inc. as of November
2, 1997, and for the year then ended included in the Company's Current Report on
Form 8-K, dated November 7, 1997, as amended.
3. The Company's Current Report on Form 8-K, dated December 15, 1997, as
amended.
4. The Company's Current Report on Form 8-K, dated February 9, 1998.
5. The description of the shares of Common Stock contained in the Company's
Registration Statement on Form 8-A dated December 11, 1997 and filed under the
Exchange Act, including any amendment or report filed for the purpose of
updating such description.
6. The description of the rights relating to the shares of Common Stock
contained in the Company's Registration Statement on Form 8-A dated January 12,
1998, as amended, and filed under the Exchange Act, including any amendment or
report filed for the purpose of updating such description.
7. The information contained under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
Company's Registration Statement on Form S-3 (File No. 333-46897).
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering shall also be deemed to
be incorporated by reference into this Prospectus.
2
<PAGE>
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to: Premier Parks
Inc., 11501 Northeast Expressway, Oklahoma City, Oklahoma 73131, Attention:
Richard A. Kipf, Corporate Secretary (telephone number: (405) 475-2500, Ext.
219).
CERTAIN PERSONS PARTICIPATING IN THESE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE EqPINES OR THE
COMMON STOCK. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF EqPINES OR COMMON
STOCK FOLLOWING THE PRICING OF THE OFFERINGS TO COVER A SYNDICATE SHORT POSITION
IN THE EqPINES OR COMMON STOCK OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF
THE EqPINES OR THE COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES RELATING TO THE OFFERING, SEE "UNDERWRITING."
LOONEY TUNES, BUGS BUNNY, DAFFY DUCK, TWEETY BIRD and YOSEMITE SAM are
copyrights and trademarks of Warner Bros., a division of Time Warner
Entertainment Company, L.P. ("TWE"). BATMAN, BATMOBILE, GOTHAM CITY AND SUPERMAN
are copyrights and trademarks of DC Comics, a partnership between TWE and a
subsidiary of Time Warner Inc. SPORTS ILLUSTRATED is a trademark of Time Inc., a
subsidiary of Time Warner Inc. HBO is a trademark of TWE. SIX FLAGS GREAT
ADVENTURE, SIX FLAGS GREAT AMERICA and SIX FLAGS are federally registered
trademarks of Six Flags Theme Parks Inc. FIESTA TEXAS and all related indicia
are trademarks of Fiesta Texas Theme Park, Ltd. POPEYE and all related indicia
are copyrights and trademarks of King Features Syndicate, Inc., a unit of The
Hearst Corporation.
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Prospectus, including, without limitation, the statements under "Prospectus
Summary," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" and located elsewhere herein regarding
industry prospects and the Company's financial position are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations are
disclosed in this Prospectus, both together with such forward-looking statements
and under "Risk Factors."
3
<PAGE>
(This page has been left blank intentionally.)
4
<PAGE>
PROSPECTUS SUMMARY
PRIOR TO THE DATE OF THIS PROSPECTUS, THE EXISTING COMPANY CALLED "PREMIER
PARKS INC." WILL BECOME A WHOLLY-OWNED SUBSIDIARY OF THE REGISTRANT AND THE
OUTSTANDING SHARES OF CAPITAL STOCK OF THE EXISTING PREMIER PARKS INC. WILL
BECOME, ON A SHARE-FOR-SHARE BASIS, SHARES OF CAPITAL STOCK OF THE REGISTRANT
WHICH WILL THEN BE RENAMED "PREMIER PARKS INC." (THE "PREMIER MERGER"). AS USED
HEREIN, THE TERMS THE "COMPANY" AND "PREMIER" MEAN FOR ANY PERIOD PRIOR TO THE
PREMIER MERGER, THE EXISTING PREMIER PARKS INC. AND ITS CONSOLIDATED
SUBSIDIARIES AND FOR ANY PERIOD SUBSEQUENT THERETO, THE REGISTRANT AND ITS
CONSOLIDATED SUBSIDIARIES.
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY AND SHOULD
BE READ IN CONJUNCTION WITH THE MORE DETAILED INFORMATION AND CONSOLIDATED
FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED OR THE CONTEXT OTHERWISE REQUIRES, ALL
INFORMATION IN THIS PROSPECTUS HAS BEEN ADJUSTED TO GIVE EFFECT TO THE PREMIER
MERGER AND THE ACQUISITIONS (AS DEFINED HEREIN) AND ASSUMES THAT THE
UNDERWRITERS' OVERALLOTMENT OPTIONS ARE NOT EXERCISED. AS USED IN THIS
PROSPECTUS, UNLESS THE CONTEXT REQUIRES OTHERWISE, THE TERMS (I) THE "1996
ACQUISITIONS" REFERS TO THE ACQUISITIONS OF ELITCH GARDENS, THE GREAT ESCAPE,
WATERWORLD SACRAMENTO AND WATERWORLD CONCORD (TOGETHER, THE "WATERWORLD PARKS")
AND RIVERSIDE PARK, (II) THE "1997 ACQUISITIONS" REFERS TO THE ACQUISITION OF
KENTUCKY KINGDOM--THE THRILL PARK IN LOUISVILLE, KENTUCKY ("KENTUCKY KINGDOM"),
THE PROPOSED ACQUISITION OF ALL OF THE OUTSTANDING CAPITAL STOCK OF WALIBI S.A.
("WALIBI") ASSUMING SUCCESSFUL COMPLETION OF THE WALIBI TENDER OFFER (AS DEFINED
HEREIN), AS WELL AS THE COMPANY'S MANAGEMENT CONTRACT, LEASE AND PURCHASE OPTION
WITH RESPECT TO MARINE WORLD AFRICA USA IN VALLEJO, CALIFORNIA ("MARINE WORLD"),
(III) THE "SIX FLAGS ACQUISITION" REFERS TO THE ACQUISITION, BY MERGER, OF ALL
OF THE CAPITAL STOCK OF SIX FLAGS ENTERTAINMENT CORPORATION ("SFEC" AND,
TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES, "SIX FLAGS") WHICH WILL OCCUR
CONTEMPORANEOUSLY WITH THE CLOSING OF THE OFFERING, (IV) THE "ACQUISITIONS"
REFERS TO THE 1996 ACQUISITIONS, THE 1997 ACQUISITIONS AND THE SIX FLAGS
ACQUISITION AND (V) THE "SIX FLAGS PARKS" REFERS TO THE PARKS OPERATED BY SIX
FLAGS ON THE DATE OF THE SIX FLAGS ACQUISITION, AND THE "PREMIER PARKS" REFERS
TO ALL OF THE PARKS OPERATED BY THE COMPANY (INCLUDING PARKS ACQUIRED AND TO BE
ACQUIRED IN THE 1997 ACQUISITIONS, BUT EXCLUDING THE SIX FLAGS PARKS). ALL PRO
FORMA FINANCIAL INFORMATION PRESENTED HEREIN GIVES PRO FORMA EFFECT TO EACH OF
THE ACQUISITIONS (OTHER THAN MARINE WORLD). ALL PARK ATTENDANCE INFORMATION AND
RANKINGS BASED ON SUCH DATA INCLUDED IN THIS PROSPECTUS (OTHER THAN ATTENDANCE
DATA FOR THE PREMIER PARKS AND THE SIX FLAGS PARKS) ARE BASED ON INFORMATION
PUBLISHED BY AMUSEMENT BUSINESS, A RECOGNIZED INDUSTRY PUBLICATION, WHICH,
ACCORDING TO SUCH PUBLICATION, INCLUDES ESTIMATES BASED ON SOURCES IT BELIEVES
TO BE RELIABLE. RANKINGS OF METROPOLITAN AND DESIGNATED MARKET AREAS ("DMA") ARE
BASED ON A COPYRIGHTED 1996-97 SURVEY OF TELEVISION HOUSEHOLDS PUBLISHED BY A.C.
NIELSEN MEDIA RESEARCH.
ALL INFORMATION IN THIS PROSPECTUS RELATING TO THE ASSUMED PROCEEDS OF THE
OFFERINGS AND RELATED SIX FLAGS FINANCINGS, THE AMOUNTS AND NUMBERS OF
SECURITIES TO BE SOLD THEREIN AND THE INTEREST AND DIVIDEND RATES ON THOSE
SECURITIES IS BASED ON THE ASSUMPTIONS DESCRIBED IN "UNAUDITED PRO FORMA
FINANCIAL STATEMENTS" CONTAINED ELSEWHERE HEREIN.
THE COMPANY
The Company is the largest regional theme park operator, and the second
largest theme park company, in the world, based on 1997 attendance of
approximately 37 million at its parks. It operates 31 regional parks, including
15 of the 50 largest theme parks in North America based on 1997 attendance. The
Company's theme parks serve nine of the ten largest metropolitan areas in the
country. The Company estimates that approximately two-thirds of the population
of the continental U.S. live within a 150-mile radius of the Company's theme
parks. On a pro forma basis, the Company's total revenue and earnings before
interest, taxes, depreciation and amortization ("EBITDA") for the year ended
December 31, 1997 was approximately $815.3 million and $263.5 million,
respectively. See "Unaudited Pro Forma Financial Statements."
A substantial portion of the proceeds of the Offerings will be used to fund
the Six Flags Acquisition. See "--The Six Flags Transactions." Six Flags
operates eight regional theme parks, as well as three
5
<PAGE>
separately gated water parks and a wildlife safari park (each of which is
located near one of the theme parks). None of the Six Flags Parks is located
within the primary market of any of the Premier Parks. During 1997, the Six
Flags Parks drew, in the aggregate, approximately 68% of their patrons from
within a 100-mile radius. During that year, Six Flags' attendance, revenue and
EBITDA totaled approximately 22.2 million, $708.7 million and $164.1 million,
respectively.
Six Flags has operated regional theme parks under the Six Flags name for
over thirty years. As a result, Six Flags has established a
nationally-recognized brand name. Premier will obtain worldwide ownership of the
Six Flags brand name and expects to use the Six Flags brand name, generally
beginning in the 1999 season, at most of the Premier Parks.
In addition, as part of the Six Flags Acquisition, the Company will obtain
from Warner Bros. and DC Comics the exclusive right for theme-park usage of
certain Warner Bros. and DC Comics characters throughout the United States
(except the Las Vegas metropolitan area) and Canada. These characters include
BUGS BUNNY, DAFFY DUCK, TWEETY BIRD, YOSEMITE SAM, BATMAN, SUPERMAN and others.
Since 1991, Six Flags has used these characters to market its parks and to
provide an enhanced family entertainment experience. The long-term license will
include the right to sell merchandise featuring the characters at the parks and
will apply to all of the Company's current theme parks, as well as future parks
that meet certain criteria. Premier intends to make extensive use of these
characters at the Six Flags Parks and, commencing in 1999, at most of the
existing Premier Parks. The Company believes that use of the Warner Bros. and DC
Comics characters promotes attendance, supports higher ticket prices, increases
lengths-of-stay and enhances in-park spending. See "Business--Licenses."
The Premier Parks consist of nine regional theme parks (six of which include
a water park component) and four water parks located across the United States,
as well as six regional theme parks and two smaller attractions located in
Europe and scheduled to be acquired in March 1998 in the acquisition of Walibi.
During the 1997 operating season, the 11 parks then owned by Premier drew, on
average, approximately 82% of their patrons from within a 100-mile radius, with
approximately 35.7% of visitors utilizing group and other pre-sold tickets and
approximately 20.6% utilizing season passes.
Under current management, since 1989 Premier has assumed control of 30
parks, and has achieved significant internal growth. The 11 parks owned by the
Company for the 1997 operating season achieved same park growth during 1997 in
attendance, revenue and park-level operating cash flow (representing all park
operating revenues and expenses without depreciation and amortization or
allocation of corporate overhead or interest expense) of 17.3%, 21.3% and 59.5%,
respectively, as compared to 1996. See "--Summary Historical and Pro Forma
Data."
The Company's parks are individually themed and provide a complete
family-oriented entertainment experience. The Company's theme parks generally
offer a broad selection of state-of-the-art and traditional thrill rides, water
attractions, themed areas, concerts and shows, restaurants, game venues and
merchandise outlets. In the aggregate, the Company's theme parks offer more than
800 rides, including over 90 roller coasters, making the Company the leading
provider of "thrill rides" in the industry.
The Company believes that its parks benefit from limited direct competition.
The combination of limited supply of real estate appropriate for theme park
development, high initial capital investment, long development lead-time and
zoning restrictions provides each of the parks with a significant degree of
protection from competitive new theme park openings. Based on its knowledge of
the development of other theme parks in the United States, the Company's
management estimates that it would cost at least $200 million and would take a
minimum of two years to construct a new regional theme park comparable to the
Company's largest parks.
The Company's senior and operating management team has extensive experience
in the theme park industry. Premier's six senior executive officers have over
150 years aggregate experience in the industry and its ten general managers
(prior to the Six Flags Acquisition) have an aggregate of approximately 210
6
<PAGE>
years experience in the industry, including approximately 85 years at the
Premier Parks. A number of Premier's executives and operating personnel have
experience at Six Flags.
According to AMUSEMENT BUSINESS, total North American amusement/theme park
attendance in 1997 was approximately 270 million. Total attendance for the 50
largest parks in North America was 167.2 million in 1997, compared to 145.0
million in 1994, representing a compound annual growth rate of 4.9%. The Company
believes that this growth reflects two trends: (i) demographic growth in the
5-24 year old age group, which is expected to continue through 2010 and (ii) an
increasing emphasis on family-oriented leisure and recreation activities.
The Company's strategy for achieving growth includes the following key
elements: (i) pursuing growth opportunities at existing parks; (ii) expanding
the Company's parks; and (iii) making selective acquisitions.
PURSUING GROWTH OPPORTUNITIES AT EXISTING PARKS
The Company believes there are substantial opportunities for continued
internal growth at its parks. The Company seeks to increase revenue by
increasing attendance and per capita spending, while also maintaining strict
control of operating expenses. The primary elements used to achieve this
objective are: (i) adding rides and attractions and improving overall park
quality; (ii) enhancing marketing and sponsorship programs; (iii) increasing
group sales, season passes and other pre-sold tickets; (iv) implementing ticket
pricing strategies to maximize ticket revenues and park utilization; (v) adding
and enhancing restaurants and merchandise and other revenue outlets; and (vi)
adding special events. This approach is designed to exploit the operating
leverage inherent in the theme park business. Once parks achieve certain
critical attendance levels, operating cash flow margins increase because revenue
growth through incremental attendance gains and increased in-park spending is
not offset by a comparable increase in operating expenses, because a large
portion of such expenses is relatively fixed during any given year.
THE PREMIER PARKS
Management believes it has demonstrated the effectiveness of its strategy at
the Premier Parks owned prior to the 1997 Acquisitions. For example, during the
year ended December 31, 1997, the three parks acquired in the Company's 1995
acquisition of Funtime Parks, Inc. (the "Funtime Acquisition") achieved compound
annual growth in attendance, revenue and park-level operating cash flow of
10.2%, 14.9% and 27.2%, respectively, compared to 1995. Similarly, during the
year ended December 31, 1997, the five parks acquired in the 1996 Acquisitions
realized growth in attendance, revenue and park-level operating cash flow of
33.8%, 37.9% and 228.9%, respectively, compared to 1996. In particular, two of
the parks acquired in the 1996 Acquisitions, Elitch Gardens in Denver and
Riverside Park in Springfield, Massachusetts, realized dramatic growth during
their first year under the Company's ownership. As a result of capital
investment and improved marketing, during the year ended December 31, 1997,
attendance and revenue at Elitch Gardens grew 62.1% and 53.3%, respectively, and
park-level operating cash flow increased from $(1.8) million to $8.6 million, as
compared to 1996. Similarly, during the year ended December 31, 1997, attendance
and revenue at Riverside Park increased 57.7% and 56.7%, respectively, and
park-level operating cash flow increased from $1.5 million to $8.2 million, as
compared to 1996.
Management believes that each of the parks acquired by Premier in the 1997
Acquisitions offer similar opportunities to implement the Company's growth
strategy. For example, at Marine World, a well-known wildlife park located in
the San Francisco market, management is expanding the park's entertainment
component with theme park rides and attractions, investing approximately $35-$40
million for the 1998 season to add fourteen new rides in the first phase of this
expansion. The Walibi acquisition provides the Company with a significant
presence in the expanding theme park industry in Europe and management believes
that the Company's strategy of targeted capital investment and sophisticated
marketing can improve performance at these parks. The Company has agreed to
invest approximately $38 million in the
7
<PAGE>
Walibi Parks (as defined herein) over the three years commencing with the 1999
season. See "-- Other Recent Developments" and "Business--Pursuing Growth
Opportunities at Existing Parks."
The Company believes that, by virtue of the Six Flags Acquisition, a number
of the existing Premier Parks have the potential over the next several seasons
to accelerate their rate of growth. Recent attendance levels at the Six Flags
theme parks (between 1.7 millon and 3.6 million in 1997) have been substantially
higher than the annual attendance at the largest Premier Parks (between 1.0
million and 1.5 million during that year). Management believes that a number of
the existing Premier Parks, particularly Adventure World, Geauga Lake, Kentucky
Kingdom, Marine World and Riverside Park, all of which are located in or near
major metropolitan areas, can significantly accelerate their market penetration
and the expansion of their geographic market through the use of the Six Flags
brand name, aggressive marketing campaigns featuring the animated characters
licensed from Warner Bros. and DC Comics, as well as targeted capital investment
in new rides and attractions. Management also believes that this expanded
penetration, as well as the incorporation of the animated characters in the
parks and in merchandise sales, can result in increased per capita spending at
the existing Premier Parks. The Company expects to commence general use of the
Six Flags brand name and the licensed characters at the Premier Parks for the
1999 season.
THE SIX FLAGS PARKS
The Six Flags Parks generally enjoy significant market penetration. Thus,
although the Company plans to make targeted capital expenditures at these parks
to increase attendance and per capita spending levels, it expects to increase
significantly the EBITDA of these parks primarily through increased operating
efficiencies. First, and most importantly, the Company believes that it can
substantially reduce Six Flags' corporate overhead and other corporate-level
expenses. Second, the Company expects to achieve significant improvement in
park-level operating margins. Third, by virtue of economies of scale, the
Company believes that operating efficiencies in areas such as marketing,
insurance, promotion, purchasing and other expenses can be realized. Finally,
the Company believes that its increased size following the Six Flags Acquisition
will enable it to achieve savings in capital expenditures.
EXPANDING THE COMPANY'S PARKS
The Company is expanding several of the Premier Parks in order to increase
attendance and per capita spending. For example, the Company is constructing an
economy motel at its Darien Lake park for the 1998 season to supplement the
existing campgrounds. In addition, the Company recently purchased campgrounds
adjacent to Geauga Lake and expects to add, prior to the 1999 season, a more
complete complement of "dry" rides to Wyandot Lake, which is currently primarily
a water park. In addition, the Company owns 400 acres adjacent to Adventure
World which are zoned for entertainment, recreational and residential uses and
are available for complementary uses. Additional acreage owned by the Company
and suitable for development exists at several of the other Premier Parks.
The Company may expand in the future certain of the Six Flags Parks by
adding complementary attractions, such as campgrounds, lodging facilities, new
water parks and concert venues. For example, Six Flags owns over 1,500
undeveloped acres adjacent to Six Flags Great Adventure (located between New
York City and Philadelphia) suitable for such purposes. Additional acreage
suitable for development exists at several other Six Flags Parks. See
"Business--Environmental and Other Regulation."
MAKING SELECTIVE ACQUISITIONS
The U.S. regional theme park industry is highly fragmented with over 150
parks owned by over 100 operators. Management believes that, in addition to the
Acquisitions, there are numerous acquisition opportunities, both in the U.S. and
abroad, that can expand its business. While the Company will continue to pursue
acquisitions of regional parks with attendance between 300,000 and 1.5 million
annually, the Company will also consider acquisitions of larger parks or park
chains (such as Six Flags).
8
<PAGE>
The Company believes it has a number of competitive advantages in acquiring
theme parks. Operators of destination or large regional park chains, other than
Cedar Fair L.P., have not generally been actively seeking to acquire parks in
recent years. Additionally, as a multi-park operator with a track record of
successfully acquiring, improving and repositioning parks, the Company has
numerous competitive advantages over single-park operators in pursuing
acquisitions and improving the operating results at acquired parks. These
advantages include the ability to (i) exercise group purchasing power (for both
operating and capital assets); (ii) achieve administrative economies of scale;
(iii) attract greater sponsorship revenue, support from sponsors with
nationally-recognized brands and marketing partners; (iv) use the Six Flags
brand name and the characters licensed from Warner Bros. and DC Comics; (v)
recruit and retain superior management; (vi) optimize the use of capital assets
by rotating rides among its parks to provide fresh attractions; (vii) access
capital markets; and (viii) use its NYSE-listed Common Stock as a portion of the
acquisition consideration. See "Risk Factors--Uncertainty of Future
Acquisitions; Potential Effects of Acquisitions" and "Business--Acquisition
Strategy."
The Company's principal executive offices are located at 11501 Northeast
Expressway, Oklahoma City, Oklahoma 73131, (405) 475-2500 and at 122 East 42nd
Street, New York, New York 10168, (212) 599-4690.
THE SIX FLAGS TRANSACTIONS
The Offering is one of a series of related transactions (the "Six Flags
Transactions") which will be consummated immediately prior to or concurrently
with the Offering. The elements of the Six Flags Transactions are:
THE PREMIER MERGER
The company presently named Premier Parks Inc. (together with its
consolidated subsidiaries, "Premier Operations") will merge in the Premier
Merger with a wholly-owned subsidiary of Premier Parks Holdings Corporation in
accordance with Section 251(g) of the Delaware General Corporation Law. As a
result of the Premier Merger, holders of shares of Common Stock of Premier
Operations will become, on a share-for-share basis, holders of Common Stock of
Premier Parks Holdings Corporation, and Premier Operations will become a
wholly-owned subsidiary of Premier Parks Holdings Corporation. On the effective
date of the Premier Merger, Premier Operations will change its name to Premier
Parks Operations Inc., and Premier Parks Holdings Corporation will change its
name to Premier Parks Inc.
THE SIX FLAGS ACQUISITION
Pursuant to an Agreement and Plan of Merger dated as of February 9, 1998
(the "Six Flags Agreement"), Premier will acquire by merger all of the capital
stock of SFEC from its current stockholders (the "Sellers") for $965 million
(plus an approximate $11 million adjustment based on year-end balance sheet
adjustments and option cancellation costs). The purchase price is payable all in
cash or, at the Company's option, in cash and Seller Depositary Shares
representing interests in up to $200.0 million of the Company's Convertible
Redeemable Preferred Stock (the "Seller Preferred Stock"). The Company may
reduce (but not below $100.0 million) or eliminate the Seller Depositary Shares
by increasing the cash portion of the purchase price. If the Seller Depositary
Shares are not issued, the additional cash portion of the purchase price will be
funded from the net proceeds of the Common Stock Offering. At the date of
acquisition, Six Flags' liabilities will include approximately $192.3 million
principal amount at maturity ($161.1 million accreted value at December 28,
1997) of SFEC's Zero Coupon Senior Notes due 1999 (the "SFEC Zero Coupon Senior
Notes") and approximately $285.0 million principal amount at maturity ($269.9
million accreted value at December 28, 1997) of 12 1/4% Senior Subordinated
Discount Notes due 2005 (the "SFTP Senior Subordinated Notes") of Six Flags
Theme Parks Inc. (together with its subsidiaries, "SFTP"), an indirect
wholly-owned subsidiary of SFEC. See "Description of Indebtedness." In addition,
the Company will refinance all outstanding Six Flags bank indebtedness
(approximately $348.5
9
<PAGE>
million at December 28, 1997) and certain other indebtedness of SFEC
(approximately $30.5 million at December 28, 1997). See "Description of Six
Flags Agreement."
THE FINANCINGS
In the Offerings:
1. The Company will issue (the "Common Stock Offering") 13,000,000 shares of
Common Stock with estimated gross proceeds of $593.2 million (based upon the
average closing price of the Company's Common Stock for the twenty trading days
ended February 27, 1998).
2. The Company will issue (the "EqPINES Offering") 5,000,000 EqPINES
representing interests in the Company's % Mandatorily Convertible Preferred
Stock (the "Mandatorily Convertible Preferred Stock" and, together with the
Seller Preferred Stock, the "Convertible Preferred Stock"), with estimated gross
proceeds of $228.2 million (based upon the average closing price of the
Company's Common Stock for the twenty trading days ended February 27, 1998). See
"Description of EqPINES."
3. The Company will issue (the "Discount Notes Offering") $ million
aggregate principal amount at maturity of its % Senior Discount Notes due
2008 (the "Company Senior Discount Notes") with estimated gross proceeds of
$250.0 million. See "Description of Indebtedness--Company Senior Discount
Notes."
4. The Company will issue (the "Senior Notes Offering") $280.0 million
principal amount of its % Senior Notes due 2006 (the "Company Senior Notes"
and, together with the Company Senior Discount Notes, the "Company Notes"). See
"Description of Indebtedness--Company Senior Notes."
5. SFEC will issue (the "SFEC Notes Offering") $170.0 million principal
amount of its % Senior Notes due 2006 (the "New SFEC Notes") guaranteed on a
fully subordinated basis by the Company. The proceeds of the New SFEC Notes,
together with additional funds, will be deposited in escrow to repay in full at
or prior to maturity the SFEC Zero Coupon Senior Notes. See "Description of
Indebtedness--New SFEC Notes."
In addition, the Company is using approximately $225.0 million of borrowings
under the Premier Credit Facility (as defined below) to pay the cash portion of
the Walibi purchase price and refinance certain Walibi net indebtedness (which
together are estimated to be $122.5 million) and to prefund capital expenditures
and provide working capital (which together are estimated to be approximately
$102.5 million). The Company will also borrow approximately $420.0 million under
a new $472.0 million Six Flags senior secured credit facility (the "Six Flags
Credit Facility" and, together with the Premier Credit Facility, the "Credit
Facilities") primarily to repay bank indebtedness of SFTP. See "Description of
Indebtedness-- Premier Credit Facility" and "--Six Flags Credit Facility."
The closing of the Offering is conditioned upon the closing of all other
elements of the Six Flags Transactions. Although the size of one or more of the
Offerings may be changed, the aggregate gross proceeds of all the Offerings is
not expected to change materially.
10
<PAGE>
The following table sets forth a summary of the expected sources and uses of
funds associated with the Six Flags Transactions:
<TABLE>
<CAPTION>
AMOUNT
(IN
SOURCES THOUSANDS)
-----------
<S> <C>
Common Stock Offering(1)(2).................................................... $ 593,190
EqPINES Offering(1)............................................................ 228,150
Issuance of Seller Depositary Shares(2)........................................ 200,000
Company Senior Discount Notes Offering(1)...................................... 250,000
Company Senior Notes Offering(1)............................................... 280,000
SFEC Notes Offering(1)......................................................... 170,000
Borrowings under the Premier Credit Facility(3)................................ 102,500
Borrowings under the Six Flags Credit Facility................................. 420,000
-----------
Total...................................................................... $2,243,840
-----------
-----------
USES
Acquisition of SFEC capital stock.............................................. $ 965,000
Adjustment to purchase price of SFEC capital stock............................. 11,000
Deposit for repayment of SFEC Zero Coupon Senior Notes......................... 175,030
Repayment of Six Flags indebtedness............................................ 382,430
Interest escrow for Company Senior Notes(4).................................... 76,260
Restricted Cash Account(5)..................................................... 75,000
Financing of tender offer for partnership interests in Six Flags Over
Texas(6)..................................................................... 117,250
Prefunding of capital expenditures and working capital(7)...................... 350,450
Transaction offering fees, expenses, discounts and escrows..................... 91,420
-----------
Total...................................................................... $2,243,840
-----------
-----------
</TABLE>
- ------------------------
(1) Reflects assumed gross proceeds.
(2) If the Company determines not to issue the Seller Depositary Shares, the
additional cash necessary to pay that portion of the purchase price for the
Six Flags Acquisition will be funded from net proceeds of the Common Stock
Offering.
(3) Does not include an estimated $122.5 million (assuming a 100% Walibi Tender
Offer (as defined herein)) of borrowings to be used to fund the Walibi
acquisition.
(4) Represents escrow to prefund the first six semi-annual interest payments
thereon.
(5) Represents restricted cash to satisfy obligations under the arrangements
relating to the Co-Venture Parks (as defined herein) and to fund dividends
on the Convertible Preferred Stock, as required under the indentures that
will govern the Company Notes. See "Description of Securities--Preferred
Stock--Seller Preferred Stock" and "Description of EqPINES--Dividends."
(6) Reflects tender of approximately 33% of the units representing limited
partnership interests. See "Business--Description of Parks--Six Flags Over
Texas and Six Flags Hurricane Harbor."
(7) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations-- Liquidity, Capital Commitments and Resources."
11
<PAGE>
Following the Six Flags Transactions, the Company's structure will be:
Chart demonstrating Parent-Subsidiary relationships and the respective
debt/credit obligations of each such entity following the Offerings.
12
<PAGE>
OTHER RECENT DEVELOPMENTS
KENTUCKY KINGDOM. In November 1997, the Company acquired all of the
membership interests of the limited liability company that owns substantially
all of the assets used in the operation of Kentucky Kingdom, a combination theme
and water park located in Louisville, Kentucky, for an aggregate purchase price
of $64.0 million, of which approximately $4.8 million was paid by delivery of
121,671 shares of Common Stock, with the balance paid in cash and by the
assumption of liabilities. Depending upon the level of revenues at Kentucky
Kingdom during each of the 1998-2000 seasons, the Company may be required to
issue additional shares of Common Stock to the seller.
MARINE WORLD. In April 1997, the Company became manager of Marine World, a
marine and exotic wildlife park located in Vallejo, California, pursuant to a
contract with an agency of the City of Vallejo under which the Company is
entitled to receive an annual base management fee of $250,000 and up to $250,000
annually in additional fees based on park performance. In November 1997, the
Company exercised an option to lease approximately 40 acres of land within the
site for nominal rent and an initial term of 55 years (plus four ten-year and
one four-year renewal options). The Company intends to expand the park's
entertainment component by adding theme park rides and attractions on the leased
land, which is located within the existing park, in order to create one
fully-integrated regional theme park at the site. Premier is entitled to
receive, in addition to the management fee, 80% of the cash flow generated by
the combined operations at the park, after combined operating expenses and debt
service on outstanding debt obligations relating to the park. The Company is
currently implementing the first phase of the expansion of the entertainment
component at Marine World. The Company also has an option to purchase the entire
site commencing in February 2002 at a purchase price equal to the greater of the
then principal amount of certain debt obligations of the seller (expected to
aggregate $52.0 million at February 2002) or the then fair market value of the
seller's interest in the park (based on a formula relating to the seller's 20%
share of Marine World's cash flow). The Company currently expects to exercise
this purchase option when it becomes exercisable.
WALIBI. In December 1997, the Company entered into an agreement (the
"Walibi Agreement") with three of the principal stockholders of Walibi, S.A.
("Walibi"), pursuant to which the Company expects to purchase in March 1998
approximately 50% of the outstanding capital stock of Walibi (the "Private
Acquisition"). Following the closing of the Private Acquisition, the Company
will commence a "public takeover bid," as defined and regulated under Belgian
law (the "Walibi Tender Offer"), for the remainder of the outstanding capital
stock of Walibi.
Walibi is a corporation (SOCIETE ANONYME) organized under the laws of
Belgium. Walibi's stock is currently traded on the Official Market of the
Brussels Stock Exchange. It owns six theme parks (the "Walibi Parks"), two
located in Belgium, one in The Netherlands and three in France, as well as two
smaller attractions in Belgium. Walibi's operations had combined 1997 attendance
of approximately 3.5 million.
The transaction values Walibi at approximately $139.5 million (at the
exchange rate of Belgian Francs ("BEF") 37.065 to US$1 on December 31, 1997),
based on a multiple of seven times Walibi's 1997 EBITDA. This amount includes
the assumption or refinancing of Walibi net indebtedness (total debt less cash
and cash equivalents) which aggregated approximately $53.0 million at December
31, 1997. As a result, the aggregate consideration to be paid by the Company for
the outstanding stock of Walibi (assuming the Company acquires 100% of the
outstanding Walibi capital stock pursuant to the Walibi Tender Offer) will be
$86.5 million (based on the year-end exchange rate). The purchase price in the
Private Acquisition will be paid 80% in cash in BEF and 20% in Common Stock
(approximately 229,000 shares). Shares of Common Stock issued in the Private
Acquisition will not be registered under the Securities Act and will be subject
to a "lock-up" agreement until the later of June 6, 1998 or 41 days after the
consummation of the Private Acquisition. The Company has agreed to grant certain
registration rights
13
<PAGE>
under the Securities Act to the sellers in the Walibi acquisition with respect
to shares issued in the Private Acquisition. The consideration offered in the
Walibi Tender Offer will be payable at the election of the holders of Walibi
capital stock (i) in cash only or (ii) in cash and shares of Common Stock in the
same ratio as the Private Acquisition. The Company will fund the cash portion of
the purchase price of the Walibi acquisition (as well as the refinancing of
certain indebtedness of Walibi) from borrowings under a $300.0 million senior
secured credit facility (the "Premier Credit Facility") entered into by Premier
Operations in March 1998. See "Description of Indebtedness--Premier Credit
Facility." In addition, the Company will be obligated to issue additional shares
of Premier Common Stock in the event certain gross revenue targets are met for
the Walibi Parks.
Under the terms of the Walibi Agreement, the Company has agreed to invest at
least BEF 1.4 billion (approximately $38 million based on the year-end exchange
rate) in the Walibi Parks over the three years commencing with the 1999 season.
14
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered(1):
U.S. Offering................... 10,400,000 shares
International Offering.......... 2,600,000 shares
Total......................... 13,000,000 shares
Common Stock outstanding:
prior to the Offering(2)........ 18,873,111 shares
after the Offering(3)........... 32,331,111 shares
The Offerings..................... The Company is concurrently offering (i) 13,000,000
shares of Common Stock, (ii) 5,000,000 EqPINES
representing interests in Mandatorily Convertible
Preferred Stock with estimated gross proceeds of $228.2
million, (iii) $ million aggregate principal
amount at maturity of Company Senior Discount Notes,
with estimated gross proceeds of $250.0 million, and
(iv) $280.0 million principal amount of Company Senior
Notes. In addition, SFEC is offering $170.0 million of
New SFEC Notes. The Company also may issue Seller
Depositary Shares representing interests in up to $200.0
million of Seller Preferred Stock as part of the
consideration for the Six Flags Acquisition. See "--The
Six Flags Transactions," "Description of
Indebtedness--Company Senior Discount Notes," "--Company
Senior Notes," "--New SFEC Notes," "Description of
Securities--Preferred Stock--Seller Preferred Stock" and
"Description of EqPINES." The Offerings are conditioned
upon the closing of all other elements of the Six Flags
Transactions.
Use of Proceeds................... The Company intends to apply the net proceeds from the
Offerings to fund the cash portion of the purchase price
for the Six Flags Acquisition; to provide for the
repayment in full of the SFEC Zero Coupon Senior Notes
and for certain interest payments on the the Company
Senior Notes; to fund improvements and expansion of the
Company's parks, including the parks acquired in the Six
Flags Acquisition and the 1997 Acquisitions; to acquire
and make improvements at additional theme parks; and for
general corporate purposes, including working capital
requirements. See "Use of Proceeds."
NYSE symbols:
Common Stock.................... "PKS"
EqPINES......................... "PKSPrA"
</TABLE>
- ------------------------
(1) Excludes 1,950,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment options.
(2) Includes an aggregate of 375,000 unvested restricted shares issued to the
Company's Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer, which vest proportionately on January 1 of the five years
commencing 1999. Excludes (i) an aggregate of 45,039 shares of Common Stock
issuable upon exercise of warrants; (ii) an aggregate of 1,270,000 shares of
Common Stock reserved for issuance under the Company's Stock Incentive
Plans, of which options for 764,700 shares have been granted and options for
455,800 shares are presently exercisable; and (iii) an aggregate of 450,000
additional restricted shares issuable at the option of the Company to the
Company's Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer, under employment agreements with such officers.
(3) Assumes the issuance of 229,000 shares in the Private Acquisition and
229,000 shares in the Walibi Tender Offer. Excludes (i) any shares issuable
to the sellers in the Kentucky Kingdom and Walibi acquisitions depending
upon the future revenues of the acquired parks; (ii) shares issuable upon
conversion of the Convertible Preferred Stock or as dividends on the
Mandatorily Convertible Preferred Stock; and (iii) 1,950,000 shares of
Common Stock issuable upon exercise of the Underwriters' over-allotment
options.
15
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA DATA
The tables below contain certain summary historical and pro forma financial
and operating data for the Company and certain summary historical financial and
operating data for Six Flags. The historical financial data of the Company for
1996 includes the 1996 Acquisitions (other than Riverside Park) from the dates
of the respective acquisitions. The pro forma financial and operating data of
the Company for the year ended December 31, 1997 give effect to (i) the
acquisitions of Walibi (assuming a 100% Walibi Tender Offer on the basis of 80%
payable in cash and 20% payable in shares of Common Stock) and Kentucky Kingdom
as if they had occurred on January 1, 1997; and (ii) the acquisition of Six
Flags as if it had occurred on December 30, 1996 (the first day of Six Flags'
1997 fiscal year). The following summary historical financial and operating
data, except for attendance and revenue per visitor data, for each of the years
in the three-year period ended December 31, 1997 (or December 28, 1997 in the
case of Six Flags) have been derived from the financial statements of the
Company and Six Flags appearing elsewhere in this Prospectus and should be read
in conjunction with those financial statements (including the notes thereto),
"Unaudited Pro Forma Financial Statements" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Other historical
financial and operating data (except attendance and revenue per visitor data)
have been derived from audited consolidated financial statements which are not
included herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1993 1994 1995(1) 1996(2) 1997
--------- --------- ----------- ----------- ------------------------
<CAPTION>
PRO
ACTUAL(3) FORMA(4)
----------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, RATIO AND PER VISITOR AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
THE COMPANY
STATEMENT OF OPERATIONS DATA:
Total revenue.............................. $ 21,860 $ 24,899 $ 41,496 $ 93,447 $ 193,904 $ 815,333
Gross profit(5)............................ 7,787 7,991 13,220 31,388 69,731 263,200
Income from operations(5).................. 3,019 2,543 3,948 14,461 33,184 131,620
Interest expense, net...................... (1,438) (2,299) (5,578) (11,121) (17,775) (180,273)
Income (loss) before extraordinary loss.... 1,354 102 (1,045)(6) 1,765 14,099 (41,292)
Income (loss) before extraordinary loss per
common share--Basic...................... $ .51 $ .04 $ (.40)(6) $ .14 $ .79 $ (2.14)
--Diluted.................... $ .51 $ .04 $ (.40)(6) $ .13 $ .76 $ (2.14)
OTHER DATA:
EBITDA(7).................................. $ 4,562 $ 4,549 $ 7,706 $ 22,994 $ 61,340(8) $ 263,455
Adjusted EBITDA(9)......................... -- -- -- -- -- $ 306,037
Net cash provided by operating
activities(10)........................... $ 2,699 $ 1,060 $ 10,646 $ 11,331 $ 47,150 $ 153,027
Depreciation and amortization.............. $ 1,537 $ 1,997 $ 3,866 $ 8,533 $ 19,792 $ 107,138
Capital expenditures....................... $ 7,674 $ 10,108 $ 10,732 $ 39,423 $ 135,852 $ 212,229(11)
Total attendance........................... 1,322 1,408 2,302 (12 4,518 (12 8,631 (12 36,530(13)
Revenue per visitor(14).................... $ 16.54 $ 17.68 $ 18.03 $ 20.66 $ 22.18 $ 27.37
SELECTED RATIOS:
Net debt/EBITDA(15)........................ -- -- -- -- -- 4.8x
Total debt/EBITDA(15)...................... -- -- -- -- -- 7.0x
EBITDA/cash interest expense(15)........... -- -- -- -- -- 2.2x
EBITDA/total interest expense(15).......... -- -- -- -- -- 1.4x
Ratio of earnings to fixed charges(16)..... 2.1x 1.1x (16) 1.3 x 2.3 x (16)
Ratio of earnings to combined fixed charges
and preferred stock dividends(16)........ 2.1x 1.1x (16) 1.2 x 2.3 x (16)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------
ACTUAL(17) PRO FORMA(18)
----------- --------------
<S> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................ $ 84,288 $ 479,804(19)
Total assets......................................................................... $ 611,321 $3,553,662
Total long-term debt and capitalized lease obligations (excluding current
maturities)........................................................................ $ 216,231 $2,032,831
Total debt........................................................................... $ 217,026 $2,035,626
Mandatorily redeemable preferred stock............................................... -- $ 200,000
Stockholders' equity................................................................. $ 323,749 $1,130,180
</TABLE>
(SEE FOOTNOTES ON FOLLOWING PAGE)
16
<PAGE>
- ------------------------
(1) The historical Statement of Operations Data for 1995 reflect the results of
the parks acquired in the Funtime Acquisition from the date of acquisition,
August 15, 1995.
(2) The historical Statement of Operations Data for 1996 reflect the results of
Elitch Gardens from October 31, 1996, the Waterworld Parks from November
19, 1996 and The Great Escape from December 4, 1996 (the dates of their
respective acquisitions).
(3) The historical Statement of Operations Data for 1997 reflect the results of
Riverside Park from February 5, 1997 and Kentucky Kingdom from November 7,
1997 (the dates of their respective acquisitions).
(4) The pro forma financial and operating data for the year ended December 31,
1997 give effect to (i) the acquisitions of Walibi (assuming a 100% Walibi
Tender Offer on the basis of 80% payable in cash and 20% payable in shares
of Common Stock) and Kentucky Kingdom as if they had occurred on January 1,
1997; and (ii) the acquisition of Six Flags as if it had occured on
December 30, 1996 (the first day of Six Flags' 1997 fiscal year). The pro
forma income per share for 1997 gives effect to the January 1997 public
offering, the Common Stock Offering and the EqPINES Offering (assuming no
exercise of the Underwriters' over-allotment options) as if they had
occurred on January 1, 1997. See "Unaudited Pro Forma Financial
Statements-- Unaudited Pro Forma Statement of Operations" generally and
with respect to certain assumptions used in respect of the related
financings.
(5) Gross profit is revenue less operating expenses, costs of products sold and
depreciation and amortization. Income from operations is gross profit less
selling, general and administrative expenses.
(6) During 1995, the Company incurred an extraordinary loss of $140,000, net of
income tax benefit, on extinguishment of debt in connection with the
Funtime Acquisition. This extraordinary loss is not included in income
(loss) before extraordinary loss and income (loss) before extraordinary
loss per common share for 1995.
(7) EBITDA is defined as earnings before extraordinary loss, interest expense,
net, income tax expense (benefit), depreciation and amortization, minority
interest and equity in loss of real estate partnership. The Company has
included information concerning EBITDA because it is used by certain
investors as a measure of the Company's ability to service and/or incur
debt. EBITDA is not required by generally accepted accounting principles
("GAAP") and should not be considered in isolation or as an alternative to
net income, net cash provided by operating, investing and financing
activities or other financial data prepared in accordance with GAAP or as
an indicator of the Company's operating performance. This information
should be read in conjunction with the Statements of Cash Flows contained
in the Company's financial statements included elsewhere herein. Equity in
loss of real estate partnership was $142,000, $83,000, $69,000, $78,000 and
$59,000 during each of the five years ended December 31, 1997,
respectively. Pro Forma EBITDA includes equity in operations of theme parks
and the depreciation and amortization ($6,830,000) of the investment in the
Co-Venture Parks (as defined herein) included therein.
(8) Includes an $8,364,000 termination fee paid to the Company upon termination
of its prior agreement to become managing general partner of the Texas
Co-Venture Partnership (as defined herein). Such termination fee is not
included in the pro forma amounts.
(9) Adjusted EBITDA reflects the Company's pro forma EBITDA plus the portion of
the pro forma EBITDA of Six Flags Over Georgia and Six Flags Over Texas
(the "Co-Venture Parks") ($34,672,000) distributed on a pro forma basis to
the other limited partners and therefore not included in the Company's pro
forma EBITDA. See Note (1) to the Six Flags Selected Historical Financial
and Operating Data. The Co-Venture Partnership (as defined herein)
agreements restrict the amount of cash distributable to the Company. See
"Business--Description of Parks--Six Flags Parks--Six Flags Over Georgia"
and "--Six Flags Over Texas and Six Flags Hurricane Harbor." Adjusted
EBITDA also includes $7,910,000 of pro forma EBITDA of Marine World for
1997 which is not already reflected in the Company's pro forma EBITDA. The
Company manages the operations of Marine World and has an option to
purchase the entire park beginning in February 2002. Adjusted EBITDA is not
indicative of the Company's ability to service or incur indebtedness and is
not a measure of the Company's profitability or liquidity. Adjusted EBITDA
is not meant to be predictive of future operating results.
(10) During each of the five years ended December 31, 1997, the Company's net
cash used in investing activities was $7,698,000, $10,177,000, $74,139,000,
$155,149,000 and $217,070,000, respectively. During those periods, net cash
provided by financing activities was $2,106,000, $7,457,000, $90,914,000,
$119,074,000 and $250,165,000, respectively.
(11) Does not include pro forma amount expended ($93,700,000) by the Company to
purchase interests of the limited partners in the Co-Venture Partnerships.
(12) Represents in the case of 1995 attendance at the three parks owned by the
Company prior to the Funtime Acquisition for the entire 1995 season and
attendance at the Funtime parks from and after August 15, 1995. In the case
of 1996, historical attendance does not include attendance at any of the
parks acquired in the 1996 Acquisitions since those acquisitions were
completed following the 1996 season. Historical attendance for the year
ended December 31, 1997 does not include attendance at Marine World or
attendance at Kentucky Kingdom since that park was acquired following the
1997 season.
(13) Pro forma attendance information includes attendance at Marine World for
1997.
(14) Pro forma and historical revenue per visitor for all applicable periods
does not include revenue of Paradise Island (a fee-per-attraction
entertainment center that does not track attendance, acquired in November
1996). Pro forma revenue per visitor also excludes revenue and attendance
of Marine World and the Co-Venture Parks.
(15) Total debt/EBITDA and Net debt/EBITDA include total outstanding pro forma
indebtedness of the Company (excluding the SFEC Zero Coupon Senior Notes)
in the accreted principal amount of $1,831,951,000. Net debt deducts from
total outstanding pro forma indebtedness $556,064,000 (representing
$479,804,000 of pro forma cash and cash equivalents and $76,260,000 of pro
forma restricted-use investments placed in escrow to fund the first six
semi-annual interest payments on the Company Senior Notes). See
"Capitalization." EBITDA/cash interest expense is calculated using pro
forma cash interest expense of $119,492,000. EBITDA/total interest expense
is calculated using pro forma total interest expense $185,712,000
(excluding interest on the SFEC Zero Coupon Senior Notes).
(16) For the purpose of determining the ratio of earnings to fixed charges, and
the ratio of earnings to combined fixed charges and preferred stock
dividends, earnings consist of income (loss) before extraordinary loss and
before income taxes and fixed charges. Fixed charges consist of interest
expense net of interest income, amortization of deferred financing costs
and discount or premium relating to indebtedness, and the portion
(approximately one-third) of rental expense that management believes
represents the interest component of rent expense. Preferred stock dividend
requirements have been increased to an amount representing the before tax
earnings which would have been required to cover such dividend
requirements. For the year ended December 31, 1995, the Company's earnings
were insufficient to cover fixed charges by $1,738,000, and were
insufficient to cover combined fixed charges and preferred stock dividends
by $2,620,000. On a pro forma basis, for the year ended December 31, 1997,
the Company's earnings were insufficient to cover fixed charges and
combined fixed charges and preferred stock dividends by $31,818,000 and
$77,720,000, respectively.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
17
<PAGE>
(17) Actual balance sheet data as of December 31, 1997 include the Company's
purchase of Kentucky Kingdom and investment in Marine World as of that
date.
(18) The pro forma balance sheet data give effect to the acquisitions of Walibi
(assuming a 100% Walibi Tender Offer on the basis of 80% payable in cash
and 20% payable in shares of Common Stock) and Six Flags, the Offerings
(assuming no exercise of the underwriters' over-allotment options) and the
related financings as if they had occurred on December 31, 1997. Includes
SFEC Zero Coupon Senior Notes as well as cash held in escrow to repay the
SFEC Zero Coupon Senior Notes. Pro forma total long-term debt and total
debt include SFEC Zero Coupon Senior Notes and SFTP Senior Subordinated
Notes at fair value rather than accreted amount. See "Capitalization." See
also "Unaudited Pro Forma Financial Statements--Unaudited Pro Forma Balance
Sheet" generally and with respect to certain assumptions used in respect of
the related financings.
(19) Excludes $326,300,000 of restricted-use investments. See "Capitalization."
---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DECEMBER 26, JANUARY 1, DECEMBER 31, DECEMBER 29, DECEMBER 28,
<CAPTION>
1993 1995 1995 1996 1997
------------- ----------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER VISITOR AMOUNTS)
<S> <C> <C> <C> <C> <C>
SIX FLAGS
STATEMENT OF OPERATIONS DATA:(1)
Total revenue............................... $ 532,455 $ 556,791 $ 629,457 $ 680,876 $ 708,666
Income from operations(2)................... 53,236 54,561 66,738 67,715 79,575
Interest expense, net....................... (54,963) (48,753) (63,282) (76,530) (84,430)
Net (loss).................................. (12,944) (695) (3,287) (15,249) (3,708)
OTHER DATA:
EBITDA(3)................................... 122,371 134,642 150,182 155,132 164,068
Net cash provided by operating
activities(4)............................. 111,934 100,895 124,587 128,602 110,303
Depreciation and amortization............... 69,135 80,081 83,444 87,417 84,493
Capital expenditures........................ 34,057 42,039 45,578 75,627 67,675(5)
Total attendance............................ 19,144 19,855 21,830 22,796 22,229
Revenue per visitor......................... $ 27.81 $ 28.04 $ 28.83 $ 29.87 $ 31.88
</TABLE>
- ------------------------
(1) Prior to the Six Flags Acquisition, Six Flags, through two subsidiaries,
was the general partner in theme park limited partnerships (the "Co-Venture
Partnerships") related to the Co-Venture Parks. For the fiscal years
presented, Six Flags accounted for the parks as co-ventures, i.e., their
revenues and expenses (excluding partnership depreciation) were included in
the Six Flags consolidated statements of operations and the net amounts
distributed to the limited partners were deducted as expenses. Except for
the limited partnership units owned in the Georgia park at December 28,
1997, Six Flags had no rights or title to the Co-Venture Parks' assets or
to the proceeds from any sale of the Co-Venture Parks' assets or
liabilities during the periods presented. The Co-Venture Parks contributed
revenues of $160.6 million, $152.0 million and $176.8 million to Six Flags
in the fiscal years 1995, 1996 and 1997, respectively. During these three
fiscal years, the Co-Venture Parks contributed EBITDA of $36.8 million,
$24.3 million and $34.7 million (after payments of $11.6 million, $ 8.1
million and $21.3 million to the limited partners). In 1995, 1996 and 1997,
the Co-Venture Parks produced $48.4 million, $32.4 million and $56.0
million of EBITDA, respectively. In connection with the Six Flags
Acquisition, Six Flags is transferring its interests in the Co-Venture
Parks to Premier. Premier intends to account for its interests in the
Co-Venture Parks under the equity method of accounting.
(2) Income from operations is revenue less operating, general and
administrative expenses, costs of products sold and depreciation and
amortization.
(3) EBITDA is defined as earnings before interest expense, net, income tax
expense (benefit), depreciation and amortization and minority interest. The
Company has included information concerning EBITDA because it is used by
certain investors as a measure of a company's ability to service and/or
incur debt. EBITDA is not required by generally accepted accounting
principles ("GAAP") and should not be considered in isolation or as an
alternative to net income, net cash provided by operating, investing and
financing activities or other financial data prepared in accordance with
GAAP or as an indicator of the Six Flags operating performance. This
information should be read in conjunction with the Statements of Cash Flows
contained in the financial statements of Six Flags included elsewhere
herein.
(4) During each of the fiscal years ended December 26, 1993, January 1, 1995,
December 31, 1995, December 29, 1996 and December 28, 1997, Six Flags' net
cash used in investing activities was approximately $41.6 million, $43.8
million, $93.9 million, $81.2 million, and $149.7 million, respectively.
During these periods, net cash provided (used) in financing activities was
approximately $(73.2) million, $(55.6) million, $10.6 million, $(52.2)
million, and $10.6 million, respectively.
(5) Does not include amount expended ($62.7 million) by Six Flags to purchase
interests of the limited partners in the Co-Venture Partnerships.
18
<PAGE>
RISK FACTORS
PRIOR TO MAKING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE OTHER MATTERS REFERRED TO
IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS:
RISKS ASSOCIATED WITH SUBSTANTIAL INDEBTEDNESS AND OTHER OBLIGATIONS
Following the Six Flags Transactions, the Company will be highly leveraged.
On a pro forma basis, as of December 31, 1997, the Company had total outstanding
indebtedness (excluding the SFEC Zero Coupon Senior Notes) in the accreted
principal amount of approximately $1,832.0 million, including (i) $250.0 million
in accreted value at that date of the Company Senior Discount Notes ($
million principal amount at maturity in 2008); (ii) $280.0 million in aggregate
principal amount of Company Senior Notes; (iii) $125.0 million in aggregate
principal amount of Premier Operations' 9 3/4% Senior Notes due 2007 (the "1997
Premier Notes"); (iv) $90.0 million in aggregate principal amount of Premier
Operations' 12% Senior Notes due 2003 (the "1995 Premier Notes" and, together
with the 1997 Premier Notes, the "Premier Notes"); (v) $269.9 million in
accreted value at that date of SFTP Senior Subordinated Notes ($285.0 million
principal amount at maturity in 2005); (vi) $170.0 million in aggregate
principal amount of New SFEC Notes (together with the Company Notes, the Premier
Notes and the SFTP Senior Subordinated Notes, the "Senior Notes"); (vii) $225.0
million in outstanding borrowings under the Premier Credit Facility; (viii)
$420.0 million in outstanding borrowings under the Six Flags Credit Facility and
(ix) $2.0 million of capitalized lease obligations. Pro forma indebtedness at
that date also included $161.1 million accreted value of SFEC Zero Coupon Senior
Notes, which will be repaid from the proceeds of the New SFEC Notes together
with other funds. On a pro forma basis, as of December 31, 1997, the Company
would have had stockholders' equity of approximately $1,130.2 million. In
addition, the annual dividends (which are payable in cash, in the case of the
Seller Preferred Stock, or in cash, or by issuance of shares of Common Stock, at
the option of the Company, in the case of the Mandatorily Convertible Preferred
Stock) on the Convertible Preferred Stock aggregate $ , and the Company
is required to offer to purchase the Seller Preferred Stock in 2010 (if not
earlier redeemed or converted). On a pro forma basis, for the year ended
December 31, 1997, the Company's earnings would have been insufficient to cover
its combined fixed charges and preferred stock dividends by approximately $77.7
million. In addition, the indentures relating to the Senior Notes (the
"Indentures") permit the Company to incur additional indebtedness under certain
circumstances. See "Capitalization," "Selected Historical and Pro Forma
Financial and Operating Data," "Unaudited Pro Forma Financial Statements" and
"Description of Indebtedness."
By reason of the Six Flags Acquisition, the Company will be required to
offer to repurchase the SFTP Senior Subordinated Notes at a price equal to 101%
of their accreted amount (approximately $287.9 million at June 15, 1998). On
March 23, 1998, the last reported sales price of these notes was substantially
in excess of their accreted amount. The Company has not entered into any standby
arrangement to finance the purchase of such notes, and there can be no assurance
that the Company would be able to obtain such financing in the event that it
were to become necessary.
In addition to its obligations under its outstanding indebtedness and
preferred stock, the Company is required to (i) make minimum annual
distributions of approximately $46.2 million (subject to cost of living
adjustments) to its partners in two Six Flags Parks, Six Flags Over Georgia and
Six Flags Over Texas (the "Co-Venture Parks") and (ii) make minimum capital
expenditures at each of the Co-Venture Parks during rolling five-year periods,
based generally on 6% of such park's revenues. Cash flow from operations at the
Co-Venture Parks will be used to satisfy these requirements first, before any
funds are required from the Company. The Company has also agreed to purchase a
maximum number of 5% per year (accumulating to the extent not purchased in any
given year) of the total limited partnership units outstanding as of the date of
the co-venture agreements that govern the partnerships (to the extent tendered
by the unit holders). The agreed price for these purchases is based on a
valuation for each respective Co-Venture Park equal to the greater of (i) a
value derived by multiplying its weighted-average four year EBITDA (as defined
therein) by a specified multiple (8.0 in the case of the Georgia park and 8.5 in
the case of the Texas park)
19
<PAGE>
or (ii) $250.0 million in the case of the Georgia park and $374.8 million in the
case of the Texas park. The Company's obligations with respect to Six Flags Over
Georgia and Six Flags Over Texas will continue until 2027 and 2028,
respectively. In March 1998 Six Flags completed a tender offer pursuant to which
it purchased approximately 33% of the outstanding limited partner units in the
Texas park for an aggregate purchase price of $117.3 million. Six Flags funded
the tender from borrowings which must be refinanced by the Company in connection
with the Six Flags Acquisition. The Company has assumed a 25% tender for
purposes of preparing the pro forma financial information contained herein.
Since a larger number of units were tendered, the Company will be required to
refinance the additional indebtedness of Six Flags incurred by virtue thereof
and, accordingly, will have less cash to prefund capital expenditures and
working capital requirements.
As the Company purchases units relating to either Co-Venture Park, it will
be entitled to the minimum distribution and other distributions attributable to
such units, unless it is then in default under the applicable agreements with
its partners at such Co-Venture Park. Time Warner Inc. and certain of its
affiliates (collectively, "Time Warner") have guaranteed the obligations of Six
Flags under these agreements. Premier will indemnify Time Warner in respect of
its guarantee pursuant to a Subordinated Indemnity Agreement (the "Subordinated
Indemnity Agreement"). See "Description of Six Flags Agreement." The Company
estimates that its maximum unit purchase obligation for 1998, when purchases are
required only for the Georgia park, will aggregate approximately $13 million
(approximately $31 million for 1999, when purchases for both partnerships are
required) and its minimum capital expenditures for 1998 at these parks will
total approximately $11 million. See "Business--Description of Parks--Six Flags
Parks--Six Flags Over Georgia" and "--Six Flags Over Texas and Six Flags
Hurricane Harbor." In addition, the Company has agreed to invest approximately
$38 million to expand the six Walibi Parks over three years, commencing 1999.
The Company's ability to make scheduled payments on, or to refinance, its
indebtedness, to pay dividends on its preferred stock, or to fund planned
capital expenditures and its obligations under the arrangements relating to the
Co-Venture Parks, will depend on its future performance, which, to a certain
extent, is subject to general economic, financial, weather, competitive and
other factors that are beyond its control. The Company believes that, based on
current and anticipated operating results, cash flow from operations, available
cash, available borrowings under the Credit Facilities and the net proceeds of
the Offerings (to the extent not used in connection with the Six Flags
Acquisition) will be adequate to meet the Company's future liquidity needs,
including anticipated requirements for working capital, capital expenditures,
scheduled debt and preferred stock dividends and its obligations under
arrangements relating to the Co-Venture Parks, for at least the next several
years. The Company may, however, need to refinance all or a portion of its
existing debt on or prior to maturity or to obtain additional financing. There
can be no assurance that the Company's business will generate sufficient cash
flow from operations, that currently anticipated cost savings will be realized
or that future borrowings will be available under the Credit Facilities in an
amount sufficient to enable the Company to service its indebtedness or to fund
its other liquidity needs. In addition, there can be no assurance that the
Company will be able to effect any such refinancing on commercially reasonable
terms or at all. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity, Capital Commitments and
Resources."
The degree to which the Company will be leveraged following the Six Flags
Transactions could have important consequences to the Company, including, but
not limited to: (i) making it more difficult for the Company to satisfy its
obligations, (ii) increasing the Company's vulnerability to general adverse
economic and industry conditions, (iii) limiting the Company's ability to obtain
additional financing to fund future working capital, capital expenditures,
acquisitions and other general corporate requirements, (iv) requiring the
dedication of a substantial portion of the Company's cash flow from operations
to the payment of principal of, and interest on, its indebtedness and dividends
on its preferred stock, thereby reducing the availability of such cash flow to
fund working capital, capital expenditures, acquisitions or other general
corporate purposes, (v) limiting the Company's flexibility in planning for, or
reacting to, changes in its business and the industry, and (vi) placing the
Company at a competitive disadvantage vis-a-vis less
20
<PAGE>
leveraged competitors. In addition, the Indentures and the Credit Facilities
will contain financial and other restrictive covenants that will limit the
ability of the Company to, among other things, borrow additional funds. Failure
by the Company to comply with such covenants could result in an event of default
which, if not cured or waived, would have a material adverse effect on the
Company. See "Description of Indebtedness."
The Company's inability to service its obligations would have a material
adverse effect on the market value and marketability of the Common Stock and the
EqPINES. In the event of bankruptcy proceedings involving the Company, the
Company's creditors will have a claim upon the Company's assets prior in right
to the holders of Common Stock and EqPINES.
HOLDING COMPANY STRUCTURE; LIMITATIONS ON ACCESS TO CASH FLOW OF SUBSIDIARIES
The Company has no operations of its own and derives all of its revenue from
its subsidiaries. Therefore, the Company's ability to pay its obligations
(including debt service on the Company Senior Discount Notes, the Company Senior
Notes and dividend and redemption obligations on the Convertible Preferred Stock
and obligations under the Subordinated Indemnity Agreement with Time Warner)
when due is dependent upon the receipt of sufficient funds from its direct and
indirect subsidiaries. SFEC is also a holding company and its ability to pay its
obligations (including debt service on the New SFEC Notes) when due, as well as
to pay any dividends or distributions to the Company, is similarly dependent.
Under the terms of the indentures governing the Premier Notes, the SFTP
Senior Subordinated Notes and the New SFEC Notes, the Premier Credit Facility
and the Six Flags Credit Facility, the payment of dividends by Premier
Operations, SFEC and SFTP are subject to restrictive covenants that will
significantly restrict or prohibit their ability to pay dividends or make other
distributions to the Company. See "Description of Indebtedness" for a summary of
the terms of the dividend restrictions. In addition, the terms of the Company
Notes and the Mandatorily Convertible Preferred Stock will permit the Company's
subsidiaries to incur additional indebtedness, the terms of which could limit or
prohibit the payment of dividends or the making of other distributions by such
subsidiaries. The Premier Credit Facility will prohibit the payment of dividends
by Premier Operations to the Company for any purpose other than a one time
distribution, not to exceed $20.0 million, on the date of the Six Flags
Acquisition. The Six Flags Credit Facility will prohibit the payment of
dividends by SFTP to SFEC or the Company, except a one time distribution, not to
exceed $10.0 million, and dividends to provide funds to pay dividends on the
Seller Preferred Stock and to pay interest on the New SFEC Notes (but in each
case, only if no default has occurred and is continuing under the Six Flags
Credit Facility). As a result, there can be no assurance that dividends,
distributions or loans to the Company from its subsidiaries will be sufficient
to fund its obligations. See "Description of Indebtedness."
If any indebtedness of any of the Company's subsidiaries were to be
accelerated, there would be no assurance that the assets of any such subsidiary
would be sufficient to repay such indebtedness. The Company's rights to
participate in the distribution of the assets of its operating subsidiaries upon
a liquidation or reorganization of such companies will be subject to the prior
claims of their respective creditors.
RESTRICTIVE DEBT COVENANTS
The Credit Facilities contain a number of significant covenants that, among
other things, restrict the ability of the Company's operating subsidiaries to
dispose of assets, incur additional indebtedness, pay cash dividends, create
liens on assets, make investments or acquisitions, engage in mergers or
consolidations, make capital expenditures, engage in certain transactions with
affiliates or redeem or repurchase the indebtedness of such subsidiaries. In
addition, under the Credit Facilities, Premier Operations and SFTP are each
required to comply with specified financial ratios and tests, including interest
expense, fixed charges and total debt coverage ratios. The Indentures also
contain a series of restrictive covenants.
The Company is currently in compliance with the covenants and restrictions
contained in the Credit Facilities and the applicable Indentures. However, its
ability to continue to comply with financial tests and
21
<PAGE>
ratios in the Credit Facilities may be affected by events beyond its control,
including prevailing economic, financial, weather and industry conditions. The
breach of any such financial covenant could result in the termination of the
Credit Facilities (and the acceleration of the maturity of all amounts
outstanding thereunder) and, by virtue of cross default provisions, the
acceleration of the maturity of other indebtedness of the Company, including the
Senior Notes.
In addition, under the terms of the Subordinated Indemnity Agreement (which
lasts until 2028), without the consent of Time Warner, the Company cannot incur
indebtedness (other than the New SFEC Notes) at SFEC or any of its subsidiaries
that is secured by any assets of (or guaranteed by) the Company, Premier
Operations or any of its subsidiaries, or secure any indebtedness of the
Company, Premier Operations or any of its subsidiaries with any of the assets of
(or guarantees by) SFEC or any of its subsidiaries. These covenants could
inhibit the ability of the Company to borrow in the future.
ABILITY TO MANAGE RAPID GROWTH
The Six Flags Acquisition is significantly larger than any of Premier's
previous acquisitions, and the combination and integration of the respective
operations of Six Flags and Premier will be of a substantially greater scale
than previously undertaken by Premier and will be ongoing concurrently with the
integration of Walibi, its first foreign acquisition. The increased size of
Premier's operations and the process of combining and integrating Six Flags with
Premier, particularly during the same period as the integration of Walibi, will
place substantial additional demands upon existing management resources and
require Premier to effectively redeploy such resources, including hiring new
personnel. There can be no assurance that Premier's management will be able to
successfully integrate the operations of Six Flags or Walibi or that the
anticipated benefits of the Six Flags Acquisition or the Walibi acquisition to
Premier will be realized or, if realized, as to the timing thereof. The
inability to successfully manage the integration of Six Flags or Walibi with
Premier would have a material adverse effect on Premier's results of operations
and financial condition.
UNCERTAINTY OF FUTURE ACQUISITIONS; POTENTIAL EFFECTS OF ACQUISITIONS
In addition to the Acquisitions, the Company intends to continue to make
selective acquisitions that would expand its business. There can be no assurance
that the Company will be able to locate and acquire additional businesses. To
the extent any such acquisition would result in the incurrence or assumption of
indebtedness by the Company (or its operating subsidiaries), such incurrence or
assumption must comply with the limitations on the Company's (or such
subsidiary's) ability to incur or assume indebtedness under the Credit
Facilities and the Indentures. There can be no assurance that any future
acquisition will be permissible under these loan agreements or that waivers of
any such covenants could be obtained. See
"--Restrictive Debt Covenants."
In certain instances, a consummated acquisition may adversely affect the
Company's financial condition and reported results, at least in the short-term,
depending on many factors, including capital requirements and the accounting
treatment of such acquisition. There can be no assurance that the 1997
Acquisitions, the Six Flags Acquisition or any future acquisition will perform
as expected, will not result in significant unexpected liabilities or will ever
contribute significant revenues or profits to the Company. Shares of Common
Stock (or securities convertible into Common Stock) were or will be used as a
portion of the aggregate consideration in the acquisitions of The Great Escape,
Riverside Park, Kentucky Kingdom, Walibi and may be used in the Six Flags
Acquisition. The Company may issue a substantial number of shares of Common
Stock (or convertible securities) to fund future acquisitions. By virtue of the
foregoing, the Company's acquisitions could have an adverse effect on the market
price of the Common Stock and the EqPINES.
RISKS OF ACCIDENTS AND DISTURBANCES AT PARKS; EFFECTS OF LOCAL CONDITIONS AND
EVENTS
Because substantially all of the Company's parks feature "thrill rides,"
attendance at the parks and, consequently, revenues may be adversely affected by
any serious accident or similar occurrence with
22
<PAGE>
respect to a ride. In that connection, in June 1997, a slide collapsed at the
Company's Waterworld park in Concord, California, resulting in one fatality and
the park's closure for twelve days. The collapse had a material adverse effect
on that park's 1997 operating performance, as well as a lesser impact on the
Company's Sacramento water park (which is also named "Waterworld"), located
approximately seventy miles from the Concord park, but did not have a material
effect on the balance of the Company's 1997 operations. The Company has
recovered all of the Concord park's operating shortfall under its business
interruption insurance. Premier Operations' liability insurance policies provide
coverage of up to $25.0 million per loss occurrence and require Premier
Operations to pay the first $50,000 of loss per occurrence. Six Flags' liability
insurance policies provide coverage of up to $175.0 million per loss occurrence
and require Six Flags to pay the first $2.0 million per loss occurrence.
Other local conditions and events can also adversely affect attendance. For
example, in 1994, the Company's Six Flags Magic Mountain park experienced
significant attendance declines and interruptions of business as a result of the
Los Angeles County earthquake centered in Northridge, California. Six Flags Over
Georgia experienced attendance declines in 1996 as a result of the 1996 Summer
Olympics. Management believes that the geographic diversity of the Company's
theme parks reduces the effects of such occurrences on the Company's
consolidated results.
In addition, in view of the proximity of certain of the Company's parks to
major urban areas and the appeal of the parks to teenagers and young adults, the
Company's parks could experience disturbances that could adversely affect the
image of and attendance levels at its parks. Working together with local police
authorities, the Company has taken certain security-related precautions designed
to prevent disturbances in its parks, but there can be no assurance that it will
be able to prevent any such disturbances.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
As a result of the Walibi acquisition, a portion of the Company's operations
will be conducted in Europe, and the Company will become subject to risks that
are inherent in operating abroad. These risks can include difficulties in
staffing and managing foreign operations, longer payment cycles, problems in
collecting accounts receivable, political risks, unexpected changes in
regulatory requirements, fluctuations in currency exchange rates, import
restrictions or prohibitions, delays from customs brokers or government agencies
and potentially adverse tax consequences resulting from operating in multiple
jurisdictions with different tax laws. There can be no assurance that these and
other comparable risks, individually or in the aggregate, will not adversely
impact the Company's financial and operating results in Europe.
EFFECTS OF INCLEMENT WEATHER; SEASONAL FLUCTUATIONS OF OPERATING RESULTS
Because the great majority of theme parks' attractions are outdoor
activities, attendance at parks and, accordingly, the Company's revenues are
significantly affected by the weather. Additionally, seven of the Company's
parks are primarily water parks which, by their nature, are more sensitive to
adverse weather than are theme parks. Unfavorable weekend weather and unusual
weather of any kind can adversely affect park attendance.
The operations of the Company are highly seasonal, with more than 80% of
park attendance occurring in the second and third calendar quarters of each
year. The great majority of the Company's revenue is collected in those quarters
while most expenditures for capital improvements and significant maintenance are
incurred when the parks are closed in the first and fourth quarters.
Accordingly, the Company believes that quarter-to-quarter comparisons of its
results of operations should not be relied upon as an indication of future
performance. Nevertheless, the market price of the Common Stock may fluctuate
significantly in response to variations in the Company's quarterly and annual
results of operations.
HIGHLY COMPETITIVE BUSINESS
The Company's parks compete directly with other theme, water and amusement
parks and indirectly with all other types of recreational facilities and forms
of entertainment within their market areas,
23
<PAGE>
including movies, sports attractions and vacation travel. Accordingly, the
Company's business is and will continue to be subject to factors affecting the
recreation and leisure time industries generally, such as general economic
conditions and changes in discretionary consumer spending habits. Within each
park's regional market area, the principal factors affecting competition include
location, price, the uniqueness and perceived quality of the rides and
attractions in a particular park, the atmosphere and cleanliness of a park and
the quality of its food and entertainment.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends upon the continued contributions of its
executive officers and key operating personnel, particularly Kieran E. Burke,
Chairman and Chief Executive Officer, and Gary Story, President and Chief
Operating Officer. The loss of services of, or a material reduction in the
amount of time devoted to the Company by, either of such individuals or certain
other key personnel could adversely affect the business of the Company. Although
the Company recently entered into three-year employment agreements with each of
Mr. Burke and Mr. Story, there is no assurance that the Company will be able to
retain their services during that period. Under certain circumstances, the loss
of the services of both Messrs. Burke and Story and the failure to replace them
within a specified time period would constitute a default under the Credit
Facilities.
CERTAIN ANTI-TAKEOVER CONSIDERATIONS; CHANGE OF CONTROL
Certain provisions of the Company's Certificate of Incorporation and By-Laws
may have the effect of discouraging or delaying attempts to gain control of the
Company, including provisions which could result in the Company's stockholders
receiving less for their shares of Common Stock than otherwise might be
available in the event of a take-over attempt. These provisions include: (i)
authorizing the Board of Directors to fix the size of the Board of Directors
between three and 15 directors; (ii) authorizing directors to fill vacancies on
the Board of Directors that occur between annual meetings; and (iii) restricting
the persons who may call a special meeting of stockholders. Additionally, the
Company's authorized but unissued preferred stock can be used, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. In that connection, the Company has a plan that grants
to common stockholders rights to purchase shares of preferred stock (with
characteristics of Common Stock) upon the occurrence of certain events,
including events that could lead to a change in control. The existence of this
rights plan could discourage or hinder attempts by third parties to obtain
control of the Company. Furthermore, certain provisions of Delaware law may also
discourage or hinder attempts by third parties to obtain control of the Company.
See "Description of Securities--Rights Plan" and "-- Delaware Law and Certain
Charter and By-Law Provisions." In addition, certain events that could lead to a
change of control of the Company will constitute a Change of Control under the
Indentures relating to the Senior Notes (other than the Indenture relating to
the SFTP Senior Subordinated Notes), and require the Company to make an offer to
purchase these Senior Notes. A Change of Control is also a default under the
Credit Facilities. The Six Flags Transactions do not constitute a Change of
Control under the Indentures (other than the Indenture relating to the SFTP
Senior Subordinated Notes). By virtue of the Six Flags Transactions, the Company
will be required to make an offer to purchase the SFTP Senior Subordinated
Notes. See "--Risks Associated with Substantial Indebtedness and Other
Obligations."
As part of the Six Flags Acquisition, the Company will obtain from Warner
Bros. and DC Comics the exclusive right for theme-park usage of certain Warner
Bros. and DC Comics characters throughout the United States (except the Las
Vegas metropolitan area) and Canada. Warner Bros. can terminate this license
under certain circumstances, including if persons engaged in the movie or
television industries obtain control of the Company.
CASH DIVIDENDS UNLIKELY
The Company has not paid dividends on its Common Stock during the three
years ended December 31, 1997 and does not anticipate paying any cash dividends
thereon in the foreseeable future. The Company's ability to pay cash dividends
on the Common Stock will be restricted under the Indentures
24
<PAGE>
relating to the Company Notes and will be affected by, among other factors, the
Company's substantial indebtedness and holding company structure. See "--Risks
Associated with Substantial Indebtedness and Other Obligations" and "--Holding
Company Structure; Limitations on Access to Cash Flow of Subsidiaries."
SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE
Upon consummation of the Offerings, the Company will have 32.3 million
shares of Common Stock outstanding and 5.0 million EqPINES (initially
convertible into 5.0 million shares of Common Stock) outstanding. Future sales
of Common Stock (or Seller Depositary Shares) by existing stockholders pursuant
to Rule 144 under the Securities Act, or through the exercise of outstanding
registration rights or otherwise, could have an adverse effect on the prevailing
market price of the Common Stock and the Company's ability to raise additional
capital. Except for the Common Stock to be sold in the Common Stock Offering,
the Convertible Preferred Stock and shares of Common Stock issued upon
conversion of the Convertible Preferred Stock, the Company has agreed not to
offer, sell, contract to sell or otherwise issue any shares of Common Stock
(except pursuant to outstanding options and warrants) or other capital stock or
securities convertible into or exchangeable for, or any rights to acquire,
Common Stock or other capital stock, with certain exceptions (including certain
exceptions for Common Stock or other capital stock issued or sold in connection
with future acquisitions by the Company, including any Common Stock to be issued
in connection with the Walibi acquisition), prior to the expiration of 90 days
from the date of this Prospectus without the prior written consent of Lehman
Brothers Inc. ("Lehman Brothers"). The Company's officers, directors and
principal stockholders, who hold in the aggregate approximately 6.0 million
shares of Common Stock (including shares issuable upon exercise of outstanding
options and warrants and outstanding shares of restricted stock), have agreed
not to sell any such shares for 90 days following the date of this Prospectus
without the consent of Lehman Brothers. In addition, the Sellers in the Six
Flags Acquisition have agreed not to sell any Seller Preferred Stock during such
90-day period. Thereafter, all such shares held by the Company's officers,
directors and principal stockholders will be eligible for sale in the public
market (subject, in most cases, to applicable volume limitations and other
resale conditions imposed by Rule 144). In addition, subject to the "lock-up"
arrangements described above and a minimum 41-day "lock-up" agreed to by the
sellers in the Walibi acquisition, holders of approximately 4.9 million shares
of Common Stock and the holders of Seller Preferred Stock have the right to
require the Company to register such shares (and, in the case of the Seller
Preferred Stock, the shares of Common Stock issuable upon conversion thereof)
for sale under the Securities Act. Depending upon the level of future revenues
at Kentucky Kingdom and Walibi, the Company may also be required in the future
to issue additional shares of Common Stock (assuming the maximum number of
shares of Common Stock are issued in the Walibi Tender Offer) with an aggregate
market value of up to $15.0 million to the sellers thereof. See "Prospectus
Summary--Other Recent Developments." The Company may also pay quarterly dividend
payments on the EqPINES (which aggregate $ million over three years) by
issuing additional shares of Common Stock. The sale, or the availability for
sale, of substantial amounts of Common Stock or securities convertible into
Common Stock in the public market at any time subsequent to the date of this
Prospectus could adversely affect the prevailing market price of the Common
Stock and the EqPINES. See "Description of Securities--Registration Rights."
LESS EQUITY APPRECIATION FOR EQPINES THAN COMMON STOCK
The opportunity for equity appreciation afforded by an investment in the
EqPINES is less than the opportunity for equity appreciation afforded by an
investment in Common Stock. Holders of EqPINES will realize no equity
appreciation if at the Mandatory Conversion Date (as defined herein) the
Conversion Price (as defined herein) of the Common Stock is below the Threshold
Appreciation Price (as defined herein), and less than all of the equity
appreciation if at such time the Conversion Price of the Common Stock is above
the Threshold Appreciation Price. Holders of EqPINES will realize the entire
decline in equity value if at such time the Conversion Price of the Common Stock
is below the Initial Price (as defined herein). See "Description of
EqPINES--Mandatory Conversion of EqPINES."
25
<PAGE>
DILUTION OF COMMON STOCK
The Conversion Rate, the Optional Conversion Rate, the Threshold
Appreciation Price and the Initial Price (each as defined herein) on the EqPINES
are subject to adjustment for certain events, such as stock splits and
combinations, stock dividends, certain other actions by the Company that modify
its capital structure and certain other transactions involving the Company. See
"Description of EqPINES--Conversion Adjustments" and "--Adjustment for Certain
Consolidations or Mergers." Such rates and prices will not be adjusted for other
events, such as offerings of Common Stock for cash or in connection with
acquisitions that may adversely affect the market price of Common Stock. Due to
the relationship of such rates and prices to the market price of Common Stock,
such other events may also adversely affect the trading price of the EqPINES.
There can be no assurance that the Company will not make such offerings of
Common Stock or as to the size of such offerings, if any.
LIMITED VOTING RIGHTS FOR EQPINES
The Mandatorily Convertible Preferred Stock represented by the EqPINES does
not carry any right to vote at the stockholders' meetings of the Company, except
with respect to adverse charter and by-law amendments or the authorization or
creation of classes of capital stock ranking senior as to payment of dividends
or liquidation preference to the Mandatorily Convertible Preferred Stock, as
well as in certain circumstances involving protracted dividend arrearages. See
"Description of EqPINES--Voting Rights." As a result, unless holders of EqPINES
voluntarily convert their EqPINES into Common Stock prior to the Mandatory
Conversion Date, such holders will not be entitled to any rights with respect to
the Common Stock (including, without limitation, voting rights and the right to
receive any dividends or other distributions on the Common Stock) until such
time, and will generally have no influence on virtually all matters submitted
for general stockholder approval.
UNCERTAINTY OF FEDERAL INCOME TAX CONSEQUENCES FOR MANDATORILY CONVERTIBLE
PREFERRED STOCK
No statutory, judicial or administrative authority directly addresses the
characterization of the Mandatorily Convertible Preferred Stock or instruments
similar to the Mandatorily Convertible Preferred Stock for U.S. federal income
tax purposes. As a result, significant aspects of the U.S. federal income tax
consequences of an investment in the Mandatorily Convertible Preferred Stock
(including investments in EqPINES representing interests in Mandatorily
Convertible Preferred Stock) are not certain. No ruling is being requested from
the Internal Revenue Service (the "Service") with respect to the Mandatorily
Convertible Preferred Stock or the EqPINES and no assurance can be given that
the Service will agree with the conclusions expressed under "Description of
EqPINES--Federal Income Tax Consequences."
Distributions on the Mandatorily Convertible Preferred Stock (including
distributions that are paid in the form of shares of Common Stock and
constructive distributions) will be taxable for U.S. federal income tax purposes
as ordinary dividend income and, subject to limitations described in
"Description of EqPINES--Federal Income Tax Consequences--Dividends," will be
eligible for the dividends-received deduction that is available to certain U.S.
corporate holders only to the extent paid out of current or accumulated earnings
and profits of the Company as determined for U.S. federal income tax purposes.
Such distributions otherwise will be treated in the manner described under
"Federal Income Tax Consequences--Dividends." It is uncertain whether the
Company will have any current or accumulated earnings and profits. To the extent
that the Company does not have current or accumulated earnings and profits, or
the amount of such distributions exceeds the Company's current or accumulated
earnings and profits, distributions on the Mandatorily Convertible Preferred
Stock (whether actual or constructive) will constitute tax-free returns of
capital to the extent of the holder's tax basis in the Mandatorily Convertible
Preferred Stock and thereafter will constitute capital gain, and will not be
eligible for the dividends-received deduction.
In the case of a distribution on the Mandatorily Convertible Preferred Stock
that is paid in the form of shares of Common Stock, the fair market value of
such Common Stock on the distribution date will be taxable for U.S. federal
income tax purposes in the same manner as a cash distribution would be treated.
26
<PAGE>
ABSENCE OF A PREVIOUS MARKET FOR THE EQPINES
The EqPINES are a new issue of securities with no established trading
market. Application has been made to list the EqPINES on the NYSE, but no
assurance can be given as to the development or liquidity of any trading market
in the EqPINES. If an active market does not develop, the market price and
liquidity of the EqPINES will be adversely affected.
IMPACT OF YEAR 2000 ISSUE
An issue exists for all companies that rely on computers as the year 2000
approaches. The "Year 2000" problem is the result of the past practice in the
computer industry of using two digits rather than four to identify the
applicable year. This practice will result in incorrect results when computers
perform arithmetic operations, comparisons or data field sorting involving years
later than 1999. The Company anticipates that it will be able to test its entire
system using its internal programming staff and outside computer consultants and
intends to make any necessary modifications to prevent disruption to its
operations. Costs in connection with any such modifications are not expected to
be material. However, if such modifications are not completed in a timely
manner, the Year 2000 problem may have a material adverse impact on the
operations of the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Impact of Year 2000 Issue."
27
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the Offerings, after
deducting estimated underwriting discounts and commissions and estimated
expenses payable by the Company, will be approximately $ million (or
approximately $ million if the Underwriters' over-allotment options are
exercised in full). The Company intends to use the net proceeds from the
Offerings to fund the $765 million cash portion of the purchase price (plus an
approximate $11 million adjustment) payable to the Sellers in the Six Flags
Acquisition; to provide funds for the repayment in full of the SFEC Zero Coupon
Senior Notes and for certain interest payments on the Company Senior Notes; to
fund improvements and expansion of the Company's parks, including the Walibi
Parks and the Six Flags Parks; to acquire and make improvements at additional
theme parks; and for general corporate purposes, including working capital
requirements. Although the Company has had discussions with respect to several
additional acquisition opportunities, no agreement or understanding with respect
to any future acquisition has been reached. There can be no assurance that any
such additional acquisitions will be made. See "Prospectus Summary--The Six
Flags Transactions--The Financings," "Risk Factors--Uncertainty of Future
Acquisitions; Potential Effects of Acquisitions" and "Business--Acquisition
Strategy."
The Company presently intends to use the net proceeds of any exercise of the
Underwriters' over-allotment options to reduce the amount of (or eliminate) the
Seller Preferred Stock to be issued in the Six Flags Acquisition (or to redeem
the Seller Preferred Stock within 90 days of its issuance). Further, if the
Company determines not to issue the Seller Preferred Stock, the additional cash
portion of the purchase price for the Six Flags Acquisition will be funded from
the net proceeds of the Common Stock Offering.
Pending their ultimate use, the portion of net proceeds from the Offerings
not used in connection with the Six Flags Acquisition may be invested in
short-term, investment grade, interest bearing securities, certificates of
deposit or direct or guaranteed obligations of the United States.
28
<PAGE>
CAPITALIZATION
The following table sets forth as of December 31, 1997, (i) the actual
capitalization of the Company; and (ii) the pro forma capitalization of the
Company after giving effect to the acquisitions of Walibi (assuming a 100%
Walibi Tender Offer with 80% paid in cash and 20% paid in shares of Common
Stock) and Six Flags, and after giving effect to the Offerings (assuming that
the Underwriters' over-allotment options are not exercised) and other related
financings. This table should be read in conjunction with the consolidated
financial statements of the Company and Six Flags (including the notes thereto)
included elsewhere in this Prospectus, and "Unaudited Pro Forma Financial
Statements" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------
<S> <C> <C>
ACTUAL PRO FORMA
--------- -----------
<CAPTION>
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents......................................................................... $ 84,288 $ 479,804(1)
--------- -----------
--------- -----------
Restricted-use investments........................................................................ $ -- $ 326,290(2)(3)
--------- -----------
--------- -----------
Short-term debt(4)................................................................................ $ 795 $ 2,795
--------- -----------
--------- -----------
Long-term debt (excluding current maturities):
Premier Credit Facility....................................................................... $ -- $ 224,000
Six Flags Credit Facility..................................................................... -- 419,000
1995 Premier Notes............................................................................ 90,000 90,000
1997 Premier Notes............................................................................ 125,000 125,000
Company Senior Discount Notes................................................................. -- 250,000
Company Senior Notes.......................................................................... -- 280,000(3)
New SFEC Notes................................................................................ -- 170,000
SFEC Zero Coupon Senior Notes................................................................. -- 170,100(2)(5)
SFTP Senior Subordinated Notes................................................................ -- 303,500(5)
Other......................................................................................... 1,231 1,231
--------- -----------
Total long-term debt...................................................................... 216,231 2,032,831(2)
--------- -----------
Mandatorily redeemable preferred stock (none outstanding (actual) and outstanding (with a
liquidation value of $200.0 million) (pro forma))............................................... -- 200,000
--------- -----------
Stockholders' equity: Common Stock (90,000,000 authorized; 18,873,111 outstanding (actual)(6) and
32,331,111 outstanding (pro forma)(7)) and Mandatorily Convertible Preferred Stock (none
outstanding (actual) and 10,000 outstanding (pro forma)(8))..................................... 323,749 1,130,180
--------- -----------
Total capitalization...................................................................... $ 539,980 $3,363,011
--------- -----------
--------- -----------
</TABLE>
- ------------------------------
(1) Cash balances include prefunding of capital expenditures and working
capital.
(2) The pro forma amount for the SFEC Zero Coupon Senior Notes and total
long-term debt do not give effect to the repayment thereof from the net
proceeds of the SFEC Notes Offering. Similarly, pro forma restricted-use
investments include $175.0 million which will be held in escrow to repay the
SFEC Zero Coupon Senior Notes.
(3) Restricted use investments include (i) $76.3 million which will be deposited
in escrow to fund the first six semi-annual interest payments on the Company
Senior Notes, (ii) a $75.0 million restricted cash account to fund certain
obligations in respect of the Co-Venture Parks and dividend payments on the
Convertible Preferred Stock and (iii) $175.0 million which will be held in
escrow to repay the SFEC Zero Coupon Notes.
(4) Represents current portion of long-term debt, including $1.0 million in
respect of the Premier Credit Facility and $1.0 million in respect of the
Six Flags Credit Facility. At December 31, 1997, the Company did not have
any amounts outstanding under its then-existing revolving credit facility,
which was terminated in February 1998. At March 24, 1998, the Company had
borrowed $10.0 million under the revolving credit facility portion of the
Premier Credit Facility.
(5) Represents fair market value of such indebtedness at December 31, 1997.
Actual accreted amounts outstanding at December 31, 1997 were $161.1 million
for the SFEC Zero Coupon Senior Notes and $269.9 million for the SFTP Senior
Subordinated Notes.
(6) Includes an aggregate of 375,000 unvested restricted shares issued to the
Company's Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer which vest proportionately on January 1 of the five years
commencing 1999. Excludes (i) an aggregate of 45,039 shares of Common Stock
issuable upon exercise of warrants; (ii) an aggregate of 1,270,000 shares of
Common Stock reserved for issuance under the Company's Stock Incentive
Plans, of which options for 764,700 shares have been granted and options for
455,800 shares are presently exercisable and (iii) an aggregate of 450,000
additional restricted shares issuable at the Company's option to the
Company's Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer, under employment agreements with such officers.
(7) Assumes the issuance of 229,000 shares in the Private Acquisition and
229,000 shares in the Walibi Tender Offer. Excludes (i) any shares issuable
to the sellers in the Kentucky Kingdom and Walibi acquisitions depending
upon the future revenues of the acquired parks; (ii) shares issuable upon
conversion of the Convertible Preferred Stock or as dividends on the
Mandatorily Convertible Preferred Stock; and (iii) 1,950,000 shares of
Common Stock issuable upon exercise of the underwriters' over-allotment
options.
(8) Excludes effect of 750,000 EqPINES issuable upon exercise of the
underwriters' over-allotment option.
29
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
The following selected historical financial and operating data, except for
attendance and revenue per visitor data, of (i) the Company as of and for each
of the years in the three-year period ended December 31, 1997, and (ii) Six
Flags as of December 29, 1996 and December 28, 1997 and for each of the three
years in the period ended December 28, 1997, are derived from the audited
financial statements of each entity appearing elsewhere in this Prospectus. The
selected historical financial data of the Company and Six Flags for fiscal years
1993 and 1994 have been derived from audited financial statements which are not
included herein. The historical financial data of the Company for the year ended
December 31, 1995 include the results of the Funtime parks from August 15, 1995,
the date of the Funtime Acquisition. The historical financial data of the
Company for the year ended December 31, 1996 include the operations of Elitch
Gardens from October 31, 1996, the Waterworld Parks from November 19, 1996 and
The Great Escape from December 4, 1996 (the dates of their respective
acquisitions). The historical financial data of the Company for the year ended
December 31, 1997 include the operations of Riverside Park from February 5, 1997
and Kentucky Kingdom from November 7, 1997 (the dates of their respective
acquisitions).
The following selected pro forma financial and operating data of the Company
for the year ended December 31, 1997 are derived from the Unaudited Pro Forma
Financial Statements appearing elsewhere in this Prospectus. The pro forma
financial and operating data of the Company are presented for informational
purposes only, have been prepared based on estimates and assumptions deemed by
the Company to be appropriate and do not purport to be indicative of the
financial position or results of operations which would actually have been
attained if the relevant acquisitions had occurred on the assumed dates or which
may be achieved in the future.
30
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1993 1994 1995(1) 1996(2) 1997
--------- --------- --------- --------- ----------------------
PRO
ACTUAL(3) FORMA(4)
--------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, RATIO AND PER VISITOR AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
THE COMPANY
Statement of Operations Data:
Revenue:
Theme park admissions.......... $ 12,874 $ 13,936 $ 21,863 $ 41,162 $ 94,611 $ 424,108
Theme park food, merchandise
and other.................... 8,986 10,963 19,633 52,285 99,293 391,225
--------- --------- --------- --------- --------- -----------
Total revenue................ 21,860 24,899 41,496 93,447 193,904 815,333
--------- --------- --------- --------- --------- -----------
Operating costs and expenses:
Operating expenses............. 10,401 12,358 19,775 42,425 81,356 335,620
Selling, general and
administrative............... 4,768 5,448 9,272 16,927 36,547 131,580
Cost of products sold.......... 2,135 2,553 4,635 11,101 23,025 109,375
Depreciation and
amortization................. 1,537 1,997 3,866 8,533 19,792 107,138
--------- --------- --------- --------- --------- -----------
Total operating costs and
expenses................... 18,841 22,356 37,548 78,986 160,720 683,713
--------- --------- --------- --------- --------- -----------
Income from operations....... 3,019 2,543 3,948 14,461 33,184 131,620
Other income (expense):
Interest expense, net.......... (1,438) (2,299) (5,578) (11,121) (17,775) (180,273)
Equity in operations of theme
parks........................ -- -- -- -- -- 18,216
Termination fee, net of
expenses..................... -- -- -- -- 8,364 --
Minority interest.............. -- -- -- -- -- (516)
Other income (expense)......... (136) (74) (177) (78) (59) (408)
--------- --------- --------- --------- --------- -----------
Total other income
(expense).................. (1,574) (2,373) (5,755) (11,199) (9,470) (162,981)
--------- --------- --------- --------- --------- -----------
Income (loss) before income
taxes...................... 1,445 170 (1,807) 3,262 23,714 (31,361)
Income tax expense (benefit)..... 91 68 (762) 1,497 9,615 9,931
--------- --------- --------- --------- --------- -----------
Income (loss) before
extraordinary loss......... $ 1,354 $ 102 $ (1,045 (5) $ 1,765 $ 14,099 $ (41,292)
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
Income (loss) before
extraordinary loss per
common share--basic........ $ .51 $ .04 $ (.40 (5) $ .14 $ .79 $ (2.14)
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
Income (loss) before
extraordinary loss per
common share--diluted...... $ .51 $ .04 $ (.40 (5) $ .13 $ .76 $ (2.14)
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
OTHER DATA:
EBITDA(6)........................ $ 4,562 $ 4,549 $ 7,706 $ 22,994 $ 61,340(7) $ 263,455
Adjusted EBITDA(8)............... -- -- -- -- -- $ 306,037
Net cash provided by operating
activities(9).................. $ 2,699 $ 1,060 $ 10,646 $ 11,331 $ 47,150 $ 153,027
Capital expenditures............. $ 7,674 $ 10,108 $ 10,732 $ 39,423 $ 135,852 $ 212,229(10)
Total attendance................. 1,322 1,408 2,302 (11 4,518 (11 8,631 (11 36,530(12)
Revenue per visitor(13).......... $ 16.54 $ 17.68 $ 18.03 $ 20.66 $ 22.18 $ 27.37
SELECTED RATIOS:
Net debt/EBITDA(14).............. -- -- -- -- -- 4.8x
Total debt/EBITDA(14)............ -- -- -- -- -- 7.0x
EBITDA/cash interest
expense(14).................... -- -- -- -- -- 2.2x
EBITDA/total interest
expense(14).................... -- -- -- -- -- 1.4x
Ratio of earnings to fixed
charges(15).................... 2.1x 1.1x (15) 1.3x 2.3x (15)
Ratio of earnings to combined
fixed charges and preferred
stock dividends(15)............ 2.1x 1.1x (15) 1.2x 2.3x (15)
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- -------------------------
PRO
ACTUAL(16) FORMA(17)
----------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
THE COMPANY
Balance Sheet Data:
Cash and cash equivalents................. $ 3,026 $ 1,366 $ 28,787 $ 4,043 $ 84,288 $ 479,804(18)
Total assets.............................. $ 36,708 $ 45,539 $ 173,318 $ 304,803 $ 611,321 $3,553,662
Total long-term debt and capitalized lease
obligations (excluding current
maturities)........................... $ 18,649 $ 22,216 $ 93,213 $ 149,342 $ 216,231 $2,032,831
Total debt................................ $ 20,821 $ 24,108 $ 94,278 $ 150,834 $ 217,026 $2,035,626
Mandatorily redeemable preferred stock.... -- -- -- -- -- $ 200,000
Stockholders' equity...................... $ 13,192 $ 18,134 $ 45,911 $ 113,182 $ 323,749 $1,130,180
</TABLE>
- ------------------------
(1) The historical Statement of Operations Data for 1995 reflect the results of
the parks acquired in the Funtime Acquisition from the date of acquisition,
August 15, 1995.
(2) The historical Statement of Operations Data for 1996 reflect the results of
Elitch Gardens from October 31, 1996, the Waterworld Parks from November 19,
1996 and The Great Escape from December 4, 1996 (the dates of their
respective acquisitions).
(3) The historical Statement of Operations Data for 1997 reflect the results of
Riverside Park from February 5, 1997 and Kentucky Kingdom from November 7,
1997 (the dates of their respective acquisitions).
(4) The pro forma financial and operating data for the year ended December 31,
1997 give effect to (i) the acquisitions of Walibi (assuming a 100% Walibi
Tender Offer on the basis of 80% payable in cash and 20% payable in shares
of Common Stock) and Kentucky Kingdom as if they had occurred on January 1,
1997; and (ii) the acquisition of Six Flags as if it had occurred on
December 30, 1996 (the first day of Six Flags' 1997 fiscal year). The pro
forma income per share for 1997 gives effect to the January 1997 public
offering, the Common Stock Offering and the EqPINES Offering (assuming no
exercise of the Underwriters' over-allotment options) as if they had
occurred on January 1, 1997. See "Unaudited Pro Forma Financial
Statements--Unaudited Pro Forma Statement of Operations" generally and with
respect to certain assumptions used in respect of the related financings.
(5) During 1995, the Company incurred an extraordinary loss of $140,000, net of
income tax benefit, on extinguishment of debt in connection with the Funtime
Acquisition. This extraordinary loss is not included in income (loss) before
extraordinary loss and income (loss) before extraordinary loss per common
share for 1995.
(6) EBITDA is defined as earnings before extraordinary loss, interest expense,
net, income tax expense (benefit), depreciation and amortization, minority
interest and equity in loss of real estate partnership. The Company has
included information concerning EBITDA because it is used by certain
investors as a measure of the Company's ability to service and/or incur
debt. EBITDA is not required by GAAP and should not be considered in
isolation or as an alternative to net income, net cash provided by
operating, investing and financing activities or other financial data
prepared in accordance with GAAP or as an indicator of the Company's
operating performance. This information should be read in conjunction with
the Statements of Cash Flows contained in the Company's financial statements
included elsewhere herein. Equity in loss of real estate partnership was
$142,000, $83,000, $69,000, $78,000, and $59,000 during each of the five
years ended December 31, 1997, respectively. Pro Forma EBITDA includes
equity in operations of theme parks and the depreciation and amortization
($6,830,000) of the investment in the Co-Venture Parks included therein.
(7) Includes an $8,364,000 termination fee paid to the Company upon termination
of its prior agreement to become managing general partner of the Texas
Co-Venture Partnership. Such termination fee is not included in the pro
forma amounts.
(8) Adjusted EBITDA reflects the Company's pro forma EBITDA plus the portion of
the pro forma EBITDA of the Co-Venture Parks ($34,672,000) distributed on a
pro forma basis to the other limited partners and therefore not included in
the Company's pro forma EBITDA. See Note (1) to the Six Flags Selected
Historical
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
32
<PAGE>
Financial and Operating Data. The Co-Venture Partnership agreements restrict
the amount of cash distributable to the Company. See "Business--Six Flags
Parks--Six Flags Over Georgia" and "--Six Flags Over Texas and Six Flags
Hurricane Harbor." Adjusted EBITDA also includes $7,910,000 of pro forma
EBITDA of Marine World for 1997 which is not already reflected in the
Company's pro forma EBITDA. The Company manages the operations of Marine
World and has an option to purchase the entire park beginning in February
2002. Adjusted EBITDA is not indicative of the Company's ability to service
or incur indebtedness and is not a measure of the Company's profitability or
liquidity. Adjusted EBITDA is not meant to be predictive of future operating
results.
(9) During each of the five years ended December 31, 1997, the Company's net
cash used in investing activities was $7,698,000, $10,177,000, $74,139,000,
$155,149,000 and $217,070,000, respectively. During those periods, net cash
provided by financing activities was $2,106,000, $7,457,000, $90,914,000,
$119,074,000 and $250,165,000, respectively.
(10) Does not include pro forma amount expended ($93,700,000) by the Company to
purchase interests of the limited partners in the Co-Venture Partnerships.
(11) Represents in the case of 1995 attendance at the three parks owned by the
Company prior to the Funtime Acquisition for the entire 1995 season and
attendance at the Funtime parks from and after August 15, 1995. In the case
of 1996, historical attendance does not include attendance at any of the
parks acquired in the 1996 Acquisitions since those acquisitions were
completed following the 1996 season. Historical attendance for the year
ended December 31, 1997 does not include attendance at Marine World or
attendance at Kentucky Kingdom since that park was acquired following the
1997 season.
(12) Pro forma attendance information includes attendance at Marine World for
1997.
(13) Pro forma and historical revenue per visitor for all applicable periods do
not include revenue of Paradise Island (a fee-per-attraction entertainment
center that does not track attendance, acquired in November 1996). Pro forma
revenue per visitor also excludes revenue and attendance of Marine World and
the Co-Venture Parks.
(14) Total debt/EBITDA and Net debt/EBITDA include total outstanding pro forma
indebtedness of the Company (excluding the SFEC Zero Coupon Senior Notes) in
the accreted principal amount of $1,831,951,000. Net debt deducts from total
outstanding pro forma indebtedness $556,064,000 (representing $479,804,000
of pro forma cash and cash equivalents and $76,260,000 of pro forma
restricted-use investments placed in escrow to fund the first six
semi-annual interest payments on the Company Senior Notes). See
"Capitalization." EBITDA/cash interest expense is calculated using pro forma
cash interest expense of $119,492,000. EBITDA/total interest expense is
calculated using pro forma total interest expense of $185,712,000 (excluding
interest on the SFEC Zero Coupon Senior Notes).
(15) For the purpose of determining the ratio of earnings to fixed charges, and
the ratio of earnings to combined fixed charges and preferred stock
dividends, earnings consist of income (loss) before extraordinary loss and
before income taxes and fixed charges. Fixed charges consist of interest
expense net of interest income, amortization of deferred financing costs and
discount or premium relating to indebtedness and the portion (approximately
one-third) of rental expense that management believes represents the
interest component of rent expense. Preferred stock dividend requirements
have been increased to an amount representing the before tax earnings which
would have been required to cover such dividend requirements. For the year
ended December 31, 1995, the Company's earnings were insufficient to cover
fixed charges by $1,738,000 and were insufficient to cover combined fixed
charges and preferred stock dividends by $2,620,000. On a pro forma basis,
for the year ended December 31, 1997, the Company's earnings were
insufficient to cover fixed charges and combined fixed charges and preferred
stock dividends by $31,818,000 and $77,720,000, respectively.
(16) Actual balance sheet data as of December 31, 1997 include the Company's
purchase of Kentucky Kingdom and investment in Marine World as of that date.
(17) The pro forma balance sheet data give effect to the acquisitions of Walibi
(assuming a 100% Walibi Tender Offer on the basis of 80% payable in cash and
20% payable in Common Stock) and Six Flags, the Offerings (assuming no
exercise of the underwriters' over-allotment options) and the related
financings as if they had occurred on December 31, 1997. Includes SFEC Zero
Coupon Senior Notes as well as cash held in escrow to repay the SFEC Zero
Coupon Senior Notes. Pro forma total long-term debt and total debt include
SFEC Zero Coupon Senior Notes and SFTP Senior Subordinated Notes at fair
value rather than accreted amount. See "Capitalization." See also "Unaudited
Pro Forma Financial Statements--Unaudited Pro Forma Balance Sheet" generally
and with respect to certain assumptions used in respect of the related
financings.
(18) Excludes $326,300,000 of restricted-use investments. See "Capitalization."
33
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
<S> <C> <C> <C>
DECEMBER 31, DECEMBER 29, DECEMBER 28,
1995 1996 1997
------------ ------------ ------------
<CAPTION>
(IN THOUSANDS, EXCEPT PER VISITOR
AMOUNTS)
<S> <C> <C> <C>
SIX FLAGS
STATEMENT OF OPERATIONS DATA(1):
Revenue:
Operating services.................................................. $ 366,665 $ 405,558 $ 427,569
Sales of products and other......................................... 262,792 275,318 281,097
------------ ------------ ------------
Total revenue(1).................................................. 629,457 680,876 708,666
------------ ------------ ------------
Costs and expenses:
Operating, general and administrative............................... 388,137 419,756 443,359
Cost of products sold............................................... 91,138 105,988 101,239
Depreciation and amortization....................................... 83,444 87,417 84,493
------------ ------------ ------------
Total costs and expenses.......................................... 562,719 613,161 629,091
------------ ------------ ------------
Income from operations(2)............................................. 66,738 67,715 79,575
Other income (expense):
Interest expense, net............................................... (63,282) (76,530) (84,430)
Minority interest................................................... -- (1,297) 1,147
------------ ------------ ------------
Total other income (expense)...................................... (63,282) (77,827) (83,283)
------------ ------------ ------------
Income (loss) before income taxes................................. 3,456 (10,112) (3,708)
Income tax expense.................................................... 6,743 5,137 --
------------ ------------ ------------
Net (loss)........................................................ $ (3,287) $ (15,249) $ (3,708)
------------ ------------ ------------
------------ ------------ ------------
OTHER DATA:
EBITDA(3)............................................................. $ 150,182 $ 155,132 $ 164,068
Net cash provided by operating activities(4).......................... $ 124,587 $ 128,602 $ 110,303
Capital expenditures.................................................. $ 45,578 $ 75,627 $ 67,675(5)
Total attendance...................................................... 21,830 22,796 22,229
Revenue per visitor................................................... $ 28.83 $ 29.87 $ 31.88
</TABLE>
- ------------------------
(1) Prior to the Six Flags Acquisition, Six Flags, through two subsidiaries, was
the general partner in the Co-Venture Partnerships. For the fiscal years
presented, Six Flags accounted for the parks as co-ventures, i.e., their
revenues and expenses (excluding partnership depreciation) were included in
Six Flags consolidated statements of operations and the net amounts
distributed to the limited partners were deducted as expenses. Except for
the limited partnership units owned in the Georgia park at December 28,
1997, Six Flags had no rights or title to the Co-Venture Parks' assets or to
the proceeds from any sale of the Co-Venture Parks' assets or liabilities
during the periods presented. The Co-Venture Parks contributed revenues of
$160.6 million, $152.0 million and $176.8 million to Six Flags in the fiscal
years 1995, 1996 and 1997, respectively. During these three fiscal years,
the Co-Venture Parks contributed EBITDA of $36.8 million, $24.3 million and
$34.7 million (after payment of $11.6 million, $8.1 million and $21.3
million to the limited partners). In 1995, 1996 and 1997, the Co-Venture
Parks produced $48.4 million, $32.4 million and $56.0 million of EBITDA,
respectively. In connection with the Six Flags Transactions, SFEC is
transferring its interest in the Co-Venture Parks to Premier. Premier
intends to account for its interests in the Co-Venture Parks under the
equity method of accounting.
(2) Income from operations is revenue less operating, general and administrative
expenses, costs of products sold and depreciation and amortization.
(3) EBITDA is defined as earnings before interest expense, net, income tax
expense (benefit), depreciation and amortization and minority interest. The
Company has included information concerning EBITDA because it is used by
certain investors as a measure of a company's ability to service and/or
incur debt. EBITDA is not required by GAAP and should not be considered in
isolation or as an alternative to net income, net cash provided by
operating, investing and financing activities or other financial data
prepared in accordance with GAAP or as an indicator of the Six Flags
operating
34
<PAGE>
performance. This information should be read in conjunction with the
Statements of Cash Flows contained in the Six Flags financial statements
included elsewhere herein.
(4) During each of the fiscal years ended December 31, 1995, December 29, 1996
and December 28, 1997, Six Flags' net cash used in investing activities was
approximately $93.9 million, $81.2 million and $149.7 million, respectively.
During these periods, net cash provided (used) in financing activities was
approximately $10.6 million, $(52.2) million and $10.6 million,
respectively.
(5) Does not include amount expended ($62.7 million) by Six Flags to purchase
interests of the limited partners in the Co-Venture Partnerships.
35
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements (the "Pro Forma
Financial Statements") of the Company are based upon and should be read in
conjunction with the historical financial statements of Premier, Kentucky
Kingdom, Six Flags and Walibi, which are included elsewhere in this Prospectus,
except in the case of Kentucky Kingdom and Walibi which are incorporated herein
by reference.
The unaudited pro forma statement of operations for the year ended December
31, 1997 gives effect to the acquisitions of Kentucky Kingdom, Six Flags, and
Walibi, the financings associated with the transactions, and the issuance of
Convertible Preferred Stock and Common Stock as if they had occurred on January
1, 1997 (except in the case of Six Flags, which was treated as if it occurred
December 30, 1996, the first day of the 1997 fiscal year of Six Flags). The Pro
Forma Financial Statements also give pro forma effect to the new arrangements
with respect to the Co-Venture Parks entered into by Six Flags in 1997.
The unaudited pro forma balance sheet is presented as if the acquisitions of
Six Flags and Walibi, the financings associated with the transactions, and the
issuance of Convertible Preferred Stock and Common Stock occurred on December
31, 1997 (except in the case of Six Flags, which was treated as if it were
acquired December 28, 1997, the last day of the 1997 fiscal year of Six Flags).
The acquisitions will be accounted for using the purchase method of accounting.
Allocations of the purchase price have been determined based upon estimates of
fair value. The final allocation of the purchase price may differ from these
preliminary estimates due to the final allocation being based on the completion
of valuations of certain acquired assets and assumed liabilities and
management's evaluation of such items.
The Pro Forma Financial Statements are for informational purposes only, have
been prepared based upon estimates and assumptions deemed by the Company to be
appropriate and do not purport to be indicative of the financial position or
results of operations which would actually have been attained if the
acquisitions had occurred as presented in such statements or which could be
achieved in the future.
36
<PAGE>
PREMIER PARKS INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT FOR RATIO, SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL ---------------
HISTORICAL KENTUCKY HISTORICAL HISTORICAL COMBINED CO-VENTURE
PREMIER KINGDOM (1) SIX FLAGS WALIBI (2) COMPANY ADJUSTMENTS(3)
---------- ------------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Theme park admissions.................. $ 94,611 $ 11,562 $ 368,139 $ 43,742 $ 518,054 $ (93,946)
Theme park food, merchandise, and
other................................ 99,293 10,152 340,527 24,101 474,073 (82,848)
---------- ------------- ----------- ------------- ----------- ---------------
Total revenue...................... 193,904 21,714 708,666 67,843 992,127 (176,794)
---------- ------------- ----------- ------------- ----------- ---------------
OPERATING COSTS AND EXPENSES:
Operating expenses..................... 81,356 5,705 330,033 31,629 448,723 (100,445)
Selling, general and administrative.... 36,547 5,194 113,326 10,567 165,634 (17,474)
Costs of products sold................. 23,025 2,684 101,239 6,097 133,045 (24,137)
Depreciation and amortization.......... 19,792 2,344 84,493 13,998 120,627 (12,107)
---------- ------------- ----------- ------------- ----------- ---------------
Total operating costs and
expenses......................... 160,720 15,927 629,091 62,291 868,029 (154,163)
---------- ------------- ----------- ------------- ----------- ---------------
Income (loss) from operations.......... 33,184 5,787 79,575 5,552 124,098 (22,631)
OTHER INCOME (EXPENSE):
Interest expense, net.................. (17,775) (3,974) (84,430) (3,409) (109,588) --
Equity in operations of theme parks.... -- -- -- -- -- 22,631
Termination fee, net of expenses....... 8,364 -- -- -- 8,364 --
Minority interest...................... -- -- 1,147 -- 1,147 --
Other income (expense)................. (59) 293 -- (289) (55) --
---------- ------------- ----------- ------------- ----------- ---------------
Total other income (expense)....... (9,470) (3,681) (83,283) (3,698) (100,132) 22,631
Income (loss) before income taxes...... 23,714 2,106 (3,708) 1,854 23,966 --
Income tax expense (benefit)........... 9,615 -- -- 2,373 11,988 --
---------- ------------- ----------- ------------- ----------- ---------------
Net income (loss)...................... $ 14,099 $ 2,106 $ (3,708) $ (519) $ 11,978 $ --
---------- ------------- ----------- ------------- ----------- ---------------
---------- ------------- ----------- ------------- ----------- ---------------
Net income (loss) applicable to common
stock................................ $ 14,099 $ 2,106 $ (3,708) $ (519) $ 11,978 $ --
---------- ------------- ----------- ------------- ----------- ---------------
---------- ------------- ----------- ------------- ----------- ---------------
Net income (loss) per common share..... $ 0.79 (15) (15) (15) (15)
----------
----------
Weighted average shares................ 17,938,000 (15) (15) (15) (15)
----------
----------
EBITDA (16)............................ $ 61,340 $ 8,424 $ 164,068 $ 19,261 $ 253,093 $ --
---------- ------------- ----------- ------------- ----------- ---------------
---------- ------------- ----------- ------------- ----------- ---------------
Net cash provided by operating
activities........................... $ 47,150 $ 4,042 $ 110,303 $ 12,206 17) $ 173,701 $ --
---------- ------------- ----------- ------------- ----------- ---------------
---------- ------------- ----------- ------------- ----------- ---------------
Ratio of earnings to fixed charges..... 2.3x
Ratio of earnings to combined fixed
charges and preferred stock
dividends............................ 2.3x
<CAPTION>
PREMIER COMPANY
OPERATIONS (4) SIX FLAGS PRO FORMA
--------------- ----------- ----------
<S> <C> <C> <C>
REVENUE:
Theme park admissions.................. $ -- $ -- $ 424,108
Theme park food, merchandise, and
other................................ -- -- 391,225
--------------- ----------- ----------
Total revenue...................... -- -- 815,333
--------------- ----------- ----------
OPERATING COSTS AND EXPENSES:
Operating expenses..................... (62)(5) (12,596) 335,620
Selling, general and administrative.... (2,903)(6) (13,677) 131,580
Costs of products sold................. (261)(7) 728(7) 109,375
Depreciation and amortization.......... (6,587)(8) 5,205(8) 107,138
--------------- ----------- ----------
Total operating costs and
expenses......................... (9,813) (20,340) 683,713
--------------- ----------- ----------
Income (loss) from operations.......... 9,813 20,340 131,620
OTHER INCOME (EXPENSE):
Interest expense, net.................. (13,156)(9) (57,529) (180,273)
Equity in operations of theme parks.... -- (4,415) 0 ) 18,216
Termination fee, net of expenses....... (8,364)(11) -- --
Minority interest...................... -- (1,663) (516)
Other income (expense)................. (353)(13) -- (408)
--------------- ----------- ----------
Total other income (expense)....... (21,873) (63,607) (162,981)
Income (loss) before income taxes...... (12,060) (43,267) (31,361)
Income tax expense (benefit)........... (3,882)(14) 1,825 14 9,931
--------------- ----------- ----------
Net income (loss)...................... $ (8,178) $ (45,092) $ (41,292)
--------------- ----------- ----------
--------------- ----------- ----------
Net income (loss) applicable to common
stock................................ $ (8,178) $ (73,092) ) $ (69,292)
--------------- ----------- ----------
--------------- ----------- ----------
Net income (loss) per common share..... $ (2.14)(15)
----------
----------
Weighted average shares................ 32,331,000(15)
----------
----------
EBITDA (16)............................ $ (5,491 ) $ 15,853 $ 263,455
--------------- ----------- ----------
--------------- ----------- ----------
Net cash provided by operating
activities........................... $ (17,376 ) $ (3,298 ) $ 153,027
--------------- ----------- ----------
--------------- ----------- ----------
Ratio of earnings to fixed charges..... (18)
Ratio of earnings to combined fixed
charges and preferred stock
dividends............................ (18)
</TABLE>
See accompanying notes to unaudited pro forma statement of operations.
37
<PAGE>
Premier Parks Inc.
Notes to Unaudited Pro Forma Statement of Operation
Year Ended December 31, 1997
(All amounts in thousands, except share data)
BASIS OF PRESENTATION
The accompanying unaudited pro forma statement of operations for the year
ended December 31, 1997, has been prepared based upon certain pro forma
adjustments to historical financial information of the Company, Kentucky
Kingdom, Six Flags and Walibi. The Company's acquisition of the operating assets
of Kentucky Kingdom occurred on November 7, 1997. The Company's acquisition of
the capital stock of SFEC and Walibi are scheduled to be completed in the second
quarter of 1998.
The unaudited pro forma statement of operations for the year ended December
31, 1997, has been prepared assuming the acquisitions, the related financings,
the issuance of the Convertible Preferred Stock and Common Stock and the new
Co-Venture Park arrangements occurred January 1, 1997 (except in the case of Six
Flags, which was treated as if it were acquired on December 30, 1996, the first
day of the 1997 fiscal year of Six Flags). The unaudited pro forma statement of
operations should be read in conjunction with the financial statements of the
Company, Kentucky Kingdom, Six Flags and Walibi and notes thereto included
elsewhere herein or, in the case of Kentucky Kingdom and Walibi, which are
incorporated herein by reference.
PRO FORMA ADJUSTMENTS
(1) The results of Kentucky Kingdom included herein represent the ten months
during 1997 prior to the acquisition of Kentucky Kingdom by the Company.
Revenues, operating expenses and other expenses for the first two months
(November and December 1996) of Kentucky Kingdom's fiscal year ended
November 2, 1997 were $2, $1,199 and $849, respectively, and are not
included in the accompanying unaudited pro forma statement of operations.
(2) The results of Walibi are converted from Belgian Francs ("BEF") and are
accounted for using generally accepted accounting principles of Belgium.
The following table reflects the adjustment of the Walibi statement of
operations to conform to U.S. generally accepted accounting principles and
U.S. dollars (using the December 31, 1997 exchange rate of 37.065 BEF to
US$1):
<TABLE>
<CAPTION>
AMOUNT ACCOUNTING ADJUSTED AMOUNT
(IN BEF) ADJUSTMENTS AMOUNT (IN U.S.$)
----------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Theme park admissions........................................ 1,621,309 -- 1,621,309 $ 43,742
Theme park food, merchandise, and other...................... 893,291 -- 893,291 24,101
----------- ------------ ---------- ----------
Total revenue................................................ 2,514,600 -- 2,514,600 67,843
----------- ------------ ---------- ----------
Operating expenses........................................... 1,175,031 (2,700) 1,172,331 31,629
Selling, general and administrative.......................... 391,677 -- 391,677 10,567
Costs of products sold....................................... 225,974 -- 225,974 6,097
Depreciation and amortization................................ 524,988 (6,144) 518,844 13,998
----------- ------------ ---------- ----------
Total operating costs and expenses........................... 2,317,670 (8,844) 2,308,826 62,291
----------- ------------ ---------- ----------
Income (loss) from operations................................ 196,930 8,844 205,774 5,552
Interest expense, net........................................ (126,383) -- (126,383) (3,409)
Other income (expense)....................................... (10,700) -- (10,700) (289)
----------- ------------ ---------- ----------
Total other income (expense)................................. (137,083) -- (137,083) (3,698)
----------- ------------ ---------- ----------
Income (loss) before income taxes............................ 59,847 8,844 68,691 1,854
Income tax expense........................................... 59,287 28,656 87,943 2,373
----------- ------------ ---------- ----------
Net income (loss)............................................ 560 (19,812) (19,252) $ (519)
----------- ------------ ---------- ----------
----------- ------------ ---------- ----------
</TABLE>
38
<PAGE>
PREMIER PARKS INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED DECEMBER 31, 1997
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
The unaudited pro forma statement of operations data assume all Walibi
stockholders accept the Walibi Tender Offer. If no such holders tender their
shares, the pro forma adjustment for minority interest would have been
increased by $1,969.
(3) Represents results of the Six Flags Over Texas and Six Flags Over Georgia
theme parks. Prior to the Six Flags Acquisition, Six Flags included the
results of the Co-Venture Partnerships in Six Flags' consolidated statements
of operations and the net amounts paid to the limited partners thereof were
reflected as an operating expense. After the date of the Six Flags
Acquisition, the Company will account for the results of the Co-Venture
Partnerships using the equity method of accounting. Under this method of
accounting, the Company's interest in the Co-Venture Partnerships will be
reflected in equity in operations of theme parks.
(4) Represents adjustments arising from Premier's acquisitions of Kentucky
Kingdom and Walibi, including interest expense associated with borrowings
under the Premier Credit Facility, and from the elimination of Premier's
termination fee referred to in note (11) below.
(5) Adjustments reflect reductions in park-level operating expenses of $62 in
the case of Kentucky Kingdom and $12,596, in the case of Six Flags.
(6) Adjustments reflect reductions in selling, general and administrative
expenses of $897 in the case of Kentucky Kingdom (including insurance,
franchise tax and other expenses); $2,006 in the case of Walibi (including
costs relating to its annual report, other shareholder-related expenses,
salaries and other expenses) and $13,677 in the case of Six Flags (including
national advertising and promotion expenses, insurance, and other expenses,
net of reduction of accrued restructuring costs and other non-recurring
items).
(7) Adjustments reflect $261 of cost reductions related to termination of
concessionaire arrangements at Kentucky Kingdom, and elimination of $728 of
non-recurring benefits from reversing previously accrued expenses at Six
Flags during 1997.
(8) Adjustments in the Premier Operations column reflect the elimination of
historical depreciation and amortization of $16,342 for Kentucky Kingdom and
Walibi and the inclusion of estimated pro forma depreciation of $7,909 and
amortization of $1,846. Adjustments in the Six Flags column reflect the
elimination of historical depreciation of $58,902 and the inclusion of
estimated pro forma depreciation of $25,937 and the elimination of
historical amortization of $13,484 (after reduction of $12,107 of
amortization related to the Co-Venture Partnerships) and the inclusion of
estimated pro forma amortization of $51,654. Depreciation by the Company is
based on useful lives of 20 years and intangible assets are amortized over
25 years. In the case of Walibi, the pro forma value of property and
equipment was increased from historical recorded value. In the case of Six
Flags, the pro forma value of property and equipment is estimated to be
consistent with the historical recorded value. Thus, the net pro forma
reduction of Six Flags depreciation is a result of longer average lives used
by the Company. The increase in Six Flags net pro forma amortization results
from the increase in the pro forma amount of intangible assets and the
amortization of such costs over 25 years. The allocation of the Six Flags
purchase price to property and equipment, based on book value, and to
intangible assets based on the excess of the purchase price over the
estimated value of the acquired net assets is subject to adjustment. The
final allocation of the purchase price may differ from these preliminary
estimates due to the final allocation being based on the completion of
valuations of certain acquired assets and assumed liabilities and
management's evaluation of such items.
(9) Adjustments reflect the interest expense associated with the Company Notes,
the New SFEC Notes, the Premier Credit Facility, and the Six Flags Credit
Facility net of the elimination of the interest expense associated with the
Company and Six Flags credit facilities previously outstanding, the long-
term debt of Kentucky Kingdom, the long-term debt of Walibi, and the
elimination of the interest
39
<PAGE>
PREMIER PARKS INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED DECEMBER 31, 1997
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
income earned by the Company on the cash used in the purchase of Kentucky
Kingdom as if the Company had made the above acquisitions as of January 1,
1997 (except in the case of Six Flags, which was treated as if it occurred
on December 30, 1996, the first day of the 1997 fiscal year of Six Flags).
Issuance costs associated with the new borrowings are being amortized over
the respective terms. The components of the adjustments are as follows:
<TABLE>
<S> <C> <C>
In the case of the Premier Operations adjustments:
Interest expense on Premier Credit Facility (assuming a 7 7/8%
interest rate)................................................... $ (17,719)
Interest expense from amortization of issuance costs............... (600)
Interest expense from commitment fees on the Premier Credit
Facility......................................................... (375)
Elimination of historical interest expense - Premier............... 655
Elimination of historical interest expense - Walibi................ 3,409
Elimination of historical interest expense - Kentucky Kingdom...... 3,974
Elimination of historical interest income on cash
used to acquire Kentucky Kingdom................................. (2,500)
---------
$ (13,156)
---------
---------
In the case of the Six Flags adjustments:
Interest expense on Company Senior Notes (assuming a 10% interest
rate)............................................................ $ (28,000)
Interest expense on Company Senior Discount Notes (assuming an 11%
interest rate)................................................... (27,500)
Interest expense on New SFEC Notes (assuming a 9 1/2% interest
rate)............................................................ (16,150)
Interest expense on Six Flags Credit Facility (assuming a 8.198%
interest rate)................................................... (34,432)
Interest expense from amortization of issuance costs............... (4,614)
Interest expense from commitment fee on the Six Flags Credit
Facility......................................................... (260)
Elimination of historical interest expense - Six Flags............. 53,427
---------
$ (57,529)
---------
---------
</TABLE>
A 0.125% change in the interest rates on the Company Notes, New SFEC Notes
and Credit Facilities would increase interest expense, net, in the case of
Premier Operations, by $281, in the case of Six Flags by $1,400 and, in the
case of Company Pro Forma, by $1,681.
(10) Adjustment reflects the equity in the operations of the Six Flags Over
Texas and Six Flags Over Georgia theme parks, based upon the Company's 25%
ownership of the limited partnership that owns the Georgia park and the
estimated 25% ownership of the limited partnership that owns the Texas park,
as if the Georgia and Texas partnership agreements had been in effect as of
January 1, 1997. Adjustments were also made to reflect (i) the elimination
of the historical amortization expense related to the investment in the
Texas limited partnership of $8,402, (ii) the estimated amortization of
$3,125 of the 25% investment in the Texas limited partnership, (iii)
recognition of the increased minimum level of required limited partnership
distributions of $20,261 as a result of the change in agreement, (iv)
receipt of $6,925 of limited partnership distributions associated with the
25% ownership of the limited partnership, and (v) cost savings associated
with allocation of national advertising costs and insurance costs of $3,644.
The pro forma statement of operations assumes a 25% tender acceptance rate
for units in the Texas limited partnership. If 50% of such units are
tendered, equity in operations of theme parks would be $17,338 as compared
to the $13,538 reflected in the pro forma statement of operations.
(11) Adjustment reflects the elimination of $8,364 termination fee paid to the
Company in connection with the termination of the Company's prior agreement
to become managing general partner of the Texas Co-Venture Partnership.
40
<PAGE>
PREMIER PARKS INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED DECEMBER 31, 1997
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(12) Adjustment reflects the increase of $1,663 relating to the minority
interest owner's share of operations related to net cost reductions at
Fiesta Texas reflected above.
(13) Adjustment reflects the reduction of $353 of other income (expense) of
Kentucky Kingdom related to a lease obligation not assumed by the Company
and assets not purchased by the Company.
(14) Adjustments reflects the application of income taxes to the pro forma
adjustments and to the acquired operations that were not previously directly
subject to income taxation, after consideration of permanent differences, at
a rate of 39%.
(15) Net income (loss) applicable to common stock is adjusted to reflect $28,000
of dividends payable to holders of Seller Preferred Stock and EqPINES at
assumed dividend rates of 6 1/2% and 7 1/2%, respectively.
Net income (loss) per common share and weighted average share data are not
presented for Kentucky Kingdom, Six Flags and Walibi as the information is
not meaningful. In the event of an all cash Walibi Tender Offer, net income
(loss) per common share would be $(2.16) and pro forma weighted average
number of common shares would be 32,092,000.
The calculation of pro forma weighted average shares outstanding for the
year ended December 31, 1997 is as follows:
<TABLE>
<S> <C>
Pro forma weighted average number of common shares outstanding
before the Common Stock Offering and the Walibi acquisition... 18,873,000
Common shares to be issued in the Common Stock Offering, the
proceeds of which will be used in part to fund the Six Flags
Acquisition, as if issued on January 1, 1997.................. 13,000,000
Common shares to be issued as partial consideration for the
Private Acquisition, as if issued on January 1, 1997.......... 229,000
Common shares to be issued as partial consideration for the
Walibi Tender Offer, as if issued on January 1, 1997.......... 229,000
---------
Pro forma weighted average number of common shares
outstanding................................................... 32,331,000
---------
---------
</TABLE>
(16) EBITDA is defined as earnings before interest expense, net, income tax
expense (benefit), depreciation and amortization, minority interest and
equity in loss of real estate partnership. The Company has included
information concerning EBITDA because it is used by certain investors as a
measure of the Company's ability to service and/or incur debt. EBITDA is not
required by GAAP and should not be considered in isolation or as an
alternative to net income, net cash provided by operating, investing and
financing activities or other financial data prepared in accordance with
GAAP or as an indicator of the Company's operating performance. This
information should be read in conjunction with the Statements of Cash Flows
contained in the financial statements included elsewhere herein. Equity in
loss of real estate partnership was $59,000 during the year ended December
31, 1997. Pro forma EBITDA includes equity in operations of theme parks and
the depreciation and amortization ($6,830,000) of the investment in the
Co-Venture Parks included therein.
(17) The operating cash flow for Walibi during 1997 was 452,430 BEF. At an
exchange rate of 37.065 BEF to US$1, the operating cash flow would have been
$12,206.
(18) On a pro forma basis, for the year ended December 31, 1997, the Company's
earnings were insufficient to cover fixed charges and combined fixed charges
and preferred stock dividends by $31,818 and $77,720, respectively.
41
<PAGE>
PREMIER PARKS INC.
UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL HISTORICAL
PREMIER SIX FLAGS WALIBI (1)
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................................................................ $ 84,288 $ 16,805 $ 16,423
Accounts receivable...................................................................... 6,537 7,258 5,693
Inventories.............................................................................. 5,547 14,338 1,748
Income tax receivable.................................................................... 995 -- --
Prepaid expenses and other current assets................................................ 3,690 11,899 1,595
----------- ----------- -----------
Total current assets................................................................. 101,057 50,300 25,459
Deferred charges......................................................................... 10,123 20,171
Restricted-use investments............................................................... -- -- --
Deposits and other....................................................................... 3,949 26,784 281
----------- ----------- -----------
Total other assets................................................................... 14,072 46,955 281
Investment in theme parks, net........................................................... -- 78,370 --
Property and equipment, net.............................................................. 450,256 492,137 91,174
Intangible assets, net................................................................... 45,936 196,928 2,431
----------- ----------- -----------
Total assets......................................................................... $ 611,321 $ 864,690 $ 119,345
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses.................................................... $ 23,199 $ 61,014 $ 11,387
Accrued interest payable................................................................. 9,785 3,431 --
Current maturities of long-term debt and capitalized lease obligations................... 795 56,633 18,843
----------- ----------- -----------
Total current liabilities............................................................ 33,779 121,078 30,230
Long-term debt and capitalized lease obligations......................................... 216,231 753,369 50,545
Other long-term liabilities.............................................................. 4,025 12,570 1,970
Deferred income taxes.................................................................... 33,537 -- 4,706
Mandatorily redeemable preferred stock................................................... -- -- --
Stockholders' equity..................................................................... 323,749 (22,327) 31,894
----------- ----------- -----------
Total liabilities and stockholders' equity........................................... $ 611,321 $ 864,690 $ 119,345
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
COMPANY PROFORMA COMPANY
COMBINED ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................................................................ $ 117,516 $(135,210) 2) $ 479,804
(1,262,134)(3)
1,759,632(4)
Accounts receivable...................................................................... 19,488 19,488
Inventories.............................................................................. 21,633 21,633
Income tax receivable.................................................................... 995 995
Prepaid expenses and other current assets................................................ 17,184 17,184
----------- ----------- -----------
Total current assets................................................................. 176,816 362,288 539,104
Deferred charges......................................................................... 30,294 39,166(4) 49,289
(20,171)(3)
Restricted-use investments............................................................... -- 251,290(4) 326,290
75,000(4)
Deposits and other....................................................................... 31,014 (10,984)(3) 52,530
25,000(3)
7,500(4)
----------- ----------- -----------
Total other assets................................................................... 61,308 366,801 428,109
Investment in theme parks, net........................................................... 78,370 (18,274)(3) 153,796
93,700(3)
Property and equipment, net.............................................................. 1,033,567 17,326(2) 1,050,893
Intangible assets, net................................................................... 245,295 1,094,436(3) 1,381,760
42,029(2)
----------- ----------- -----------
Total assets......................................................................... $1,595,356 $1,958,306 $3,553,662
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses.................................................... $ 95,600 $ 95,600
Accrued interest payable................................................................. 13,216 (3,431)(3) 9,785
Current maturities of long-term debt and capitalized lease obligations................... 76,271 (18,843)(2) 2,795
(56,633)(3)
2,000(4)
----------- ----------- -----------
Total current liabilities............................................................ 185,087 (76,907) 108,180
Long-term debt and capitalized lease obligations......................................... 1,020,145 (50,545)(2) 2,032,831
(279,769)(3)
1,343,000(4)
Other long-term liabilities.............................................................. 18,565 35,000(3) 53,565
Deferred income taxes.................................................................... 38,243 6,584(2) 28,906
(15,921)(3)
Mandatorily redeemable preferred stock................................................... -- 200,000(3) 200,000
Stockholders' equity..................................................................... 333,316 (31,894)(2) 1,130,180
22,327(3)
18,843(2)
(1,421)(4)
789,009(4)
----------- ----------- -----------
Total liabilities and stockholders' equity........................................... $1,595,356 $1,958,306 $3,553,662
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma balance sheet.
42
<PAGE>
PREMIER PARKS INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
DECEMBER 31, 1997
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
BASIS OF PRESENTATION
The accompanying unaudited pro forma balance sheet as of December 31, 1997,
has been prepared based on certain pro forma adjustments to historical financial
information of the Company, Six Flags and Walibi. The Company's acquisition of
the capital stock of SFEC and Walibi are scheduled to be completed in the second
quarter of 1998.
The unaudited pro forma balance sheet as of December 31, 1997, has been
prepared assuming the acquisition of Six Flags and Walibi occurred on December
31, 1997. The unaudited pro forma balance sheet should be read in conjunction
with the financial statements of the Company, Six Flags and Walibi and notes
thereto included elsewhere herein or, in the case of Walibi, incorporated herein
by reference.
PRO FORMA ADJUSTMENTS
(1) The amounts for Walibi are converted from Belgian Francs ("BEF") and are
accounted for using generally accepted accounting principles of Belgium. The
following table reflects the adjustment of the Walibi balance sheet to
conform to U.S. generally accepted accounting principles and the conversion
to U.S. dollars (using the December 31, 1997 exchange rate of 37.065 BEF to
US$1) :
<TABLE>
<CAPTION>
AMOUNT ACCOUNTING ADJUSTED AMOUNT
(IN BEF) ADJUSTMENTS AMOUNT (IN U.S.$)
---------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents.................................. 608,724 -- 608,724 $ 16,423
Accounts receivable........................................ 210,997 -- 210,997 5,693
Inventories................................................ 64,780 -- 64,780 1,748
Prepaid expenses and other current assets.................. 69,909 (10,800) 59,109 1,595
Deposits and other......................................... 10,407 -- 10,407 281
Property and equipment, net................................ 3,393,688 (14,344) 3,379,344 91,174
Intangible assets, net..................................... 45,694 44,429 90,123 2,431
Total assets............................................... 4,404,199 19,285 4,423,484 119,345
Accounts payable and accrued expenses...................... 404,365 17,636 422,001 11,387
Current maturities of long-term debt and capitalized lease 698,411 -- 698,411 18,843
obligations..............................................
Long-term debt and capitalized lease obligations........... 1,873,467 -- 1,873,467 50,545
Other long-term liabilities................................ 58,015 15,000 73,015 1,970
Deferred income taxes...................................... 281,475 (107,029) 174,446 4,706
Stockholders' equity....................................... 1,088,466 93,678 1,182,144 31,894
Total liabilities and stockholders' equity................. 4,404,199 19,285 4,423,484 119,345
</TABLE>
43
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET (CONTINUED)
DECEMBER 31, 1997
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(2) Adjustment reflects the purchase of the outstanding capital stock of Walibi
for $64,822 of cash and in Common Stock of the Company valued at $18,843, as
well as $1,000 of estimated transaction costs. As of December 31, 1997,
Walibi had $69,388 of debt outstanding. As part of the acquisition, the debt
will be paid in full. The purchase price, including the debt payment, will
be funded from the Premier Credit Facility. The acquisition of Walibi will
be accounted for using the purchase price method of accounting. Allocation
of the purchase price for purposes of the pro forma balance sheet was based
upon estimated fair values of assets and liabilities. Estimated fair value
of property and equipment exceeds the historical carrying value by $17,326.
Other than intangible assets and deferred tax liabilities, fair value is not
anticipated to differ significantly from the current recorded value of other
assets and liabilities. Deferred tax liabilities have been increased by
$6,584 as a result of the differences between the fair value and tax basis
of the assets and liabilities. Purchase price in excess of the estimated
fair value of the acquired net assets has been reflected as an increase in
intangible assets.
The unaudited pro forma balance sheet data assumes a 100% acceptance of the
Walibi Tender Offer with 80% of the tender offer consideration payable in
cash and 20% in shares of Common Stock. If a 100% acceptance of an all cash
Walibi Tender Offer occurs, pro forma cash and cash equivalents and
stockholders' equity would decrease by $9,422.
If no shares of Walibi capital stock are tendered, the Company Pro Forma
amounts would be as follows:
<TABLE>
<CAPTION>
COMPANY
PRO FORMA
----------
<S> <C>
Cash and cash equivalents................................................................... $ 573,686
Intangible assets, net...................................................................... 1,363,791
Total assets................................................................................ 3,629,575
Current maturities of long-term debt and capitalized lease obligations...................... 21,638
Long-term debt and capitalized lease obligations............................................ 2,083,376
Other long-term liabilities................................................................. 69,512
Stockholders' equity........................................................................ 1,120,758
</TABLE>
(3) Adjustment reflects the purchase of the outstanding capital stock of Six
Flags for $776,000 of cash and Seller Preferred Stock of $200,000,
transaction costs of $10,000 and the purchase of 25% of the outstanding
limited partnership units of the Texas Co-Venture Park for $93,700. Six
Flags has commenced the tender offer on the terms described under
"Business--Description of Parks--Six Flags over Texas and Six Flags
Hurricane Harbor". The Company has assumed a 25% tender acceptance rate
based on comparable results of the prior tender relating to the Georgia
park. A $25,000 indemnity escrow will be established from the purchase price
to fund indemnification claims of Premier under the Six Flags Agreement. The
indemnity escrow is reflected as a deposit and as an other long-term
liability. As of December 31, 1997, Six Flags had $810,002 of debt
outstanding. The Company will refinance outstanding indebtedness of $379,003
and $3,431 of accrued interest and assume $430,999 of long-term debt. The
purchase price and debt repayment will be funded from proceeds of the
Offerings. The acquisition will be accounted for using the purchase method
of
44
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET (CONTINUED)
DECEMBER 31, 1997
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
accounting. Allocation of the purchase price for purposes of the pro forma
balance sheet was based upon estimated fair values of assets and
liabilities. Fair value of assets and liabilities approximate recorded
historical amounts, except for the fair value of the assumed debt and
certain other assets, investments and deferred charges. The fair value of
the assumed debt was $42,601 higher than the recorded value and certain
other assets were reduced by $49,429. Additionally, $10,000 of liabilities
related to changes in contractual agreements and other obligations are
reflected as other long-term liabilities. Purchase price in excess of the
estimated fair value of the acquired net assets has been reflected as an
increase in intangible assets.
The unaudited pro forma combined balance sheet data assumes a 25% tender
acceptance rate in the tender offer for units in the Texas Co-Venture Park.
In the event of a 50% tender acceptance rate, the applicable Company Pro
Forma amounts would be as follows:
<TABLE>
<CAPTION>
COMPANY PRO
FORMA
-----------
<S> <C>
Cash and cash equivalents.............................................................. $ 386,104
Investment in theme parks, net......................................................... $ 247,496
</TABLE>
(4) Adjustment reflects the following proceeds and costs:
<TABLE>
<CAPTION>
Equity:
<S> <C>
Common Stock (assuming 13,000,000 shares issued at $45.63 per share
based upon the average closing price of the Company's common stock for
the twenty trading days ended February 27, 1998)........................ $ 593,190
EqPINES (assuming 5,000,000 shares issued at $45.63 per share).......... 228,150
Less discounts and costs................................................ (32,331)
-----------
$ 789,009
-----------
-----------
<CAPTION>
Debt:
<S> <C>
Company Senior Notes.................................................... $ 280,000
Company Senior Discount Notes........................................... 250,000
New SFEC Notes.......................................................... 170,000
Premier Credit Facility ($1,000 principal due within one year).......... 225,000
Six Flags Credit Facility ($1,000 principal due within one year)........ 420,000
-----------
1,345,000
Less debt issuance costs.................................................... (40,587)
-----------
$1,304,413
-----------
-----------
</TABLE>
Deferred charges of $1,421 associated with the Company's prior credit
facility are reflected as a reduction in stockholders' equity.
As part of the Six Flags agreements, the Company will establish a $75,000
restricted-use investment securing the Company's obligations related to the
Co-Venture Parks' requirements and certain obligations related to the
Convertible Preferred Stock. The Company will also establish a deposit of
$7,500 related to securing the Company's obligation with respect to minimum
annual distributions and mandatory capital expenditures at the Co-Venture
Parks. Additionally, the Company will be establishing restricted-use
investments of $175,030 related to the repayment of the SFEC Zero Coupon
Senior Notes and of $76,260 for payment of the first six semi-annual
interest payments on the Company's Senior Notes.
45
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's revenue is derived from the sale of tickets for entrance to
its parks (approximately 52.7%, 44.0% and 48.8% in 1995, 1996 and 1997,
respectively) and the sale of food, merchandise, games and attractions inside
its parks and other income (approximately 47.3%, 56.0% and 51.2% in 1995, 1996
and 1997, respectively). The Company's principal costs of operations include
salaries and wages, employee benefits, advertising, outside services,
maintenance, utilities and insurance. The Company's expenses are relatively
fixed. Costs for full-time employees, maintenance, utilities, advertising and
insurance do not vary significantly with attendance, thereby providing the
Company with a significant degree of operating leverage as attendance increases
and fixed costs per visitor decrease.
The Company acquired three parks in 1995 in the Funtime Acquisition, and
acquired four parks during the last quarter of 1996. The Company acquired
Riverside Park in February 1997, and Kentucky Kingdom in November 1997. In
addition, the Company assumed management of Marine World in April 1997,
exercised a lease option with respect to a portion of that park in November
1997, and executed a purchase option for the entire park in September 1997. The
following discussion as it relates to 1996 includes two presentations. The first
includes the historical results of the Company (including the results of the
parks acquired in the 1996 Acquisitions (other than Riverside Park) only from
their dates of acquisition forward (October 31, 1996 for Elitch Gardens;
November 19, 1996 for the Waterworld parks; and December 4, 1996 for The Great
Escape). The second includes both the historical results for the Company and the
results of the parks acquired in the 1996 Acquisitions for periods prior to the
dates of their respective acquisition.
The following discussion as it relates to 1997 includes the results of the
parks acquired in the 1996 Acquisitions (other than Riverside Park) for the full
year, as well as Kentucky Kingdom and Riverside Park from their dates of
acquisition forward, and includes Marine World only to the extent of the
management fee received and depreciation expense related to that park.
The Company believes that significant opportunities exist to acquire
additional theme parks. Although the Company has had discussions with respect to
several additional business acquisitions, no agreement or understanding has been
reached with respect to any specific future acquisition other than the Six Flags
and Walibi acquisitions. In addition, the Company intends to continue its
on-going expansion of the rides and attractions and overall improvement of its
parks to maintain and enhance their appeal. Management believes this strategy
has contributed to increased attendance, lengths of stay and in-park spending
and therefore, profitability. A consummated acquisition, including, the Six
Flags and Walibi acquisitions, when consummated, may adversely affect the
Company's operating results, at least in the short term, depending on many
factors including capital requirements and the accounting treatment of any such
acquisition. See "Unaudited Pro Forma Financial Statements."
46
<PAGE>
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 AND 1996
The table below sets forth certain financial information with respect to the
Company (including the 1996 Acquisitions and Riverside Park) for the year ended
December 31, 1996 and with respect to the Company and Kentucky Kingdom and
Marine World for the year ended December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL HISTORICAL
HISTORICAL 1996 PREMIER
NINE MONTHS ACQUISITIONS (EXCLUDING
ENDED SEPTEMBER FOR PERIODS MARINE KENTUCKY
30, 1996 FOR SUBSEQUENT TO WORLD AND KINGDOM
HISTORICAL 1996 SEPTEMBER 30, HISTORICAL KENTUCKY AND MARINE HISTORICAL
PREMIER(1) ACQUISITIONS(2) 1996(3) COMBINED KINGDOM)(4) WORLD(5) PREMIER
----------- --------------- -------------- ----------- ----------- ----------- -----------
<CAPTION>
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
Theme park admissions...... $ 41,162 $ 34,062 $ 724 $ 75,948 $ 94,611 $ -- $ 94,611
Theme park food,
merchandise and other.... 52,285 30,453 1,020 83,758 99,103 190 99,293
----------- ------- -------------- ----------- ----------- ----------- -----------
Total revenue............ 93,447 64,515 1,744 159,706 193,714 190 193,904
----------- ------- -------------- ----------- ----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Operating expenses......... 42,425 23,204 3,116 68,745 80,307 1,049 81,356
Selling, general and
administrative........... 16,927 17,035 2,289 36,251 36,461 86 36,547
Costs of products sold..... 11,101 9,448 347 20,896 23,025 -- 23,025
Depreciation and
amortization............. 8,533 13,028 703 22,264 19,159 633 19,792
----------- ------- -------------- ----------- ----------- ----------- -----------
Total operating costs and
expenses............... 78,986 62,715 6,455 148,156 158,952 1,768 160,720
----------- ------- -------------- ----------- ----------- ----------- -----------
Income (loss) from
operations................. 14,461 1,800 (4,711) 11,550 34,762 (1,578) 33,184
OTHER INCOME (EXPENSE):
Interest expense, net...... (11,121) (4,624) (517) (16,262) (17,763) (12) (17,775)
Termination fee, net of
expenses................. -- -- -- -- 8,364 -- 8,364
Other income (expense)..... (78) (284) -- (362) (59) -- (59)
----------- ------- -------------- ----------- ----------- ----------- -----------
Total other income
(expense).............. (11,199) (4,908) (517) (16,624) (9,458) (12) (9,470)
----------- ------- -------------- ----------- ----------- ----------- -----------
Income before income
taxes.................... 3,262 (3,108) (5,228) (5,074) 25,304 (1,590) 23,714
Income tax expense
(benefit)................ 1,497 1,131 -- 2,628 9,615 -- 9,615
----------- ------- -------------- ----------- ----------- ----------- -----------
Net income (loss).......... $ 1,765 $ (4,239) $ (5,228) $ (7,702) $ 15,689 $ (1,590) $ 14,099
----------- ------- -------------- ----------- ----------- ----------- -----------
----------- ------- -------------- ----------- ----------- ----------- -----------
</TABLE>
- ------------------------
(1) Includes results of the 1996 Acquisitions from and after the acquisition
dates.
(2) Includes results of the 1996 Acquisitions for the nine months ended
September 30, 1996.
(3) Includes results of the 1996 Acquisitions for the respective periods
commencing October 1, 1996 and ending on the respective acquisition dates
(or in the case of Riverside Park, December 31, 1996).
(4) Excludes management fee and depreciation expense relating to Marine World
and results of Kentucky Kingdom for the period subsequent to the acquisition
date, November 7, 1997.
(5) Represents management fee and depreciation expense relating to Marine World
and results of Kentucky Kingdom from the acquisition date through December
31, 1997.
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<PAGE>
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
REVENUE. Revenue aggregated $193.9 million in 1997 ($193.7 million at the
eleven parks owned during the 1997 season), compared to $93.4 million in 1996,
and to combined revenue of $159.7 million in 1996. This 21.3% increase in
revenue at the same eleven parks is primarily attributable to increased
attendance (17.3%) at these eleven parks, which resulted in part from increased
season pass and group sales at several parks.
OPERATING EXPENSES. Operating expenses increased during 1997 to $81.4
million ($80.3 million at the eleven parks owned during the 1997 season) from
$42.4 million reported in 1996, and from $68.7 million combined operating
expenses for 1996. This 16.9% increase in operating expenses at the same eleven
parks is mainly due to additional staffing related to the increased attendance
levels and increased pay rates. As a percentage of revenue, operating expenses
at these parks constituted 41.5% for 1997 and 43.0% on a combined basis for
1996.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses at the eleven owned parks were $36.5 million in 1997, compared to $16.9
million reported, and $36.3 million combined, selling, general and
administrative expenses for 1996. As a percentage of revenues, these expenses at
the same eleven parks constituted 18.8% for 1997 and 22.7% for 1996 combined.
This increase over 1996 combined expenses relates primarily to increased
advertising and marketing expenses to promote the newly acquired parks and the
new rides and attractions at all of the parks, increased sales taxes arising
from increased volume generally and increased property taxes and professional
services, offset by significant reductions in personnel and insurance expenses.
COSTS OF PRODUCTS SOLD. Costs of products sold were $23.0 million at the
eleven parks for 1997 compared to $11.1 million reported and $20.9 million
combined for 1996. Cost of products sold (as a percentage of in-park revenue) at
these parks constituted approximately 23.2% for 1997 and 25.0% for 1996
combined. This $2.1 million or 10.2% increase over combined 1996 results is
directly related to the 18.3% increase in food, merchandise and other revenues.
DEPRECIATION AND INTEREST EXPENSE. Depreciation expense increased $11.3
million over the reported 1996 results. The increase is a result of the full
year's effect of the 1996 Acquisitions (other than Riverside Park), the purchase
price paid for the Riverside Park and Kentucky Kingdom acquisitions and the
on-going capital program at the Company's parks. Interest expense, net,
increased $6.7 million from 1996 as a result of interest on the 1997 Premier
Notes.
TERMINATION FEE, NET OF EXPENSES. During October 1997, the Company entered
into an agreement with the limited partner of the partnership that owns Six
Flags Over Texas to become the managing general partner of the partnership, to
manage the operations of the park, to receive a portion of the income from such
operations, and to purchase limited partnership units over the term of the
agreement.
The agreement was non-exclusive and contained a termination fee of
$10,750,000 payable to the Company in the event the agreement was terminated.
Subsequent to the Company's agreement with the limited partnership, the prior
operator of the park reached an agreement with the limited partnership, and the
Company's agreement was terminated. The Company received the termination fee in
December 1997 and included the termination fee, net of $2,386,000 of expenses
associated with the transaction, as income in 1997.
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INCOME TAXES. The Company incurred income tax expense of $9.6 million
during 1997, compared to $1.5 million during 1996. The effective tax rate for
1997 was approximately 40.5% as compared to 45.9% in 1996. This decrease is the
result of the decline in the size of the non-deductible goodwill from the
Funtime Acquisition and the acquisition of Riverside Park relative to the
Company's income.
At December 31, 1997, the Company estimates that it had approximately $37
million of net operating losses ("NOLs") carryforwards for Federal income tax
purposes. The NOLs are subject to review and potential disallowance by the
Internal Revenue Service upon audit of the Federal income tax returns of the
Company and its subsidiaries. In addition, the use of such NOLs is subject to
limitations on the amount of taxable income that can be offset with such NOLs.
Some of such NOLs also are subject to a limitation as to which of the
subsidiaries' income such NOLs are permitted to offset. Accordingly, no
assurance can be given as to the timing or amount of the availability of such
NOLs to the Company and its subsidiaries. See Note 7 to Premier's Consolidated
Financial Statements.
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<PAGE>
YEARS ENDED DECEMBER 31, 1996 AND 1995
The table below sets forth certain financial information with respect to the
Company and the Funtime parks for the year ended December 31, 1995 and with
respect to the Company and the 1996 Acquisitions (other than Riverside Park) for
the year ended December 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------ --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL FUNTIME(2)
----------------------------
<CAPTION>
SIX MONTHS HISTORICAL
ENDED FORTY-THREE PREMIER
HISTORICAL JULY 2, DAYS ENDED HISTORICAL (EXCLUDING 1996 1996 HISTORICAL
PREMIER(1) 1995 AUGUST 14, 1995 COMBINED ACQUISITIONS)(3) ACQUISITIONS(4) PREMIER
----------- ----------- --------------- ----------- --------------- -------------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Theme park
admissions......... $ 21,863 $ 6,195 $ 9,680 $ 37,738 $ 41,157 $ 5 $ 41,162
Theme park food,
merchandise and
other.............. 19,633 8,958 13,450 42,041 52,148 137 52,285
----------- ----------- ------- ----------- ------- ------- -----------
Total revenue.......... 41,496 15,153 23,130 79,779 93,305 142 93,447
----------- ----------- ------- ----------- ------- ------- -----------
Expenses:
Operating expenses... 19,775 10,537 6,039 36,351 40,568 1,857 42,425
Selling, general and
administrative..... 9,272 3,459 2,533 15,264 16,534 393 16,927
Costs of products
sold............... 4,635 2,083 2,953 9,671 11,071 30 11,101
Depreciation and
amortization....... 3,866 3,316 829 8,011 7,785 748 8,533
----------- ----------- ------- ----------- ------- ------- -----------
Total costs and
expenses............. 37,548 19,395 12,354 69,297 75,958 3,028 78,986
----------- ----------- ------- ----------- ------- ------- -----------
Income (loss) from
operations........... 3,948 (4,242) 10,776 10,482 17,347 (2,886) 14,461
Interest expense,
net.................. (5,578) (2,741) (321) (8,640) (11,121) -- (11,121)
Other income
(expense)............ (177) 4 (4) (177) (78) -- (78)
----------- ----------- ------- ----------- ------- ------- -----------
Total other income
(expense)............ (5,755) (2,737) (325) (8,817) (11,199) -- (11,199)
----------- ----------- ------- ----------- ------- ------- -----------
Income before income
taxes and
extraordinary loss... (1,807) (6,979) 10,451 1,665 6,148 (2,886) 3,262
Income tax expense
(benefit)............ (762) (2,722) 4,076 592 2,905 (1,408) 1,497
----------- ----------- ------- ----------- ------- ------- -----------
Income (loss) before
extraordinary loss... $ (1,045) $ (4,257) $ 6,375 $ 1,073 $ 3,243 $ (1,478) $ 1,765
----------- ----------- ------- ----------- ------- ------- -----------
----------- ----------- ------- ----------- ------- ------- -----------
</TABLE>
- ------------------------
(1) Includes results of the Funtime Acquisition from and after August 15, 1995,
the acquisition date.
(2) Represents results of the parks acquired in the Funtime Acquisition from
January 1, 1995 to August 14, 1995.
(3) Excludes operating results of parks acquired in the 1996 Acquisitions, but
includes interest expense incurred by virtue of associated financings as of
the date incurred.
(4) Represents results of the parks acquired in the 1996 Acquisitions (other
than Riverside Park which was acquired in February 1997) from their
respective acquisition dates through December 31, 1996.
50
<PAGE>
REVENUE. Revenue aggregated $93.4 million in 1996 ($93.3 million without
the 1996 Acquisitions), compared to $41.5 million actual in 1995, and to
combined revenue of $79.8 million in 1995. This 17.0% increase in revenue
(excluding the 1996 Acquisitions) over combined 1995 revenue at the same six
parks is attributable to increased attendance (10.3%) and per capita revenue
(6.3%) at the six parks and increased sponsorship revenue, as well as increased
season pass sales at several parks, and increased campground revenue at Darien
Lake and income from the new contractual arrangements for 1996 at the Darien
Lake Performance Arts Center.
OPERATING EXPENSES. Operating expenses increased during 1996 to $42.4
million ($40.6 million excluding the 1996 Acquisitions) from $19.8 million
reported in 1995 and from $36.4 million combined operating expenses for 1995.
This 11.6% increase in operating expenses (excluding the 1996 Acquisitions) over
combined 1995 operating expenses is mainly due to additional staffing related to
increased attendance levels and increased pay rates, offset to some extent by a
decrease in equipment rental expense in 1996 due to the purchase of equipment
that had been leased during 1995. As a percentage of revenue, operating expenses
(excluding the 1996 Acquisitions) constituted 43.5% for 1996 and 45.6% on a
combined basis for 1995.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses were $16.5 million in 1996 (excluding the 1996 Acquisitions), compared
to $9.3 million reported, and $15.3 million combined, selling, general and
administrative expenses for 1995. As a percentage of revenue, these expenses
constituted 17.7% for 1996 and 19.1% for 1995 combined. This increase over 1995
combined expenses relates primarily to increased advertising and marketing
expenses to promote the Funtime parks and the new rides and attractions at all
of the parks, increased sales taxes arising from increased volume generally and
increased property taxes and professional services.
COSTS OF PRODUCTS SOLD. Costs of products sold were $11.1 million for 1996
compared to $4.6 million reported and $9.7 million combined for 1995. Cost of
products sold (as a percentage of in-park revenue) constituted approximately
21.2% for 1996 and 23.0% for 1995 combined. This $1.4 million or 14.5% increase
over combined 1995 results is directly related to the 24.0% increase in 1996 in
food, merchandise and other revenue.
DEPRECIATION AND INTEREST EXPENSE. Depreciation and amortization expense
was $8.5 million for 1996 as compared to $3.9 million in 1995. The increase was
a result of the full year's effect of the Funtime Acquisition, the $116.2
million spent during the fourth quarter of 1996 for the 1996 Acquisitions and
the on-going capital program at the Company's parks. Interest expense, net,
increased $5.5 million in 1996, as compared to 1995, as a result of interest on
the 1995 Premier Notes for twelve months in 1996 as compared to four and
one-half months in 1995 and the Company's borrowings under its then-existing
senior credit facility made in connection with the 1996 Acquisitions.
INCOME TAXES. The Company incurred income tax expense of $1.5 million
during 1996, compared to a tax benefit of $762,000 during 1995. The effective
tax rate for 1996 was approximately 45.9% as compared to 42.2% in 1995. The
increase is the result of twelve months of goodwill amortization in 1996 versus
four and one-half months in 1995. The goodwill recognized for financial
reporting of the Funtime Acquisition and the 1996 Acquisitions is not deductible
for Federal income tax purposes. See Note 7 to Notes to Premier's Consolidated
Financial Statements.
LIQUIDITY, CAPITAL COMMITMENTS AND RESOURCES
The operations of the Company are highly seasonal, with the majority of the
operating season occurring between Memorial Day and Labor Day. Most of the
Company's revenue is collected in the second and third quarters of each year
while most expenditures for capital improvements and major maintenance are
incurred when the parks are closed. See "Risk Factors -- Effects of Inclement
Weather; Seasonal Fluctuations of Operating Results." The Company employs a
substantial number of seasonal
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<PAGE>
employees who are compensated on an hourly basis. The Company is not subject to
Federal or certain applicable state minimum wage rates in respect of its
seasonal employees. However, the 1996 increase of $.90 an hour over two years in
the Federal minimum wage rate, and any increase in these state minimum wage
rates, may result over time in increased compensation expense for the Company as
it relates to these employees as a result of competitive factors.
HISTORICAL
During 1996, the Company generated net cash of $11.3 million from operating
activities. Net cash used in investing activities in 1996 totaled $155.1
million, $116.2 million of which was employed in connection with the 1996
Acquisitions (other than Riverside Park) and $39.4 million represented amounts
spent for capital expenditures, offset slightly by proceeds received from
equipment sales. Net cash provided by financing activities for 1996 totaled
$119.1 million, reflecting the net proceeds from the June 1996 public offering
described below and borrowings under the Company's senior credit facility,
offset, in part, by scheduled repayments of capitalized lease obligations.
During 1997, the Company generated net cash of $47.2 million from operating
activities. Net cash used in investing activities in 1997 totaled $217.1
million, $81.4 million of which was employed in connection with the acquisitions
of Riverside Park and Kentucky Kingdom and $135.9 million represented amounts
spent for capital expenditures at the Company's parks. Net cash provided by
financing activities for 1997 totaled $250.2 million, reflecting the net
proceeds from the January 1997 offerings of Common Stock and $125.0 million
principal amount of 1997 Premier Notes described below, offset in part by
repayment of borrowings under the Company's senior credit facility.
In June 1996, the Company completed a public offering of approximately 3.9
million shares of Common Stock at a price to the public of $18.00 per share,
resulting in aggregate net proceeds to the Company of approximately $65.3
million. In connection with the June 1996 public offering, all of the Company's
then outstanding shares of preferred stock, together with all accrued dividends
thereon, were converted into approximately 2.6 million shares of Common Stock.
In January 1997, the Company completed two concurrent public offerings, issuing
an additional 6.9 million shares of Common Stock at a price to the public of
$29.00 per share, resulting in aggregate net proceeds to the Company of
approximately $189.5 million, and issuing $125 million principal amount of the
1997 Premier Notes, resulting in net proceeds of approximately $120.7 million.
On October 31, 1996, the Company acquired substantially all of the assets
used in the operation of Elitch Gardens for $62.5 million in cash. On November
19, 1996, the Company acquired substantially all of the assets used in the
operation of the Waterworld Parks for an aggregate cash consideration of $17.25
million. On December 4, 1996, the Company acquired substantially all of the
assets of The Great Escape for $33.0 million in cash. On February 5, 1997, the
Company acquired all of the capital stock of the owner of Riverside Park for
approximately $22.2 million, of which $1.0 million was paid in Common Stock with
the balance paid in cash. On April 1, 1997, the Company assumed management of
Marine World, and subsequently exercised a long-term lease option for a portion
of the park and obtained a purchase option with respect to the entire property.
In November 1997, the Company purchased substantially all of the assets used in
the operation of Kentucky Kingdom for a purchase price of $64.0 million, of
which approximately $4.8 million was paid by delivery of 121,671 shares of
Common Stock, with the balance paid in cash and by assumption of certain
liabilities. Depending on the level of revenues at Kentucky Kingdom during each
of the 1998 through 2000 seasons, the Company may be required to issue
additional shares of Common Stock to the seller.
At December 31, 1997, substantially all of Premier's indebtedness was
represented by the Premier Notes in an aggregate principal amount of $215.0
million, which require aggregate annual interest payments of approximately $23.0
million. Except in the event of a change of control of the Company and certain
other circumstances, no principal payment on the Premier Notes is due until the
maturity dates
52
<PAGE>
thereof, August 15, 2003 in the case of the 1995 Premier Notes and January 15,
2007, in the case of the 1997 Premier Notes. In February 1998, Premier
terminated its $115.0 million senior secured credit facility and obtained a
commitment with respect to the Premier Credit Facility. The Company will expense
its remaining deferred charges related to the terminated facility in the first
quarter of 1998. The Company expects to enter into the Premier Credit Facility
on or about March 6, 1998.
PRO FORMA
In March 1998, the Company entered into the Premier Credit Facility,
pursuant to which it will initially borrow $125.0 million, substantially all of
which will be expended in connection with the Walibi acquisition. See
"Description of Indebtedness."
Upon consummation of the Six Flags Transactions, the Company will issue (i)
up to 13,000,000 shares of Common Stock, (ii) up to 5,000,000 EqPINES
(depositary shares representing interests in Mandatorily Convertible Preferred
Stock), (iii) Seller Depositary Shares representing up to $200.0 million of
Seller Preferred Stock, (iv) $ million principal amount at maturity of
Company Senior Discount Notes (with estimated gross proceeds of $250.0 million),
(v) $280.0 million aggregate principal amount of Company Senior Notes and (vi)
$170.0 million aggregate principal amount of New SFEC Notes. The EqPINES will
accrue cumulative dividends (payable, at the Company's option, in cash or shares
of Common Stock) at % per annum, and will be mandatorily convertible into
Common Stock in 2001. The Seller Preferred Stock will accrue cumulative cash
dividends at % per annum and the Company is required to offer to purchase the
Seller Preferred Stock in 2010. The Company may reduce (but not below $100.0
million) or may eliminate the Seller Depositary Shares by increasing the cash
portion of the consideration for the Six Flags Acquisition. If the Company
determines not to issue the Seller Depositary Shares, the additional cash
portion of the purchase price will be funded from the net proceeds of the Common
Stock Offering. The Company Senior Discount Notes will not require any interest
payments prior to , 2003, or, except in the event of a change of control
of the Company and certain other circumstances, any principal payments prior to
their maturity in 2008. The Company Senior Notes will require annual interest
payments of $ and, except in the event of a change of control of the
Company or certain other circumstances, will not require any principal payments
prior to their maturity in 2006. The New SFEC Notes will require annual interest
payments of $ and, except in the event of a change of control of the
Company or certain other circumstances, will not require any principal payments
prior to their maturity in 2006. The net proceeds of the SFEC Notes Offering,
together with other funds, will be deposited in escrow to repay in full the SFEC
Zero Coupon Senior Notes. In addition, in connection with the Six Flags
Transactions, the Company will (i) assume $285.0 million principal amount at
maturity of the SFTP Senior Subordinated Notes, which had an accreted value of
$269.9 million at December 28, 1997, (ii) refinance all outstanding SFTP bank
indebtedness with the proceeds of $420.0 million of borrowings under the Six
Flags Credit Facility, and (iii) refinance all outstanding bank debt of SFEC
with a portion of the proceeds of the Offerings. The SFTP Senior Subordinated
Notes require interest payments of approximately $34.9 million per annum,
payable semi-annually commencing December 15, 1998, and, except in certain
circumstances, no principal payments are due thereon until their maturity date,
June 15, 2005. Term loan borrowings under the Six Flags Credit Facility will
mature on November 30, 2004 (with principal payments of $1.0 million in each of
1998 through 2001, $25.0 million in 2002, $40.0 million in 2003 and $303.0
million at maturity). Revolving credit borrowings under this facility ($100.0
million) mature on the fifth anniversary of the Six Flags Credit Facility.
Borrowings under the Six Flags Credit Facility will be guaranteed by SFEC and
SFTP's subsidiaries and will be secured by substantially all of the assets of
SFTP and its subsidiaries and a pledge by SFEC of the stock of SFEC. The Premier
Credit Facility includes a five-year $75.0 million revolving credit facility, a
five-year $100.0 million term loan facility (with principal payments of $10.0
million, $25.0 million, $30.0 million and $35.0 million in the second, third,
fourth and fifth years) and an eight-year $125.0 million term loan facility
(with principal payments of $1.0 million in each of the first six years and
$25.0 million and $94.0 million in the seventh and eighth years, respectively).
Borrowings under the Premier Credit Facility are guaranteed by Premier
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<PAGE>
Operations' domestic subsidiaries and are secured by substantially all of the
assets of Premier Operations and such subsidiaries (other than real estate). See
"Description of Indebtedness."
On a pro forma basis as of December 31, 1997, the Company would have had
total outstanding indebtedness in the accreted principal amount of $1,832.0
million (excluding $161.1 million accreted value of the SFEC Zero Coupon Senior
Notes which will be repaid from proceeds of the SFEC Notes Offering, together
with other funds). Based on actual interest rates for debt outstanding at
December 31, 1997 and assumed interest rates for pro forma debt, annual interest
payments for 1998 on this indebtedness would have aggregated $136.9 million. In
addition, annual dividend payments on the Convertible Preferred Stock at assumed
dividend rates would have aggregated $28.0 million.
By reason of the Six Flags Acquisition, the Company will be required to
offer to purchase the SFTP Senior Subordinated Notes at a price equal to 101% of
their accreted amount (approximately $287.9 million at June 15, 1998). On March
23, 1998, the last reported sales price of these notes was substantially in
excess of their accreted amount. The Company does not expect to be required to
purchase any material amount of these notes by reason of this offer. Although
the Company has entered into discussions with lenders to provide a standby
arrangement to finance the purchase of such notes, there can be no assurance
that such discussions will be successful or that the Company will be able to
obtain any other financing in the event that it should become necessary.
The Company will be required to (i) make minimum annual distributions of
approximately $46.2 million (subject to cost of living adjustments) to its
partners in the Co-Venture Parks and (ii) make minimum capital expenditures at
each of the Co-Venture Parks during rolling five-year periods, generally based
on 6% of such park's revenue. Cash flow from operations at the Co-Venture Parks
will be used to satisfy these requirements, before any funds are required from
the Company. The Company has also agreed to purchase a maximum number of 5% per
year (accumulating to the extent not purchased in any given year) of limited
partnership units outstanding as of the date of the co-venture agreements that
govern the partnerships (to the extent tendered by the unit holders). The agreed
price for these purchases is based on a valuation for each respective Co-Venture
Park equal to the greater of (i) a value derived by multiplying its
weighted-average four year EBITDA (as defined therein) by a specified multiple
(8.0 in the case of the Georgia park and 8.5 in the case of the Texas park) or
(ii) $250.0 million in the case of the Georgia park and $374.8 million in the
case of the Texas park. The Company's obligations with respect to Six Flags Over
Georgia and Six Flags Over Texas will continue until 2026 and 2027,
respectively. As the Company purchases units, it will be entitled to the minimum
distribution and other distributions attributable to such units unless it is
then in default under its obligations to its partners at the Co-Venture Parks.
The Company estimates that its maximum unit purchase obligation for 1998, when
purchases are required only for the Georgia park, will aggregate approximately
$13 million (approximately $31 million for 1999 when purchases for both
partnerships are required) and its minimum capital expenditures at these parks
for 1998 will total $11 million. In March 1998, Six Flags completed a tender
offer pursuant to which it purchased approximately 33% of the outstanding
limited partnership units in Six Flags Over Texas, for an aggregate price of
$117.3 million, which was financed by borrowings. The Company has assumed a 25%
tender for purposes of preparing the pro forma financial information contained
herein. Since a larger number of units were tendered, the Company will be
required to refinance the additional indebtedness of Six Flags incurred by
virtue thereof, and accordingly, will have less cash to prefund capital
expenditures and working capital requirements.
The degree to which the Company will be leveraged following the Six Flags
Transactions could have important consequences to the Company. See "Risk
Factors--Risks Associated with Substantial Indebtedness and Other Obligations"
and "Description of Indebtedness."
The Company's liquidity could be adversely affected by unfavorable weather,
accidents or the occurrence of an event or condition, including negative
publicity or significant local competitive events (such as the 1996 Summer
Olympics in the case of Six Flags Over Georgia) that significantly reduces paid
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attendance and, therefore, revenue at any of its theme parks. On June 2, 1997, a
slide collapsed at the Company's Waterworld park in Concord, California,
resulting in one fatality and the park's closure for twelve days. The park
re-opened with the approval of the City of Concord on June 14, 1997. Although
the collapse and the resulting closure had a material adverse impact on that
park's operating performance for 1997, as well as a lesser impact on the
Company's Sacramento water park (which is also named "Waterworld"), located
approximately seventy miles from the Concord park, the Company's other parks
were not adversely affected. The Company has recovered all of the Concord park's
operating shortfall under its business interruption insurance. In addition, the
Company believes that its liability insurance coverage should be more than
adequate to provide for any personal injury liability which may ultimately be
found to exist in connection with the collapse.
The Company believes that, based on current and anticipated operating
results, cash flow from operations, available cash, available borrowings under
the Credit Facilities and the net proceeds of the Offerings (to the extent not
used in connection with the Six Flags Acquisition) will be adequate to meet the
Company's future liquidity needs, including anticipated requirements for working
capital, capital expenditures, scheduled debt and preferred stock dividends and
its obligations under arrangements relating to the Co-Venture Parks, for at
least the next several years. The Company may, however, need to refinance all or
a portion of its existing debt on or prior to maturity or to obtain additional
financing. See "Risk Factors-- Risks Associated with Substantial Indebtedness
and Other Obligations."
NEWLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." SFAS
No. 130 is effective for fiscal years beginning after December 15, 1997. SFAS
No. 130 establishes standards for reporting and display of "comprehensive
income" and its components in a set of financial statements. It requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The Company
currently does not have any components of comprehensive income that are not
included in net income. After the acquisition of Walibi, the only item not
currently included in the Company's consolidated statement of operations would
be the currency translation adjustment that will be reported as part of
stockholders' equity after the acquisition. The Company will adopt SFAS No. 130
in the year 1998.
Also in June 1997, Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information," was
issued. SFAS No. 131 is effective for periods beginning after December 15, 1997.
SFAS No. 131 requires that a public entity report financial and descriptive
information about its reportable segments. Operating segments are components of
an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. The Company will adopt SFAS No.
131 in 1998. However, such adoption is not expected to impact the Company's
financial disclosures because the Company's current operations are limited to
one reportable operating segment under SFAS No. 131's definitions. After the
acquisition of Walibi, the Company will be required to disclose certain
financial information related to its foreign operations.
In January 1997, the Commission issued Release No. 33-7386, which requires
enhanced descriptions of accounting policies for derivative financial
instruments and derivative commodity instruments in the footnotes to financial
statements. The release also requires certain quantitative and qualitative
disclosure outside financial statements about market risks inherent in market
risk sensitive instruments and other financial instruments. The requirements
regarding accounting policy descriptions were effective for any fiscal period
ending after June 15, 1997. However, because derivative financial and commodity
instruments have not materially affected the Company's consolidated financial
position, cash flows or results of operations, this part of the release does not
affect the Company's 1997 financial statement disclosures. The
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<PAGE>
quantitative and qualitative disclosures required by the release will be
initially provided in the Company's annual report on Form 10-K for the year
ending December 31, 1998.
IMPACT OF YEAR 2000 ISSUE
An issue exists for all companies that rely on computers as the year 2000
approaches. The "Year 2000" problem is the result of past practices in the
computer industry of using two digits rather than four to identify the
applicable year. This practice will result in incorrect results when computers
perform arithmetic operations, comparisons or data field sorting involving years
later than 1999. The Company anticipates that it will be able to test its entire
system using its internal programming staff and outside computer consultants and
intends to make any necessary modifications to prevent disruption to its
operations. Costs in connection with any such modifications are not expected to
be material. See "Risk Factors -- Impact of Year 2000 Issue."
56
<PAGE>
BUSINESS
GENERAL
The Company is the largest regional theme park operator, and the second
largest theme park company, in the world, based on 1997 attendance of
approximately 37 million. It operates 31 regional parks, including 15 of the 50
largest theme parks in North America, based on 1997 attendance. The Company's
theme parks serve 9 of the 10 largest metropolitan areas in the country. The
Company estimates that approximately two-thirds of the population of the
continental U.S. live within a 150-mile radius of the Company's theme parks. On
a pro forma basis, the Company's total revenue and EBITDA for the year ended
December 31, 1997 was approximately $815.3 million and $263.5 million,
respectively.
The following table sets forth certain information for the Company's parks:
<TABLE>
<CAPTION>
NAME TYPE OF PARK PRIMARY MARKET 1997 ATTENDANCE(1) ACRES(2)
- ------------------------------- --------------- --------------------------------- --------------------- -------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PREMIER PARKS:
Adventure World................ Theme/Water Baltimore/Washington, D.C. 960 115
Bellewaerde.................... Theme Belgium 670 133
Darien Lake.................... Theme/Water Buffalo/Rochester 1,400 142
Elitch Gardens................. Theme/Water Denver 1,450 60
Frontier City.................. Theme Oklahoma City 520 60
Geauga Lake.................... Theme/Water Cleveland 1,250 116
The Great Escape............... Theme/Water Lake George/Albany, New York 680 100
Kentucky Kingdom............... Theme/Water Louisville 1,150 58
Marine World................... Theme/Wildlife San Francisco 1,100 105
Riverside Park................. Theme New England/Boston 1,200 160
Walibi Aquitaine............... Theme France 240 74
Walibi Flevo................... Theme The Netherlands 450 250
Walibi Rhone-Alpes............. Theme/Water France 350 35
Walibi Schtroumpf.............. Theme France 350 375
Walibi Wavre and Aqualibi...... Theme/Water Belgium 960 120
Waterworld USA/Concord......... Water San Francisco 180 24
Waterworld USA/Sacramento...... Water Sacramento 290 20
White Water Bay................ Water Oklahoma City 320 22
Wyandot Lake................... Water Columbus, Ohio 390 18
SIX FLAGS PARKS:
Six Flags AstroWorld........... Theme Houston 1,990 90
Six Flags Water World.......... Water Houston 280 14
Six Flags Fiesta Texas......... Theme San Antonio 1,640 200
Six Flags Great Adventure...... Theme New York City/Philadelphia 3,690(3) 576(3)
Six Flags Wild Safari Animal
Park........................... Wildlife New York City/Philadelphia (3) (3)
Six Flags Great America........ Theme Chicago/Milwaukee 3,040 86
Six Flags Magic Mountain....... Theme Los Angeles 3,270 110
Six Flags Hurricane Harbor..... Water Los Angeles 350 11
Six Flags St. Louis............ Theme St. Louis 1,690 499
Six Flags Over Georgia......... Theme Atlanta 2,780 196
Six Flags Over Texas........... Theme Dallas/Fort Worth 2,950 197
Six Flags Hurricane Harbor..... Water Dallas/Fort Worth 560 49
</TABLE>
- ------------------------
(1) Excludes approximately 0.4 million in attendance at Walibi's two smaller
attractions.
(2) Includes acreage currently dedicated to park usage. Additional acreage
suitable for development exists at many of the facilities.
(3) Attendance and acreage information for Six Flags Great Adventure also
includes data for the adjacent Six Flags Wild Safari Animal Park.
The Six Flags Parks consist of eight regional theme parks, as well as three
separately gated water parks and a wildlife safari park (each of which is
located near one of the theme parks). None of the Six Flags Parks are located
within the primary market of any of the Premier Parks. During 1997, the Six
Flags Parks drew, in the aggregate, approximately 68% of their patrons from
within a 100-mile radius. During that year, Six Flags' attendance, revenue and
EBITDA totaled approximately 22.2 million, $708.7 million and $164.1 million,
respectively.
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Six Flags has operated regional theme parks under the Six Flags name for
over thirty years. As a result, Six Flags has established a
nationally-recognized brand name. Premier will obtain worldwide ownership of the
Six Flags brand name and expects to use the Six Flags brand name, generally
beginning in the 1999 season, at most of the Premier Parks.
In addition, as part of the Six Flags Acquisition, the Company will obtain
from Warner Bros. and DC Comics the exclusive right for theme-park usage of
certain Warner Bros. and DC Comics characters throughout the United States
(except the Las Vegas metropolitan area) and Canada. These characters include
BUGS BUNNY, DAFFY DUCK, TWEETY BIRD, YOSEMITE SAM, BATMAN, SUPERMAN and others.
Since 1991, Six Flags has used these characters to market its parks and to
provide an enhanced family entertainment experience. The long-term license will
include the right to sell merchandise featuring the characters at the parks and
will apply to all of the Company's current theme parks, as well as future parks
that meet certain criteria. Premier intends to make extensive use of these
characters at the Six Flags Parks and, commencing in 1999, at most of the
existing Premier Parks. The Company believes that use of the Warner Bros. and DC
Comics characters promotes attendance, supports higher ticket prices, increases
lengths-of-stay and enhances in-park spending. See "--Licenses."
The Premier Parks consist of nine regional theme parks (six of which include
a water park component) and four water parks located across the United States,
as well as six regional theme parks and two smaller attractions located in
Europe and scheduled to be acquired in March 1998 in the acquisition of Walibi.
During the 1997 operating season, the eleven parks then owned by Premier drew,
on average, approximately 82% of their patrons from within a 100-mile radius,
with approximately 35.7% of visitors utilizing group and other pre-sold tickets
and approximately 20.6% utilizing season passes.
Under current management, since 1989 Premier has assumed control of 30
parks, and has achieved significant internal growth. The 11 parks owned by the
Company for the 1997 operating season achieved same park growth in attendance,
revenue and park-level operating cash flow (representing all park operating
revenues and expenses without depreciation and amortization or allocation of
corporate overhead or interest expense) of 17.3%, 21.3% and 59.5%, respectively,
as compared to 1996.
The Company's parks are individually themed and provide a complete
family-oriented entertainment experience. The Company's theme parks generally
offer a broad selection of state-of-the-art and traditional thrill rides, water
attractions, themed areas, concerts and shows, restaurants, game venues and
merchandise outlets. In the aggregate, the Company's theme parks offer more than
800 rides, including over 90 roller coasters, making the Company the leading
provider of "thrill rides" in the industry.
The Company believes that its parks benefit from limited direct competition.
The combination of limited supply of real estate appropriate for theme park
development, high initial capital investment, long development lead-time and
zoning restrictions provides each of the parks with a significant degree of
protection from competitive new theme park openings. Based on its knowledge of
the development of other theme parks in the United States, the Company's
management estimates that it would cost at least $200 million and would take a
minimum of two years to construct a new regional theme park comparable to the
Company's largest parks.
The Company's senior and operating management team has extensive experience
in the theme park industry. Premier's six senior executive officers have over
150 years aggregate experience in the industry and its ten general managers
(prior to the Six Flags Acquisition) have an aggregate of approximately 210
years experience in the industry, including approximately 85 years at the
Premier Parks. A number of Premier's executives and operating personnel have
experience at Six Flags.
According to AMUSEMENT BUSINESS, total North American amusement/theme park
attendance in 1997 was approximately 270 million. Total attendance for the 50
largest parks in North America was 167.2 million in 1997, compared to 145.0
million in 1994, representing a compound annual growth rate of 4.9%. The Company
believes that this growth reflects two trends: (i) demographic growth in the
5-24 year old age
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group, which is expected to continue through 2010 and (ii) an increasing
emphasis on family-oriented leisure and recreation activities.
The Company's strategy for achieving growth includes the following key
elements: (i) pursuing growth opportunities at existing parks; (ii) expanding
the Company's parks; and (iii) making selective acquisitions.
PURSUING GROWTH OPPORTUNITIES AT EXISTING PARKS
The Company believes there are substantial opportunities for continued
internal growth at its parks. The Company's operating strategy is to increase
revenue by increasing attendance and per capita spending, while also maintaining
strict control of operating expenses. This approach is designed to exploit the
operating leverage inherent in the theme park business. Once parks achieve
certain critical attendance levels, operating cash flow margins increase because
revenue growth through incremental attendance gains and increased in-park
spending is not offset by a comparable increase in operating expenses, because a
large portion of such expenses is relatively fixed during any given year. The
primary elements of this strategy include:
--ADDING RIDES AND ATTRACTIONS AND IMPROVING OVERALL PARK QUALITY. The
Company regularly makes investments in the development and implementation of new
rides and attractions at its parks. The Company believes that the introduction
of marketable rides is an important factor in promoting each of the parks in
order to increase market penetration and encourage longer visits, which lead to
increased attendance and sales of food and merchandise. Once a park reaches an
appropriate level of attractions for its market size, the Company will add new
marketable attractions at that park only every three to four years.
--ENHANCING MARKETING AND SPONSORSHIP PROGRAMS. Premier's parks have
benefitted from professional, creative marketing programs which emphasize the
marketable rides and attractions, breadth of available entertainment and value
provided by each park. Following the Six Flags Acquisition, the Company intends
to implement marketing programs that also emphasize the Six Flags brand name, as
well as the animated characters licensed from Warner Bros. and DC Comics. The
Company has also successfully attracted well known sponsorship and promotional
partners, such as Pepsi, McDonald's, Coca-Cola, Taco Bell, Blockbuster,
7-Eleven, Wendy's, First USA Bank, Best Western and various supermarket chains.
The Company believes that its increased number of parks and annual attendance
has enabled it to expand and enhance its sponsorship and promotional programs.
--INCREASING GROUP SALES, SEASON PASSES AND OTHER PRE-SOLD TICKETS. Group
sales and pre-sold tickets provide the Company with a consistent and stable base
of attendance, representing over 35.7% of aggregate attendance at the 11 parks
owned by the Company in the 1997 season, with approximately 20.6% of patrons
utilizing season passes.
--IMPLEMENTING TICKET PRICING STRATEGIES TO MAXIMIZE TICKET REVENUES AND
PARK UTILIZATION. Management regularly reviews its ticket price levels and
ticket category mix in order to capitalize on opportunities to implement
selective price increases, both through main gate price increases and the
reduction in the number and types of discounts. Management believes that
opportunities exist to implement marginal ticket price increases without
significant reductions in attendance levels. Such increases have successfully
been implemented on a park-by-park basis in connection with the introduction of
major new attractions or rides. In addition, the Company offers discounts on
season, multi-visit and group tickets and also offers discounts on tickets for
specific periods, in order to increase attendance at less popular times such as
weekdays and evenings.
--INCREASING AND ENHANCING RESTAURANTS AND MERCHANDISE AND OTHER REVENUE
OUTLETS TO INCREASE LENGTH-OF-STAY AND IN-PARK SPENDING. The Company also seeks
to increase in-park spending by adding well-themed restaurants, remodeling and
updating existing restaurants and adding new merchandise outlets. The Company
has successfully increased spending on food and beverages by introducing well-
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<PAGE>
recognized local and national brands, such as Domino's, Friendly's, KFC and
TCBY. Typically, the Company operates these revenue outlets and often is the
franchisee. Finally, the Company has taken steps to decrease the waiting time
for its most popular restaurants and merchandise outlets.
--ADDING SPECIAL EVENTS. The Company has also developed a variety of
off-season special events designed to increase attendance and revenue prior to
Memorial Day and after Labor Day. Examples include Hallowscream and Fright
Fest-Registered Trademark-, Halloween events in which parks are transformed with
supernatural theming, scary rides and haunting shows, Oktoberfest, in which
traditional German food, theming, music and entertainment are presented at the
parks and Holiday in the Park-Registered Trademark-, a winter holiday event, in
which several parks are transformed with winter and holiday theming.
THE PREMIER PARKS
Management believes it has demonstrated the effectiveness of its strategy at
the Premier Parks owned prior to the 1997 Acquisitions. The Company first
implemented its strategy at the parks it owned prior to the Funtime Acquisition.
FRONTIER CITY--In 1990 and 1991, an aggregate of approximately $7.0 million
was invested in Frontier City to add several major rides, expand and improve the
children's area, significantly increase the size of and theme the group picnic
facilities and construct a 12,000 square foot air-conditioned mall and main
events center. These additions, combined with an aggressive marketing strategy,
resulted in Frontier City's attendance and revenue increasing approximately 54%
and 83%, respectively, from 1989 to 1991.
ADVENTURE WORLD--Since acquiring Adventure World in January 1992, the
Company has invested approximately $42 million in the park to add numerous rides
and attractions and to improve theming. As a result of these improvements, as
well as aggressive and creative marketing and sales strategies, Adventure
World's attendance increased during the five seasons ended 1997 at a compound
annual rate of 21.5%. Additionally, revenue and park-level operating cash flow
at Adventure World increased from $6.1 million and $0.1 million, respectively,
for 1992 to $20.2 million and $4.9 million, respectively, for 1997.
The Company is continuing to apply its growth strategy to the three Funtime
parks, acquired in August 1995. Since that time, the Company has invested
approximately $43 million at these parks to add marketable rides and attractions
and make other improvements and implemented creative marketing and sales
programs. As a result of this strategy, during 1997, the Funtime parks achieved
compound annual growth in attendance, revenue and park-level operating cash flow
of 10.2%, 14.9% and 27.2%, respectively, as compared to 1995.
DARIEN LAKE--For the 1996 and 1997 seasons, Premier invested approximately
$21 million, adding numerous rides and attractions and 50 recreational vehicles.
Further, the Company entered into a long-term contract with a national concert
promoter under which the promoter invested $2.5 million to make improvements at
Darien Lake's 20,000 seat amphitheater and agreed to book at least twenty
nationally-recognized performers per season. As a result of these investments
and creative marketing and sales initiatives, during 1997 , Darien Lake achieved
compound annual growth of 15.2% in attendance, 20.5% in revenue and 45.2% in
park-level operating cash flow over the results for 1995.
During the 1997 season, the Company began to apply its operating strategy to
the five parks acquired in the 1996 Acquisitions. The Company invested
approximately $65 million in the parks for that season to add marketable rides
and attractions and make other improvements and implemented creative marketing
and sales programs. As a result of this strategy, during 1997, these five parks
achieved growth in attendance, revenue and park-level operating cash flow of
33.8%, 37.9% and 228.9%, respectively, as compared to 1996.
ELITCH GARDENS--Subsequent to its October 1996 acquisition of Elitch
Gardens, the Company invested approximately $30 million at that park for the
1997 season, adding three major marketable rides including a "state-of-the-art"
steel suspended looping roller coaster, an entire water park, a new main
entrance and
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<PAGE>
main street (including a theatre) and numerous revenue outlets, as well as
substantial theming and landscaping. As a result, during 1997, attendance and
revenue at Elitch Gardens grew 62.1% and 53.3%, respectively, and park-level
operating cash flow increased from ($1.8) million to $8.6 million, as compared
to 1996.
RIVERSIDE PARK--The Company invested approximately $25 million for the 1997
season at Riverside Park, which it acquired in February 1997, to add three major
marketable rides, including a "state-of-the-art" steel suspended looping roller
coaster, a group picnic area, a new main entrance and improved theming and
landscaping. As a result, during 1997, attendance and revenue at Riverside Park
increased 57.7% and 56.7%, respectively, and park-level operating cash flow
increased from $1.5 million to $8.2 million, as compared to 1996.
Management believes that each of the parks acquired by Premier in the 1997
Acquisitions offer similar opportunities to implement the Company's growth
strategy. Specifically, the Company believes it can increase attendance and per
capita revenue at Kentucky Kingdom. The Company intends to invest approximately
$10 million at Kentucky Kingdom for the 1998 season to add dueling wooden roller
coasters, a five-story interactive family water attraction and restaurants and
other revenue outlets. Marine World represents an opportunity to operate and
eventually own an established, well-known wildlife park in the San Francisco
market, with excellent access to major area highways. Premier has exercised its
option to lease approximately 40 acres at Marine World for a term of up to 99
years at a nominal rent. Upon exercise of the lease option, Premier became
entitled to receive, in addition to its management fee, 80% of the cash flow
generated by the park after operating expenses and debt service. Management
intends to expand the park's entertainment component with theme park rides and
attractions. The Company is currently implementing the first phase of this
expansion of Marine World by investing approximately $35-$40 million for the
1998 season to add fourteen new rides, including a boomerang steel roller
coaster, a river rapids ride and a shoot-the-chute giant splash ride. In
September 1997, the Company was granted an option to purchase the entire site
commencing in February 2002, which it currently expects to exercise at that
time.
The Walibi acquisition provides the Company with a significant presence in
the expanding theme park industry in Europe and management believes that the
Company's strategy of targeted capital investment and sophisticated marketing
can improve performance at these parks. The Company has agreed to invest
approximately $38 million in the Walibi Parks over the three years commencing
with the 1999 season. The Company believes that the Walibi Parks have suffered
from limited available funds for investment and a lack of creative marketing.
Additionally, the Company believes that the presence of Disney Land Paris
outside of Paris has resulted in greater awareness of local parks in Europe. For
example, in 1997, European park attendance grew 6%, as compared to 4% in North
America.
Further, the Company believes that, by virtue of the Six Flags Acquisition,
a number of the existing Premier Parks have the potential over the next several
seasons to accelerate their rate of growth. Recent attendance levels at the Six
Flags theme parks (between 1.7 million and 3.6 million in 1997) have been
substantially higher than the annual attendance at the largest Premier Parks
(between 1.0 million and 1.5 million during that year). Management believes that
a number of existing Premier Parks, particularly Adventure World, Geauga Lake,
Kentucky Kingdom, Marine World and Riverside Park, all of which are located in
or near major metropolitan areas, can significantly accelerate their market
penetration and the expansion of their geographic market. Management believes
this can be achieved through the use of the Six Flags brand name, aggressive
marketing campaigns featuring the animated characters licensed from Warner Bros.
and DC Comics, as well as targeted capital investment in new rides and
attractions. Management also believes that this expanded penetration, as well as
the incorporation of the animated characters in the parks and in merchandise
sales can result in increased per capita spending at the existing Premier Parks.
The Company expects to commence general use of the Six Flags brand name and the
licensed characters at the Premier Parks for the 1999 season.
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<PAGE>
THE SIX FLAGS PARKS
The Six Flags Parks generally enjoy significant market penetration. Thus,
although the Company plans to make targeted capital expenditures at these parks
to increase their attendance and per capita spending levels, it expects to
increase significantly the EBITDA of these parks primarily through increases in
operating efficiencies. First and most importantly, the Company believes that it
can substantially reduce Six Flags' corporate overhead and other corporate-level
expenses. Second, the Company expects to achieve significant improvement in
park-level operating margins. Third, by virtue of economies of scale, the
Company believes that operating efficiencies in areas such as marketing,
insurance, promotion, purchasing and other expenses can be realized. Finally,
the Company believes that its increased size following the Six Flags Acquisition
will enable it to achieve savings in capital expenditures, including by the
Company's ability to rotate rides among its parks.
EXPANDING THE COMPANY'S PARKS
The Company is expanding several of the Premier Parks in order to increase
attendance and per capita spending. For example, the Company is constructing an
economy motel at Darien Lake for the 1998 season to supplement the campgrounds.
In addition, the Company recently purchased campgrounds adjacent to Geauga Lake,
and expects to add, prior to the 1999 season, a more complete complement of
"dry" rides to Wyandot Lake, which is currently primarily a water park. In
addition, the Company owns 400 acres adjacent to Adventure World which are zoned
for entertainment, recreational and residential uses and are available for
complementary uses. Additional acreage owned by the Company and suitable for
development exists at several of the Company's other parks. The Company may use
a portion of the proceeds of the Offering and the Concurrent Offerings to fund
expansions at its parks. See "Use of Proceeds."
The Company may expand in the future certain of the Six Flags Parks by
adding complementary attractions, such as campgrounds, lodging facilities, new
water parks and concert venues. For example, Six Flags owns over 1,500
undeveloped acres adjacent to Six Flags Great Adventure (located between New
York City and Philadelphia) suitable for such purposes. Additional acreage
suitable for development exists at several other Six Flags Parks. See
"--Environmental and Other Regulation."
ACQUISITION STRATEGY
The Company expects to achieve further growth beyond that generated from
internal growth at its existing parks through continued selective acquisitions
of additional regional theme parks. Given its decentralized management approach,
the Company has experience in managing assets in diverse locations, and
therefore does not seek acquisitions with any specific geographic focus. In that
connection, in the first quarter of 1998 the Company expects to acquire a
controlling interest in Walibi (and expects to acquire the remaining interest in
the second quarter of 1998), which owns six theme parks and two smaller
attractions in Europe, and may continue to pursue acquisitions of parks located
outside of the United States.
The U.S. regional theme park industry is highly fragmented with over 150
parks owned by over 100 operators. Management believes that, in addition to the
Acquisitions, there are numerous acquisition opportunities, both in the U.S. and
abroad, that can expand its business while the Company will continue to pursue
acquisitions of regional parks with attendance between 300,000 and 1.5 million
annually, the Company will consider acquisitions of larger parks or chains (such
as Six Flags).
The Company believes it has a number of competitive advantages in acquiring
theme parks. Operators of destination or large regional park chains, other than
Cedar Fair L.P., have not generally been actively seeking to acquire parks in
recent years. Additionally, as a multi-park operator with a track record of
successfully acquiring, improving and repositioning parks, the Company has
numerous competitive advantages over single-park operators in pursuing
acquisitions and improving the operating results at acquired parks. These
advantages include the ability to (i) exercise group purchasing power (for both
operating and
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capital assets); (ii) achieve administrative economies of scale; (iii) attract
greater sponsorship revenue, support from sponsors with nationally-recognized
brands and marketing partners; (iv) use the Six Flags brand name and the
characters licensed from Warner Bros. and DC Comics; (v) recruit and retain
superior management; (vi) optimize the use of capital assets by rotating rides
among its parks to provide fresh attractions; and (vii) access capital markets.
See "Risk Factors--Uncertainty of Future Acquisitions; Potential Effects of
Acquisitions."
Furthermore, the Company is able to make acquisitions where its capital
stock forms all or part of the purchase price. This is particularly important
where the seller has a low tax basis in its assets, which the Company believes
is often the case with its acquisition targets. While the Company expects that
many acquisitions will be made for cash, its ability to use Common Stock for all
or part of the purchase price will provide it with an additional advantage over
single-park operators in making such acquisitions. For example, shares of Common
Stock (or securities convertible into Common Stock) were or will be used as a
portion of the aggregate consideration in the acquisitions of Kentucky Kingdom
and Walibi and may be used in the Six Flags Acquisition. In most cases, the
Company will seek to acquire outright ownership of parks, as it did with the
1996 Acquisitions. However, transactions may be undertaken in other forms,
including acquisition of less than full ownership, such as participation in park
management, leases or joint venture arrangements. For example, the Company
manages Marine World and leases a portion of that facility, with an option to
acquire the entire park, commencing in 2002.
The Company expects to continue to acquire parks which have been
undermanaged and have not benefitted from sustained capital expenditures, and to
reposition such parks through the implementation of its operating strategies.
The Company may also acquire better performing parks which require less
additional investment but where cash flow can be improved through economies of
scale in operating and capital expenditures and other enhancements.
The Company intends to locate acquisition targets primarily through its own
direct efforts. Management has extensive contacts throughout the industry and is
an active participant in industry associations. Particular attention is given to
cultivating relationships over time with park owners who appear likely to be or
become potential sellers due to factors such as age or family or economic
circumstances. In addition, the Company has developed a reputation as an active
acquiror of regional parks. Through this reputation and general industry
contacts, the Company believes that it becomes aware of most acquisition
opportunities that develop in its area of focus.
THE THEME PARK INDUSTRY
HISTORY
Although there is a long history of traditional amusement parks, primarily
family-owned and consisting of thrill rides and midways, the opening of
Disneyland in 1955 introduced the first modern theme park. Several features of
modern theme parks distinguish them from the traditional amusement park whose
carnival atmosphere and thrill rides offer less to families and adults. Theme
parks are designed around one central or several different themes which are
consistently applied to all areas, including the rides, attractions,
entertainment, food, restaurants and landscape. Modern parks also typically
present a variety of free entertainment not found at old-style amusement parks.
Theme parks also offer the visitor numerous and diverse dining establishments in
order to expand length of stay and position the parks as an all-day
entertainment center. Generally, theme parks also plan nighttime entertainment
(such as fireworks) and special events, and keep certain rides open into the
night to further extend the hours of operation. As a result of these
differences, theme parks draw attendance from a wider geographic area and
attract a larger number of people from within a given market. Theme parks also
attract more families and group outings, and the average length of stay and per
capita outlay is greater.
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The following table identifies the nine largest operators of theme park
chains worldwide ranked by total attendance, showing the number and type of such
parks operated by each and the aggregate attendance in 1997.
<TABLE>
<CAPTION>
TYPE NUMBER 1997
NAME OF OPERATOR OF PARK OF PARKS ATTENDANCE
- --------------------------------------------------------------- ----------------------- ------------- -------------
<S> <C> <C> <C>
(IN
THOUSANDS)
Disney......................................................... Destination 8 86,000
PREMIER PARKS(1)............................................... REGIONAL 31 36,500
Anheuser-Busch................................................. Regional/Destination 9 20,700
Universal Studios.............................................. Destination 2 14,300
Cedar Fair..................................................... Regional 7 13,400
Paramount Parks................................................ Regional 6 12,800
Blackpool Pleasure Beach Co.(2)................................ Destination 3 8,800
The Tussauds Group(2).......................................... Regional 3 7,400
Silver Dollar City............................................. Regional/Destination 5 4,900
</TABLE>
- ------------------------
(1) Figures for Premier Parks reflect the 1997 Acquisitions and the Six Flags
Acquisition as if such acquisitions had all occurred at the commencement of
the 1997 season.
(2) Does not operate parks in North America.
DESTINATION PARKS VERSUS REGIONAL PARKS
Destination parks are those designed primarily to attract visitors willing
generally to travel long distances and incur significant expense to visit the
parks' attractions as part of an extended stay. To accommodate vacationers, many
destination parks also include on-site lodging. Walt Disney World and Universal
Studios are well-known examples of this type of park. Management believes that
destination parks are typically more affected by the national economy than are
regional parks. With the exception of Six Flags Magic Mountain, located in the
same market as Disneyland and Universal Studios Hollywood, the Company does not
believe that its parks compete directly with destination parks.
Regional theme parks, such as those historically operated by the Company,
are designed to attract visitors for a full day or a significant number of
hours. Management views regional theme parks as those that draw the majority of
their patrons from within a 50-mile radius of the park and the great majority of
their visitors from within a 100-mile radius of the park. Visiting a regional
theme park may be significantly less expensive than visiting a destination park
because of lower transportation expenses, lower ticket prices and the lack of
extended lodging expenses. The U.S. regional theme park industry is highly
fragmented with over 150 parks owned by over 100 operators.
ATTRACTIONS
Regional theme parks attract patrons of all ages. Families and young people
are attracted by the variety of major rides and attractions, children's rides
and various entertainment areas including thematic shows and concerts. Most park
admission policies are "pay-one-price," which entitles a guest to virtually
unlimited free access to all rides, shows and attractions.
Depending on the size of the property, regional theme parks typically have
between 30 and 40 attractions. These rides include roller coasters and water
rides, as well as other attractions such as bumper cars, aerial rides and
children's rides. A park may also have distinct entertainment and show areas
with specific themes such as a wild west or pirate stunt show. Games, food and
merchandise stands often reflect the theme of the particular area in which they
are located. This enhances the promotional effect of the
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thematic area. By offering a variety of rides and themed areas, a park is able
to target a wider age spectrum from the surrounding population.
In addition to thrill rides, many parks offer indoor attractions and outdoor
concerts, ranging from musical skits and bands to full-scale evening concerts by
prominent entertainers. Selected concerts may require an add-on to the
admissions price, but often are part of the regular ticket price, providing
added value to visitors.
Food service offered ranges from full-service restaurants to fast food.
Young people may only be interested in a quick meal between rides while the
family may choose to relax for a picnic. Refreshment stands serve snack foods,
such as hot dogs, cotton candy and soda. In addition, game booths and
merchandise souvenir stands are dispersed throughout a park.
HISTORY
The Company was incorporated in 1981 as The Tierco Group, Inc., and through
1989 was primarily engaged in the ownership and management of real estate and
mortgage loans. In October 1989, the Company's current senior management assumed
control, and during 1989, management determined to focus Premier's business on
its theme park operations, which at that point consisted of a 50% interest in
Frontier City. In 1991, the Company acquired White Water Bay and increased its
ownership in Frontier City to in excess of 50%. In 1992, the Company acquired
Adventure World and the remaining minority interest in Frontier City and
disposed of substantially all of its non-theme park operations. In 1994, the
Company changed its name to Premier Parks Inc. On August 15, 1995, the Company
completed the Funtime Acquisition. On June 4, 1996, the Company completed a
public offering of approximately 3.9 million shares of Common Stock, at a price
to the public of $18.00 per share, which raised $65.3 million of net proceeds.
In the fourth quarter of 1996, the Company acquired Elitch Gardens, the
Waterworld Parks and The Great Escape, and, in February 1997, acquired Riverside
Park. In January 1997, the Company completed the issuance, through a public
offering, of an additional 6.9 million shares of its Common Stock at a price to
the public of $29.00 per share, which raised approximately $189.5 million of
aggregate net proceeds. In the fourth quarter of 1997, the Company acquired
Kentucky Kingdom and its leasehold interest at Marine World. In the first
quarter of 1998, the Company expects to acquire an approximate 50% interest in
Walibi, and expects to acquire the remaining interest in the second quarter of
1998. On February 9, 1998, the Company entered into an agreement to acquire all
of the outstanding capital stock of SFEC.
DESCRIPTION OF PARKS
PREMIER PARKS
ADVENTURE WORLD
Adventure World is a combination theme and water park located in Largo,
Maryland, approximately 15 miles east of Washington, D.C. and 30 miles southwest
of Baltimore, Maryland. The park's primary market includes Maryland, northern
Virginia, Washington, D.C. and parts of Pennsylvania and Delaware. This market
provides the park with a permanent resident population base of approximately 6.6
million people within 50 miles and 10.9 million people within 100 miles. The
Washington, D.C. and Baltimore markets are the number 7 and number 23 DMAs in
the United States, respectively. Based upon in-park surveys, approximately 87%
of the visitors to Adventure World in 1997 resided within a 50-mile radius of
the park, and 92% resided within a 100-mile radius.
The Company owns a site of 515 acres, with 115 acres currently used for park
operations. The remaining 400 acres, which are fully zoned for entertainment and
recreational uses, provide the Company with ample expansion opportunity, as well
as the potential to develop complementary operations, such as an amphitheater.
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Adventure World's principal competitors are King's Dominion Park, located in
Doswell, Virginia (near Richmond); Hershey Park, located in Hershey,
Pennsylvania; and Busch Gardens, located in Williamsburg, Virginia. These parks
are located approximately 120, 125 and 175 miles, respectively, from Adventure
World.
DARIEN LAKE & CAMPING RESORT
Darien Lake, a combination theme and water park, is the largest theme park
in the State of New York and the 38th largest theme park in the United States
based on 1997 attendance of 1.4 million. Darien Lake is located off Interstate
90 in Darien Center, New York, approximately 30, 40 and 120 miles from Buffalo,
Rochester and Syracuse, New York, respectively. The park's primary market
includes upstate New York, western and northern Pennsylvania and southern
Ontario, Canada. This market provides the park with a permanent resident
population base of approximately 2.1 million people within 50 miles of the park
and 3.1 million with 100 miles. The Buffalo, Rochester and Syracuse markets are
the number 40, number 75 and number 72 DMAs in the United States, respectively.
Based upon in-park surveys, approximately 62% of the visitors to Darien Lake in
1997 resided within a 50-mile radius of the park, and 79% resided within a
100-mile radius.
The Darien Lake property consists of approximately 1,000 acres, including
144 acres for the theme park, 242 acres of campgrounds and 593 acres of
agricultural, undeveloped and water areas. Darien Lake also has a 20,000 seat
amphitheater. Following the 1995 season, the Company entered into a long-term
arrangement with a national concert promoter to realize the cash flow potential
of the amphitheater. As a result, since it acquired the park, the Company has
realized substantial increases in revenues earned from concerts held at the
facility.
Adjacent to the Darien Lake theme park is a camping resort owned and
operated by the Company with 1,180 developed campsites, including 330
recreational vehicles (RV's) available for daily and weekly rental. In addition,
there are 500 other campsites available for tenting. Darien Lake is one of the
few theme parks in the United States which offers a first class campground
adjacent to the park. The campground is the fifth largest in the United States.
In 1997, approximately 310,000 people used the Darien Lake campgrounds. The
Company believes that substantially all of the camping visitors use the theme
park. The Company is constructing an economy motel at the site for the 1998
season to supplement the campgrounds.
Darien Lake's principal competitor is Wonderland Park located in Toronto,
Canada, approximately 125 miles from Darien Lake. In addition, Darien Lake
competes to a lesser degree with three smaller amusement parks located within 50
miles of the park. Darien Lake is significantly larger with a more diverse
complement of entertainment than any of these three smaller facilities.
ELITCH GARDENS
Elitch Gardens is a combination theme and water park located on
approximately 60 acres in the downtown area of Denver, Colorado, next to Mile
High Stadium and McNichols Arena, and close to Coors Field. Based on 1997
attendance of 1.5 million, Elitch Gardens is the 37th largest theme park in the
United States. The park's primary market includes the greater Denver area, as
well as most of central Colorado. This market provides the park with a permanent
resident population base of approximately 2.4 million people within 50 miles of
the park and approximately 3.3 million people within 100 miles. The Denver area
is the number 18 DMA in the United States. Based upon in-park surveys,
approximately 54% of the visitors to Elitch Gardens in 1997 resided within a
50-mile radius of the park, and 78% resided within a 100-mile radius.
A park in Denver under the name of "Elitch Gardens" has been in continuous
operation for over 100 years. During 1994 and 1995, the park was relocated from
its smaller location on the north side of Denver to its current location in
downtown Denver. The park was constructed at a cost of $100.0 million (including
land and equipment, as well as extensive infrastructure). The park was reopened
in 1995. Management
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believes that the park, as constructed, did not have sufficient marketable rides
and attractions to achieve its attendance potential. In addition, prior to its
acquisition in 1996, the park lacked theming and landscaping, as well as
creative marketing. Elitch Gardens has no significant direct competitors.
FRONTIER CITY
Frontier City is a western theme park located along Interstate 35 in
northeast Oklahoma City, Oklahoma, approximately 100 miles from Tulsa. The
park's market includes nearly all of Oklahoma and certain parts of Texas and
Kansas, with its primary market in Oklahoma City and Tulsa. This market provides
the park with a permanent resident population base of approximately 1.2 million
people within 50 miles of the park and 2.1 million people within 100 miles. The
Oklahoma City and Tulsa markets are the number 43 and number 58 DMAs in the
United States, respectively. Based upon in-park surveys, approximately 63% of
the visitors to Frontier City in 1997 resided within a 50-mile radius of the
park, and 69% resided within a 100-mile radius.
The Company owns a site of approximately 90 acres, with 60 acres currently
used for park operations. The remaining 30 acres provide the Company with the
potential to develop complementary operations, such as campgrounds or an
amphitheater. Frontier City's only significant competitor is Six Flags Over
Texas, the Company's park located in Arlington, Texas, approximately 225 miles
from Frontier City.
GEAUGA LAKE
Geauga Lake is a combination theme and water park, and is the 40th largest
theme park in the United States based on 1997 attendance of 1.3 million. Geauga
Lake is located in Aurora, Ohio, 20 miles southeast of Cleveland and
approximately 30, 60 and 120 miles, respectively, from Akron and Youngstown,
Ohio and Pittsburgh, Pennsylvania. This market provides the park with a
permanent resident population base of approximately 4.0 million people within 50
miles of the park and 7.4 million within 100 miles. The Cleveland/Akron,
Youngstown and Pittsburgh markets are the number 13, number 97 and number 19
DMAs in the United States, respectively. Based upon in-park surveys,
approximately 44% of the visitors to Geauga Lake in 1997 resided within a
50-mile radius of the park, and 76% resided within a 100-mile radius.
The 257-acre property on which Geauga Lake is situated includes a 55-acre
spring-fed lake. The theme park itself presently occupies approximately 116
acres. There are approximately 87 acres of undeveloped land (of which
approximately 30 acres have the potential for further development).
Geauga Lake's principal competitors are Cedar Point in Sandusky, Ohio and
Kennywood in Pittsburgh, Pennsylvania. These parks are located approximately 90
miles and 120 miles, respectively, from Geauga Lake. There are also three small
water parks within a 50-mile radius of Geauga Lake, and Sea World, a marine
park, is located on the other side of Geauga Lake. While Sea World does, to some
extent, compete with Geauga Lake, it is a complementary attraction, and many
patrons visit both facilities. In that regard, the Company and Sea World conduct
joint marketing programs in outer market areas, involving joint television
advertising of combination passes. In addition, combination tickets are sold at
each park.
THE GREAT ESCAPE
The Great Escape, which opened in 1954, is a combination theme and water
park located off Interstate 87 in the Lake George resort area, 180 miles north
of New York City and 40 miles north of Albany. The park's primary market
includes the Lake George tourist population and the upstate New York and western
New England resident population. Official statistics indicate that the area had
a visitor population of over 7.5 million people in 1995, of which over 3.5
million were overnight visitors, with an average length of stay of 4.3 days.
This market provides the park with a permanent resident population base of
approximately 800,000 people within 50 miles of the park and 3.3 million people
within 100 miles.
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The Albany market is the number 52 DMA in the United States. Based upon in-park
surveys, approximately 41% of the visitors to The Great Escape in 1997 resided
within a 50-mile radius of the park, and 69% resided within a 100-mile radius.
The Great Escape is located on a site of approximately 335 acres, with 100
acres currently used for park operations. Approximately 30 of the undeveloped
acres are suitable for park expansion. The Great Escape's only significant
direct competitor is Riverside Park, the Company's park located in Springfield,
Massachusetts, approximately 150 miles from The Great Escape. In addition, there
is a smaller water park located in Lake George.
KENTUCKY KINGDOM
Kentucky Kingdom is a combination theme and water park, located on
approximately 58 acres on and adjacent to the grounds of the Kentucky State Fair
in Louisville, Kentucky, of which approximately 38 acres are leased under ground
leases with terms (including renewal options) expiring in 2049, with the balance
owned by the Company. Based on 1997 attendance of 1.1 million, Kentucky Kingdom
was the 47th largest theme park in the United States. The park's primary market
includes Louisville and Lexington, Kentucky, Evansville and Indianapolis,
Indiana and Nashville, Tennessee. This market provides the park with a permanent
resident population of approximately 1.4 million people within 50 miles and 4.6
million people within 100 miles. The Louisville and Lexington markets are the
number 50 and number 67 DMAs in the United States.
The Company believes that, although Kentucky Kingdom is outfitted with a
large number of rides and has a solid attendance base, the park has suffered
from limited available funds for investment and a lack of revenue outlets.
Premier intends to spend approximately $10 million prior to the 1998 season to
add two major new attractions and to upgrade the quality and quantity of the
merchandise outlets and restaurants. The Company also intends to implement more
professional and creative marketing, sales and promotional programs. Kentucky
Kingdom's only significant direct competitor is Paramount's Kings Island and The
Beach, located in Cincinnati, Ohio, approximately 100 miles from the park.
MARINE WORLD
Marine World, a theme park which has historically featured primarily marine
mammals and exotic land animals, is the 47th largest theme park in the United
States, based on 1997 attendance of 1.1 million. Marine World is located in
Vallejo, California, approximately 32 miles from San Francisco, 22 miles from
Oakland and 57 miles from Sacramento. This market provides the park with a
permanent resident population base of approximately 5.4 million people within 50
miles and 10.0 million people within 100 miles. The San Francisco/Oakland and
Sacramento areas are the number 5 and number 20 DMAs in the United States,
respectively. Based upon in-park surveys, approximately 50% of the visitors to
Marine World in 1997 resided within a 50-mile radius of the park, and 78%
resided within a 100-mile radius.
The Company manages the operations of Marine World pursuant to a management
agreement entered into in February 1997, pursuant to which the Company is
entitled to receive an annual base management fee of $250,000 and up to $250,000
annually in additional fees based on park performance. In addition, in November
1997 the Company exercised at no additional cost an option to lease
approximately 40 acres of land at the site on a long-term basis and at nominal
rent, entitling the Company to receive, in addition to the management fee, 80%
of the cash flow generated by the park after operating expenses and debt
service. Finally, the Company has the option to purchase the entire park
beginning in February 2002, which it currently expects to exercise at that time.
Marine World currently consists of 105 acres comprised of various
presentation stadiums, animal habitats, visitor walkways, parking, concession
and picnic areas, bordering a 55-acre man-made lake. The park provides for the
shelter and care of over 50 marine mammals, 600 land animals, over 70 sharks and
rays, birds and reptiles, over 2,600 tropical and cold water fish and marine
invertebrates, and 500 butterflies, all featured in a variety of exhibits and
participatory attractions.
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Marine World's principal competitors are Underwater World at Pier 39 in San
Francisco, Great America in Santa Clara and Outer Bay at Monterey Bay Aquarium.
These parks are located approximately, 30, 60 and 130 miles from Marine World,
respectively. In addition, plans for Hecker Pass, a new theme park in Gilroy,
California (approximately 100 miles from Marine World) are under development. If
developed, the Company believes that the park would not be operational for at
least two years.
Since taking over the management of Marine World in April 1997, the Company
has stabilized the park's performance by reducing operating expenses, shortening
the operating season, and beginning to expand the park's entertainment component
by adding a themed children's area with children's rides called "Popeye's
Seaport" and the DinoSphere TurboRide, a ride simulation theatre. The Company
expects to invest between $35-$40 million at Marine World for the 1998 season to
add fourteen new rides, including a boomerang steel roller coaster, a river
rapids ride and a shoot-the-chute giant splash ride.
RIVERSIDE PARK
Riverside Park is a combination theme park and motor speedway, located off
Interstate 91 near Springfield, Massachusetts, approximately 95 miles west of
Boston. Riverside Park's primary market includes Springfield and western
Massachusetts, and Hartford and western Connecticut, as well as portions of
eastern Massachusetts (including Boston) and eastern New York. Based on 1997
attendance of over 1.2 million, Riverside Park is the 43rd largest theme park in
the United States. This market provides the park with a permanent resident
population base of approximately 3.1 million people within 50 miles and 14.7
million people within 100 miles. Based upon in-park surveys, approximately 63%
of the visitors to Riverside Park in 1997 resided within a 50-mile radius of the
park, and 95% resided within a 100-mile radius. Springfield, Hartford/New Haven
and Boston are the number 103, number 27 and number 6 DMAs in the United States.
Riverside Park is comprised of approximately 160 acres, with 118 acres
currently used for park operations, 12 acres for a picnic grove and
approximately 30 undeveloped acres. Riverside Park's Speedway is a multi-use
stadium which includes a one-quarter mile NASCAR-sanctioned short track for
automobile racing which can seat 6,200 for speedway events and 15,000 festival
style for concerts.
Riverside Park's most significant competitor is Lake Compounce located in
Bristol, Connecticut, approximately 50 miles from Riverside Park. Lake Compounce
had not been in regular full-service operation for several years. However, the
prior owner of the park entered into a joint venture relationship in 1996 with
an established park operator, and the park has received a substantial investment
of private and public funds and did operate in the 1997 season. To a lesser
extent, Riverside Park competes with The Great Escape, the Company's park
located in Lake George, New York, approximately 150 miles from Riverside Park.
WATERWORLD PARKS
The Waterworld Parks consist of two water parks (Waterworld USA/Concord and
Waterworld USA/ Sacramento) and one family entertainment center (Paradise
Island).
Waterworld USA/Concord is located in Concord, California, in the East Bay
area of San Francisco. The park's primary market includes nearly all of the San
Francisco Bay area. This market provides the park with a permanent resident
population base of approximately 6.8 million people within 50 miles of the park
and 10.0 million people within 100 miles. The San Francisco Bay market is the
number 5 DMA in the United States. Based upon in-park surveys, approximately 94%
of the visitors in 1997 resided within a 50-mile radius of the park, and 97%
resided within a 100-mile radius.
Waterworld USA/Sacramento is located on the grounds of the California State
Fair in Sacramento, California. Also located on the fair grounds is Paradise
Island, the Company's family entertainment center. The facilities' primary
market includes Sacramento and the immediate surrounding area. This market
provides the park with a permanent resident population base of approximately 2.7
million people within 50
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miles of the park and 9.7 million people within 100 miles. The Sacramento market
is the number 20 DMA in the United States. Based upon in-park surveys,
approximately 80% of the visitors in 1997 resided within a 50-mile radius of the
park, and 96% resided within a 100-mile radius.
Both facilities are leased under long-term ground leases. The Concord site
includes approximately 29 acres, with 24 acres currently used for park
operations. The Sacramento facility is located on approximately 20 acres, all of
which is used for the park and the family entertainment center. Concord's only
significant direct competitor is Raging Waters located in San Jose,
approximately 100 miles from that facility. Sacramento's only significant
competitor is Sunsplash located in northeast Sacramento, approximately 40 miles
from that facility.
WHITE WATER BAY
White Water Bay is a tropical themed water park situated on 22 acres located
along Interstate 40 in southwest Oklahoma City, Oklahoma. The park is the 15th
largest water park in the United States based on 1997 attendance of
approximately 316,000. The park's primary market includes the greater Oklahoma
City metropolitan area. Oklahoma City is the number 43 DMA in the United States.
This market provides the park with a permanent resident population base of
approximately 1.2 million people within 50 miles of the park and 2.1 million
people within 100 miles. Based upon in-park surveys, approximately 80% of the
visitors to White Water Bay in 1997 resided within a 50-mile radius of the park,
and 87% resided within a 100-mile radius. White Water Bay has no direct
competitors.
WYANDOT LAKE
Wyandot Lake, a water park that also offers "dry" rides, is located just
outside of Columbus, Ohio, adjacent to the Columbus Zoo on property sub-leased
from the Columbus Zoo. The park's primary market includes the Columbus
metropolitan area and other central Ohio towns. This market provides the park
with a permanent resident population base of approximately 2.0 million people
within 50 miles of the park and approximately 6.4 million people within 100
miles. The Columbus market is the number 34 DMA in the United States. Based on
in-park surveys, approximately 85% of the visitors to Wyandot Lake in 1997
resided within a 50-mile radius of the park, and 93% resided within a 100-mile
radius.
The Company leases from the Columbus Zoo the land, the buildings and several
rides which existed on the property at the time the lease was entered into in
1983. The current lease expires in 1998, but the Company expects to exercise the
first of its two five-year renewal options. The land leased by Wyandot Lake
consists of approximately 18 acres. The park shares parking facilities with the
Columbus Zoo.
Wyandot Lake's direct competitors are Paramount's Kings Island and The
Beach, each located in Cincinnati, Ohio, and Cedar Point, located in Sandusky,
Ohio. Each of these parks is located approximately 100 miles from Wyandot Lake.
Although the Columbus Zoo is located adjacent to the park, it is a complementary
attraction, with many patrons visiting both facilities.
WALIBI PARKS
In March 1998, Premier is scheduled to acquire approximately 50% of the
shares of capital stock of Walibi (on a fully diluted basis) in the Private
Acquisition. Thereafter, the Company will commence the Walibi Tender Offer for
the balance of the Walibi shares, pursuant to which the Company expects to
acquire all or substantially all of such shares. Walibi, a Belgian corporation
whose capital stock is traded on the Official Market of the Brussels Stock
Exchange, owns six theme parks, two located in Belgium, one in The Netherlands
and three in France, as well as two smaller attractions in Brussels. Walibi's
operations had combined 1997 attendance of approximately 3.5 million.
The Walibi Parks consist of six theme parks and two small attractions
throughout Europe, including: Bellewaerde, Mini-Europe and Oceade, Walibi
Aquitaine, Walibi Flevo, Walibi Rhone-Alpes, Walibi Schtroumpf and Walibi Wavre
and Aqualibi. The Walibi Parks' primary markets include Belgium, The
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Netherlands, southwestern France, eastern France and northern France. These
markets provide the Walibi Parks with a permanent resident population of 23.0
million people within 50 miles and 54.5 million people within 100 miles.
The Walibi Parks' most significant competitors are Disneyland Paris, located
in France, Meli Park and Bobbeejaanland, each located in Belgium, de Efteling,
located in The Netherlands, and Parc Asterix, located in France.
SIX FLAGS PARKS
In February 1998, Premier entered into the Six Flags Agreement to acquire
all of the capital stock of SFEC from the Sellers. See "Description of Six Flags
Agreement." Six Flags operates 12 "Six Flags" branded theme parks in eight
locations in the United States, consisting of eight major regional theme parks,
as well as three separately gated water parks and one wildlife safari park (each
located near one of the theme parks). The closing of the Six Flags Acquisition
will occur concurrently with the closing of the Offering.
SIX FLAGS ASTROWORLD AND SIX FLAGS WATERWORLD
Six Flags AstroWorld, the 28th largest theme park in the United States with
1997 attendance of 2.0 million, and the separately gated adjacent Six Flags
WaterWorld, with 1997 attendance of 283,000, are located in Houston, Texas on
the grounds of an entertainment and sports complex that includes the Houston
Astrodome. The Houston, Texas market provides the parks with a permanent
resident population of 4.3 million people within 50 miles and 5.2 million people
within 100 miles. The Houston market is the number 11 DMA in the United States.
Based upon in-park surveys, approximately 68% of the visitors to the parks in
1997 resided within a 50-mile radius of the park, and 73% resided within a
100-mile radius.
The Company owns a site of approximately 90 acres used for the theme park,
and approximately 14 acres used for the water park. Six Flags AstroWorld
indirectly competes with Sea World of Texas and the Company's Six Flags Fiesta
Texas, both located in San Antonio, Texas, approximately 200 miles from the
park. Six Flags WaterWorld competes with Splashtown and Water Works, two nearby
water parks.
SIX FLAGS FIESTA TEXAS
Six Flags Fiesta Texas (the "Fiesta Park"), the 33rd largest theme park in
the United States with 1997 attendance of 1.6 million, is located on
approximately 206 acres of land in San Antonio, Texas. The San Antonio, Texas
market provides the park with a permanent resident population of 1.7 million
people within 50 miles and 3.0 million people within 100 miles. The San Antonio
market is the number 38 DMA in the United States. Based upon in-park surveys,
approximately 43% of the visitors to the parks in 1997 resided within a 50-mile
radius of the park, and 55% resided within a 100-mile radius.
Six Flags Fiesta Texas' principal competitor is Sea World of Texas located
in San Antonio. In addition, the park competes to a lesser degree with Six Flags
Astro-World, the Company's park located in Houston, Texas, approximately 200
miles from the park.
PARTNERSHIP STRUCTURE. Six Flags took over management of the park in 1996.
The park is operated by San Antonio Theme Park, L.P., a limited partnership (the
"Fiesta Partnership"). Partners in the Fiesta Partnership include (i) Six Flags
San Antonio, L.P. (a limited partnership between two wholly-owned subsidiaries
of SFTP) as a 59% general partner (the "Six Flags GP"), (ii) San Antonio Park
GP, LLC (a Delaware limited liability company managed and partially owned by the
Sellers in which SFTP holds a 99% equity interest) as a 1% general partner (the
"Sellers GP") and (iii) Fiesta Texas Theme Park, Ltd (a Texas limited
partnership indirectly wholly-owned by La Cantera Development Company) as a 40%
limited partner (the "La Cantera LP"). Pursuant to the Six Flags Acquisition the
Sellers will transfer to the Company their 1% interest in the Sellers GP.
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The land and most of the assets of the Fiesta Park are owned by the La
Cantera LP. The La Cantera LP leases the park to the Fiesta Partnership (the
"Fiesta Lease"). In exchange, the Fiesta Partnership pays the La Cantera LP a
nominal annual rent and is required to make certain capital improvements to and
cover all operating expenses of the park.
The Fiesta Lease has an initial term which extends through the end of fiscal
year 2005, but under certain circumstances may be extended until the end of
fiscal year 2015. If extended, the Fiesta Lease can be terminated at the end of
fiscal year 2010 at the option of either the Fiesta Partnership or the lessor.
The Fiesta Partnership has the right to terminate the Fiesta Lease effective at
the end of fiscal year 2001 if it has incurred in excess of a specified
cumulative operating loss during the 1998 to 2001 fiscal years. As long as the
Fiesta Lease continues in effect, the Fiesta Partnership has the option to
purchase the tangible and intangible assets of Fiesta Park and to buy-out the La
Cantera LP's interest in the Fiesta Partnership during the initial term of the
Fiesta Lease, at the end of fiscal year 2010 should the lessor terminate the
Fiesta Lease and at the end of fiscal year 2015.
In connection with Six Flags' management of Fiesta Park, the Six Flags GP
entered into a management agreement with the Fiesta Partnership (the "Fiesta
Agreement") under which it will manage and operate Fiesta Park on the Fiesta
Partnership's behalf. Under the terms of the Fiesta Agreement, the Fiesta
Partnership will pay the Six Flags GP an annual management fee and intellectual
property fee. For the 1996 and 1997 fiscal years, the annual management fee
payable to the Six Flags GP was 4% of the Fiesta Partnership's Gross Revenues
(as defined in the Fiesta Agreement) for such year. Commencing with the 1998
fiscal year, the management fee is 25% of EBITDA (as defined in the Fiesta
Agreement). The intellectual property fee payable to the Six Flags GP throughout
the term of the Fiesta Agreement will be based on the Fiesta Partnership's Gross
Revenues.
SIX FLAGS GREAT ADVENTURE AND SIX FLAGS WILD SAFARI ANIMAL PARK
Six Flags Great Adventure, the 10th largest theme park in the United States,
and the separately gated adjacent Six Flags Wild Safari Animal Park, the 23rd
largest theme park in the United States with 1997 combined attendance of 3.7
million, are located in Jackson, New Jersey, approximately 70 miles south of New
York City and 50 miles east of Philadelphia. The New York and Philadelphia
markets provide the parks with a permanent resident population of 11.5 million
people within 50 miles and 25.9 million people within 100 miles. The New York
and Philadelphia markets are the number 1 and number 4 DMAs in the United
States, respectively. Based upon in-park surveys, approximately 50% of the
visitors to the parks in 1997 resided within a 50-mile radius of the park, and
80% resided within a 100-mile radius.
The Company owns a site of approximately 1,862 acres, of which approximately
221 acres are currently used for the thrill-ride based theme park operations,
and 1,641 acres remain undeveloped. Additionally, the Company owns approximately
355 adjacent acres that are used for the wildlife safari park, home to 55
species of 1,200 exotic animals which can be seen over a four and a half mile
drive. Six Flags Great Adventure's principal competitors are Hershey Park,
located in Hershey, Pennsylvania, approximately 150 miles from the park; and
Dorney Park, located in Allentown, Pennsylvania, approximately 75 miles from the
park.
SIX FLAGS GREAT AMERICA
Six Flags Great America, the 16th largest theme park in the United States
with 1997 attendance of 3.0 million, is located in Gurnee, Illinois, between
Chicago, Illinois and Milwaukee, Wisconsin. The Chicago and Milwaukee markets
provide the park with a permanent resident population of 7.6 million people
within 50 miles and 12.5 million people within 100 miles. The Chicago and
Milwaukee markets are the number 3 and number 31 DMAs in the United States,
respectively. Based upon in-park surveys, approximately 64% of the visitors to
the park in 1997 resided within a 50-mile radius of the park, and 80% resided
within a 100-mile radius.
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The Company owns a site of approximately 86 acres used for the theme park
operations. Six Flags Great America currently has no direct theme park
competitors in the region, but does compete with Paramount's Kings Island,
located near Cincinnati, Ohio, approximately 350 miles from the park; Cedar
Point, located in Sandusky, Ohio, approximately 340 miles from the park; and Six
Flags St. Louis, the Company's park located near St. Louis, Missouri,
approximately 320 miles from the park.
SIX FLAGS MAGIC MOUNTAIN AND SIX FLAGS HURRICANE HARBOR
Six Flags Magic Mountain, the 12th largest theme park in the United States
with 1997 attendance of 3.3 million, and the separately gated adjacent Six Flags
Hurricane Harbor, the 11th largest water park in the United States with 1997
attendance of 351,000, are located in Valencia, California, in the northwest
section of Los Angeles County. The Los Angeles, California market provides the
parks with a permanent resident population of 9.4 million people within 50 miles
and 15.8 million people within 100 miles. The Los Angeles market is the number 2
DMA in the United States. Based upon in-park surveys, approximately 45% of the
visitors to the parks in 1997 resided within a 50-mile radius of the parks, and
64% resided within a 100-mile radius.
The Company owns a site of approximately 110 acres used for the theme park,
and approximately 11 acres used for the pirate-themed water park. Six Flags
Magic Mountain's principal competitors include Disneyland in Anaheim,
California, located approximately 60 miles from the park, Universal Studios
Hollywood in Universal City, California, located approximately 20 miles from the
park, Knott's Berry Farm in Buena Park, California, located approximately 50
miles from the park, and Sea World of California in San Diego, California,
located approximately 150 miles from the park. Six Flags Hurricane Harbor has no
direct competitors in the area.
SIX FLAGS OVER GEORGIA
Six Flags Over Georgia, the 20th largest theme park in the United States
with 1997 attendance of 2.8 million, is located in Mableton, Georgia,
approximately 10 miles outside of Atlanta, Georgia. The Atlanta, Georgia market
provides the park with a permanent resident population of 3.8 million people
within 50 miles and 6.3 million people within 100 miles. The Atlanta market is
the number 10 DMA in the United States. Based upon in-park surveys,
approximately 42% of the visitors to the park in 1997 resided within a 50-mile
radius of the park, and 58% resided within a 100-mile radius.
Six Flags Over Georgia's primary competitors include Paramount's Carowinds
in Charlotte, North Carolina, located approximately 250 miles from the park, and
Dollywood in Pigeon Forge, Tennessee, located approximately 200 miles from the
park. The Georgia Limited Partner (as defined below) owns the site of
approximately 283 acres, including approximately 87 acres of undeveloped land,
all of which is leased to Six Flags Over Georgia II, L.P. (the "Georgia
Co-Venture Partnership").
PARTNERSHIP STRUCTURE. On March 18, 1997, Six Flags completed arrangements
pursuant to which Six Flags will manage the Georgia park through 2026. Under the
agreements governing these arrangements (the "Georgia Agreements"), the Georgia
park is owned (excluding real property) by the Georgia Co-Venture Partnership of
which a Six Flags subsidiary is the managing general partner. In the second
quarter of 1997, two subsidiaries of Six Flags made a tender offer for
partnership interests ("LP Units") in the 99% limited partner of the Georgia
Co-Venture Partnership (the "Georgia Limited Partner"), that valued the Georgia
park at the greater of $250 million or eight times 1997 EBITDA of the Georgia
park (the "Georgia Tender Offer Price"). Six Flags purchased approximately 25%
of the LP Units in the 1997 tender offer at an aggregate price of $62.7 million.
The key elements of these arrangements are as follows: (i) the Georgia
Limited Partner (which is not affiliated with Six Flags) received minimum annual
distributions of $18.5 million in 1997, which will increase each year thereafter
in proportion to increases in the cost of living; (ii) thereafter, Six Flags
will be
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entitled to receive from available cash (after provision for reasonable reserves
and after capital expenditures per annum of approximately 6% of prior year's
revenues) a management fee equal to 3% of the prior year's gross revenues, and,
thereafter, any additional available cash will be distributed 95% to Six Flags
and 5% to the Georgia Limited Partner; (iii) commencing in 1998, and on an
annual basis thereafter, Six Flags will offer to purchase additional LP Units at
a price based on a valuation for the park equal to the greater of $250.0 million
or a value derived by multiplying the weighted average four year EBITDA (as
defined therein) of the park by 8.0; (iv) in 2027, Six Flags will have the
option to acquire all remaining interests in the Georgia park at a price based
on the Georgia Tender Offer Price, increased in proportion to the increase in
the cost of living between December 1996 and December 2026, and (v) the Company
is required to make minimum capital expenditures at the Georgia park during
rolling five-year periods, based generally on 6% of the park's revenues. Cash
flow from operations at the Georgia park will be used to satisfy these
requirements first, before any funds are required from the Company. In
connection with the Subordinated Indemnity Agreement, the Company is
transferring to Time Warner (who has guaranteed the Six Flags obligations under
these arrangements) record title to the corporations which own certain entities
that have purchased and will purchase LP Units, and the Company will receive an
assignment from Time Warner of all cash flow received on such LP Units and will
otherwise control such entities, except in the event of a default by the Company
of its obligations under these arrangements. After all such obligations have
been satisfied, Time Warner is required to retransfer to the Company such record
title for a nominal consideration. In addition, the Company will issue preferred
stock of the managing partner of the Georgia Limited Partner to Time Warner
which, in the event of such a default, would permit Time Warner to obtain
control of such entity. See "Description of Six Flags Agreement."
Six Flags has accounted for the Georgia park as a co-venture and included
the revenues and expenses of the Georgia Co-Venture Partnership (excluding
partnership depreciation and interest expense associated with limited
partnership debt) in Six Flags' consolidated financial statements and deducted
as expenses the net amounts distributed to the limited partners.
The Company intends to account for its interest in the Georgia park under
the equity method of accounting.
SIX FLAGS OVER TEXAS AND SIX FLAGS HURRICANE HARBOR
Six Flags Over Texas, the 16th largest theme park in the United States with
1997 attendance of 2.9 million, and the separately gated Six Flags Hurricane
Harbor, the 7th largest water park in the United States with 1997 attendance of
558,000, are located across Interstate 30 from each other in Arlington, Texas,
between Dallas and Fort Worth, Texas. The Dallas/Fort Worth market provides the
parks with a permanent resident population of 4.5 million people within 50 miles
and 5.6 million people within 100 miles. The Dallas/Fort Worth market is the
number 8 DMA in the United States. Based upon in-park surveys, approximately 60%
of the visitors to the parks in 1997 resided within a 50-mile radius of the
park, and 68% resided within a 100-mile radius.
The Texas Limited Partner (as defined below) owns the site of approximately
197 acres used for the theme park, and the Company owns approximately an
additional 49 acres, of which approximately 18 acres are currently used for
Hurricane Harbor and 22 acres remain undeveloped. Six Flags Over Texas'
principal competitors include Sea World of Texas and the Company's Six Flags
Fiesta Texas, both located in San Antonio, Texas, approximately 285 miles from
the park. Six Flags Hurricane Harbor has no direct competitors in the area.
PARTNERSHIP STRUCTURE. Six Flags Over Texas is owned (excluding real
property) by Texas Flags, Ltd. (the "Texas Co-Venture Partnership"), a Texas
limited partnership of which the 1% general partner is a wholly-owned subsidiary
of Six Flags, and the 99% limited partner is Six Flags Fund II, Ltd., a Texas
limited partnership (the "Texas Limited Partner") which is unaffiliated with Six
Flags.
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In December 1997, Six Flags completed arrangements pursuant to which it will
manage Six Flags Over Texas through 2027. The key elements of the new
arrangements are as follows: (i) the Texas Limited Partner will receive minimum
annual distributions of $27.7 million in 1998, increasing each year thereafter
in proportion to increases in the cost of living; (ii) thereafter, Six Flags
will be entitled to receive from available cash (after provision for reasonable
reserves and after capital expenditures per annum of approximately 6.0% of prior
year's revenues) a management fee equal to 3% of the prior year's gross
revenues, and, thereafter, any additional available cash will be distributed
92.5% to Six Flags and 7.5% to the Texas Limited Partner; (iii) in the first
quarter of 1998, Six Flags made a tender offer for partnership units ("LP
Units") in the Texas Limited Partner that valued the park at the greater of
approximately $374.8 million or 8.5 times 1997 EBITDA (as defined herein) of the
park (the "Texas Tender Offer Price"); (iv) commencing in 1999, and on an annual
basis thereafter, Six Flags will offer to purchase LP Units at a price based on
a valuation for the park equal to the greater of $374.8 million or a value
derived by multiplying the weighted-average four year EBITDA of the park by 8.5;
(v) in 2028 Six Flags and its affiliates will have the option to acquire all
remaining interests in the park at a price based on the Texas Tender Offer
Price, increased in proportion to the increase in the cost of living between
December 1997 and December 2027; and (vi) the Company is required to make
minimum capital expenditures at the Texas park during rolling five-year periods,
based generally on 6% of such park's revenues. Cash flow from operations at the
Texas park will be used to satisfy these requirements first, before any funds
are required from the Company. In March 1998, Six Flags completed a tender offer
pursuant to which Six Flags purchased approximately 33% of the outstanding LP
Units for an aggregate purchase price of $117.3 million. In connection with the
Subordinated Indemnity Agreement, the Company is transferring to Time Warner
(who has guaranteed the Six Flags obligations under these arrangements) record
title to the corporations which own certain entities that have purchased and
will purchase LP Units and the Company will receive an assignment from Time
Warner of all cash flow received on such LP Units and will otherwise control
such entities, except in the event of a default by the Company of its
obligations under these arrangements. After all such obligations have been
satisfied, Time Warner is required to retransfer to the Company such record
title for a nominal consideration. In addition, the Company will issue preferred
stock of the managing partner of the Texas Co-Venture Partnership to Time Warner
which, in the event of such a default, would permit Time Warner to obtain
control of such entity. See "Description of Six Flags Agreement."
Six Flags has accounted for the park as a co-venture and included the
revenues and expenses of the Texas Co-Venture Partnership (excluding partnership
depreciation and interest expense associated with limited partnership debt) in
its consolidated financial statements and deducted as expenses the net amounts
distributed to the Texas Limited Partner.
The Company intends to account for its interest in the Texas park under the
equity method of accounting.
SIX FLAGS ST. LOUIS
Six Flags St. Louis, the 33rd largest theme park in the United States with
1997 attendance of 1.7 million, is located in Eureka, Missouri, about 35 miles
west of St. Louis, Missouri. The St. Louis market provides the park with a
permanent resident population of 2.6 million people within 50 miles and 3.7
million people within 100 miles. The St. Louis market is the number 21 DMA in
the United States. Based upon in-park surveys, approximately 55% of the visitors
to the park in 1997 resided within a 50-mile radius of the park, and 65% resided
within a 100-mile radius.
The Company owns a site of approximately 499 acres used for the theme park
operations. Six Flags St. Louis competes with Paramount's Kings Island, located
near Cincinnati, Ohio, approximately 350 miles from the park; Cedar Point,
located in Sandusky, Ohio, approximately 515 miles from the park; Silver Dollar
City, located in Branson, Missouri, approximately 250 miles from the park; and
Six Flags Great America, the Company's park located near Chicago, Illinois,
approximately 320 miles from the park.
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MARKETING AND PROMOTION
The Company attracts visitors through national and local multi-media
marketing and promotional programs for each of its parks. The national programs
are designed to market and enhance the Six Flags brand name. Local programs are
tailored to address the different characteristics of their respective markets
and to maximize the impact of specific park attractions and product
introductions. All marketing and promotional programs are updated or completely
revamped each year to address new developments. Marketing programs are
supervised by the Company's Vice President for Marketing, with the assistance of
the Company's senior management and its national advertising agency.
The Company also develops partnership relationships with well-known national
and regional consumer goods companies and retailers to supplement its
advertising efforts and to provide attendance incentives in the form of
discounts and/or premiums. The Company has also arranged for popular local radio
and television programs to be filmed or broadcast live from its parks.
Group sales and pre-sold tickets provide the Company with a consistent and
stable base of attendance, representing approximately 35.7% of aggregate
attendance in 1997 at the eleven parks owned by Premier during that season. Each
park has a group sales and pre-sold ticket manager and a well-trained sales
staff dedicated to selling multiple group sales and pre-sold ticket programs
through a variety of methods, including direct mail, telemarketing and personal
sales calls. Historically, Premier has been successful in increasing group sales
and pre-sold tickets at its existing and acquired parks.
The Company has also developed effective programs for marketing season pass
tickets. Season pass sales establish a solid attendance base in advance of the
season, thus reducing exposure to inclement weather. Additionally, season pass
holders often bring paying guests and generate "word-of-mouth" advertising for
the parks. The increased in-park spending which results from season passes is
not offset by incremental operating expenses, since such expenses are relatively
fixed during the operating season. During 1997, 20.6% of visitors to the eleven
parks then owned by the Company utilized season passes.
A significant portion of the Company's attendance is attributable to the
sale of discount admission tickets. The Company offers discounts on season and
multi-visit tickets, tickets for specific dates and tickets to affiliated groups
such as businesses, schools and religious, fraternal and similar organizations.
The increased in-park spending which results from such attendance is not offset
by incremental operating expenses, because such expenses are relatively fixed
during the operating season. In 1997, approximately 72% of patrons at the 11
parks then owned by the Company were admitted at a discount rate and, for the
year ended December 31, 1997, approximately 44.7% of the Company's revenue was
attributable to in-park spending.
The Company also implements promotional programs as a means of targeting
specific market segments and geographic locations not reached through its group
or retail sales efforts. The promotional programs utilize coupons, sweepstakes,
reward incentives and rebates to attract additional visitors. These programs are
implemented through direct mail, telemarketing, direct response media,
sponsorship marketing and targeted multi-media programs. The special promotional
offers are usually for a limited time and offer a reduced admission price or
provide some additional incentive to purchase a ticket, such as combination
tickets with a complementary location.
LICENSES
Pursuant to the License Agreement among Warner Bros., DC Comics, the Company
and SFTP, the Company has the exclusive right for a term through 2053 to use
Warner Bros. and DC Comics characters in theme parks throughout the United
States and Canada (other than the Las Vegas metropolitan area). In particular,
the License Agreement entitles the Company to use, subject to customary approval
rights of Warner Bros., and in limited circumstances, approval rights of certain
third parties, all animated cartoon and comic book characters that Warner Bros.
and DC Comics have the right to license, including as of the
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date hereof, BATMAN, SUPERMAN, BUGS BUNNY, DAFFY DUCK, TWEETY BIRD and YOSEMITE
SAM, and will include the right to sell merchandise using the characters. The
license fee is fixed until 2005, and thereafter, the license fee will be subject
to periodic scheduled increases and will be payable on a per-theme park basis.
In addition, the Company will be required to pay a royalty fee on merchandise
sold that uses the licensed characters. Six Flags is also a party to certain
additional license agreements with Warner Bros. and Time Warner concerning,
among others, HBO BACKLOT COMMISSARY and SPORTS ILLUSTRATED FESTIVAL. Warner
Bros. has the right to terminate the License Agreement under certain
circumstances, including if any persons involved in the movie or television
industries obtain control of the Company and upon a default under the
Subordinated Indemnity Agreement. Premier also licenses on a non-exclusive basis
certain other characters, including POPEYE, for use at certain Premier Parks.
PARK OPERATIONS
The Company currently operates in geographically diverse markets in the
United States and Europe. Each of the Company's parks is operated to the extent
practicable as a separate operating division of the Company in order to maximize
local marketing opportunities and to provide flexibility in meeting local needs.
Each park is managed by a general manager who reports to one of the Company's
regional executives (each of whom report to its Chief Operating Officer) and is
responsible for all operations and management of the individual park. Local
advertising, ticket sales, community relations and hiring and training of
personnel are the responsibility of individual park management in coordination
with corporate support teams.
Each of the Company's parks is managed by a full-time, on-site management
team under the direction of the general manager. Each such management team
includes senior personnel responsible for operations and maintenance, marketing
and promotion, human resources and merchandising. Park management compensation
structures are designed to provide incentives (including stock options and cash
bonuses) for individual park managers to execute the Company's strategy and to
maximize revenues and operating cash flow at each park. The Company's ten
general managers (before the Six Flags Acquisition) have an aggregate of
approximately 210 years experience in the industry, including approximately 85
years at parks owned or operated by Premier.
The Company's parks are generally open daily from Memorial Day through Labor
Day. In addition, most of the Company's parks are open during weekends prior to
and following their daily seasons, primarily as a site for theme events (such as
Hallowscream, Fright Fest-Registered Trademark-, Oktoberfest and Holiday in the
Park-Registered Trademark-). Due to their location, certain Six Flags Parks have
longer operation seasons. Typically, the parks charge a basic daily admission
price, which allows unlimited use of all rides and attractions, although in
certain cases special rides and attractions require the payment of an additional
fee. The Company's family entertainment centers are open year-round and do not
charge an admission price.
CAPITAL IMPROVEMENTS
The Company regularly makes capital investments in the development and
implementation of new rides and attractions at its parks. The Company purchases
both new and used rides. In addition, the Company rotates rides among its parks
to provide fresh attractions. The Company believes that the introduction of new
rides is an important factor in promoting each of the parks in order to achieve
market penetration and encourage longer visits, which lead to increased
attendance and in-park spending. In addition, the Company generally adds theming
to acquired parks and enhances the theming and landscaping of its existing parks
in order to provide a complete family oriented entertainment experience. Capital
expenditures are planned on a seasonal basis with most expenditures made during
the off-season. Expenditures for materials and services associated with
maintaining assets, such as painting and inspecting rides are expensed as
incurred and therefore are not included in capital expenditures.
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The Company's level of capital expenditures are directly related to the
optimum mix of rides and attractions given park attendance and market
penetration. These targeted expenditures are intended to drive significant
attendance growth at the parks and to provide an appropriate complement of
entertainment value, depending on the size of a particular market. As an
individual park begins to reach an appropriate attendance penetration for its
market, management generally plans a new ride or attraction every three to four
years in order to enhance the park's entertainment product.
MAINTENANCE AND INSPECTION
The Company's rides are inspected daily by maintenance personnel during the
operating season. These inspections include safety checks, as well as regular
maintenance and are made through both visual inspection of the ride and test
operation. Senior management of the Company and the individual parks evaluate
the risk aspects of each park's operation. Potential risks to employees and
staff as well as to the public are evaluated. Contingency plans for potential
emergency situations have been developed for each facility. During the
off-season, maintenance personnel examine the rides and repair, refurbish and
rebuild them where necessary. This process includes x-raying and magnafluxing (a
further examination for minute cracks and defects) steel portions of certain
rides at high-stress points. The Company has approximately 900 full-time
employees who devote substantially all of their time to maintaining the parks
and their rides and attractions.
In addition to the Company's maintenance and inspection procedures, the
Company's liability insurance carrier performs an annual inspection of each park
and all attractions and related maintenance procedures. The result of insurance
inspections are written evaluation and inspection reports, as well as written
suggestions on various aspects of park operations. State inspectors also conduct
annual ride inspections before the beginning of each season. Other portions of
each park are also subject to inspections by local fire marshals and health and
building department officials. Furthermore, the Company uses Ellis & Associates
as water safety consultants at its parks in order to train life guards and audit
safety procedures.
EMPLOYEES
The Company employs approximately 2,800 full-time employees and
approximately 35,000 seasonal employees during the operating season. In this
regard, the Company competes with other local employers for qualified student
and other candidates on a season-by-season basis. As part of the seasonal
employment program, the Company employs a significant number of teenagers, which
subjects the Company to child labor laws. The Company is not subject to federal
or certain applicable state minimum wage rates in respect of its seasonal
employees. However, the recent increase in the federal or any applicable state
minimum wage rate could result over time in increased compensation expense for
the Company as it relates to these employees as a result of competitive factors.
Approximately 14.8% of the Company's full-time and approximately 15.3% of
its seasonal employees are subject to labor agreements with local chapters of
national unions. These labor agreements expire in January 2000 (Six Flags Over
Texas), December 2000 (Six Flags Over Georgia), December 1999 (Six Flags Great
Adventure), January 2000 (Six Flags St. Louis) and January 2000 (Marine World).
The Company has never experienced any work stoppages, and believes that it has a
strong relationship with its employees and unions.
INSURANCE
The Company maintains insurance of the type and in amounts that it believes
are commercially reasonable and that are available to businesses in its
industry. Premier Operations maintains multi-layered general liability policies
that provide for excess liability coverage of up to $25.0 million per
occurrence. By virtue of self-insured retention limits, Premier Operations is
required to pay the first $50,000 of loss per
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occurrence. Six Flags maintains multi-layered general liability policies that
provide for excess liability coverage of up to $175.0 million per occurrence. By
virtue of self-insured retention limits ($500,000 per occurrence) and first
dollar coverage by a captive insurance company, Six Flags or its wholly-owned
insurance company subsidiary is required to pay the first $2 million of loss per
occurrence. Premier may alter the insurance coverage of Six Flags following the
Six Flags Acquisition. Premier's combined cost for liability insurance and for
self-insured claims for 1997 was $0.9 million compared to $0.8 million in 1996
and $0.6 million in 1995. For the same three years Six Flags liability costs and
claims were $13.8 million, $15.9 million and $15.8 million, respectively. The
Company also maintains fire and extended coverage, workers' compensation,
business interruption and other forms of insurance typical to businesses in its
industry. The fire and extended coverage policies insure the Company's real and
personal properties (other than land) against physical damage resulting from a
variety of hazards.
ENVIRONMENTAL AND OTHER REGULATION
The Company's operations are subject to increasingly stringent federal,
state and local environmental laws and regulations including laws and
regulations governing water discharges, air emissions, soil and groundwater
contamination, the maintenance of underground and above-ground storage tanks and
the disposal of waste and hazardous materials. In addition, its operations are
subject to other local, state and federal governmental regulations including,
without limitation, labor, health, safety, zoning and land use and minimum wage
regulations applicable to theme park operations, and local and state regulations
applicable to restaurant operations at the park. The Company believes that it is
in substantial compliance with applicable environmental and other laws and
regulations and, although no assurance can be given, it does not foresee the
need for any significant expenditures in this area in the near future.
Remediation of certain hazardous substances or petroleum products are
underway at the Company's Six Flags Great Adventure Park. The Company does not
anticipate that any environmental remediation matters, either individually or in
the aggregate, will have a material adverse effect on its financial condition or
results of operation.
In addition, portions of the undeveloped areas at its parks may be
classified as wetlands. Accordingly, the Company may need to obtain governmental
permits and other approvals prior to conducting development activities that
affect these areas, and future development may be prohibited in some or all of
these areas.
LEGAL PROCEEDINGS
The nature of the industry in which the Company operates tends to expose it
to claims by visitors for injuries. Historically, the great majority of these
claims have been minor. While the Company believes that it is adequately insured
against the claims currently pending against it and any potential liability, if
the number of such events resulting in liability significantly increased, or if
the Company becomes subject to damages that cannot by law be insured against,
such as punitive damages, there may be a material adverse effect on its
operations.
On March 19, 1997, SFTP, and its wholly-owned subsidiary Six Flags Over
Georgia, Inc. (collectively, the "Six Flags Parties") commenced a declaratory
judgment action in the Superior Court of Gwinnett County, Georgia, entitled SIX
FLAGS OVER GEORGIA, INC. AND SIX FLAGS THEME PARKS, INC. V. SIX FLAGS FUND, LTD.
AND AVRAM SALKIN, AS TRUSTEE OF THE CLAIMS TRUST (the "Georgia Litigation"). The
Six Flags Parties sought, among other things, a declaration and determination of
the rights and obligations of the partners of Six Flags Over Georgia, L.P., with
respect to certain disputed partnership affairs and an accounting of all
partnership affairs. On April 21, 1997, defendants Six Flags Fund, Ltd. and its
affiliates (collectively, the "SFOG Fund Parties") filed a motion to dismiss the
declaratory judgment action as well as an answer and counterclaim naming SFEC
and Time Warner Entertainment Company, L.P. as additional counterclaim-
defendants. The counterclaim seeks imposition of a constructive trust and an
accounting, compensatory
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damages of in excess of $250 million and unspecified punitive damages for
alleged breaches of fiduciary duty, conversion, fraud and conspiracy allegedly
committed by the counterclaim-defendants in connection with the management of
Six Flags Over Georgia.
On June 9, 1997, the parties entered into a consent order in which they
agreed, among other things, to realign the parties. An amended complaint was
then filed by the SFOG Fund Parties as the newly-aligned plaintiffs against the
Six Flags Parties in which the same substantive claims were asserted. The Six
Flags Parties filed their answer denying liability and asserting several
affirmative defenses on July 24, 1997. The Six Flags Parties intend to
vigorously contest the allegations of the complaint.
The Sellers have agreed to indemnify the Company from any and all
liabilities arising out of the Georgia Litigation. See "Description of Six Flags
Agreement--Indemnification."
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information with respect to the
directors, executive officers and key employees of the Company or its
subsidiaries.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- --------------------------------- --------- ------------------------------------------------------------------------
<S> <C> <C>
Kieran E. Burke.................. 40 Chairman and Chief Executive Officer; Director
Gary Story....................... 42 President and Chief Operating Officer; Director
James F. Dannhauser.............. 45 Chief Financial Officer; Director
Hue W. Eichelberger.............. 39 Executive Vice President
Dan Aylward...................... 45 Vice President, General Manager, Marine World
Jack D. Bateman.................. 40 Vice President, General Manager, Kentucky Kingdom
Timothy D. Black................. 32 Vice President, General Manager, Wyandot Lake
James C. Bouy.................... 56 Vice President, General Manager, Elitch Gardens
John S. Collins.................. 38 Vice President, General Manager, The Great Escape
Jeffrey A. Lococo................ 42 Vice President, General Manager, Geauga Lake
Richard A. McCurley.............. 38 Vice President, General Manager, Waterworld
Bill Muirhead.................... 42 Vice President, General Manager, Riverside Park
Bradley Y. Paul.................. 50 Vice President, General Manager, Darien Lake
Manuel Gonzalez-Perez............ 36 Vice President, General Manager, Frontier City
Traci E. Blanks.................. 37 Vice President of Marketing
David Thomas..................... 40 Vice President of Entertainment
Richard A. Kipf.................. 63 Vice President of Administration, Corporate Secretary
John Gannon...................... 40 Vice President of Finance
Russell Kuteman.................. 45 Vice President of Finance
Paul A. Biddelman................ 52 Director
Michael E. Gellert............... 66 Director
Jack Tyrrell..................... 51 Director
Sandy Gurtler.................... 48 Director
Charles R. Wood.................. 83 Director
</TABLE>
KIERAN E. BURKE has served as Chief Executive Officer and a Director of the
Company since October 1989 and Chairman of the Board since June 1994. From 1989
through June 1994, he was President of Premier. Mr. Burke also serves as a
director of Blue Ridge Real Estate Company and Big Boulder Corporation. Mr.
Burke was an investment banker prior to becoming President of Premier. Mr. Burke
is a member of the board of directors of the International Association of
Amusement Parks & Attractions ("IAAPA").
GARY STORY has served as President and a Director of the Company since June
1994 and as Chief Operating Officer since January 1992. From January 1992
through June 1994, he also served as Premier's Executive Vice President. Prior
to that time, he had been General Manager of Frontier City for more than five
years. From 1983 through 1984, Mr. Story served as General Manager of Luna Park,
an amusement park in Sydney, Australia, during its redevelopment as a theme park
and from 1981 through 1983 he served as General Manager of Diversiones del
Reino, an amusement park in Mexico City. From 1972 through 1981, Mr. Story
served in various capacities with Six Flags. Mr. Story is a former member of the
board of directors of IAAPA.
JAMES F. DANNHAUSER became Chief Financial Officer of the Company in
October 1995 and has served as a Director of Premier since December 1992. From
1990 through June 1996, Mr. Dannhauser was a managing director of Lepercq, de
Neuflize & Co. Incorporated, an investment banking firm ("Lepercq"). Mr.
Dannhauser is a member of the board of directors of Lepercq.
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HUE W. EICHELBERGER has served as Executive Vice President since 1996;
prior thereto he served as Vice President and General Manager of Adventure World
since 1992. From 1991 through 1992, he served as Park Manager of White Water
Bay. From 1988 through 1991, he was Associate Director of Corporate Development
at Silver Dollar City, Inc. Prior thereto, Mr. Eichelberger served as General
Manager of White Water (a water park in Grand Prairie, Texas) and FantaSea (a
water park in Wichita, Kansas).
DAN AYLWARD has served as Vice President and General Manager of Marine
World since February 1997. From January 1995 to February 1997, Mr. Aylward was
President and General Manager of Silverwood Theme Park, a small theme park
operation in Idaho. From June 1989 to January 1995 he served as General Manager
of Old Tucson Studios in Tucson, Arizona. Prior thereto, Mr. Aylward was
employed at Kings Island.
JACK D. BATEMAN has served as Vice President and General Manager of
Kentucky Kingdom since its acquisition by the Company in November 1997. Prior to
that time, he served as Director of Marketing at Elitch Gardens since 1996.
Prior to joining Premier, Mr. Bateman worked in various capacities at Six Flags
for over fifteen years, most recently as Director of Destination Marketing at
Six Flags Over Texas.
TIMOTHY D. BLACK has served as Vice President and General Manager of
Wyandot Lake since 1997. From 1995 through 1997, he was Manager of Park
Operations at Six Flags Fiesta Texas. From 1992 to 1995, he was Director of
Operations and Maintenance at Frontier City.
JAMES C. BOUY served as Vice President and General Manager of Geauga Lake
since 1994 and became General Manager of Elitch Gardens following its
acquisition by the Company. Prior thereto, from 1992 through 1994, he served as
Vice President and General Manager of Kennywood Park in Pittsburgh,
Pennsylvania. From 1985 through 1991, Mr. Bouy was employed by Funtime as Vice
President and General Manager of Darien Lake. Prior thereto, from 1975 through
1981, he was employed by the Marriott Corporation, where his responsibilities
included serving as Chief Operating Officer for The Great American Theme Park in
Gurnee, Illinois and The Great American Theme Park in Santa Clara, California.
JOHN S. COLLINS has served as a Vice President since 1998 and as General
Manager of The Great Escape since November 1996. Prior to that time, he served
in various capacities at Geauga Lake for over ten years, most recently as
Director of Marketing.
JEFFREY A. LOCOCO has served as Vice President and General Manager of
Wyandot Lake since 1989 and became the General Manager of Geauga Lake following
its acquisition by the Company. From 1982 through 1989, he served as Director of
Marketing and Sales of Geauga Lake. From 1980 through 1982, Mr. Lococo served as
Regional Sales Manager with Marriott's Great America Theme Park.
RICHARD A. MCCURLEY has served as Vice President and General Manager of
Frontier City and White Water Bay since 1994 and became General Manager of
Waterworld following its acquisition by the Company. He joined Premier in 1992
as Director of Revenue for Frontier City and White Water Bay and, during that
year, transferred to become Director of Revenue for Adventure World. From 1985
through 1992, Mr. McCurley was Food Service Manager and later Food Service
Director at Knotts Berry Farms. Prior to that period, he spent six years with
Worlds of Fun, a major theme park in Kansas City, Missouri, ultimately serving
as Director of Food Services.
BILL MUIRHEAD has served as Vice President and General Manager of Riverside
Park since January 1997. Prior to that, beginning in 1992, he served as Vice
President and General Manager of Expo/Tiered Retail Services Inc., a company
headquartered in Hong Kong and specialized in developing themed retail and
gaming operations in the South Pacific rim. Prior thereto, Mr. Muirhead was
employed at Dorney Park and Six Flags Great Adventure.
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BRADLEY Y. PAUL has served as Vice President and General Manager of Darien
Lake since 1991. From 1984 through 1991 he served as Marketing Director of
Darien Lake.
MANUEL GONZALEZ-PEREZ has served as Vice President and General Manager of
Frontier City since 1996. From 1995 to 1996 he served as Director of Park
Revenue and Operation at Frontier City. From 1991 to 1995, Mr. Gonzalez-Perez
was President and CEO for Park Street (Family Entertainment Center) in Mexico
and from 1991 to 1994 he served as Revenue Director for Reine Arthon in Mexico
City.
TRACI E. BLANKS has served as Vice President of Marketing since 1995. From
1992 through 1994, she served as Vice President Marketing for Frontier City and
White Water Bay. From 1986 through 1992, she served as Director of Marketing for
Frontier City, and as such was responsible for all marketing and group sales
programs. From 1986 through 1987, she also served as Manager of Advertising and
Promotions for Frontier City.
DAVID THOMAS has served as Vice President of Entertainment since 1993. From
1987 through 1993, he was responsible for the Company's show productions
(including booking national touring acts to appear at the parks) as well as the
staging of numerous festivals including Oktoberfest and Hallowscream. Prior to
1987, he served as President of Silvertree Productions, producing over forty
stage shows, musicals, stunt spectaculars and magic illusion presentations.
RICHARD A. KIPF has served as Corporate Secretary of the Company (or its
predecessors) since 1975 and has served as Vice President of Administration
since 1994.
JOHN P. GANNON has served as Vice President of Finance for the Company
since August of 1995 when Premier purchased Funtime Parks, Inc. Mr. Gannon had
previously served as Vice President and Treasurer for Funtime Parks, Inc. from
1990 to 1995. From 1987 to 1990, he served as a controller for Geauga Lake Park
in Aurora, Ohio. Prior thereto, Mr. Gannon, a certified public accountant, was
employed with Ernst & Young, beginning in 1979, and was assigned to the Funtime
audit. Mr. Gannon is a past president of the Akron Chapter of the Institute of
Management Accounts.
RUSSELL W. KUTEMAN has served as Vice President of Finance of the Company
since 1996. From 1986 through 1996, Mr. Kuteman served as the Vice President of
Finance for Wet 'n Wild and later Six Flags. Prior to 1986, Mr. Kuteman served
as Vice President of Finance for several independent petroleum companies. Mr.
Kuteman is a CPA, and began his professional career with Peat, Marwick, Mitchell
& Co. in 1976.
PAUL A. BIDDELMAN has served as a Director of the Company since December
1992. Since December 1997, Mr. Biddelman has been president of Hanseatic
Corporation ("Hanseatic"), a private investment company. Prior to that date, he
was treasurer of Hanseatic for more than five years. Mr. Biddelman also serves
as a director of Electronic Retailing Systems International, Inc., Insituform
Technologies, Inc., Celadon Group, Inc., Petroleum Heat and Power Co., Inc. and
Star Gas Corporation (general partner of Star Gas Partners, L.P.).
MICHAEL E. GELLERT has served as a Director of the Company since March
1989. He previously served as a Director of Premier and as a Trustee of Tierco
from 1979 until 1986. From June 1989 through June 1994, he also served as the
Chairman of the Board of Premier. Mr. Gellert is a general partner of Windcrest
Partners ("Windcrest"), a New York limited partnership. Windcrest, the principal
business of which is private investing, is an affiliate of Premier. Mr. Gellert
also serves as a director of Devon Energy Corp., Humana Inc., Seacor Holdings,
Inc., Regal Cinemas, Inc. and The Putnam Trust Company of Greenwich Advisory
Board of The Bank of New York.
JACK TYRRELL has served as a Director of Premier since December 1992. For
more than five years, Mr. Tyrrell has been a general partner of Lawrence Venture
Partners, a general partnership, the principal business of which is that of
acting as general partner of Lawrence, Tyrrell, Ortale & Smith ("LTOS"), a
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private investment limited partnership. Mr. Tyrrell is also a general partner of
LTOS II Partners, a general partnership, the principal business of which is that
of acting as general partner of Lawrence, Tyrrell, Ortale & Smith II, L.P.
("LTOS II"), a private investment limited partnership. Mr. Tyrrell is also a
general partner of Richland Partners, L.P., a limited partnership, the principal
business of which is that of acting as general partner of Richland Ventures,
L.P. ("Richland"), a private investment limited partnership. In addition, Mr.
Tyrrell is a general partner of Richland Partners II, L.P., a limited
partnership, the principal business of which is that of acting as general
partner of Richland Ventures II, L.P. ("Richland II"), a private investment
limited partnership. Mr. Tyrrell also serves as a director of National Health
Investors, Inc. and Regal Cinemas, Inc.
SANDY GURTLER has served as a Director of the Company since 1997. Mr.
Gurtler is the chief executive officer, a director and a shareholder of Chilcott
Entertainment Corp., which was the general partner of the owner of Elitch
Gardens prior to the acquisition of the park by the Company in October 1996. Mr.
Gurtler also serves as a consultant to the Company.
CHARLES R. WOOD has served as a Director of the Company since 1997. Mr.
Wood is the President and sole shareholder of Storytown USA, Inc. and Fantasy
Rides Corporation, which collectively owned The Great Escape prior to the
acquisition of the park by the Company in December 1996. Mr. Wood also serves as
a consultant to the Company and owns, directly or through wholly-owned
corporations, a variety of businesses in the Lake George area, including real
estate, motels, restaurants and an action park.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of January 1, 1998
(except as noted below) as to Common Stock owned by (a) each of the Company's
current directors and senior executive officers; (b) all current directors and
officers of the Company as a group; and (c) each person who, to the best of the
Company's knowledge, beneficially owned on that date more than 5% of the
outstanding Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE OF CLASS
NUMBER OF SHARES ------------------------
BENEFICIALLY PRIOR TO AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OFFERING OFFERING
- -------------------------------------------------------------------------- ----------------- ----------- -----------
<S> <C> <C> <C>
Kieran E. Burke(1)........................................................ 314,877 1.6 *
Paul A. Biddelman(2)...................................................... 2,657,071 14.1 8.2
James F. Dannhauser(3).................................................... 76,665 * *
Michael E. Gellert(4)..................................................... 1,368,961 7.3 4.2
Gary Story(5)............................................................. 143,000 * *
Jack Tyrrell(6)........................................................... 695,253 3.7 2.2
Sandy Gurtler............................................................. -- -- --
Charles R. Wood........................................................... 9,091(7) * *
Robert J. Gellert(8)...................................................... 1,254,553 6.6 3.9
122 East 42nd Street
New York, New York 10168
Windcrest Partners(9)..................................................... 1,136,025 6.0 3.5
122 East 42nd Street
New York, New York 10168
Hanseatic Corporation(10)................................................. 2,657,071 14.1 8.2
Wolfgang Traber
450 Park Avenue
New York, New York 10152
FMR Corp.(11)............................................................. 1,296,500 6.9 4.0
82 Devonshire Street
Boston, Massachusetts 02109
Baron Capital Group(12)................................................... 1,184,700 6.3 3.7
767 Fifth Avenue
New York, NY 10153
Warburg Pincus Asset Management(13)....................................... 968,145 5.1 3.0
466 Lexington Avenue
New York, NY 10017
All directors and officers as a group(14) (14 persons).................... 5,306,419 27.5 16.2
</TABLE>
- ------------------------
* Less than one percent.
(1) Includes 75,637 shares of Common Stock and warrants and options to purchase
239,238 shares of Common Stock for his own account as to which Mr. Burke has
sole voting and investment power. Does not include 258,675 shares under the
unvested portion of options and restricted shares granted.
(2) Represents shares of Common Stock beneficially owned by Hanseatic
Corporation ("Hanseatic"), of which Mr. Biddelman is President. See footnote
(10) below.
(3) Includes 32,665 shares of Common Stock and options to purchase 44,000 shares
of Common Stock. Does not include 154,325 shares under the unvested portion
of options and restricted shares granted.
(4) Includes 232,936 shares of Common Stock, as to which Mr. Gellert has sole
voting and investment power. Also includes 1,136,025 shares of Common Stock
beneficially owned by Windcrest Partners
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("Windcrest") which shares voting and investment power with its general
partners, Michael E. Gellert and Robert J. Gellert.
(5) Includes 25,000 shares of common stock and options to purchase 118,000
shares of Common Stock. Does not include 197,000 shares under the unvested
portion of options and restricted shares granted.
(6) Includes 9,794 shares of Common Stock for his own account; 4,396 shares of
Common Stock held in a trust for the benefit of his son; 311,940 shares of
Common Stock beneficially owned by Lawrence, Tyrrell, Ortale & Smith II,
L.P. ("LTOS II"); and an aggregate of 369,123 shares of Common Stock
beneficially owned by Richland Ventures, L.P. ("Richland") and Richland
Ventures II, L.P. ("Richland II"). Mr. Tyrrell, who is a general partner of
the respective general partners of LTOS II, Richland and Richland II,
disclaims beneficial ownership of all shares held by such entities.
(7) Represents shares held by Double "H" Hole in the Woods Ranch, Inc., a
charitable organization of which Mr. Wood is Chairman of the Board.
(8) Includes 2,514 shares of Common Stock for his own account, as to which he
has sole voting and investment power; 40,351 shares of Common Stock as agent
for 26 other persons and entities with whom he shares voting and investment
power; 2,168 shares of Common Stock as trustee for Michael E. Gellert's
sister with respect to which he shares voting and investment power with
Peter J. Gellert (who holds these shares as agent); 5,558 shares of Common
Stock as trustee of irrevocable trusts for the benefit of Michael E.
Gellert's children as to which he has sole voting and investment power;
1,083 shares of Common Stock as trustee of an irrevocable trust for the
benefit of his brother as to which he has sole voting and investment power;
1,854 shares of Common Stock as trustee of a trust for the benefit of a
second cousin as to which he has sole voting and investment power; 1,136,025
shares of Common Stock owned by Windcrest, which shares voting and
investment power with its general partners, Michael E. Gellert and Robert J.
Gellert; and 65,000 shares of Common Stock beneficially owned by Lexfor
Corporation of which he is President and a director, as to which he shares
voting and investment power with the other officers and directors. Michael
E. Gellert disclaims beneficial ownership of the shares of Common Stock
owned by the trusts for the benefit of his children.
(9) Windcrest shares voting and investment power with its general partners,
Michael E. Gellert and Robert J. Gellert.
(10) Represents shares of Common Stock beneficially owned by Hanseatic. Mr.
Traber holds a majority of the shares of capital stock of Hanseatic and thus
may be deemed to beneficially own such Common Stock. Of such shares,
2,588,695 shares of Common Stock are held by Hanseatic Americas LDC, a
Bahamian limited duration company in which the sole managing member is
Hansabel Partners LLC, a Delaware limited liability company in which the
sole managing member is Hanseatic. The remaining shares of Common Stock are
held by Hanseatic for discretionary customer accounts. Information has been
derived from Amendment No. 7 to Schedule 13D, dated December 5, 1997.
(11) Includes 1,213,200 shares of Common Stock beneficially owned by Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of FMR
Corp. and a registered investment adviser (including 3,400 shares of Common
Stock owned by Fidelity American Special Situations Trust ("FASST"), an
English unit trust as to which Fidelity acts as a sub-adviser); 81,400
shares of Common Stock beneficially owned by Fidelity Management Trust
Company ("FMT"), a wholly-owned subsidiary of FMR Corp. and a bank; and
5,300 shares beneficially owned by Fidelity International Limited ("FIL"), a
Bermudan investment adviser and former majority-owned subsidiary of Fidelity
(including 3,400 shares of Common Stock owned by FASST, as to which a
subsidiary of FIL acts as an investment adviser). Edward C. Johnson 3d,
Chairman of FMR Corp. and FIL, Abigail P. Johnson, a director of FMR Corp.,
and members of the Johnson family may be deemed to form a controlling group
with respect to FMR Corp. Information has been derived from Schedule 13G,
dated December 30, 1997.
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(12) Includes 1,136,700 shares of Common Stock beneficially owned by BAMCO,
Inc., a registered investment adviser as to which Baron Capital Group
("BCG") and Ronald Baron ("Baron"), President of BCG, may be deemed parent
holding companies; and 48,000 shares of Common Stock beneficially owned by
Baron Capital Management, Inc., a registered investment adviser as to which
BCG and Baron may be deemed parent holding companies. Information has been
derived from Schedule 13G, dated February 17, 1998.
(13) Represents shares beneficially owned by Warburg Pincus Asset Management,
Inc., a registered investment adviser. Information has been derived from
Amendment No. 1 to Schedule 13G, dated January 12, 1998.
(14) The share amounts listed include shares of Common Stock that the following
persons have the right to acquire within 60 days from December 1, 1997
(Kieran E. Burke, 239,238 shares (see footnote (1)); James F. Dannhauser,
44,000 shares (see footnote (3)); Gary Story, 118,000 shares (see footnote
(5)); and all directors and officers as a group, 442,839 shares.
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DESCRIPTION OF SIX FLAGS AGREEMENT
GENERAL
On February 9, 1998, the company presently named Premier Parks Inc., certain
wholly-owned subsidiaries of Premier, SFEC and each of the Sellers entered into
the Six Flags Agreement. The Six Flags Agreement provides for the Six Flags
Acquisition, pursuant to which Premier will acquire, by merger, all of the
capital stock of SFEC from the Sellers for $965 million (the "Capital Stock
Consideration") (plus an approximate $11 million adjustment based on year-end
balance sheet adjustments and option cancellation costs). The Capital Stock
Consideration will be payable all in cash or, at the Company's option, in cash
and Seller Depositary Shares representing interests in up to $200 million of the
Seller Preferred Stock. The Company may reduce (but not below $100.0 million) or
may eliminate the Seller Depositary Shares by increasing the cash portion of the
purchase price. The net proceeds of the Offerings will be used, in whole or in
part, to fund the cash portion of the Capital Stock Consideration. If the
Company determines not to issue the Seller Depositary Shares, the additional
cash portion of the Capital Stock Consideration will be funded from the net
proceeds of the Common Stock Offering. Consummation of the Six Flags Acquisition
is a condition to the Offerings.
THE MERGERS
Prior to the Six Flags Acquisition, and pursuant to the Premier Merger, the
company presently named Premier Parks Inc. will merge with a wholly-owned
subsidiary of Premier Parks Holdings Corporation in accordance with Section
251(g) of the Delaware General Corporation Law. As a result of the Premier
Merger, holders of shares of Common Stock of Premier will become, on a
share-for-share basis, holders of Common Stock of Premier Parks Holdings
Corporation, and Premier will become a wholly-owned subsidiary of Premier Parks
Holdings Corporation. On the effective date of the Premier Merger, Premier will
change its name to Premier Parks Operations Inc., and Premier Parks Holdings
Corporation will change its name to Premier Parks Inc.
In addition to the share-for-share exchange, each option or similar right
exercisable for capital stock of Premier outstanding immediately prior to the
Premier Merger automatically will be converted into an option or similar right
exercisable for a number of shares of the Common Stock equal to the number of
shares of capital stock of Premier for which such option or similar right was
exercisable immediately prior to the Premier Merger.
Immediately following the closing of the Offerings, SFEC and a wholly-owned
subsidiary of the Company will be merged pursuant to the Six Flags Acquisition,
with SFEC continuing as the surviving corporation and as a wholly-owned
subsidiary of the Company. Pursuant to the Six Flags Acquisition, (i) each share
of capital stock of SFEC outstanding immediately prior to the Six Flags
Acquisition, all of which are held by the Sellers, automatically will be
converted into the right to receive a pro rata share of the Capital Stock
Consideration based on the aggregate number of such shares (together with a cash
payment in lieu of any fractional shares of Seller Preferred Stock to which the
Sellers would have otherwise been entitled as part of the Capital Stock
Consideration) and (ii) each option or similar right exercisable for capital
stock of SFEC outstanding immediately prior to the Six Flags Acquisition
automatically will be cancelled in exchange for a cash payment by SFEC (all such
cash payments together, the "SFEC Option Consideration") of all amounts
necessary to fund such payments being loaned or contributed by the Company.
CONDITIONS
The Six Flags Agreement contains customary closing conditions of the
parties. In addition, the Company's obligation to consummate the Six Flags
Acquisition is subject to the condition that the
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Company raise equity capital in an amount at least equal to the difference
between $900.0 million and the value of the Seller Preferred Stock issued to the
Sellers pursuant to the Six Flags Acquisition.
INDEMNIFICATION
The Six Flags Agreement contains customary representations, warranties,
covenants and other agreements of the parties. Each Seller has agreed to
indemnify and hold harmless the Company against certain damages, claims and
liabilities (and the cost and expenses related thereto) suffered by the Company
in respect of (i) any breach of or inaccuracy in any representation or warranty
contained in the Six Flags Agreement made by such Seller individually, or by the
Sellers collectively, and (ii) any breach or violation of any covenant or
agreement made by any Seller for itself or on behalf of SFEC or its subsidiaries
contained in the Six Flags Agreement or any documents delivered at the closing
thereunder. The Company has agreed to indemnify and hold harmless the Sellers
against certain damages, claims and liabilities (and the cost and expenses
related thereto) suffered by the Sellers in respect to (i) any breach of or
inaccuracy in any representation or warranty made by or on behalf of the
Company, and (ii) any breach or violation of any covenant made by or on behalf
of the Company in the Six Flags Agreement or any documents delivered at the
closing thereunder.
Generally, no party may make a claim for indemnification for breaches of
representations and warranties and of covenants and other agreements as
described in the immediately preceding paragraph after the date (the "Claims
Termination Date") which is the earlier of (i) the 45th day following the date
on which audited annual financial statements of the Company and its consolidated
subsidiaries for the 1998 fiscal year are first made available to the Company
and (ii) April 30, 1999.
The Company may not make any claims for indemnification for breaches of any
of the Sellers' representations and warranties until the aggregate amount of the
damages suffered exceeds $5 million (the "Basket Amount"), whereupon the Sellers
are obligated to pay in full all such amounts for indemnification, including the
Basket Amount. The total maximum amount that the Sellers are required to pay for
indemnification for breaches of the Sellers' representations and warranties
under the Six Flags Agreement is $25 million. The Sellers' ability to make
indemnification claims for breaches of any of the Company's representations and
warranties is subject to a corresponding Basket Amount and $25 million maximum
amount.
Upon consummation of the Six Flags Acquisition, the Company will deposit $25
million in cash into an escrow fund under a General Indemnity Escrow Agreement
to be entered into by the Company with the Sellers and certain holders of
options exercisable for capital stock of SFEC. A portion of such deposit will
come from the Capital Stock Consideration payable to the Sellers, with the
balance to come from the SFEC Option Consideration payable to the optionholders
who are party to the General Indemnity Escrow Agreement. The escrow fund will be
the sole source of payment for the Sellers' indemnification obligations to the
Company for breaches of or inaccuracies in the Sellers' representations and
warranties. Any payment as a result of breaches of or inaccuracies in an
individual Seller's representations and warranties may be limited to such
individual Seller's contribution to the escrow fund.
In addition, the Sellers have agreed to indemnify the Company from any and
all liabilities arising out of the Georgia Litigation. See "Business--Legal
Proceedings."
AGREEMENTS RELATED TO THE SIX FLAGS AGREEMENT
Certain ancillary agreements will be entered into pursuant to the Six Flags
Agreement in connection with the Six Flags Acquisition. See "Business--Licenses"
and "Description of Securities--Registration Rights."
In addition to the ancillary agreements to be entered into in connection
with the Six Flags Acquisition that are described elsewhere herein, at the
closing of the Six Flags Transactions, the Company will enter
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into the Subordinated Indemnity Agreement with Time Warner, pursuant to which
the Company will indemnify Time Warner in respect of its effective guarantee of
the SFEC Zero Coupon Senior Notes, and the Company and Six Flags will indemnify
Time Warner in respect of its guarantee of the obligations of Six Flags under
the agreements relating to the Co-Venture Parks. Pursuant to the Subordinated
Indemnity Agreement, the Company will transfer to Time Warner record title to
the corporations which own certain entities that have purchased and will
purchase units of the limited partners of such partnerships, and the Company
will receive an assignment from Time Warner of all cash flow received on such
units and will otherwise control such entities, except in the event of a default
by the Company of its obligations under the Subordinated Indemnity Agreement.
After all such obligations have been satisfied, Time Warner is required to
retransfer to the Company such record title for a nominal consideration. In the
event of a default, the Subordinated Indemnity Agreement allows Time Warner to
acquire the stock of the entities that purchase units of the limited partners of
the Co-Venture Parks and the assets of the Company subsidiary which holds the
general partner interest in the Co-Venture Parks. In addition, the Company will
issue preferred stock of the managing partners of the Co-Venture Parks to Time
Warner which, in the event of such a default, would permit Time Warner to obtain
control of such entities. The Subordinated Indemnity Agreement also limits the
Company's ability to sell the Six Flags Parks. Except in the case of the New
SFEC Notes, under the terms of the Subordinated Indemnity Agreement, without the
consent of Time Warner, the Company cannot incur indebtedness at SFEC or any of
its subsidiaries that is secured by any assets of (or guaranteed by) the
Company, Premier Operations or any of its subsidiaries, or secure any
indebtedness of the Company, Premier Operations or any of its subsidiaries with
any of the assets of (or guarantees by) SFEC or any of its subsidiaries.
In connection with the Premier Merger, Premier, SFEC and Premier Operations
will enter into a Shared Services Agreement pursuant to which Premier will
provide certain corporate, administrative and other general services to SFEC and
Premier Operations for their operations and the operations of their
subsidiaries. Generally, Premier will provide legal, financial, accounting,
human resources, information systems, payroll, marketing and promotion, and
other services to its subsidiaries. In addition, the purchasing, design and
implementation of capital improvements, the production of live entertainment at
the parks, as well as the purchasing of operating supplies, will generally be
done by Premier on behalf of its subsidiaries. With respect to such services
provided generally to the parks, the costs thereof, including third party costs
and appropriate corporate overhead, will generally be allocated based on each
park's percentage of Premier's revenues. Costs of services provided to
particular parks, such as costs relating to capital improvements, will be
allocated to such park and will normally include, in addition to direct costs,
an allocation of time spent and expenses incurred by corporate personnel in
providing such services. SFEC and Premier Operations will be obligated to
purchase such services only so long as they may deem such services to be
necessary or desirable for their operations and the operations of their
subsidiaries.
A tax sharing agreement will be entered into between Premier and SFEC for
the purpose of allocating to SFEC its share of any actual federal income tax
liability of Premier's consolidated federal income tax group that will include
SFEC and its eligible subsidiaries. Under the tax sharing agreement, SFEC will
be required to make payments to Premier shortly before Premier is required to
make tax payments, including estimated tax payments, to the Internal Revenue
Service on behalf of the consolidated group. Premier will act as agent for SFEC
and its subsidiaries with respect to federal income tax matters and will pay to
the Internal Revenue Service the federal income tax liability of the
consolidated group. Under the tax sharing agreement, the amount that SFEC and
its subsidiaries will owe to Premier may not exceed the tax liability that they
would have owed if they were not members of Premier's consolidated group and
instead were a separate consolidated group, but without taking into account any
of their tax attribute carrybacks or carryforwards. The tax sharing agreement
will provide for the application of similar principles to any unitary,
consolidated or combined state or local income tax filing group that includes
SFEC or any of its subsidiaries in the same group with Premier or any of its
subsidiaries other than SFEC and its subsidiaries.
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DESCRIPTION OF INDEBTEDNESS
PREMIER CREDIT FACILITY
Borrowings under the Premier Credit Facility, which was entered into in
March 1998, are secured by substantially all of the assets of Premier Operations
and its domestic subsidiaries (other than real estate), and guaranteed by such
subsidiaries. The Premier Credit Facility has an aggregate availability of
$300.0 million consisting of (i) a five-year $75.0 million revolving credit
facility for working capital and general corporate purposes (the "Revolving
Credit Facility"); (ii) a five-year $100.0 million term loan facility ("Facility
B"); and (iii) an eight-year $125.0 million term loan facility ("Facility C"
and, together with Facility B, the "Term Loan Facilities"), in each case, to
fund acquisitions and make capital improvements. The Company expects to borrow
$125.0 million in March 1998, in part, to fund the cash portion of the purchase
price for the Walibi acquisition. Interest rates per annum under the Premier
Credit Facility are equal to either (a) a base rate equal to the higher of the
Federal Funds Rate plus 1/2% or the prime rate of Citibank, N.A., in each case,
plus the Applicable Margin (as defined therein) or (b) the London Interbank
Offered Rate plus the Applicable Margin. The Revolving Credit Facility will
terminate on March 31, 2003. Borrowings under Facility B will mature on March
31, 2003 and borrowings under Facility C will mature on March 31, 2006; however,
aggregate principal payments and reductions of $10.0 million, $25.0 million,
$30.0 million and $35.0 million will be required during the second, third,
fourth and fifth years of Facility B and aggregate principal payments of $1.0
million each are required in each of the first six years of Facility C in
addition to a $25.0 million payment in year seven and a $94.0 million payment in
year eight.
The Premier Credit Facility contains restrictive covenants that, among other
things, limit the ability of Premier Operations and its subsidiaries to dispose
of assets; incur additional indebtedness or liens; pay dividends; repurchase
stock; make investments; engage in mergers or consolidations; and engage in
certain transactions with subsidiaries and affiliates. In addition, the Premier
Credit Facility requires that Premier Operations comply with certain specified
financial ratios and tests, including ratios of total debt to EBITDA, interest
expense to EBITDA and fixed charges to EBITDA.
Defaults under the Premier Credit Facility include (i) failure to repay
principal when due; (ii) failure to pay interest within three days after due;
(iii) default in the performance of certain obligations of Premier Operations'
principal subsidiaries under the Security Agreement (as defined thereunder);
(iv) failure to comply with certain covenants, conditions or agreements under
the credit agreement which, in certain cases, continues for 30 days; (v) default
by Premier Operations or any of its principal subsidiaries in respect of any
indebtedness above specified levels; (vi) certain events of bankruptcy; (vii)
certain judgments against Premier Operations or any of its principal
subsidiaries; (viii) the occurrence of a Change in Control (as defined
thereunder); (ix) the assertion of certain Environmental Claims (as defined
thereunder); and (x) under certain circumstances, the failure by Messrs. Burke
and Story to serve Premier Operations in their present positions and the failure
to replace them within a specified time period.
SIX FLAGS CREDIT FACILITY
Borrowings under the Six Flags Credit Facility, which will be entered into
on or prior to the closing of the Six Flags Acquisition, will be secured by
substantially all of the assets of SFTP and its subsidiaries and a pledge by
SFEC of the stock of SFEC, and will be guaranteed by such subsidiaries and SFEC.
The Six Flags Credit Facility will have an aggregate availability of $472
million consisting of (i) up to $100.0 million under a Revolving Credit Facility
to be used to refinance existing outstanding Six Flags bank indebtedness and for
working capital and other general corporate purposes; and (ii) up to $372.0
million under Facility B to be used to refinance existing outstanding Six Flags
bank indebtedness and fund acquisitions and make capital improvements. The
Company anticipates that Facility B will be fully funded in connection with the
Six Flags Acquisition. Interest rates per annum under the Six Flags Credit
Facility are equal to either (a) a base rate equal to the higher of the Federal
Funds Rate plus 1/2% or the prime rate of Citibank, N.A., in each case, plus the
Applicable Margin (as defined therein) or (b) the London Interbank Offered Rate
plus the Applicable Margin. The Revolving Credit Facility will terminate five
years from the closing of the Six Flags Acquisition. Borrowings under Facility B
will mature on November 30, 2004. However, for Facility B,
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aggregate principal payments and reductions of $1.0 million will be required
during each of the first, second, third and fourth years and aggregate principal
payments of $25.0 million and $40.0 million are required in years five and six,
and $303.0 million at maturity.
The Six Flags Credit Facility will contain restrictive covenants that, among
other things, limit the ability of SFTP and its subsidiaries to dispose of
assets; incur additional indebtedness or liens; pay dividends; repurchase stock;
make investments; engage in mergers or consolidations; and engage in certain
transactions with subsidiaries and affiliates. In addition, the Six Flags Credit
Facility will require SFTP to comply with certain specified financial ratios and
tests, including ratios of total debt to EBITDA, interest expense to EBITDA, and
fixed charges to EBITDA.
Defaults under the Six Flags Credit Facility will include (i) failure to
repay principal when due; (ii) failure to pay interest within three days after
due; (iii) default in the performance of certain obligations of SFTP's principal
subsidiaries under the Security Agreement (as defined thereunder); (iv) failure
to comply with certain covenants, conditions or agreements under the credit
agreement which, in certain cases, continues for 30 days; (v) default by SFTP or
any of its principal subsidiaries in respect of any indebtedness above specified
levels; (vi) certain events of bankruptcy; (vii) certain judgments against SFTP
or any of its principal subsidiaries; (viii) the occurrence of a Change in
Control (as defined thereunder); (ix) the assertion of certain Environmental
Claims (as defined thereunder); and (x) under certain circumstances, the failure
by Messrs. Burke and Story to serve as Chief Executive Officer and Chief
Operating Officer of SFTP and the failure to replace them within a specified
time period.
COMPANY SENIOR DISCOUNT NOTES
The Company Senior Discount Notes are senior obligations of the Company, in
an aggregate principal amount at maturity sufficient to generate gross proceeds
of $250.0 million. The Company Senior Discount Notes will mature on ,
2008. The Company Senior Discount Notes accrete in value until , 2003 at
which time the accreted value will equal 100% of their principal amount. The
Company Senior Discount Notes bear cash interest at the rate of % per annum,
commencing , 2003, and are not guaranteed by the Company's subsidiaries.
Approximately $75.0 million of net proceeds from the sale of the Senior
Discount Notes will be deposited with the trustee to provide a fund until
, 2003 (the "Restricted Cash Account") to satisfy obligations under the
Co-Venture Parks agreements and to pay dividends on the Convertible Preferred
Stock. The Company's obligations will be secured pending disbursement by a
pledge of the Restricted Cash Account.
The Company Senior Discount Notes are redeemable, at the Company's option,
in whole or in part, at any time on or after , 2003, at specified
redemption prices, together with accrued and unpaid interest, if any, to the
date of redemption.
Upon the occurrence of a Change of Control (as defined in the applicable
Indenture), the Company will be required to make an offer to repurchase the
Company Senior Discount Notes at a price equal to 101% of the accreted value
thereof, prior to , 2003 or 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of purchase, on or after
, 2003. Neither the Premier Merger nor the Six Flags Acquisition
constitutes a Change of Control under the Indenture relating to the Company
Senior Discount Notes.
The Indenture relating to the Company Senior Discount Notes contains
restrictive covenants that, among other things, limit the ability of the Company
to dispose of assets; incur additional indebtedness or liens; pay dividends;
engage in mergers or consolidations; and engage in certain transactions with
subsidiaries and affiliates. Defaults under the applicable Indenture include (i)
failure to pay interest on the Company Senior Discount Notes within 30 days
after such payments are due; (ii) failure to pay principal or premium, if any,
on the Company Senior Discount Notes; (iii) failure to comply for 30 days after
notice with the Company's repurchase obligations upon the occurrence of a Change
of Control or an Asset Sale (as defined in the applicable Indenture) or with
certain covenants or provisions governing the Restricted
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Cash Account and failure to comply for 60 days after notice with the other
agreements contained in the applicable Indenture, the Company Senior Discount
Notes or the Restricted Cash Account; (iv) the default by the Company or any of
its Restricted Subsidiaries (as defined in the applicable Indenture) in respect
of any indebtedness above specified levels; (v) certain events of bankruptcy or
insolvency; (vi) a material breach or default of, or repudiation by the Company
of its obligations under the escrow agreement governing the Restricted Cash
Account or the unenforceability of the escrow agreement governing the Restricted
Cash Account against the Company; and (vii) certain judgements against the
Company or any of its Restricted Subsidiaries above specified levels.
COMPANY SENIOR NOTES
The Company Senior Notes are senior obligations of the Company, in the
aggregate principal amount of $280.0 million of which up to $76.3 million will
be used to capitalize a three-year overfund account (the "Interest Escrow
Account") with respect to the Company Senior Notes. The Company Senior Notes
will mature on , 2006. The Company Senior Notes bear interest at the
rate of % per annum and are not guaranteed by the Company's subsidiaries.
The Company Senior Notes are redeemable, at the Company's option, in whole
or in part, at any time on or after , 2002, at specified redemption
prices, together with accrued and unpaid interest, if any, to the date of
redemption.
Upon the occurrence of a Change of Control (as defined in the applicable
Indenture) the Company will be required to make an offer to repurchase the
Company Senior Notes at a price equal to 101% of the principal amount thereof,
together with accrued and unpaid interest, if any, to the date of repurchase.
Neither the Premier Merger nor the Six Flags Acquisition constitutes a Change of
Control under the Indenture relating to the Company Senior Notes.
The Indenture relating to the Company Senior Notes contains restrictive
covenants that, among other things, limit the ability of the Company to dispose
of assets; incur additional indebtedness or liens; pay dividends; engage in
mergers or consolidations; and engage in certain transactions with subsidiaries
and affiliates. Defaults under the applicable Indenture include (i) failure to
pay interest on the Company Senior Notes within 30 days (two days in the case of
interest payments due on or prior to , 2001) after such payments are due;
(ii) failure to pay principal or premium, if any on the Company Senior Notes;
(iii) failure to comply for 30 days after notice with the Company's repurchase
obligations upon the occurrence of a Change of Control or an Asset Sale (as
defined in the applicable Indenture) or with certain covenants or the provisions
governing the Interest Escrow Account and failure to comply for 60 days after
notice with the other agreements contained in the applicable Indenture, the
Company Senior Notes or the Interest Escrow Account; (iv) the default by the
Company or any of its Restricted Subsidiaries (as defined in the applicable
Indenture) in respect of any indebtedness above specified levels; (v) certain
events of bankruptcy or insolvency; (vi) a material breach or default of, or
repudiation by the Company of its obligations under, the escrow agreement
governing the Interest Escrow Account or the unenforceability of the escrow
agreement governing the Interest Escrow Account against the Company; and (vii)
certain judgments against the Company or any of its Restricted Subsidiaries
above specified levels.
PREMIER NOTES
The Premier Notes are senior, unsecured obligations of Premier Operations,
in the aggregate principal amount of $215.0 million, of which $90.0 million will
mature on August 15, 2003 (the 1995 Premier Notes) and $125.0 million will
mature on January 15, 2007 (the 1997 Premier Notes). The 1995 Premier Notes bear
interest at the rate of 12% per annum and the 1997 Premier Notes bear interest
at the rate of 9 3/4% per annum. The Premier Notes are guaranteed on a senior,
unsecured basis by the principal operating subsidiaries of Premier Operations.
The 1995 Premier Notes are redeemable, at Premier Operations' option, in
whole or in part, at any time on or after August 15, 1999, at specified
redemption prices, together with accrued and unpaid
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interest, if any, to the date of redemption. The 1997 Premier Notes are
redeemable, at Premier Operations' option, in whole or in part, at any time on
or after January 15, 2002, at specified redemption prices, together with accrued
and unpaid interest, if any, to the date of redemption.
Upon the occurrence of a Change of Control (as defined in the relevant
Indenture), Premier Operations will be required to make an offer to repurchase
the Premier Notes at a price equal to 101% of the principal amount thereof,
together with accrued and unpaid interest, if any, to the date of repurchase.
Neither the Premier Merger nor the Six Flags Acquisition constitutes a Change of
Control under the Indentures relating to the Premier Notes.
The Indentures relating to the Premier Notes contain restrictive covenants
that, among other things, limit the ability of Premier Operations to dispose of
assets; incur additional indebtedness or liens; pay dividends; engage in mergers
or consolidations; and engage in certain transactions with subsidiaries and
affiliates. Defaults under these Indentures include (i) failure to pay interest
on the applicable Premier Notes within 30 days after such payments are due; (ii)
failure to repay principal when due at its maturity date, upon optional
redemption, upon required repurchase, upon acceleration or otherwise; (iii)
failure to comply for 30 days after notice with Premier Operations' repurchase
obligations upon the occurrence of a Change of Control and failure to comply for
60 days after notice with the other covenants contained in the applicable
Indenture; (iv) the default by Premier Operations or any of its principal
subsidiaries in respect of any indebtedness above specified levels; (v) certain
events of bankruptcy; (vi) certain judgments against Premier Operations or any
principal subsidiaries; (vii) any principal subsidiaries (as defined in the
indentures) ceasing to be in full force and effect (except as contemplated by
the terms thereof); and (viii) the denial or disaffirmation by any principal
subsidiary of its obligations under the applicable Indentures, which continues
for 10 days.
SFTP SENIOR SUBORDINATED NOTES
The SFTP Senior Subordinated Notes are unsecured senior subordinated
obligations of SFTP, in an aggregate principal amount of $285.0 million and will
mature on June 15, 2005. The SFTP Senior Subordinated Notes accrete in value
until June 15, 1998, at which time the accreted value will equal 100% of their
principal amount. The SFTP Senior Subordinated Notes bear interest at the rate
of 12 1/4% per annum, payable semiannually on June 15 and December 15 of each
year, commencing December 15, 1998. The SFTP Senior Subordinated Notes are
guaranteed on a senior, unsecured basis by the principal operating subsidiaries
of SFTP.
The SFTP Senior Subordinated Notes are redeemable, at SFTP's option, in
whole or in part, at any time on or after June 15, 2000 at specified redemption
prices, together with accrued and unpaid interest, if any, to the date of
redemption. Upon the occurrence of a Change of Control (as defined in the
applicable Indenture), SFTP is required to make an offer to repurchase the SFTP
Senior Subordinated Notes at a price equal to 101% of the accreted value thereof
to the date of repurchase. The Six Flags Transactions constitute a Change of
Control under the Indenture relating to the SFTP Senior Subordinated Notes, and
the Company will be required to make an offer to purchase the SFTP Senior
Subordinated Notes within 30 days of the closing of the Six Flags Transactions.
The Company does not expect that it will be required to purchase any material
amount of such Notes pursuant to such offer. See "Risk Factors--Risks Associated
with Substantial Indebtedness."
The Indenture pursuant to which the SFTP Senior Subordinated Notes were
issued contains restrictive covenants that, among other things, limit the
ability of SFTP and its subsidiaries to dispose of assets; incur additional
indebtedness or liens; pay dividends; engage in mergers or consolidations; and
engage in certain transactions with subsidiaries and affiliates.
Defaults under this Indenture include (i) failure to pay interest on the
SFTP Senior Subordinated Notes within 30 days after such payments are due; (ii)
failure to repay principal when due at its maturity date, upon optional
redemption, upon required repurchase, upon acceleration or otherwise; (iii)
failure to comply for 30 days after notice with SFTP's repurchase obligations
upon the occurrence of a Change of Control and failure to comply for 60 days
after notice with the other covenants contained in the Indenture;
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(iv) the default by SFTP or any Significant Subsidiary (as defined in the
applicable indenture) in respect of any indebtedness above specified levels; (v)
certain events of bankruptcy; (vi) certain judgments against SFTP or any
Significant Subsidiary; (vii) any note guarantee (as defined in the applicable
Indenture) ceasing to be in full force and effect (except as contemplated by the
terms thereof); and (viii) the denial or disaffirmation by any note guarantor
(as defined in the applicable indenture) of its obligations under the applicable
Indenture or any note guarantee, which continues for 10 days.
SFEC ZERO COUPON SENIOR NOTES
The SFEC Zero Coupon Senior Notes are senior unsecured obligations of SFEC,
in an aggregate principal amount of $192.25 million and will mature on December
15, 1999. The SFEC Zero Coupon Senior Notes accrete in value until December 15,
1999, at which time the accreted value will equal 100% of their principal
amount. There are no periodic payments on the SFEC Zero Coupon Senior Notes. One
of the Sellers, Time Warner, has effectively guaranteed the SFEC Zero Coupon
Senior Notes, and the Company has indemnified Time Warner in respect of its
guarantee. The Company will use the proceeds of the SFEC Notes Offering,
together with other funds, to repay SFEC Zero Coupon Senior Notes. Until so
used, such proceeds and other funds (or U.S. government obligations purchased
therefrom) will be deposited in escrow.
The SFEC Zero Coupon Senior Notes may not be redeemed prior to maturity.
Defaults under the indenture relating to the SFEC Zero Coupon Senior Notes
include (i) the failure by SFEC or Time Warner to comply for 30 days after
written notice with any covenant in the applicable indenture; (ii) failure to
pay, when due, upon final maturity or upon acceleration, the principal amount of
any indebtedness of SFEC or any of its subsidiaries in excess of $5.0 million,
or any indebtedness of Time Warner or any of its Material Subsidiaries (as
defined in the applicable indenture) in excess of $50 million, if such
indebtedness is not discharged within 60 days after written notice; (iii)
certain events of bankruptcy of SFEC or Seller; and (iv) failure to pay the
principal amount of any SFEC Zero Coupon Senior Note at its maturity date.
Accordingly, after the Six Flags Acquisition, such a default by Time Warner
could result in the acceleration of the maturity of the SFEC Zero Coupon Senior
Notes.
NEW SFEC NOTES
The New SFEC Notes will be senior, unsecured obligations of SFEC, in the
aggregate principal amount of $170.0 million. The New SFEC Notes will mature on
, 2006. The New SFEC Notes will bear interest at the rate of % per
annum and will be guaranteed by the Company on a fully subordinated basis (the
"Guarantee") but will not be guaranteed by SFEC's subsidiaries. All of the net
proceeds from the sale of the New SFEC Notes will be placed in escrow (the "SFEC
Escrow Account") for repayment of the SFEC Zero Coupon Senior Notes. The
indenture relating to the New SFEC Notes will provide that SFEC will defease the
SFEC Zero Coupon Senior Notes no later than 360 days from the date of the
Offerings.
The New SFEC Notes will be redeemable, at SFEC's option, in whole or in
part, at any time on or after , 2002 at specified redemption prices,
together with accrued and unpaid interest, if any, to the date of redemption.
Upon the occurrence of a Change of Control (as defined in the applicable
Indenture), SFEC will be required to make an offer to repurchase the New SFEC
Notes at a price equal to 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of repurchase. Neither the
Premier Merger nor the Six Flags Acquisition constitutes a Change of Control
under the Indenture relating to the New SFEC Notes.
The Indenture relating to the New SFEC Notes contains restrictive covenants
that, among other things, limit the ability of SFEC to dispose of assets; incur
additional indebtedness or liens; pay dividends; engage in mergers or
consolidations; and engage in certain transactions with subsidiaries and
affiliates. Defaults under the applicable Indenture include (i) failure to pay
interest on the New SFEC Notes within 30 days after such payments are due; (ii)
failure to pay principal or premium, if any on the New SFEC
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Notes; (iii) failure to comply for 30 days after notice with SFEC's repurchase
obligations upon the occurrence of a Change of Control or an Asset Sale (as
defined in the applicable Indenture) or with certain covenants or the provisions
governing the SFEC Escrow Account and failure by either the Company or SFEC to
comply for 60 days after notice with the other agreements contained in the
applicable Indenture, the Guarantee, the SFEC Escrow Account or the New SFEC
Notes; (iv) the default by SFEC or any of its Restricted Subsidiaries (as
defined in the applicable Indenture), in respect of any indebtedness above
specified levels; (v) certain events of bankruptcy or insolvency; (vi) if the
Guarantee shall be held invalid, unenforceable or shall cease for any reason to
be in full force and effect or any person acting on behalf of the Company shall
deny or disaffirm the Company's obligations under the Guarantee; (vii) a
material breach or default of, or repudiation by the Company of its obligations
under the escrow agreement governing the SFEC Escrow Account or the
unenforceability of the escrow agreement governing the SFEC Escrow Account
against the Company; and (viii) certain judgements against SFEC or any of its
Restricted Subsidiaries above specified levels.
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DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's authorized capital stock includes 90,000,000 shares of Common
Stock, par value $0.05 per share. Each share of Common Stock entitles the holder
thereof to one vote. Holders of the Common Stock have equal ratable rights to
dividends from funds legally available therefor, when, as and if declared by the
Board of Directors and are entitled to share ratably, as a single class, in all
of the assets of the Company available for distribution to holders of Common
Stock upon the liquidation, dissolution or winding up of the affairs of the
Company. Holders of Common Stock do not have preemptive, subscription or
conversion rights. However, each outstanding share of Common Stock currently has
attached to it one right (a "Right") issued pursuant to an Amended and Restated
Rights Agreement (the "Rights Agreement"). Each Right entitles its registered
holder to purchase one one-thousandth of a share of a junior participating
series of Preferred Stock designated to have economic and voting terms similar
to those of one share of Common Stock, as described under "--Rights Plan" below.
After the Offerings, 32,331,111 shares of Common Stock will be outstanding and
shares will be reserved for future issuance (1,315,038 for options and
warrants and upon conversion of the Convertible Preferred Stock).
Bank One Trust Company, N.A., Oklahoma City, Oklahoma, is the transfer agent
and registrar for the Common Stock.
PREFERRED STOCK
The Company's authorized capital stock includes 500,000 shares of Preferred
Stock, par value $1.00 per share. The Preferred Stock may be issued in series,
and shares of each series will have such rights and preferences as are fixed by
the Board of Directors in resolutions authorizing the issuance of that
particular series. In designating any series of Preferred Stock, the Board of
Directors may, without further action by the holders of the Common Stock, fix
the number of shares constituting that series and fix the dividend rights,
dividend rate, conversion rights, voting rights (which may be greater or lesser
than the voting rights of the Common Stock), rights and terms of redemption
(including any sinking fund provisions), and the liquidation preferences of such
series of Preferred Stock. Holders of any series of Preferred Stock, when and if
issued, may have priority claims to dividends and to any distributions upon
liquidation of the Company, and other preferences over the holders of the Common
Stock. After giving effect to the Six Flags Transactions, shares of
Preferred Stock will be outstanding. In addition, approximately 20,600 shares of
Preferred Stock have been reserved for issuance under the Rights Plan.
MANDATORILY CONVERTIBLE PREFERRED STOCK
Pursuant to the EqPINES Offering, the Company will issue EqPINES in respect
of its Mandatorily Convertible Preferred Stock. The terms of the EqPINES and the
Manditorily Convertible Preferred Stock are described under "Description of
EqPINES."
SELLER PREFERRED STOCK
In connection with the Six Flags Acquisition, the Company may issue to the
Sellers Seller Depositary Shares for up to $200.0 million of Seller Preferred
Stock. The Company may reduce (but not below $100.0 million) or may eliminate
the Seller Depositary Shares by increasing the cash portion of the consideration
for the Six Flags Acquisition. The following is a summary of the terms of the
Seller Preferred Stock.
DIVIDENDS. Subject to the terms of the Company Notes, holders of shares of
the Seller Preferred Stock will be entitled to receive annually cash dividends
out of funds of the Company legally available for payment, at an annual rate of
% of the $ liquidation value (the "Liquidation Value") per share.
Dividends will be cumulative from the date of original issuance of the Seller
Preferred Stock. The Seller Preferred Stock will rank PARI PASSU as to dividends
with the Mandatorily Convertible Preferred Stock and have priority as to
dividends over the Common Stock and any other series or class of the Company's
stock hereafter issued.
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LIQUIDATION RIGHTS. In case of the voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of shares of Seller Preferred
Stock are entitled to receive the amount equal to the Liquidation Value thereof,
plus an amount equal to any accrued and unpaid dividends to the payment date,
before any payment or distribution is made to the holders of Common Stock or any
other series or class of the Company's stock hereafter issued which ranks junior
as to liquidations rights to the Seller Preferred Stock. The Seller Preferred
Stock will rank PARI PASSU as to liquidation with the Mandatorily Convertible
Preferred Stock.
VOTING RIGHTS. The holders of each share of the Seller Preferred Stock will
not be entitled to any voting rights, except as required by Delaware law and
except in certain circumstances involving a default by the Company in the
payment of dividends, the authorization of capital stock having a preference as
to dividends or upon liquidation over the Seller Preferred Stock, charter
amendments materially affecting the rights of the holders or mergers or
consolidations of the Company.
CONVERSION RIGHTS. The holders of Seller Preferred Stock will be entitled
at any time after the 90th day following the date of issuance to convert their
shares of Seller Preferred Stock into Common Stock at an initial conversion
price equal to % of the weighted average of the trading prices for all of
the sales of the Common Stock on the NYSE for the 20 consecutive trading days
ending on the third trading day prior to the issuance of the Seller Preferred
Stock, subject to adjustment in certain circumstances, including the payment of
a stock dividend on shares of the Common Stock, combinations and subdivisions of
the Common Stock, certain reclassifications of the Common Stock, the issuance to
the Company's stockholders of rights or warrants to subscribe for or purchase
shares of Common Stock at a price per share less than the then-current market
price (determined as provided in the Certificate of Designation of the Seller
Preferred Stock) of the Common Stock and certain cash dividends and
distributions of evidences of indebtedness or assets to holders of certain of
the Company's capital stock.
The Seller Depositary Shares may be voluntarily converted by the holders
thereof upon the same terms and conditions as the Seller Preferred Stock
represented by such Seller Depositary Shares, adjusted to reflect the fact that
Seller Depositary Shares represent a one-five hundredth interest of a share of
Seller Preferred Stock.
OPTIONAL REDEMPTION BY COMPANY. The Company may redeem all (but not less
than all) of the Seller Preferred Stock at any time during the 90 days following
the date of issuance at a redemption price equal to the greater of Liquidation
Value or the fair market value of the Seller Preferred Stock, in each case plus
accrued and unpaid dividends. Except as provided in the preceding sentence,
shares of Seller Preferred Stock will not be redeemable prior to ,
2001. On or after such date, the shares of Seller Preferred Stock will be
redeemable at the option of the Company, in whole or in part, at any time or
from time to time on not less than 30 nor more than 60 days notice by mail, at
the redemption prices equal to the Liquidation Value plus a premium based on 70%
of the dividend rate (declining ratably on an annual basis until 2010) plus, in
each case, accrued and unpaid dividends to the redemption date.
MANDATORY REDEMPTION BY COMPANY. On the twelfth anniversary of the date of
issuance of the Seller Preferred Stock, the Company must offer to purchase all
outstanding shares at the Liquidation Value, plus accrued and unpaid dividends
thereon to the date of purchase.
REGISTRATION RIGHTS
Holders of approximately 4.9 million shares of Common Stock have rights to
require the Company to register such shares for sale under the Securities Act.
In addition, such holders have the right to have such shares included in a
future registration statement relating to Common Stock and, in certain cases,
other equity securities, subject to customary provisions relating to the right
of the underwriters of any such offering to exclude such shares if their
inclusion would impair the success of such offering. In the event such holders
exercise their registration rights, the Company will be required to bear all
registration expenses other than underwriting discounts or other selling
expenses and fees and expenses of counsel to such holders.
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Upon consummation of the Six Flags Acquisition, Sellers will have the right
to require the Company to file a shelf registration statement within 90 days of
the closing with respect to the Seller Depositary Shares, as well as the shares
of Common Stock issuable upon conversion of the underlying Seller Preferred
Stock (the "Conversion Shares") received by them. In addition, Sellers will have
the right to require the Company on no more than four occasions to register such
shares of Seller Depositary Shares and Conversion Shares for sale under the
Securities Act. Sellers may not demand the registration of any of such shares
during such time as the shelf registration statement is effective or within six
months after the effective date of a registration statement filed in response to
a previous demand. Further, Sellers will have the right to have such Seller
Depositary Shares included in a future registration statement relating to the
Seller Depositary Shares or Common Stock, as the case may be, subject to
customary provisions relating to the right of the underwriters of any such
offering to exclude such shares if their inclusion would impair the success of
such offering. If Sellers exercise their registration rights, the Company will
be required to bear all registration expenses other than underwriting discounts
and commissions.
SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE
Upon consummation of the Offerings, the Company will have 32.3 million
shares of Common Stock outstanding and 5.0 million EqPINES (initially
convertible into 5.0 million shares of Common Stock) outstanding. Future sales
of Common Stock (or Seller Depositary Shares) by existing stockholders pursuant
to Rule 144 under the Securities Act, or through the exercise of outstanding
registration rights or otherwise, could have an adverse effect on the prevailing
market price of the Common Stock and the Company's ability to raise additional
capital. Except for the Common Stock to be sold in the Common Stock Offering,
the Convertible Preferred Stock and shares of Common Stock issued upon
conversion of the Convertible Preferred Stock, the Company has agreed not to
offer, sell, contract to sell or otherwise issue any shares of Common Stock
(except pursuant to outstanding options and warrants) or other capital stock or
securities convertible into or exchangeable for, or any rights to acquire,
Common Stock or other capital stock, with certain exceptions (including certain
exceptions for Common Stock or other capital stock issued or sold in connection
with future acquisitions by the Company, including any Common Stock to be issued
in connection with the Walibi acquisition), prior to the expiration of 90 days
from the date of this Prospectus without the prior written consent of Lehman
Brothers. The Company's officers, directors and principal stockholders, who hold
in the aggregate approximately 6.0 million shares of Common Stock (including
shares issuable upon exercise of outstanding options and warrants and
outstanding shares of restricted stock), have agreed not to sell any such shares
for 90 days following the date of this Prospectus without the consent of Lehman
Brothers. In addition, the Sellers in the Six Flags Acquisition have agreed not
to sell any Seller Preferred Stock during such 90-day period. Thereafter, all
such shares held by the Company's officers, directors and principal stockholders
will be eligible for sale in the public market (subject, in most cases, to
applicable volume limitations and other resale conditions imposed by Rule 144).
In addition, subject to the "lock-up" arrangements described above and a minimum
41-day "lock-up" agreed to by the sellers in the Walibi acquisition, holders of
approximately 4.9 million shares of Common Stock and the holders of Seller
Preferred Stock have the right to require the Company to register such shares
(and, in the case of the Seller Preferred Stock, the shares of Common Stock
issuable upon conversion thereof) for sale under the Securities Act. Depending
upon the level of future revenues at Kentucky Kingdom and Walibi, the Company
may also be required in the future to issue additional shares of Common Stock
(assuming the maximum number of shares of Common Stock are issued in the Walibi
Tender Offer) with an aggregate market value of up to $15.0 million to the
sellers thereof. See "Prospectus Summary--Other Recent Developments." The
Company may also pay quarterly dividend payments on the EqPINES (which aggregate
$ million over three years) by issuing additional shares of Common Stock.
The sale, or the availability for sale, of substantial amounts of Common Stock
or securities convertible into Common Stock in the public market at any time
subsequent to the date of this Prospectus could adversely affect the prevailing
market price of the Common Stock and the EqPINES. See "-- Registration Rights."
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RIGHTS PLAN
Each outstanding share of Common Stock currently has attached to it one
Right issued pursuant to the Rights Agreement. Each Right entitles its
registered holder to purchase one one-thousandth of a share of a junior
participating series of Preferred Stock designated to have economic and voting
terms similar to those of one share of Common Stock, for $250.00, subject to
adjustment (the "Rights Exercise Price"), but only after the earlier to occur of
(i) the tenth day following a public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 15% or
more of the outstanding voting stock of the Company (an "Acquiring Person") or
(ii) the tenth business day (or such later date as may be determined by the
Board of Directors prior to such time as any person becomes an Acquiring Person)
after the date (the "Flip-in Date") of the commencement or announcement of a
person's or group's intention to commence a tender or exchange offer whose
consummation will result in the ownership of 15% or more of the Company's
outstanding voting stock (even if no shares are actually purchased pursuant to
such offer) (in either case, the "Separation Time"). The Rights will not trade
separately from the shares of Common Stock unless and until the Separation Time
occurs.
The Rights Agreement provides that an Acquiring Person does not include (A)
the Company, (B) any subsidiary of the Company, (C) any employee benefit plan or
employee stock plan of the Company, or any trust or other entity organized,
appointed, established or holding Common Stock for or pursuant to the terms of
any such plan or (D) any person whose ownership of 15% or more of the shares of
voting stock of the Company then outstanding results solely from (i) any action
or transaction approved by the Board of Directors before such person acquires
such 15% beneficial ownership or (ii) a reduction in the number of issued and
outstanding shares of voting stock of the Company pursuant to a transaction or
transactions approved by the Board of Directors (provided that any person that
does not become an Acquiring Person by reason of clause (i) or (ii) above shall
become an Acquiring Person upon his acquisition of any additional 1% of the
Company's voting stock unless such acquisition of additional voting stock will
not result in such person becoming an Acquiring Person by reason of such clause
(i) or (ii)).
The Rights will not be exercisable until the business day following the
Separation Time. The Rights will expire on the earlier of (i) the close of
business on December 10, 2007 and (ii) the date on which the Rights are redeemed
or terminated as described below. The Rights Exercise Price and the number of
Rights outstanding, or in certain circumstances the securities purchasable upon
exercise of the Rights, are subject to adjustment upon the occurrence of certain
events.
Once any person becomes an Acquiring Person, unless the Rights are earlier
redeemed or exchanged as described below, if
(i) the Company were to be merged into or consolidated with another
entity (whether or not related to a 15% stockholder),
(ii) the Company were to merge with another entity (whether or not
related to a 15% stockholder) and be the surviving corporation, but any
shares of the Company's Common Stock were changed into or exchanged for
other securities or assets, or
(iii) more than 50% of the Company's assets or earning power were to be
sold in one or a series of related transactions,
each Right then outstanding would "flip-over" and would require that its holder
be entitled to buy, at the exercise price, that number of shares of common stock
of the acquiring company which at the time of the merger or sale would have a
market value of two times the exercise price of the Right (i.e., a discount of
50%). Any business combination not providing for the issuance of common stock of
the acquiring company in compliance with such provisions would be prohibited.
Unless the Rights are earlier redeemed or exchanged as described below, if a
person or group becomes the beneficial owner of 15% or more of the Company's
voting stock, each Right not owned by such stockholder would become exercisable,
at the Rights Exercise Price, for that number of shares of Preferred Stock which
at the time of such transaction would have a market value of two times the
Rights Exercise Price.
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At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
voting stock of the Company and before the acquisition by a person or group of
50% or more of the outstanding voting stock of the Company, the Board of
Directors may elect to cause the Company to exchange the Rights (other than
Rights owned by such person or group which have become void), in whole or in
part, at an exchange ratio of one share of the Company's Common Stock per Right,
subject to adjustment.
The Rights are redeemable by the Company by a vote of a majority of the
Board of Directors at a price of $.01 per Right at any time prior to the close
of business on the Flip-in Date (or at such later date as may be authorized by
the Board of Directors and a majority of the Continuing Directors (as defined in
the Rights Agreement)). The Rights may be redeemed after the time that any
person has become an Acquiring Person only if approved by a majority of the
Continuing Directors. The Rights have no voting rights, and they are not
entitled to dividends.
The Rights will not prevent a takeover of the Company. The Rights, however,
may cause substantial dilution to a person or group that acquires 15 percent or
more of the Common Stock unless the Rights are first redeemed or terminated by
the Board of Directors of the Company. Nevertheless, the Rights should not
interfere with a transaction that, in the judgment of the Board of Directors, is
in the best interests of the Company and its stockholders because the Rights can
be redeemed, as hereinabove described, before the consummation of such
transaction.
The complete terms of the Rights are set forth in the Rights Agreement. The
Rights Agreement is incorporated by reference as an exhibit to the Registration
Statement of which this Prospectus is a part, and the foregoing description is
qualified in its entirety by reference thereto. A copy of the Rights Agreement
can be obtained upon written request to the Rights Agent.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
Certain provisions of the Delaware General Corporation Law may also be
considered to have an anti-takeover effect. Section 203 of the Delaware General
Corporation Law prohibits a Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the time of the transaction in which the person became an interested stockholder
unless (i) prior to the time the person became an interested stockholder, either
the business combination or the transaction which resulted in the person
becoming an interested stockholder is approved by the board of directors of the
corporation, (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owns
at least 85% of the outstanding voting stock, or (iii) on or after such time the
business combination is approved by the board of directors and by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. A "business combination" includes
mergers, asset sales and other transactions resulting in a financial benefit to
the stockholder. An "interested stockholder" is a person who owns 15% or more of
the corporation's outstanding voting stock or who is an affiliate or associate
of the corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the three-year period immediately
prior to the date on which it is sought to be determined whether such person is
an interested stockholder, as well as the affiliates and associates of such
person. The restrictions of Section 203 do not apply if, among other things, a
corporation, by action of its stockholders, adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed by
Section 203, PROVIDED THAT, in addition to any other vote required by law, such
amendment to the certificate of incorporation or by-laws must be approved by the
affirmative vote of a majority of the shares entitled to vote. Moreover, an
amendment so adopted is not effective until twelve months after its adoption and
does not apply to any business combination between the corporation and any
person who became an interested stockholder of such corporation on or prior to
such adoption. The Company's Restated Certificate of Incorporation and By-Laws
do not currently contain any provisions electing not to be governed by Section
203 of the Delaware General Corporation Law.
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In addition, the Restated Certificate of Incorporation and By-Laws of the
Company contain a number of provisions which may be deemed to have the effect of
discouraging or delaying attempts to gain control of the Company, including (i)
authorizing the Board of Directors to fix the size of the Board of Directors
between three and 15 directors; (ii) authorizing directors to fill vacancies on
the Board of Directors that occur between annual meetings; (iii) restricting the
persons who may call a special meeting of stockholders; and (iv) authorizing the
issuance of Preferred Stock. Further, the applicable Indentures and the Credit
Facilities require the Company to make an offer to purchase the Company Senior
Discount Notes and the Company Senior Notes and repay all indebtedness under the
Credit Facilities upon a Change of Control (as defined therein) of the Company.
The existence of the foregoing provisions could result in (i) the Company
being less attractive to a potential acquiror and (ii) the Company's
stockholders receiving less for their shares of Common Stock than otherwise
might be available in the event of a take-over attempt.
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DESCRIPTION OF EQPINES
EACH OF THE EQPINES REPRESENTS BENEFICIAL OWNERSHIP OF ONE-FIVE HUNDREDTH OF
A SHARE OF MANDATORILY CONVERTIBLE PREFERRED STOCK AND ENTITLES THE HOLDER (AS
EVIDENCED BY ITS RECORD HOLDING OF THE DEPOSITARY RECEIPT (COLLECTIVELY, THE
"DEPOSITARY RECEIPTS") EVIDENCING THE EQPINES) TO THAT PROPORTION OF ALL THE
RIGHTS, PREFERENCES AND PRIVILEGES OF THE PROPORTIONATE SHARE OF MANDATORILY
CONVERTIBLE PREFERRED STOCK REPRESENTED THEREBY. SEE "DESCRIPTION OF DEPOSITARY
ARRANGEMENTS". THE SUMMARY OF THOSE RIGHTS, PREFERENCES AND PRIVILEGES AND
OTHERWISE OF THE TERMS OF THE EQPINES CONTAINED HEREIN DOES NOT PURPORT TO BE
COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ALL OF
THE PROVISIONS OF THE FORM OF CERTIFICATE OF DESIGNATION RELATING TO THE SHARES
OF MANDATORILY CONVERTIBLE PREFERRED STOCK (THE "CERTIFICATE OF DESIGNATION"), A
COPY OF WHICH HAS BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART.
DIVIDENDS
Holders of the EqPINES will be entitled to receive, through the Depositary,
when, as and if declared on the Mandatorily Convertible Preferred Stock
represented thereby by the Board of Directors, dividends from the date of
initial issuance of the EqPINES (which issuance will be evidenced by the initial
issuance of the Depositary Receipts) (the "Issue Date") at the rate of $ per
annum or $ per quarter payable quarterly in arrears on January 1, April
1, July 1 and October 1 or, if any such date is not a Business Day (as defined
herein), on the next succeeding Business Day (each such date, a "Regular
Dividend Payment Date"). The first dividend will be for the period from the
Issue Date to, but excluding, July 1, 1998, and will be payable on such date.
Dividends will be payable on the Mandatorily Convertible Preferred Stock to
holders of record of shares of Mandatorily Convertible Preferred Stock as they
appear on the stock register of the Company on record dates not less than 15 nor
more than 60 days preceding the payment date thereof, as will be fixed by the
Board of Directors. The Depositary will be the holder of record of shares of
Mandatorily Convertible Preferred Stock represented by the EqPINES, and
dividends paid by the Company in respect of such shares of Mandatorily
Convertible Preferred Stock will, accordingly, be paid to the Depositary. The
Depositary will distribute dividends on the Mandatorily Convertible Preferred
Stock paid to it by the Company to holders of the EqPINES in accordance with the
procedures described in "Description of Depositary Arrangements--Dividends and
Other Distributions." Dividends will cease to become payable by the Company to
the Depositary for distribution to the holders of the EqPINES when dividends
cease to accrue on the Mandatorily Convertible Preferred Stock represented
thereby on the Mandatory Conversion Date or on the date of the earlier
conversion of the EqPINES at the option of the holder. Dividends distributed
through the Depositary to the holders of the EqPINES for any period less than a
full quarterly dividend period will be paid by the Company to the Depositary on
the Mandatorily Convertible Preferred Stock represented thereby on the basis of
a 360-day year of twelve 30-day months and the actual number of days elapsed in
any period less than one month.
Dividends on the Mandatorily Convertible Preferred Stock will accrue whether
or not there are funds legally available for the payment of such dividends and
whether or not such dividends are declared. Accrued but unpaid dividends on the
Mandatorily Convertible Preferred Stock will cumulate as of the dividend payment
date on which they first become payable, but no interest will accrue on any
accumulated but unpaid dividends.
Dividends may be paid, at the election of the Company, (i) out of funds
legally available therefor, (ii) through the delivery of shares of Common Stock
or (iii) through any combination of the foregoing, provided that a dividend may
be paid in whole or in part by delivery of shares of Common Stock only if paid
on the Regular Dividend Payment Date for such dividend. If the Company elects to
pay any dividend, in whole or in part, by delivery of shares of Common Stock,
the amount of such dividend payment to be distributed per EqPINES in shares of
Common Stock (the "Stock Dividend Amount") will be distributed by the Depositary
to the holders of EqPINES which are holders on the record date for such dividend
payment. The Depositary will deliver to each such holder of EqPINES, for each
EqPINES held, a number of shares of Common Stock determined by dividing the
dollar amount of the Stock Dividend Amount by
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an amount (the "Cash Equivalent Amount") equal to 95% of the average Closing
Price (as defined herein) per share of Common Stock on the ten Trading Days (as
defined herein) ending on the third Trading Day preceding the related record
date (the "Dividend Stock Price") (appropriately adjusted in such manner as the
Board of Directors in good faith deems appropriate to take into account any
stock dividend on the Common Stock, or any subdivision, split, combination or
reclassification of the Common Stock that occurs, or the ex-dividend date for
which occurs, during the period following the first Trading Day in such ten-
Trading Day Period and ending on the last full Trading Day immediately preceding
the payment of the dividend). The Dividend Stock Price for any dividend which
will be paid, in whole or in part, through the delivery of shares of Common
Stock will be determined on the related record date for such dividend payment.
The Depositary will deliver a cash adjustment as described under "--Fractional
Shares" in lieu of delivering a fractional share in distributing a dividend
payable in Common Stock to a holder of EqPINES if delivering shares of Common
Stock on the basis of that holder's aggregate holdings of EqPINES on the related
record date would otherwise result in delivery of a fractional share. Any
portion of a dividend on the Mandatorily Convertible Preferred Stock that is
declared and not paid by the Company through delivery of shares of Common Stock
on the related Regular Dividend Payment Date will be paid in cash.
The market price of the Common Stock may vary from the Dividend Stock Price
between the date of determination of such Dividend Stock Price and the
subsequent delivery of shares of Common Stock, in payment of a dividend, by the
Depositary to the holders of EqPINES entitled thereto. If the market value on
the related dividend payment date of the shares of Common Stock delivered in
payment of a dividend is more than 5% lower than the Dividend Stock Price as of
the related record date and the holder of the EqPINES who receives the dividend
sells such shares of Common Stock at such lower price, the holder's actual
dividend yield for the dividend period in respect of which such dividend was
paid would be lower than the stated dividend yield on the EqPINES. In addition,
in connection with any such sale the holder is likely to incur commissions and
transaction costs.
If the Company elects to make a dividend payment, in whole or in part,
through the delivery of shares of Common Stock, it will give notice of such
determination by publication, on the related record date for such dividend
payment, in a daily newspaper of national circulation.
The EqPINES, as representative of beneficial ownership interests in the
Mandatorily Convertible Preferred Stock, will rank on a parity, both as to
payment of dividends and distribution of assets upon liquidation, with the
Seller Preferred Stock and any other preferred stock issued in the future by the
Company that by its terms ranks PARI PASSU with the Mandatorily Convertible
Preferred Stock.
Whether or not the Mandatory Conversion Date has occurred,
(A) no dividends (other than dividends payable in shares of, or warrants,
rights or options exercisable for or convertible into shares of, any
capital stock, including without limitation, the Common Stock, of the
Company ranking junior to the Mandatorily Convertible Preferred Stock as
to the payment of dividends and the distribution of assets upon
liquidation (collectively "Junior Stock") and cash in lieu of fractional
shares in connection with any such dividend) may be paid or declared in
cash or otherwise, nor may any other distribution be made (other than a
distribution payable in Junior Stock and cash in lieu of fractional
shares in connection with any such distribution), on any Junior Stock;
(B) no shares of any Junior Stock may be purchased, redeemed or otherwise
acquired by the Company or any of its subsidiaries (except in connection
with a reclassification or exchange of any Junior Stock through the
issuance of other Junior Stock (and cash in lieu of fractional shares in
connection therewith) or the purchase, redemption or other acquisition of
any Junior Stock (i) with any Junior Stock (and cash in lieu of
fractional shares in connection therewith) or (ii) in connection with
purchases in an aggregate amount up to $5.0 million from employees of the
Company on termination of their employment for whatever reason) nor may
any funds be set
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aside or made available for any sinking funds for the purchase,
redemption or acquisition of any Junior Stock; and
(C) no dividends or other distributions may be declared or paid on any
Preferred Stock (including the Mandatorily Convertible Preferred Stock)
that does not constitute Junior Stock ("Parity Preferred Stock") (other
than dividends or other distributions payable in Junior Stock and cash in
lieu of fractional shares in connection therewith), and the Company may
not purchase, redeem or otherwise acquire any Parity Preferred Stock
(except with any Junior Stock and cash in lieu of fractional shares in
connection therewith and except with the right, subject to the
requirement set out following clause (iv) of this paragraph and any
similar requirement of any other Preferred Stock, to receive accrued and
unpaid dividends)
unless, in the case of either (A) or (B) or (C):
(i) full dividends on Parity Preferred Stock have been paid, or declared
and set aside for payment, for all dividend periods terminating on or prior
to the date of such dividend, distribution, purchase, redemption,
acquisition, setting aside or making available, as applicable, to the extent
such dividends are cumulative,
(ii) dividends in full for the current quarterly dividend period have
been paid, or declared and set aside for payment, on all Parity Preferred
Stock to the extent such dividends are cumulative,
(iii) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase, retirement,
and sinking funds, if any, for any Parity Preferred Stock, and
(iv) the Company is not in default on any of its obligations to redeem
any Parity Preferred Stock,
or, in the case of (C) only, with respect to the declaration and payment of
dividends on Parity Preferred Stock, any such dividends are declared and paid
pro rata so that the amounts of any dividends declared and paid per share of
Mandatorily Convertible Preferred Stock and each other share of Parity Preferred
Stock will in all cases bear to each other the same ratio that accrued and
unpaid dividends (including any accumulation with respect to unpaid dividends
for prior dividend periods, if such dividends are cumulative) per share of
Mandatorily Convertible Preferred Stock and such other share of Parity Preferred
Stock bear to each other.
MANDATORY CONVERSION OF EQPINES
Unless voluntarily converted into Common Stock prior thereto, on ,
2001 (the "Mandatory Conversion Date"), each EqPINES will automatically convert
into a number of shares of Common Stock at the Conversion Rate (as defined
below) and the holder thereof will have the right to receive cash in an amount
equal to the accrued and unpaid dividends on the Mandatorily Convertible
Preferred Stock represented by such EqPINES to the Mandatory Conversion Date
(other than previously declared dividends deliverable to a holder of record of
the Depositary Receipt evidencing such EqPINES as of a prior date), whether or
not declared (the "Accrued Amount"), out of funds legally available for the
payment of dividends, subject to the requirement set forth following clause (iv)
of the immediately preceding paragraph and any other similar requirement of any
other Preferred Stock.
The "Conversion Rate" is equal to (a) if the Conversion Price (as defined
below) is greater than or equal to $ (the "Threshold Appreciation
Price"), shares of Common Stock per EqPINES, (b) if the Conversion Price is
less than the Threshold Appreciation Price but is greater than $ (the
"Initial Price"), a fraction, equal to the Initial Price divided by the
Conversion Price, of one share of Common Stock per EqPINES and (c) if the
Conversion Price is less than or equal to the Initial Price, one share of Common
Stock per EqPINES. Each of the Conversion Rate, the Threshold Appreciation Price
and the Initial Price are subject to adjustment as provided in "--Conversion
Adjustments." THE VALUE
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OF THE COMMON STOCK TO BE RECEIVED BY HOLDERS OF THE EqPINES UPON MANDATORY
CONVERSION WILL NOT NECESSARILY EQUAL THE LIQUIDATION VALUE OF THE EqPINES. Any
shares of Common Stock received by holders of EqPINES that are not affiliated
with the Company will be free of any transfer restrictions and the holders of
the EqPINES will be responsible for the payment of any and all brokerage costs
upon the subsequent sale of such shares. No fractional shares of Common Stock
will be delivered by the Depositary to the holders of EqPINES upon mandatory
conversion on the Mandatory Conversion Date (see "--Fractional Shares" below).
Notwithstanding the foregoing, (i) in the case of certain dilution events,
the Conversion Rate, the Threshold Appreciation Price and the Initial Price will
be subject to adjustment and (ii) in the case of certain adjustment events, the
consideration received by holders of the EqPINES upon mandatory conversion at
the Mandatory Conversion Date will be shares of Common Stock, other securities
and/or cash. See "--Conversion Adjustments" and "--Adjustment for Certain
Consolidations or Mergers" below.
The "Conversion Price" is the average Closing Price per share of Common
Stock for the 20 Trading Days immediately prior to (but not including) the
Mandatory Conversion Date; provided, however, that, if there are not 20 Trading
Days for the Common Stock occurring later than the 60th calendar day immediately
prior to, but not including, the Mandatory Conversion Date, the "Conversion
Price" will be the market value per share of Common Stock as of the Mandatory
Conversion Date as determined by a nationally recognized investment banking firm
retained for such purpose by the Company. The "Closing Price" of any security on
any date of determination means (i) the closing sale price (or, if no closing
sale price is reported, the last reported sale price) of such security (regular
way) on the NYSE on such date, (ii) if such security is not listed for trading
on the NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which such security is so listed,
(iii) if such security is not so listed on a United States national or regional
securities exchange, as reported by the NASDAQ Stock Market, (iv) if such
security is not so reported, the last quoted bid price for such security in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or (v) if such security is not so quoted, the average of the
mid-point of the last bid and ask prices for such security from each of at least
three nationally recognized investment banking firms selected by the Company for
such purpose. A "Trading Day" is defined as a Business Day on which the
security, the Closing Price of which is being determined, (A) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security. "Business Day" means any day that is not a Saturday, a Sunday or a day
on which the NYSE, banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to close.
For illustrative purposes only, the following chart shows the number of
shares of Common Stock that a holder of EqPINES would receive for each EqPINES
at various Conversion Prices. The table assumes that there will be no
adjustments to the Conversion Rate described under "--Conversion Adjustments"
and "--Adjustment for Certain Consolidations or Mergers" below. There can be no
assurance that the Conversion Price will be within the range set forth below.
Given the Initial Price of $ per EqPINES and the Threshold Appreciation
Price of $ per EqPINES, a holder of EqPINES
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would receive, through the Depositary, upon mandatory conversion at the
Mandatory Conversion Date the following number of shares of Common Stock:
<TABLE>
<CAPTION>
CONVERSION PRICE NUMBER OF SHARES
OF COMMON STOCK OF COMMON STOCK (1)
- --------------------------- ---------------------------------
<S> <C>
$
</TABLE>
- ------------------------
(1) In lieu of any fractional share otherwise deliverable in respect of the
aggregate number of EqPINES of any holder that are converted upon mandatory
conversion, such holder will be entitled to receive an amount in cash equal
to the same fraction of the Closing Price of the Common Stock as of the
fifth Trading Day immediately preceding the Mandatory Conversion Date.
As the foregoing chart illustrates, if upon mandatory conversion at the
Mandatory Conversion Date the Conversion Price is greater than or equal to
$ , the Company will be obligated to deliver, through the Depositary,
shares of Common Stock per EqPINES, resulting in the holders of the EqPINES
receiving only % of the appreciation in market value of the Common Stock above
$ . If upon mandatory conversion at the Mandatory Conversion Date, the
Conversion Price is greater than $ and less than $ , the Company
will be obligated to deliver, through the Depositary, only a fraction of a share
of Common Stock having a market value equal to $ per EqPINES, resulting
in the holders of the EqPINES receiving none of the appreciation in the market
value of the Common Stock from $ to $ . If upon mandatory
conversion at the Mandatory Conversion Date, the Conversion Price is less than
or equal to $ , the Company will be obligated to deliver, through the
Depositary, one share of Common Stock per EqPINES, regardless of the market
price of such shares, resulting in the holders of the EqPINES realizing the
entire loss on the decline in market value of the Common Stock.
CONVERSION AT THE OPTION OF THE HOLDER
The EqPINES are convertible, in whole but not in part, at the option of the
holders thereof, at any time prior to the Mandatory Conversion Date, into shares
of Common Stock at a rate of shares of Common Stock for each EqPINES (the
"Optional Conversion Rate"), equivalent, for each EqPINES, to a conversion price
of $ per share of Common Stock (the "Optional Conversion Price"),
subject to adjustment as described under "--Conversion Adjustments" and
"--Adjustment for Certain Consolidations or Mergers" below. No fractional shares
of Common Stock will be delivered by the Depositary to the holders of EqPINES
upon their optional conversion (see "--Fractional Shares" below).
Conversions of EqPINES at the option of the holders may be effected in
accordance with the procedures described in "Description of Depositary
Arrangements--Conversion Provisions--Conversion at the Option of the Holder."
Holders of EqPINES at the close of business on a record date for any payment
of declared dividends on the Mandatorily Convertible Preferred Stock will be
entitled to receive the dividends so declared on the corresponding dividend
payment date notwithstanding the optional conversion of the EqPINES following
such record date and prior to such dividend payment date. However, EqPINES (as
evidenced by Depositary Receipts) surrendered for optional conversion after the
close of business on a record date for any payment of declared dividends and
before the opening of business on the next succeeding dividend payment date must
be accompanied by payment in cash of an amount equal to the dividend payable on
such date. Except as provided above, upon any optional conversion of EqPINES,
the Company will make no payment of or allowance for unpaid dividends, whether
or not in arrears, through the Depositary on such EqPINES or previously declared
dividends or distributions on the shares of Common Stock issued upon such
conversion.
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CONVERSION ADJUSTMENTS
The Conversion Rate and the Optional Conversion Rate are each subject to
adjustment as appropriate in certain circumstances, including if the Company
shall (a) pay a stock dividend or make a distribution with respect to its Common
Stock in shares of Common Stock, (b) subdivide or split its outstanding Common
Stock, (c) combine its outstanding Common Stock into a smaller number of shares,
(d) issue by reclassification of its shares of Common Stock any shares of Common
Stock, (e) issue rights or warrants to all holders of its Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price (as defined below) of the Common Stock on the
record date for the determination of stockholders entitled to receive such
rights or warrants, or (f) pay a dividend or distribute to all holders of its
Common Stock evidences of its indebtedness, cash or other assets (including
capital stock of the Company but excluding any cash dividends or distributions,
other than Extraordinary Cash Distributions (as defined below), and dividends
referred to in clause (a) above) or issue rights or warrants (other than those
referred to in clause (e) above) to all holders of its Common Stock entitling
them to subscribe for or purchase any of its securities. If an adjustment is
made to the Conversion Rate pursuant to any of clauses (a) through (f) above, an
adjustment will also be made to the Threshold Appreciation Price and Initial
Price as such terms are used to determine which of clauses (a), (b) or (c) of
the definition will apply at the Mandatory Conversion Date and for purposes of
calculating the fraction in clause (b) of such definition. The required
adjustments to the Threshold Appreciation Price and the Initial Price will be
made at the Mandatory Conversion Date by multiplying each by the inverse of the
fractional adjustment made to the Conversion Rate in such circumstances pursuant
to the Certificate of Designation. In addition, the Company will be entitled
(but will not be required) to make upward adjustments in the Conversion Rate and
the Optional Conversion Rate as the Company, in its sole discretion, shall
determine to be advisable, in order that any stock dividend, subdivision or
split of shares, distribution of rights to purchase stock or securities, or
distribution of securities convertible into or exchangeable for stock (or any
transaction which could be treated as any of the foregoing transactions pursuant
to Section 305 of the Internal Revenue Code of 1986, as amended (the "Code"))
hereafter made by the Company to its stockholders will not be taxable in whole
or in part. "Current Market Price" means, as of any date of determination, the
average Closing Price per share of Common Stock for the 20 Trading Days
immediately prior to the date of determination; provided, however, that if there
are not 20 Trading Days for the Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date, the Current
Market Price will be determined as the market value per share of Common Stock as
of such date as determined by a nationally recognized investment banking firm
retained for such purpose by the Company. "Extraordinary Cash Distributions"
means, with respect to any cash dividend or distribution paid on any date, the
amount, if any, by which all cash dividends and cash distributions on the Common
Stock paid during the consecutive 12-month period ending on and including such
date (other than cash dividends and cash distributions for which an adjustment
to the Conversion Rate or the Optional Conversion Rate was previously made)
exceeds, on a per share of Common Stock basis, 10% of the average of the daily
Closing Price of the Common Stock over such consecutive 12-month period. All
adjustments to the Conversion Rate and the Optional Conversion Rate will be
calculated to the nearest 1/100th of a share of Common Stock. No adjustment in
the Conversion Rate or the Optional Conversion Rate will be required unless such
adjustment would require an increase or decrease of at least 1% therein;
PROVIDED, HOWEVER, that any adjustments which, by reason of the foregoing, are
not required to be made will be carried forward and taken into account in any
subsequent adjustment. All adjustments will be made successively.
Whenever the Conversion Rate, the Threshold Appreciation Price, the Initial
Price and the Optional Conversion Rate are adjusted as provided in the preceding
paragraph, the Company will file with the Depositary and the transfer agent for
the shares of Mandatorily Convertible Preferred Stock a certificate with respect
to such adjustment, make a prompt public announcement thereof and mail a notice
to holders of the EqPINES.
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No adjustment will be made to the Conversion Rate, the Threshold
Appreciation Price, the Initial Price or the Optional Conversion Rate in the
event that the Company issues Common Stock for cash, including at prices below
its then-existing market price, the Conversion Price or the Optional Conversion
Price. The Conversion Rate, the Threshold Appreciation Price, the Initial Price
and the Optional Conversion Rate will also not be adjusted for other events,
such as issuances of Common Stock in connection with acquisitions, that may
adversely affect the market price of the Common Stock. See "Risk
Factors--Dilution of Common Stock."
ADJUSTMENT FOR CERTAIN CONSOLIDATIONS OR MERGERS
In case of any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which each share of Common Stock outstanding
immediately prior to the merger or consolidation remains unchanged in all
material respects), or in case of any sale or transfer to another corporation of
the property of the Company as an entirety or substantially as an entirety, or
in case of any statutory exchange of securities with another corporation (other
than in connection with a merger or acquisition), each EqPINES will, after
consummation of such transaction, be subject to (i) conversion at the option of
the holder into the kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock (including fractional shares for this purpose) into which
such EqPINES might have been converted immediately prior to consummation of such
transaction and (ii) conversion on the Mandatory Conversion Date into the kind
and amount of securities, cash or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock (including
fractional shares for this purpose) into which such EqPINES would have been
converted if the conversion on the Mandatory Conversion Date had occurred
immediately prior to the date of consummation of such transaction, plus the
right, subject to the rights of other Preferred Stock, to receive, through the
Depositary, cash in an amount equal to all accrued and unpaid dividends on the
Mandatorily Convertible Preferred Stock represented by such EqPINES (other than
previously declared dividends deliverable to a holder of record of the
Depositary Receipt evidencing such EqPINES as of a prior record date); and
assuming in each case that such holder of shares of Common Stock failed to
exercise rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon consummation of such transaction
(provided that, if the kind or amount of securities, cash or other property
receivable upon consummation of such transaction is not the same for each
non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share will be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into or
for which the EqPINES will be convertible after consummation of such transaction
will be subject to adjustment as described above under the caption "--Conversion
Adjustments" following the date of consummation of such transaction. The Company
may not become a party to any such transaction unless the terms thereof are
consistent with the foregoing.
FRACTIONAL SHARES
No fractional shares of Common Stock will be delivered by the Depositary
upon conversion of the EqPINES. In lieu of any fractional share otherwise
deliverable in respect of the aggregate number of EqPINES of any holder that are
converted upon mandatory conversion or any voluntary conversion, such holder
will be entitled to receive an amount in cash equal to the same fraction of the
Closing Price of the Common Stock (A) as of the fifth Trading Day immediately
preceding the Mandatory Conversion Date, in the case of mandatory conversion, or
(B) as of the second Trading Day immediately preceding the effective date of
conversion, in the case of an optional conversion by a holder. If more than one
EqPINES is surrendered for conversion at one time by or for the same holder, the
number of shares of Common Stock issuable upon conversion thereof will be
computed on the basis of the aggregate number of EqPINES so converted.
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In addition, no fractional shares of Common Stock will be delivered by the
Depositary to holders of the EqPINES in connection with the Depositary's
distribution of dividends on the Mandatorily Convertible Preferred Stock paid by
the Company to it in shares of Common Stock. In lieu of any fractional share
otherwise so deliverable, such holders will be entitled to receive an amount in
cash equal to the same fraction of the Closing Price of the Common Stock
determined as of the fifth Trading Day immediately preceding the dividend
payment date. On the Mandatory Conversion Date, the fractional share of Common
Stock that any holder of EqPINES would otherwise be entitled to receive shall be
determined by adding all the fractional shares such holder would otherwise be
entitled to receive on the mandatory conversion of all EqPINES held by such
holder and on the payment of the regular quarterly dividend on all EqPINES held
by such holder. On that date, the Company may, at its option, deliver any
resulting whole number of shares in shares of Common Stock and the resulting
fraction in cash.
In the event that (i) mandatory conversion of the EqPINES, (ii) voluntary
conversions of EqPINES, (iii) the Depositary's delivery of shares of Common
Stock as dividends to the holders of EqPINES, (iv) the combination of (i) and
(iii) pursuant to the preceding sentence or (v) any combination of the foregoing
result in more than one holder of EqPINES being entitled to cash in lieu of a
fractional share on the related date of conversion or dividend payment, as
applicable, the Company will deliver to the Depositary for distribution to the
holders of the EqPINES cash in an amount equal to the total amount of cash to
which all holders of EqPINES are entitled in lieu of fractional shares on such
date.
If payment in cash in lieu of fractional shares of Common Stock in
accordance with the preceding three paragraphs would result in the Company's
failure to be in compliance with any debt instrument to which it is a party, the
Company will be entitled to deliver a whole share of Common Stock in lieu of
cash to holders of EqPINES entitled to fractional shares of Common Stock
(beginning with the holders entitled to the largest fractional shares) until
delivery of cash in lieu of fractional shares of Common Stock to the remaining
holders of EqPINES would no longer result in the Company's failure to be in
compliance with such debt instrument.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, and subject to the rights of holders of any other
series of Preferred Stock, the holders of EqPINES will be entitled to receive an
amount equal to the per share price to public of the EqPINES shown on the cover
page of this Prospectus plus accrued and unpaid dividends on the Mandatorily
Convertible Preferred Stock represented thereby, out of the assets of the
Company available for distribution to stockholders, before any distribution of
assets is made to holders of Junior Stock upon liquidation, dissolution or
winding up.
If, upon any voluntary or involuntary liquidation, dissolution or winding up
of the Company, the assets of the Company are insufficient to permit the payment
of the full preferential amounts payable with respect to shares of Mandatorily
Convertible Preferred Stock and all other series of Parity Preferred Stock, the
holders of shares of Mandatorily Convertible Preferred Stock and of all other
series of Parity Preferred Stock will share ratably in any distribution of
assets of the Company in proportion to the full respective preferential amounts
to which they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of Mandatorily
Convertible Preferred Stock will not be entitled to any further participation in
any distribution of assets by the Company. A consolidation or merger of the
Company with one or more corporations or a sale or transfer of substantially all
of the assets of the Company shall not be deemed to be a liquidation,
dissolution or winding up of the Company.
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VOTING RIGHTS
The holders of shares of Mandatorily Convertible Preferred Stock (including
shares of Mandatorily Convertible Preferred Stock represented by EqPINES) will
not be entitled to any voting rights, except as required by applicable state law
and as described below.
In the event that dividends on the Mandatorily Convertible Preferred Stock
(including shares of Mandatorily Convertible Preferred Stock represented by
EqPINES) or any other series of Preferred Stock are in arrears and unpaid for
six quarterly dividend periods, or if any other series of Preferred Stock shall
be entitled for any other reason to exercise voting rights, separate from the
Common Stock, to elect any Directors of the Company ("Preferred Stock
Directors"), the holders of the shares of Mandatorily Convertible Preferred
Stock (voting separately as a class with holders of all other series of
Preferred Stock which does not have a separate class vote and upon which like
voting rights have been conferred and are exercisable), with each share of
Mandatorily Convertible Preferred Stock entitled to 500 votes (equivalent to one
vote for each EqPINES) on this and other matters in which Preferred Stock votes
as a group, will be entitled to vote for the election of two Preferred Stock
Directors, such Directors to be in addition to the number of Directors
constituting the Board of Directors immediately prior to the accrual of such
right. Such right, when vested, will continue until all dividends in arrears on
the Mandatorily Convertible Preferred Stock and such series of Preferred Stock
will have been paid in full and the right of any other series of Preferred Stock
to exercise voting rights, separate from the Common Stock, to elect any
Preferred Stock Directors will terminate or have terminated, and, when so paid
and such termination occurs or has occurred, such voting right will cease. Upon
any termination of the aforesaid voting right, subject to the requirements of
the Delaware corporation law and the Restated Certificate of Incorporation of
the Company, such Preferred Stock Directors will cease to be Directors of the
Company and will resign.
The Company will not, without the approval of the holders of at least 66 2/3
percent of all the shares of Mandatorily Convertible Preferred Stock then
outstanding: (i) amend, alter or repeal any of the provisions of the Restated
Certificate of Incorporation or the By-laws of the Company so as to affect
adversely the powers, preferences or rights of the holders of the shares of
Mandatorily Convertible Preferred Stock then outstanding or reduce the minimum
time required for any notice to which only the holders of the shares of
Mandatorily Convertible Preferred Stock then outstanding may be entitled (an
amendment of the Restated Certificate of Incorporation to authorize or create,
or increase the authorized amount of or to issue, Junior Stock, preferred stock
ranking on parity with the shares of Mandatorily Convertible Preferred Stock or
any stock of any class ranking on parity with the shares of Mandatorily
Convertible Preferred Stock will be deemed not to affect adversely the powers,
preferences or rights of the holders of the shares of Mandatorily Convertible
Preferred Stock); (ii) create any series of preferred stock ranking prior to the
shares of Mandatorily Convertible Preferred Stock as to payment of dividends or
the distribution of assets upon liquidation; or (iii) authorize or create, or
increase the authorized amount of, any capital stock, or any security
convertible into capital stock, of any class ranking prior to the shares of
Mandatorily Convertible Preferred Stock as to payment of dividends or the
distribution of assets upon liquidation.
TRANSFER AGENT AND REGISTRAR
The Bank of New York will act as transfer agent and registrar for, and
paying agent for the payment of dividends on, the EqPINES and shares of
Mandatorily Convertible Preferred Stock.
LISTING
Application will be made to list the EqPINES and the Common Stock issuable
on conversion of the Mandatorily Convertible Preferred Stock on the NYSE. The
Mandatorily Convertible Preferred Stock will not be so listed and the Company
does not expect that there will be any trading market for the Mandatorily
Convertible Preferred Stock except as represented by the EqPINES.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion regarding the material United States
Federal income tax consequences expected to apply to a holder with respect to
the purchase, ownership and disposition of the shares of EqPINES representing
interests in Mandatorily Convertible Preferred Stock. This discussion is based
on the provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
the Treasury regulations promulgated thereunder and the administrative and
judicial interpretations thereof, all as in effect on the date of this
Prospectus. This discussion is intended for informational purposes only, and
does not address aspects of taxation, other than Federal income taxation, or all
tax consequences that may be relevant in the particular circumstances of each
holder (some of which, such as dealers in securities, banks, insurance
companies, tax-exempt organizations and foreign persons, may be subject to
special rules). There can be no assurance that future changes in applicable law
or administrative and judicial interpretations thereof, any of which could have
a retroactive effect, will not adversely affect the tax consequences discussed
herein or that there will not be differences of opinion as to the interpretation
of applicable law. Stock having terms closely resembling those of the shares of
Mandatorily Convertible Preferred Stock has not been the subject of any
regulation, ruling or judicial decision currently in effect, and there can be no
assurance that the Service will take the positions set forth below. The Company
has not and will not seek a ruling from the Service as to any tax matters
relating to the shares of Mandatorily Convertible Preferred Stock. PERSONS
CONSIDERING THE PURCHASE OF SHARES OF MANDATORILY CONVERTIBLE PREFERRED STOCK
SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION. THE FOLLOWING DISCUSSION RELATES ONLY TO SHARES OF MANDATORILY
CONVERTIBLE PREFERRED STOCK OR SHARES OF COMMON STOCK RECEIVED UPON CONVERSION
THEREOF OR IN EXCHANGE THEREFOR THAT ARE HELD AS CAPITAL ASSETS WITHIN THE
MEANING OF SECTION 1221 OF THE CODE. THIS SUMMARY PERTAINS ONLY TO A HOLDER THAT
IS (I) A CITIZEN OR RESIDENT OF THE U.S. FOR U.S. FEDERAL INCOME TAX PURPOSES,
(II) AN ESTATE SUBJECT TO U.S. FEDERAL INCOME TAXATION WITHOUT REGARD TO THE
SOURCE OF ITS INCOME, (III) A CORPORATION CREATED OR ORGANIZED IN OR UNDER THE
LAWS OF THE U.S. OR ANY POLITICAL SUBDIVISION THEREOF OR (IV) A TRUST WHICH IS
SUBJECT TO THE SUPERVISION OF A COURT WITHIN THE U.S. AND THE CONTROL OF A U.S.
FIDUCIARY.
EQPINES
Holders of the EqPINES will be treated for United States federal income tax
purposes as owners of the shares of Mandatorily Convertible Preferred Stock
represented by the EqPINES. Accordingly, the tax treatment of the owners of the
EqPINES will be the same as the tax treatment of the owners of the Mandatorily
Convertible Preferred Stock as described below.
Thus, upon the withdrawal of shares of Mandatorily Convertible Preferred
Stock in exchange for Depositary Receipts evidencing the ownership of EqPINES as
provided in the Depositary Agreement, (i) no gain or loss will be recognized by
an exchanging holder, (ii) the tax basis of each share of Mandatorily
Convertible Preferred Stock to an exchanging holder will be the same as the
aggregate tax basis of the EqPINES exchanged therefor, and (iii) the holding
period for shares of Mandatorily Convertible Preferred Stock in the hands of an
exchanging holder will include the period during which such holder held the
EqPINES exchanged therefor.
References in this section "Federal Income Tax Consequences," to holders of
the Mandatorily Convertible Preferred Stock will mean both holders of shares of
Mandatorily Convertible Preferred Stock and holders of EqPINES representing
shares of Mandatorily Convertible Preferred Stock. References to shares of
Mandatorily Convertible Preferred Stock will mean both shares of Mandatorily
Convertible Preferred Stock and EqPINES.
DIVIDENDS. Dividends paid on the shares of Mandatorily Convertible
Preferred Stock out of the Company's current or accumulated earnings and profits
will be taxable as ordinary income and will generally will qualify for the 70
percent intercorporate dividends-received deduction provided that the
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minimum holding period (generally at least 46 days) and that other applicable
requirements are satisfied, and subject further to the discussion of Code
Section 1059(f), below. Under certain circumstances, a corporate holder may be
subject to the alternative minimum tax with respect to a portion of the amount
of its dividends-received deduction. To the extent the Company does not have
sufficient current or accumulated earnings and profits in the years that the
Mandatorily Convertible Preferred Stock is outstanding, distributions made with
respect to the Mandatorily Convertible Preferred Stock for any such year will be
treated as a return of capital rather than a taxable dividend. Such
distributions will reduce the holder's tax basis in its Mandatorily Convertible
Preferred Stock and, to the extent distributions exceed such tax basis they will
be treated as capital gain. Such distributions will not be eligible for the
dividends-received deduction. It is uncertain whether the Company currently has,
and whether it will have prior to the Mandatory Conversion Date, any current or
accumulated earnings and profits.
Under certain circumstances, a corporation that receives an "extraordinary
dividend," as defined in Section 1059(c) of the Code, is required to reduce its
stock basis by the non-taxed portion of such dividend. Generally, quarterly
dividends that are not in arrears and that are paid to an original holder of the
shares of Mandatorily Convertible Preferred Stock will not constitute
extraordinary dividends under Section 1059(c). However, under Section 1059(f),
any dividend with respect to "disqualified preferred stock" is treated as an
"extraordinary dividend." For this purpose, "disqualified preferred stock"
includes stock which is preferred as to dividends if the issue price of such
stock exceeds its liquidation rights or redemption price. However, although the
issue is not free from doubt, it is believed that the Mandatorily Convertible
Preferred Stock is not "disqualified preferred stock."
DISTRIBUTION OF COMMON STOCK IN LIEU OF CASH DIVIDEND. If the Company pays
a distribution on the Mandatorily Convertible Preferred Stock in the form of
Common Stock, such distribution will be taxable in the same manner as
distributions described above under "Dividends." The amount of such distribution
will equal the fair market value on the distribution date of the Common Stock
distributed to a holder on that date. A holder's tax basis in Common Stock so
received will equal the fair market value of such Common Stock on the
distribution date, and such holder's holding period for such Common Stock will
commence on the day following the distribution date.
REDEMPTION PREMIUM. Under certain circumstances, Section 305(c) of the Code
requires that any excess of the redemption price of redeemable preferred stock
over its issue price be includable in income, prior to receipt, as a
constructive dividend. However, although the issue is not free from doubt it is
believed that Section 305(c) does not apply to stock with terms such as those of
the shares of Mandatorily Convertible Preferred Stock.
MANDATORY OR OPTIONAL CONVERSION INTO COMMON STOCK. Gain or loss generally
will not be recognized by a holder upon the conversion of shares of Mandatorily
Convertible Preferred Stock into shares of Common Stock if no cash is received.
Income may be recognized, however, to the extent Common Stock or cash is
received in payment of accrued and unpaid dividends upon a conversion. Such
income would probably be characterized as dividend income although some
uncertainty exists as to the appropriate characterization of payments in
satisfaction of undeclared accrued and unpaid dividends. In addition, a holder
who receives cash in lieu of a fractional share will be treated as having
received the fractional share and exchanged it for cash in a transaction subject
to Section 302 of the Code and related provisions. This exchange generally
should result in capital gain or loss measured by the difference between the
cash received for the fractional share interest and the holder's basis in the
fractional share.
Generally, a holder's tax basis in the Common Stock received upon the
conversion of the shares of Mandatorily Convertible Preferred Stock, other than
shares of Common Stock taxed upon receipt, will equal the adjusted tax basis of
the converted shares of Mandatorily Convertible Preferred Stock (exclusive of
any basis allocable to a fractional share interest) and the holding period of
such Common Stock will include the holding period of the converted shares of
Mandatorily Convertible Preferred Stock.
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ADJUSTMENT OF CONVERSION RATE. Certain adjustments (or failure to make
adjustments) to the Conversion Rate and the Optional Conversion Rate to reflect
the Company's issuance of certain rights, warrants, evidences of indebtedness,
securities or other assets to holders of Common Stock may result in constructive
distributions taxable as dividends to the holders of the shares of Mandatorily
Convertible Preferred Stock which may constitute (and cause other dividends to
constitute) "extraordinary dividends" to corporate holders as described above.
CONVERSION OF MANDATORILY CONVERTIBLE PREFERRED STOCK AFTER DIVIDEND RECORD
DATE. If a holder of shares of Mandatorily Convertible Preferred Stock
exercises the holder's right to convert the shares of Mandatorily Convertible
Preferred Stock into shares of Common Stock after a dividend record date but
before payment of the dividend, then, upon conversion the holder generally will
be required to pay the Company an amount equal to the portion of such dividend
attributable to the current quarterly dividend period, which amount would
increase the tax basis of the Common Stock received. The holder would recognize
the dividend payment as income in accordance with the rules described under
"Dividends" above.
DISPOSITION OF MANDATORY CONVERTIBLE PREFERRED STOCK AND COMMON STOCK. A
holder that disposes of or is deemed to dispose of Mandatory Convertible
Preferred Stock or Common Stock that was received either upon the conversion of
such preferred stock or as the dividend distribution generally will realize gain
(or loss) to the extent that the proceeds of such disposition (not including any
proceeds attributable to any declared accrued but unpaid dividends which will be
taxable as such to holders of record who have not previously included such
dividends in income), net of any reasonable costs of disposition, exceed (or are
exceeded by) the adjusted tax basis of the Mandatory Convertible Preferred Stock
or Common Stock that is disposed of by such holder. Such gain or loss will be
capital gain or loss, and, for individual holders that held the Mandatory
Convertible Preferred Stock and Common Stock for more than 18 months, may be
subject to a preferential tax rate of 20%.
BACKUP WITHHOLDING. Certain non-corporate holders may be subject to backup
withholding at a current rate of 31 percent on dividends. Generally, backup
withholding applies only if a taxpayer fails to furnish or certify a proper
taxpayer identification number or if the taxpayer is notified by the Service
that the taxpayer has failed to report payments of interest and dividends
properly. Holders should consult their tax advisors regarding their
qualification for exemption from backup withholding and the procedure for
obtaining any applicable exemption.
MISCELLANEOUS
Upon issuance, the shares of Mandatorily Convertible Preferred Stock will be
fully paid and nonassessable. Holders of EqPINES and Mandatorily Convertible
Preferred Stock will have no preemptive rights. The Company shall at all times
reserve and keep available out of its authorized and unissued Common Stock,
solely for issuance upon the conversion of shares of Mandatorily Convertible
Preferred Stock, such number of shares of Common Stock as will from time to time
be issuable upon the conversion of all the shares of Mandatorily Convertible
Preferred Stock then outstanding. Shares of Mandatorily Convertible Preferred
Stock converted into Common Stock of the Company or otherwise acquired by the
Company will resume the status of authorized and unissued shares of preferred
stock, undesignated as to series, and will be available for subsequent issuance.
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DESCRIPTION OF DEPOSITARY ARRANGEMENTS
THE FOLLOWING SUMMARY OF THE TERMS AND PROVISIONS OF THE DEPOSITARY
ARRANGEMENTS FOR THE EQPINES DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO,
AND QUALIFIED IN ITS ENTIRETY BY, THE DEPOSIT AGREEMENT, AS DEFINED BELOW (WHICH
CONTAINS THE FORM OF THE DEPOSITARY RECEIPT, AS DEFINED BELOW).
Each EqPINES represents one-five hundredth of a share of Mandatorily
Convertible Preferred Stock deposited under a Deposit Agreement dated as of
April 1, 1998 (the "Deposit Agreement"), among the Company, The Bank of New
York, as depositary (the "Depositary"), and the holders from time to time of
depositary receipts executed and delivered thereunder (the "Depositary
Receipts"). Subject to the terms of the Deposit Agreement, each owner of a
EqPINES is entitled, proportionately, to all the rights, preferences and
privileges of the shares of Mandatorily Convertible Preferred Stock represented
thereby (including dividend, conversion, voting and liquidation rights), and,
subject to all of the limitations of the shares of Mandatorily Convertible
Preferred Stock represented thereby, contained in the Certificate of Designation
and summarized under "Description of EqPINES." The corporate trust office of The
Bank of New York is located at 101 Barclay Street, New York, NY 10286.
The EqPINES are evidenced by Depositary Receipts. Copies of the Deposit
Agreement, the form of which has been filed with the Registration Statement of
which this Prospectus is a part, are available for inspection at the office of
the Depositary listed above.
EXECUTION AND DELIVERY OF DEPOSITARY RECEIPTS
The Company will deposit the shares of Mandatorily Convertible Preferred
Stock represented by the EqPINES being offered hereby with the Depositary, in
exchange for Depositary Receipts, which the Company will deliver to the
Underwriters (as defined herein) upon consummation of the EqPINES Offering. The
Deposit Agreement does not provide for the deposit of shares of Mandatorily
Convertible Preferred Stock and the withdrawal of Depositary Receipts by any
party other than the Company.
WITHDRAWAL OF MANDATORILY CONVERTIBLE PREFERRED STOCK
Upon surrender of Depositary Receipts at the corporate trust office of the
Depositary, the owner of the EqPINES evidenced thereby is entitled to delivery
at such office of certificates evidencing the number of shares of Mandatorily
Convertible Preferred Stock (but only in whole shares of Mandatorily Convertible
Preferred Stock) represented by such EqPINES. If the Depositary Receipts
delivered by the holder evidence a number of EqPINES in excess of the number of
EqPINES representing the number of shares of Mandatorily Convertible Preferred
Stock to be withdrawn, the Depositary will at the same time deliver to such
holder a new Depositary Receipt or Receipts evidencing such excess number of
EqPINES. The Company does not expect that there will be any public trading
market for the shares of Mandatorily Convertible Preferred Stock except as
represented by the EqPINES. See "Risk Factors--Absence of a Previous Market for
the EqPINES."
CONVERSION PROVISIONS
MANDATORY CONVERSION. As described under "Description of EqPINES--Mandatory
Conversion of EqPINES," the EqPINES are subject to mandatory conversion into
shares of Common Stock on the Mandatory Conversion Date.
CONVERSION AT THE OPTION OF THE HOLDER. As described under "Description of
EqPINES-- Conversion at the Option of the Holder," the EqPINES may be converted,
in whole but not in part, into shares of Common Stock at the option of the
holder at any time prior to the Mandatory Conversion Date. To effect such an
optional conversion, a holder of EqPINES must deliver Depositary Receipts
evidencing the EqPINES to be converted, together with a written notice of
conversion and a proper assignment of the Depositary Receipts to the Company or
in blank (and, if such conversion is to occur after the close of
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business on a record date for any payment of declared dividends and before the
opening of business on the next succeeding dividend payment date, payment in
cash of an amount equal to the dividend payable on such date), to the Depositary
or its agent. A holder who delivers Depositary Receipts evidencing the EqPINES
to the Depositary on a record date for any payment of declared dividends for
conversion on the succeding dividend payment date will not be required to
include payment of the dividend payable on such date upon deliver of such
Depositary Receipts. Each optional conversion of EqPINES shall be deemed to have
been effected immediately prior to the close of business on the date on which
the foregoing requirements shall have been satisfied. The conversion shall be at
the Optional Conversion Rate in effect at such time and on such date.
If only a portion of the EqPINES evidenced by a Depositary Receipt is to be
converted, a new Depositary Receipt or Receipts will be issued for any EqPINES
not converted. No fractional shares of Common Stock will be issued to any holder
upon mandatory or optional conversion of its EqPINES. See "--Dividends and Other
Distributions" below.
After the date fixed for conversion, the EqPINES so converted will no longer
be deemed to be outstanding and all rights of the holders of such EqPINES will
cease, except the right to receive the Common Stock and amounts payable on such
conversion and any money or other property to which the holders of such EqPINES
are entitled upon such conversion, upon surrender to the Depositary of the
Depositary Receipt or Receipts evidencing such EqPINES.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions (other than cash dividends or cash distributions paid by the
Company to the Depositary in lieu of fractional shares) and all dividends or
other distributions paid by the Company in shares of Common Stock (other than
payments of whole shares of Common Stock in lieu of fractional shares pursuant
to the final paragraph under "Description of EqPINES--Fractional Shares") in
respect of the Mandatorily Convertible Preferred Stock to the record holders of
Depositary Receipts in proportion, insofar as practicable, to the number of
EqPINES owned by such holders. The Depositary will distribute whole shares of
Common Stock paid by the Company to it on the Mandatory Conversion Date in lieu
of cash payments for fractional shares otherwise payable by the Company on the
Mandatorily Convertible Preferred Stock to holders of EqPINES entitled to such
fractional shares, beginning with the holders entitled to the largest fractional
shares.
The Depositary will distribute cash dividends or other cash distributions
received by it from the Company in lieu of fractional shares to a record holder
of Depositary Receipts on the basis of such holder's aggregate record holdings
of Depositary Receipts (i) on the related record date for a dividend payment or
(ii) which are to be converted into Common Stock on a conversion date, as
applicable, if delivering shares of Common Stock on that basis in payment of the
dividend or upon conversion would otherwise result in delivery of a fractional
share. The Depositary will, in any such event, deliver an amount in cash to such
record holder as set forth in "Description of EqPINES--Fractional Shares." On
the Mandatory Conversion Date, the fractional share of Common Stock that any
holder of EqPINES would otherwise be entitled to receive shall be determined by
adding all the fractional shares such holder would otherwise be entitled to
receive on the mandatory conversion of all EqPINES held by such holder and on
the payment of the regular quarterly dividend on all EqPINES held by such
holder. If the Company elects to deliver resulting whole number of shares in
shares of Common Stock and the resulting fraction in cash, the Depositary will
distribute shares and cash received by it to the applicable holders of EqPINES.
In the event that (i) mandatory conversion of the EqPINES, (ii) voluntary
conversions of EqPINES, (iii) the Depositary's delivery of shares of Common
Stock as dividends to the holders of EqPINES, (iv) the combination of (i) and
(iii) pursuant to the preceding sentence or (v) any combination of the foregoing
result in any holder of EqPINES being entitled to cash in lieu of a fractional
share on the related date of conversion or dividend payment, as applicable, the
Company will deliver to the Depositary for distribution
116
<PAGE>
to such holders cash in an amount equal to the total amount of cash to which all
such holders are entitled in lieu of fractional shares on such date.
In the event of a distribution other than cash or Common Stock in respect of
the shares of Mandatorily Convertible Preferred Stock, the Depositary will
distribute property received by it to the record holders of Depositary Receipts
in proportion, insofar as practicable, to the number of EqPINES owned by such
holders, unless the Depositary determines that it is not feasible to make such
distribution, in which case the Depositary may, with the approval of the
Company, adopt such method as it deems equitable and practicable for the purpose
of effecting such distribution, including sale (at public or private sale) of
such property and distribution of the net proceeds from such sale to such
holders.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Depositary on account of
taxes.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution or any dividend to
be paid by the Company in shares of Common Stock shall become payable, any
distribution other than cash shall be made, or any rights, preferences or
privileges shall be offered with respect to the shares of Mandatorily
Convertible Preferred Stock, or (ii) the Depositary shall receive notice of any
meeting at which holders of shares of Mandatorily Convertible Preferred Stock
are entitled to vote or of which holders of shares of Mandatorily Convertible
Preferred Stock are entitled to notice, the Depositary shall in each such
instance fix a record date (which shall be the same date as the record date for
the shares of Mandatorily Convertible Preferred Stock) for the determination of
the holders of Depositary Receipts (x) who shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or the net proceeds of
the sale thereof or (y) who shall be entitled to give instructions for the
exercise of voting rights at any such meeting or to receive notice of such
meeting.
VOTING OF MANDATORILY CONVERTIBLE PREFERRED STOCK
Upon receipt of notice of any meeting at which holders of shares of
Mandatorily Convertible Preferred Stock are entitled to vote, the Depositary
will mail the information contained in such notice of meeting to the record
holders of Depositary Receipts. Each record holder of Depositary Receipts on the
record date (which will be the same date as the record date for the shares of
Mandatorily Convertible Preferred Stock) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the number of
shares of Mandatorily Convertible Preferred Stock represented by such holder's
EqPINES. The Depositary will endeavor, insofar as practicable, to vote the
number of shares of Mandatorily Convertible Preferred Stock represented by such
EqPINES in accordance with such instructions, and the Company has agreed to take
all reasonable action which may be deemed necessary by the Depositary in order
to enable the Depositary to do so. The Depositary will abstain from voting
shares of Mandatorily Convertible Preferred Stock to the extent it does not
receive specific written voting instructions from the holders of Depositary
Receipts.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipts and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Depositary.
However, any amendment that imposes any fees, taxes or other charges payable by
holders of Depositary Receipts (other than taxes and other governmental charges,
fees and other expenses payable by such holders as stated under "Charges of
Depositary"), or that otherwise prejudices any substantial existing right of
holders of Depositary Receipts, will not take effect as to outstanding
Depositary Receipts until the expiration of 90 days after notice of such
amendment has been mailed to the record holders of outstanding Depositary
Receipts. Every holder of Depositary Receipts at the time any such amendment
becomes effective shall be deemed to consent and
117
<PAGE>
agree to such amendment and to be bound by the Deposit Agreement, as so amended.
In no event may any amendment impair the right of any owner of EqPINES, subject
to the conditions specified in the Deposit Agreement, upon surrender of the
Depositary Receipts evidencing such EqPINES to receive shares of Mandatorily
Convertible Preferred Stock or, upon conversion of the shares of Mandatorily
Convertible Preferred Stock represented by EqPINES, to receive shares of Common
Stock, and in each case any money or other property represented thereby, except
in order to comply with mandatory provisions of applicable law.
The Depositary may resign or be removed by the Company. Such resignation or
removal will only become effective upon the appointment of a qualified successor
depositary which expressly assumes the obligations of the Depositary under the
Deposit Agreement.
CHARGES OF DEPOSITARY
The Company will pay all charges of the Depositary including charges in
connection with the initial deposit of the shares of Mandatorily Convertible
Preferred Stock, the initial execution and delivery of the Depositary Receipts,
the distribution of information to the holders of Depositary Receipts with
respect to matters on which shares of Mandatorily Convertible Preferred Stock
are entitled to vote, withdrawals of the shares of Mandatorily Convertible
Preferred Stock by the holders of Depositary Receipts or conversion of the
shares of Mandatorily Convertible Preferred Stock, except for taxes (including
transfer taxes, if any) and other governmental charges and such other charges as
are provided in the Deposit Agreement to be at the expense of holders of
Depositary Receipts or persons depositing shares of Mandatorily Convertible
Preferred Stock.
GENERAL
The Depositary will make available for inspection by holders of Depositary
Receipts at its corporate office all reports and communications from the Company
that are delivered to the Depositary and made generally available to the holders
of the shares of Mandatorily Convertible Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control from or in performing its
obligations under the Deposit Agreement.
118
<PAGE>
UNDERWRITING
Under the terms of and subject to the conditions contained in an
underwriting agreement (the "U.S. Underwriting Agreement"), among the Company
and each of the underwriters named below (the "U.S. Underwriters"), for whom
Lehman Brothers Inc., Smith Barney Inc., Furman Selz LLC and NationsBanc
Montgomery Securities LLC are acting as representatives (the "Representatives"),
each of the several U.S. Underwriters has agreed to purchase from the Company,
and the Company has agreed to sell to each U.S. Underwriter, the aggregate
number of shares of Common Stock set forth opposite the name of such U.S.
Underwriter below:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS COMMON SHARES
- ------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Lehman Brothers Inc..............................................................................
Smith Barney Inc.................................................................................
Furman Selz LLC..................................................................................
NationsBanc Montgomery Securities LLC............................................................
---------------
Total........................................................................................ 10,400,000
---------------
---------------
</TABLE>
Under the terms of and subject to the conditions contained in an
underwriting agreement (the "International Underwriting Agreement"), among the
Company and each of the international managers named below (the "International
Managers"), for whom Lehman Brothers International (Europe), Smith Barney Inc.,
Furman Selz LLC and NationsBanc Montgomery Securities LLC are acting as Lead
Managers (the "Lead Managers"), each of the several International Managers has
agreed to purchase from the Company, and the Company has agreed to sell to each
International Manager, the aggregate number of shares of Common Stock set forth
opposite the name of such International Manager below:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS COMMON SHARES
- ------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Lehman Brothers International (Europe)...........................................................
Smith Barney Inc.................................................................................
Furman Selz LLC..................................................................................
NationsBanc Montgomery Securities LLC............................................................
---------------
Total........................................................................................ 2,600,000
---------------
---------------
</TABLE>
The U.S. Underwriting Agreement and the International Underwriting Agreement
(collectively, the "Underwriting Agreements") provide that the obligations of
the U.S. Underwriters and the International Managers, respectively, to purchase
shares of Common Stock, are subject to the approval of certain legal matters by
counsel and to certain other conditions and that if any of the shares of Common
Stock are purchased by the U.S. Underwriters pursuant to the U.S. Underwriting
Agreement or by the International Managers pursuant to the International
Underwriting Agreement, all the shares of Common Stock agreed to be purchased by
either the U.S. Underwriters or the International Managers, as the case may be,
pursuant to their respective Underwriting Agreements, must be so purchased. The
offering price and underwriting discounts and commissions for the U.S. Offering
and the International Offering are identical. The closing of each of the U.S.
Offering, the International Offering and the Concurrent Offerings is conditioned
upon the closing of the other and of the other Six Flags Transactions.
The Company has been advised by the Representatives and the Lead Managers
that the U.S. Underwriters and the International Managers propose to offer
shares of Common Stock directly to the public initially at the public offering
price set forth on the cover page of this Prospectus and to certain selected
dealers (who may include the U.S. Underwriters and International Managers) at
such public offering price less a selling concession not to exceed $ per
share. The selected dealers may reallow a concession not to exceed $ per
share. After the initial offering of the Common Stock,
119
<PAGE>
the offering price, the concession to selected dealers and the reallowance to
other dealers may be changed by the U.S. Underwriters and the International
Managers.
The U.S. Underwriters and the International Managers have entered into an
Agreement Among U.S. Underwriters and International Managers (the "Agreement
Among") pursuant to which each U.S. Underwriter has agreed that, as part of the
distribution of the shares of Common Stock offered in the U.S. Offering, (a) it
is not purchasing any of such shares for the account of anyone other than a U.S.
or Canadian Person (as defined below) and (b) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of such
shares or distribute any prospectus relating to the U.S. Offering outside the
United States or Canada or to anyone other than a U.S. or Canadian Person. In
addition, pursuant to the Agreement Among, each International Manager has agreed
that, as part of the distribution of the shares of Common Stock offered in the
International Offering, (a) it is not purchasing any of such shares for the
account of any U.S. or Canadian Person and (b) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of such
shares or distribute any prospectus relating to the International Offering
within the United States or Canada or to any U.S. or Canadian Person. The
foregoing limitations do not apply to stabilization transactions or to certain
other transactions specified in the Underwriting Agreements and the Agreement
Among, including: (i) certain purchases and sales between the U.S. Underwriters
and the International Managers; (ii) certain offers, sales, resales, deliveries
or distributions to or through investment advisors or other persons exercising
investment discretion; (iii) purchases, offers or sales by a U.S. Underwriter
that is also acting as an International Manager or by an International Manager
that is also acting as a U.S. Underwriter; and (iv) other transactions
specifically approved by the U.S. Underwriters and International Managers. As
used herein, "U.S. or Canadian Person" means any resident or citizen of the
United States or Canada, any corporation, pension, profit sharing or other trust
or other entity organized under or governed by the laws of the United States or
Canada or any political subdivision thereof (other than the foreign branch of
any United States or Canadian Person), any estate or trust the income of which
is subject to United States or Canadian federal income taxation regardless of
the source of its income, and any United States or Canadian branch of a person
other than a United States or Canadian Person. The term "United States" means
the United States of America (including, the states thereof and the District of
Columbia) and its territories, its possessions and other areas subject to its
jurisdiction. The term "Canada" means the provinces of Canada, its territories,
its possessions and other areas subject to its jurisdiction.
Pursuant to the Agreement Among, sales may be made among the U.S.
Underwriters and the International Managers of such number of shares of Common
Stock as may be mutually agreed. The price of any shares so sold shall be the
public offering price as then in effect for Common Stock being sold by the U.S.
Underwriters and the International Managers, less an amount not greater than the
selling concession unless otherwise determined by mutual agreement. To the
extent that there are sales pursuant to the Agreement Among, the number of
shares initially available for sale by the U.S. Underwriters and the
International Managers may be more or less than the amount specified on the
cover page of this Prospectus.
Each International Manager has represented and agreed that: (i) it is not
carrying on investment business in the United Kingdom in contravention of
Section 3 of the Financial Services Act 1986; (ii) it has not offered or sold
and, prior to the date six months after the latest closing date for the issue of
the shares of Common Stock, will not offer or sell any shares of Common Stock to
persons in the United Kingdom by means of any document except to persons whose
ordinary business is to buy or sell securities or debentures, whether as
principal or agent, or otherwise in circumstances that do not constitute an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulation 1995; (iii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the shares of Common Stock in, from or
otherwise involving the United Kingdom; and (iv) it has only issued or passed
on, and will only issue or pass on, to any person in the United Kingdom, any
document received by it in connection with the issue of the Common Stock if
120
<PAGE>
that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom the document may otherwise lawfully be issued or passed on and that it will
procure that any purchaser from it of shares of Common Stock undertakes to
comply with the provisions of this paragraph.
Purchasers of the shares of Common Stock offered pursuant to the Common
Stock Offering may be required to pay stamp taxes and other charges in
accordance with the laws and practices of the country of purchase in addition to
the offering price set forth on the cover page hereof.
Except for the Common Stock to be sold in the Common Stock Offering and the
Convertible Preferred Stock or shares of Common Stock to be issued upon
conversion of the Convertible Preferred Stock, the Company has agreed not to
offer, sell, contract to sell or otherwise issue any shares of Common Stock or
other capital stock or securities convertible into or exchangeable for, or any
rights to acquire, Common Stock or other capital stock, with certain exceptions
(including certain exceptions for Common Stock or other capital stock issued or
sold in connection with future acquisitions by the Company, including its
proposed acquisition of Walibi), prior to the expiration of 90 days from the
date of this Prospectus without the prior written consent of Lehman Brothers on
behalf of the Representatives and the Lead Managers. The Company's officers,
directors and principal stockholders, who hold in the aggregate approximately
6.0 million shares of Common Stock (including shares issuable upon exercise of
outstanding options, warrants and restricted stock), have agreed not to,
directly or indirectly, offer, sell or otherwise dispose of shares of Common
Stock of the Company or any securities convertible into or exchangeable for or
any rights to acquire, Common Stock or other capital stock of the Company for 90
days following the date of this Prospectus without the prior written consent of
Lehman Brothers. In addition, the Sellers in the Six Flags Acquisition have
agreed not to sell any Seller Preferred Stock (or shares of Common Stock
issuable upon conversion thereof) acquired by them in the Six Flags Acquisition
during such 90-day period.
The Company has granted to the U.S. Underwriters and the International
Managers options to purchase up to an additional 1,560,000 and 390,000 shares of
Common Stock, respectively, at the initial public offering price to the public,
less the underwriting discounts and commissions shown on the cover page of this
Prospectus, solely to cover over-allotments, if any. The options may be
exercised at any time up to 30 days after the date of this Prospectus. To the
extent that the U.S. Underwriters and the International Managers exercise such
options, each of the U.S. Underwriters and the International Managers, as the
case may be, will be committed (subject to certain conditions) to purchase a
number of additional shares proportionate to such U.S. Underwriter's or
International Manager's initial commitment as indicated in the preceding tables.
The Company and its operating subsidiaries (including Six Flags) have agreed
to indemnify the U.S. Underwriters and the International Managers against
certain liabilities, including liabilities under the Securities Act, and to
contribute to payments which the U.S. Underwriters and the International
Managers may be required to make in respect thereof.
Until the distribution of the shares of Common Stock offered hereby is
completed, rules of the Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the Representatives and the Lead Managers are
permitted to engage in certain transactions that stabilize the price of the
Common Stock. Such transactions may consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Common Stock Offering (I.E., if they sell more shares of
Common Stock than are set forth on the cover page of this Prospectus), the
Representatives and the Lead Managers may reduce that short position by
purchasing the Common Stock in the open market after the distribution has been
completed. The Representatives and the Lead Managers may also elect to reduce
any short position by exercising all or part of the over-allotment options
described herein.
121
<PAGE>
The Representatives and the Lead Managers also may impose a penalty bid on
certain Underwriters and selling group members. This means that if the
Representatives or the Lead Managers purchase Common Stock in the open market to
reduce the Underwriters' short position or to stabilize the price of the Common
Stock, they may reclaim the amount of the selling concession from the
Underwriters and selling group members who sold those shares of Common Stock as
part of the Offering.
In general, purchases of a security for the purposes of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the applicable offering.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Representatives or the Lead Managers will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
An application will be made to list the EqPINES and the Common Stock into
which shares of Mandatorily Convertible Preferred Stock are convertible on the
NYSE. The Mandatorily Convertible Preferred Stock will not be so listed and the
Company does not expect that there will be any trading market for the
Mandatorily Convertible Preferred Stock except as represented by the EqPINES.
Each of Lehman Brothers, Smith Barney Inc. and Furman Selz LLC has from time
to time provided certain investment banking services to the Company and its
affiliates for which they have received customary fees. LBI Group Inc., an
affiliate of Lehman Brothers is party to financing commitments provided to the
Company in connection with the Six Flags Transactions and has received customary
fees in connection therewith. In addition, Lehman Brothers, Smith Barney Inc.
and Furman Selz LLC acted as underwriters of the Company's 1996 and 1997 public
offerings and are acting (along with NationsBanc Montgomery Securities LLC) as
underwriters in connection with the Concurrent Offerings and will receive
customary fees in connection therewith. An affiliate of Lehman Brothers is a
lender under each of the Credit Facilities.
LEGAL MATTERS
The validity of the Common Stock offered hereby and certain legal matters in
connection with the Offering will be passed upon for the Company by Baer Marks &
Upham LLP, New York, New York. The Underwriters are being represented by
Cravath, Swaine & Moore, New York, New York.
122
<PAGE>
EXPERTS
The consolidated financial statements of the Company as of December 31, 1996
and 1997, and for each of the years in the three-year period ended December 31,
1997, have been included herein in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
The financial statements of Six Flags Entertainment Corporation as of
December 28, 1997 and December 29, 1996 and for the three years ended December
28, 1997, December 29, 1996 and December 31, 1995 appearing in this Prospectus
and Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report appearing elsewhere herein and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The audited financial statements of Kentucky Kingdom, Inc. as of November 2,
1997 and for the year then ended incorporated in this Prospectus by reference
from the Company's amended report on Form 8-K/A have been audited by Carpenter,
Mountjoy & Bressler, PSC, independent auditors, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
The financial statements of Walibi, S.A. at December 31, 1997 and for the
year then ended, appearing in the Company's Form 8-K/A dated December 15, 1997,
which is incorporated herein by reference are incorporated herein in reliance
upon the report of Coopers & Lybrand LLP, independent auditors included in the
Form 8-K/A and upon the authority of such firm as experts in accounting and
auditing.
123
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF PREMIER PARKS INC.:
Independent Auditors' Report............................................................................. F-2
Consolidated Balance Sheets.............................................................................. F-3
Consolidated Statements of Operations.................................................................... F-4
Consolidated Statements of Stockholders' Equity.......................................................... F-5
Consolidated Statements of Cash Flows.................................................................... F-6
Notes to Consolidated Financial Statements............................................................... F-8
CONSOLIDATED FINANCIAL STATEMENTS OF SIX FLAGS ENTERTAINMENT CORPORATION:
Report of Independent Auditors........................................................................... F-26
Consolidated Statements of Operations.................................................................... F-27
Consolidated Balance Sheets.............................................................................. F-28
Consolidated Statements of Stockholders' Equity (Deficit)................................................ F-29
Consolidated Statements of Cash Flows.................................................................... F-30
Notes to Consolidated Financial Statements............................................................... F-31
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Premier Parks Inc.:
We have audited the accompanying consolidated balance sheets of Premier
Parks Inc. and subsidiaries as of December 31, 1996 and 1997, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Premier
Parks Inc. and subsidiaries as of December 31, 1996 and 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Oklahoma City, Oklahoma
February 23, 1998
F-2
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
ASSETS 1996 1997
- -------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................... $ 4,043,000 $84,288,000
Accounts receivable................................................................. 1,180,000 6,537,000
Inventories......................................................................... 4,200,000 5,547,000
Income tax receivable............................................................... -- 995,000
Prepaid expenses and other current assets........................................... 3,416,000 3,690,000
----------- -----------
Total current assets............................................................ 12,839,000 101,057,000
----------- -----------
Other assets:
Deferred charges.................................................................... 6,752,000 10,123,000
Deposits and other.................................................................. 9,087,000 3,949,000
----------- -----------
Total other assets.............................................................. 15,839,000 14,072,000
----------- -----------
Property and equipment, at cost....................................................... 263,175,000 485,866,000
Less accumulated depreciation....................................................... 17,845,000 35,610,000
----------- -----------
245,330,000 450,256,000
Intangible assets..................................................................... 31,669,000 48,876,000
Less accumulated amortization....................................................... 874,000 2,940,000
----------- -----------
30,795,000 45,936,000
----------- -----------
Total assets.................................................................... $304,803,000 $611,321,000
----------- -----------
----------- -----------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities
Accounts payable and accrued expenses............................................... $11,059,000 $23,199,000
Accrued interest payable............................................................ 4,304,000 9,785,000
Current portion of capitalized lease obligations.................................... 1,492,000 795,000
----------- -----------
Total current liabilities....................................................... 16,855,000 33,779,000
----------- -----------
Long-term debt and capitalized lease obligations:
Long-term debt:
Senior notes...................................................................... 90,000,000 215,000,000
Credit facility................................................................... 57,574,000 --
Capitalized lease obligations....................................................... 1,768,000 1,231,000
----------- -----------
Total long-term debt and capitalized lease obligations.......................... 149,342,000 216,231,000
Other long-term liabilities........................................................... 4,846,000 4,025,000
Deferred income taxes................................................................. 20,578,000 33,537,000
----------- -----------
Total liabilities............................................................... 191,621,000 287,572,000
----------- -----------
Stockholders' equity:
Preferred stock, 500,000 shares authorized at December 31, 1996 and 1997; no shares
issued and outstanding at December 31, 1996 and 1997.............................. -- --
Common stock, $.05 par value, 30,000,000 and 90,000,000 shares authorized at
December 31, 1996 and 1997, respectively; 11,392,669 and 18,899,457 shares issued
and 11,366,323 and 18,873,111 shares outstanding at December 31, 1996 and 1997,
respectively...................................................................... 569,000 944,000
Capital in excess of par value...................................................... 144,642,000 354,235,000
Accumulated deficit................................................................. (31,340,000) (17,241,000)
Deferred compensation............................................................... -- (13,500,000)
----------- -----------
113,871,000 324,438,000
Less 26,346 common shares of treasury stock, at cost................................ (689,000) (689,000)
----------- -----------
Total stockholders' equity...................................................... 113,182,000 323,749,000
----------- -----------
Total liabilities and stockholders' equity...................................... $304,803,000 $611,321,000
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Revenue:
Theme park admissions.......................................... $ 21,863,000 $ 41,162,000 $ 94,611,000
Theme park food, merchandise, and other........................ 19,633,000 52,285,000 99,293,000
-------------- -------------- --------------
Total revenue.............................................. 41,496,000 93,447,000 193,904,000
-------------- -------------- --------------
Operating costs and expenses:
Operating expenses............................................. 19,775,000 42,425,000 81,356,000
Selling, general and administrative............................ 9,272,000 16,927,000 36,547,000
Costs of products sold......................................... 4,635,000 11,101,000 23,025,000
Depreciation and amortization.................................. 3,866,000 8,533,000 19,792,000
-------------- -------------- --------------
Total operating costs and expenses......................... 37,548,000 78,986,000 160,720,000
-------------- -------------- --------------
Income from operations..................................... 3,948,000 14,461,000 33,184,000
Other income (expense):
Interest expense, net.......................................... (5,578,000) (11,121,000) (17,775,000)
Termination fee, net of expenses............................... -- -- 8,364,000
Other income (expense)......................................... (177,000) (78,000) (59,000)
-------------- -------------- --------------
Total other income (expense)............................... (5,755,000) (11,199,000) (9,470,000)
-------------- -------------- --------------
Income (loss) before income taxes.......................... (1,807,000) 3,262,000 23,714,000
Income tax expense (benefit)..................................... (762,000) 1,497,000 9,615,000
-------------- -------------- --------------
Income (loss) before extraordinary loss.................... (1,045,000) 1,765,000 14,099,000
Extraordinary loss on extinguishment of debt, net of income tax
benefit of $90,000 in 1995..................................... (140,000) -- --
-------------- -------------- --------------
Net income (loss).......................................... $ (1,185,000) $ 1,765,000 $ 14,099,000
-------------- -------------- --------------
-------------- -------------- --------------
Net income (loss) applicable to common stock............... $ (1,714,000) $ 1,162,000 $ 14,099,000
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average number of common shares outstanding--basic...... 3,938,000 8,603,000 17,938,000
-------------- -------------- --------------
-------------- -------------- --------------
Income (loss) per average common share outstanding-- basic:......
Income (loss) before extraordinary loss.................... $ (.40) $ .14 $ .79
Extraordinary loss......................................... (.04) -- --
-------------- -------------- --------------
Net income (loss).......................................... $ (.44) $ .14 $ .79
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average number of common shares outstanding--diluted.... 3,938,000 8,972,000 18,438,000
-------------- -------------- --------------
-------------- -------------- --------------
Income (loss) per average common share outstanding-- diluted:
Income (loss) before extraordinary loss.................... $ (.40) $ .13 $ .76
Extraordinary loss......................................... (.04) -- --
-------------- -------------- --------------
Net income (loss).......................................... $ (.44) $ .13 $ .76
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
<TABLE>
<CAPTION>
SERIES A, 7%
CUMULATIVE
CONVERTIBLE
PREFERRED STOCK COMMON STOCK
-------------------- -------------------- CAPITAL IN
SHARES SHARES EXCESS OF ACCUMULATED DEFERRED TREASURY
ISSUED AMOUNT ISSUED AMOUNT PAR VALUE DEFICIT COMPENSATION STOCK TOTAL
--------- --------- --------- --------- ---------- ------------ ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31,
1994............ -- $ -- 3,398,467 $ 170,000 50,573,000 (31,920,000) -- (689,000) 18,134,000
Issuance of
preferred
stock........... 200,000 200,000 -- -- 19,800,000 -- -- -- 20,000,000
Conversion of debt
to common
stock........... -- -- 1,485,433 74,000 8,888,000 -- -- -- 8,962,000
Net loss.......... -- -- -- -- -- (1,185,000) -- -- (1,185,000)
--------- --------- --------- --------- ---------- ------------ ------------- ----------- ----------
Balances at
December 31,
1995............ 200,000 200,000 4,883,900 244,000 79,261,000 (33,105,000) -- (689,000) 45,911,000
Conversion of
preferred stock
to common
stock........... (200,000) (200,000) 2,560,928 128,000 72,000 -- -- -- --
Issuance of common
stock........... -- -- 3,947,841 197,000 65,309,000 -- -- -- 65,506,000
Net income........ -- -- -- -- -- 1,765,000 -- -- 1,765,000
--------- --------- --------- --------- ---------- ------------ ------------- ----------- ----------
Balances at
December 31,
1996............ -- -- 11,392,669 569,000 144,642,000 (31,340,000) -- (689,000) 113,182,000
Issuance of common
stock........... -- -- 7,506,788 375,000 209,593,000 -- (14,625,000) -- 195,343,000
Amortization of
deferred
compensation.... -- -- -- -- -- -- 1,125,000 -- 1,125,000
Net income........ -- -- -- -- -- 14,099,000 -- -- 14,099,000
--------- --------- --------- --------- ---------- ------------ ------------- ----------- ----------
Balances at
December 31,
1997............ -- $ -- 18,899,457 $ 944,000 354,235,000 (17,241,000) (13,500,000) (689,000) 323,749,000
--------- --------- --------- --------- ---------- ------------ ------------- ----------- ----------
--------- --------- --------- --------- ---------- ------------ ------------- ----------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).......................................... $ (1,185,000) $ 1,765,000 $ 14,099,000
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 3,866,000 8,533,000 19,792,000
Deferred compensation.................................. -- -- 1,125,000
Extraordinary loss on early extinguishment of debt..... 230,000 -- --
Amortization of debt issuance costs.................... 317,000 811,000 1,918,000
Gain on sale of assets................................. -- (51,000) (46,000)
(Increase) decrease in accounts receivable............. 5,794,000 (215,000) (5,272,000)
Deferred income taxes (benefit)........................ (808,000) 1,433,000 6,737,000
Increase in income tax receivable...................... -- -- (995,000)
Increase in inventories and prepaid expenses and other
current assets....................................... (455,000) (2,360,000) (1,150,000)
(Increase) decrease in deposits and other assets....... 1,197,000 (3,947,000) 6,237,000
Increase (decrease) in accounts payable and accrued
expenses............................................. (2,366,000) 5,216,000 (776,000)
Increase in accrued interest payable................... 4,056,000 146,000 5,481,000
--------------- --------------- ---------------
Total adjustments...................................... 11,831,000 9,566,000 33,051,000
--------------- --------------- ---------------
Net cash provided by operating activities.................... 10,646,000 11,331,000 47,150,000
--------------- --------------- ---------------
Cash flows from investing activities:
Proceeds from the sale of equipment........................ -- 476,000 246,000
Other investments.......................................... (63,000) (48,000) (38,000)
Additions to property and equipment........................ (10,732,000) (39,423,000) (135,852,000)
Acquisition of theme park assets........................... -- (116,154,000) (60,050,000)
Acquisition of Funtime Parks, Inc. in 1995 and Stuart
Amusement Company in 1997, net of cash acquired.......... (63,344,000) -- (21,376,000)
--------------- --------------- ---------------
Net cash used in investing activities........................ (74,139,000) (155,149,000) (217,070,000)
--------------- --------------- ---------------
Cash flows from financing activities:
Repayment of debt.......................................... (17,487,000) (1,082,000) (66,576,000)
Proceeds from borrowings................................... 93,500,000 57,574,000 132,500,000
Net cash proceeds from issuance of preferred stock......... 20,000,000 -- --
Net cash proceeds from issuance of common stock............ -- 65,306,000 189,530,000
Payment of debt issuance costs............................. (5,099,000) (2,724,000) (5,289,000)
--------------- --------------- ---------------
Net cash provided by financing activities.................... 90,914,000 119,074,000 250,165,000
--------------- --------------- ---------------
Increase (decrease) in cash and cash equivalents............. 27,421,000 (24,744,000) 80,245,000
Cash and cash equivalents at beginning of year............... 1,366,000 28,787,000 4,043,000
--------------- --------------- ---------------
Cash and cash equivalents at end of year..................... $ 28,787,000 $ 4,043,000 $ 84,288,000
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
F-6
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------- -------------
<S> <C> <C> <C>
Supplementary cash flow information:
Cash paid for interest............................................. $ 1,701,000 $ 11,640,000 $ 18,315,000
------------ ------------- -------------
------------ ------------- -------------
Cash paid (received) for income taxes (refund)..................... $ (22,000) $ 64,000 $ 3,697,000
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
1995
- Common stock (1,485,433 shares) was exchanged for $9,095,000 of debt, net
of $133,000 of costs.
- The Company acquired certain rides and attractions through capital leases
with obligations totaling $3,259,000.
1996
- Preferred stock (200,000 shares) was converted into common stock
(2,560,928 shares).
- The Company issued $200,000 of common stock (9,091 shares) as a component
of a theme park acquisition.
- The Company acquired certain equipment through a capital lease with an
obligation of $64,000.
1997
- The Company issued $5,813,000 of common stock (153,800 shares) as
components of theme park acquisitions.
- The Company issued restricted common stock (450,000 shares) to certain
employees valued at $14,625,000.
- The Company assumed $268,000 of capital lease obligations as a component
of a theme park acquisition.
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
(1) SUMMARY OF SIGNIFICANT POLICIES
DESCRIPTION OF BUSINESS
Premier Parks Inc. (the "Company") owns and operates regional theme
amusement and water parks. As of December 31, 1997, the Company and its
subsidiaries own and operate twelve parks: Adventure World, a combination theme
and water park located in Largo, Maryland; Darien Lake & Camping Resort, a
combination theme and water park with an adjacent camping resort and performing
arts center, located between Buffalo and Rochester, New York; Elitch Gardens, a
theme park located in Denver, Colorado; Frontier City, a western theme park
located in Oklahoma City, Oklahoma; Geauga Lake, a combination theme and water
park located near Cleveland, Ohio; The Great Escape and Splash Water Kingdom, a
combination theme and water park located in Lake George, New York; Kentucky
Kingdom--The Thrill Park, located in Louisville, Kentucky; Riverside Park, a
theme park located near Springfield, Massachusetts; two water parks operated
under the name Waterworld/USA, located in Northern California; White Water Bay,
a tropical water park located in Oklahoma City, Oklahoma; and Wyandot Lake, a
water park which also includes "dry rides" located in Columbus, Ohio. The
Company also manages Marine World Africa USA in Vallejo, California.
BASIS OF PRESENTATION
The Company's accounting policies reflect industry practices and conform to
generally accepted accounting principles.
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries, and limited partnerships and limited liability
companies in which the Company beneficially owns 100% of the interests.
Intercompany transactions and balances have been eliminated in consolidation.
The Company's investment in a partnership in which it does not own a
controlling interest is accounted for using the equity method and included in
other assets.
CASH EQUIVALENTS
Cash equivalents of $2,753,000 and $73,694,000 at December 31, 1996 and
1997, respectively, consist of short-term highly liquid investments with a
remaining maturity as of purchase date of three months or less, which are
readily convertible into cash. For purposes of the consolidated statements of
cash flows, the Company considers all highly liquid debt instruments with
original maturities of three months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost (first in, first out) or market
and primarily consist of products for resale including merchandise and food and
miscellaneous supplies including repair parts for rides and attractions.
F-8
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(1) SUMMARY OF SIGNIFICANT POLICIES (CONTINUED)
ADVERTISING COSTS
Production costs of commercials and programming are charged to operations in
the year first aired. The costs of other advertising, promotion, and marketing
programs are charged to operations in the year incurred. The amounts capitalized
at year-end are included in prepaid expenses.
Advertising and promotions expense incurred was $5,700,000, $9,100,000, and
$21,600,000 during 1995, 1996, and 1997, respectively.
DEFERRED CHARGES
The Company capitalizes all costs related to the issuance of debt with such
costs included in deferred charges in the consolidated balance sheets. The
amortization of such costs is recognized as interest expense under a method
approximating the interest method over the life of the respective debt issue. As
of December 31, 1996, approximately $626,000 of costs associated with the
Company's January 1997 debt and equity offerings (notes 5 and 8) were also
included in deferred charges.
DEPRECIATION AND AMORTIZATION
Buildings and improvements are depreciated over their estimated useful lives
of approximately 30 years by use of the straight-line method. Furniture and
equipment are depreciated using the straight-line method over 5-10 years. Rides
and attractions are depreciated using the straight-line method over 5-25 years.
Amortization of property associated with capitalized lease obligations is
included in depreciation expense in the consolidated financial statements.
Maintenance and repairs are charged directly to expense as incurred, while
betterments and renewals are generally capitalized in the property accounts.
When an item is retired or otherwise disposed of, the cost and applicable
accumulated depreciation are removed and the resulting gain or loss is
recognized.
INTANGIBLE ASSETS
Goodwill, which represents the excess of purchase price over fair value of
net assets acquired, is amortized on a straight-line basis over the expected
period to be benefited, generally 25 years. Impairment of goodwill is assessed
whenever events or changes in circumstances indicate that the carrying amount of
goodwill may not be recoverable.
LONG-LIVED ASSETS
The Company adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," on
January 1, 1996. SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS No. 121 did not have an impact on the
Company's consolidated financial position or results of operations in 1996.
F-9
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(1) SUMMARY OF SIGNIFICANT POLICIES (CONTINUED)
INTEREST EXPENSE RECOGNITION
Interest on notes payable is generally recognized as expense on the basis of
stated interest rates. Capitalized lease obligations that do not have a stated
interest rate or that have interest rates considered to be lower than prevailing
market rates (when the obligations were incurred) are carried at amounts
discounted to impute a market rate of interest cost. Total interest expense
incurred was $6,074,000, $12,597,000, and $25,714,000 in 1995, 1996 and 1997,
respectively. Interest expense in the accompanying consolidated statements of
operations is shown net of interest income.
INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
INCOME (LOSS) PER COMMON SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share." SFAS No. 128
revised the previous calculation methods and presentations of earnings per
share. The statement requires that all prior-period earnings per share data be
restated. The Company adopted SFAS No. 128 in the fourth quarter of 1997 as
required by the statement. The effect of applying SFAS No. 128 was not material
to the Company's prior period's earnings per share data. The previously reported
amounts for earnings per share were replaced by basic earnings per share and
diluted earnings per share. Basic earnings per share for the second quarter of
1997 and for the year 1996 are $.01 per share higher than the previously
reported primary earnings per share amounts.
The Company issued convertible preferred stock in 1995. Preferred stock
dividends of $529,000 and $603,000, which were paid through additional issuances
of common stock, were considered in determining net income (loss) applicable to
common stock in 1995 and 1996, respectively.
Under the provisions of SFAS No. 128, basic earnings per share is computed
by dividing net income (loss) applicable to common stock by the weighted average
number of common shares outstanding for the period. Diluted earnings per share
reflects the potential dilution that could occur if the Company's outstanding
stock options were exercised (calculated using the treasury stock method).
The following table reconciles the weighted average number of common shares
outstanding used in the calculations of basic and diluted income per average
common share outstanding for the years 1996 and 1997. The Company incurred a
loss in 1995 and the effect on diluted loss per average common share
F-10
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(1) SUMMARY OF SIGNIFICANT POLICIES (CONTINUED)
outstanding of all contingently issuable common shares was antidilutive.
Therefore, there is no difference in the number of shares used in the basic and
diluted calculations for the year 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
<S> <C> <C>
1996 1997
---------- ------------
Weighted average number of common shares outstanding-- basic....... 8,603,000 17,938,000
Dilutive effect of potential common shares issuable upon the
exercise of employee stock options............................... 369,000 500,000
---------- ------------
Weighted average number of common shares outstanding-- diluted..... 8,972,000 18,438,000
---------- ------------
---------- ------------
</TABLE>
STOCK OPTIONS
On January 1, 1996, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation," which permits entities to recognize over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB No. 25, "Accounting for Stock Issued to Employees," whereby
compensation expense is recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. Companies which
continue to apply the provisions of APB No. 25 are required by SFAS No. 123 to
disclose pro forma net earnings and net earnings per share for employee stock
option grants made in 1995, 1996 and future years as if the fair-value-based
method defined in SFAS No. 123 had been applied. The Company has elected to
continue to apply the provisions of APB No. 25, and has provided the pro forma
disclosures required by SFAS No. 123 in note 8.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Reclassifications have been made to certain amounts reported in 1995 and
1996 to conform with the 1997 presentation.
(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
The recorded amounts for cash and cash equivalents, accounts receivable,
accounts payable and accrued expenses, and accrued interest payable approximate
fair value because of the short maturity of these financial instruments. The
fair value estimates, methods, and assumptions relating to the Company's other
financial instruments are discussed in note 5.
F-11
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(3) ACQUISITION OF THEME PARKS PRIOR TO JANUARY 1998
Pursuant to a merger agreement, on August 15, 1995, the Company acquired
Funtime Parks, Inc. ("Funtime"), a company owning three regional theme parks,
for an initial purchase price of approximately $60,000,000 in cash, with an
additional amount of approximately $5,400,000 paid to the former shareholders as
a postclosing adjustment related to the operating cash flows of the former
Funtime parks after the acquisition date. The acquisition was accounted for as a
purchase. As of the acquisition date and after giving effect to the purchase,
$18,030,000 of deferred tax liabilities were recognized for the tax consequences
attributable to the differences between the financial statement carrying amounts
and the tax basis of Funtime's assets and liabilities. Approximately $13,500,000
of cost in excess of the fair value of the net assets acquired was recorded as
goodwill.
The accompanying 1995, 1996 and 1997 consolidated statements of operations
reflect the results of Funtime from the date of acquisition (August 15, 1995).
On October 31, 1996, the Company acquired all of the interests of a
partnership which owned substantially all of the assets used in the operation of
Elitch Gardens for $62,500,000 in cash. Thereupon, the partnership dissolved by
operation of law. As a result, the assets were then directly owned by the
Company. The transaction was accounted for as a purchase. In addition, the
Company entered into a five-year non-competition agreement with the president of
Elitch Gardens Company's general partner. Based upon the purchase method of
accounting, the purchase price was primarily allocated to property and equipment
with $4,506,000 of costs recorded as intangible assets, primarily goodwill. The
general partner and a principal limited partner of Elitch Gardens Company have
agreed severally to indemnify the Company for claims in excess of $100,000 in an
amount up to $1,000,000 per partner.
On November 19, 1996, the Company acquired all of the interests of two
partnerships which owned substantially all of the assets used in the operation
of the two Waterworld/USA water parks and a related family entertainment center
for an aggregate cash purchase price of approximately $17,250,000, of which
$862,500 was placed in escrow to fund potential indemnification claims by the
Company. Thereupon, the partnerships dissolved by operation of law. As a result,
the assets were then directly owned by the Company. The transaction was
accounted for as a purchase. Based upon the purchase method of accounting, the
purchase price was primarily allocated to property and equipment with $5,110,000
of costs recorded as intangible assets, primarily goodwill.
On December 4, 1996, the Company acquired all of the interests in a limited
liability company which owned substantially all of the assets used in the
operation of The Great Escape and Splash Water Kingdom for a cash purchase price
of $33,000,000. The transaction was accounted for as a purchase. In connection
with the acquisition, the Company entered into a non-competition agreement and a
related agreement with the former owner, providing for an aggregate
consideration of $1,250,000. In addition, as a component of the transaction, the
Company issued 9,091 shares of its common stock ($200,000) to an affiliate of
the former owner. Based upon the purchase method of accounting, the purchase
price was primarily allocated to property and equipment with $9,221,000 of costs
recorded as intangible assets, primarily goodwill.
The accompanying 1996 and 1997 consolidated statement of operations reflects
the results of the Elitch Gardens, Waterworld/USA, and The Great Escape and
Splash Water Kingdom acquisitions from their respective acquisition dates.
F-12
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(3) ACQUISITION OF THEME PARKS PRIOR TO JANUARY 1998 (CONTINUED)
On February 5, 1997, the Company acquired all of the outstanding common
stock of Stuart Amusement Company ("Stuart"), the owner of Riverside Park and an
adjacent multi-use stadium, for a purchase price of $22,200,000 ($1,000,000 of
which was paid through issuance of 32,129 of the Company's common shares). The
transaction was accounted for as a purchase. As of the acquisition date and
after giving effect to the purchase, $6,623,000 of deferred tax liabilities were
recognized for the tax consequences attributable to the differences between the
financial statement carrying amounts and the tax basis of Stuart's assets and
liabilities. Approximately $10,484,000 of cost in excess of the fair value of
the net assets acquired was recorded as intangible assets, primarily goodwill.
On November 7, 1997, the Company acquired all of the interests of a limited
liability company which owned substantially all of the theme park assets of
Kentucky Kingdom--The Thrill Park ("Kentucky Kingdom"), located in Louisville,
Kentucky, for a purchase price of $64,000,000 of which $4,831,000 was paid
through the issuance of 121,671 shares of the Company's common stock. The
Company may be required to issue additional shares of common stock based upon
the level of revenues at Kentucky Kingdom during 1998, 1999, and 2000. The
acquisition was accounted for as a purchase. The purchase price was primarily
allocated to property and equipment with $4,592,000 of costs recorded as
intangible assets, primarily goodwill. The value of the additional shares, if
any, will be recognized as additional goodwill.
The accompanying 1997 consolidated statement of operations reflects the
results of Stuart and Kentucky Kingdom from their respective acquisition dates.
The following summarized pro forma results of operations assumes that for
the year ended December 31, 1997, the Stuart and Kentucky Kingdom acquisitions
and related transactions occurred as of the beginning of 1997 and for the year
ended December 31, 1996, assumes that these acquisitions, the Elitch Gardens,
The Great Escape and Splash Water Kingdom and Waterworld/USA acquisitions, and
the related transactions occurred as of the beginning of 1996.
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
(UNAUDITED)
(IN THOUSANDS)
Total revenues........................................................ $ 175,224 $ 215,620
Net income............................................................ 12,436 15,210
Income per weighted average common share outstanding-- basic.......... .66 .81
</TABLE>
F-13
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(4) PROPERTY AND EQUIPMENT
Property and equipment, at cost, are classified as follows:
<TABLE>
<CAPTION>
1996 1997
-------------- --------------
<S> <C> <C>
Land......................................................... $ 27,760,000 $ 40,099,000
Buildings and improvements................................... 106,302,000 159,661,000
Rides and attractions........................................ 112,379,000 254,969,000
Equipment.................................................... 16,734,000 31,137,000
-------------- --------------
Total...................................................... 263,175,000 485,866,000
Less accumulated depreciation................................ (17,845,000) (35,610,000)
-------------- --------------
$ 245,330,000 $ 450,256,000
-------------- --------------
-------------- --------------
</TABLE>
Included in property and equipment are costs and accumulated depreciation
associated with capitalized leases as follows:
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Cost.............................................................. $ 6,069,000 $ 6,386,000
Accumulated depreciation.......................................... (577,000) (826,000)
------------ ------------
$ 5,492,000 $ 5,560,000
------------ ------------
------------ ------------
</TABLE>
(5) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS
At December 31, 1996 and 1997, long-term debt and capitalized lease
obligations consist of:
<TABLE>
<CAPTION>
1996 1997
-------------- --------------
<S> <C> <C>
Long term debt:
Senior notes due 2003 (a).................................. $ 90,000,000 $ 90,000,000
Senior notes due 2007 (b).................................. -- 125,000,000
Credit facility (c)........................................ 57,574,000 --
-------------- --------------
Total long-term debt......................................... 147,574,000 215,000,000
Capitalized lease obligations:
Capitalized lease obligations maturing 1998 through 2000,
requiring aggregate annual lease payments ranging from
approximately $20,000 to $548,000 including implicit
interest at rates ranging from 9.875% to 14% and secured
by equipment with a net book value of approximately
$5,560,000 as of December 31, 1997....................... 3,260,000 2,026,000
-------------- --------------
Total.................................................... $ 150,834,000 $ 217,026,000
-------------- --------------
-------------- --------------
</TABLE>
F-14
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(5) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS (CONTINUED)
(a) The notes are senior unsecured obligations of the Company, with a
$90,000,000 aggregate principal amount, and mature on August 15, 2003. The notes
bear interest at 12% per annum payable semiannually on August 15 and February 15
of each year, commencing February 15, 1996. The notes are redeemable, at the
Company's option, in whole or part, at any time on or after August 15, 1999, at
varying redemption prices. Additionally, at any time prior to August 15, 1998,
the Company may redeem in the aggregate up to 33 1/3% of the original aggregate
principal amount of notes with the proceeds of one or more public equity
offerings at a redemption price of 110% of the principal amount. These notes are
guaranteed on a senior, unsecured, joint and several basis by all of the
Company's principal operating subsidiaries.
The proceeds of the notes were used in the Funtime acquisition and in the
refinancing of previously existing indebtedness. The Company recognized a
$230,000 loss on early extinguishment of debt during 1995. The loss was
recorded, net of tax effect, as an extraordinary item.
The indenture under which the notes were issued was amended January 21,
1997, in contemplation of the Company's January 1997 senior debt and equity
offerings. The indenture places limitations on operations and sales of assets by
the Company or its subsidiaries, permits incurrence of additional debt only in
compliance with certain financial ratios, and limits the Company's ability to
pay cash dividends or make other distributions to the holders of its capital
stock or to redeem such stock.
The indenture, as amended, permits the Company, subject to certain
limitations, to incur additional indebtedness, including the $125,000,000 of
indebtedness issued January 31, 1997 described below and secured senior
revolving credit facility indebtedness of up to $75,000,000.
All of the Company's subsidiaries, except for one indirect wholly owned
subsidiary, Funtime-Famous Recipe, Inc., are full, unconditional, and joint and
several guarantors of the notes. The assets and operations of Funtime-Famous
Recipe, Inc. are inconsequential to the Company and its consolidated financial
position and results of operations. Condensed financial statement information
for the guarantors is not included herein, as the Company does not believe such
information would be material to the understanding of the Company and its direct
and indirect subsidiaries.
(b) On January 31, 1997, the Company issued $125,000,000 of 9 3/4% senior
notes due January 2007. The notes are senior unsecured obligations of the
Company and equal to the Company's 2003 notes in priority upon liquidation.
Interest is payable on January 15 and July 15 of each year, commencing July 15,
1997. The notes are redeemable, at the Company's option, in whole or in part, at
any time on or after January 15, 2002, at varying redemption prices.
Additionally, at any time prior to January 15, 2000, the Company may redeem in
the aggregate up to 33 1/3% of the original aggregate principal amount of notes
with the proceeds of one or more public equity offerings at a redemption price
of 110% of the principal amount. The notes are guaranteed on a senior,
unsecured, joint and several basis by all of the Company's principal operating
subsidiaries.
The indenture under which the notes were issued places limitations
substantially similar to those of the Company's senior notes due in 2003. A
portion of the proceeds were used to fully pay amounts outstanding under the
Company's Credit Facility.
(c) In connection with the 1996 acquisitions described in note 3, in October
1996 the Company entered into a senior secured credit facility (the "Credit
Facility") with a syndicate of banks. The Credit
F-15
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(5) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS (CONTINUED)
Facility had an aggregate availability of $115,000,000 of which (i) up to
$30,000,000 under the revolving credit facility (the "Revolving Credit
Facility") was for working capital and general corporate purposes; (ii) up to
$25,000,000 ("Facility A") was to finance capital expenditures prior to April
30, 1998; and (iii) up to $60,000,000 ("Facility B") was to finance certain
acquisitions by the Company (including the acquisitions described in note 3),
provided that at least 50% of the consideration for any such acquisition or
improvements under Facility A or Facility B (collectively, the "Term Loan
Facility") was required to have been funded by the Company. Interest rates per
annum under the Credit Facility were equal to a base rate equal to the higher of
the Federal Funds Rate plus 1/2% or the prime rate of Citibank N.A., in each
case plus the Applicable Margin (as defined thereunder) or the London Interbank
Offered Rate plus the Applicable Margin. Commitment fees approximated $53,000
and $620,000 in 1996 and 1997, respectively. The Revolving Credit Facility was
to terminate October 31, 2002 (reducing to $15,000,000 on October 31, 2001) and
borrowings under the Term Loan Facility were to mature October 31, 2001;
however, aggregate principal payments of $7,500,000, $20,000,000 and $25,000,000
were to be required under the Term Loan Facility during 1998, 1999 and 2000,
respectively. Borrowings under the Revolving Credit Facility were required to be
fully paid for at least 30 days each year and were secured by substantially all
of the Company's assets (other than real estate) and guarantees of the Company's
principal subsidiaries. Borrowings under the Term Loan Facility were secured by
the assets acquired with the proceeds thereof, and limited guarantees of the
Company's principal subsidiaries. The Credit Facility contained restrictive
covenants that, among other things, limited the ability of the Company and its
subsidiaries to dispose of assets; incur additional indebtedness or liens; pay
dividends; repurchase stock; make investments; engage in mergers or
consolidations and engage in certain transactions with subsidiaries and
affiliates. In addition, the Credit Facility required that the Company comply
with certain specified financial ratios and tests, including ratios of total
debt to earnings before interest, taxes and depreciation and amortization
(EBITDA), interest expense to EBITDA, and fixed charges to EBITDA.
On January 31, 1997, the Company and the syndicate of banks agreed to amend
the Credit Facility. The $30,000,000 Revolving Credit Facility has a maturity
date of December 31, 2001 (without reduction prior to that date). Additionally,
following repayment of amounts that were then outstanding under the Term Loan
Facility through the use of proceeds from the Company's January 1997 debt and
equity offerings, the Term Loan Facility was converted into an $85,000,000
reducing revolving credit facility. The Term Loan Facility, as amended, will be
available to fund acquisitions and make capital improvements. The amount
available under the Term Loan Facility reduces to $75,000,000 on December 31,
1999, to $45,000,000 on December 31, 2000, and matures on December 31, 2001.
Borrowings under the amended Credit Facility are secured by substantially all
the assets of the Company and its subsidiaries (other than real estate) and are
guaranteed by the Company's operating subsidiaries. The restrictive covenants
are essentially the same as those of the original October 1996 credit facility.
On February 9, 1998, the Company terminated the Credit Facility. No amounts
were outstanding as of December 31, 1997 or as of the termination date.
F-16
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(5) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS (CONTINUED)
Annual maturities of long-term debt and capitalized lease obligations,
adjusted to reflect the payment of the amounts outstanding under the Credit
Facility through use of proceeds of the January 1997 note issuance, during the
five years subsequent to December 31, 1997, are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998.......................................................................... $ 795,000
1999.......................................................................... 412,000
2000.......................................................................... 723,000
2001.......................................................................... 67,000
2002 and thereafter........................................................... 215,029,000
--------------
$ 217,026,000
--------------
--------------
</TABLE>
The fair value of the Company's long-term debt is estimated by using quoted
prices or discounted cash flow analyses based on current borrowing rates for
debt with similar maturities. Under the above assumptions the estimated fair
value of long-term debt and capitalized lease obligations at December 31, 1996
and 1997, is approximately $160,000,000 and $236,000,000, respectively.
(6) TERMINATION FEE
During October 1997, the Company entered into an agreement with the limited
partner of the partnership that owns the Six Flags Over Texas theme park. The
general terms of the agreement were for the Company to become the managing
general partner of the partnership, to manage the operations of the park, to
receive a portion of the income from such operations, and to purchase limited
partnership units over the term of the agreement. The provisions of the
agreement also granted the Company an option to purchase all of the partnership
interests in the partnership at the end of the agreement.
The agreement was non-exclusive and contained a termination fee of
$10,750,000 payable to the Company in the event the agreement was terminated.
Subsequent to the Company's agreement with the limited partnership, the prior
operator of the theme park also reached an agreement with the limited
partnership. The Company received the termination fee in December 1997 and has
included the termination fee, net of $2,386,000 of expenses associated with the
transaction, as a component of other income (expense) in the accompanying 1997
consolidated statement of operations.
F-17
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(7) INCOME TAXES
Income tax expense (benefit) allocated to operations for 1995, 1996 and 1997
consists of the following:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------------ ------------ ------------
<S> <C> <C> <C>
1995:
U.S. Federal...................................... $ (44,000) $ (508,000) $ (552,000)
State and local................................... -- (210,000) (210,000)
------------ ------------ ------------
$ (44,000) $ (718,000) $ (762,000)
------------ ------------ ------------
------------ ------------ ------------
1996:
U.S. Federal...................................... $ -- $ 1,335,000 $ 1,335,000
State and local................................... 64,000 98,000 162,000
------------ ------------ ------------
$ 64,000 $ 1,433,000 $ 1,497,000
------------ ------------ ------------
------------ ------------ ------------
1997:
U.S. Federal...................................... $ 2,505,000 $ 6,060,000 $ 8,565,000
State and local................................... 373,000 677,000 1,050,000
------------ ------------ ------------
$ 2,878,000 $ 6,737,000 $ 9,615,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
Recorded income tax expense (benefit) allocated to operations differed from
amounts computed by applying the U.S. federal income tax rate of 34% in 1995 and
1996 and 35% in 1997 to pretax income (loss) approximately as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Computed "expected" federal income tax expense
(benefit)......................................... $ (614,000) $ 1,109,000 $ 8,300,000
Amortization of goodwill............................ 78,000 180,000 327,000
Other, net.......................................... (68,000) 87,000 200,000
Effect of state and local income taxes, net of
federal tax benefit............................... (158,000) 121,000 788,000
------------ ------------ ------------
$ (762,000) $ 1,497,000 $ 9,615,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
Substantially all of the Company's future taxable temporary differences
(deferred tax liabilities) relate to the different financial accounting and tax
depreciation methods and periods for property and equipment. The Company's net
operating loss carryforwards, alternative minimum tax carryforwards, and
deferred compensation amounts represent future income tax deductions (deferred
tax assets). The tax effects of these temporary differences as of December 31,
1996 and 1997, are presented below:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Deferred tax assets before valuation allowance................. $ 11,496,000 $ 21,891,000
Less valuation allowance....................................... 1,196,000 1,196,000
------------- -------------
Net deferred tax assets........................................ 10,300,000 20,695,000
Deferred tax liabilities....................................... 30,878,000 54,232,000
------------- -------------
Net deferred tax liability..................................... $ 20,578,000 $ 33,537,000
------------- -------------
------------- -------------
</TABLE>
The Company's deferred tax liability results from the financial carrying
value for property and equipment being substantially in excess of the Company's
tax basis in the corresponding assets. The
F-18
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(7) INCOME TAXES (CONTINUED)
Company's property and equipment are being depreciated primarily over a 7-year
period for tax reporting purposes and a longer 20- to 25-year period for
financial purposes. The faster tax depreciation has resulted in tax losses which
can be carried forward to future years to offset future taxable income. Because
most of the Company's depreciable assets' financial carrying value and tax basis
difference will reverse before the expiration of the Company's net operating
loss carryforwards and taking into account the Company's projections of future
taxable income over the same period, management believes that it will more
likely than not realize the benefits of these net future deductions.
The Company has experienced ownership changes within the meaning of the
Internal Revenue Code Section 382 and the regulations thereunder. As a result of
the ownership changes, net operating loss carryforwards generated before the
ownership changes can be deducted in subsequent periods only in certain limited
situations. Accordingly, it is probable that the Company will not be able to use
most of the net operating loss carryforwards generated prior to October 30,
1992. A valuation allowance for the pre-October 1992 net operating loss
carryforwards has been established. The Company experienced an additional
ownership change on June 4, 1996 as a result of the issuance of shares of common
stock and the conversion of preferred stock into additional shares of common
stock. This ownership change may limit the use of the Company's November 1992
through June 1996 net operating loss carryforwards in a given year; however, it
is more likely than not that the post-October 1992 carryforwards will be fully
utilized by the Company before their expiration.
As of December 31, 1997, the Company has approximately $36,709,000 of net
operating loss carryforwards available for federal income tax purposes which
expire through 2012. Included in that total are pre-October 30, 1992, net
operating loss carryforwards of which $3,400,000 are not expected to be
utilized. Additionally, the Company has approximately $4,370,000 of alternative
minimum tax credits which have no expiration date.
(8) STOCKHOLDERS' EQUITY
PREFERRED STOCK
The Company has authorized 500,000 shares of preferred stock, $1 par value.
During 1995, the Company issued 200,000 shares of Series A, 7% cumulative
convertible preferred stock at $100 per share. During June 1996, the shares,
including all dividends thereon, were converted into 2,560,928 common shares.
The Company has agreed to provide the former preferred stockholders certain
registration rights relative to the common stock issued upon conversion of the
preferred stock.
Holders of Series A preferred stock were entitled to receive cumulative
dividends at an annual rate of $7 per share. At the Company's election,
dividends were payable in cash and/or in additional Series A preferred stock.
The terms of the Company's senior notes and credit facility limit the Company's
ability to pay cash dividends. All dividends paid to the preferred stockholders
were made by additional issuances of common stock at the time of the conversion
into shares of common stock as described above.
All shares of preferred stock rank senior and prior in right to all of the
Company's now or hereafter issued common stock with respect to dividend payments
and distribution of assets upon liquidation or dissolution of the Company.
F-19
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(8) STOCKHOLDERS' EQUITY (CONTINUED)
COMMON STOCK
In August 1995, the Company issued 1,175,063 common shares in full exchange
for the Company's $7,000,000 senior subordinated convertible notes and 310,370
common shares in full exchange for the Company's $2,095,000 junior subordinated
term loan. The Company has agreed to provide the stockholders certain
registration rights in the future.
On April 4, 1996, a majority of the Company's common and preferred
shareholders and the Company's board of directors approved a one-for-five
reverse stock split effective May 6, 1996. The par value of common stock was
increased to $.05 per share from $.01 per share. Additionally, the authorized
common shares of the Company were changed to 30,000,000. The accompanying
consolidated financial statements and notes to the consolidated financial
statements reflect the reverse stock split as if it had occurred as of the
earliest date presented.
On June 4, 1996, and June 6, 1996, the Company issued 3,425,000 and 513,750,
respectively, of its common shares resulting in net proceeds to the Company of
$65,306,000. Additionally, on June 4, 1996, the Company exchanged 2,560,928 of
its common shares for all 200,000 shares of its previously outstanding preferred
stock.
On January 31, 1997, the Company issued 6,900,000 of its common shares
resulting in net proceeds to the Company of approximately $189,530,000.
STOCK OPTIONS AND WARRANTS
In 1993, 1994, 1995, and 1996, certain members of the Company's management
were issued seven-year options to purchase 145,200, 36,000, 248,000, and
337,500, of its common shares, at an exercise price of $5.00, $7.50, $8.25, and
$22.00 per share, respectively, under the Company's 1993, 1995 and 1996 Stock
Option and Incentive Plans (the Plans). No stock options were issued during
1997. Stock options are granted with an exercise price equal to the stock's fair
market value at the date of grant. These options may be exercised on a
cumulative basis with 20% of the total exercisable on date of issuance and with
an additional 20% being available for exercise on each of the succeeding
anniversary dates. Any unexercised portion of the options will automatically and
without notice terminate upon the seventh anniversary of the issuance date or
upon termination of employment.
At December 31, 1997, there were 503,300 additional shares available for
grant under the Plans. The per share weighted-average fair value of stock
options granted during 1995 and 1996 was $5.56 and $14.97 on the date of grant
using the Black--Scholes option-pricing model with the following
weighted-average assumptions: 1995--expected dividend yield 0%, risk-free
interest rate of 5.5%, and an expected life of 5 years; 1996--expected dividend
yield 0%, risk-free interest rate of 6.25%, and an expected life of 5 years.
The Company applies APB Opinion No. 25 in accounting for its stock options
and, accordingly, no compensation cost has been recognized for its stock options
in the consolidated financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options
F-20
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(8) STOCKHOLDERS' EQUITY (CONTINUED)
under SFAS No. 123, the Company's net income (loss) would have been changed to
the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1995 1996 1997
------------- ------------ -------------
<S> <C> <C> <C> <C>
Net income (loss) applicable to common stock:
As reported $ (1,714,000) $ 1,162,000 $ 14,099,000
Pro forma (1,880,000) 390,000 13,325,000
Income (loss) per average common share
outstanding--basic:
As reported $ (.44) $ .14 $ .79
Pro forma (.48) .05 .74
</TABLE>
Pro forma net income (loss) applicable to common stock reflects only options
granted in 1995 and 1996. Therefore, the full impact of calculating compensation
cost for stock options under SFAS No. 123 is not reflected in the pro forma net
income (loss) amounts presented above because compensation cost is reflected
over the options' vesting period of 4 years and compensation cost for options
granted prior to January 1, 1995 is not considered.
Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
----------- -----------------
<S> <C> <C>
Balance at December 31, 1994.................................... 181,200 $ 5.50
Granted....................................................... 248,000 8.25
Exercised..................................................... -- --
Forfeited..................................................... -- --
Expired....................................................... -- --
----------- ------
Balance at December 31, 1995.................................... 429,200 7.09
Granted....................................................... 337,500 22.00
Exercised..................................................... -- --
Forfeited..................................................... -- --
Expired....................................................... -- --
----------- ------
Balance at December 31, 1996.................................... 766,700 13.65
Granted....................................................... -- --
Exercised..................................................... -- --
Forfeited..................................................... (2,000) 5.00
Expired....................................................... -- --
----------- ------
Balance at December 31, 1997.................................... 764,700 $ 13.67
----------- ------
----------- ------
</TABLE>
F-21
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(8) STOCKHOLDERS' EQUITY (CONTINUED)
At December 31, 1997, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $5.00 to $22.00 and 5.01
years, respectively.
At December 31, 1995, 1996, and 1997, the number of options exercisable was
151,120, 304,460 and 455,800, respectively, and weighted-average exercise price
of those options was $6.30, $10.01 and $11.25, respectively.
In 1989, the Company's current chairman was issued a ten-year warrant to
purchase 26,346 common shares (currently being held as treasury stock) at an
exercise price of $1.00 per share and a ten-year warrant to purchase 18,693
common shares at an exercise price of $1.00 per share.
SHARE RIGHTS PLAN
On December 10, 1997, the Company's board of directors authorized a share
rights plan. Under the plan, stockholders have one right for each share of
common stock held. The rights become exercisable ten business days after (a) an
announcement that a person or group of affiliated or associated persons has
acquired beneficial ownership of 15% or more of the voting shares outstanding,
or (b) the commencement or announcement of a person's or group's intention to
commence a tender or exchange offer that could result in a person or group
owning 15% or more of the voting shares outstanding.
Each right entitles its holder (except a holder who is the acquiring person)
to purchase 1/100 of a share of a junior participating series of preferred stock
designated to have economic and voting terms similar to those of one share of
common stock for $250.00, subject to adjustment. In the event of certain merger
or asset sale transactions with another party or transactions which would
increase the equity ownership of a shareholder who then owned 15% or more of the
Company, each right will entitle its holder to purchase securities of the
merging or acquiring party with a value equal to twice the exercise price of the
right.
The rights, which have no voting power, expire in 2008. The rights may be
redeemed by the Company for $.01 per right until the right becomes exercisable.
RESTRICTED STOCK GRANT
The Company has issued 450,000 restricted common shares to members of the
Company's senior management. The restrictions on the stock lapse ratably over a
six-year term commencing January 1, 1998, generally based upon the continued
employment of the members of management. The restrictions also lapse if any or
all members are terminated without cause or if a change in control of the
Company occurs. The fair value of the restricted shares, as determined at the
date of grant, approximated $14,625,000 and will be recognized as an expense
over the vesting term.
(9) 401(K) PLAN
The Company has a qualified, contributory 401(k) plan (the Plan). All
regular employees are eligible to participate in the Plan if they have completed
one full year of service and are at least 21 years old. The Company matches 100%
of the first 2% and 25% of the next 6% of salary contributions made by
employees. The accounts of all participating employees are fully vested. The
Company recognized
F-22
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(9) 401(K) PLAN (CONTINUED)
approximately $32,000, $150,000 and $377,000 of expense in the years ended
December 31, 1995, 1996 and 1997, respectively.
(10) MARINE WORLD
In April 1997, the Company became manager of Marine World, a marine and
exotic wildlife park located in Vallejo, California, pursuant to a contract with
an agency of the City of Vallejo under which the Company is entitled to receive
an annual base management fee of $250,000 and up to $250,000 annually in
additional fees based on park performance. In November 1997, the Company
exercised its option to lease approximately 40 acres of land within the site for
nominal rent and an initial term of 55 years (plus four ten-year and one
four-year renewal options). At December 31, 1997, the Company is in the process
of adding theme park rides and attractions on the leased land, which is located
within the existing park, in order to create one fully-integrated regional theme
park at the site. The Company is entitled to receive, in addition to the
management fee, 80% of the cash flow generated by the combined operations at the
park, after combined operating expenses and debt service on outstanding debt
obligations relating to the park. The Company also has an option to purchase the
entire site commencing in February 2002 at a purchase price equal to the greater
of the then principal amount of certain debt obligations of the seller (expected
to aggregate $52.0 million at February 2002) or the then fair market value of
the seller's interest in the park (based on a formula relating to the seller's
20% share of Marine World's cash flow). The Company currently expects to
exercise this purchase option when it becomes exercisable.
(11) COMMITMENTS AND CONTINGENCIES
The Company leases office space under a lease agreement which expires April
30, 2001. The lease requires minimum monthly payments over its term and also
escalation charges for proportionate share of expenses as defined in the lease.
An affiliate of the Company shares office space with the Company and has agreed
to pay 50% of the rental payments. Rent expense recognized by the Company (after
deduction of amounts paid by the affiliate) for the years ended December 1995,
1996 and 1997, aggregated $68,000, $64,000, and $64,000, respectively.
The Company leases the sites of Wyandot Lake and each of the two
Waterworld/USA locations with rent based upon percentages of revenues earned by
each park. During 1995, 1996, and 1997, the Company recognized approximately
$100,000, $385,000 and $1,110,000, respectively, of rental expense under these
rent agreements.
Total rental expense, including office space and park sites, was
approximately $550,000, $1,227,000, and $2,229,000 for the years ended December
31, 1995, 1996, and 1997, respectively.
On June 2, 1997, a water slide collapsed at the Company's Waterworld/USA
park in Concord, California, resulting in one fatality and the park's closure
for twelve days. Although the collapse and the resulting closure had a material
adverse impact on that park's operating performance for 1997, as well as a
lesser impact on the Company's Sacramento water park (which is also named
"Waterworld/USA"), located approximately seventy miles from the Concord park,
the Company's other parks were not adversely affected. The Company has recovered
all of the Concord park's operating shortfall under its business interruption
insurance. In addition, the Company believes that its liability insurance
coverage should be
F-23
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(11) COMMITMENTS AND CONTINGENCIES (CONTINUED)
adequate to provide for any personal injury liability which may ultimately be
found to exist in connection with the collapse.
The Company is party to various legal actions arising in the normal course
of business. Matters that are probable of unfavorable outcome to the Company and
which can be reasonably estimated are accrued. Such accruals are based on
information known about the matters, the Company's estimates of the outcomes of
such matters and its experience in contesting, litigating and settling similar
matters. None of the actions are believed by management to involve amounts that
would be material to consolidated financial condition, operations, or liquidity
after consideration of recorded accruals.
(12) CERTAIN TRANSACTIONS
During 1995, in connection with the acquisition of Funtime and the issuance
of the $90,000,000 senior notes, the Company paid investment banking and
financial advisory fees in the amount of $800,000 and $475,000 to Lepercq, de
Neuflize & Co. Incorporated (Lepercq) and Hanseatic Corporation (Hanseatic),
respectively. Two directors of the Company are director and treasurer,
respectively, of Lepercq and Hanseatic.
(13) PROPOSED ACQUISITIONS OF ADDITIONAL THEME PARKS
On December 15, 1997, the Company entered into an agreement with the
majority shareholders of Walibi, S.A. ("Walibi"), to purchase the outstanding
stock of Walibi held by the majority shareholders. The purchase agreement
commits the Company to tender for the remaining stock. The estimated aggregate
purchase price of the Walibi common stock plus the debt of Walibi to be assumed
by the Company will approximate $140,000,000. The acquisition will be accounted
for using the purchase method of accounting and is expected to be completed in
March 1998.
On February 9, 1998, the Company agreed to purchase 100% of the capital
stock of Six Flags Entertainment Corporation for $965,000,000 (subject to
adjustment) and the assumption of approximately $770,000,000 of indebtedness.
The purchase price is payable in cash or, at the Company's option, cash and up
to $200,000,000 of preferred stock. The Company has filed registration
statements to offer equity and debt securities to fund the cash portion of the
purchase price. The acquisition will be accounted for using the purchase method
of accounting and is expected to be completed in April 1998.
If the agreement to purchase Six Flags is terminated, except as a result of
legal or governmental restrictions or by mutual consent, the Company may be
required to pay a termination fee of $25,000,000.
F-24
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(14) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Following is a summary of the unaudited interim results of operations for
the years ended December 31, 1996 and 1997:
<TABLE>
<CAPTION>
1996
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH FULL
QUARTER QUARTER QUARTER QUARTER YEAR
------------ ------------- ------------- ------------- -------------
Revenue................................ $ 2,430,000 $ 26,953,000 $ 60,409,000 $ 3,655,000 $ 93,447,000
Net income (loss) applicable to common
stock................................ (5,584,000) (744,000) 16,238,000 (8,748,000) 1,162,000
Net income (loss) applicable to common
stock per share:
Basic.............................. $ (1.15) $ (.11) $ 1.43 $ (.77) $ .14
Diluted............................ $ (1.15) $ (.11) $ 1.39 $ (.77) $ .13
</TABLE>
<TABLE>
<CAPTION>
1997
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH FULL
QUARTER QUARTER QUARTER QUARTER YEAR
------------ ------------- -------------- ------------- --------------
Revenue............................. $ 4,264,000 $ 62,468,000 $ 120,014,000 $ 7,158,000 $ 193,904,000
Net income (loss) applicable to
common stock...................... (9,742,000) 5,698,000 27,237,000 (9,094,000) 14,099,000
Net income (loss) applicable to
common stock per share:
Basic........................... $ (.61) $ .31 $ 1.49 $ (.48) $ .79
Diluted......................... $ (.61) $ .30 $ 1.45 $ (.48) $ .76
</TABLE>
F-25
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Six Flags Entertainment Corporation
We have audited the accompanying consolidated balance sheets of Six Flags
Entertainment Corporation as of December 28, 1997 and December 29, 1996 and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three years in the period ended December 28,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Six Flags Entertainment Corporation at December 28, 1997 and December 29, 1996
and the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 28, 1997 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
February 14, 1998
F-26
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Operating services......................................................... $ 366,665 $ 405,558 $ 427,569
Sales of products.......................................................... 255,030 268,150 271,046
Other...................................................................... 7,762 7,168 10,051
---------- ---------- ----------
629,457 680,876 708,666
---------- ---------- ----------
Costs and expenses:
Operating, general and administrative expenses............................. 388,137 419,756 443,359
Cost of products sold...................................................... 91,138 105,988 101,239
Depreciation............................................................... 51,848 55,090 58,902
Amortization............................................................... 31,596 32,327 25,591
Interest, net.............................................................. 63,282 76,530 84,430
Minority interest.......................................................... -- 1,297 (1,147)
---------- ---------- ----------
626,001 690,988 712,374
---------- ---------- ----------
Income (loss) before income taxes............................................ 3,456 (10,112) (3,708)
Income tax expense........................................................... 6,743 5,137 --
---------- ---------- ----------
Net loss..................................................................... $ (3,287) $ (15,249) $ (3,708)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-27
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 29, 1996 AND DECEMBER 28, 1997
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................................. $ 45,587 $ 16,805
Receivables, net.......................................................................... 6,559 3,258
Receivable from affiliate................................................................. -- 4,000
Inventories, net.......................................................................... 13,526 14,338
Maintenance supplies...................................................................... 6,620 8,051
Prepaid expenses and other current assets................................................. 4,150 3,848
---------- ----------
Total current assets...................................................................... 76,442 50,300
Property and equipment, net............................................................... 489,068 492,137
Investment in co-venture parks, net....................................................... 19,135 78,370
Excess of cost over net assets acquired, net.............................................. 205,117 196,928
Deferred financing costs, net............................................................. 24,278 20,171
Other assets, net......................................................................... 12,727 26,784
---------- ----------
Total assets.............................................................................. $ 826,767 $ 864,690
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................................................... $ 29,518 $ 21,055
Accrued liabilities....................................................................... 49,885 43,390
Current portion of long-term debt......................................................... 38,332 26,130
Short-term borrowings..................................................................... 1,585 30,503
---------- ----------
Total current liabilities................................................................. 119,320 121,078
Long-term debt............................................................................ 714,993 753,369
Other long-term liabilities............................................................... 14,728 12,420
Minority interest......................................................................... 1,297 150
Commitments and contingencies
Stockholders' Deficit:
Class A Convertible Preferred Stock ($.01 par value per share: 6,100,000 shares
authorized; 5,100,000 shares issued and outstanding at December 29, 1996 and December
28, 1997; $243,572 and $273,499 aggregate liquidation preference at December 29, 1996
and December 28, 1997, respectively).................................................... 51 51
Class B Convertible Preferred Stock ($.01 par value per share; 4,900,000 shares
authorized, issued and outstanding at December 29, 1996 and December 28, 1997; $196,000
aggregate liquidation preference at December 29, 1996 and December 28, 1997)............ 49 49
Class A Common Stock ($.01 par value per share; 6,100,000 shares authorized; 51 shares
issued and outstanding at December 29, 1996 and December 28, 1997)...................... -- --
Class B Common Stock ($.01 par value per share: 20,000,000 shares authorized; 49 shares
issued and outstanding at December 29, 1996 and December 28, 1997)...................... -- --
Additional paid-in capital................................................................ 35,983 40,217
Accumulated deficit....................................................................... (56,159) (59,867)
Unearned compensation reserved stock awards............................................... (3,495) (2,777)
---------- ----------
Total stockholders' deficit............................................................... (23,571) (22,327)
---------- ----------
Total liabilities and stockholders' deficit............................................... $ 826,767 $ 864,690
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-28
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
PREFERRED STOCK A PREFERRED STOCK B COMMON STOCK ADDITIONAL
---------------------- ---------------------- ------------------------ PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
--------- ----------- --------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995... -- $ -- -- $ -- 300 $ -- $ 122,320 $ (37,623)
Net loss..................... -- -- -- -- -- -- -- (3,287)
1995 Refinancing............. -- -- -- -- -- -- (90,843) --
1995 Recapitalization........ 5,100,000 51 4,900,000 49 (200) -- (100) --
Reserved stock awards........ -- -- -- -- -- -- 4,372 --
Amortization of unearned
compensation............... -- -- -- -- -- -- -- --
--------- ----- --------- ----- --- ----- ----------- ------------
Balance at December 31,
1995....................... 5,100,000 51 4,900,000 49 100 -- 35,749 (40,910)
Net loss..................... -- -- -- -- -- -- -- (15,249)
Reserved stock awards........ -- -- -- -- -- -- 234 --
Amortization of unearned
compensation............... -- -- -- -- -- -- -- --
--------- ----- --------- ----- --- ----- ----------- ------------
Balance at December 29,
1996....................... 5,100,000 51 4,900,000 49 100 -- 35,983 (56,159)
Net loss..................... -- -- -- -- -- -- -- (3,708)
Reserved stock awards........ -- -- -- -- -- -- 234 --
Amortization of unearned
compensation............... -- -- -- -- -- -- -- --
Capital contribution......... -- -- -- -- -- -- 4,000 --
--------- ----- --------- ----- --- ----- ----------- ------------
Balance at December 28,
1997....................... 5,100,000 $ 51 4,900,000 $ 49 100 $ -- $ 40,217 $ (59,867)
--------- ----- --------- ----- --- ----- ----------- ------------
--------- ----- --------- ----- --- ----- ----------- ------------
<CAPTION>
STOCKHOLDERS'
UNEARNED EQUITY
COMPENSATION (DEFICIT)
--------------- -------------
<S> <C> <C>
Balance at January 1, 1995... $ -- $ 84,697
Net loss..................... -- (3,287)
1995 Refinancing............. -- (90,843)
1995 Recapitalization........ -- --
Reserved stock awards........ (4,372) --
Amortization of unearned
compensation............... 220 220
------- -------------
Balance at December 31,
1995....................... (4,152) (9,213)
Net loss..................... -- (15,249)
Reserved stock awards........ (234) --
Amortization of unearned
compensation............... 891 891
------- -------------
Balance at December 29,
1996....................... (3,495) (23,571)
Net loss..................... -- (3,708)
Reserved stock awards........ (234) --
Amortization of unearned
compensation............... 952 952
Capital contribution......... -- 4,000
------- -------------
Balance at December 28,
1997....................... $ (2,777) $ (22,327)
------- -------------
------- -------------
</TABLE>
See notes to consolidated financial statements.
F-29
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
----------- ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss..................................................................... $ (3,287) $ (15,249) $ (3,708)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization.............................................. 83,444 87,417 84,493
Noncash interest expense................................................... 26,998 43,688 48,552
Minority interest.......................................................... -- 1,297 (1,147)
Inventory reserve.......................................................... -- 1,077 --
Deferred income taxes...................................................... 806 5,137 --
Changes in current assets and liabilities:
Receivables................................................................ 3,068 401 3,301
Inventories................................................................ (1,518) (3,648) (812)
Maintenance supplies....................................................... (303) (914) (1,431)
Prepaid expenses and other current assets.................................. (1,308) 43 302
Accounts payable and accrued liabilities................................... 17,820 9,286 (14,958)
Other, net................................................................... (1,133) 67 (4,289)
----------- ---------- ----------
Net cash provided by operating activities.................................... 124,587 128,602 110,303
----------- ---------- ----------
INVESTING ACTIVITIES:
Investment in co-venture parks............................................... (8,729) (5,548) (10,654)
Cost of acquisitions, including real estate held for development............. (39,593) -- --
Purchase of co-venture limited partnership units............................. -- -- (62,678)
Prepayment of SFOT partnership obligation.................................... -- -- (10,725)
Purchase of property and equipment........................................... (45,578) (75,627) (67,675)
Proceeds from sale of land and property...................................... -- -- 2,000
----------- ---------- ----------
Net cash used in investing activities........................................ (93,900) (81,175) (149,732)
----------- ---------- ----------
FINANCING ACTIVITIES:
Net proceeds from related party debt......................................... 65,969 -- --
Proceeds from revolving lines of credit...................................... 2,205 41,673 97,936
Payments on revolving lines of credit........................................ (2,124) (40,881) (58,521)
Payments on term loans....................................................... (55,500) (53,000) (59,000)
Proceeds from other debt..................................................... -- -- 30,232
----------- ---------- ----------
Net cash provided by (used in) financing activities.......................... 10,550 (52,208) 10,647
----------- ---------- ----------
Increase (decrease) in cash and cash equivalents............................. 41,237 (4,781) (28,782)
Cash and cash equivalents at beginning of year............................... 9,131 50,368 45,587
----------- ---------- ----------
Cash and cash equivalents at end of year..................................... $ 50,368 $ 45,587 $ 16,805
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-30
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
Six Flags Entertainment Corporation ("SFEC", and together with its
subsidiaries, "Six Flags"), a Delaware corporation, was formed in 1991 to effect
the acquisition of S.F. Holdings, Inc. ("Holdings") and its subsidiary Six Flags
Theme Parks Inc. ("SFTP"). SFEC owns 100% of the Common Stock of Holdings, which
owns 100% of the Common Stock of SFTP. Prior to June 23, 1995, SFEC was wholly
owned by Time Warner Entertainment Company, L.P., a Delaware limited partnership
("TWE"). On June 23, 1995, TWE caused SFEC to undergo a recapitalization and TWE
sold 51% of its interest in SFEC to an investor group (the "Investor Group") led
by Boston Ventures Management, Inc., a private investment management firm (the
"1995 Recapitalization"). In connection with the 1995 Recapitalization, SFEC
consummated a series of transactions (the "1995 Refinancing", together with the
1995 Recapitalization, the "1995 Refinancing and Recapitalization").
SFEC and Holdings are holding companies which have no significant operations
independent of their ownership of SFTP. Accordingly, the consolidated financial
statements of Six Flags consist principally of the assets, liabilities,
operations and cash flows of SFTP and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated. Certain amounts
have been reclassified to conform to the current year presentation.
Six Flags operates twelve "Six Flags" branded theme parks in eight locations
throughout the United States. Nine of the theme parks--Six Flags Great Adventure
and Wild Safari Animal Park (New York-Philadelphia), Six Flags Great America
(Chicago-Milwaukee), Six Flags Magic Mountain and Six Flags Hurricane Harbor
(Los Angeles) (collectively "Six Flags California"), Six Flags Astroworld and
Six Flags Waterworld (Houston) (collectively "Six Flags Houston"), Six Flags St.
Louis (St. Louis) and Six Flags Hurricane Harbor (Dallas-Ft. Worth)--are owned
directly by SFTP. Six Flags Fiesta Texas located in San Antonio, Texas is leased
by a limited partnership of which a subsidiary of SFTP is a general partner and
manages the park. Two parks--Six Flags Over Texas (Dallas-Ft. Worth) and Six
Flags Over Georgia (Atlanta)--are operated by SFTP pursuant to partnership
agreements (the "co-venture parks"). Six Flags Over Texas is owned by a limited
partnership ("Texas Flags") of which the managing general partner is a
wholly-owned subsidiary of SFTP. Six Flags Over Georgia is owned by a limited
partnership of which the managing general partner is SFOG II, Inc., a Delaware
corporation which is a wholly-owned subsidiary of SFEC ("SFOG II"). Six Flags
has entered into new partnership agreements for the management of Six Flags Over
Georgia and Six Flags Over Texas through 2026 and 2027, respectively. See the
Investment In Co-venture Parks footnote for a description of these new
agreements.
In March 1996, SFTP completed arrangements pursuant to which SFTP, through
wholly-owned subsidiaries, manages the Fiesta Texas theme park located in San
Antonio, Texas ("Fiesta Park"). The Fiesta Park, which is owned by a subsidiary
of La Cantera Development Company ("La Cantera"), an affiliate of United Service
Automobile Association ("USAA"), was leased to a newly formed limited
partnership (the "Fiesta Partnership") in which SFTP, acting through
wholly-owned subsidiaries (the "Six Flags GP"), is a general partner with an
approximate 60% equity interest. La Cantera is the limited partner with a 40%
equity interest. In connection with these arrangements, the Fiesta Partnership
obtained an option to purchase the tangible and intangible assets related to the
Fiesta Park as well as the limited partner's interest in the Fiesta Partnership.
In addition, Six Flags GP receives an annual management fee and intellectual
property fee in connection with the management of the Fiesta Park. The
management fee is based on revenues for 1996 and 1997 and will be based on
operating profit thereafter. The intellectual property fee is based on revenues.
F-31
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SFTP's consolidated results for 1996 include a full year of Fiesta Park's
operations. The following unaudited proforma financial information for the 1995
fiscal year gives effect to consolidation of Fiesta Park as if it had occurred
at the beginning of the 1995 fiscal year. These proforma results are not
necessarily indicative of what the results would have been had SFTP actually
managed the park during 1995. Proforma revenues and net loss would have been
$672 million and $8.6 million, respectively, if the consolidation of the Fiesta
Park occurred at the beginning of the 1995 fiscal year.
The 1995, 1996, and 1997 fiscal years each consisted of 52 weeks. The 1995
fiscal year ended on December 31, 1995, while the 1996 and 1997 fiscal years
ended on December 29, 1996 and December 28, 1997, respectively.
1995 REFINANCING AND RECAPITALIZATION
The 1995 Refinancing and Recapitalization was effected through the following
transactions consummated in June 1995:
1. SFEC effected a recapitalization (the "Recapitalization") pursuant to
which its Common Stock (all of which was owned by TWE) was recapitalized
into shares of Class A Convertible Preferred Stock (representing
approximately 51% of the equity), Class B Convertible Preferred Stock
(representing approximately 49% of the equity) and Common Stock (the
"SFEC Common Stock"), which has nominal value.
2. TWE sold to the Investor Group all of the outstanding shares of SFEC's
Class A Convertible Preferred Stock and 51% of the outstanding shares of
the SFEC Common Stock.
3. SFTP borrowed $475.0 million on a term basis pursuant to a credit
agreement dated as of June 23, 1995 (the "Credit Agreement") with a group
of banks.
4. SFTP issued $285.0 million aggregate principal amount of 12.25% Senior
Subordinated Discount Notes due 2005 (the "12.25% Notes") at an aggregate
issue price of $200.0 million.
5. SFTP paid TWE $640 million in connection with (i) the repurchase of all
assets previously sold to TWE as part of the sale and leaseback
transactions, (ii) the repayment of intercompany indebtedness and related
accrued interest, (iii) a payment as required under a license agreement
entered into with TWE and (iv) a payment in consideration of TWE entering
into a non-competition agreement for the benefit of Six Flags. The total
amount paid to TWE in excess of the outstanding indebtedness to TWE has
been accounted for as an equity transaction.
6. SFTP incurred approximately $27.5 million in deferred financing fees and
approximately $7.5 million in transaction fees related to the 1995
Refinancing and Recapitalization. The amount paid for transaction fees
has been accounted for as an equity transaction. In addition, the 2%
participation in a trust, which holds all TWE-owned aircraft, ceased upon
the consummation of the 1995 Refinancing and Recapitalization. The
elimination of the remaining net book value of this 2% interest
(approximately $1.8 million) has been accounted for as an equity
transaction.
ACCOUNTING AND FINANCIAL REPORTING POLICIES
REVENUES AND EXPENSES
Operating services revenue consists primarily of theme park admissions and
parking, corporate sponsorships and other in-park services. Sales of products
consist primarily of revenues from the in-park sales of food and beverages,
merchandise, gifts and souvenirs, games of skill and gasoline. Operating
F-32
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
expenses consist of theme park employee compensation and benefits (approximately
50%) and advertising media and production (approximately 10%-15%). Park
maintenance materials and services, utilities, operating supplies, insurance and
other operating service costs account for the remainder. Cost of products sold
consists of the cost of food and beverages, gifts and souvenirs, games of skill
prizes and gasoline sold. During 1997, Six Flags reversed approximately $7.3
million of expense accruals no longer deemed necessary. Such amounts have been
reflected as expense reductions of $0.7 million in cost of products sold, and
$6.6 million in operating, general and administrative expenses in the current
year statement of operations.
INCOME TAXES
Six Flags uses the liability method of accounting for income taxes required
by FASB Statement No. 109, "Accounting for Income Taxes".
CASH EQUIVALENTS
Cash equivalents consist of short-term, highly liquid investments purchased
with a maturity date of three months or less.
INVENTORIES
Inventories, primarily products held for resale, are valued at the lower of
cost or market. Cost is determined principally using the first-in, first-out
method.
OFF-SEASON EXPENSES
Theme park operations are highly seasonal with substantially all revenues
being generated in the second and third quarters. Such revenues are recognized
when earned, while cost of products sold, general and administrative expenses,
interest on debt and income taxes are recognized when incurred. All other
interim period costs related to park operations are considered off-season
expenses and are charged to interim periods based upon estimated annual
revenues. No costs are deferred at the end of a fiscal year.
PROPERTY AND EQUIPMENT
Property and equipment, which includes land, rides and attractions,
buildings and improvements, and other (principally machinery and equipment) are
stated at cost (fair value at the date of acquisition). Depreciation is computed
for financial reporting purposes using the straight-line method over the
estimated useful lives of the assets. The estimated lives used in computing
depreciation are:
<TABLE>
<S> <C>
Rides and attractions........................................ 3 to 25 years
10 to 33
Buildings and improvements................................... years
Other........................................................ 3 to 15 years
</TABLE>
INVESTMENT IN CO-VENTURE PARKS
Six Flags, through two subsidiaries, is the general partner in two theme
park limited partnerships. Six Flags accounts for the parks as co-ventures,
i.e., the revenues and expenses (excluding partnership depreciation) are
included in Six Flags' consolidated statements of operations and the net amounts
distributed to the limited partners are deducted as expenses. Except for the
limited partnership units purchased pursuant to the tender offer, Six Flags has
no rights or title to the co-venture park assets or to
F-33
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the proceeds from any sale of the co-venture parks' assets. Accordingly, Six
Flags' consolidated balance sheets do not include any of the co-venture parks'
assets. The investment in co-venture parks included in the consolidated balance
sheets represents (i) Six Flags' interest in the estimated future cash flows
from the operations of the co-venture parks and is amortized over the life of
the partnership agreements, and (ii) the value of Limited Partnership units
purchased pursuant to the SFOG tender offer. The co-venture parks contributed
revenues of $160.6 million, $152.0 million and $176.8 million to Six Flags in
the fiscal years 1995, 1996 and 1997, respectively. See the Investment In
Co-venture Parks footnote below for a description of the new agreements
extending the management of Six Flags Over Georgia and Six Flags Over Texas,
each for another 30-year term.
DEFERRED FINANCING COSTS
Deferred financing costs consist of debt issuance costs incurred in
connection with the Credit Agreement, the issuance of the 12.25% Notes and the
issuance of the $192.3 million aggregate principal amount of Zero Coupon Senior
Notes due 1999 (the "Zero Coupon Notes") in December 1992. Deferred financing
costs are amortized over the life of the related debt. Accumulated amortization
of deferred financing costs at December 29, 1996 and December 28, 1997 amounted
to $8.3 million and $12.0 million, respectively.
EXCESS OF COST OVER NET ASSETS ACQUIRED
The excess of cost over net assets acquired is amortized over periods not
exceeding forty years using the straight-line method. Accumulated amortization
at December 29, 1996 and December 28, 1997 amounted to $39.6 million and $47.7
million, respectively.
OTHER ASSETS
Other assets consist primarily of intangible assets, which are amortized
over periods of two to thirteen years using the straight-line method.
Additionally, in 1997, other assets include a $10.7 million prepayment in
accordance with the Texas Agreements. See the Investment In Co-venture Parks
footnote.
REVENUE RECOGNITION
In general, Six Flags recognizes operating revenue from ticket sales when
guests are admitted to the parks. Theme park operations are highly seasonal and
substantially all revenues are generated in the second and third quarters of the
fiscal year.
CONCENTRATIONS OF CREDIT RISKS
Financial instruments, which potentially subject Six Flags to concentrations
of credit risk, consist primarily of cash and cash equivalents and receivables.
Six Flags places its cash and cash equivalents with high credit, quality
institutions and minimizes its credit risk exposure relating to receivables
through formal credit policies and monitoring procedures.
FINANCIAL INSTRUMENTS
The fair value of financial instruments, such as long-term debt, is
disclosed when significantly different from the recorded values of such
instruments in the consolidated balance sheets pursuant to FASB Statement No.
107, "Disclosure about Fair Value of Financial Instruments." Six Flags generally
estimates
F-34
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the fair value of its long-term debt by using discounted cash flow analyses
based on Six Flags' current borrowing rates for debt with similar maturities, or
by quoted market prices for the same issues.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
IMPAIRMENT OF LONG-LIVED ASSETS
The carrying value of long-lived assets, including intangibles, is reviewed
if the facts and circumstances, such as significant declines in revenues,
earnings or cash flows, or material adverse changes in the business climate,
suggest that it may be impaired. Six Flags performs its review by comparing the
book value relating to long-lived assets to the estimated future undiscounted
cash flows relating to such long-lived assets. If any impairment in the value of
the long- lived assets is indicated, the carrying value of the long-lived assets
is adjusted to reflect such impairment calculated based on the discounted cash
flows of the impaired assets or the assets fair value, as appropriate.
ADVERTISING
Advertising costs are expensed as incurred or the first time the advertising
takes place. Six Flags incurred advertising costs of approximately $53.4
million, $64.6 million and $61.1 million in the 1995, 1996 and 1997 fiscal
years, respectively
INVENTORIES
Inventories at December 29, 1996 and December 28, 1997 consist of the
following (in thousands):
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Merchandise, gifts and souvenirs........................................ $ 10,892 $ 12,029
Food and beverages...................................................... 1,242 948
Games................................................................... 1,158 1,133
Other................................................................... 234 228
--------- ---------
$ 13,526 $ 14,338
--------- ---------
--------- ---------
</TABLE>
F-35
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment at December 29, 1996 and December 28, 1997 consist of
the following (in thousands):
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Land................................................................ $ 55,218 $ 50,582
Buildings and improvements.......................................... 249,066 263,475
Rides and attractions............................................... 364,770 389,798
Other............................................................... 8,239 9,033
Construction in progress............................................ 36,950 55,368
----------- -----------
714,243 768,256
Less accumulated depreciation....................................... (225,175) (276,119)
----------- -----------
$ 489,068 $ 492,137
----------- -----------
----------- -----------
</TABLE>
INVESTMENT IN CO-VENTURE PARKS
Changes in the investment in co-venture parks at December 29, 1996 and
December 28, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Balance at beginning of period........................................ $ 34,404 $ 19,135
Capital additions made by the co-venture parks........................ 5,436 16,147
Operations, net of distributions to the limited partners.............. 18,603 18,633
Distributions to Six Flags............................................ (18,491) (24,126)
Amortization.......................................................... (20,817) (11,515)
---------- ----------
19,135 18,274
---------- ----------
Purchase of SFOG limited partnership units............................ -- 62,678
Amortization.......................................................... -- (2,582)
---------- ----------
-- 60,096
---------- ----------
$ 19,135 $ 78,370
---------- ----------
---------- ----------
</TABLE>
F-36
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SIX FLAGS OVER GEORGIA
On March 18, 1997, Six Flags, Time Warner and TWE completed arrangements
pursuant to which SFOG II will manage the Six Flags Over Georgia Park through
2026. Under the agreements governing the new arrangements (the "Georgia
Agreements"), the Six Flags Over Georgia Park is owned by a newly formed limited
partnership ("Six Flags Over Georgia II") of which SFOG II is the managing
general partner.
The key elements of the new arrangements are as follows: (i) the limited
partner (which is not affiliated with Six Flags) will receive minimum annual
distributions of $18.5 million in 1997, increasing each year thereafter in
proportion to increases in the cost of living; thereafter, SFOG II will be
entitled to receive from available cash (after provision for reasonable reserves
and after capital expenditures per annum of approximately 6% of prior year
revenues) a management fee equal to 3% of the prior year's gross revenues; and,
thereafter, any additional available cash will be distributed 95% to SFOG II and
5% to the limited partner; (ii) in the second quarter of 1997, a subsidiary of
SFTP (the "SFTP-SFOG Subsidiary") and a subsidiary of SFEC (the "SFEC-SFOG
Subsidiary") made a tender offer for partnership interests ("SFOG LP Units") in
Six Flags Fund, Ltd. (L.P.), which owns 99% of the limited partner of Six Flags
Over Georgia II, that valued the Six Flags Over Georgia Park at the greater of
$250 million or 8.0 times 1997 EBITDA of the Six Flags Over Georgia Park (the
"SFOG Tender Offer Price"); (iii) commencing in 1998, and on an annual basis
thereafter, the SFTP-SFOG Subsidiary and the SFEC-SFOG Subsidiary will offer to
purchase additional SFOG LP Units at a price based on the greater of the SFOG
Tender Offer Price or the EBITDA of the Six Flags Over Georgia Park for the
prior four years (provided that no more than $50 million of such SFOG LP Units
will be acquired by the SFTP-SFOG Subsidiary); and (iv) in 2026, Six Flags and
its affiliates will have the option to acquire the Six Flags Over Georgia Park
at a price based on the Tender Offer Price, increased in proportion to the
increase in the cost of living between December 1996 and December 2026. SFEC,
SFTP, and TWE have guaranteed certain of the obligations (including the minimum
annual distributions noted in (i) above) of SFOG II and Six Flags Over Georgia
II under the Georgia Agreements, and in consideration therefor, SFOG II has
agreed to assign to SFTP at least 90% of the cash distributions it receives from
time to time from Six Flags Over Georgia II. Six Flags continues to account for
the Six Flags Over Georgia Park as a co-venture and includes the revenues and
expenses of Six Flags Over Georgia II partnership (excluding partnership
depreciation) in Six Flags' consolidated financial statements and deducts as
expenses the net amounts distributed to the limited partners. As a result of
entering into the Georgia Agreements, Six Flags expects a reduction in net
income and net cash flow allocation from Six Flags Over Georgia II.
On May 6, 1997, in connection with the closing of the tender offer described
above, the SFTP-SFOG Subsidiary and the SFEC-SFOG Subsidiary purchased
approximately 17% and 8%, respectively, of SFOG LP Units for approximately $42.4
million and $20.3 million, respectively. The purchase of SFOG LP Units entitles
each such purchaser the right to receive minimum annual distributions and any
residual distributions (5% of available cash after the minimum annual
distributions and management fee distributions) in proportion to the percentage
amounts purchased. The purchase of SFOG LP Units by the SFTP-SFOG Subsidiary was
financed through a drawdown on Six Flags' secured revolving line of credit
available for acquisitions under the Credit Agreement and the purchase of SFOG
LP Units by the SFEC-SFOG Subsidiary was financed through loans from TWE, which
were subsequently refinanced with demand loans from Chase Bank. See Long-Term
Debt footnote.
In connection with the purchase of the SFOG LP Units, approximately $49.8
million of the excess of cost over net assets acquired associated with this
investment is being amortized over 30 years. The net
F-37
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
investment in SFOG LP Units is presented as part of the investment in co-venture
parks. Accumulated amortization at December 28, 1997 amounted to $2.6 million.
SIX FLAGS OVER TEXAS
On November 24, 1997, Six Flags, Time Warner and TWE completed arrangements
pursuant to which Six Flags Over Texas, Inc., a wholly-owned subsidiary of SFTP
("SFOT"), will manage the Six Flags Over Texas Park through 2027. Under the
agreements governing the new arrangements (the "Texas Agreements"), the Six
Flags Over Texas Park will continue to be owned by Texas Flags Ltd., a limited
partnership ("Six Flags Over Texas") of which SFOT is the managing general
partner.
The key elements of the new arrangements are as follows: (i) the limited
partner (which is not affiliated with Six Flags) will receive minimum annual
distributions of $27.7 million in 1998, increasing each year thereafter in
proportion to increases in the cost of living; thereafter, SFOT II will be
entitled to receive from available cash (after provision for reasonable reserves
and after capital expenditures per annum of approximately 6% of prior year
revenues) a management fee equal to 3% of the prior year's gross revenues; and,
thereafter, any additional available cash will be distributed 92.5% to SFOT and
7.5% to the limited partner; (ii) in the first quarter of 1998, a subsidiary of
SFTP (the "SFTP-SFOT Subsidiary") and a subsidiary of SFEC (the "SFEC-SFOT
Subsidiary") have commenced a tender offer for partnership interests ("SFOT LP
Units") in Six Flags Over Texas, Ltd., which owns 99% of the limited partner of
Six Flags Over Texas, that values the Six Flags Over Texas Park at the greater
of $375 million or 8.5 times 1998 EBITDA of the Six Flags Over Texas Park (the
"SFOT Tender Offer Price"); (iii) commencing in 1999, and on an annual basis
thereafter, the SFTP-SFOT Subsidiary and the SFEC-SFOT Subsidiary will offer to
purchase additional SFOT LP Units at a price based on the EBITDA of the Six
Flags Over Texas Park for the prior four years; and (iv) in 2027, Six Flags and
its affiliates will have the option to acquire the Six Flags Over Texas Park at
a price based on the SFOT Tender Offer Price, increased in proportion to the
increase in the cost of living between December 1997 and December 2027. SFEC,
SFTP and TWE have guaranteed certain of the obligations (including the minimum
annual distributions noted in (i) above) of SFOT under the Texas Agreements. Six
Flags intends to continue to account for the Six Flags Over Texas Park as a co-
venture and to include the revenues and expenses of Texas Flags partnership
(excluding partnership depreciation) in Six Flags' consolidated financial
statements and deduct as expenses the net amounts distributed to the limited
partners. As a result of entering into the Texas Agreements, Six Flags expects a
reduction in net income and net cash flow allocation from Texas Flags.
In connection with the entering into the Texas Agreements, a subsidiary of
SFEC loaned $10.7 million to Texas Flags Ltd. during December 1997 as a
prepayment of its obligations under the Texas Agreements. This amount has been
included in other assets, net as of December 28, 1997.
The tender offer for SFOT LP Units commenced on January 23, 1998 and is
expected to close on March 12, 1998. Six Flags will purchase these units through
the SFEC-SFOT Subsidiary and will finance the purchase of such units through
loans from a syndicate of lenders.
F-38
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ACCRUED LIABILITIES
Accrued liabilities at December 29, 1996 and December 28, 1997 consist of
the following (in thousands):
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Insurance............................................................... $ 15,867 $ 15,608
Income taxes payable.................................................... 4,036 557
Real estate and property taxes.......................................... 2,983 3,352
Compensation and payroll taxes.......................................... 7,920 8,728
Interest................................................................ 2,741 3,431
Pension costs........................................................... 2,868 921
Deferred revenue........................................................ 4,422 4,352
Other................................................................... 9,048 6,441
--------- ---------
$ 49,885 $ 43,390
--------- ---------
--------- ---------
</TABLE>
SHORT-TERM BORROWINGS
Short-term borrowings at December 29, 1996 and December 28, 1997 consist of
the following (in thousands):
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
8.5% Note payable to Chase Bank, due March 31, 1998...................... $ -- $ 19,778
7.2% Note payable to TWE, due March 31, 1998............................. -- 10,725
Co-venture parks general partner line of credit.......................... 1,585 --
--------- ---------
$ 1,585 $ 30,503
--------- ---------
--------- ---------
</TABLE>
The proceeds from the note payable to Chase Bank were used to purchase
approximately 8% of SFOG LP Units pursuant to the tender offer for such units.
The proceeds from the TWE note payable were loaned to Texas Flags Ltd. in
connection with the Texas Agreements. See the Investment in Co-venture Parks
footnote. The weighted average interest rate of short-term borrowings
outstanding as of December 29, 1996 and December 28, 1997 was 7.5 % and 8.5%,
respectively.
F-39
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
LONG-TERM DEBT
Long-term debt of Six Flags at December 29, 1996 and December 28, 1997
consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Credit Agreement, due through 2003, interest rates from 8.5% to
9.13%............................................................... $ 366,500 $ 348,500
12.25% Notes of SFTP, due 2005, less unamortized discount of $45,328
and $15,075 at December 29, 1996 and December 28, 1997,
respectively........................................................ 239,672 269,925
Zero Coupon Notes of SFEC, due 1999, less unamortized discount of
$45,097 and $31,176 at December 29, 1996 and December 28, 1997,
respectively........................................................ 147,153 161,074
---------- ----------
753,325 779,499
Less current portion.................................................. (38,332) (26,130)
---------- ----------
$ 714,993 $ 753,369
---------- ----------
---------- ----------
</TABLE>
The scheduled annual maturities of Six Flags' debt are as follows (in
thousands):
<TABLE>
<S> <C>
1998.............................................................. $ 26,130
1999.............................................................. 216,074
2000.............................................................. 65,000
2001.............................................................. 60,000
2002.............................................................. 39,870
Thereafter........................................................ 372,425
---------
$ 779,499
---------
---------
</TABLE>
CREDIT AGREEMENT
In 1995, SFTP entered into a $600 million Credit Agreement with a group of
lenders. The Credit Agreement consists of a $345 million Tranche A Senior
Secured Term Loan Facility (the "Tranche A Term Facility"), a $130 million
Tranche B Senior Secured Term Loan Facility (the "Tranche B Term
Facility")(together the "Term Facilities"), and a Senior Secured Revolving
Credit Facility (the "Revolving Facility"). The Revolving Facility provides for
revolving loans to SFTP and the issuance of letters of credit for the account of
SFTP in an aggregate principal amount of up to $125 million, of which not more
than $12 million may be represented by letters of credit. The interest rates per
annum applicable to the Tranche A Term Facility and Revolving Facility are LIBOR
plus 2.50%, as adjusted semi-annually. The interest rate per annum applicable to
the Tranche B Term Facility is LIBOR plus 3.00%, as adjusted semi-annually. The
amounts outstanding under the Term Facilities were $307.5 million at December
28, 1997. At December 29, 1996, there were no amounts borrowed against the
Revolving Facility. The amounts borrowed against the Revolving Facility as of
December 28, 1997 were $41 million. As of December 28, 1997, the Company had
$9.3 million in letters of credit outstanding.
Borrowings under the Tranche A Term Facility are payable as to principal in
July and September of each year through 2001. Borrowings under the Tranche B
Term Facility are payable in July and September of each year through 2002 and in
June 23, 2003. SFTP is required to make mandatory prepayments of
F-40
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
loans, and letters of credit will be mandatorily reduced based on certain
criteria, as defined in the Credit Agreement.
At least once during the period from June 30 to August 31 in each fiscal
year, SFTP must repay all loans outstanding under the Revolving Facility in
excess of an amount equal to the lesser of (a) $50.0 million and (b) the
principal amount of loans then outstanding under the Revolving Facility that
were used to finance related business acquisitions. SFTP may not make drawings
under the Revolving Facility for 30 consecutive days following the date of such
repayment. During such period, SFTP must also cause each co-venture park limited
partnership to repay all amounts outstanding under their unsecured credit lines
and not to make drawings thereunder for 30 consecutive days following the date
of such repayment.
The obligations of SFTP under the Credit Agreement are unconditionally and
irrevocably guaranteed by each of SFTP's direct or indirect subsidiaries, other
than the co-venture partnerships and certain special purpose subsidiaries. In
addition, the Credit Agreement is secured by first priority security interests
in all capital stock and other equity interests of SFEC and its subsidiaries.
SFTP is required to pay a per annum fee equal to 2.50%, plus a fronting fee
of 0.25%, of the aggregate face amount of outstanding letters of credit under
the Revolving Facility and a per annum fee equal to 0.50% on the undrawn portion
of the commitments in respect of the Revolving Facility. Commitment fees totaled
$0.3 million, $0.6 million and $0.4 million in 1995, 1996 and 1997,
respectively.
The Credit Agreement contains a number of significant covenants that, among
other things, restricts the ability of SFTP to dispose of assets, incur
additional indebtedness, repay other indebtedness, amend material agreements,
pay dividends, create liens on assets, enter into leases, make investments or
acquisitions, engage in mergers or consolidations, make capital expenditures, or
engage in certain transactions with subsidiaries and affiliates and will
otherwise restrict corporate activities. In addition, under the Credit Agreement
SFTP is required to comply with specified financial ratios and tests, including
cash interest expense coverage, debt service coverage and debt to earnings
ratios. The Credit Agreement also contains provisions that prohibit any
modification of the indenture governing the Notes in any manner adverse to the
lenders under the Credit Agreement and that limit SFTP's ability to refinance
the Notes without the consent of such lenders.
In December 1995, SFTP entered into no-cost interest rate collar
transactions with certain lenders (or their affiliates) under the Credit
Agreement. The interest rate collar transactions effectively protect against an
increase in the three month LIBOR above 7% but limits SFTP's ability to benefit
from a decline in the three month LIBOR below 4.55% with respect to $172
million, $150 million and $130 million notional amounts of debt during the 1996,
1997 and 1998 fiscal years, respectively. Interest payments/receipts on these
interest rate collar agreements will be made quarterly. No such
payments/receipts occurred through December 28, 1997.
The fair value of the Credit Agreement and related interest rate collar
transactions approximated their carrying value as of December 29, 1996 and
December 28, 1997.
SENIOR SUBORDINATED DISCOUNT NOTES
SFTP issued the 12.25% Notes on June 23, 1995 (the "Issue Date") pursuant to
an Indenture dated as of such date, among SFTP, the Note Guarantors and United
States Trust Company of New York, as trustee. In November 1995, SFTP offered to
exchange $285.0 million aggregate principal amount of its 12.25% Series A Senior
Subordinated Discount Notes due 2005 (the "Series A Notes" and, together with
the 12.25% Notes, the "Notes") for a like principal amount of its 12.25% Notes.
The exchange offer expired on December 18, 1995, and $283.5 million aggregate
principal amount of the Series A Notes were
F-41
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
exchanged for an equal principal amount of 12.25% Notes. The Series A Notes are
governed by the same indenture as, and are substantially identical to, the
12.25% Notes. However, unlike the 12.25% Notes, the Series A Notes were issued
in a transaction registered under the Securities Act of 1933, as amended.
The Notes are and will be unsecured senior subordinated obligations of SFTP,
limited to $285.0 million aggregate principal amount, maturing on June 15, 2005.
The Notes will accrete in value for purposes of the Indenture until June 15,
1998, at which time the accreted value of the Notes will equal 100% of their
principal amount ($285 million). Interest payable in cash will not accrue or be
payable prior to June 15, 1998; thereafter, the accreted value of the Notes will
no longer increase and cash interest will be payable semi-annually on June 15
and December 15 of each year, commencing December 15, 1998, at a rate of 12.25%
per annum.
The Notes will be redeemable, at SFTP's option, in whole or in part, at any
time on or after June 15, 2000 through maturity. If redeemed during the 12-month
period commencing on June 15 of the years set forth below, SFTP will be required
to pay the following redemption prices:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2000........................................................................ 106.0%
2001........................................................................ 104.0%
2002........................................................................ 102.0%
2003 and thereafter......................................................... 100.0%
</TABLE>
In addition, at any time prior to June 15, 1998, SFTP may, subject to
certain requirements, redeem Notes having a principal amount of up to 35% of the
original aggregate principal amount of the Notes with the net cash proceeds of
one or more public equity offering by SFTP at a redemption price equal to
112.25% of the accreted value of the Notes to be redeemed as of the redemption
date; provided, however, that at least 65% of the original aggregate principal
amount of the Notes must remain outstanding.
The fair value of the Notes, estimated based on the quoted market prices,
was $230.1 million and $303.5 million at December 29, 1996 and December 28,
1997, respectively.
The Notes are guaranteed on an unsecured, senior subordinated basis by Six
Flags Over Georgia, Inc., Six Flags Over Texas, Inc. and S.F. Partnership (the
"Note Guarantors"), each of which is a wholly-owned subsidiary of SFTP.
ZERO COUPON NOTES
The Zero Coupon Notes are unsecured obligations of SFEC issued under an
Indenture dated as of December 16, 1992, as amended, between SFEC, TWE and the
United States Trust Company of New York, as trustee (the "Indenture"). The Zero
Coupon Notes may not be redeemed prior to maturity and there will be no periodic
payments of interest over the life of the Zero Coupon Notes.
TWE has unconditionally and irrevocably agreed that upon a failure by SFEC
to pay the principal amount of the Zero Coupon Notes upon maturity, or to pay
the Accreted Value Amount (as defined in the Indenture) upon a declaration of
acceleration following a Secondary Event of Default (as defined in the
Indenture), TWE will offer to purchase the Zero Coupon Notes from the holders
thereof at a predetermined price. TWE's obligation to make the offer to purchase
will rank PARI PASSU with all other unsecured and unsubordinated obligations for
money borrowed of TWE.
The fair value of the Notes, estimated based on the quoted market prices,
was $154.3 million and $170.1 million at December 29, 1996 and December 28,
1997, respectively.
F-42
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
STOCKHOLDERS' EQUITY
Pursuant to the 1995 Refinancing and Recapitalization, SFEC's outstanding
equity consists of 5,100,000 shares of Class A Convertible Preferred Stock, par
value $.01 per share, 4,900,000 shares of Class B Convertible Preferred Stock,
par value $.01 per share, 51 shares of Class A Common Stock, par value $.01 per
share ("Class A Common Stock"), and 49 shares of Class B Common Stock, par value
$.01 per share ("Class B Common Stock"). The Class A Convertible Preferred Stock
has a liquidation preference per share of $40 plus accrued and unpaid dividends
to the liquidation date. Dividends accrue on the outstanding shares of Class A
Convertible Preferred Stock on a daily basis at the rate of 12% per annum,
compounded semi-annually on December 1 and June 1 of each year. Accrued and
unpaid dividends for the Class A Convertible Preferred Stock were $39.6 million
and $69.5 million at December 29, 1996 and December 28, 1997, respectively. The
Class B Convertible Preferred Stock has a liquidation preference per share of
$40. No dividends shall accrue on the Class B Convertible Preferred Stock.
Members of the Investor Group own 51% of the equity of SFEC, consisting of all
of the outstanding shares of Class A Convertible Preferred Stock and Class A
Common Stock, and TWE owns 49% of the equity of SFEC, consisting of all of the
outstanding shares of Class B Convertible Preferred Stock and Class B Common
Stock. SFEC's Class A Convertible Preferred Stock and Class A Common Stock are
further divided into shares of voting stock (known as Class A-1 Convertible
Preferred Stock and Class A-1 Common Stock, respectively) and non-voting stock
(known as Class A-2 Convertible Preferred Stock and Class A-2 Common Stock,
respectively). The non-voting shares of each such class were created for the
benefit of certain regulated entities (each a "Regulated Holder") whose ability
to own voting stock is restricted. Shares of Class A-1 Convertible Preferred
Stock and Class A-1 Common Stock may be exchanged by a Regulated Holder on a
share-for-share basis for non-voting shares of such class. Shares of Class A-2
Convertible Preferred Stock and Class A-2 Common Stock may be exchanged on a
share-for-share basis for voting shares of each such class if such shares are
held by a person other than by a Regulated Holder. Except for voting rights
specifically accorded to a particular class under Delaware law, the shares of
Class A-1 Common Stock and Class B Common Stock vote together as a single class
on matters requiring stockholder action.
Six Flags has entered into an Employment Agreement ("the Agreement") with an
Executive (the "Executive") whereby SFEC agrees to reserve for issuance a
certain number of shares of Class B Common Stock (the "Reserved Shares"), as
defined in the Agreement. The Reserved Shares will become vested on December 31,
2000, subject to the Executive's employment having continued through such date
or prior thereto if certain events occur as defined in the Agreement. Upon
vesting of the Reserved Shares, the Executive will be entitled to receive from
Six Flags, in addition to the issued shares, any dividends or distributions had
such shares been issued and outstanding at the time that such dividends or
distributions were declared and paid as defined in the Agreement. Six Flags has
recognized compensation expense related to the Reserved Shares during 1996 and
1997.
Under the Agreement, the Executive was also granted options to purchase
shares of SFEC's Class B Common Stock. The options include an option to purchase
an additional 163,936 shares of SFEC's Class B Common Stock (the "Tranche 1
Option"), and a second option to purchase an additional 327,872 shares of SFEC's
Class B Common Stock (the "Tranche 2 Option"). The exercise price of the Tranche
1 Option is based on a September 1995 exercise price of $40.64 per share,
increasing at a cumulative annual rate of 10%. The exercise price of the Tranche
2 Option is based on a September 1995 exercise price of $40.94, increasing at a
cumulative annual rate of 15%. On each September 15 while the Executive is
employed under Agreement, the number of shares of SFEC's Class B Common Stock
reserved for issuance under the terms of the Tranche 1 Option will decrease by
5,858.9 shares, at which time the Executive will be granted a like number of
additional Reserved Shares. In addition, SFEC granted additional options for the
purchase
F-43
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
of 327,872 shares of SFEC's Class B Common Stock to members of management of Six
Flags and its subsidiaries. The terms of these options will be similar to the
Tranche 1 Option and Tranche 2 Option described above.
The options become exercisable only if there is a triggering event, as
defined in the stock option plan agreement. Accordingly, these stock options
have been treated as if they were unissued due to the uncertainty regarding the
Executive's and other management employees' ability to exercise such options.
In 1995, the Financial Accounting Standards Board issued SFAS. No. 123,
"Accounting for Stock-Based Compensation," which permits either recording the
estimated value of stock-based compensation over the applicable vesting period
or disclosing such cost in the notes to the financial statements. Six Flags has
adopted the disclosure-only provisions of SFAS 123. Had compensation cost for
the stock options been determined consistent with SFAS 123, the proforma effect
would not have been significant.
PENSION PLAN
Six Flags maintains a noncontributory, defined benefit pension plan (the
"Plan") covering substantially all of Six Flags' full-time employees. The Plan
permits normal retirement at age 65, with early retirement at ages 55 through 64
upon attainment of ten years of credited service. The early retirement benefit
is reduced for benefits commencing before age 62. Plan benefits are calculated
according to a benefit formula based on age, average compensation over the
highest consecutive five-year period during the employee's last ten years of
employment and years of service. Plan assets are invested primarily in common
stocks and mutual funds. The Plan does not have significant liabilities other
than benefit obligations. Under Six Flags' funding policy, contributions to the
Plan are determined using the projected unit credit cost method. This funding
policy meets the requirements under the Employee Retirement Income Security Act
of 1974.
F-44
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The reconciliation of the funded status of the Plan for the fiscal years
1996 and 1997 follows (in thousands):
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Actuarial present value of current accumulated pension obligations,
including vested benefits of $35,615 and $45,289 in 1996 and 1997,
respectively.......................................................... $ 41,243 $ 52,436
--------- ---------
--------- ---------
Actuarial present value of accumulated pension obligations, adjusted for
assumptions regarding future compensation levels (projected benefit
obligations).......................................................... $ 58,702 $ 68,912
Pension assets at market value.......................................... 60,560 77,024
--------- ---------
Projected benefit obligation less than pension assets................... (1,858) (8,112)
Unrecognized net gain................................................... 3,389 7,943
Unrecognized prior service costs........................................ 1,337 1,090
--------- ---------
Accrued pension liability............................................... $ 2,868 $ 921
--------- ---------
--------- ---------
</TABLE>
Net pension cost for the fiscal years 1995, 1996 and 1997 included the
following components (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
---------- --------- ----------
<S> <C> <C> <C>
Pension costs for benefits earned........................... $ 2,035 $ 3,133 $ 3,025
Interest cost on projected benefit obligation............... 3,612 4,436 4,858
Actual return on pension assets............................. (3,510) (8,484) (13,584)
Net amortization and deferrals.............................. (176) 3,776 7,912
---------- --------- ----------
Net pension cost............................................ $ 1,961 $ 2,861 $ 2,211
---------- --------- ----------
---------- --------- ----------
</TABLE>
Measurement of the projected benefit obligation was based on the following
assumptions:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Discount rate.......................................................... 7.25% 7.75% 7.25%
Return on plan assets.................................................. 9.00% 9.00% 9.00%
Expected rate of salary progression.................................... 6.00% 6.00% 5.00%
</TABLE>
SAVINGS PLAN
Under the provisions of the Six Flags' savings plan, all full-time and
seasonal employees of Six Flags completing one year of service (minimum 1,000
hours) and attaining age 21 are eligible to participate and may contribute up to
6% of compensation as a tax deferred basic contribution. Each participant may
also elect to make additional contributions of up to 10% of compensation (up to
4% tax deferred). Tax deferred contributions to the savings plan may not exceed
amounts defined by the Internal Revenue Service ($9,500 for 1997). Both the
basic and additional contributions are at all times vested. Six Flags, at its
discretion, may make matching contributions of up to 100% of its employees'
basic contributions. Six Flags contributed $0.7 million for each of the 1996 and
1995 Plan years, representing up to 30% of the employees' basic contributions.
Six Flags plans to make $0.9 million in contributions for the 1997 plan year.
Six Flags matching contributions to the savings plan are made in the first
quarter of the succeeding year.
F-45
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INCOME TAXES
Significant components of income tax expense are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Current
Federal........................................................ $ 3,668 $ -- $ --
State.......................................................... 2,269 -- --
--------- --------- ---------
Total current.................................................... 5,937 -- --
--------- --------- ---------
Deferred
Federal........................................................ 606 4,369 --
State.......................................................... 200 768 --
--------- --------- ---------
Total deferred................................................... 806 5,137 --
--------- --------- ---------
$ 6,743 $ 5,137 $ --
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income tax expense (benefit) varied from the U.S. federal statutory income
tax rate due to the following (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Tax provision (benefit) on income (loss) at U.S. federal
statutory rate of 35%....................................... $ 1,209 $ (3,539) $ (1,298)
Non-deductible amortization of goodwill....................... 2,762 2,287 2,866
State income taxes, net of federal benefit.................... 1,600 499 --
Carryover of net operating losses............................. -- 5,822 (1,241)
Other......................................................... 1,172 68 (327)
--------- --------- ---------
Income tax expense............................................ $ 6,743 $ 5,137 $ --
--------- --------- ---------
--------- --------- ---------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
F-46
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Significant components of Six Flags' deferred tax assets and liabilities at
December 29, 1996 and December 28, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997
---------- ---------
<S> <C> <C>
Deferred tax liabilities:
Depreciation......................................................... $ 18,800 $ 33,736
Deferral related to tax and fiscal year end difference............... 41,051 46,225
Other................................................................ 22,824 7,256
---------- ---------
Total deferred tax liabilities......................................... 82,675 87,217
---------- ---------
Deferred tax assets:
Tax basis in excess of book basis.................................... 58,964 55,467
Net operating loss carryforwards..................................... 24,698 43,071
Other................................................................ 4,835 4,600
---------- ---------
Total deferred tax assets.............................................. 88,497 103,138
Valuation allowance.................................................... (5,822) (15,921)
---------- ---------
Net deferred tax assets................................................ 82,675 87,217
---------- ---------
Net deferred income taxes.............................................. $ -- $ --
---------- ---------
---------- ---------
</TABLE>
Realization of deferred tax assets associated with the net operating loss
carryforwards is dependent upon generating sufficient taxable income prior to
their expiration. Management believes that there is a risk that certain of these
net operating loss carryforwards may expire unused and, accordingly, has
established a valuation allowance against them. Although realization is not
assured for the remaining deferred tax assets, management believes it is more
likely than not that they will be realized through future taxable earnings or
alternative tax strategies.
At December 31, 1997, Six Flags has approximately $123.0 million of net
operating loss carryforwards, which expire through 2012.
SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information consists of the following (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
----------- --------- ----------
<S> <C> <C> <C>
Cash interest paid........................................ $ 35,282 $ 34,284 $ 36,089
----------- --------- ----------
----------- --------- ----------
Income taxes paid......................................... $ 5,401 $ -- $ 3,479
----------- --------- ----------
----------- --------- ----------
1995 Refinancing and Recapitalization:
Proceeds from term loans................................ $ 475,000 $ -- $ --
Proceeds from the 12.25% Notes.......................... 200,024 -- --
Repayment of TWE debt................................... (558,453) -- --
Return of capital....................................... (89,047) -- --
Payment of deferred financing fees...................... (27,524) -- --
----------- --------- ----------
$ -- $ -- $ --
----------- --------- ----------
----------- --------- ----------
</TABLE>
F-47
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH TIME WARNER ENTERTAINMENT COMPANY, L.P. AND AFFILIATES
On December 31, 1997, TWE contributed $4.0 million to Six Flags pursuant to
an agreement with the Investor Group. This capital contribution is reflected as
an affiliate receivable as of December 28, 1997.
On May 5, 1997, TWE loaned $19.5 million to a subsidiary of Six Flags. The
proceeds from this affiliate loan were used to purchase approximately 8% of SFOG
LP Units pursuant to the tender offer for such units. On December 23, 1997, this
affiliate loan, along with accrued interest, was refinanced with Chase Bank. On
November 24, 1997, TWE loaned $10.7 million to another Six Flags subsidiary. The
proceeds of this affiliate loan were loaned to Texas Flags Ltd. in connection
with the Texas Agreements. See the Investment In Co-venture Parks footnote.
In 1996 and 1997, Six Flags reimbursed TWE and its affiliates $4.4 million
and $2.6 million, respectively, for royalties on merchandise, advertising and
other expenses. Employees of a subsidiary of TWE served as senior management of
Six Flags during 1995. Costs associated with this management team, including
compensation and overhead, were charged to Six Flags by TWE. During 1995, Six
Flags was also allocated costs for additional services from TWE, including
accounting services, insurance coverage, transportation, and other services.
Costs allocated from TWE were at a level agreed upon by TWE and Six Flags. Six
Flags believes that this method of allocation was reasonable and that the
allocated costs approximated the costs which would have been incurred on a
stand-alone basis. In 1995, Six Flags recorded approximately $5.3 million for
merchandise royalties, advertising, and other expenses, as well as compensation,
overhead and other services allocated to Six Flags by TWE. Liabilities relating
to such amounts are included in other long-term liabilities in the accompanying
consolidated balance sheets. There were no costs allocated from TWE subsequent
to June 23, 1995.
As part of the 1995 Refinancing and Recapitalization, Six Flags entered into
a new license agreement (the "License Agreement") pursuant to which it obtained
the exclusive right for a term of 55 years to theme park use in the United
States and Canada (excluding the Las Vegas, Nevada metropolitan area) of all
animated, cartoon and comic book characters that Warner Bros. and DC Comics have
the right to license for such use during the term of the agreement, including
all characters which, prior to the effectiveness of the License Agreement,
already had been licensed by Warner Bros. and DC Comics to Six Flags for use in
connection with Six Flags' theme parks.
Under the License Agreement, Six Flags will pay an annual license fee of
$500,000 for each of the first ten years of the license term. Thereafter, the
license fee will be subject to periodic scheduled increases and will be payable
on a per-theme park basis. The annual license fees will also be increased by
amounts equal to any third-party payments which may be payable by Warner Bros.
or DC Comics as a result of the use of any licensed character by Six Flags.
Six Flags entered into an amendment to the License Agreement ("Amendment No.
1") which provides the exclusive right for a period of three years ending
December 31, 1998, to theme park use of elements contained in released versions
of certain theatrical motion pictures and television shows, along with usage of
the "Warner Bros. Backlot Logo" (the "Logo Usage"). Each separate motion
picture, television series and/or Logo Usage may be utilized only in connection
with live shows within Six Flags' parks. Six Flags was charged $400,000 in total
for the years 1996 and 1997 and will be charged $150,000 in 1998 for the rights
granted pursuant to Amendment No. 1.
F-48
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In addition to the annual license fees described above, Six Flags is also
required to pay royalties on sales of products incorporating the licensed
characters at standard royalty rates for such products, subject to increase from
time to time. Warner Bros. will be entitled to terminate the License Agreement
prior to the expiration of the stated term if Six Flags, at any time during the
term, is directly or indirectly controlled by a person that derives significant
revenues from the production or distribution of motion pictures or engages in
certain other businesses competitive with TWE.
Six Flags also entered into a license agreement with TWE pursuant to which
TWE granted Six Flags a 25-year license to use the trademarks and service marks
relating to the "Home Box Office" and "HBO" names and the "HBO" logo for use in
connection with the operation of restaurants in Six Flags' theme parks. The TWE
license is royalty-free for the first ten years of its term. Thereafter, annual
royalties will be established every five years. Six Flags also entered into an
agreement entitling Six Flags (i) to use the name "Time Warner" in connection
with operating a retail merchandise outlet with the name "Time Warner Studio
Store" at Six Flags' theme parks and for establishing a themed area in each of
Six Flags' theme parks to be called "Time Warner Studios" and (ii) to stage a
concert series in Six Flags' theme parks under the name "Warner Music Rock
Review." Six Flags also entered into a license agreement with the Sports
Illustrated division of Time Warner pursuant to which Time Warner granted Six
Flags a ten-year royalty-free license to use the "Sports Illustrated" and
"Sports Illustrated for Kids" trademarks and service marks in connection with
the operation of a sports festival at Six Flags' theme parks. The licensor under
each of these additional license agreements has the right to terminate the
license granted thereby if, during the stated term of any such license
agreement, the Warner Bros. License Agreement is terminated for any reason. The
licensor also has the right under certain circumstances to suspend the right of
any of Six Flags' theme parks to use the licenses granted thereby if the license
is not sufficiently utilized in such theme park.
At January 1, 1995, Six Flags had amounts outstanding to TWE aggregating
$488.0 million. Interest expense relating to the amounts due to TWE for fiscal
year 1995 amounted to $18.0 million. At January 1, 1995, accrued interest on the
TWE debt amounted to $7.2 million. As part of the 1995 Refinancing, all amounts
due to TWE were repaid.
COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS AND OTHER
Six Flags is a party to lawsuits incidental to its business and against
which Six Flags believes it is adequately insured or which will not result in
losses material to the consolidated financial position or results of operations
of Six Flags.
On March 19, 1997, SFTP, and its wholly-owned subsidiary Six Flags Over
Georgia, Inc. (collectively, the "Six Flags Parties") commenced a declaratory
judgement action in the Superior Court of Gwinnett County, Georgia, entitled Six
Flags Over Georgia, Inc. and Six Flags Theme Parks, Inc. v. Six Flags Fund, Ltd.
and Avram Salkin, as Trustee of the Claims Court. The Six Flags Parties sought,
among other things, a declaration and determination of rights and obligations of
the partners of Six Flags Over Georgia, LP with respect to certain disputed
partnership affairs and an accounting of all partnership affairs. On April 21,
1997, defendants Six Flags Fund Ltd. and its affiliates (collectively, the "SFOG
Fund Parties") filed a motion to discuss the declaratory judgment action as well
as an answer and counterclaim naming SFEC and Time Warner Entertainment Company,
LP as additional counterclaim-defendants. The counterclaim seeks imposition of a
constructive trust, compensatory damages of in excess of $250 million and
unspecified punitive damages for alleged breaches of fiduciary duty, conversion,
fraud and conspiracy allegedly committed by the counterclaim-defendants in
connection with the management of the Six Flags Over
F-49
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Georgia theme park (the "Georgia Park"). Six Flags and the other
counterclaim-defendants intend to vigorously contest these allegations.
On June 9, 1997, the parties entered into a Consent Order in which they
agreed, among other things, to realign the parties. An Amended Complaint was
then filed by the SFOG Fund Parties as the newly aligned plaintiffs against the
Six Flags Parties in which the same substantive claims were asserted. The Six
Flags Parties filed their answer denying liability and asserting several
affirmative defenses on July 24, 1997. The Six Flags Parties intend to
vigorously contest the allegations of the complaint.
On February 2, 1995, Six Flags entered into an agreement with the Jackson
Township Municipal Utilities Authority of New Jersey (the "Authority") which
provides for the extension of the Authority's sanitary sewer collection
facilities to Six Flags Great Adventure ("SFGA"), Six Flags' theme park located
in Jackson, New Jersey, and connection of the SFGA property to such facilities.
SFGA will be entitled to utilize approximately 40% of the total capacity of the
extension and the Authority will waive SFGA's fees relating to connecting to the
extension. The Authority through the New Jersey Waste Water Treatment Trust
("NJWWTT") plans to issue approximately $6.5 million of tax-exempt bonds (the
"Bonds") to finance the costs of the extension. Six Flags has agreed to pay the
Authority amounts equal to principal and interest on the Bonds plus fees to the
NJWWTT. Such debt service payments are estimated at approximately $0.5 million
per annum over the 20-year life of the bonds. In addition, Six Flags has
permitted the Authority to retain, as security, $0.9 million that the Authority
currently owes to Six Flags. These amounts will be repaid to Six Flags on a pro
rata basis as the principal of the Bonds is amortized. Six Flags will be
entitled to credits against the debt service payments as new users connect to
the extension and pay for the 60% of capacity not used by SFGA. Six Flags made
the first principal and interest payment on the bonds, approximately $0.2
million, during the first quarter of 1998.
LEASES
Six Flags leases certain buildings, vehicles, equipment and rides under
operating leases. Vehicles are generally leased under a Fleet Lease Agreement,
which provides for early lease termination under certain conditions. All other
leases are generally noncancellable and may contain renewal options upon
expiration.
Total rent expense for the fiscal years ended 1995, 1996 and 1997 was $12.0
million, $8.5 million and $9.7 million, respectively. Minimum future rent
payments totaling $16.0 million under commitments for noncancellable operating
leases in effect at the end of 1997 are payable as follows: $5.7 million in
1998, $4.3 million in 1999, $3.0 million in 2000, $1.9 million in 2001, $1.0
million in 2002 and $0.1 million for years thereafter.
SUBSEQUENT EVENT
On February 9, 1998, TWE and Boston Ventures Management, Inc. entered into
an agreement with Premier Parks Inc. ("Premier") to sell SFEC for approximately
$1.9 billion. Under the terms of the agreement, Premier will acquire 100% of the
equity of SFEC for $965 million, subject to adjustment, including $765 million
in cash and $200 million in convertible preferred stock of Premier. Premier will
assume a total of approximately $890 million of debt. As part of the
transaction, the companies will enter into a long-term licensing agreement that
gives Premier the exclusive theme park rights in the U.S. and Canada (excluding
the Las Vegas, Nevada Metropolitan area) of all Warner Bros. and DC Comics
animated cartoon and comic book characters. The transaction is expected to close
in the second quarter of 1998. These financial statements do not reflect any
adjustments relating to the consummation of the transaction.
F-50
<PAGE>
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Premier expects to finance the transaction with approximately $700 million
of public equity and equity equivalents as well as public debt and bank
financing.
The consummation of this transaction will cause the reserved shares and
options discussed in the Stockholders' Equity footnote to become vested and
exercisable, respectively.
F-51
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OF THE U.S. UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF
ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Information by Reference......................... 2
Prospectus Summary........................................................ 5
Risk Factors.............................................................. 18
Use of Proceeds........................................................... 27
Capitalization............................................................ 28
Selected Historical and Pro Forma Financial and Operating Data............ 29
Unaudited Pro Forma Financial Statements.................................. 35
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 45
Business.................................................................. 55
Management................................................................ 79
Principal Stockholders.................................................... 83
Description of Six Flags Agreement........................................ 86
Description of Indebtedness............................................... 89
Description of Securities................................................. 95
Description of EqPINES.................................................... 101
Description of Depositary Arrangements.................................... 113
Underwriting.............................................................. 117
Legal Matters............................................................. 120
Experts................................................................... 121
Index to Financial Statements............................................. F-1
</TABLE>
13,000,000 SHARES
[LOGO]
PREMIER PARKS INC.
COMMON STOCK
------------------
PROSPECTUS
, 1998
---------------------
LEHMAN BROTHERS
SALOMON SMITH BARNEY
FURMAN SELZ
NATIONSBANC MONTGOMERY
SECURITIES LLC
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THIS PRELIMINARY OFFICIAL STATEMENT AND THE INFORMATION CONTAINED HEREIN ARE
SUBJECT TO COMPLETION OR AMENDMENT WITHOUT NOTICE. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY THEM BE ACCEPTED, PRIOR TO THE TIME THE OFFICIAL
STATEMENT IS DELIVERED IN FINAL FORM. UNDER NO CIRCUMSTANCES SHALL THIS
PRELIMINARY OFFICIAL STATEMENT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF, THESE SECURITIES IN ANY
JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION, QUALIFICATION OR FILING UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
Subject to Completion, dated March 25, 1998
PROSPECTUS [International Alternate Page]
[LOGO]
13,000,000 SHARES
PREMIER PARKS INC.
COMMON STOCK
-------------------
All of the shares of Common Stock offered hereby will be sold by Premier
Parks Inc. (collectively with its predecessor, the "Company" or "Premier"). Of
the 13,000,000 shares of Common Stock offered, 2,600,000 shares are being
offered initially outside the United States and Canada in an international
offering (the "International Offering") by the International Managers and
10,400,000 shares are being offered inside the United States and Canada in a
concurrent offering (the "U.S. Offering") by the U.S. Underwriters (together
with the International Managers, the "Underwriters"). These offerings are
collectively referred to herein as the "Offering." See "Underwriting."
The Offering is being made in connection with the acquisition (the "Six
Flags Acquisition") by the Company of all of the capital stock of Six Flags
Entertainment Corporation ("SFEC"). The Company is concurrently offering $
million aggregate principal amount at maturity of its senior discount notes due
2008, with estimated gross proceeds of $250.0 million, $280.0 million aggregate
principal amount of its senior notes due 2006, and 5,000,000 Premium Income
Equity Securities (the "EqPINES-SM-") representing interests in the Company's
mandatorily convertible preferred stock (the "Mandatorily Convertible Preferred
Stock") with estimated gross proceeds of $228.2 million (assuming the
underwriters' over-allotment option for 750,000 EqPINES is not exercised). SFEC
is concurrently offering $170.0 million aggregate principal amount of senior
notes due 2006 (collectively, the "Concurrent Offerings" and, together with the
Offering, the "Offerings"). The Offerings will finance, in whole or in part, the
Six Flags Acquisition. The Company may also issue depositary shares (the "Seller
Depositary Shares") representing interests in up to $200.0 million of the
Company's convertible redeemable preferred stock to the current stockholders of
SFEC as part of the consideration for the Six Flags Acquisition. The Company may
reduce (but not below $100 million) or may eliminate the Seller Depositary
Shares by increasing the cash portion of the consideration for the Six Flags
Acquisition and may, if issued, redeem the Seller Depositary Shares for cash
within 90 days of the closing at the higher of the issuance price and market
value. If the Seller Depositary Shares are not issued, the additional cash
portion of the consideration for the Six Flags Acquisition will be funded from
the net proceeds of the Common Stock Offering. The closing of the Offering is
conditioned upon the closing of the Concurrent Offerings and the Six Flags
Acquisition.
The Common Stock is listed on the New York Stock Exchange (the "NYSE") under
the symbol "PKS." On March 23, 1998, the last sales price of the Common Stock,
as reported by the NYSE, was $57 3/16 per share. The Company has applied to list
the EqPINES on the NYSE. The Mandatorily Convertible Preferred Stock will not be
so listed and the Company does not expect that there will be any trading market
for the Mandatorily Convertible Preferred Stock except as represented by the
EqPINES.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 18 HEREIN FOR CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share................................................ $ $ $
Total(3)................................................. $ $ $
</TABLE>
(1) The Company and its operating subsidiaries have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted options to the Underwriters to purchase up to
1,950,000 additional shares of Common Stock on the same terms and conditions
as set forth herein solely to cover over-allotments, if any. If such options
were exercised in full, the total Price to Public, Underwriting Discounts
and Commissions and Proceeds to Company would be be $ , $ and
$ , respectively. See "Underwriting."
------------------------
The shares of Common Stock offered by this Prospectus are offered by the
International Managers subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
International Managers and to certain further conditions. It is expected that
delivery of the shares of Common Stock will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about , 1998.
--------------------------
LEHMAN BROTHERS SALOMON SMITH BARNEY INTERNATIONAL
FURMAN SELZ NATIONSBANC MONTGOMERY SECURITIES LLC
, 1998
<PAGE>
[International Alternate Page]
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
TO NON-UNITED STATES HOLDERS
The following is a general summary of the material United States federal
income and estate tax considerations to a Foreign Holder (as defined below)
relevant to the ownership and disposition of shares of Common Stock. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
final, temporary and proposed United States Treasury Regulations promulgated
thereunder, Service rulings, official pronouncements and judicial decisions, all
as in effect on the date hereof and all of which are subject to change, possibly
with retroactive effect, or different interpretations. This summary does not
discuss all the tax consequences that may be relevant to a particular Foreign
Holder in light of the holder's particular circumstances and it is not intended
to be applicable in all respects to all categories of Foreign Holders, some of
whom may be subject to special rules not discussed below. In addition, this
summary does not address any state, local or foreign tax considerations that may
be relevant to a Foreign Holder's decision to purchase shares of Common Stock.
As used herein, a "Foreign Holder" means any person who, for United States
federal income tax purposes, is neither (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any State or of any of its
territories or possessions or (iii) a domestic trust or estate.
ALL HOLDERS THAT ARE FOREIGN HOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
OWNERSHIP AND DISPOSITION OF SHARES OF COMMON STOCK IN LIGHT OF THEIR OWN
PARTICULAR CIRCUMSTANCES.
SALE OR EXCHANGE OF COMMON STOCK
Subject to the discussion of backup withholding below, any capital gain
realized upon a sale or exchange of Common Stock by a beneficial owner who is a
Foreign Holder ordinarily will not be subject to United States federal income
tax unless (i) such gain is effectively connected with a trade or business
conducted by such Foreign Holder within the United States (in which case the
branch profits tax may also apply if the holder is a foreign corporation), (ii)
in the case of a Foreign Holder that is an individual, such holder is present in
the United States for a period or periods aggregating 183 days or more in the
taxable year of the sale or exchange and certain other conditions are met or
(iii) the Company is or has been a "United States real property holding
corporation" (a "USRPHC") for federal income tax purposes and such Foreign
Holder has held, directly or constructively, more than 5% of the outstanding
Common Stock within the five-year period ending on the date of the sale or
exchange, and no treaty exception is applicable. It is uncertain whether the
Company is a USRPHC within the meaning of the Code. If the Company is or becomes
a USRPHC then a Foreign Holder described in (iii) of the preceding sentence
generally will be subject to United States federal income tax at regular
graduated rates on gain recognized on a sale or other disposition of Common
Stock. Accordingly, a Foreign Holder that intends to acquire more than 5% of the
outstanding Common Stock should consult its tax advisor regarding possible
adverse tax consequences to such holder.
DIVIDENDS ON COMMON STOCK
Generally, any dividends paid on Common Stock will be subject to United
States federal withholding tax at a rate of 30% of the amount of the dividend,
or at a lower applicable treaty rate. However, if the dividend is effectively
connected with a United States trade or business of a Foreign Holder, it will be
subject to United States federal income tax on a net basis at ordinary federal
income tax rates (in which case the branch profits tax may also apply if such
holder is a foreign corporation), and will not be subject to the 30% withholding
tax.
Under current Treasury Regulations, a holder's status as a non-United States
person and eligibility for a tax treaty reduced rate of withholding will be
determined by reference to the holder's address and to any outstanding
certificates or statements concerning eligibility for a reduced rate of
withholding, unless facts and circumstances indicate that reliance on such
address, certificates or statements is not warranted.
<PAGE>
[International Alternate Page]
However, the Service has recently issued Regulations that require a non-United
States person to provide certifications under penalties of perjury in order to
obtain treaty benefits for payments made after December 31, 1998.
FEDERAL ESTATE TAXES
Common Stock that is beneficially owned by an individual who is neither a
citizen nor a resident of the United States at the time of death will be
included in such holder's gross estate for United States federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Generally, dividends on Common Stock paid to holders that are Foreign
Holders that are subject to the 30% or a reduced treaty rate of United States
federal withholding tax will be exempt from backup withholding tax. Otherwise,
backup withholding of United States federal income tax at a rate of 31% may
apply to dividends paid with respect to Common Stock to holders that are not
"exempt recipients" and that fail to provide certain information (including the
holder's taxpayer identification number) in the manner required by United States
law and applicable regulations.
Payments of the proceeds from the sale by a holder that is a Foreign Holder
of shares of Common Stock made to or through a foreign office of a broker will
not be subject to information reporting or backup withholding, except that if
the broker is a United States person, a controlled foreign corporation for
United States tax purposes or a foreign person 50% or more of whose gross income
is effectively connected with a United States trade or business for a specified
three-year period, information reporting may apply to such payments. Payments of
the proceeds from the sale of shares of Common Stock to or through the United
States office of a broker will be subject to information reporting and backup
withholding unless the holder certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
<PAGE>
[International Alternate Page]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OF THE INTERNATIONAL MANAGERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Information by Reference......................... 2
Prospectus Summary........................................................ 5
Risk Factors.............................................................. 18
Use of Proceeds........................................................... 27
Capitalization............................................................ 28
Selected Historical and Pro Forma Financial and Operating Data............ 29
Unaudited Pro Forma Financial Statements.................................. 35
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 45
Business.................................................................. 55
Management................................................................ 79
Principal Stockholders.................................................... 83
Description of Six Flags Agreement........................................ 86
Description of Indebtedness............................................... 89
Description of Securities................................................. 95
Description of EqPINES.................................................... 101
Description of Depositary Arrangements.................................... 113
Certain United States Federal Tax Considerations to Non-United States
Holders................................................................. 116
Underwriting.............................................................. 118
Legal Matters............................................................. 121
Experts................................................................... 121
Index to Financial Statements............................................. F-1
</TABLE>
13,000,000 SHARES
[LOGO]
PREMIER PARKS INC.
COMMON STOCK
------------------
PROSPECTUS
, 1998
------------------------
LEHMAN BROTHERS
SALOMON SMITH BARNEY
INTERNATIONAL
FURMAN SELZ
NATIONSBANC MONTGOMERY
SECURITIES LLC
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[Convertible Stock]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. UNDER NO CIRCUMSTANCES SHALL THIS REGISTRATION STATEMENT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY
SALE OF, THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH JURISDICTION.
<PAGE>
Subject to Completion, dated March 25, 1998
[Alternate Page-EqPINES]
PROSPECTUS
5,000,000 EQPINES-SM-
PREMIER PARKS INC.
PREMIUM INCOME EQUITY SECURITIES ("EQPINES-SM-")
CONSISTING OF DEPOSITARY SHARES, EACH REPRESENTING ONE-FIVE HUNDREDTH OF A
SHARE OF % MANDATORILY CONVERTIBLE PREFERRED STOCK
---------------------
[LOGO]
All of the Premium Income Equity Securities ("EqPINES-SM-") offered hereby
(the "Offering" or the "EqPINES Offering") are being sold by Premier Parks Inc.
(collectively with its predecessor, the "Company" or "Premier"). Each of the
EqPINES represents one five-hundredth of a share of % Mandatorily Convertible
Preferred Stock ("Mandatorily Convertible Preferred Stock") of the Company
deposited with the Depositary (as defined herein). Each EqPINES, through the
Depositary, entitles the holder to all proportional rights and preferences of
the share of Mandatorily Convertible Preferred Stock represented thereby. The
liquidation preference of each EqPINES is $ , plus accrued and unpaid
dividends thereon. See "Description of EqPINES".
Unless converted by the holder into the Company's common stock, par value
$0.05 per share (the "Common Stock") prior thereto, on , 2001 (the
"Mandatory Conversion Date") each EqPINES will automatically convert into a
number of shares of Common Stock at the Conversion Rate. The "Conversion Rate"
is, subject to adjustment in certain events, equal to (a) if the Conversion
Price (as defined below) is greater than or equal to $ (the "Threshold
Appreciation Price"), shares of Common Stock per EqPINES, (b) if the
Conversion Price is less than the Threshold Appreciation Price but greater than
$ (the "Initial Price"), a fraction, equal to the Initial Price divided by the
Conversion Price, of one share of Common Stock per EqPINES and (c) if the
Conversion Price is less than or equal to the Initial Price, one share of Common
Stock per EqPINES. The Threshold Appreciation Price and the Initial Price are
also subject to adjustment in certain events. The "Conversion Price" is the
average Closing Price (as defined herein) per share of Common Stock for the 20
Trading Days (as defined herein) immediately prior to (but not including) the
Mandatory Conversion Date, except as otherwise described herein. See
"Description of EqPINES--Mandatory Conversion of EqPINES". At any time prior to
the Mandatory Conversion Date, each EqPINES is convertible, in whole but not in
part, at the option of the holder thereof into shares of Common Stock,
subject to adjustment in certain events. See "Description of EqPINES--Conversion
at the Option of the Holder". The value of the Common Stock that will be
received by holders of EqPINES upon their conversion may be more or less than
the amount paid for the EqPINES offered hereby due to market fluctuations in the
price of the Common Stock.
Annual dividends on the EqPINES are cumulative at a rate of $ per EqPINES
from the date of initial issuance, payable quarterly in arrears on each January
1, April 1, July 1 and October 1, commencing July 1, 1998. The Company may, at
its option, pay dividends with cash, shares of Common Stock or in some
combination of both, provided that dividends may be paid with Common Stock only
if paid on the Regular Dividend Payment Date (as defined herein) for such
dividend. For purposes of calculating dividend payments, each share of Common
Stock delivered to holders of EqPINES for payment of dividends will be valued at
95% of the average Closing Price for the Common Stock over a ten-Trading Day
period preceding the related record date for the dividend payment. See
"Description of EqPINES--Dividends" and "-- Mandatory Conversion of EqPINES".
The holders of Mandatorily Convertible Preferred Stock (including shares of
Mandatorily Convertible Preferred Stock represented by the EqPINES) are not
entitled to any voting rights, except as required by applicable state law and
with respect to adverse charter and by-law amendments or the authorization or
creation of classes of capital stock ranking senior as to payment of dividends
or liquidation preference to the Mandatorily Convertible Preferred Stock, and in
certain circumstances involving protracted dividend arrearages. See "Description
of EqPINES--Voting Rights".
The EqPINES Offering is being made in connection with the acquisition (the
"Six Flags Acquisition") by the Company of all of the capital stock of Six Flags
Entertainment Corporation ("SFEC"). The Company is concurrently offering $
million aggregate principal amount at maturity of its senior discount notes due
2008, with estimated gross proceeds of $250.0 million, $280.0 million aggregate
principal amount of its senior notes due 2006, and 13,000,000 shares of Common
Stock with estimated gross proceeds of $593.2 million (assuming the
underwriters' over-allotment options are not exercised) (the "Common Stock
Offering"). SFEC is concurrently offering $170.0 million aggregate principal
amount of senior notes due 2006 (collectively, the "Concurrent Offerings" and,
together with the EqPINES Offering, the "Offerings"). The Offerings will
finance, in whole or in part, the Six Flags Acquisition. The Company may also
issue up to depositary shares (the "Seller Depositary Shares") representing
interests in up to $200.0 million of the Company's convertible redeemable
preferred stock to the current stockholders of SFEC as part of the consideration
for the Six Flags Acquisition. The Company may reduce (but not below $100
million) or may eliminate the Seller Depositary Shares by increasing the cash
portion of the consideration for the Six Flags Acquisition and may, if issued,
redeem the Seller Depositary Shares for cash within 90 days of the closing at
the higher of the issuance price and market value. If the Seller Depositary
Shares are not issued, the additional cash portion of the consideration for the
Six Flags Acquisition will be funded from the net proceeds of the Common Stock
Offering. The closing of the Offering is conditioned upon the closing of the
Concurrent Offerings and the Six Flags Acquisition.
Application will be made to list the EqPINES and the Common Stock issuable
on conversion of the Mandatorily Convertible Preferred Stock on the New York
Stock Exchange (the "NYSE"). The Mandatorily Convertible Preferred Stock will
not be so listed and the Company does not expect that there will be any trading
market for the Mandatorily Convertible Preferred Stock except as represented by
the EqPINES.
The Common Stock is listed on the NYSE under the symbol "PKS". On March 23,
1998, the last sales price of the Common Stock, as reported by the NYSE was
$57 3/16 per share.
---------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 19 HEREIN FOR CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per EqPINES.............................................. $ $ $
Total(3)................................................. $ $ $
</TABLE>
(1) The Company and its operating subsidiaries have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting".
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted an option to the Underwriters to purchase up to an
additional 750,000 EqPINES on the same terms and conditions as set forth
herein solely to cover over-allotments, if any. If such option is exercised
in full, the total Price to Public, Underwriting Discounts and Commissions
and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
---------------------------
The EqPINES offered by this Prospectus are offered by the Underwriters
subject to prior sale, to withdrawal, cancellation or modification of the offer
without notice, to delivery to and acceptance by the Underwriters and to certain
further conditions. It is expected that delivery of the Depositary Receipts
evidencing the EqPINES will be made at the offices of Lehman Brothers Inc., New
York, New York, on or about , 1998.
LEHMAN BROTHERS SALOMON SMITH BARNEY
, 1998
<PAGE>
[Alternate Page-EqPINES]
THE OFFERING
<TABLE>
<S> <C>
Securities........................ 5,000,000 EqPINES, consisting of depositary shares, each
representing one five-hundredth of a share of
Mandatorily Convertible Preferred Stock, are offered
hereby. Each EqPINES entitles the holder to that
proportion of all the rights, preferences and privileges
of a share of Mandatorily Convertible Preferred Stock
(including dividend, conversion, voting and liquidation
rights and preferences) represented thereby.
Dividends......................... $ per annum per EqPINES cumulative from the date
of initial issuance, payable quarterly in arrears on
each January 1, April 1, July 1 and October 1,
commencing July 1, 1998. The Company may, at its option,
pay dividends with cash, shares of Common Stock or in
some combination of both, provided that dividends may be
paid with Common Stock only if paid on the Regular
Dividend Payment Date (as defined herein) for such
dividend. For purposes of dividend payments, each share
of Common Stock will be valued at 95% of the average
Closing Price (as defined herein) for the Common Stock
over a ten Trading Day (as defined herein) period
preceding the related record date for the dividend
payment. See "Description of EqPINES--Dividends" and
"--Mandatory Conversion of EqPINES".
Mandatory Conversion.............. On , 2001 (the "Mandatory Conversion Date"),
each EqPINES will automatically convert into shares of
Common Stock at the Conversion Rate. The "Conversion
Rate" is, subject to adjustment in certain events, equal
to (a) if the Conversion Price (as defined below) is
greater than or equal to $ (the "Threshold
Appreciation Price"), shares of Common Stock per
EqPINES, (b) if the Conversion Price is less than the
Threshold Appreciation Price but is greater than
$ (the "Initial Price"), a fraction, equal to
the Initial Price divided by the Conversion Price, of
one share of Common Stock per EqPINES and (c) if the
Conversion Price is less than or equal to the Initial
Price, one share of Common Stock per EqPINES. The
Threshold Application Price and the Initial Price are
also subject to adjustment in certain events. The
"Conversion Price" is the average Closing Price per
share of Common Stock for the 20 Trading Days
immediately prior to (but not including) the Mandatory
Conversion Date, except as otherwise described herein.
See "Description of EqPINES-- Mandatory Conversion of
EqPINES".
Optional Conversion............... At any time prior to the Mandatory Conversion Date, each
EqPINES is convertible, in whole but not in part, at the
option of the holder thereof into shares of Common
Stock, subject to adjustment in certain events. See
"Description of EqPINES--Conversion at the Option of the
Holder" and "Description of Depositary
Arrangements--Conversion Provisions".
Voting Rights..................... The holders of EqPINES will be entitled to direct the
voting of the shares of Mandatorily Convertible
Preferred Stock represented thereby. See "Description of
EqPINES--Voting Rights". The Mandatorily Convertible
Preferred Stock has no voting rights, except as required
by applicable state law and
</TABLE>
13
<PAGE>
[Alternate Page-EqPINES]
<TABLE>
<S> <C>
except that (i) if dividends on the Mandatorily
Convertible Preferred Stock or any other series of the
Company's Preferred Stock are in arrears and unpaid for
six quarterly dividend periods the Mandatorily
Convertible Preferred Stock (voting as a class with
certain other series of Preferred Stock) will be
entitled to elect two directors of the Company and (ii)
the Mandatorily Convertible Preferred Stock will have
voting rights with respect to certain alterations of the
Company's Restated Certificate of Incorporation and
By-Laws and the creation or authorization of preferred
stock or other capital stock (or securities convertible
into capital stock) ranking prior to the Mandatorily
Convertible Preferred Stock as to the payment of
dividends or the distribution of assets upon
liquidation. See "Description of Depositary
Arrangements--Voting of Mandatorily Convertible
Preferred Stock".
Liquidation Preference and
Ranking......................... The EqPINES, as representative of beneficial ownership
interests in the Mandatorily Convertible Preferred
Stock, will rank prior to the Common Stock as to payment
of dividends and distributions of assets upon
liquidation. The liquidation preference of each EqPINES
is an amount equal to the sum of (i) $ and (ii)
all accrued and unpaid dividends thereon. See
"Description of EqPINES--Dividends" and "-- Liquidation
Rights".
Listing........................... Application will be made to list the EqPINES and the
Common Stock issuable on conversion of the Mandatorily
Convertible Preferred Stock on the NYSE. The Mandatorily
Convertible Preferred Stock will not be so listed and
the Company does not expect that there will be any
trading market for the Mandatorily Convertible Preferred
Stock except as represented by the EqPINES.
The Offerings..................... The Company is concurrently offering (i) 13,000,000
shares of Common Stock, with estimated gross proceeds of
$593.2 million, (ii) the 5,000,000 EqPINES offered
hereby, (iii) $ million aggregate principal
amount at maturity of Company Senior Discount Notes,
with estimated gross proceeds of $250.0 million and (iv)
$280.0 million principal amount of Company Senior Notes.
In addition, SFEC is issuing $170.0 million of New SFEC
Notes. The Company may also issue Seller Depositary
Shares representing interests in up to $200.0 million of
Seller Preferred Stock as part of the consideration for
the Six Flags Acquisition. See "--The Six Flags
Transactions", "Description of Indebtedness--Company
Senior Discount Notes", "-- Company Senior Notes",
"--New SFEC Notes", "Description of
Securities--Preferred Stock--Seller Preferred Stock" and
"Description of EqPINES". The Offerings are conditioned
upon the closing of all other elements of the Six Flags
Transactions.
Use of Proceeds................... The Company intends to apply the net proceeds from the
Offerings to fund the cash portion of the purchase price
for the Six Flags Acquisition; to provide for the
repayment in full of the SFEC Zero Coupon Senior Notes;
to fund improvements and expansion of the Company's
parks, including the parks acquired in the Six Flags
Acquisition and the 1997 Acquisitions; to acquire and
make improvements at additional theme parks; and for
general corporate purposes, including working capital
requirements. See "Use of Proceeds".
</TABLE>
14
<PAGE>
[Alternate Page-EqPINES]
<TABLE>
<S> <C>
NYSE symbols:
Common Stock.................... "PKS"
EqPINES.........................
</TABLE>
15
<PAGE>
[Alternate Page-EqPINES]
UNDERWRITING
Under the terms of and subject to the conditions contained in an
underwriting agreement (the "Underwriting Agreement"), among the Company and
each of the underwriters named below (the "Underwriters"), each of the several
Underwriters has agreed to purchase from the Company, and the Company has agreed
to sell to each Underwriter, the aggregate number of EqPINES set forth opposite
the name of such Underwriter below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS EQPINES
---------------
<S> <C>
Lehman Brothers Inc..............................................................................
Smith Barney Inc. ...............................................................................
-------
Total.........................................................................................
-------
-------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to purchase EqPINES are subject to the approval of certain legal matters by
counsel and to certain other conditions and that if any of the EqPINES are
purchased by the Underwriters pursuant to the Underwriting Agreement, all the
EqPINES agreed to be purchased by the Underwriters pursuant to the Underwriting
Agreement must be so purchased. The closing of each of the EqPINES Offering and
the Concurrent Offerings is conditioned upon the closing of the other and of the
other Six Flags Transactions.
The Company has been advised that the Underwriters propose to offer EqPINES
directly to the public initially at the public offering price set forth on the
cover page of this Prospectus and to certain selected dealers (who may include
the Underwriters) at such public offering price less a selling concession not to
exceed $ per EqPINES. The selected dealers may reallow a concession not
to exceed $ per EqPINES. After the initial offering of the EqPINES, the
offering price, the concession to selected dealers and the reallowance to other
dealers may be changed by the Underwriters.
Except for the EqPINES to be sold in the EqPINES Offering (and the
Mandatorily Convertible Preferred Stock represented thereby), the Seller
Preferred Stock and the Common Stock to be sold in the Concurrent Offerings or
issued upon conversion of the Convertible Preferred Stock, the Company has
agreed not to offer, sell, contract to sell or otherwise issue any shares of
Common Stock or other capital stock or securities convertible into or
exchangeable for, or any rights to acquire Common Stock or other capital stock,
with certain exceptions (including certain exceptions for Common Stock or other
capital stock issued or sold in connection with future acquisitions by the
Company, including its proposed acquisition of Walibi), prior to the expiration
of 90 days from the date of this Prospectus without the prior written consent of
Lehman Brothers. The Company's officers, directors and principal stockholders,
who hold in the aggregate approximately 6.0 million shares of Common Stock
(including shares issuable upon exercise of outstanding options, warrants and
restricted stock), have agreed not to, directly or indirectly, offer, sell or
otherwise dispose of shares of Common Stock of the Company or any securities
convertible into or exchangeable for or any rights to acquire, Common Stock or
other capital stock of the Company for 90 days following the date of this
Prospectus without the prior written consent of Lehman Brothers. In addition,
the Sellers in the Six Flags Acquisition have agreed not to sell any Seller
Preferred Stock (or shares of Common Stock issuable upon conversion thereof)
acquired by them in the Six Flags Acquisition during such 90-day period.
The Company has granted to the Underwriters an option to purchase up to an
additional 750,000 EqPINES at the initial public offering price to the public,
less the underwriting discounts and commissions shown on the cover page of this
Prospectus, solely to cover over-allotments, if any. The option may be exercised
at any time up to 30 days after the date of this Prospectus. To the extent that
the Underwriters exercise such option, each of the Underwriters will be
committed (subject to certain conditions) to purchase a number of additional
shares proportionate to such Underwriter's initial commitment as indicated in
the preceding table.
117
<PAGE>
[Alternate Page-EqPINES]
The Company and its operating subsidiaries (including Six Flags) have agreed
to indemnify the Underwriters against certain liabilities, including liabilities
under the Securities Act, and to contribute to payments which the Underwriters
may be required to make in respect thereof.
Until the distribution of the EqPINES offered hereby is completed, rules of
the Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase the EqPINES and the Common Stock. As an
exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the EqPINES and the Common Stock. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the EqPINES and the Common Stock.
If the Underwriters create a short position in the EqPINES in connection
with the EqPINES Offering (I.E., if they sell more EqPINES than are set forth on
the cover page of this Prospectus), the Underwriters may reduce that short
position by purchasing EqPINES in the open market after the distribution has
been completed.
The Underwriters also may impose a penalty bid on certain Underwriters and
selling group members. This means that if the Underwriters purchase EqPINES in
the open market to reduce their short position or to stabilize the price of the
EqPINES, they may reclaim the amount of the selling concession from the
Underwriters and selling group members who sold those EqPINES as part of the
EqPINES Offering.
In general, purchases of a security for the purposes of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the applicable offering.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the EqPINES. In addition, neither the
Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
An application will be made to list the EqPINES and the Common Stock into
which the Mandatorily Convertible Preferred Stock are convertible on the NYSE.
The Mandatorily Convertible Preferred Stock will not be so listed and the
Company does not expect that there will be any trading market for the
Mandatorily Convertible Preferred Stock except as represented by the EqPINES.
The EqPINES are a new issue of securities with no established trading market.
While application has been made to list the EqPINES on the NYSE, no assurance
can be given as to the development or liquidity of any trading market in the
EqPINES. If an active market does not develop, the market price and liquidity of
the EqPINES will be adversely affected.
Each of Lehman Brothers and Smith Barney Inc. has from time to time provided
certain investment banking services to the Company and its affiliates for which
they have received customary fees. LBI Group Inc., an affiliate of Lehman
Brothers is party to financing commitments provided to the Company in connection
with the Six Flags Transactions and has received customary fees in connection
therewith. In addition, Lehman Brothers and Smith Barney Inc. acted as
underwriters of the Company's 1996 and 1997 public offerings and are acting as
underwriters in connection with the Concurrent Offerings and will receive
customary fees in connection therewith. An affiliate of Lehman Brothers is a
lender under each of the Credit Facilities.
LEGAL MATTERS
The validity of the EqPINES and the Mandatorily Convertible Preferred Stock
offered hereby and certain legal matters in connection with the EqPINES Offering
will be passed upon for the Company by Baer Marks & Upham LLP, New York, New
York. The Underwriters are being represented by Cravath, Swaine & Moore, New
York, New York.
118
<PAGE>
[Alternate Page--EqPINES]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Information by Reference......................... 2
Prospectus Summary........................................................ 5
Risk Factors.............................................................. 19
Use of Proceeds........................................................... 28
Capitalization............................................................ 29
Selected Historical and Pro Forma Financial and Operating Data............ 30
Unaudited Pro Forma Financial Statements.................................. 36
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 46
Business.................................................................. 56
Management................................................................ 80
Principal Stockholders.................................................... 84
Description of Six Flags Agreement........................................ 87
Description of Indebtedness............................................... 90
Description of Securities................................................. 96
Description of EqPINES.................................................... 102
Description of Depositary Arrangements.................................... 114
Underwriting.............................................................. 118
Legal Matters............................................................. 119
Experts................................................................... 120
Index to Financial Statements............................................. F-1
</TABLE>
5,000,000 EQPINES-SM-
[LOGO]
PREMIER PARKS INC.
PREMIUM INCOME
EQUITY SECURITIES
EACH REPRESENTING ONE FIVE-HUNDREDTH OF A SHARE OF % MANDATORILY CONVERTIBLE
PREFERRED STOCK
------------------------
PROSPECTUS
, 1998
---------------------
LEHMAN BROTHERS
SALOMON SMITH BARNEY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be borne by the
Registrant in connection with the issuance and distribution of the securities
being registered (other than underwriting discounts and commissions). All
amounts presented are estimates except the Securities and Exchange Commission
registration fee and the National Association of Securities Dealers, Inc. filing
fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................. $ 349,216
National Association of Securities Dealers, Inc. filing fee..................... 30,500
New York Stock Exchange listing fee............................................. 163,900
Accounting fees and expenses.................................................... 110,000
Legal fees and expenses......................................................... 350,000
Printing and engraving expenses................................................. 630,000
Transfer agent and registrar fees............................................... 10,000
Depositary fees................................................................. 5,000
Miscellaneous................................................................... 151,384
---------
Total fees and expenses......................................................... $1,800,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law which covers the
indemnification of directors, officers, employees and agents of a corporation is
hereby incorporated herein by reference. Reference is made to Article XXV of the
Registrant's By-Laws which provides for indemnification by the Registrant in the
manner and to the full extent permitted by Delaware law.
Reference is also made to Section 8 of the U.S. Underwriting Agreement and
the International Underwriting Agreement, to be filed by amendment as Exhibits
1(a) and 1(b), respectively.
ITEM 16. EXHIBITS.
See Exhibit Index.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
II-1
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if the registration statement is on Form
S-3, Form S-8 or Form F-3, and the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(3) That, for purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(4) That, for the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference herein
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant,
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York on the 24th day of March,
1998.
PREMIER PARKS INC.
By: /s/ KIERAN E. BURKE
------------------------------------------
Kieran E. Burke
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
II-3
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (principal executive March 24, 1998
Kieran E. Burke officer)
* Director, President and
- ------------------------------ Chief March 24, 1998
Gary Story Operating Officer
Chief Financial Officer
* and
- ------------------------------ Director (principal March 24, 1998
James F. Dannhauser financial and accounting
officer)
*
- ------------------------------ Director March 24, 1998
Paul A. Biddelman
*
- ------------------------------ Director March 24, 1998
Michael E. Gellert
*
- ------------------------------ Director March 24, 1998
Jack Tyrrell
*
- ------------------------------ Director March 24, 1998
Sandy Gurtler
*
- ------------------------------ Director March 24, 1998
Charles R. Wood
*By: JAMES M. COUGHLIN
-------------------------
James M. Coughlin
Attorney-in-fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
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PAGE
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<S> <C> <C> <C>
(1) Underwriting Agreements:
(a) Form of U.S. Underwriting Agreement among the Registrant, certain of its subsidiaries,
Lehman Brothers Inc., Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery
Securities LLC as representatives of the several U.S. Underwriters.........................
(b) Form of International Underwriting Agreement among the Registrant, certain of its
subsidiaries, Lehman Brothers International (Europe), Smith Barney Inc., Furman Selz LLC
and NationsBanc Montgomery Securities LLC as representatives of the several International
Managers...................................................................................
(c) Form of Agreement among U.S. Underwriters and International Managers.......................
(d) Form of Underwriting Agreement among the Registrant, certain of its subsidiaries, Lehman
Brothers Inc., and Smith Barney Inc. (Premium Income Equity Securities)....................
(e) Form of Underwriting Agreement among the Registrant, certain of its subsidiaries, Lehman
Brothers Inc., Salomon Brothers Inc and NationsBanc Montgomery Securities LLC as
representatives of the several Underwriters (Company Notes)................................
(f) Form of Underwriting Agreement among Six Flags Entertainment Corporation, certain of its
subsidiaries, Lehman Brothers Inc., Salomon Brothers Inc. and NationsBanc Montgomery
Securities LLC as representatives of the several Underwriters (New SFEC Notes).............
(2) Plan of Acquisition:
(a) Agreement and Plan of Merger dated February 9, 1998, among the Registrant, the subsidiaries
of the Registrant named therein, the holders of capital stock of Six Flags Entertainment
Corporation and Six Flags Entertainment Corporation-- incorporated by reference from
Exhibit 10(a) to the Registrant's Current Report on Form 8-K dated February 9, 1998........
(b) Subordinated Indemnity Agreement dated February 9, 1998, among the Registrant, the
subsidiaries of the Registrant named therein, Time Warner Inc., the subsidiaries of Time
Warner Inc. named therein, Six Flags Entertainment Corporation and the subsidiaries of Six
Flags Entertainment Corporation named therein..............................................
(4) Instruments Defining the Rights of Security Holders, Including Indentures:
(a) Indenture dated as of August 15, 1995, among the Registrant, the subsidiaries of the
Registrant named therein and United States Trust Company of New York, as trustee --
incorporated by reference from Exhibit 4(2) to Registrant's Registration Statement on Form
S-1 (Reg. No. 33-62225) declared effective on November 9, 1995 (the "1995 Registration
Statement")................................................................................
(b) Form of First Supplemental Indenture dated as of November 9, 1995 --incorporated by
reference from Exhibit 4(2.1) to the 1995 Registration Statement...........................
(c) Purchase Agreement, dated August 10, 1995, among the Registrant, the subsidiaries of the
Registrant named therein and Chemical Securities Inc. --incorporated by reference from
Exhibit 4(3) to the 1995 Registration Statement............................................
(d) Exchange and Registration Rights Agreement, dated August 14, 1995, among the Registrant,
the subsidiaries of the Registrant named therein and Chemical Securities Inc. --
incorporated by reference from Exhibit 4(4) to the 1995 Registration Statement.............
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C> <C>
(e) Convertible Note Purchase Agreement, dated as of March 3, 1993, between the Registrant and
the purchasers named therein (including forms of Senior Subordinated Convertible Notes and
Registration Rights Agreement) -- incorporated by reference from Exhibit 4(i) to Form 10-K
of the Registrant for the year ended December 31, 1993.....................................
(f) Form of Subscription Agreement, dated October 1992, between the Registrant and certain
investors -- incorporated by reference from Exhibit 4(a) to the Registrant's Current Report
on Form 8-K dated October 30, 1992.........................................................
(g) Stock Purchase and Warrant Issuance Agreement, dated October 16, 1989, between the
Registrant and Kieran E. Burke -- incorporated by reference from Exhibit 4(i) to Form 10-K
of the Registrant for the year ended December 31, 1989.....................................
(h) Warrant, dated October 16, 1989, to purchase 131,728 shares of Common Stock issued by the
Registration to Kieran E. Burke -- incorporated by reference from Exhibit 4(k) to Form 10-K
of the Registrant for the year ended December 31, 1989.....................................
(i) Warrant, dated October 16, 1989, to purchase 93,466 shares of Common Stock issued by the
Registrant to Kieran E. Burke -- incorporated by reference from Exhibit 4(l) to Form 10-K
of the Registrant for the year ended December 31, 1989.....................................
(j) Form of Common Stock Certificate -- incorporated by reference from Exhibit 4(l) to the
Registrant's Registration Statement on Form S-2 (Reg. No. 333-08281) declared effective on
May 28, 1996...............................................................................
(k) Form of depositary receipt evidencing ownership of Premium Income Equity Securities (filed
as part of Exhibit 4(u) hereof)............................................................
(m) Form of Indenture dated as of February 1, 1997, among the Registrant and the Bank of New
York, as trustee (including the form of Notes) -- incorporated by reference from Exhibit
4(l) to the Registrant's Registration Statement on Form S-2 (Reg. No. 333-16573) filed with
the Securities and Exchange Commission on January 22, 1997.................................
(n) Form of Second Supplemental Indenture dated January 21, 1997 -- incorporated by reference
from Exhibit 4(n) to the Registrant's Registration Statement on Form S-2 (Reg. No.
333-16573) filed with the Securities and Exchange Commission on January 22, 1997...........
(o) Form of Indenture, dated as of March , 1998, between the Registrant and the Bank of New
York.......................................................................................
(p) Form of Indenture, dated as of March , 1998, between the Registrant and The Bank of New
York.......................................................................................
(q) Form of Indenture, dated as of March , 1998, among the Registrant, Six Flags Entertainment
Corporation and The Bank of New York.......................................................
(r) Form of Certificate of Designation, Rights and Preferences relating to Seller Preferred
Stock......................................................................................
(s) Form of Certificate of Designation, Rights and Preferences relating to Mandatorily
Convertible Preferred Stock................................................................
(t) Amended and Restated Rights Agreement, dated as of January 12, 1998, between the Registrant
and Bank One Trust Company, N.A. (including certificate of designation of Series A Junior
Participating Preferred Stock) incorporated by reference from Exhibit 4.1 to the
Registrant's Current Report on Form 8-K as amended, dated December 15, 1997................
(u) Form of Deposit Agreement dated as of , 1998, among the Registrant, the Bank
of New York, and the holders from time to time of depositary receipts executed and
delivered thereunder.......................................................................
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C> <C>
(v) Form of Pledge and Escrow Agreement dated as of , 1998 by and between the
Registrant and The Bank of New York, as Trustee (Senior Notes) (included in Exhibit 4(o)
hereof)
(w) Form of Pledge, Escrow and Disbursement Agreement dated as of , 1998 by and
between the Registrant and The Bank of New York, as Trustee (Senior Discount Notes)
(included in Exhibit 4(p) hereof)
(x) Pledge, Escrow and Disbursement Agreement by and between Six Flags Entertainment
Corporation and The Bank of New York, as Trustee (SFEC Notes) (included in Exhibit 4(q)
hereof)
(5) Opinion of Baer Marks & Upham LLP, including consent......................................................
**(12) (a) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends...
**(12) (b) Computation of Ratio of Earnings to Fixed Charges..........................................
(23) Consents:
(a) Consent of Baer Marks & Upham LLP (included in Exhibit (5))................................
(b) Consent of KPMG Peat Marwick LLP...........................................................
(c) Consent of Ernst & Young LLP...............................................................
*(d) Consent of Coopers & Lybrand LLP...........................................................
(e) Consent of Carpenter Mountjoy & Bressler, PSC..............................................
**(24) Power of Attorney.........................................................................................
**(27) Financial Data Schedule...................................................................................
</TABLE>
- ------------------------
* To be incorporated by reference to the Company's Current Report on Form 8-K
to be filed prior to the effective date of this Registration Statement
** Previously filed
II-7
<PAGE>
EXHIBIT 1(a)
[Draft--3/18/98]
10,400,000 Shares
PREMIER PARKS INC.
Common Stock
U.S. UNDERWRITING AGREEMENT
, 1998
Lehman Brothers Inc.
Smith Barney Inc.
Furman Selz LLC
NationsBanc Montgomery Securities LLC
As Representatives of the several
U.S. Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Premier Parks Inc., a Delaware corporation (the "Company"), proposes to
sell to the U.S. Underwriters named in Schedule 1 hereto (the "U.S.
Underwriters"), and the U.S. Underwriters propose, severally and not jointly, to
purchase 10,400,000 shares (the "Firm Stock") of the Company's Common Stock, par
value $.05 per share (the "Common Stock"). In addition, the Company proposes to
grant to the U.S. Underwriters an option to purchase up to an additional
1,560,000 shares of the Common Stock on the terms and for the purposes set forth
in Section 2 (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock". This is to confirm
the agreement concerning the purchase of the Stock from the Company by the U.S.
Underwriters.
It is understood by all parties that the Company is currently entering
into an agreement dated the date hereof (the "International Underwriting
Agreement") providing for the sale by the Company of 2,990,000 shares of Common
Stock (including the over-allotment option thereunder) (the "International
Stock") through arrangements with certain underwriters outside the United States
(the "International
<PAGE>
2
Managers"), for whom Lehman Brothers International (Europe), Smith Barney
Inc., Furman Selz LLC and NationsBanc Montgomery Securities LLC are acting as
lead managers (the "Lead Managers"). The U.S. Underwriters and the
International Managers simultaneously are entering into an agreement between
the U.S. and international underwriting syndicates (the "Agreement Between
U.S. Underwriters and International Managers") which provides for, among
other things, the transfer of shares of Common Stock between the two
syndicates.
One form of prospectus relating to the Stock and one form of prospectus
relating to the International Stock are to be used in connection with the
offering (the "Offering") of the Stock and the International Stock. The latter
form of prospectus will be identical to the former except for certain substitute
pages as included in the registration statement and amendments thereto referred
to below. Except as used in Sections 2, 3, 4, 9 and 10 herein, and except as the
context may otherwise require, references herein to the Stock shall include all
the shares which may be sold pursuant to either this Agreement or the
International Underwriting Agreement, and references herein to any prospectus
whether in preliminary or final form, and whether as amended or supplemented,
shall include both the U.S. and the international versions thereof. As used in
this Agreement, the term "Underwriter" includes U.S. Underwriters and
International Managers.
It is also understood by all parties that the Company is undertaking
the Offering in connection with its acquisition (the "Six Flags Acquisition")
from the current stockholders (the "Sellers") of all of the capital stock of Six
Flags Entertainment Corporation ("SFEC"), and that, in connection with the Six
Flags Acquisition, the Company is concurrently offering $ million aggregate
principal amount at maturity of its senior discount notes due 2008 (the "Company
Senior Discount Notes") with estimated gross proceeds of $250 million, $280
million aggregate principal amount of its senior notes due 2006 (the "Company
Senior Notes") and, with the over-allotment option, 5,750,000 Premium Income
Equity Securities ("PInES") representing interests in the Company's mandatorily
convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with
estimated gross proceeds of $228.2 million. In addition, it is understood by all
parties that Six Flags Theme Parks Inc. ("SFTP") is concurrently entering into a
new $472 million senior secured credit facility (the "Six Flags Credit
Facility") under a credit agreement dated the date of this
<PAGE>
3
Agreement among it, certain of the Six Flags Subsidiaries (as defined in
Section 15) and Lehman Commercial Paper, Inc., and Premier Operations Inc.
("Premier Operations") has entered into a $300 million senior secured credit
facility (the "Premier Credit Facility" and, together with the Six Flags
Credit Facility, the "Credit Facilities") under a credit agreement among the
Company, certain of the Premier Subsidiaries and Premier Partnerships (each
as defined in Section 15) and Lehman Commercial Paper, Inc. It is further
understood by all parties that, immediately following the Offering, SFEC will
offer $170 million aggregate principal amount of senior notes due 2006 (the
"New SFEC Notes"), and that, concurrently with the Offering, the Company may
issue depositary shares (the "Seller Depositary Shares") representing
interests in up to $200 million of the Company's convertible redeemable
preferred stock (the "Seller Convertible Redeemable Preferred Stock") to the
Sellers as part of the consideration for the Six Flags Acquisition.
1. Representations, Warranties and Agreements of the Company and
Certain of the Subsidiaries. The Company and Premier Operations and, as of the
First Delivery Date (as hereinafter defined), SFEC and SFTP represent, warrant
and agree, jointly and severally, that:
(a) A registration statement on Form S-3 (file number
333-45859), and amendments thereto, with respect to the Stock has (i)
been prepared by the Company in conformity in all material respects
with the requirements of the United States Securities Act of 1933 (the
"Securities Act") and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission
(the "Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the
Securities Act. Copies of such registration statement and amendments
thereto have been delivered by the Company to you as the
representatives (the "Representatives") of the U.S. Underwriters. Upon
your written request, but not without your agreement, the Company will
also file a Rule 462(b) Registration Statement in accordance with
Rule 462(b). As used in this Agreement, "Effective Time" means the date
and the time as of which such registration statement, the most recent
post-effective amendment thereto, if any, or any Rule 462(b)
Registration Statement became or becomes effective; "Effective Date"
<PAGE>
4
means the date of the Effective Time; "Preliminary Prospectus" means
each prospectus included in such registration statement, or amendments
thereof, before it became effective under the Securities Act and any
prospectus relating to the Stock filed with the Commission by the
Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time, including any
documents incorporated by reference therein at such time and all
information contained in the final prospectus relating to the Stock
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 5(a) hereof and deemed to be a
part of the registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations and, in the
event any Rule 462(b) Registration Statement becomes effective prior to
the First Delivery Date, also means such registration statement as so
amended, unless the context otherwise requires; "Prospectus" means such
final prospectus, as first filed with the Commission pursuant to
paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations; and
"Rule 462(b) Registration Statement" means the registration statement
and any amendments thereto filed pursuant to Rule 462(b) of the Rules
and Regulations relating to the offering covered by the initial
Registration Statement (file number 333-45859). Reference made herein
to any Preliminary Prospectus or to the Prospectus shall be deemed to
refer to and include any documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act, as of the
date of such Preliminary Prospectus or the Prospectus, as the case may
be. The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus,
any further amendments or supplements to the Registration Statement or
the Prospectus and any Rule 462(b) Registration Statement will, when
they become effective or are filed with the Commission, as the case may
be, conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not,
as of the applicable Effective Time (as to the Registration Statement
and any amendment thereto) and as of the applicable filing date
<PAGE>
5
(as to the Prospectus and any amendment or supplement thereto) contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided that no representation or warranty is
made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with
written information furnished to the Company through the
Representatives or the Lead Managers by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Securities Exchange Act of 1934
(the "Exchange Act") and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(d) The Company, each of the Premier Subsidiaries and, as of
the First Delivery Date, each of the Six Flags Subsidiaries have been
or will be, as applicable, duly incorporated and are or will be, as
applicable, validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation; each of the
Premier Partnerships and, as of the First Delivery Date, each of the
Six Flags Partnerships (as defined in Section 15) is or will be, as
applicable, validly existing as a limited partnership in good standing
under the laws of their respective jurisdictions of formation; the
Company, each of the Premier Subsidiaries and each of the Premier
Partnerships and, as of the First Delivery Date, each of the Six Flags
Subsidiaries and each of the Six Flags Partnerships are or will be, as
applicable, duly qualified to do business and are or will be, as
applicable, in good standing as foreign entities in each jurisdiction
in which their respective ownership or lease of property or the conduct
of their respective businesses requires or will require, as applicable,
such qualification, except where the failure to so qualify would not
have in the aggregate a material adverse effect on the consolidated
financial position, stockholders' equity (or partners' equity, as
applicable), results of
<PAGE>
6
operations, business or prospects of the Company and the Subsidiaries
taken as a whole (a "Material Adverse Effect") and have or will have,
as applicable, all corporate or partnership power and authority, as the
case may be, necessary to own or hold their respective properties and
to conduct the businesses in which they are or will be, as applicable,
engaged; none of the subsidiaries (as defined in Rule 405 of the Rules
and Regulations) of the Company (other than the Subsidiaries) is a
"significant subsidiary", as such term is defined in Rule 405 of the
Rules and Regulations; and the assets, liabilities and operations of
such other subsidiaries are immaterial to the assets, liabilities,
operations and prospects of the Company and the Subsidiaries taken as a
whole.
(e) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non- assessable and conform in all material respects to the
description thereof contained in the Prospectus. All of the issued
shares of capital stock of each Premier Subsidiary (in the case of
Walibi, S.A. ("Walibi"), a Belgian corporation, to our knowledge) have
been, and all of the issued shares of capital stock of each Six Flags
Subsidiary, as of the First Delivery Date, will be, duly and validly
authorized and issued and are or will be, as applicable, fully paid and
non-assessable and, except for the capital stock of Walibi that is
subject to the Walibi Tender Offer (as defined in Section 1(ai)), are
or will be, as applicable, owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims except
for liens, encumbrances, equities or claims arising under the Credit
Facilities and the subordinated indemnity agreement among the Company
and certain of its affiliates, SFEC and certain of its affiliates and
Time Warner Inc. and certain of its affiliates dated , 1998
(the "Subordinated Indemnity Agreement"). 100% of the partnership
interest in the Premier Partnerships is held and, as of the First
Delivery Date, 100% of the partnership interest in the Six Flags
Partnerships, except for the 40% general partnership interest in San
Antonio Theme Park, L.P. ("Fiesta Partnership") held by Fiesta Texas
Theme Park, Ltd., the 99% limited partnership interest in Six Flags
Over Georgia II, L.P. (the "Georgia Co-Venture
<PAGE>
7
Partnership") indirectly held by investors in Six Flags Fund, Ltd.
(L.P.), of which approximately 75% are not affiliated with the Company,
and the 99% limited partnership interest in Texas Flags, Ltd. (the
"Texas Co- Venture Partnership") indirectly held by investors in Six
Flags Fund II, Ltd. (L.P.), of which approximately % are not
affiliated with the Company, will be, as applicable, held directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims except for liens, encumbrances, equities or claims
under the Credit Facilities and the Co-Venture Parks Agreements (as
defined in Section 15).
(f) The unissued shares of the Stock to be issued and sold by
the Company to the U.S. Underwriters hereunder and to the International
Managers under the International Underwriting Agreement have been duly
and validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued, fully
paid and non-assessable.
(g) This Agreement and the International Underwriting
Agreement have been duly authorized, executed and delivered by the
Company, each of the Premier Subsidiaries and each of the Premier
Partnerships that is a party hereto or thereto, and, as of the First
Delivery Date, will be duly authorized, executed and delivered by each
of the Six Flags Subsidiaries that is a party hereto or thereto.
(h) The execution, delivery and performance of this Agreement
and the International Underwriting Agreement by the Company and each of
the Subsidiaries that are parties hereto or thereto, and the
consummation of the transactions contemplated hereby and thereby, will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of the Subsidiaries is a party
or by which the Company or any of the Subsidiaries is bound or to which
any of the property or assets of the Company or any of the Subsidiaries
is subject, nor will such actions result in any violation of the
provisions of the charter or by-laws or other constitutive documents of
the Company or any of the Subsidiaries or, assuming that all consents,
approvals, authorizations, registrations or
<PAGE>
8
qualifications as may be required under the Exchange Act and applicable
state and foreign securities laws in connection with the purchase and
distribution of the Stock by the U.S. Underwriters and the
International Managers are obtained, any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries or any of
their properties or assets except, in each case, breaches, violations
or defaults which, in the aggregate, are not reasonably likely to have
a Material Adverse Effect; and except for the registration of the Stock
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act and applicable state and foreign securities laws in connection with
the purchase and distribution of the Stock by the U.S. Underwriters and
the International Managers, no consent, approval, authorization or
order of, or filing or registration with, any such court or
governmental agency or body is required or, with respect to the Six
Flags Subsidiaries will be required, for the execution, delivery and
performance of this Agreement or the International Underwriting
Agreement by the Company or any of the Subsidiaries that are parties
hereto or thereto and the consummation of the transactions
contemplated hereby and thereby.
(i) Except as disclosed in the Prospectus and as to those
rights which have been duly and validly waived, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Securities Act.
(j) The Company has not sold or issued any shares of Common
Stock during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S
of, the Securities Act, other than (i) 121,671 shares issued pursuant
to the Company's acquisition of all of the membership interests of KKI,
LLC on November 7, 1997, (ii) 228,855 shares
<PAGE>
9
issued pursuant to the Company's acquisition of at least 49% of the
outstanding capital stock of Walibi on March , 1998 (the "Walibi
Acquisition"), (iii) an aggregate of 450,000 restricted shares issued
to the Company's Chief Executive Officer, Chief Operating Officer and
Chief Financial Officer, (iv) 768 shares issued to certain directors of
the Company and (v) shares issued pursuant to the Company's employee
benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants, which, in each case, are disclosed in the Prospectus.
(k) Neither the Company nor any of the Subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Prospectus, any loss or interference with its business
from fire, explosion, flood, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, except losses or interferences which
will not, in the aggregate, have a Material Adverse Effect; and, since
such date, there has not been any change in the capital stock other
than in connection with the Premier Merger (as defined in
Section 1(ag)) or long-term debt of the Company or any of the
Subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity
(or partners' equity, as applicable) or results of operations of the
Company and its Subsidiaries, otherwise than as set forth or
contemplated in the Prospectus.
(l) The historical financial statements (including the related
notes and supporting schedules) filed as part of the Registration
Statement or included in the Prospectus present fairly the financial
condition and results of operations of the entities purported to be
shown thereby at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles in
the United States (or, in the case of Walibi, generally accepted
accounting principles in Belgium) applied on a consistent basis
throughout the periods involved, and, in the case of Walibi, have been
reconciled to accounting principles generally accepted in the United
States to the extent
<PAGE>
10
required by the applicable accounting requirements of the Securities
Act and the Rules and Regulations. The pro forma financial statements
included in the Prospectus have been prepared on a basis consistent
with such historical financial statements, except for the pro forma
adjustments specified therein, and comply in all material respects with
Regulation S-X under the Securities Act, and the pro forma adjustments
have been properly applied to historical amounts in the compilation of
such pro forma financial statements.
(m) KPMG Peat Marwick LLP, who have certified certain
financial statements of the Company, Ernst & Young LLP, who have
certified certain financial statements of SFEC, Coopers & Lybrand, who
have certified certain financial statements of Walibi and Carpenter
Mountjoy & Bressler, who have certified certain financial statements of
Kentucky Kingdom, Inc. ("Kentucky Kingdom") whose reports appear in the
Prospectus or are incorporated by reference therein and who have each
delivered the respective initial letters referred to in Section 7(h)
hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(n) The Company and each of the Subsidiaries (in the case of
Walibi, to our knowledge) have good and marketable title in fee simple
to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects except for such liens arising under the Credit
Facilities or contemplated in Section 1(e) hereof as are described in
the Prospectus or such as would not have a Material Adverse Effect; and
all real property and buildings held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as would not have a Material Adverse
Effect.
(o) The Company and each of the Subsidiaries (in the case of
Walibi, to our knowledge) carry, or are covered by insurance in such
amounts and covering such risks (including the risk of earthquakes) as
the Company has reasonably concluded, based on its experience, is
adequate for the conduct of their respective businesses and the value
of their respective properties and as is
<PAGE>
11
customary for companies engaged in similar businesses in similar
industries.
(p) The Company and each of the Subsidiaries (in the case of
Walibi, to our knowledge) own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service mark registrations, copyrights
and licenses necessary for the conduct of their respective businesses
as presently conducted and, with respect to the Amended and Restated
License Agreement among certain affiliates of Warner Bros., SFTP and
the Company dated February 9, 1998 (the "License Agreement"), as
contemplated by the Prospectus, and have no reason to believe that the
conduct of their respective businesses will conflict with, and have not
received any notice of any claim of conflict with, any such rights of
others with such exceptions as would not have a Material Adverse
Effect.
(q) Except as otherwise disclosed in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or
any of the Subsidiaries is a party or of which any property or assets
of the Company or any of the Subsidiaries is the subject which, if
determined adversely to the Company or any of the Subsidiaries, might
have a Material Adverse Effect or are otherwise required to be
disclosed in the Prospectus; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(r) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(s) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations.
(t) No relationship, direct or indirect, exists between or
among the Company or any Subsidiary on the one hand, and the directors,
officers, stockholders,
<PAGE>
12
customers or suppliers of the Company or any Subsidiary on the other
hand, which is required to be described or incorporated by reference in
the Prospectus which is not so described or incorporated by reference.
(u) No labor disturbance by the employees of the Company or
any Subsidiary exists or, to the knowledge of the Company, is imminent
which might be reasonably expected to have a Material Adverse Effect.
(v) The Company is and, as of the First Delivery Date, SFEC
will be in compliance in all material respects with all presently and
then applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined
in ERISA) has occurred or, with respect to SFEC, as of the First
Delivery Date will have occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or SFEC, as applicable, would
have any material liability; the Company has not incurred and, as of
the First Delivery Date, SFEC will not have incurred and neither the
Company expects nor SFEC, as of the First Delivery Date, will expect to
incur material liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections
412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code");
and each "pension plan" for which the Company or SFEC, as applicable,
would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing
has occurred or, with respect to SFEC, as of the First Delivery Date,
will have occurred whether by action or by failure to act, which might
reasonably be expected to cause the loss of such qualification.
(w) The Company and each of the Subsidiaries (in the case of
Walibi, to our knowledge) are in compliance in all respects with (i)
all presently applicable provisions of the Occupational Safety and
Health Act of 1970, as amended, including all applicable regulations
thereunder and (ii) all presently applicable state and local laws and
regulations relating to the safety of its theme park and water park
operations, with such exceptions as would not have a Material Adverse
Effect.
<PAGE>
13
(x) The Company has filed and, as of the First Delivery Date,
SFEC and its subsidiaries will have filed all federal, and all material
state and local income and franchise tax returns required to be filed
through the date hereof or the First Delivery Date, as applicable,
other than those filings being contested in good faith. The Company has
paid and, as of the First Delivery Date, SFEC will have paid all taxes
of which it has notice or will have notice, as applicable, are due
thereon, other than those being contested in good faith and for which
adequate reserves have been provided or will have been provided, as
applicable, or those currently payable or payable as of the First
Delivery Date, as applicable, without penalty or interest and no tax
deficiency has been determined adversely to the Company or any of
the Subsidiaries which has had, nor does the Company have any
knowledge of any tax deficiency which, if determined adversely to
the Company or any of the Subsidiaries, might be reasonably expected
to have, a Material Adverse Effect.
(y) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or
granted any securities or (ii) declared or paid any dividend on its
capital stock, and neither the Company nor any of its Subsidiaries
has (i) incurred any material liability or obligation, direct or
contingent, other than liabilities and obligations which were
incurred in the ordinary course of business or (ii) entered into any
material transaction not in the ordinary course of business other
than the Six Flags Acquisition.
(z) The Company and each of its Subsidiaries (in the case of
Walibi, to our knowledge) (i) make and keep accurate books and records
and (ii) maintain internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of their financial statements in
conformity with generally accepted accounting principles in the United
States (or, in the case of Walibi, generally accepted accounting
principles in Belgium) and to maintain accountability for their assets,
(C) access to their assets is permitted only in accordance with
<PAGE>
14
management's authorization and (D) the recorded accountability for
their assets is compared with existing assets at reasonable intervals.
(aa) Neither the Company nor any of the Subsidiaries (in the
case of Walibi, to our knowledge) (i) is in violation of its charter or
by-laws (or its partnership agreement, as applicable), (ii) is in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or
assets is subject or (iii) is in violation in any material respect of
any material law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject or has
failed to obtain any material license, permit, certificate, franchise
or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business.
(ab) Neither the Company nor any of the Subsidiaries (in the
case of Walibi, to our knowledge), nor, to its knowledge, any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or any of the Subsidiaries, has used any
corporate or partnership funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(ac) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of the Subsidiaries (in the case of Walibi, to our
knowledge) (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the
<PAGE>
15
Company or the Subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which
would require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a Material Adverse Effect; there has
been no material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to
or caused by the Company or any of the Subsidiaries or with respect to
which the Company or any of the Subsidiaries have knowledge, except for
any such spill, discharge, leak, emission, injection, escape, dumping
or release which would not have or would not be reasonably likely to
have, singularly or in the aggregate with all such spills, discharges,
leaks, emissions, injections, escapes, dumpings and releases, a
Material Adverse Effect; and the terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the
meanings specified in any applicable local, state, federal and foreign
laws or regulations with respect to environmental protection.
(ad) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission thereunder.
(ae) At the First Delivery Date, (i) the Six Flags Acquisition
shall be consummated in accordance with the terms of the Agreement and
Plan of Merger dated February 9, 1998 among the Company, Premier
Operations, Premier Parks Merger Corporation, PPStar I, Inc., SFEC and
the Sellers (the "Merger Agreement"), and without any material waiver
of any of the conditions precedent to any of the parties' obligations
under the Merger Agreement, (ii) each of the concurrent offerings by
the Company of the Company Senior Discount Notes, the Company Senior
Notes and the PInES shall be consummated, (iii) the offering by SFEC of
the New SFEC Notes shall be consummated immediately following the
Offering, (iv) each of the Credit Facilities shall be in effect and
available
<PAGE>
16
for borrowing and (v) no default or event which, with notice or lapse
of time or both, would constitute such a default shall have occurred
and be continuing, or shall result from the transactions contemplated
hereby to occur prior to, concurrently with or immediately following
the consummation of the Offering, under (A) the Merger Agreement, (B)
the indentures relating to any of the Company Senior Discount Notes,
the Company Senior Notes, Premier Operations' 12% Senior Notes due 2003
(the "1995 Premier Notes"), Premier Operations' 9 3/4% Senior Notes due
2007 (the "1997 Premier Notes"), SFEC's Zero Coupon Notes due 1999 (the
"SFEC Zero Coupon Notes"), SFTP's Senior Subordinated Notes due 2005
(the "SFTP Senior Subordinated Notes") and the New SFEC Notes, (C) the
credit agreements relating to either of the Credit Facilities or
(D) the Stock Purchase Agreement dated December 15, 1997 between
Premier Operations (or a to be formed Belgian corporation) and Centrag,
S.A., Karaba N.V. and Westkoi N.V. (the "Walibi Agreement").
(af) The statements set forth in the Prospectus under the
captions "Business--Licenses", "Business-- Intercompany Services
Agreement", "Business--Tax Sharing Agreement", "Description of Six
Flags Agreement", "Description of Indebtedness" and "Description of
Securities", insofar as they describe the terms of the agreements and
securities referred to therein, are accurate and fairly present the
information required to be shown.
(ag) The merger (the "Premier Merger") of the company formerly
known as Premier Parks Inc. with a wholly owned subsidiary of Premier
Parks Holdings Corporation has been effected, and, in connection
therewith, no stockholder vote was required under applicable Delaware
law and the Premier Merger otherwise complies in all respects with the
General Corporation Law of the State of Delaware.
(ah) No stockholder vote is required under applicable Delaware
law in connection with the Six Flags Acquisition, and the Six Flags
Acquisition otherwise complies in all respects with the General
Corporation Law of the State of Delaware.
(ai) The Company has effected the Walibi Acquisition and has
commenced a tender offer (the "Walibi
<PAGE>
17
Tender Offer") for the remainder of the outstanding capital stock of
Walibi as described in the Prospectus.
(aj) On or prior to the First Delivery Date, the License
Agreement, the Subordinated Indemnity Agreement, the Intercompany
Services Agreement and the Tax Sharing Agreement shall have been
entered into by the parties thereto with the provisions described in
the Prospectus.
2. Purchase of the Stock by the U.S. Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 10,400,000 shares of
the Firm Stock to the several U.S. Underwriters and each of the U.S.
Underwriters, severally and not jointly, agrees to purchase the number of shares
of the Firm Stock set opposite that U.S. Underwriter's name in Schedule 1
hereto.
In addition, the Company grants to the U.S. Underwriters an option to
purchase up to 1,560,000 shares of Option Stock. Such option is granted solely
for the purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 4 hereof. Shares of Option Stock shall be
purchased severally and not jointly for the account of the U.S. Underwriters in
proportion to the number of shares of Firm Stock set opposite the name of such
U.S. Underwriters in Schedule 1 hereto. The respective purchase obligations of
each U.S. Underwriter with respect to the Option Stock shall be adjusted by the
Representatives so that no U.S. Underwriter shall be obligated to purchase
Option Stock other than in 100 share amounts. The price of both the Firm Stock
and any Option Stock shall be $ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or the Second Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein and in the International
Underwriting Agreement.
3. Offering of Stock by the U.S. Underwriters.
Upon authorization by the Representatives of the release of the Firm
Stock, the several U.S. Underwriters propose to offer the Firm Stock for sale
upon the terms and conditions set forth in the Prospectus.
<PAGE>
18
Each U.S. Underwriter agrees that, except to the extent permitted by
the Agreement Between U.S. Underwriters and International Managers, it will not
offer or sell any of the Stock outside of the United States and Canada.
4. Delivery of and Payment for the Stock. Delivery of and payment for
the Firm Stock shall be made at the office of Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time,
on the fourth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each U.S. Underwriter against payment to or
upon the order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence (except that the
Company will not be responsible for any delay resulting from any action or
inaction of any U.S. Underwriter or International Manager) and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of each U.S. Underwriter hereunder. Upon delivery, the Firm
Stock shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Stock, the Company shall make the
certificates representing the Firm Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 2 may be exercised by written notice
being given to the Company by the Representatives. Such notice shall set forth
the aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representatives, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor
<PAGE>
19
earlier than the second business day after the date on which the option shall
have been exercised nor later than the third business day after the date on
which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as the "Second Delivery
Date" and the First Delivery Date and the Second Delivery Date are sometimes
each referred to as a "Delivery Date".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on the Second Delivery Date.
On the Second Delivery Date, the Company shall deliver or cause to be delivered
the certificates representing the Option Stock to the Representatives for the
account of each U.S. Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence (except that the Company will not be responsible
for any delay resulting from any action or inaction of any U.S. Underwriter or
International Manager), and delivery at the time and place specified pursuant to
this Agreement is a further condition of the obligations of each U.S.
Underwriter hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representatives shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the Second Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than Commission's close of business
on the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no
<PAGE>
20
further amendment or any supplement to the Registration Statement or to
the Prospectus and to file no Rule 462(b) Registration Statement except
as permitted herein; to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof; upon your
request, to cause the Rule 462(b) Registration Statement, properly
completed, to be filed with the Commission pursuant to Rule 462(b) and
to provide evidence satisfactory to the Representatives of such filing;
to advise the Representatives, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification, to use promptly its reasonable best
efforts to obtain its withdrawal;
(b) To furnish reasonably promptly to each of the
Representatives and to counsel for the U.S. Underwriters a signed copy
of the Registration Statement as originally filed with the Commission,
each amendment thereto and any Rule 462(b) Registration Statement filed
with the Commission, including all consents and exhibits filed
therewith;
(c) To deliver promptly to the Representatives such number of
the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission, each amendment thereto (in each
case excluding exhibits other than this Agreement and the computation
of per share earnings) and any Rule 462(b) Registration Statement, (ii)
each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus and (iii) any document incorporated by
reference in the
<PAGE>
21
Prospectus (excluding exhibits thereto); and, if the delivery of a
prospectus is required at any time after the Effective Time in
connection with the offering or sale of the Stock or any other
securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Securities
Act or the Exchange Act, to notify the Representatives and, upon their
request, to file such document and to prepare and furnish without
charge to each U.S. Underwriter and to any dealer in securities as many
copies as the Representatives may from time to time reasonably request
of an amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus, any Prospectus pursuant to
Rule 424 of the Rules and Regulations or any Rule 462(b) Registration
Statement to furnish a copy thereof to the Representatives and counsel
for the U.S. Underwriters and obtain the consent of the Representatives
to the filing;
(f) As soon as practicable after the Effective Date (it being
understood that the Company shall have until at least 410 days after
the end of the Company's current fiscal quarter), to make generally
available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its
subsidiaries (which need not be audited) complying
<PAGE>
22
with Section 11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date,
to furnish to the Representatives copies of all materials furnished by
the Company to its public shareholders and all public reports and all
reports and financial statements furnished by the Company to the
principal national securities exchange upon which the Common Stock may
be listed pursuant to requirements of or agreements with such exchange
or to the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale (or obtain an exemption from registration) under the
securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Stock; provided, however,
that the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general consent
to service of process in any jurisdiction in any action other than one
arising out of the offering or sale of the Stock;
(i) For a period of 90 days from the date of the Prospectus,
not to, directly or indirectly, (i) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or any
securities convertible into or exchangeable for Common Stock (other
than the Stock, the International Stock, the PInES, the Mandatorily
Convertible Preferred Stock, the Seller Depositary Shares, the Seller
Convertible Redeemable Preferred Stock, shares issued pursuant to
employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights or upon the conversion of the
Seller Convertible Redeemable Preferred Stock or the Mandatorily
Convertible Preferred Stock, and
<PAGE>
23
other than shares issued by the Company as consideration to any seller
of assets or stock that the Company or any of the Subsidiaries is
acquiring, provided that any shares so issued to such seller or
sellers, including any shares issued after the date of the Prospectus
pursuant to the Walibi Acquisition or the Walibi Tender Offer, in the
aggregate, do not exceed one-fifth of the total equity of the Company
outstanding at the time of the first such issuance, and further
provided that such seller or sellers (other than the sellers of Walibi)
contemporaneously with any such issuance or issuances enter into an
agreement with the Representatives in substantially the same form as
the agreement described in this paragraph (i) for the remainder of the
90 day period), or sell or grant options, rights or warrants with
respect to any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the grant of options pursuant
to option plans existing on the date hereof) or (ii) enter into any
swap or other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of ownership of
such shares of Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock
or other securities, in cash or otherwise, in each case without the
prior written consent of Lehman Brothers Inc.; and to cause each
officer and director of the Company and Hanseatic Corporation, Richland
Ventures, L.P., Richland Ventures II, L.P., Lawrence, Tyrrell, Ortale &
Smith, Lawrence, Tyrrell, Ortale & Smith II, L.P., Windcrest Partners,
[JG Partnership, Ltd.,] [J. David Grissom] and Robert J. Gellert (in
the case of Robert J. Gellert only, limited to (A) shares held for his
own account and (B) shares beneficially owned by Lexfor Corporation) to
furnish to the Representatives, prior to the First Delivery Date, a
letter or letters, in form and substance satisfactory to counsel for
the Underwriters, pursuant to which each such person shall agree not
to, directly or indirectly, (iii) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or any
securities convertible into or exchangeable for Common Stock or
(iv) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits
or risks
<PAGE>
24
of ownership of such shares of Common Stock, whether any such
transaction described in clause (iii) or (iv) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in
each case for a period of 90 days from the date of the Prospectus,
without the prior written consent of Lehman Brothers Inc.;
(j) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment
company" within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission thereunder;
(k) To cause an authorized officer to execute this Agreement
on behalf of each of the Six Flags Subsidiaries on the First Delivery
Date;
(l) Not to waive the lock-up agreements executed by the
Sellers in connection with the Six Flags Acquisition whereby each of
the Sellers agreed to not sell any Seller Convertible Redeemable
Preferred Stock (or shares of Common Stock issuable upon conversion
thereof) during the period of 90 days from the date of the Prospectus,
without the prior written consent of Lehman Brothers Inc.; and
(m) To make an offer to purchase the SFTP Senior Subordinated
Notes following the Six Flags Acquisition in accordance with the
provisions of the indenture for the SFTP Senior Subordinated Notes
relating to offers to purchase the SFTP Senior Subordinated Notes upon
a change of control of SFTP.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in
<PAGE>
25
this Agreement; (d) the costs of producing and distributing this Agreement, the
International Underwriting Agreement, the Agreement Between U.S. Underwriters
and International Managers, the Agreement Among International Managers, the
International Selling Agreement and any other related documents in connection
with the offering, purchase, sale and delivery of the Stock; (e) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of sale of the Stock; (f)
listing or other fees incident to the inclusion of the Common Stock (including
the Stock) for listing on the New York Stock Exchange; (g) the fees and
expenses, if applicable, of qualifying the Stock under the securities laws of
the several jurisdictions as provided in Section 5(h) and of preparing, printing
and distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (h) if one is required pursuant to the rules of
the NASD, all fees and expenses of a qualified independent underwriter; and
(i) all other costs and expenses incident to the performance of the obligations
of the Company or any of the Subsidiaries under this Agreement; provided that,
except as provided in this Section 6 and in Section 11, the U.S. Underwriters
shall pay their own costs and expenses, including the costs and expenses of
their counsel, any transfer taxes on the Stock which they may sell and the
expenses of advertising any offering of the Stock made by the U.S. Underwriters.
7. Conditions of U.S. Underwriters' Obligations. The respective
obligations of the U.S. Underwriters hereunder are subject to the accuracy, when
made and on each Delivery Date, of the representations and warranties of the
Company, Premier Operations, SFEC and SFTP contained herein, to the performance
by the Company and each of the Subsidiaries that is a party hereto of its
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with.
<PAGE>
26
(b) No U.S. Underwriter or International Manager shall have
discovered and disclosed to the Company on or prior to such Delivery
Date that the Registration Statement or the Prospectus or any amendment
or supplement thereto contains an untrue statement of a fact which, in
the opinion of Cravath, Swaine & Moore, counsel for the U.S.
Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
International Underwriting Agreement, the Stock, the Registration
Statement and the Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the
U.S. Underwriters, and the Company shall have furnished to such counsel
all documents and information that they may reasonably request to
enable them to pass upon such matters.
(d) Baer Marks & Upham LLP shall have furnished to the
Representatives its written opinion, as counsel to the Company,
addressed to the U.S. Underwriters and dated such Delivery Date, in
form reasonably satisfactory to the Representatives, to the effect
that:
(i) The Company and each of the Premier Subsidiaries
and each of the Six Flags Subsidiaries have been duly
incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation; each of the Premier Partnerships and each of
the Six Flags Partnerships is validly existing as a limited
partnership in good standing under the laws of its
jurisdiction of formation; and the Company, the Premier
Subsidiaries, the Premier Partnerships, the Six Flags
Subsidiaries and the Six Flags Partnerships are each duly
qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their
respective businesses requires such qualification except where
<PAGE>
27
the failure to so qualify would not have a Material Adverse
Effect and have all corporate or partnership power and
authority necessary to own or hold their respective properties
and conduct the businesses in which they are engaged as
described in the Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company now outstanding (including the
shares of Stock being delivered on such Delivery Date) have
been duly and validly authorized and issued, are fully paid
and non-assessable and conform in all material respects to the
description thereof contained in the Prospectus; all of the
shares of Stock have been duly authorized and, when issued and
delivered to the Representatives for the account of each U.S.
Underwriter against payment therefor as provided herein, shall
be validly issued, fully paid and non-assessable; to such
counsel's knowledge, all of the issued shares of capital stock
of each Premier Subsidiary and each Six Flags Subsidiary have
been duly and validly authorized and issued and are fully
paid, non- assessable and, except for the capital stock of
Walibi that is subject to the Walibi Tender Offer, are owned
directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims, except for liens,
encumbrances, equities or claims arising under the Credit
Facilities and the Subordinated Indemnity Agreement; and 100%
of the partnership interest in each of the
Premier Partnerships and each of the Six Flags Partnerships is
held directly or indirectly by the Company, except for the 40%
general partnership interest in Fiesta Partnership held by
Fiesta Texas Theme Park, Ltd., the 99% limited partnership
interest in the Georgia Co-Venture Partnership indirectly held
by investors in Six Flags Fund, Ltd. (L.P.), of which
approximately 75% are not affiliated with the Company, and the
99% limited partnership interest in the Texas Co- Venture
Partnership indirectly held by investors in Six Flags
Funds II, Ltd. (L.P.), of which approximately % are not
affiliated with the Company, free and clear of all liens,
encumbrances,
<PAGE>
28
equities or claims, except for liens, encumbrances, equities
or claims arising under the Credit Facilities and the
Co-Venture Parks Agreements;
(iii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or other
instrument known to such counsel;
(iv) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or
any of the Subsidiaries is a party or of which any property or
assets of the Company or any of the Subsidiaries is the
subject which, if determined adversely to the Company or any
of the Subsidiaries, might have a Material Adverse Effect;
and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(v) Based solely upon oral confirmation from the
staff of the Commission, the Registration Statement was
declared effective under the Securities Act as of the date and
time specified in such opinion; the Prospectus was filed with
the Commission pursuant to the subparagraph of Rule 424(b) of
the Rules and Regulations specified in such opinion on the
date specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued
and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(vi) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the
Company prior to such Delivery Date (other than the financial
statements and related schedules therein and other financial
or statistical data included therein, as to which such counsel
need express no opinion) comply as to form in all material
respects with the requirements of the Securities Act and the
Rules and Regulations; and the documents incorporated by
<PAGE>
29
reference in the Prospectus (other than the financial
statements and related schedules therein and other financial
or statistical data included therein, as to which such counsel
need express no opinion), when they were filed with the
Commission, complied as to form in all material respects with
the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder;
(vii) To the best of such counsel's knowledge, there
are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules
and Regulations which have not been described or filed as
exhibits to the Registration Statement or incorporated therein
by reference as permitted by the Rules and Regulations;
(viii) Each of this Agreement and the International
Underwriting Agreement has been duly authorized, executed and
delivered by the Company and each of the Subsidiaries that is
a party hereto or thereto;
(ix) The issue and sale of the shares of Stock being
delivered on such Delivery Date by the Company and the
compliance by the Company and each of the Subsidiaries that is
a party hereto or thereto with all of the provisions of this
Agreement and the International Underwriting Agreement and the
consummation of the transactions contemplated hereby and
thereby (including the offerings of the Company Senior
Discount Notes, the Company Senior Notes and the New SFEC
Notes and the entering into of the Six Flags Credit Facility
and any borrowing thereunder in connection with the Six Flags
Acquisition) will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such
counsel to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries is
bound or to which any of the property or assets of the Company
or any of the Subsidiaries is subject, nor will such actions
<PAGE>
30
result in any violation of the provisions of the charter or
by-laws or other constitutive documents of the Company or any
of the Subsidiaries or, assuming that all consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state or
foreign securities laws in connection with the purchase and
distribution of the Stock by the U.S. Underwriters and the
International Managers are obtained, any Federal or New York
State statute, the General Corporation Law of the State of
Delaware, or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries or
any of their properties or assets; and, except for the
registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state or foreign securities laws in connection with
the purchase and distribution of the Stock by the U.S.
Underwriters, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement or the International
Underwriting Agreement by the Company or any of the
Subsidiaries that is a party hereto or thereto and the
consummation of the transactions contemplated hereby and
thereby; and
(x) To the best of such counsel's knowledge, no
holders of securities of the Company have rights to require
the Company to include such securities with the Stock
registered pursuant to the Registration Statement.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the State of New York and the
General Corporation Law of the State of Delaware and that such counsel
is not admitted in any state other than New York; and, in respect of
matters of fact, may rely upon certificates of officers of the Company
or the Subsidiaries, provided
<PAGE>
31
that such counsel shall state that it believes that both the U.S.
Underwriters and it are justified in relying upon such certificates.
Such counsel shall also have furnished to the Representatives a written
statement, addressed to the U.S. Underwriters and dated such Delivery
Date, in form satisfactory to the Representatives, to the effect that
(x) such counsel has acted as counsel to the Company on a regular basis
(although the Company is also represented with respect to the
Walibi Acquisition, the Walibi Tender Offer, the Six Flags Acquisition,
litigation matters, regulatory matters and certain other matters, by
other outside counsel), has acted as counsel to the Company in
connection with financing transactions since February 1992 and has
acted as counsel to the Company in connection with the preparation of
the Registration Statement and (y) based on the foregoing, no facts
have come to the attention of such counsel which lead it to believe
that (I) the Registration Statement (other than the financial
statements and other financial and statistical data contained therein,
as to which such counsel need express no belief), as of the Effective
Date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that the
Prospectus (other than the financial statements and other financial and
statistical data contained therein, as to which such counsel need
express no belief) contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (II) any
documents incorporated by reference in the Prospectus (other than the
financial statements and other financial and statistical data contained
therein, as to which such counsel need express no belief) when they
were filed with the Commission contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. In rendering such statement, such
counsel may rely upon the opinion and statement delivered by
Weil Gotshal & Manges LLP pursuant to Section 5(e) hereto with respect
to the information covered by such opinion and statement. The foregoing
opinion and statement may be qualified by a statement to the effect
<PAGE>
32
that such counsel does not assume any responsibility for the accuracy
or fairness with respect to the information required to be shown under
the Securities Act and the Rules and Regulations of the statements
contained in the Registration Statement or the Prospectus except for
the statements made in the Prospectus under the captions "Prospectus
Summary--Other Recent Developments--Walibi", "Business--Intercompany
Services Agreement", "Business-- Tax Sharing Agreement", "Description
of Indebtedness", "Description of Securities", "Description of PInES"
and "Description of Depositary Arrangements" insofar as such statements
describe the terms of the Walibi Acquisition and Walibi Tender Offer,
the documents or agreements referred to therein, the Stock, the Seller
Convertible Redeemable Preferred Stock, the Company's debt instruments
or other securities, or the registration rights referred to therein and
concern legal matters.
(e) Weil Gotshal & Manges LLP shall have furnished to the
Representatives its written opinion, as special counsel to the Company,
addressed to the U.S. Underwriters and dated such Delivery Date, in
form reasonably satisfactory to the Representatives, as to certain
matters set forth in Section 7(d) and to the effect that the statements
set forth in the Prospectus under the captions "Business--Licenses" and
"Description of Six Flags Agreement", insofar as such statements
describe the terms of the documents or agreements referred to therein,
are accurate, complete and fair.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the State of New York and the
General Corporation Law of the State of Delaware and, in respect of
matters of fact, may rely upon certificates of officers of the Company
or the Subsidiaries, provided that such counsel shall state that it
believes that both the U.S. Underwriters and it are justified in
relying upon such certificates. Such counsel shall also have furnished
to the Representatives a written statement, addressed to the U.S.
Underwriters and dated such Delivery Date, in form satisfactory to the
Representatives, to the effect that (x) such counsel has acted as
counsel to the Company in connection with the Walibi Acquisition, the
Walibi Tender Offer and the Six Flags Acquisition and has reviewed the
information (the
<PAGE>
33
"Walibi and Six Flags Information") in the Registration Statement
relating to the Walibi Acquisition, the Walibi Tender Offer, the Six
Flags Acquisition and the business and operations of Walibi and its
subsidiaries and SFEC and its subsidiaries and (y) based on the
foregoing, no facts have come to the attention of such counsel which
lead it to believe that (I) the Registration Statement (other than the
financial statements and other financial and statistical data contained
therein, as to which such counsel need express no belief), as of the
Effective Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or
that the Prospectus (other than the financial statements and other
financial and statistical data contained therein, as to which such
counsel need express no belief) contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading or
(II) any documents incorporated by reference in the Prospectus (other
than the financial statements and other financial and statistical data
contained therein, as to which such counsel need express no belief)
when they were filed with the Commission contained an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The foregoing statement may
be qualified by a statement to the effect that the statement's scope is
limited to the Walibi and Six Flags Information.
(f) Richards, Layton & Finger shall have furnished to the
Representatives its written opinion, as special Delaware counsel to the
Company, addressed to the U.S. Underwriters and dated such Delivery
Date, in form reasonably satisfactory to the Representatives, to the
effect that, in connection with the Premier Merger, no shareholder vote
was required under applicable Delaware law and, in connection with the
Six Flags Acquisition, no shareholder vote is required under applicable
Delaware law, and that the Premier Merger and the Six Flags Acquisition
otherwise comply in all respects with applicable Delaware law.
<PAGE>
34
(g) The Representatives shall have received from Cravath,
Swaine & Moore, counsel for the U.S. Underwriters, such opinion or
opinions and such statement or statements, dated such Delivery Date,
with respect to the issuance and sale of the Stock, the Registration
Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company and the
Subsidiaries shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon
such matters.
(h) At the time of execution of this Agreement, the
Representatives shall have received from (I) KPMG Peat Marwick LLP a
letter, in form and substance satisfactory to the Representatives,
addressed to the U.S. Underwriters and dated the date hereof (i)
confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of
the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five
days prior to the date hereof), the conclusions and findings of such
firm with respect to the financial information and other matters
ordinarily covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings, except for the financial
information and other matters covered in the letters from Ernst & Young
LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler described
immediately hereinafter; (II) Ernst & Young LLP a letter, in form and
substance satisfactory to the Representatives, addressed to the U.S.
Underwriters and dated the date hereof (i) confirming that they are
independent accountants within the meaning of the Securities Act and
are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof, the conclusions and
findings of such firm with respect to certain financial information and
other matters relating to SFEC and its subsidiaries as have been
previously agreed to by such firm and the Representatives; (III)
Coopers & Lybrand a letter, in form and substance satisfactory to the
Representatives, addressed to the U.S. Underwriters and dated the date
<PAGE>
35
hereof (i) confirming that they are independent accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of
the date hereof, the conclusions and findings of such firm with respect
to certain financial information and other matters relating to Walibi
and its subsidiaries, as have been previously agreed to by such firm
and the Representatives; and (IV) Carpenter Mountjoy & Bressler a
letter, in form and substance satisfactory to the Representatives,
addressed to the U.S. Underwriters and dated the date hereof (i)
confirming that they are independent accountants within the meaning of
the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission and (ii) stating, as of the
date hereof, the conclusions and findings of such firm with respect to
certain financial information and other matters relating to Kentucky
Kingdom, as have been previously agreed to by such firm and the
Representatives.
(i) With respect to the letters of KPMG Peat Marwick LLP,
Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler
referred to in the preceding paragraph and delivered to the
Representatives concurrently with the execution of this Agreement (the
"initial letters"), the Company shall have furnished to the
Representatives a letter (the "bring-down letters") of each of such
accountants, addressed to the U.S. Underwriters and dated such Delivery
Date (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as
of the date of the bring- down letter (or, in the case of the letter of
KPMG Peat Marwick LLP, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and
other matters covered by the initial
<PAGE>
36
letter and (iii) confirming in all material respects the conclusions
and findings set forth in the initial letter.
(j) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board,
its President or a Vice President and its chief financial officer
stating that:
(i) The representations, warranties and agreements of
the Company and each of Premier Operations, SFEC and SFTP in
Section 1 are true and correct as of such Delivery Date; the
Company and each of the Subsidiaries that is a party hereto
have complied with all their agreements contained herein; and
the conditions set forth in Sections 7(a) and 7(k) have been
fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of
the Effective Date, the Registration Statement and Prospectus
did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or
amendment to the Registration Statement or the Prospectus.
(k) Since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus there shall not
have been any change in the capital stock (or partners' equity, as
applicable) other than the Premier Merger or long-term debt of the
Company or any of the Subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity (or partners'
equity, as applicable) or results of operations of the Company and its
subsidiaries, otherwise, in each case, than as set forth or
contemplated in the Prospectus, the effect of which, in any such case,
is, in the judgment of the Representatives, so material (to the Company
and its Subsidiaries, taken as a whole) and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Stock being delivered on
<PAGE>
37
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(l) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Company's debt securities by any "nationally recognized statistical
rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no
such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of the Company's debt securities.
(m) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall have been declared
by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv)
there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of a majority in interest
of the several U.S. Underwriters, impracticable or inadvisable to
proceed with the public offering or delivery of the Stock being
delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(n) The Six Flags Acquisition shall have been or shall be
consummated concurrently with the Offering and without any material
waiver of any of the conditions precedent to any of the parties'
obligations under the Merger Agreement.
<PAGE>
38
(o) Each of the offerings by the Company of the Company Senior
Discount Notes, the Company Senior Notes and the PInES shall have been
or shall be consummated concurrently with the Offering.
(p) The offering by SFEC of the New SFEC Notes shall be
consummated immediately following the Offering.
(q) Each of the Premier Credit Facility and the Six Flags
Credit Facility shall be in effect and available for borrowing.
(r) No default or event which, with notice or lapse of time or
both, would constitute such a default shall have occurred and be
continuing, or would result from the transactions contemplated hereby
to occur prior to, concurrently with or immediately following the
consummation of the Offering, under (i) the Merger Agreement, (ii) the
indentures relating to any of the Company Senior Discount Notes, the
Company Senior Notes, the 1995 Premier Notes, the 1997 Premier Notes,
the SFEC Zero Coupon Notes, the SFTP Senior Subordinated Notes and the
New SFEC Notes, (iii) the credit agreement relating to either the
Premier Credit Facility or the Six Flags Credit Facility or (iv) the
Walibi Agreement.
(s) The Premier Merger shall have been consummated.
(t) Each of (i) the License Agreement, (ii) the Subordinated
Indemnity Agreement, (iii) the Intercompany Services Agreement and
(iv) the Tax Sharing Agreement shall have been entered into by the
parties thereto with the provisions described in the Prospectus.
(u) An authorized officer shall have executed this Agreement
on behalf of each of the Six Flags Subsidiaries.
(v) Delivery of and payment for the Firm Stock under the
International Underwriting Agreement shall have occurred concurrently
with delivery of and payment for the Firm Stock hereunder on the First
Delivery Date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they
<PAGE>
39
are in form and scope reasonably satisfactory to counsel for the U.S.
Underwriters.
8. Indemnification and Contribution.
(a) The Company and the Subsidiaries that are parties hereto,
jointly and severally, shall indemnify and hold harmless each U.S.
Underwriter (including any Underwriter in its role as qualified
independent underwriter pursuant to the rules of the NASD), its
officers and employees and each person, if any, who controls any U.S.
Underwriter within the meaning of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock),
to which that U.S. Underwriter, officer, employee or controlling person
may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or
supplement thereto or (B) in any blue sky application or other document
prepared or executed by the Company (or based upon any written
information furnished by the Company) specifically for the purpose of
qualifying any or all of the Stock under the securities laws of any
jurisdiction (any such application, document or information being
hereinafter called a Blue Sky Application ), (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact
required to be stated therein or necessary to make the statements
therein not misleading or (iii) any act or failure to act or any
alleged act or failure to act by any U.S. Underwriter in connection
with, or relating in any manner to, the Stock or the Offering
contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based
upon matters covered by clause (i) or (ii) above (provided that the
Company and the Subsidiaries that are parties hereto shall not be
liable under this clause (iii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss,
claim, damage, liability or action resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such U.S.
Underwriter
<PAGE>
40
through its gross negligence or willful misconduct), and shall
reimburse each U.S. Underwriter and each such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that U.S. Underwriter, officer, employee or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
Company and the Subsidiaries that are parties hereto shall not be
liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written
information concerning any U.S. Underwriter or any International
Manager furnished to the Company through the Representatives or Lead
Managers by or on behalf of any U.S. Underwriter or International
Manager specifically for inclusion therein; and provided further that
with respect to any such untrue statement or omission made in the
Preliminary Prospectus, the indemnity agreement contained in this
Section 8(a) shall not enure to the benefit of the U.S. Underwriter
from whom the person asserting any such losses, claims, damages or
liabilities purchased the Stock concerned if, to the extent that such
sale was an initial sale by such U.S. Underwriter and any such loss,
claim, damage or liability of such U.S. Underwriter is a result of the
fact that both (A) a copy of the Prospectus was not sent or given to
such person at or prior to the written confirmation of the sale of such
Stock to such person, and (B) the untrue statement or omission in the
Preliminary Prospectus was corrected in the Prospectus unless, in
either case, such failure to deliver the Prospectus was a result of
noncompliance by the Company with Section 5(c). The foregoing indemnity
agreement is in addition to any liability which the Company or any of
the Subsidiaries that are parties hereto may otherwise have to any U.S.
Underwriter or to any officer, employee or controlling person of that
U.S. Underwriter.
(b) Each U.S. Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company and the Subsidiaries that are
parties hereto, each of their respective officers and employees, each
of their respective directors, and each person, if any, who controls
the Company or any
<PAGE>
41
Subsidiary that is a party hereto within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any
Subsidiary that is a party hereto or any such director, officer or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (B) in any Blue Sky Application or
(ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information concerning such U.S. Underwriter furnished to the
Company through the Representatives by or on behalf of that U.S.
Underwriter specifically for inclusion therein, and shall reimburse the
Company, any such Subsidiary and any such director, officer or
controlling person for any legal or other expenses reasonably incurred
by the Company, any such Subsidiary or any such director, officer or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity agreement
is in addition to any liability which any U.S. Underwriter may
otherwise have to the Company, any such Subsidiary, or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 8 except to the extent it has been materially prejudiced
by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to
<PAGE>
42
an indemnified party otherwise than under this Section 8. If any such
claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party,
to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim
or action, the indemnifying party shall not be liable to the
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that the Representatives shall have the right, upon written
notice to the Company, to employ counsel to represent jointly the
Representatives and those other U.S. Underwriters and their respective
officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be
sought by the U.S. Underwriters against the Company and the
Subsidiaries that are parties hereto under this Section 8 if, in the
reasonable judgment of the Representatives, it is advisable for the
Representatives and those U.S. Underwriters, officers, employees and
controlling persons to be jointly represented by separate counsel, and
in that event the reasonable fees and expenses of such separate counsel
shall be paid, jointly and severally, by the Company and the
Subsidiaries that are parties hereto. It is understood that the
indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at
any one time for all such indemnified party or parties. No indemnifying
party shall (i) without the prior written consent of the indemnified
parties (which consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such
<PAGE>
43
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the consent of the
indemnifying party or if there be a final judgment of the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or liability
by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless
an indemnified party under Section 8(a) or 8(c) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the
Company and the Subsidiaries that are parties hereto on the one hand
and the U.S. Underwriters on the other from the offering of the Stock
or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Subsidiaries that are parties
hereto on the one hand and the U.S. Underwriters on the other with
respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits
received by the Company and the Subsidiaries that are parties hereto on
the one hand and the U.S. Underwriters on the other with respect to
such offering shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Stock purchased under this
Agreement (before deducting expenses) received by the Company on the
one hand, and the total underwriting discounts and commissions received
by the U.S. Underwriters with respect to the shares of the Stock
purchased under this Agreement, on the other hand, bear to the total
gross proceeds from the offering of the shares of the Stock under this
Agreement, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company or the U.S. Underwriters, the
intent of the parties and their relative
<PAGE>
44
knowledge, access to information and opportunity to correct or prevent
such statement or omission. For purposes of the preceding two
sentences, the net proceeds deemed to be received by the Company shall
be deemed to be also for the benefit of the Subsidiaries that are
parties hereto and information supplied by the Company shall also be
deemed to have been supplied by the Subsidiaries that are parties
hereto. The Company, the Subsidiaries that are parties hereto and the
U.S. Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to be determined by
pro rata allocation (even if the U.S. Underwriters were treated as one
entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result
of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 8(d), no U.S. Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which
the Stock underwritten by it and distributed to the public was offered
to the public exceeds the amount of any damages which such U.S.
Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The U.S. Underwriters' obligations to contribute as
provided in this Section 8(d) are several in proportion to their
respective underwriting obligations and not joint.
(e) The U.S. Underwriters severally confirm and the Company
and the Subsidiaries that are parties hereto acknowledge that the
statements with respect to the public offering of the Stock by the U.S.
Underwriters set forth in the first and last paragraphs on the cover
page of, the legend concerning stabilization on the third page of and
statements under the caption "Underwriting" including but not limited
to the concession and reallowance figures, the Prospectus constitute
the only information concerning such U.S. Underwriters furnished in
writing to the Company by or on
<PAGE>
45
behalf of the U.S. Underwriters specifically for inclusion in the
Registration Statement and the Prospectus.
9. Defaulting U.S. Underwriters.
If, on either Delivery Date, any U.S. Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting U.S. Underwriters shall be obligated to purchase the Stock which
the defaulting U.S. Underwriter agreed but failed to purchase on such Delivery
Date in the respective proportions which the number of shares of the Firm Stock
set opposite the name of each remaining non-defaulting U.S. Underwriter in
Schedule 1 hereto bears to the total number of shares of the Firm Stock set
opposite the names of all the remaining non-defaulting U.S. Underwriters in
Schedule 1 hereto; provided, however, that the remaining non-defaulting U.S.
Underwriters shall not be obligated to purchase any of the Stock on such
Delivery Date if the total number of shares of the Stock which the defaulting
U.S. Underwriter or U.S. Underwriters agreed but failed to purchase on such date
exceeds 9.09% of the total number of shares of the Stock to be purchased on such
Delivery Date, and any remaining non-defaulting U.S. Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 2.
If the foregoing maximums are exceeded, the remaining non-defaulting U.S.
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining U.S. Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to
purchase on such Delivery Date, this Agreement (or, with respect to the Second
Delivery Date, the obligation of the U.S. Underwriters to purchase, and of the
Company to sell, the Option Stock) shall terminate without liability on the part
of any non- defaulting U.S. Underwriter or the Company, except that the Company
will continue to be liable for the payment of expenses to the extent set forth
in Section 6. As used in this Agreement, the term "U.S. Underwriter" includes,
for all purposes of this Agreement unless the context requires otherwise, any
party not listed in Schedule 1 hereto who,
<PAGE>
46
pursuant to this Section 9, purchases Stock which a defaulting U.S. Underwriter
agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting U.S. Underwriter of
any liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing U.S. Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
U.S. Underwriters may be necessary in the Registration Statement, the Prospectus
or in any other document or arrangement.
10. Termination. The obligations of the U.S. Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(k), 7(l) or 7(m) shall have
occurred or if the U.S. Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
11. Reimbursement of U.S. Underwriters' Expenses. If the Company shall
fail to tender the Stock for delivery to the U.S. Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
U.S. Underwriters' obligations hereunder required to be fulfilled by the Company
is not fulfilled (other than by reason of any events described in Section 7(m)
except for the suspension of trading or minimum prices of the securities of the
Company), the Company will reimburse the U.S. Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the U.S. Underwriters in connection with this Agreement and the proposed
purchase of the Stock, and promptly following demand the Company shall pay the
full amount thereof to the Representatives. If this Agreement is terminated
pursuant to Section 9 by reason of the default of one or more U.S. Underwriters,
the Company shall not be obligated to reimburse any defaulting U.S. Underwriter
on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
<PAGE>
47
(a) if to the U.S. Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-526-6588), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th
Floor, New York, NY 10285;
(b) if to the Company or any of the Subsidiaries, shall be
delivered or sent by mail, telex or facsimile transmission to 122 East
42nd Street, 49th Floor, New York, NY 10168, Attention: Kieran E. Burke
(Fax: 212- 949-6203);
provided, however, that any notice to a U.S. Underwriter pursuant to
Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission
to such U.S. Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the U.S. Underwriters by Lehman Brothers Inc. on behalf of
the Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the U.S. Underwriters, the Company,
the Subsidiaries that are parties hereto and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and
agreements of the Company and the applicable Subsidiaries contained in this
Agreement shall also be deemed to be for the benefit of the officers and
employees of each U.S. Underwriter and the person or persons, if any, who
control any U.S. Underwriter within the meaning of Section 15 of the Securities
Act and for the benefit of each International Manager (and officers, employees
and such controlling persons thereof) who offers or sells any shares of Common
Stock in accordance with the terms of the Agreement Between U.S. Underwriters
and International Managers and (B) the indemnity agreement of the U.S.
Underwriters contained in Section 8(b) of this Agreement shall be deemed to
<PAGE>
48
be for the benefit of directors of the Company, officers of the Company who have
signed the Registration Statement and any person controlling the Company within
the meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations, warranties
and agreements of the Company, the applicable Subsidiaries and the U.S.
Underwriters contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Stock and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
15. Definition of the Terms "Business Day", "Premier Subsidiary",
"Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership",
"Subsidiary" and "Co-Venture Parks Agreements". For purposes of this Agreement,
(a) "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) "Premier Subsidiary" means each of Premier Operations,
Walibi, Funtime Parks, Inc., an Ohio corporation, Funtime, Inc., an Ohio
corporation, Wyandot Lake, Inc., an Ohio corporation, Darien Lake Theme Park and
Camping Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware
corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier City
Properties, Inc., an Oklahoma corporation, Stuart Amusement Company, a
Massachusetts corporation, Premier Waterworld Concord Inc., a California
corporation, Premier Waterworld Sacramento Inc., a California corporation,
Premier Parks of Colorado Inc., a Colorado corporation, Great Escape Holding
Inc., a New York corporation, Great Escape LLC, a New York limited liability
company, Great Escape Theme Park LLC, a New York limited liability company,
Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside Park
Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware limited
liability company, Park Management Corp., a California corporation, Indiana
Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio
corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier
International Holdings, Inc., a Delaware corporation and [other Premier entities
held in corporate form and as limited
<PAGE>
49
liability companies], (c) "Premier Partnership" means each of Frontier City
Partners, Limited Partnership, an Oklahoma limited partnership, Elitch Gardens,
L.P., a Colorado limited partnership and [other Premier entities held as limited
partnerships], (d) "Six Flags Subsidiary" means each of SFEC, SFTP, [S.F.
Holdings, Inc., a Delaware corporation, SFTP Inc., a Delaware corporation, S.F.
Sponsorship Services, Inc., a Delaware corporation, Six Flags Over Georgia,
Inc., a Delaware corporation, SFOG II, Inc., a Delaware corporation, SFOG II
Employee, Inc., a Delaware corporation, SFOG Acquisition A, Inc., a Delaware
corporation, SFOG Acquisition B, LLC, a Delaware limited liability company, Six
Flags Over Texas, Inc., a Delaware corporation, SFOT Employee, Inc., a Delaware
corporation, SFOT Acquisition I, Inc.,, a Delaware corporation, SFOT Acquisition
II, Inc., a Delaware corporation, SFOT II, Inc., a Delaware corporation,
American National Indemnity Co., a Vermont corporation, Six Flags Beverages,
Inc., a Texas corporation, Funtircity Family Entertainment Parks, Inc., a
Delaware corporation, Funtricity Vicksburg Family Entertainment Park Inc., a
Delaware corporation, Pennrec, Co., a Delaware corporation, Six Flags Admiral,
Inc., a Delaware corporation, Six Flags Management Corp., a Delaware
corporation, Six Flags Power Plant, Inc., a Delaware corporation, Six Flags
Services, Inc., a Delaware Corporation, Six Flags Services of Georgia, Inc., a
Georgia corporation, Six Flags Services of Illinois, Inc. , a Delaware
corporation, Six Flags Services of Missouri, Inc., a Delaware corporation, Six
Flags Services of Texas, Inc., a Delaware corporation, Stars Hall of Fame, Inc.,
a Delaware corporation, San Antonio Park GP, LLC, a Delaware limited liability
company, SFTP San Antonio GP, Inc., a Delaware corporation, Texas Flags Ltd., a
Texas corporation, and SFTP San Antonio, Inc., a Delaware corporation], (e) "Six
Flags Partnership" means each of Fiesta Partnership, the Georgia Co-Venture
Partnership, the Texas Co-Venture Partnership and [Six Flags San Antonio, L.P.,
a Delaware limited partnership], (f) "Subsidiary" means each of the Premier
Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries and the Six
Flags Partnerships; provided, however, that the term "Subsidiary" shall include
the Six Flags Subsidiaries and the Six Flags Partnerships only as of and after
the First Delivery Date, and "Co-Venture Parks Agreements" means (i) the Overall
Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.),
Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia,
Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG
Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags
<PAGE>
50
Services of Georgia, Inc., SFTP and SFEC and the Related Agreements (as defined
therein), (ii) the Overall Agreement, dated as of November 24, 1997, among Six
Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas
Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II,
Inc., Six Flags Over Texas, Inc., SFTP and SFEC and the Related Agreements (as
defined therein), and (iii) the Lease Agreement with Option to Purchase, dated
as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited
Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and
the Transaction Documents (as defined therein), in each case, as the same may be
modified or amended from time to time.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
51
If the foregoing correctly sets forth the agreement among the Company,
the Subsidiaries that are parties hereto and the U.S. Underwriters, please
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
Premier Parks Inc.
By
----------------------------------
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Subsidiaries (as
listed in Section 15 but
not including Walibi)
By
---------------------------------
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Partnerships (as
listed in Section 15)
By Each of their respective
General Partners
By
----------------------------------
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Six Flags Subsidiaries (as
listed in Section 15)
By
----------------------------------
<PAGE>
52
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
Accepted:
Lehman Brothers Inc.
Smith Barney Inc.
Furman Selz LLC
NationsBanc Montgomery Securities LLC
For themselves and as Representatives
of the several U.S. Underwriters named
in Schedule 1 hereto
By Lehman Brothers Inc.
By ----------------------------------
Authorized Representative
<PAGE>
SCHEDULE 1
Number
Underwriters of Firm Shares
- ------------ --------------
Lehman Brothers Inc......................................
Smith Barney Inc.........................................
Furman Selz LLC..........................................
NationsBanc Montgomery Securities LLC....................
---------------
Total..............................................
---------------
---------------
<PAGE>
Exhibit 1(b)
2,600,000 Shares
PREMIER PARKS INC.
Common Stock
INTERNATIONAL UNDERWRITING AGREEMENT
, 1998
Lehman Brothers International (Europe)
Smith Barney Inc.
Furman Selz LLC
NationsBanc Montgomery Securities LLC
As Lead Managers of the several
International Managers named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Premier Parks Inc., a Delaware corporation (the "Company"), proposes to
sell to the International Managers named in Schedule 1 hereto (the
"International Managers"), and the International Managers propose, severally and
not jointly, to purchase 2,600,000 shares (the "Firm Stock") of the Company's
Common Stock, par value $.05 per share (the "Common Stock"). In addition, the
Company proposes to grant to the International Managers an option to purchase up
to an additional 390,000 shares of the Common Stock on the terms and for the
purposes set forth in Section 2 (the "Option Stock"). The Firm Stock and the
Option Stock, if purchased, are hereinafter collectively called the "Stock".
This is to confirm the agreement concerning the purchase of the Stock from the
Company by the International Managers.
It is understood by all parties that the Company is currently entering
into an agreement dated the date hereof (the "U.S. Underwriting Agreement")
providing for the sale by the Company of 11,960,000 shares of Common Stock
(including the over-allotment option thereunder) (the "U.S. Stock") through
arrangements with certain underwriters in the United States (the "U.S.
Underwriters"), for whom Lehman Brothers
<PAGE>
Inc., Smith Barney Inc., Furman Selz LLC and NationsBanc Montgomery Securities
LLC are acting as representatives (the "Representatives"). The International
Managers and the U.S. Underwriters simultaneously are entering into an agreement
between the international and U.S. underwriting syndicates (the "Agreement
Between U.S. Underwriters and International Managers") which provides for, among
other things, the transfer of shares of Common Stock between the two syndicates.
One form of prospectus relating to the Stock and one form of prospectus
relating to the U.S. Stock are to be used in connection with the offering (the
"Offering") of the Stock and the U.S. Stock. The latter form of prospectus will
be identical to the former except for certain substitute pages as included in
the registration statement and amendments thereto referred to below. Except as
used in Sections 2, 3, 4, 9 and 10 herein, and except as the context may
otherwise require, references herein to the Stock shall include all the shares
which may be sold pursuant to either this Agreement or the U.S. Underwriting
Agreement, and references herein to any prospectus whether in preliminary or
final form, and whether as amended or supplemented, shall include both the
international and the U.S. versions thereof. As used in this Agreement, the term
"Underwriter" includes International Managers and U.S. Underwriters.
It is also understood by all parties that the Company is undertaking
the Offering in connection with its acquisition (the "Six Flags Acquisition")
from the current stockholders (the "Sellers") of all of the capital stock of Six
Flags Entertainment Corporation ("SFEC"), and that, in connection with the Six
Flags Acquisition, the Company is concurrently offering $ million aggregate
principal amount at maturity of its senior discount notes due 2008 (the "Company
Senior Discount Notes") with estimated gross proceeds of $250 million, $280
million aggregate principal amount of its senior notes due 2006 (the "Company
Senior Notes") and, with the over-allotment option, 5,750,000 Premium Income
Equity Securities ("PInES") representing interests in the Company's mandatorily
convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with
estimated gross proceeds of $228.2 million. In addition, it is understood by all
parties that Six Flags Theme Parks Inc. ("SFTP") is concurrently entering into a
new $472 million senior secured credit facility (the "Six Flags Credit
Facility") under a credit agreement dated the date of this Agreement among it,
certain of the Six Flags Subsidiaries (as defined in Section 15) and Lehman
Commercial Paper, Inc., and
2
<PAGE>
Premier Operations Inc. ("Premier Operations") has entered into a $300 million
senior secured credit facility (the "Premier Credit Facility" and, together with
the Six Flags Credit Facility, the "Credit Facilities") under a credit agreement
among the Company, certain of the Premier Subsidiaries and Premier Partnerships
(each as defined in Section 15) and Lehman Commercial Paper, Inc. It is further
understood by all parties that, immediately following the Offering, SFEC will
offer $170 million aggregate principal amount of senior notes due 2006 (the "New
SFEC Notes"), and that, concurrently with the Offering, the Company may issue
depositary shares (the "Seller Depositary Shares") representing interests in up
to $200 million of the Company's convertible redeemable preferred stock (the
"Seller Convertible Redeemable Preferred Stock") to the Sellers as part of the
consideration for the Six Flags Acquisition.
1. Representations, Warranties and Agreements of the Company and
Certain of the Subsidiaries. The Company and Premier Operations and, as of the
First Delivery Date (as hereinafter defined), SFEC and SFTP represent, warrant
and agree, jointly and severally, that:
(a) A registration statement on Form S-3 (file number 333-45859), and
amendments thereto, with respect to the Stock has (i) been prepared by the
Company in conformity in all material respects with the requirements of the
United States Securities Act of 1933 (the "Securities Act") and the rules
and regulations (the "Rules and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder, (ii) been
filed with the Commission under the Securities Act and (iii) become
effective under the Securities Act. Copies of such registration statement
and amendments thereto have been delivered by the Company to you as the
lead managers (the "Lead Managers") of the International Managers. Upon
your written request, but not without your agreement, the Company will also
file a Rule 462(b) Registration Statement in accordance with Rule 462(b).
As used in this Agreement, "Effective Time" means the date and the time as
of which such registration statement, the most recent post-effective
amendment thereto, if any, or any Rule 462(b) Registration Statement became
or becomes effective; "Effective Date" means the date of the Effective
Time; "Preliminary Prospectus" means each prospectus included in such
registration statement, or amendments thereof, before it
3
<PAGE>
became effective under the Securities Act and any prospectus relating to
the Stock filed with the Commission by the Company with the consent of the
Lead Managers pursuant to Rule 424(a) of the Rules and Regulations;
"Registration Statement" means such registration statement, as amended at
the Effective Time, including any documents incorporated by reference
therein at such time and all information contained in the final prospectus
relating to the Stock filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations in accordance with Section 5(a) hereof and deemed
to be a part of the registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and Regulations and, in
the event any Rule 462(b) Registration Statement becomes effective prior to
the First Delivery Date, also means such registration statement as so
amended, unless the context otherwise requires; "Prospectus" means such
final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Rules and Regulations; and "Rule 462(b)
Registration Statement" means the registration statement and any amendments
thereto filed pursuant to Rule 462(b) of the Rules and Regulations relating
to the offering covered by the initial Registration Statement (file number
333-45859). Reference made herein to any Preliminary Prospectus or to the
Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act, as of the date of such Preliminary Prospectus or the
Prospectus, as the case may be. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus, any
further amendments or supplements to the Registration Statement or the
Prospectus and any Rule 462(b) Registration Statement will, when they
become effective or are filed with the Commission, as the case may be,
conform in all material respects to the requirements of the Securities Act
and the Rules and Regulations and do not and will not, as of the applicable
Effective Time (as to the Registration Statement and any amendment thereto)
and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not
4
<PAGE>
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Lead Managers or the Representatives
by or on behalf of any Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects to
the requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules and regulations of the Commission thereunder, and none
of such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.
(d) The Company, each of the Premier Subsidiaries and, as of the First
Delivery Date, each of the Six Flags Subsidiaries have been or will be, as
applicable, duly incorporated and are or will be, as applicable, validly
existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation; each of the Premier Partnerships
and, as of the First Delivery Date, each of the Six Flags Partnerships (as
defined in Section 15) is or will be, as applicable, validly existing as a
limited partnership in good standing under the laws of their respective
jurisdictions of formation; the Company, each of the Premier Subsidiaries
and each of the Premier Partnerships and, as of the First Delivery Date,
each of the Six Flags Subsidiaries and each of the Six Flags Partnerships
are or will be, as applicable, duly qualified to do business and are or
will be, as applicable, in good standing as foreign entities in each
jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires or will require, as
applicable, such qualification, except where the failure to so qualify
would not have in the aggregate a material adverse effect on the
consolidated financial position, stockholders' equity (or partners' equity,
as applicable), results of operations, business or prospects of the Company
and the Subsidiaries taken as a whole (a "Material Adverse Effect") and
have or will have, as applicable, all corporate or partnership power and
authority, as the case may be, necessary to own or hold their respective
properties and to conduct the businesses in which they
5
<PAGE>
are or will be, as applicable, engaged; none of the subsidiaries (as
defined in Rule 405 of the Rules and Regulations) of the Company (other
than the Subsidiaries) is a "significant subsidiary", as such term is
defined in Rule 405 of the Rules and Regulations; and the assets,
liabilities and operations of such other subsidiaries are immaterial to the
assets, liabilities, operations and prospects of the Company and the
Subsidiaries taken as a whole.
(e) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the description
thereof contained in the Prospectus. All of the issued shares of capital
stock of each Premier Subsidiary (in the case of Walibi, S.A.
("Walibi"), a Belgian corporation, to our knowledge) have been, and all
of the issued shares of capital stock of each Six Flags Subsidiary, as
of the First Delivery Date, will be, duly and validly authorized and
issued and are or will be, as applicable, fully paid and non-assessable
and, except for the capital stock of Walibi that is subject to the
Walibi Tender Offer (as defined in Section 1(ai)), are or will be, as
applicable, owned directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims except for liens,
encumbrances, equities or claims arising under the Credit Facilities and
the subordinated indemnity agreement among the Company and certain of
its affiliates, SFEC and certain of its affiliates and Time Warner Inc.
and certain of its affiliates dated , 1998 (the
"Subordinated Indemnity Agreement"). 100% of the partnership interest in
the Premier Partnerships is held and, as of the First Delivery Date,
100% of the partnership interest in the Six Flags Partnerships, except
for the 40% general partnership interest in San Antonio Theme Park, L.P.
("Fiesta Partnership") held by Fiesta Texas Theme Park, Ltd., the 99%
limited partnership interest in Six Flags Over Georgia II, L.P. (the
"Georgia Co-Venture Partnership") indirectly held by investors in Six
Flags Fund, Ltd. (L.P.), of which approximately 75% are not affiliated
with the Company, and the 99% limited partnership interest in Texas
Flags, Ltd. (the "Texas Co- Venture Partnership") indirectly held by
investors in Six Flags Fund II, Ltd. (L.P.), of which approximately %
are not affiliated with the Company, will be, as
6
<PAGE>
applicable, held directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims except for liens, encumbrances,
equities or claims under the Credit Facilities and the Co-Venture Parks
Agreements (as defined in Section 15).
(f) The unissued shares of the Stock to be issued and sold by the
Company to the International Managers hereunder and to the U.S.
Underwriters under the U.S. Underwriting Agreement have been duly and
validly authorized and, when issued and delivered against payment therefor
as provided herein, will be duly and validly issued, fully paid and
non-assessable.
(g) This Agreement and the U.S. Underwriting Agreement have been duly
authorized, executed and delivered by the Company, each of the Premier
Subsidiaries and each of the Premier Partnerships that is a party hereto or
thereto, and, as of the First Delivery Date, will be duly authorized,
executed and delivered by each of the Six Flags Subsidiaries that is a
party hereto or thereto.
(h) The execution, delivery and performance of this Agreement and the
U.S. Underwriting Agreement by the Company and each of the Subsidiaries
that are parties hereto or thereto, and the consummation of the
transactions contemplated hereby and thereby, will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or assets of the
Company or any of the Subsidiaries is subject, nor will such actions result
in any violation of the provisions of the charter or by-laws or other
constitutive documents of the Company or any of the Subsidiaries or,
assuming that all consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state and foreign securities laws in connection with the purchase and
distribution of the Stock by the International Managers and the U.S.
Underwriters are obtained, any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries or any of their properties or assets
except,
7
<PAGE>
in each case, breaches, violations or defaults which, in the aggregate, are
not reasonably likely to have a Material Adverse Effect; and except for the
registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state and foreign securities
laws in connection with the purchase and distribution of the Stock by the
International Managers and the U.S. Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court
or governmental agency or body is required or, with respect to the Six
Flags Subsidiaries will be required, for the execution, delivery and
performance of this Agreement or the U.S. Underwriting Agreement by the
Company or any of the Subsidiaries that are parties hereto or thereto and
the consummation of the transactions contemplated hereby and thereby.
(i) Except as disclosed in the Prospectus and as to those rights which
have been duly and validly waived, there are no contracts, agreements or
understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities
in the securities registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
(j) The Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus, including
any sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act, other than (i) 121,671 shares issued pursuant to the
Company's acquisition of all of the membership interests of KKI, LLC on
November 7, 1997, (ii) 228,855 shares issued pursuant to the Company's
acquisition of at least 49% of the outstanding capital stock of Walibi on
March , 1998 (the "Walibi Acquisition"), (iii) an aggregate of 450,000
restricted shares issued to the Company's Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer, (iv) 768 shares issued to
certain directors of the Company and (v) shares issued pursuant to the
Company's employee benefit plans, qualified stock options plans or other
employee
8
<PAGE>
compensation plans or pursuant to outstanding options, rights or warrants,
which, in each case, are disclosed in the Prospectus.
(k) Neither the Company nor any of the Subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any loss or interference with its business from fire,
explosion, flood, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus,
except losses or interferences which will not, in the aggregate, have a
Material Adverse Effect; and, since such date, there has not been any
change in the capital stock other than in connection with the Premier
Merger (as defined in Section 1(ag)) or long-term debt of the Company or
any of the Subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity (or
partners' equity, as applicable) or results of operations of the Company
and its Subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(l) The historical financial statements (including the related notes
and supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby at the
dates and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles in the United States (or, in
the case of Walibi, generally accepted accounting principles in Belgium)
applied on a consistent basis throughout the periods involved, and, in the
case of Walibi, have been reconciled to accounting principles generally
accepted in the United States to the extent required by the applicable
accounting requirements of the Securities Act and the Rules and
Regulations. The pro forma financial statements included in the Prospectus
have been prepared on a basis consistent with such historical financial
statements, except for the pro forma adjustments specified therein, and
comply in all material respects with Regulation S-X under the Securities
Act, and the pro forma adjustments have been properly applied
9
<PAGE>
to historical amounts in the compilation of such pro forma financial
statements.
(m) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company, Ernst & Young LLP, who have certified certain
financial statements of SFEC, Coopers & Lybrand, who have certified certain
financial statements of Walibi and Carpenter Mountjoy & Bressler, who have
certified certain financial statements of Kentucky Kingdom, Inc. ("Kentucky
Kingdom") whose reports appear in the Prospectus or are incorporated by
reference therein and who have each delivered the respective initial
letters referred to in Section 7(h) hereof, are independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(n) The Company and each of the Subsidiaries (in the case of Walibi, to
our knowledge) have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects
except for such liens arising under the Credit Facilities or contemplated
in Section 1(e) hereof as are described in the Prospectus or such as would
not have a Material Adverse Effect; and all real property and buildings
held under lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases, with such exceptions as would not
have a Material Adverse Effect.
(o) The Company and each of the Subsidiaries (in the case of Walibi, to
our knowledge) carry, or are covered by insurance in such amounts and
covering such risks (including the risk of earthquakes) as the Company has
reasonably concluded, based on its experience, is adequate for the conduct
of their respective businesses and the value of their respective properties
and as is customary for companies engaged in similar businesses in similar
industries.
(p) The Company and each of the Subsidiaries (in the case of Walibi, to
our knowledge) own or possess adequate rights to use all material patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights and licenses
necessary for the conduct of their respective businesses as presently
conducted and, with respect to the Amended and Restated License
10
<PAGE>
Agreement among certain affiliates of Warner Bros., SFTP and the Company
dated February 9, 1998 (the "License Agreement"), as contemplated by the
Prospectus, and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others with such
exceptions as would not have a Material Adverse Effect.
(q) Except as otherwise disclosed in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of the
Subsidiaries is a party or of which any property or assets of the Company
or any of the Subsidiaries is the subject which, if determined adversely to
the Company or any of the Subsidiaries, might have a Material Adverse
Effect or are otherwise required to be disclosed in the Prospectus; and to
the best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(r) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(s) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have
not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as permitted by
the Rules and Regulations.
(t) No relationship, direct or indirect, exists between or among the
Company or any Subsidiary on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any Subsidiary on
the other hand, which is required to be described or incorporated by
reference in the Prospectus which is not so described or incorporated by
reference.
(u) No labor disturbance by the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent which
might be reasonably expected to have a Material Adverse Effect.
(v) The Company is and, as of the First Delivery Date, SFEC will be in
compliance in all material
11
<PAGE>
respects with all presently and then applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred or, with respect to
SFEC, as of the First Delivery Date will have occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company or SFEC, as
applicable, would have any material liability; the Company has not incurred
and, as of the First Delivery Date, SFEC will not have incurred and neither
the Company expects nor SFEC, as of the First Delivery Date, will expect to
incur material liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company or SFEC, as applicable, would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred or, with
respect to SFEC, as of the First Delivery Date, will have occurred whether
by action or by failure to act, which might reasonably be expected to cause
the loss of such qualification.
(w) The Company and each of the Subsidiaries (in the case of Walibi, to
our knowledge) are in compliance in all respects with (i) all presently
applicable provisions of the Occupational Safety and Health Act of 1970, as
amended, including all applicable regulations thereunder and (ii) all
presently applicable state and local laws and regulations relating to the
safety of its theme park and water park operations, with such exceptions as
would not have a Material Adverse Effect.
(x) The Company has filed and, as of the First Delivery Date, SFEC and
its subsidiaries will have filed all federal, and all material state and
local income and franchise tax returns required to be filed through the
date hereof or the First Delivery Date, as applicable, other than those
filings being contested in good faith. The Company has paid and, as of the
First Delivery Date, SFEC will have paid all taxes of which it has notice
or will have notice, as applicable, are due thereon, other than those being
contested in good faith and for which adequate reserves have been provided
or will have been provided, as applicable, or those currently payable or
12
<PAGE>
payable as of the First Delivery Date, as applicable, without penalty or
interest and no tax deficiency has been determined adversely to the Company
or any of the Subsidiaries which has had, nor does the Company have any
knowledge of any tax deficiency which, if determined adversely to the
Company or any of the Subsidiaries, might be reasonably expected to have, a
Material Adverse Effect.
(y) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities or
(ii) declared or paid any dividend on its capital stock, and neither the
Company nor any of its Subsidiaries has (i) incurred any material liability
or obligation, direct or contingent, other than liabilities and obligations
which were incurred in the ordinary course of business or (ii) entered into
any material transaction not in the ordinary course of business other than
the Six Flags Acquisition.
(z) The Company and each of its Subsidiaries (in the case of Walibi, to
our knowledge) (i) make and keep accurate books and records and (ii)
maintain internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to
permit preparation of their financial statements in conformity with
generally accepted accounting principles in the United States (or, in the
case of Walibi, generally accepted accounting principles in Belgium) and to
maintain accountability for their assets, (C) access to their assets is
permitted only in accordance with management's authorization and (D) the
recorded accountability for their assets is compared with existing assets
at reasonable intervals.
(aa) Neither the Company nor any of the Subsidiaries (in the case of
Walibi, to our knowledge) (i) is in violation of its charter or by-laws (or
its partnership agreement, as applicable), (ii) is in default in any
material respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement
13
<PAGE>
or other material agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is subject or
(iii) is in violation in any material respect of any material law,
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental authorization
or permit necessary to the ownership of its property or to the conduct of
its business.
(ab) Neither the Company nor any of the Subsidiaries (in the case of
Walibi, to our knowledge), nor, to its knowledge, any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or any of the Subsidiaries, has used any corporate or partnership
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(ac) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of
the Subsidiaries (in the case of Walibi, to our knowledge) (or, to the
knowledge of the Company, any of their predecessors in interest) at, upon
or from any of the property now or previously owned or leased by the
Company or the Subsidiaries in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to
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or caused by the Company or any of the Subsidiaries or with respect to
which the Company or any of the Subsidiaries have knowledge, except for any
such spill, discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely to have,
singularly or in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a Material Adverse
Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous
substances" and "medical wastes" shall have the meanings specified in any
applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
(ad) Neither the Company nor any Subsidiary is an "investment company"
within the meaning of such term under the Investment Company Act of 1940
and the rules and regulations of the Commission thereunder.
(ae) At the First Delivery Date, (i) the Six Flags Acquisition shall be
consummated in accordance with the terms of the Agreement and Plan of
Merger dated February 9, 1998 among the Company, Premier Operations,
Premier Parks Merger Corporation, PPStar I, Inc., SFEC and the Sellers (the
"Merger Agreement"), and without any material waiver of any of the
conditions precedent to any of the parties' obligations under the Merger
Agreement, (ii) each of the concurrent offerings by the Company of the
Company Senior Discount Notes, the Company Senior Notes and the PInES shall
be consummated, (iii) the offering by SFEC of the New SFEC Notes shall be
consummated immediately following the Offering, (iv) each of the Credit
Facilities shall be in effect and available for borrowing and (v) no
default or event which, with notice or lapse of time or both, would
constitute such a default shall have occurred and be continuing, or shall
result from the transactions contemplated hereby to occur prior to,
concurrently with or immediately following the consummation of the
Offering, under (A) the Merger Agreement, (B) the indentures relating to
any of the Company Senior Discount Notes, the Company Senior Notes, Premier
Operations' 12% Senior Notes due 2003 (the "1995 Premier Notes"), Premier
Operations' 9 3/4% Senior Notes due 2007 (the "1997 Premier Notes"), SFEC's
Zero Coupon Notes due 1999 (the "SFEC Zero Coupon Notes"), SFTP's Senior
Subordinated Notes due 2005 (the "SFTP Senior Subordinated Notes") and the
New SFEC Notes, (C) the credit agreements relating to either of the Credit
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Facilities or (D) the Stock Purchase Agreement dated December 15, 1997
between Premier Operations (or a to be formed Belgian corporation) and
Centrag, S.A., Karaba N.V. and Westkoi N.V. (the "Walibi Agreement").
(af) The statements set forth in the Prospectus under the captions
"Business--Licenses", "Business--Intercompany Services Agreement",
"Business--Tax Sharing Agreement", "Description of Six Flags Agreement",
"Description of Indebtedness" and "Description of Securities", insofar as
they describe the terms of the agreements and securities referred to
therein, are accurate and fairly present the information required to be
shown.
(ag) The merger (the "Premier Merger") of the company formerly known as
Premier Parks Inc. with a wholly owned subsidiary of Premier Parks Holdings
Corporation has been effected, and, in connection therewith, no stockholder
vote was required under applicable Delaware law and the Premier Merger
otherwise complies in all respects with the General Corporation Law of the
State of Delaware.
(ah) No stockholder vote is required under applicable Delaware law in
connection with the Six Flags Acquisition, and the Six Flags Acquisition
otherwise complies in all respects with the General Corporation Law of the
State of Delaware.
(ai) The Company has effected the Walibi Acquisition and has commenced
a tender offer (the "Walibi Tender Offer") for the remainder of the
outstanding capital stock of Walibi as described in the Prospectus.
(aj) On or prior to the First Delivery Date, the License Agreement, the
Subordinated Indemnity Agreement, the Intercompany Services Agreement and
the Tax Sharing Agreement shall have been entered into by the parties
thereto with the provisions described in the Prospectus.
2. Purchase of the Stock by the International Managers. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 2,600,000 shares of
the Firm Stock to the several International Managers and each of the
International Managers, severally and not jointly, agrees
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to purchase the number of shares of the Firm Stock set opposite that
International Manager's name in Schedule 1 hereto.
In addition, the Company grants to the International Managers an option
to purchase up to 390,000 shares of Option Stock. Such option is granted solely
for the purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 4 hereof. Shares of Option Stock shall be
purchased severally and not jointly for the account of the International
Managers in proportion to the number of shares of Firm Stock set opposite the
name of such International Managers in Schedule 1 hereto. The respective
purchase obligations of each International Manager with respect to the Option
Stock shall be adjusted by the Lead Managers so that no International Manager
shall be obligated to purchase Option Stock other than in 100 share amounts. The
price of both the Firm Stock and any Option Stock shall be $ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or the Second Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein and in the U.S. Underwriting
Agreement.
3. Offering of Stock by the International Managers.
Upon authorization by the Lead Managers of the release of the Firm
Stock, the several International Managers propose to offer the Firm Stock for
sale upon the terms and conditions set forth in the Prospectus.
Each International Manager agrees that, except to the extent
permitted by the Agreement Between U.S. Underwriters and International Managers,
it will not offer or sell any of the Stock outside of the United States and
Canada.
4. Delivery of and Payment for the Stock. Delivery of and payment for
the Firm Stock shall be made at the office of Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time,
on the fourth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the Lead
Managers and the
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Company. This date and time are sometimes referred to as the "First Delivery
Date." On the First Delivery Date, the Company shall deliver or cause to be
delivered certificates representing the Firm Stock to the Lead Managers for the
account of each International Manager against payment to or upon the order of
the Company of the purchase price by wire transfer in immediately available
funds. Time shall be of the essence (except that the Company will not be
responsible for any delay resulting from any action or inaction of any
International Manager or U.S. Underwriter) and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations
of each International Manager hereunder. Upon delivery, the Firm Stock shall be
registered in such names and in such denominations as the Lead Managers shall
request in writing not less than two full business days prior to the First
Delivery Date. For the purpose of expediting the checking and packaging of the
certificates for the Firm Stock, the Company shall make the certificates
representing the Firm Stock available for inspection by the Lead Managers in New
York, New York, not later than 2:00 P.M., New York City time, on the business
day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 2 may be exercised by written notice
being given to the Company by the Lead Managers. Such notice shall set forth the
aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Lead Managers, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
third business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes each referred to as a "Delivery Date".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the Lead Managers
and the Company) at 10:00 A.M., New York City time, on the Second
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Delivery Date. On the Second Delivery Date, the Company shall deliver or cause
to be delivered the certificates representing the Option Stock to the Lead
Managers for the account of each International Manager against payment to or
upon the order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence (except that the
Company will not be responsible for any delay resulting from any action or
inaction of any International Manager or U.S. Underwriter), and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of each International Manager hereunder. Upon delivery, the
Option Stock shall be registered in such names and in such denominations as the
Lead Managers shall request in the aforesaid written notice. For the purpose of
expediting the checking and packaging of the certificates for the Option Stock,
the Company shall make the certificates representing the Option Stock available
for inspection by the Lead Managers in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the Second Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the Lead Managers
and to file such Prospectus pursuant to Rule 424(b) under the Securities
Act not later than Commission's close of business on the second business
day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus and to file no Rule 462(b)
Registration Statement except as permitted herein; to advise the Lead
Managers, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective
or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Lead Managers with copies thereof; upon your
request, to cause the Rule 462(b) Registration Statement, properly
completed, to be filed with the Commission pursuant to Rule 462(b) and to
provide evidence satisfactory to the Lead Managers of such filing; to
advise the Lead Managers, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
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suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, to use
promptly its reasonable best efforts to obtain its withdrawal;
(b) To furnish reasonably promptly to each of the Lead Managers and to
counsel for the International Managers a signed copy of the Registration
Statement as originally filed with the Commission, each amendment thereto
and any Rule 462(b) Registration Statement filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Lead Managers such number of the
following documents as the Lead Managers shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission, each amendment thereto (in each case excluding exhibits other
than this Agreement and the computation of per share earnings) and any Rule
462(b) Registration Statement, (ii) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus and (iii) any
document incorporated by reference in the Prospectus (excluding exhibits
thereto); and, if the delivery of a prospectus is required at any time
after the Effective Time in connection with the offering or sale of the
Stock or any other securities relating thereto and if at such time any
events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Securities Act or the Exchange
Act, to notify the Lead Managers and, upon their request, to file such
document and to prepare and furnish without charge to each International
Manager and
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<PAGE>
to any dealer in securities as many copies as the Lead Managers may from
time to time reasonably request of an amended or supplemented Prospectus
which will correct such statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Lead Managers,
be required by the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus, any Prospectus pursuant to
Rule 424 of the Rules and Regulations or any Rule 462(b) Registration
Statement to furnish a copy thereof to the Lead Managers and counsel for
the International Managers and obtain the consent of the Lead Managers to
the filing;
(f) As soon as practicable after the Effective Date (it being
understood that the Company shall have until at least 410 days after the
end of the Company's current fiscal quarter), to make generally available
to the Company's security holders and to deliver to the Lead Managers an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the Rules
and Regulations (including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to furnish
to the Lead Managers copies of all materials furnished by the Company to
its public shareholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant to
requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder;
(h) Promptly from time to time to take such action as the Lead Managers
may reasonably request to qualify the Stock for offering and sale (or
obtain an exemption from registration) under the securities laws of such
jurisdictions as the Lead Managers may request and to comply with such laws
so as to permit the continuance of
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sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Stock; provided, however,
that the Company shall not be required to qualify as a foreign corporation
or a dealer in securities or to execute a general consent to service of
process in any jurisdiction in any action other than one arising out of the
offering or sale of the Stock;
(i) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (i) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock or any securities
convertible into or exchangeable for Common Stock (other than the Stock,
the U.S. Stock, the PInES, the Mandatorily Convertible Preferred Stock, the
Seller Depositary Shares, the Seller Convertible Redeemable Preferred
Stock, shares issued pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans existing on the date
hereof or pursuant to currently outstanding options, warrants or rights or
upon the conversion of the Seller Convertible Redeemable Preferred Stock or
the Mandatorily Convertible Preferred Stock, and other than shares issued
by the Company as consideration to any seller of assets or stock that the
Company or any of the Subsidiaries is acquiring, provided that any shares
so issued to such seller or sellers, including any shares issued after the
date of the Prospectus pursuant to the Walibi Acquisition or the Walibi
Tender Offer, in the aggregate, do not exceed one-fifth of the total equity
of the Company outstanding at the time of the first such issuance, and
further provided that such seller or sellers (other than the sellers of
Walibi) contemporaneously with any such issuance or issuances enter into an
agreement with the Lead Managers in substantially the same form as the
agreement described in this paragraph (i) for the remainder of the 90 day
period), or sell or grant options, rights or warrants with respect to any
shares of Common Stock or securities convertible into or exchangeable for
Common Stock (other than the grant of options pursuant to option plans
existing on the date hereof) or (ii) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any
of the economic benefits or risks of ownership
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<PAGE>
of such shares of Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or
other securities, in cash or otherwise, in each case without the prior
written consent of Lehman Brothers Inc.; and to cause each officer and
director of the Company and Hanseatic Corporation, Richland Ventures, L.P.,
Richland Ventures II, L.P., Lawrence, Tyrrell, Ortale & Smith, Lawrence,
Tyrrell, Ortale & Smith II, L.P., Windcrest Partners, [JG Partnership,
Ltd.,] [J. David Grissom] and Robert J. Gellert (in the case of Robert J.
Gellert only, limited to (A) shares held for his own account and (B) shares
beneficially owned by Lexfor Corporation) to furnish to the Lead Managers,
prior to the First Delivery Date, a letter or letters, in form and
substance satisfactory to counsel for the Underwriters, pursuant to which
each such person shall agree not to, directly or indirectly, (iii) offer
for sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result
in the disposition by any person at any time in the future of) any shares
of Common Stock or any securities convertible into or exchangeable for
Common Stock or (iv) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any
such transaction described in clause (iii) or (iv) above is to be settled
by delivery of Common Stock or other securities, in cash or otherwise, in
each case for a period of 90 days from the date of the Prospectus, without
the prior written consent of Lehman Brothers Inc.;
(j) To take such steps as shall be necessary to ensure that neither the
Company nor any subsidiary shall become an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder;
(k) To cause an authorized officer to execute this Agreement on behalf
of each of the Six Flags Subsidiaries on the First Delivery Date;
(l) Not to waive the lock-up agreements executed by the Sellers in
connection with the Six Flags Acquisition whereby each of the Sellers
agreed to not sell any Seller Convertible Redeemable Preferred Stock
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<PAGE>
(or shares of Common Stock issuable upon conversion thereof) during the
period of 90 days from the date of the Prospectus, without the prior
written consent of Lehman Brothers Inc.; and
(m) To make an offer to purchase the SFTP Senior Subordinated Notes
following the Six Flags Acquisition in accordance with the provisions of
the indenture for the SFTP Senior Subordinated Notes relating to offers to
purchase the SFTP Senior Subordinated Notes upon a change of control of
SFTP.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
costs of producing and distributing this Agreement, the U.S. Underwriting
Agreement, the Agreement Between U.S. Underwriters and International Managers,
the Agreement Among International Managers, the International Selling Agreement
and any other related documents in connection with the offering, purchase, sale
and delivery of the Stock; (e) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. (the "NASD") of
the terms of sale of the Stock; (f) listing or other fees incident to the
inclusion of the Common Stock (including the Stock) for listing on the New York
Stock Exchange; (g) the fees and expenses, if applicable, of qualifying the
Stock under the securities laws of the several jurisdictions as provided in
Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to the Underwriters or foreign
counsel to the International Managers); (h) if one is required pursuant to the
rules of the NASD, all fees and expenses of a qualified independent underwriter;
and (i) all other costs and expenses incident to the performance of the
obligations of the Company or any of the Subsidiaries under this Agreement;
provided that, except as provided in this Section 6 and in Section 11, the
International Managers shall
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<PAGE>
pay their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Stock which they may sell and the expenses of
advertising any offering of the Stock made by the International Managers.
7. Conditions of International Managers' Obligations. The respective
obligations of the International Managers hereunder are subject to the accuracy,
when made and on each Delivery Date, of the representations and warranties of
the Company, Premier Operations, SFEC and SFTP contained herein, to the
performance by the Company and each of the Subsidiaries that is a party hereto
of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened by
the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No International Manager or U.S. Underwriter shall have discovered
and disclosed to the Company on or prior to such Delivery Date that the
Registration Statement or the Prospectus or any amendment or supplement
thereto contains an untrue statement of a fact which, in the opinion of
Cravath, Swaine & Moore, counsel for the International Managers, is
material or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the U.S. Underwriting
Agreement, the Stock, the Registration Statement and the Prospectus, and
all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material
respects to counsel for the International Managers, and the Company shall
have furnished to such counsel all documents and information
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that they may reasonably request to enable them to pass upon such matters.
(d) Baer Marks & Upham LLP shall have furnished to the Lead Managers
its written opinion, as counsel to the Company, addressed to the
International Managers and dated such Delivery Date, in form reasonably
satisfactory to the Lead Managers, to the effect that:
(i) The Company and each of the Premier Subsidiaries and each of
the Six Flags Subsidiaries have been duly incorporated and are validly
existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation; each of the Premier
Partnerships and each of the Six Flags Partnerships is validly existing
as a limited partnership in good standing under the laws of its
jurisdiction of formation; and the Company, the Premier Subsidiaries,
the Premier Partnerships, the Six Flags Subsidiaries and the Six Flags
Partnerships are each duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification except where the
failure to so qualify would not have a Material Adverse Effect and have
all corporate or partnership power and authority necessary to own or
hold their respective properties and conduct the businesses in which
they are engaged as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company now outstanding (including the shares of Stock being delivered
on such Delivery Date) have been duly and validly authorized and
issued, are fully paid and non-assessable and conform in all material
respects to the description thereof contained in the Prospectus; all of
the shares of
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Stock have been duly authorized and, when issued and delivered to the
Lead Managers for the account of each International Manager against
payment therefor as provided herein, shall be validly issued, fully
paid and non-assessable; to such counsel's knowledge, all of the issued
shares of capital stock of each Premier Subsidiary and each Six Flags
Subsidiary have been duly and validly authorized and issued and are
fully paid, non-assessable and, except for the capital stock of Walibi
that is subject to the Walibi Tender Offer, are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, except for liens, encumbrances, equities or claims
arising under the Credit Facilities and the Subordinated Indemnity
Agreement; and 100% of the partnership interest in each of the Premier
Partnerships and each of the Six Flags Partnerships is held directly or
indirectly by the Company, except for the 40% general partnership
interest in Fiesta Partnership held by Fiesta Texas Theme Park, Ltd.,
the 99% limited partnership interest in the Georgia Co-Venture
Partnership indirectly held by investors in Six Flags Fund, Ltd.
(L.P.), of which approximately 75% are not affiliated with the Company,
and the 99% limited partnership interest in the Texas Co- Venture
Partnership indirectly held by investors in Six Flags Funds II, Ltd.
(L.P.), of which approximately % are not affiliated with the Company,
free and clear of all liens, encumbrances, equities or claims, except
for liens, encumbrances, equities or claims arising under the Credit
Facilities and the Co-Venture Parks Agreements;
(iii) There are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer of, any
shares of the Stock pursuant to the Company's charter or by-laws or any
agreement or other instrument known to such counsel;
(iv) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of the Subsidiaries is a party or
of which any property or assets of the Company or any of the
Subsidiaries is the subject which, if determined adversely to the
Company or any of the Subsidiaries, might have a Material Adverse
Effect; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
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(v) Based solely upon oral confirmation from the staff of the
Commission, the Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion; the
Prospectus was filed with the Commission pursuant to the subparagraph
of Rule 424(b) of the Rules and Regulations specified in such opinion
on the date specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of such counsel, no proceeding for that purpose is pending or
threatened by the Commission;
(vi) The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to such
Delivery Date (other than the financial statements and related
schedules therein and other financial or statistical data included
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Securities
Act and the Rules and Regulations; and the documents incorporated by
reference in the Prospectus (other than the financial statements and
related schedules therein and other financial or statistical data
included therein, as to which such counsel need express no opinion),
when they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder;
(vii) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which have not been
described or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations;
(viii) Each of this Agreement and the U.S. Underwriting Agreement
has been duly authorized, executed and delivered by the Company and
each of the Subsidiaries that is a party hereto or thereto;
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<PAGE>
(ix) The issue and sale of the shares of Stock being delivered on
such Delivery Date by the Company and the compliance by the Company and
each of the Subsidiaries that is a party hereto or thereto with all of
the provisions of this Agreement and the U.S. Underwriting Agreement
and the consummation of the transactions contemplated hereby and
thereby (including the offerings of the Company Senior Discount Notes,
the Company Senior Notes and the New SFEC Notes and the entering into
of the Six Flags Credit Facility and any borrowing thereunder in
connection with the Six Flags Acquisition) will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company or any of the Subsidiaries is a party or by which
the Company or any of the Subsidiaries is bound or to which any of the
property or assets of the Company or any of the Subsidiaries is
subject, nor will such actions result in any violation of the
provisions of the charter or by-laws or other constitutive documents of
the Company or any of the Subsidiaries or, assuming that all consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state or foreign
securities laws in connection with the purchase and distribution of the
Stock by the International Managers and the U.S. Underwriters are
obtained, any Federal or New York State statute, the General
Corporation Law of the State of Delaware, or any order, rule or
regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries or
any of their properties or assets; and, except for the registration of
the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state or foreign securities laws
in connection with the purchase and distribution of the Stock by the
International Managers, no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental
agency or body is required for the execution,
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delivery and performance of this Agreement or the U.S. Underwriting
Agreement by the Company or any of the Subsidiaries that is a party
hereto or thereto and the consummation of the transactions contemplated
hereby and thereby; and
(x) To the best of such counsel's knowledge, no holders of
securities of the Company have rights to require the Company to include
such securities with the Stock registered pursuant to the Registration
Statement.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the General Corporation Law
of the State of Delaware and that such counsel is not admitted in any state
other than New York; and, in respect of matters of fact, may rely upon
certificates of officers of the Company or the Subsidiaries, provided that
such counsel shall state that it believes that both the International
Managers and it are justified in relying upon such certificates. Such
counsel shall also have furnished to the Lead Managers a written statement,
addressed to the International Managers and dated such Delivery Date, in
form satisfactory to the Lead Managers, to the effect that (x) such counsel
has acted as counsel to the Company on a regular basis (although the
Company is also represented with respect to the Walibi Acquisition, the
Walibi Tender Offer, the Six Flags Acquisition, litigation matters,
regulatory matters and certain other matters, by other outside counsel),
has acted as counsel to the Company in connection with financing
transactions since February 1992 and has acted as counsel to the Company in
connection with the preparation of the Registration Statement and (y) based
on the foregoing, no facts have come to the attention of such counsel which
lead it to believe that (I) the Registration Statement (other than the
financial statements and other financial and statistical data contained
therein, as to which such counsel need express no belief), as of the
Effective Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, or that the
Prospectus (other than the financial statements and other financial and
statistical data contained therein, as to which such
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counsel need express no belief) contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading or (II) any
documents incorporated by reference in the Prospectus (other than the
financial statements and other financial and statistical data contained
therein, as to which such counsel need express no belief) when they were
filed with the Commission contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. In rendering such statement, such counsel may rely
upon the opinion and statement delivered by Weil Gotshal & Manges LLP
pursuant to Section 5(e) hereto with respect to the information covered by
such opinion and statement. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does not assume
any responsibility for the accuracy or fairness with respect to the
information required to be shown under the Securities Act and the Rules and
Regulations of the statements contained in the Registration Statement or
the Prospectus except for the statements made in the Prospectus under the
captions "Prospectus Summary--Other Recent Developments--Walibi",
"Business--Intercompany Services Agreement", "Business-- Tax Sharing
Agreement", "Description of Indebtedness", "Description of Securities",
"Description of PInES" and "Description of Depositary Arrangements" insofar
as such statements describe the terms of the Walibi Acquisition and Walibi
Tender Offer, the documents or agreements referred to therein, the Stock,
the Seller Convertible Redeemable Preferred Stock, the Company's debt
instruments or other securities, or the registration rights referred to
therein and concern legal matters.
(e) Weil Gotshal & Manges LLP shall have furnished to the Lead Managers
its written opinion, as special counsel to the Company, addressed to the
International Managers and dated such Delivery Date, in form reasonably
satisfactory to the Lead Managers, as to certain matters set forth in
Section 7(d) and to the effect that the statements set forth in the
Prospectus under the captions "Business--Licenses" and "Description of Six
Flags Agreement", insofar as such statements describe the terms of the
documents or agreements referred to therein, are accurate, complete and
fair.
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In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the General Corporation Law
of the State of Delaware and, in respect of matters of fact, may rely upon
certificates of officers of the Company or the Subsidiaries, provided that
such counsel shall state that it believes that both the International
Managers and it are justified in relying upon such certificates. Such
counsel shall also have furnished to the Lead Managers a written statement,
addressed to the International Managers and dated such Delivery Date, in
form satisfactory to the Lead Managers, to the effect that (x) such counsel
has acted as counsel to the Company in connection with the Walibi
Acquisition, the Walibi Tender Offer and the Six Flags Acquisition and has
reviewed the information (the "Walibi and Six Flags Information") in the
Registration Statement relating to the Walibi Acquisition, the Walibi
Tender Offer, the Six Flags Acquisition and the business and operations of
Walibi and its subsidiaries and SFEC and its subsidiaries and (y) based on
the foregoing, no facts have come to the attention of such counsel which
lead it to believe that (I) the Registration Statement (other than the
financial statements and other financial and statistical data contained
therein, as to which such counsel need express no belief), as of the
Effective Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, or that the
Prospectus (other than the financial statements and other financial and
statistical data contained therein, as to which such counsel need express
no belief) contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading or (II) any documents incorporated by
reference in the Prospectus (other than the financial statements and other
financial and statistical data contained therein, as to which such counsel
need express no belief) when they were filed with the Commission contained
an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing
statement may be qualified
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by a statement to the effect that the statement's scope is limited to the
Walibi and Six Flags Information.
(f) Richards, Layton & Finger shall have furnished to the Lead Managers
its written opinion, as special Delaware counsel to the Company, addressed
to the International Managers and dated such Delivery Date, in form
reasonably satisfactory to the Lead Managers, to the effect that, in
connection with the Premier Merger, no shareholder vote was required under
applicable Delaware law and, in connection with the Six Flags Acquisition,
no shareholder vote is required under applicable Delaware law, and that the
Premier Merger and the Six Flags Acquisition otherwise comply in all
respects with applicable Delaware law.
(g) The Lead Managers shall have received from Cravath, Swaine & Moore,
counsel for the International Managers, such opinion or opinions and such
statement or statements, dated such Delivery Date, with respect to the
issuance and sale of the Stock, the Registration Statement, the Prospectus
and other related matters as the Lead Managers may reasonably require, and
the Company and the Subsidiaries shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(h) At the time of execution of this Agreement, the Lead Managers shall
have received from (I) KPMG Peat Marwick LLP a letter, in form and
substance satisfactory to the Lead Managers, addressed to the International
Managers and dated the date hereof (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii)
stating, as of the date hereof (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more
than five days prior to the date hereof), the conclusions and findings of
such firm with respect to the financial information and other matters
ordinarily covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings, except for the financial
information and other matters covered in the letters from Ernst & Young
LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler described
immediately
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hereinafter; (II) Ernst & Young LLP a letter, in form and substance
satisfactory to the Lead Managers, addressed to the International Managers
and dated the date hereof (i) confirming that they are independent
accountants within the meaning of the Securities Act and are in compliance
with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission and (ii)
stating, as of the date hereof, the conclusions and findings of such firm
with respect to certain financial information and other matters relating to
SFEC and its subsidiaries as have been previously agreed to by such firm
and the Lead Managers; (III) Coopers & Lybrand a letter, in form and
substance satisfactory to the Lead Managers, addressed to the International
Managers and dated the date hereof (i) confirming that they are independent
accountants within the meaning of the Securities Act and are in compliance
with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission and (ii)
stating, as of the date hereof, the conclusions and findings of such firm
with respect to certain financial information and other matters relating to
Walibi and its subsidiaries, as have been previously agreed to by such firm
and the Lead Managers; and (IV) Carpenter Mountjoy & Bressler a letter, in
form and substance satisfactory to the Lead Managers, addressed to the
International Managers and dated the date hereof (i) confirming that they
are independent accountants within the meaning of the Securities Act and
are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof, the conclusions and
findings of such firm with respect to certain financial information and
other matters relating to Kentucky Kingdom, as have been previously agreed
to by such firm and the Lead Managers.
(i) With respect to the letters of KPMG Peat Marwick LLP, Ernst & Young
LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler referred to in the
preceding paragraph and delivered to the Lead Managers concurrently with
the execution of this Agreement (the "initial letters"), the Company shall
have furnished to the Lead Managers a letter (the "bring-down letters") of
each of such accountants, addressed to the International Managers and dated
such Delivery Date (i) confirming that they are independent public
accountants within the
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meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, (ii) stating, as of the date of the
bring- down letter (or, in the case of the letter of KPMG Peat Marwick LLP,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to the date of
the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to the Lead Managers a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the Company
and each of Premier Operations, SFEC and SFTP in Section 1 are true and
correct as of such Delivery Date; the Company and each of the
Subsidiaries that is a party hereto have complied with all their
agreements contained herein; and the conditions set forth in Sections
7(a) and 7(k) have been fulfilled; and
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus.
(k) Since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus there shall not have been
any change in the capital stock (or partners' equity, as applicable) other
than the Premier Merger or long-term debt of the Company or any of the
Subsidiaries or any change, or any
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development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity (or partners'
equity, as applicable) or results of operations of the Company and its
subsidiaries, otherwise, in each case, than as set forth or contemplated in
the Prospectus, the effect of which, in any such case, is, in the judgment
of the Lead Managers, so material (to the Company and its Subsidiaries,
taken as a whole) and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Stock being
delivered on such Delivery Date on the terms and in the manner contemplated
in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization",
as that term is defined by the Commission for purposes of Rule 436(g)(2) of
the Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the Company
on any exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment
of a majority in interest of the several International Managers,
impracticable or inadvisable to proceed with
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the public offering or delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(n) The Six Flags Acquisition shall have been or shall be consummated
concurrently with the Offering and without any material waiver of any of
the conditions precedent to any of the parties' obligations under the
Merger Agreement.
(o) Each of the offerings by the Company of the Company Senior Discount
Notes, the Company Senior Notes and the PInES shall have been or shall be
consummated concurrently with the Offering.
(p) The offering by SFEC of the New SFEC Notes shall be consummated
immediately following the Offering.
(q) Each of the Premier Credit Facility and the Six Flags Credit
Facility shall be in effect and available for borrowing.
(r) No default or event which, with notice or lapse of time or both,
would constitute such a default shall have occurred and be continuing, or
would result from the transactions contemplated hereby to occur prior to,
concurrently with or immediately following the consummation of the
Offering, under (i) the Merger Agreement, (ii) the indentures relating to
any of the Company Senior Discount Notes, the Company Senior Notes, the
1995 Premier Notes, the 1997 Premier Notes, the SFEC Zero Coupon Notes, the
SFTP Senior Subordinated Notes and the New SFEC Notes, (iii) the credit
agreement relating to either the Premier Credit Facility or the Six Flags
Credit Facility or (iv) the Walibi Agreement.
(s) The Premier Merger shall have been consummated.
(t) Each of (i) the License Agreement, (ii) the Subordinated Indemnity
Agreement, (iii) the Intercompany Services Agreement and (iv) the Tax
Sharing Agreement shall have been entered into by the parties thereto with
the provisions described in the Prospectus.
(u) An authorized officer shall have executed this Agreement on behalf
of each of the Six Flags Subsidiaries.
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(v) Delivery of and payment for the Firm Stock under the U.S.
Underwriting Agreement shall have occurred concurrently with delivery of
and payment for the Firm Stock hereunder on the First Delivery Date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and scope reasonably
satisfactory to counsel for the International Managers.
8. Indemnification and Contribution.
(a) The Company and the Subsidiaries that are parties hereto, jointly
and severally, shall indemnify and hold harmless each International Manager
(including any Underwriter in its role as qualified independent underwriter
pursuant to the rules of the NASD), its officers and employees and each
person, if any, who controls any International Manager within the meaning
of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
but not limited to, any loss, claim, damage, liability or action relating
to purchases and sales of Stock), to which that International Manager,
officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto or (B) in any blue sky application or
other document prepared or executed by the Company (or based upon any
written information furnished by the Company) specifically for the purpose
of qualifying any or all of the Stock under the securities laws of any
jurisdiction (any such application, document or information being
hereinafter called a "Blue Sky Application"), (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any amendment or supplement thereto, or in any
Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any International
Manager in connection with, or relating in any manner to, the Stock or the
Offering contemplated hereby, and which is included as
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part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company and the Subsidiaries that are parties hereto
shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
International Manager through its gross negligence or willful misconduct),
and shall reimburse each International Manager and each such officer,
employee or controlling person promptly upon demand for any legal or other
expenses reasonably incurred by that International Manager, officer,
employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company and the Subsidiaries that are parties hereto shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement
or alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any such amendment or supplement, or in any Blue Sky Application, in
reliance upon and in conformity with written information concerning any
International Manager or U.S. Underwriter, furnished to the Company through
the Lead Managers or Representatives by or on behalf of any International
Manager or U.S. Underwriter specifically for inclusion therein; and
provided further that with respect to any such untrue statement or omission
made in the Preliminary Prospectus, the indemnity agreement contained in
this Section 8(a) shall not enure to the benefit of the International
Manager from whom the person asserting any such losses, claims, damages or
liabilities purchased the Stock concerned if, to the extent that such sale
was an initial sale by such International Manager and any such loss, claim,
damage or liability of such International Manager is a result of the fact
that both (A) a copy of the Prospectus was not sent or given to such person
at or prior to the written confirmation of the sale of such Stock to such
person, and (B) the untrue statement or omission in the Preliminary
Prospectus was corrected in the Prospectus unless, in either case, such
failure to deliver the Prospectus was a result of noncompliance by the
Company with Section 5(c). The foregoing indemnity agreement is in addition
to any liability which the Company or any of the Subsidiaries that are
parties hereto may otherwise have to any
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International Manager or to any officer, employee or controlling person of
that International Manager.
(b) Each International Manager, severally and not jointly, shall
indemnify and hold harmless the Company and the Subsidiaries that are
parties hereto, each of their respective officers and employees, each of
their respective directors, and each person, if any, who controls the
Company or any Subsidiary that is a party hereto within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or
any Subsidiary that is a party hereto or any such director, officer or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission
or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be
stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information concerning such International
Manager furnished to the Company through the Lead Managers by or on behalf
of that International Manager specifically for inclusion therein, and shall
reimburse the Company, any such Subsidiary and any such director, officer
or controlling person for any legal or other expenses reasonably incurred
by the Company, any such Subsidiary or any such director, officer or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity agreement is
in addition to any liability which any International Manager may otherwise
have to the Company, any such Subsidiary, or any such director, officer,
employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement
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of that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to
notify the indemnifying party shall not relieve it from any liability which
it may have to an indemnified party otherwise than under this Section 8. If
any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the Lead
Managers shall have the right, upon written notice to the Company, to
employ counsel to represent jointly the Lead Managers and those other
International Managers and their respective officers, employees and
controlling persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the International
Managers against the Company and the Subsidiaries that are parties hereto
under this Section 8 if, in the reasonable judgment of the Lead Managers,
it is advisable for the Lead Managers and those International Managers,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the reasonable fees and expenses of
such separate counsel shall be paid, jointly and severally, by the Company
and the Subsidiaries that are parties hereto. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate
firm of attorneys (in addition to any local counsel) at any one time for
all such indemnified party or parties. No indemnifying party shall (i)
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder
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(whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled
with the consent of the indemnifying party or if there be a final judgment
of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss
or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(c) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the
relative benefits received by the Company and the Subsidiaries that are
parties hereto on the one hand and the International Managers on the other
from the offering of the Stock or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Subsidiaries
that are parties hereto on the one hand and the International Managers on
the other with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Subsidiaries that are parties hereto on the
one hand and the International Managers on the other with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company on the one hand, and
the total underwriting discounts and commissions received by the
International Managers with respect to the shares of the Stock purchased
under this Agreement, on the other hand, bear to the total gross proceeds
from the offering of the shares of the Stock under this Agreement, in each
case as set forth in the
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table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or the International
Managers, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or
omission. For purposes of the preceding two sentences, the net proceeds
deemed to be received by the Company shall be deemed to be also for the
benefit of the Subsidiaries that are parties hereto and information
supplied by the Company shall also be deemed to have been supplied by the
Subsidiaries that are parties hereto. The Company, the Subsidiaries that
are parties hereto and the International Managers agree that it would not
be just and equitable if contributions pursuant to this Section 8(d) were
to be determined by pro rata allocation (even if the International Managers
were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), no International Manager shall be required to contribute any
amount in excess of the amount by which the total price at which the Stock
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such International Manager has
otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The International
Managers' obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The International Managers severally confirm and the Company and
the Subsidiaries that are parties hereto acknowledge that the statements
with respect to the public offering of the Stock by the International
Managers set forth in the first and last paragraphs on the cover page of,
the
43
<PAGE>
legend concerning stabilization on the third page of and statements under
the caption "Underwriting" including but not limited to the concession and
reallowance figures, the Prospectus constitute the only information
concerning such International Managers furnished in writing to the Company
by or on behalf of the International Managers specifically for inclusion in
the Registration Statement and the Prospectus.
9. Defaulting International Managers.
If, on either Delivery Date, any International Manager defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting International Managers shall be obligated to purchase the
Stock which the defaulting International Manager agreed but failed to
purchase on such Delivery Date in the respective proportions which the
number of shares of the Firm Stock set opposite the name of each remaining
non-defaulting International Manager in Schedule 1 hereto bears to the
total number of shares of the Firm Stock set opposite the names of all the
remaining non-defaulting International Managers in Schedule 1 hereto;
provided, however, that the remaining non-defaulting International Managers
shall not be obligated to purchase any of the Stock on such Delivery Date
if the total number of shares of the Stock which the defaulting
International Manager or International Managers agreed but failed to
purchase on such date exceeds 9.09% of the total number of shares of the
Stock to be purchased on such Delivery Date, and any remaining
non-defaulting International Manager shall not be obligated to purchase
more than 110% of the number of shares of the Stock which it agreed to
purchase on such Delivery Date pursuant to the terms of Section 2. If the
foregoing maximums are exceeded, the remaining non-defaulting International
Managers, or those other underwriters satisfactory to the Lead Managers who
so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be
purchased on such Delivery Date. If the remaining International Managers or
other underwriters satisfactory to the Lead Managers do not elect to
purchase the shares which the defaulting International Manager or
International Managers agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the
obligation of the International Managers to purchase, and of the Company to
sell, the Option Stock) shall terminate without liability on the part of
any non-defaulting International Manager or the Company, except that the
Company will continue to be liable
44
<PAGE>
for the payment of expenses to the extent set forth in Section 6. As used
in this Agreement, the term "International Manager" includes, for all
purposes of this Agreement unless the context requires otherwise, any party
not listed in Schedule 1 hereto who, pursuant to this Section 9, purchases
Stock which a defaulting International Manager agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting International
Manager of any liability it may have to the Company for damages caused by
its default. If other underwriters are obligated or agree to purchase the
Stock of a defaulting or withdrawing International Manager, either the Lead
Managers or the Company may postpone the Delivery Date for up to seven full
business days in order to effect any changes that in the opinion of counsel
for the Company or counsel for the International Managers may be necessary
in the Registration Statement, the Prospectus or in any other document or
arrangement.
10. Termination. The obligations of the International Managers
hereunder may be terminated by the Lead Managers by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock
if, prior to that time, any of the events described in Sections 7(k), 7(l)
or 7(m) shall have occurred or if the International Managers shall decline
to purchase the Stock for any reason permitted under this Agreement.
11. Reimbursement of International Managers' Expenses. If the Company
shall fail to tender the Stock for delivery to the International Managers
by reason of any failure, refusal or inability on the part of the Company
to perform any agreement on its part to be performed, or because any other
condition of the International Managers' obligations hereunder required to
be fulfilled by the Company is not fulfilled (other than by reason of any
events described in Section 7(m) except for the suspension of trading or
minimum prices of the securities of the Company), the Company will
reimburse the International Managers for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by the
International Managers in connection with this Agreement and the proposed
purchase of the Stock, and promptly following demand the Company shall pay
the full amount thereof to the Lead Managers. If this Agreement is
terminated pursuant to Section 9 by reason of the default of one or more
International Managers, the Company shall not be
45
<PAGE>
obligated to reimburse any defaulting International Manager on account of
those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the International Managers, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers International
(Europe), Three World Financial Center, New York, New York 10285,
Attention: Syndicate Department (Fax: 212-526-6588), with a copy, in
the case of any notice pursuant to Section 8(c), to the Director of
Litigation, Office of the General Counsel, Lehman Brothers Inc., 3
World Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company or any of the Subsidiaries, shall be
delivered or sent by mail, telex or facsimile transmission to 122 East
42nd Street, 49th Floor, New York, NY 10168, Attention: Kieran E. Burke
(Fax: 212-949-6203);
provided, however, that any notice to an International Manager pursuant to
Section 8(c) shall be delivered or sent by mail, telex or facsimile
transmission to such International Manager at its address set forth in its
acceptance telex to the Lead Managers, which address will be supplied to
any other party hereto by the Lead Managers upon request. Any such
statements, requests, notices or agreements shall take effect at the time
of receipt thereof. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the
International Managers by Lehman Brothers International (Europe) on behalf
of the Lead Managers.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the International Managers, the
Company, the Subsidiaries that are parties hereto and their respective
successors. This Agreement and the terms and provisions hereof are for the
sole benefit of only those persons, except that (A) the representations,
warranties, indemnities and agreements of the Company and the applicable
Subsidiaries contained in this Agreement shall also be deemed to be for the
benefit of the officers and employees of each International Manager and the
person or persons, if any, who control any International Manager within the
meaning of Section 15 of the Securities Act
46
<PAGE>
and for the benefit of each U.S. Underwriter (and officers, employees and
such controlling persons thereof) who offers or sells any shares of Common
Stock in accordance with the terms of the Agreement Between U.S.
Underwriters and International Managers and (B) the indemnity agreement of
the International Managers contained in Section 8(b) of this Agreement
shall be deemed to be for the benefit of directors of the Company, officers
of the Company who have signed the Registration Statement and any person
controlling the Company within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give
any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations, warranties
and agreements of the Company, the applicable Subsidiaries and the
International Managers contained in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Stock and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them
or any person controlling any of them.
15. Definition of the Terms "Business Day", "Premier Subsidiary",
"Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership",
"Subsidiary" and "Co-Venture Parks Agreements". For purposes of this
Agreement, (a) "business day" means any day on which the New York Stock
Exchange, Inc. is open for trading, (b) "Premier Subsidiary" means each of
Premier Operations, Walibi, Funtime Parks, Inc., an Ohio corporation,
Funtime, Inc., an Ohio corporation, Wyandot Lake, Inc., an Ohio
corporation, Darien Lake Theme Park and Camping Resort, Inc., a New York
corporation, Tierco Maryland, Inc., a Delaware corporation, Tierco Water
Park, Inc., an Oklahoma corporation, Frontier City Properties, Inc., an
Oklahoma corporation, Stuart Amusement Company, a Massachusetts
corporation, Premier Waterworld Concord Inc., a California corporation,
Premier Waterworld Sacramento Inc., a California corporation, Premier Parks
of Colorado Inc., a Colorado corporation, Great Escape Holding Inc., a New
York corporation, Great Escape LLC, a New York limited liability company,
Great Escape Theme Park LLC, a New York limited liability company,
Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside
Park
47
<PAGE>
Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware
limited liability company, Park Management Corp., a California corporation,
Indiana Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an
Ohio corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier
International Holdings, Inc., a Delaware corporation and [other Premier
entities held in corporate form and as limited liability companies], (c)
"Premier Partnership" means each of Frontier City Partners, Limited
Partnership, an Oklahoma limited partnership, Elitch Gardens, L.P., a
Colorado limited partnership and [other Premier entities held as limited
partnerships], (d) "Six Flags Subsidiary" means each of SFEC, SFTP,[S.F.
Holdings, Inc., a Delaware corporation, SFTP Inc., a Delaware corporation,
S.F. Sponsorship Services, Inc., a Delaware corporation, Six Flags Over
Georgia, Inc., a Delaware corporation, SFOG II, Inc., a Delaware
corporation, SFOG II Employee, Inc., a Delaware corporation, SFOG
Acquisition A, Inc., a Delaware corporation, SFOG Acquisition B, LLC, a
Delaware limited liability company, Six Flags Over Texas, Inc., a Delaware
corporation, SFOT Employee, Inc., a Delaware corporation, SFOT Acquisition
I, Inc.,, a Delaware corporation, SFOT Acquisition II, Inc., a Delaware
corporation, SFOT II, Inc., a Delaware corporation, American National
Indemnity Co., a Vermont corporation, Six Flags Beverages, Inc., a Texas
corporation, Funtircity Family Entertainment Parks, Inc., a Delaware
corporation, Funtricity Vicksburg Family Entertainment Park Inc., a
Delaware corporation, Pennrec, Co., a Delaware corporation, Six Flags
Admiral, Inc., a Delaware corporation, Six Flags Management Corp., a
Delaware corporation, Six Flags Power Plant, Inc., a Delaware corporation,
Six Flags Services, Inc., a Delaware Corporation, Six Flags Services of
Georgia, Inc., a Georgia corporation, Six Flags Services of Illinois, Inc.
, a Delaware corporation, Six Flags Services of Missouri, Inc., a Delaware
corporation, Six Flags Services of Texas, Inc., a Delaware corporation,
Stars Hall of Fame, Inc., a Delaware corporation, San Antonio Park GP, LLC,
a Delaware limited liability company, SFTP San Antonio GP, Inc., a Delaware
corporation, Texas Flags Ltd., a Texas corporation, and SFTP San Antonio,
Inc., a Delaware corporation] (e) "Six Flags Partnership" means each of
Fiesta Partnership, the Georgia Co-Venture Partnership, the Texas
Co-Venture Partnership and [Six Flags San Antonio, L.P., a Delaware limited
partnership] (f) "Subsidiary" means each of the Premier Subsidiaries, the
Premier Partnerships, the Six Flags Subsidiaries and the Six Flags
Partnerships; provided, however, that the term "Subsidiary" shall include
the Six Flags Subsidiaries and the Six Flags Partnerships only as of and
after the First Delivery
48
<PAGE>
Date, and "Co-Venture Parks Agreements" means (i) the Overall Agreement,
dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin
Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia,
Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG
Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of
Georgia, Inc., SFTP and SFEC and the Related Agreements (as defined
therein), (ii) the Overall Agreement, dated as of November 24, 1997, among
Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C.,
Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT
Acquisition II, Inc., Six Flags Over Texas, Inc., SFTP and SFEC and the
Related Agreements (as defined therein), and (iii) the Lease Agreement with
Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme
Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and
Six Flags San Antonio, L.P. and the Transaction Documents (as defined
therein), in each case, as the same may be modified or amended from time to
time.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
49
<PAGE>
If the foregoing correctly sets forth the agreement among the Company,
the Subsidiaries that are parties hereto and the International Managers,
please indicate your acceptance in the space provided for that purpose
below.
Very truly yours,
Premier Parks Inc.
By
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Subsidiaries (as
listed in Section 15 but
not including Walibi)
By
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Partnerships (as
listed in Section 15)
By Each of their respective
General Partners
By
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Six Flags Subsidiaries (as
listed in Section 15)
By
Name: Kieran E. Burke
50
<PAGE>
Title: Chairman of the
Board and Chief
Executive Officer
Accepted:
Lehman Brothers Inc.
Smith Barney Inc.
Furman Selz LLC
NationsBanc Montgomery Securities LLC
For themselves and as Lead Managers
of the several International Managers named
in Schedule 1 hereto
By Lehman Brothers International (Europe)
By --------------------------------------
Authorized Representative
51
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Number
Underwriters of Firm Shares
- ------------ --------------
<S> <C>
Lehman Brothers International (Europe)............
Smith Barney Inc..................................
Furman Selz LLC...................................
NationsBanc Montgomery Securities LLC.............
----------
Total.......................................
----------
----------
</TABLE>
<PAGE>
EXHIBIT 1(c)
[Draft--3/11/98]
13,000,000 Shares
PREMIER PARKS INC.
Common Stock
AGREEMENT BETWEEN U.S. UNDERWRITERS
AND INTERNATIONAL MANAGERS
, 1998
AGREEMENT by and between (a) the U.S. Underwriters (the "U.S.
Underwriters") named in Schedule 1 to the U.S. Underwriting Agreement dated the
date hereof (the "U.S. Underwriting Agreement") among Premier Parks Inc., a
Delaware corporation (the "Company"), its subsidiaries which are parties
thereto, Six Flags Entertainment Corporation ("SFEC") and its subsidiaries which
are parties thereto, and Lehman Brothers Inc., Smith Barney Inc., Furman Selz
LLC and NationsBanc Montgomery Securities LLC, as Representatives (the
"Representatives") of the U.S. Underwriters, and (b) the International Managers
(the "International Managers") named in Schedule 1 to the International
Underwriting Agreement dated the date hereof (the "International Underwriting
Agreement") among the Company, its subsidiaries which are parties thereto, SFEC
and its subsidiaries which are parties thereto, and Lehman Brothers
International (Europe), Smith Barney Inc., Furman Selz LLC and NationsBanc
Montgomery Securities LLC as Lead Managers (the "Lead Managers") for the
International Managers.
WHEREAS, the U.S. Underwriters, pursuant to the U.S.
Underwriting Agreement, have agreed to purchase from the Company an aggregate of
10,400,000 shares of the Company's Common Stock (par value $.05 per share) (the
"U.S. Stock") to be offered and sold in the United States and Canada, and the
International Managers, pursuant to the International Underwriting Agreement,
have agreed to purchase from the Company an aggregate of 2,600,000 shares of the
Company's Common Stock (par value $.05 per share) (the "International Stock") to
be offered and sold outside the United States and Canada; the U.S. Stock and the
International Stock are hereinafter collectively referred to as the "Firm
Stock";
<PAGE>
2
WHEREAS, solely for the purpose of covering over-allotments,
the U.S. Underwriters, pursuant to the U.S. Underwriting Agreement, have been
granted options by the Company to purchase up to 1,560,000 additional shares of
the Company's Common Stock (the "U.S. Option Stock") and the International
Managers, pursuant to the International Underwriting Agreement, have been
granted options by the Company to purchase up to 390,000 additional shares of
the Company's Common Stock (the "International Option Stock") (the U.S. Option
Stock and the International Option Stock are hereinafter collectively referred
to as the "Option Stock", and the Firm Stock and the Option Stock are
hereinafter collectively referred to as the "Stock"); and
WHEREAS, in connection with the foregoing, the Representatives
and the Lead Managers deem it necessary and advisable that certain of the
activities of the U.S. Underwriters and the International Managers be
coordinated pursuant to this Agreement;
NOW, THEREFORE, the Representatives (on behalf of the U.S.
Underwriters) and the Lead Managers (on behalf of the International Managers)
hereby agree as follows:
1. (a) The U.S. Underwriters, acting through the
Representatives, and the International Managers, acting through the Lead
Managers, agree that they will consult with each other as to the availability
for sale to the public of Stock purchased pursuant to the U.S. Underwriting
Agreement and the International Underwriting Agreement, from time to time until
the earliest of (i) the termination of the provisions of the Supplemental
Agreement Among U.S. Underwriters dated the date hereof (the "Agreement Among
U.S. Underwriters"), (ii) the termination of the provisions of the Agreement
Among International Managers dated the date hereof (the "Agreement Among
International Managers") or (iii) a mutual agreement of the U. S. Underwriters,
acting through the Representatives, and the International Managers, acting
through the Lead Managers, to terminate the selling restrictions set forth in
Sections 2(a) and 2(b) of this Agreement.
(b) At any time and from time to time as mutually agreed
between the Representatives and the Lead Managers, the Representatives may sell
(for the accounts of one or more U.S. Underwriters) to the Lead Managers (for
the ac counts of the International Managers) such number of shares
<PAGE>
3
of U.S. Stock purchased pursuant to the U.S. Underwriting Agreement and
remaining unsold, as may be so mutually agreed upon. From time to time as
mutually agreed between the Lead Managers and the Representatives, the Lead
Managers may sell (for the accounts of one or more International Managers) to
the Representatives (for the accounts of U.S. Underwriters) such number of
shares of International Stock purchased pursuant to the International
Underwriting Agreement and remaining unsold, as may be so mutually agreed upon.
(c) Unless otherwise determined by mutual agree ment between
the Representatives and the Lead Managers, the price of any Stock so purchased
or sold shall be the public offering price as then in effect for Stock being
sold by the U.S. Underwriters and the International Managers less the selling
concession allocable to such Stock. Settlement between the Representatives and
the Lead Managers with respect to any Stock which the Representatives and the
Lead Managers have agreed to purchase or sell pursuant to this Agreement shall
occur at least two business days prior to each Delivery Date specified in the
U.S. Underwriting Agreement and, in the case of purchases and sales made
thereafter, as promptly as practicable but in no event later than three business
days after the transaction date. Certificates for the Stock so purchased shall
be delivered on the respective settlement dates. The liability for payment to
the Company of the purchase price of the Stock being purchased by the U.S.
Underwriters under the U.S. Underwriting Agreement and the liability for payment
to the Company of the purchase price of the Stock being purchased by the
International Managers under the International Underwriting Agreement,
respectively, shall not be affected by the provisions of this Agreement. The
U.S. Underwriters and the International Managers shall pay any sales or transfer
taxes, fees or other charges payable in connection with the sale or delivery of
Stock sold by them under this Agreement.
(d) The obligations of the U.S. Underwriters in respect of any
purchase or sale of Stock hereunder shall be pro rata in accordance with the
proportion of the total number of shares of Stock which the U.S. Underwriters
are obligated to purchase from the Company pursuant to the U.S. Underwriting
Agreement; provided, however, that if the net purchases of International Stock
hereunder by the U.S. Underwriters exceed 15% of the aggregate number of shares
of U.S. Stock to be purchased from the Company by the U.S. Underwriters pursuant
to the U.S. Underwriting Agreement,
<PAGE>
4
the excess shares of International Stock shall be purchased by such U.S.
Underwriters as shall be designated by the Representatives.
2. (a) (i) Each U.S. Underwriter agrees that, except for (i)
purchases and sales pursuant to Section 1 hereof, (ii) transactions described in
paragraph (c) of this Section 2, (iii) stabilization transactions contemplated
under Section 3 hereof and (iv) other transactions spe cifically approved by the
Representatives and the Lead Managers, (A) it is not purchasing any Stock for
the account of anyone other than a U.S. or Canadian Person (as defined below),
(B) it has not offered or sold, and will not offer, sell, resell or deliver,
directly or indirectly, any of the Stock or distribute any Preliminary
Prospectus or U.S. Pro spectus (each as defined in the Agreement Among U.S.
Underwriters) to anyone other than a U.S. or Canadian Person and (C) that any
dealer to whom it may sell any of the Stock (x) will represent that it is not
purchasing for the account of anyone other than a U.S. or Canadian Person and
(y) will agree that it will not offer, sell, resell or deliver, directly or
indirectly, any of the Stock or distribute any Preliminary Prospectus or U.S.
Prospectus to anyone other than a U.S. or Canadian Person or to any other dealer
who does not so represent and agree.
(ii) Each U.S. Underwriter agrees that each offer of shares
made by it in Canada shall be made pursuant to applicable Canadian
securities laws.
(b) Each International Manager agrees that, except for (i)
purchases and sales pursuant to Section 1 hereof, (ii) transactions described in
paragraph (c) of this Section 2, (iii) stabilization transactions contemplated
under Section 3 hereof and (iv) other transactions specifically approved by the
Lead Managers and the Representatives, (A) it is not purchasing any Stock for
the account of any U.S. or Canadian Person, (B) it has not of fered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of the
Stock or distribute any Preliminary Prospectus or International Prospectus (each
as defined in the Agreement Among International Managers) to any U.S. or
Canadian Person and (C) that any dealer to whom it may sell any of the Stock (x)
will represent that it is not purchasing for the account of any U.S. or Canadian
Person and (y) will agree that it will not offer, sell, resell or deliver,
directly or indirectly, any of the Stock or distribute any Preliminary
Prospectus or International
<PAGE>
5
Prospectus to any U.S. or Canadian Person or to any other dealer who does not so
represent and agree.
(c) The limitations of this Section 2 shall not restrict (i)
offers, sales, resales, deliveries or dis tributions by a U.S. Underwriter to or
through investment advisors who are U.S. or Canadian Persons, or other U.S. or
Canadian Persons exercising investment discretion, who are purchasing for the
account of anyone other than a U.S. or Canadian Person, or offers, sales,
resales, deliveries or distributions by an International Manager to or through
investment advisors who are not U.S. or Canadian Persons, or other persons
exercising investment discretion who are not U.S. or Canadian Persons, who are
purchasing for the account of a U.S. or Canadian Person, (ii) purchases by a
U.S. Underwriter who is also acting as an International Manager of Stock for the
account of anyone other than a U.S. or Canadian Person, or purchases by an
International Manager who is also acting as a U.S. Underwriter of Stock for the
account of a U.S. or Canadian Person or (iii) offers or sales by a U.S.
Underwriter who is also acting as an International Manager of Stock to anyone
other than a U.S. or Canadian Person, or offers or sales by an International
Manager who is also acting as a U.S. Underwriter of Stock to a U.S. or Canadian
Person.
(d) As used herein, "U.S. or Canadian Person" means any
resident or citizen of the United States or Canada, any corporation, partnership
or other entity created or organized in or under the laws of the United States
or Canada or any political subdivision thereof or any estate or trust the income
of which is subject to United States federal income taxation or Canadian income
taxation regardless of the source (other than the foreign branch of any U.S. or
Canadian Person), and includes any United States or Canadian branch of a person
other than a U.S. or Canadian Person. The term "United States" means the United
States of America (including the states thereof and the District of Columbia)
and its territories, its possessions and other areas subject to its jurisdiction
and the term "Canada" means Canada, its provinces, territories, possessions and
other areas subject to its jurisdiction.
3. (a) All stabilization transactions, if any, conducted in
the United States or Canada shall be conducted through Lehman Brothers Inc., and
all stabilization trans actions, if any, conducted outside the United States and
Canada shall be conducted through Lehman Brothers
<PAGE>
6
International (Europe), so that stabilization activities both within and outside
the United States and Canada shall be coordinated and conducted in compliance
with any applicable laws and regulations.
(b) The U.S. Underwriters shall have responsi bility with
respect to any action which the Representatives may take to make over-allotments
in arranging for sales of Stock in the United States and Canada, and the
International Managers shall have responsibility with respect to any action
which the Lead Managers may take to make over-allotments in arranging for sales
of Stock outside the United States and Canada.
(c) The Lead Managers undertake, and agree to cause each of
the International Managers to undertake, that in connection with the
distribution of the Stock they will comply with the prohibitions against trading
by persons interested in a distribution set forth in Regulation M under the
United States Securities Exchange Act of 1934, as amended, and Sections 9 and 10
of the Agreement Among International Managers. The International Managers will
cause each dealer who has agreed to participate or is participating in the
distribution to give a similar undertaking.
(d) All stabilization transactions conducted by Lehman
Brothers Inc. or Lehman Brothers International (Europe) shall be for the
respective accounts of the several U.S. Underwriters and the several
International Managers in the proportions set forth in Section 4 hereof. In no
event shall the net commitment pursuant to overallotment of such stabilization
transactions, including the net commitment for long or short account represented
by the Stock purchased or sold pursuant to Section 1 hereof, exceed in the case
of each U.S. Underwriter or International Manager, 15% of the aggregate initial
public offering price of the total number of shares of Stock which such U.S.
Underwriter or Interna tional Manager is obligated to purchase pursuant to the
U.S. Underwriting Agreement or the International Underwriting Agreement, as the
case may be, and this Agreement.
4. The Representatives and the Lead Managers shall agree as to
the expenses which will constitute expenses of the underwriting and distribution
of the Stock common to the U.S. Underwriters and the International Managers
which expenses, as well as any stabilizing profits, shall be allocated between
the U.S. Underwriters, on the one
<PAGE>
7
hand, and the International Managers, on the other hand, in the same proportions
as the number of shares of Stock agreed to be purchased under the U.S.
Underwriting Agreement and the number of shares of Stock agreed to be purchased
under the International Underwriting Agreement bear to the total number of
shares of Stock. It is agreed that such common expenses shall, unless otherwise
agreed by the Representatives and the Lead Managers, be limited to any losses or
expenses incurred in stabilizing the market price of the Stock in accordance
with Section 3 hereof. Except with respect to such common expenses, the U.S.
Underwriters will pay the aggregate expenses incurred in connection with the
purchase, carrying or sale of the Stock purchased by the U.S. Underwriters from
the Company and the International Managers will pay the aggregate expenses
incurred in connection with the purchase, carrying or sale of the Stock
purchased by the International Managers from the Company.
5. The Representatives and the Lead Managers agree that:
(a) the Lead Managers will not establish a Delivery Date under
the International Underwriting Agreement which differs from that
established under the U.S. Underwriting Agreement, and if such Delivery
Date is postponed by action of the U.S. Underwriters as provided in the
U.S. Underwriting Agreement or by action of the International Managers
as provided in the International Underwriting Agreement, it will be
post poned to a date and time mutually agreed upon by the
Representatives and the Lead Managers;
(b) changes in the respective public offering prices or in the
respective selling concessions and reallowances to dealers will be made
only by mutual agreement until the time specified in Section 1(a)
hereof;
(c) the Representatives and the Lead Managers will each keep
the other fully informed of the progress of the offering and
distribution of the Stock;
(d) the Representatives will not cause the termination of the
Agreement Among U.S. Underwriters and the Lead Managers will not cause
the termination of the Agreement Among International Managers without,
in each case, the consent of the other until 30 days after the date
hereof; and
<PAGE>
8
(e) advertising with respect to the offering shall be as
determined by Lehman Brothers Inc.
6. This Agreement may be amended prior to any Delivery Date
specified in the U.S. Underwriting Agreement and the International Underwriting
Agreement by mutual written consent of the Representatives and the Lead
Managers.
7. This Agreement may be signed in several coun terparts,
which together shall constitute one and the same instrument.
<PAGE>
9
8. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
choice of law or conflicts of law principles thereof.
IN WITNESS WHEREOF, this Agreement has been executed on the
date first above written.
LEHMAN BROTHERS INC.
SMITH BARNEY INC.
FURMAN SELZ LLC
NATIONSBANC MONTGOMERY
SECURITIES LLC
For themselves and as Repre-
sentatives for each of the
several U.S. Underwriters
by LEHMAN BROTHERS INC.
by
-------------------------------
Authorized Representative
LEHMAN BROTHERS INTERNATIONAL
(EUROPE)
SMITH BARNEY INC.
FURMAN SELZ LLC
NATIONSBANC MONTGOMERY
SECURITIES LLC
For themselves and as Lead
Managers for each of the
several International Managers
by LEHMAN BROTHERS INTERNATIONAL
(EUROPE)
by
-------------------------------
Authorized Representative
<PAGE>
Exhibit 1(d)
5,000,000 PInES(-SM-)
PREMIER PARKS INC.
Premium Income Equity Securities ("PInES(-SM-)")
UNDERWRITING AGREEMENT
, 1998
Lehman Brothers Inc.
Smith Barney Inc.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Premier Parks Inc., a Delaware corporation (the "Company"),
proposes to sell to the Underwriters named in Schedule 1 hereto (the
"Underwriters"), and the Underwriters propose, severally and not
jointly, to purchase 5,000,000 PInES (the "Firm Securities") consisting
of depositary shares (the "PInES"), each representing one-five
hundredth of a share of the Company's % mandatorily convertible
preferred stock (the "Mandatorily Convertible Preferred Stock"). In
addition, the Company proposes to grant to the Underwriters an option
to purchase up to an additional 750,000 PInES on the terms and for the
purposes set forth in Section 2 (the "Option Securities"). The Firm
Securities and the Option Securities, if purchased, are hereinafter
collectively called the "Securities". This is to confirm the agreement
concerning the purchase of the Securities from the Company by the
Underwriters.
A form of prospectus relating to the Securities is to be used
in connection with the offering (the "Offering") of the Securities.
It is also understood by all parties that the Company is
undertaking the Offering in connection with its acquisition (the "Six
Flags Acquisition") from the current stockholders (the "Sellers") of
all of the capital stock of Six Flags Entertainment Corporation
("SFEC"), and that, in
<PAGE>
connection with the Six Flags Acquisition, the Company is concurrently
offering $ million aggregate principal amount at maturity of its
senior discount notes due 2008 (the "Company Senior Discount Notes")
with estimated gross proceeds of $250 million, $280 million aggregate
principal amount of its senior notes due 2006 (the "Company Senior
Notes") and, with the over-allotment option, 14,950,000 shares (the
"Concurrent Common Stock") of the Company's Common Stock, par value
$.05 per share (the "Common Stock") with estimated gross proceeds of
$ million. In addition, it is understood by all parties that Six
Flags Theme Parks Inc. ("SFTP") is concurrently entering into a new
$472 million senior secured credit facility (the "Six Flags Credit
Facility") under a credit agreement dated the date of this Agreement
among it, certain of the Six Flags Subsidiaries (as defined in Section
15) and Lehman Commercial Paper, Inc., and Premier Operations Inc.
("Premier Operations") has entered into a $300 million senior secured
credit facility (the "Premier Credit Facility" and, together with the
Six Flags Credit Facility, the "Credit Facilities") under a credit
agreement among the Company, certain of the Premier Subsidiaries and
Premier Partnerships (each as defined in Section 15) and Lehman
Commercial Paper, Inc. It is further understood by all parties that,
immediately following the Offering, SFEC will offer $170 million
aggregate principal amount of senior notes due 2006 (the "New SFEC
Notes"), and that, concurrently with the Offering, the Company may
issue depositary shares (the "Seller Depositary Shares") representing
interests in up to $200 million of the Company's convertible redeemable
preferred stock (the "Seller Convertible Redeemable Preferred Stock")
to the Sellers as part of the consideration for the Six Flags
Acquisition.
1. Representations, Warranties and Agreements of the Company
and Certain of the Subsidiaries. The Company and Premier Operations
and, as of the First Delivery Date (as hereinafter defined), SFEC and
SFTP represent, warrant and agree, jointly and severally, that:
(a) A registration statement on Form S-3 (file number
333-45859), and amendments thereto, with respect to the
Securities, the Mandatorily Convertible Preferred Stock and
the Common Stock, issuable upon conversion of the Mandatorily
Convertible Preferred Stock or as dividends on the Mandatorily
Convertible Preferred Stock, has (i) been prepared by the
Company in conformity in all material respects with the
requirements of the United
2
<PAGE>
States Securities Act of 1933 (the "Securities Act") and the
rules and regulations (the "Rules and Regulations") of the
United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the
Securities Act. Copies of such registration statement and
amendments thereto have been delivered by the Company to you
as the Underwriters. Upon your written request, but not
without your agreement, the Company will also file a Rule
462(b) Registration Statement in accordance with Rule 462(b).
As used in this Agreement, "Effective Time" means the date and
the time as of which such registration statement, the most
recent post-effective amendment thereto, if any, or any Rule
462(b) Registration Statement became or becomes effective;
"Effective Date" means the date of the Effective Time;
"Preliminary Prospectus" means each prospectus included in
such registration statement, or amendments thereof, before it
became effective under the Securities Act and any prospectus
relating to the Securities filed with the Commission by the
Company with the consent of the Underwriters pursuant to Rule
424(a) of the Rules and Regulations; "Registration Statement"
means such registration statement, as amended at the Effective
Time, including any documents incorporated by reference
therein at such time and all information contained in the
final prospectus relating to the Securities filed with the
Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 5(a) hereof and deemed
to be a part of the registration statement as of the Effective
Time pursuant to paragraph (b) of Rule 430A of the Rules and
Regulations and, in the event any Rule 462(b) Registration
Statement becomes effective prior to the First Delivery Date,
also means such registration statement as so amended, unless
the context otherwise requires; "Prospectus" means such final
prospectus, as first filed with the Commission pursuant to
paragraph (1) or (4) of Rule 424(b) of the Rules and
Regulations; and "Rule 462(b) Registration Statement" means
the registration statement and any amendments thereto filed
pursuant to Rule 462(b) of the Rules and Regulations relating
to the offering covered by the initial Registration Statement
(file number 333-45859). Reference made herein to any
Preliminary Prospectus or to the Prospectus shall be deemed to
refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of
3
<PAGE>
the date of such Preliminary Prospectus or the Prospectus, as
the case may be. The Commission has not issued any order
preventing or suspending the use of any Preliminary
Prospectus.
(b) The Registration Statement conforms, and the
Prospectus, any further amendments or supplements to the
Registration Statement or the Prospectus and any Rule 462(b)
Registration Statement will, when they become effective or are
filed with the Commission, as the case may be, conform in all
material respects to the requirements of the Securities Act
and the Rules and Regulations and do not and will not, as of
the applicable Effective Time (as to the Registration
Statement and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is
made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the
Company by any Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission,
conformed in all material respects to the requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations of the Commission thereunder, and none
of such documents contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading.
(d) The Company, each of the Premier Subsidiaries
and, as of the First Delivery Date, each of the Six Flags
Subsidiaries have been or will be, as applicable, duly
incorporated and are or will be, as applicable, validly
existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation; each of the
Premier Partnerships and, as of the First Delivery Date, each
of the Six Flags Partnerships (as defined in Section 15) is or
will be, as applicable, validly existing as a limited
partnership in good standing under the laws of their
respective jurisdictions of formation; the Company, each of
the Premier Subsidiaries and each of
4
<PAGE>
the Premier Partnerships and, as of the First Delivery Date,
each of the Six Flags Subsidiaries and each of the Six Flags
Partnerships are or will be, as applicable, duly qualified to
do business and are or will be, as applicable, in good
standing as foreign entities in each jurisdiction in which
their respective ownership or lease of property or the conduct
of their respective businesses requires or will require, as
applicable, such qualification, except where the failure to so
qualify would not have in the aggregate a material adverse
effect on the consolidated financial position, stockholders'
equity (or partners' equity, as applicable), results of
operations, business or prospects of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect")
and have or will have, as applicable, all corporate or
partnership power and authority, as the case may be, necessary
to own or hold their respective properties and to conduct the
businesses in which they are or will be, as applicable,
engaged; none of the subsidiaries (as defined in Rule 405 of
the Rules and Regulations) of the Company (other than the
Subsidiaries) is a "significant subsidiary", as such term is
defined in Rule 405 of the Rules and Regulations; and the
assets, liabilities and operations of such other subsidiaries
are immaterial to the assets, liabilities, operations and
prospects of the Company and the Subsidiaries taken as a
whole.
(e) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform in all material respects to the description thereof
contained in the Prospectus. All of the issued shares of
capital stock of each Premier Subsidiary (in the case of
Walibi, S.A. ("Walibi"), a Belgian corporation, to our
knowledge) have been, and all of the issued shares of capital
stock of each Six Flags Subsidiary, as of the First Delivery
Date, will be, duly and validly authorized and issued and are
or will be, as applicable, fully paid and non-assessable and,
except for the capital stock of Walibi that is subject to the
Walibi Tender Offer (as defined in Section 1(ai)), are or will
be, as applicable, owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities
or claims except for liens, encumbrances, equities or claims
arising under the Credit Facilities and the subordinated
indemnity agreement among the
5
<PAGE>
Company and certain of its affiliates, SFEC and certain of its
affiliates and Time Warner Inc. and certain of its affiliates
dated , 1998 (the "Subordinated Indemnity Agreement").
100% of the partnership interest in the Premier Partnerships
is held and, as of the First Delivery Date, 100% of the
partnership interest in the Six Flags Partnerships, except
for the 40% general partnership interest in San Antonio Theme
Park, L.P. ("Fiesta Partnership") held by Fiesta Texas Theme
Park, Ltd., the 99% limited partnership interest in Six Flags
Over Georgia II, L.P. (the "Georgia Co-Venture Partnership")
indirectly held by investors in Six Flags Fund, Ltd. (L.P.),
of which approximately 75% are not affiliated with the
Company, and the 99% limited partnership interest in Texas
Flags, Ltd. (the "Texas Co- Venture Partnership") indirectly
held by investors in Six Flags Fund II, Ltd. (L.P.), of which
approximately % are not affiliated with the Company, will
be, as applicable, held directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims
except for liens, encumbrances, equities or claims under the
Credit Facilities and the Co-Venture Parks Agreements (as
defined in Section 15).
(f) The unissued shares of the Securities to be
issued and sold by the Company to the Underwriters hereunder
have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable. The
unissued shares of Mandatorily Convertible Preferred Stock to
be issued in exchange by the Company to the Depositary (as
defined herein) under the Deposit Agreement (as defined
herein) have been duly and validly authorized and, when issued
and exchanged for depositary receipts therefor as provided in
the Deposit Agreement, will be duly and validly issued, fully
paid and non-assessable. The shares of Common Stock, issuable
upon the conversion of the Mandatorily Convertible Preferred
Stock or as dividends on the Mandatorily Convertible Preferred
Stock, have been duly and validly authorized and reserved for
issuance upon such conversion or dividend, will be validly
issued, fully paid and non-assessable.
(g) This Agreement has been duly authorized, executed
and delivered by the Company, each of the Premier Subsidiaries
and each of the Premier Partnerships that is a party hereto or
thereto, and, as of the First
6
<PAGE>
Delivery Date, will be duly authorized, executed and delivered
by each of the Six Flags Subsidiaries that is a party hereto
or thereto. The Deposit Agreement relating to the Securities
(the "Deposit Agreement") has been duly authorized, executed
and delivered by the Company and the Depositary named therein
(the "Depositary").
(h) The execution, delivery and performance of this
Agreement and the Deposit Agreement by the Company and each of
the Subsidiaries that are parties hereto, and the consummation
of the transactions contemplated hereby and thereby, will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or
assets of the Company or any of the Subsidiaries is subject,
nor will such actions result in any violation of the
provisions of the charter or by-laws or other constitutive
documents of the Company or any of the Subsidiaries or,
assuming that all consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act and applicable state and foreign securities laws
in connection with the purchase and distribution of the
Securities by the Underwriters and the exchange of the
Mandatorily Convertible Preferred Stock for depositary
receipts by the Depositary are obtained, any statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of the
Subsidiaries or any of their properties or assets except, in
each case, breaches, violations or defaults which, in the
aggregate, are not reasonably likely to have a Material
Adverse Effect; and except for the registration of the
Securities and the Mandatorily Convertible Preferred Stock
under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state and
foreign securities laws in connection with the purchase and
distribution of the Securities by the Underwriters and the
exchange of the Mandatorily Convertible Preferred Stock for
depositary receipts by the Depositary, no consent, approval,
authorization or order of, or filing or registration with, any
such court or governmental agency or body is required or, with
respect to the Six
7
<PAGE>
Flags Subsidiaries will be required, for the execution,
delivery and performance of this Agreement or the Deposit
Agreement by the Company or any of the Subsidiaries that are
parties hereto and the consummation of the transactions
contemplated hereby and thereby.
(i) Except as disclosed in the Prospectus and as to
those rights which have been duly and validly waived, there
are no contracts, agreements or understandings between the
Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company
to include such securities in the securities registered
pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
(j) The Company has not sold or issued any shares of
capital stock during the six-month period preceding the date
of the Prospectus, including any sales pursuant to Rule 144A
under, or Regulations D or S of, the Securities Act, other
than the following Common Stock: (i) 121,671 shares issued
pursuant to the Company's acquisition of all of the membership
interests of KKI, LLC on November 7, 1997, (ii) 228,855 shares
issued pursuant to the Company's acquisition of at least 49%
of the outstanding capital stock of Walibi on March , 1998
(the "Walibi Acquisition"), (iii) an aggregate of 450,000
restricted shares issued to the Company's Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer,
(iv) 768 shares issued to certain directors of the Company and
(v) shares issued pursuant to the Company's employee benefit
plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights
or warrants, which, in each case, are disclosed in the
Prospectus.
(k) Neither the Company nor any of the Subsidiaries
has sustained, since the date of the latest audited financial
statements included in the Prospectus, any loss or
interference with its business from fire, explosion, flood,
accident or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Prospectus,
8
<PAGE>
except losses or interferences which will not, in the
aggregate, have a Material Adverse Effect; and, since such
date, there has not been any change in the capital stock other
than in connection with the Premier Merger (as defined in
Section 1(ag)) or long-term debt of the Company or any of the
Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change,
in or affecting the general affairs, management, financial
position, stockholders' equity (or partners' equity, as
applicable) or results of operations of the Company and its
Subsidiaries, otherwise than as set forth or contemplated in
the Prospectus.
(l) The historical financial statements (including the related
notes and supporting schedules) filed as part of the
Registration Statement or included in the Prospectus present
fairly the financial condition and results of operations of
the entities purported to be shown thereby at the dates and
for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles in
the United States (or, in the case of Walibi, generally
accepted accounting principles in Belgium) applied on a
consistent basis throughout the periods involved, and, in the
case of Walibi, have been reconciled to accounting principles
generally accepted in the United States to the extent required
by the applicable accounting requirements of the Securities
Act and the Rules and Regulations. The pro forma financial
statements included in the Prospectus have been prepared on a
basis consistent with such historical financial statements,
except for the pro forma adjustments specified therein, and
comply in all material respects with Regulation S-X under the
Securities Act, and the pro forma adjustments have been
properly applied to historical amounts in the compilation of
such pro forma financial statements.
(m) KPMG Peat Marwick LLP, who have certified certain
financial statements of the Company, Ernst & Young LLP, who
have certified certain financial statements of SFEC, Coopers &
Lybrand, who have certified certain financial statements of
Walibi and Carpenter Mountjoy & Bressler, who have certified
certain financial statements of Kentucky Kingdom, Inc.
("Kentucky Kingdom") whose reports appear in the Prospectus or
are incorporated by reference therein and who have each
delivered the respective initial letters referred to in
9
<PAGE>
Section 7(h) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(n) The Company and each of the Subsidiaries (in the
case of Walibi, to our knowledge) have good and marketable
title in fee simple to all real property and good and
marketable title to all personal property owned by them, in
each case free and clear of all liens, encumbrances and
defects except for such liens arising under the Credit
Facilities or contemplated in Section 1(e) hereof as are
described in the Prospectus or such as would not have a
Material Adverse Effect; and all real property and buildings
held under lease by the Company and the Subsidiaries are held
by them under valid, subsisting and enforceable leases, with
such exceptions as would not have a Material Adverse Effect.
(o) The Company and each of the Subsidiaries (in the
case of Walibi, to our knowledge) carry, or are covered by
insurance in such amounts and covering such risks (including
the risk of earthquakes) as the Company has reasonably
concluded, based on its experience, is adequate for the
conduct of their respective businesses and the value of their
respective properties and as is customary for companies
engaged in similar businesses in similar industries.
(p) The Company and each of the Subsidiaries (in the
case of Walibi, to our knowledge) own or possess adequate
rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights and
licenses necessary for the conduct of their respective
businesses as presently conducted and, with respect to the
Amended and Restated License Agreement among certain
affiliates of Warner Bros., SFTP and the Company dated
February 9, 1998 (the "License Agreement"), as contemplated by
the Prospectus, and have no reason to believe that the conduct
of their respective businesses will conflict with, and have
not received any notice of any claim of conflict with, any
such rights of others with such exceptions as would not have a
Material Adverse Effect.
(q) Except as otherwise disclosed in the Prospectus,
there are no legal or governmental proceedings pending to
which the Company or any of the
10
<PAGE>
Subsidiaries is a party or of which any property or assets of
the Company or any of the Subsidiaries is the subject which,
if determined adversely to the Company or any of the
Subsidiaries, might have a Material Adverse Effect or are
otherwise required to be disclosed in the Prospectus; and to
the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others.
(r) The conditions for use of Form S-3, as set forth
in the General Instructions thereto, have been satisfied.
(s) There are no contracts or other documents which
are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act
or by the Rules and Regulations which have not been described
in the Prospectus or filed as exhibits to the Registration
Statement or incorporated therein by reference as permitted by
the Rules and Regulations.
(t) No relationship, direct or indirect, exists
between or among the Company or any Subsidiary on the one
hand, and the directors, officers, stockholders, customers or
suppliers of the Company or any Subsidiary on the other hand,
which is required to be described or incorporated by reference
in the Prospectus which is not so described or incorporated by
reference.
(u) No labor disturbance by the employees of the
Company or any Subsidiary exists or, to the knowledge of the
Company, is imminent which might be reasonably expected to
have a Material Adverse Effect.
(v) The Company is and, as of the First Delivery
Date, SFEC will be in compliance in all material respects with
all presently and then applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has
occurred or, with respect to SFEC, as of the First Delivery
Date will have occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or SFEC, as
applicable, would have any material liability; the Company has
not incurred and, as of the First Delivery Date, SFEC will not
have incurred and neither the Company expects nor SFEC, as of
the First Delivery Date, will expect to incur
11
<PAGE>
material liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension
plan" for which the Company or SFEC, as applicable, would have
any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects
and nothing has occurred or, with respect to SFEC, as of the
First Delivery Date, will have occurred whether by action or
by failure to act, which might reasonably be expected to cause
the loss of such qualification.
(w) The Company and each of the Subsidiaries (in the
case of Walibi, to our knowledge) are in compliance in all
respects with (i) all presently applicable provisions of the
Occupational Safety and Health Act of 1970, as amended,
including all applicable regulations thereunder and (ii) all
presently applicable state and local laws and regulations
relating to the safety of its theme park and water park
operations, with such exceptions as would not have a Material
Adverse Effect.
(x) The Company has filed and, as of the First
Delivery Date, SFEC and its subsidiaries will have filed all
federal, and all material state and local income and franchise
tax returns required to be filed through the date hereof or
the First Delivery Date, as applicable, other than those
filings being contested in good faith. The Company has paid
and, as of the First Delivery Date, SFEC will have paid all
taxes of which it has notice or will have notice, as
applicable, are due thereon, other than those being contested
in good faith and for which adequate reserves have been
provided or will have been provided, as applicable, or those
currently payable or payable as of the First Delivery Date, as
applicable, without penalty or interest and no tax deficiency
has been determined adversely to the Company or any of the
Subsidiaries which has had, nor does the Company have any
knowledge of any tax deficiency which, if determined adversely
to the Company or any of the Subsidiaries, might be reasonably
expected to have, a Material Adverse Effect.
(y) Since the date as of which information is given
in the Prospectus through the date hereof, and except as may
otherwise be disclosed in the Prospectus,
12
<PAGE>
the Company has not (i) issued or granted any securities or
(ii) declared or paid any dividend on its capital stock, and
neither the Company nor any of its Subsidiaries has (i)
incurred any material liability or obligation, direct or
contingent, other than liabilities and obligations which were
incurred in the ordinary course of business or (ii) entered
into any material transaction not in the ordinary course of
business other than the Six Flags Acquisition.
(z) The Company and each of its Subsidiaries (in the
case of Walibi, to our knowledge) (i) make and keep accurate
books and records and (ii) maintain internal accounting
controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to
permit preparation of their financial statements in conformity
with generally accepted accounting principles in the United
States (or, in the case of Walibi, generally accepted
accounting principles in Belgium) and to maintain
accountability for their assets, (C) access to their assets is
permitted only in accordance with management's authorization
and (D) the recorded accountability for their assets is
compared with existing assets at reasonable intervals.
(aa) Neither the Company nor any of the Subsidiaries
(in the case of Walibi, to our knowledge) (i) is in violation
of its charter or by-laws (or its partnership agreement, as
applicable), (ii) is in default in any material respect, and
no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in
any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which
it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation in
any material respect of any material law, ordinance,
governmental rule, regulation or court decree to which it or
its property or assets may be subject or has failed to obtain
any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business.
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(ab) Neither the Company nor any of the Subsidiaries
(in the case of Walibi, to our knowledge), nor, to its
knowledge, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or
any of the Subsidiaries, has used any corporate or partnership
funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; made
any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(ac) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment
of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any of the Subsidiaries (in the
case of Walibi, to our knowledge) (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or
from any of the property now or previously owned or leased by
the Company or the Subsidiaries in violation of any applicable
law, ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to
have, singularly or in the aggregate with all such violations
and remedial actions, a Material Adverse Effect; there has
been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or
into the environment surrounding such property of any toxic
wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or any of
the Subsidiaries or with respect to which the Company or any
of the Subsidiaries have knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely
to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings
and releases, a Material Adverse Effect; and the terms
"hazardous wastes", "toxic wastes", "hazardous substances" and
"medical wastes" shall have the meanings specified in any
applicable local, state,
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federal and foreign laws or regulations with respect to
environmental protection.
(ad) Neither the Company nor any Subsidiary is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations
of the Commission thereunder.
(ae) At the First Delivery Date, (i) the Six Flags
Acquisition shall be consummated in accordance with the terms
of the Agreement and Plan of Merger dated February 9, 1998
among the Company, Premier Operations, Premier Parks Merger
Corporation, PPStar I, Inc., SFEC and the Sellers (the "Merger
Agreement"), and without any material waiver of any of the
conditions precedent to any of the parties' obligations under
the Merger Agreement, (ii) each of the concurrent offerings by
the Company of the Company Senior Discount Notes, the Company
Senior Notes and the Concurrent Common Stock shall be
consummated, (iii) the offering by SFEC of the New SFEC Notes
shall be consummated immediately following the Offering, (iv)
each of the Credit Facilities shall be in effect and available
for borrowing and (v) no default or event which, with notice
or lapse of time or both, would constitute such a default
shall have occurred and be continuing, or shall result from
the transactions contemplated hereby to occur prior to,
concurrently with or immediately following the consummation of
the Offering, under (A) the Merger Agreement, (B) the
indentures relating to any of the Company Senior Discount
Notes, the Company Senior Notes, Premier Operations' 12%
Senior Notes due 2003 (the "1995 Premier Notes"), Premier
Operations' 9 3/4% Senior Notes due 2007 (the "1997 Premier
Notes"), SFEC's Zero Coupon Notes due 1999 (the "SFEC Zero
Coupon Notes"), SFTP's Senior Subordinated Notes due 2005 (the
"SFTP Senior Subordinated Notes") and the New SFEC Notes, (C)
the credit agreements relating to either of the Credit
Facilities or (D) the Stock Purchase Agreement dated December
15, 1997 between Premier Operations (or a to be formed Belgian
corporation) and Centrag, S.A., Karaba N.V. and Westkoi N.V.
(the "Walibi Agreement").
(af) The statements set forth in the Prospectus under
the captions "Business--Licenses", "Business-- Intercompany
Services Agreement", "Business--Tax Sharing Agreement",
"Description of Six Flags Agreement", "Description of
Indebtedness", "Description of
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Securities", "Description of PInES" and "Description of
Depositary Arrangements", insofar as they describe the terms
of the agreements and securities referred to therein, are
accurate and fairly present the information required to be
shown.
(ag) The merger (the "Premier Merger") of the company
formerly known as Premier Parks Inc. with a wholly owned
subsidiary of Premier Parks Holdings Corporation has been
effected, and, in connection therewith, no stockholder vote
was required under applicable Delaware law and the Premier
Merger otherwise complies in all respects with the General
Corporation Law of the State of Delaware.
(ah) No stockholder vote is required under applicable
Delaware law in connection with the Six Flags Acquisition, and
the Six Flags Acquisition otherwise complies in all respects
with the General Corporation Law of the State of Delaware.
(ai) The Company has effected the Walibi Acquisition
and has commenced a tender offer (the "Walibi Tender Offer")
for the remainder of the outstanding capital stock of Walibi
as described in the Prospectus.
(aj) On or prior to the First Delivery Date, the
License Agreement, the Subordinated Indemnity Agreement, the
Intercompany Services Agreement and the Tax Sharing Agreement
shall have been entered into by the parties thereto with the
provisions described in the Prospectus.
2. Purchase of the Securities by the Underwriters. On the
basis of the representations and warranties contained in, and subject
to the terms and conditions of, this Agreement, the Company agrees to
sell 5,000,000 shares of the Firm Securities to the several
Underwriters and each of the Underwriters, severally and not jointly,
agrees to purchase the number of shares of the Firm Securities set
opposite that Underwriter's name in Schedule 1 hereto.
In addition, the Company grants to the Underwriters an option
to purchase up to 750,000 shares of Option Securities. Such option is
granted solely for the purpose of covering over-allotments in the sale
of Firm Securities and is exercisable as provided in Section 4 hereof.
Shares of Option Securities shall be purchased severally and not
jointly for the account of the Underwriters in proportion to the number
of
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Firm Securities set opposite the name of such Underwriters in Schedule
1 hereto. The price of both the Firm Securities and any Option
Securities shall be $ per share.
The Company shall not be obligated to deliver any of the
Securities to be delivered on the First Delivery Date or the Second
Delivery Date (as hereinafter defined), as the case may be, except upon
payment for all the Securities to be purchased on such Delivery Date as
provided herein.
3. Offering of Securities by the Underwriters.
The several Underwriters propose to offer the Firm Securities
for sale upon the terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Securities shall be made at the office of Cravath,
Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019,
at 10:00 A.M., New York City time, on the fourth full business day
following the date of this Agreement or at such other date or place as
shall be determined by agreement between the Underwriters and the
Company. This date and time are sometimes referred to as the "First
Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Securities
to the Underwriters for the account of each Underwriter against payment
to or upon the order of the Company of the purchase price by wire
transfer in immediately available funds. Time shall be of the essence
(except that the Company will not be responsible for any delay
resulting from any action or inaction of any Underwriter) and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. Upon
delivery, the Firm Securities shall be registered in such names and in
such denominations as the Underwriters shall request in writing not
less than two full business days prior to the First Delivery Date. For
the purpose of expediting the checking and packaging of the
certificates for the Firm Securities, the Company shall make the
certificates representing the Firm Securities available for inspection
by the Underwriters in New York, New York, not later than 2:00 P.M.,
New York City time, on the business day prior to the First Delivery
Date.
At any time on or before the thirtieth day after the date of
this Agreement, the option granted in Section 2
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<PAGE>
may be exercised by written notice being given to the Company by the
Underwriters. Such notice shall set forth the aggregate number of
shares of Option Securities as to which the option is being exercised,
the names in which the shares of Option Securities are to be
registered, the denominations in which the shares of Option Securities
are to be issued and the date and time, as determined by the
Underwriters, when the shares of Option Securities are to be delivered;
provided, however, that this date and time shall not be earlier than
the First Delivery Date nor earlier than the second business day after
the date on which the option shall have been exercised nor later than
the third business day after the date on which the option shall have
been exercised. The date and time the shares of Option Securities are
delivered are sometimes referred to as the "Second Delivery Date" and
the First Delivery Date and the Second Delivery Date are sometimes each
referred to as a "Delivery Date".
Delivery of and payment for the Option Securities shall be
made at the place specified in the first sentence of the first
paragraph of this Section 4 (or at such other place as shall be
determined by agreement between the Underwriters and the Company) at
10:00 A.M., New York City time, on the Second Delivery Date. On the
Second Delivery Date, the Company shall deliver or cause to be
delivered the certificates representing the Option Securities to the
Underwriters for the account of each Underwriter against payment to or
upon the order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence (except that
the Company will not be responsible for any delay resulting from any
action or inaction of any Underwriter), and delivery at the time and
place specified pursuant to this Agreement is a further condition of
the obligations of each Underwriter hereunder. Upon delivery, the
Option Securities shall be registered in such names and in such
denominations as the Underwriters shall request in the aforesaid
written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Securities, the Company
shall make the certificates representing the Option Securities
available for inspection by the Underwriters in New York, New York, not
later than 2:00 P.M., New York City time, on the business day prior to
the Second Delivery Date.
5. Further Agreements of the Company. The Company agrees:
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<PAGE>
(a) To prepare the Prospectus in a form approved by
the Underwriters and to file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than Commission's
close of business on the second business day following the
execution and delivery of this Agreement or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under
the Securities Act; to make no further amendment or any
supplement to the Registration Statement or to the Prospectus
and to file no Rule 462(b) Registration Statement except as
permitted herein; to advise the Underwriters, promptly after
it receives notice thereof, of the time when any amendment to
the Registration Statement has been filed or becomes effective
or any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish the Underwriters with copies
thereof; upon your request, to cause the Rule 462(b)
Registration Statement, properly completed, to be filed with
the Commission pursuant to Rule 462(b) and to provide evidence
satisfactory to the Underwriters of such filing; to advise the
Underwriters, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its reasonable best
efforts to obtain its withdrawal;
(b) To furnish reasonably promptly to each of the
Underwriters and to counsel for the Underwriters a signed copy
of the Registration Statement as originally filed with the
Commission, each amendment thereto and any Rule 462(b)
Registration Statement filed with the Commission, including
all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such
number of the following documents as the Underwriters shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the
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<PAGE>
Commission, each amendment thereto (in each case excluding
exhibits other than this Agreement and the computation of per
share earnings) and any Rule 462(b) Registration Statement,
(ii) each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus and (iii) any document
incorporated by reference in the Prospectus (excluding
exhibits thereto); and, if the delivery of a prospectus is
required at any time after the Effective Time in connection
with the offering or sale of the Securities or any other
securities relating thereto and if at such time any events
shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary to amend or supplement the
Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, to notify the
Underwriters and, upon their request, to file such document
and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an
amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance.
(d) To file promptly with the Commission any
amendment to the Registration Statement or the Prospectus or
any supplement to the Prospectus that may, in the judgment of
the Company or the Underwriters, be required by the Securities
Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment
to the Registration Statement or supplement to the Prospectus,
any document incorporated by reference in the Prospectus, any
Prospectus pursuant to Rule 424 of the Rules and Regulations
or any Rule 462(b) Registration Statement to furnish a copy
thereof to the Underwriters and counsel for the Underwriters
and obtain the consent of the Underwriters to the filing;
(f) As soon as practicable after the Effective Date
(it being understood that the Company shall have until at
least 410 days after the end of the Company's current fiscal
quarter), to make generally available to
20
<PAGE>
the Company's security holders and to deliver to the
Underwriters an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule
158);
(g) For a period of five years following the
Effective Date, to furnish to the Underwriters copies of all
materials furnished by the Company to its public shareholders
and all public reports and all reports and financial
statements furnished by the Company to the principal national
securities exchange upon which the PInES may be listed
pursuant to requirements of or agreements with such exchange
or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as
the Underwriters may reasonably request to qualify the
Securities for offering and sale (or obtain an exemption from
registration) under the securities laws of such jurisdictions
as the Underwriters may request and to comply with such laws
so as to permit the continuance of sales and dealings therein
in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided, however,
that the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general
consent to service of process in any jurisdiction in any
action other than one arising out of the offering or sale of
the Stock;
(i) For a period of 90 days from the date of the
Prospectus, not to, directly or indirectly, (i) offer for
sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock or any
securities convertible into or exchangeable for Common Stock
(other than the Securities, the Concurrent Common Stock, the
Mandatorily Convertible Preferred Stock, the Seller Depositary
Shares, the Seller Convertible Redeemable Preferred Stock,
shares issued pursuant to employee benefit plans, qualified
stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently
outstanding options, warrants or rights or upon the
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<PAGE>
conversion of the Seller Convertible Redeemable Preferred
Stock or the Mandatorily Convertible Preferred Stock, and
other than shares issued by the Company as consideration to
any seller of assets or stock that the Company or any of the
Subsidiaries is acquiring, provided that any shares so issued
to such seller or sellers, including any shares issued after
the date of the Prospectus pursuant to the Walibi Acquisition
or the Walibi Tender Offer, in the aggregate, do not exceed
one-fifth of the total equity of the Company outstanding at
the time of the first such issuance, and further provided that
such seller or sellers (other than the sellers of Walibi)
contemporaneously with any such issuance or issuances enter
into an agreement with the Underwriters in substantially the
same form as the agreement described in this paragraph (i) for
the remainder of the 90 day period), or sell or grant options,
rights or warrants with respect to any shares of Common Stock
or securities convertible into or exchangeable for Common
Stock (other than the grant of options pursuant to option
plans existing on the date hereof) or (ii) enter into any swap
or other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case without the prior written
consent of Lehman Brothers Inc.; and to cause each officer and
director of the Company and Hanseatic Corporation, Richland
Ventures, L.P., Richland Ventures II, L.P., Lawrence, Tyrrell,
Ortale & Smith, Lawrence, Tyrrell, Ortale & Smith II, L.P.,
Windcrest Partners, [JG Partnership, Ltd.,] [J. David Grissom]
and Robert J. Gellert (in the case of Robert J. Gellert only,
limited to (A) shares held for his own account and (B) shares
beneficially owned by Lexfor Corporation) to furnish to the
Underwriters, prior to the First Delivery Date, a letter or
letters, in form and substance satisfactory to counsel for the
Underwriters, pursuant to which each such person shall agree
not to, directly or indirectly, (iii) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction
or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the
future of) any shares of Common Stock or any securities
convertible into or exchangeable for Common Stock or (iv)
enter into any swap or other derivatives transaction that
transfers to another, in
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<PAGE>
whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Stock, whether any such
transaction described in clause (iii) or (iv) above is to be
settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case for a period of 90 days from
the date of the Prospectus, without the prior written consent
of Lehman Brothers Inc.;
(j) To take such steps as shall be necessary to
ensure that neither the Company nor any subsidiary shall
become an "investment company" within the meaning of such term
under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder;
(k) To cause an authorized officer to execute this
Agreement on behalf of each of the Six Flags Subsidiaries on
the First Delivery Date;
(l) Not to waive the lock-up agreements executed by
the Sellers in connection with the Six Flags Acquisition
whereby each of the Sellers agreed to not sell any Seller
Convertible Redeemable Preferred Stock (or shares of Common
Stock issuable upon conversion thereof) during the period of
90 days from the date of the Prospectus, without the prior
written consent of Lehman Brothers Inc.; and
(m) To make an offer to purchase the SFTP Senior
Subordinated Notes following the Six Flags Acquisition in
accordance with the provisions of the indenture for the SFTP
Senior Subordinated Notes relating to offers to purchase the
SFTP Senior Subordinated Notes upon a change of control of
SFTP.
6. Expenses. The Company agrees to pay (a) the costs incident
to the authorization, issuance, sale and delivery of the Securities and
any taxes payable in that connection; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the
costs of distributing the Registration Statement as originally filed
and each amendment thereto and any post-effective amendments thereof
(including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any
document incorporated by reference therein, all as provided in this
Agreement; (d) the costs of producing and distributing
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this Agreement, the Deposit Agreement and any other related documents
in connection with the offering, purchase, sale and delivery of the
Securities; (e) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of sale of the Securities; (f) listing or other
fees incident to the inclusion of the PInES and the Common Stock,
issuable upon conversion of the Mandatorily Convertible Preferred Stock
or as dividends on the Mandatorily Convertible Preferred Stock, for
listing on the New York Stock Exchange; (g) the fees and expenses, if
applicable, of qualifying the Securities under the securities laws of
the several jurisdictions as provided in Section 5(h) and of preparing,
printing and distributing a Blue Sky Memorandum (including related fees
and expenses of counsel to the Underwriters); (h) if one is required
pursuant to the rules of the NASD, all fees and expenses of a qualified
independent underwriter; (i) all other costs and expenses incident to
the performance of the obligations of the Company or any of the
Subsidiaries under this Agreement; and (j) all fees and expenses of the
Depositary; provided that, except as provided in this Section 6 and in
Section 11, the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes
on the Securities which they may sell and the expenses of advertising
any offering of the Securities made by the Underwriters.
7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy,
when made and on each Delivery Date, of the representations and
warranties of the Company, Premier Operations, SFEC and SFTP contained
herein, to the performance by the Company and each of the Subsidiaries
that is a party hereto of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Prospectus shall have been timely filed with
the Commission in accordance with Section 5(a); no stop order
suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and
disclosed to the Company on or prior to such Delivery
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Date that the Registration Statement or the Prospectus or any
amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of Cravath, Swaine & Moore,
counsel for the Underwriters, is material or omits to state a
fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this
Agreement, the Securities, the Registration Statement and the
Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel
for the Underwriters, and the Company shall have furnished to
such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Baer Marks & Upham LLP shall have furnished to
the Underwriters its written opinion, as counsel to the
Company, addressed to the Underwriters and dated such Delivery
Date, in form reasonably satisfactory to the Underwriters, to
the effect that:
(i) The Company and each of the Premier
Subsidiaries and each of the Six Flags Subsidiaries
have been duly incorporated and are validly existing
as corporations in good standing under the laws of
their respective jurisdictions of incorporation; each
of the Premier Partnerships and each of the Six Flags
Partnerships is validly existing as a limited
partnership in good standing under the laws of its
jurisdiction of formation; and the Company, the
Premier Subsidiaries, the Premier Partnerships, the
Six Flags Subsidiaries and the Six Flags Partnerships
are each duly qualified to do business and are in
good standing as foreign corporations in each
jurisdiction in which their respective ownership or
lease of property or the conduct of their respective
businesses requires such qualification except where
the failure to so qualify would not have a Material
Adverse Effect and have all corporate or partnership
power and authority necessary to own or hold their
respective properties and conduct the
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<PAGE>
businesses in which they are engaged as described in
the Prospectus;
(ii) The Company has an authorized
capitalization as set forth in the Prospectus, and
all of the issued shares of capital stock of the
Company now outstanding (including the shares of the
Securities being delivered on such Delivery Date and
the shares of Mandatorily Convertible Preferred
Stock) have been duly and validly authorized and
issued, are fully paid and non-assessable and conform
in all material respects to the description thereof
contained in the Prospectus; all of the shares of the
Securities and the shares of Mandatorily Convertible
Preferred Stock have been duly authorized and, when
issued and delivered to the Underwriters for the
account of each Underwriter against payment therefor
as provided herein and to the Depositary in
accordance with the Deposit Agreement, respectively,
shall be validly issued, fully paid and
non-assessable; the shares of Common Stock, issuable
upon the conversion of the Mandatorily Convertible
Preferred Stock or as dividends on the Mandatorily
Convertible Preferred Stock, have been duly and
validly authorized and reserved for issuance upon
such conversion or dividend, will be validly issued,
fully paid and nonassessable; such Common Stock
conforms in all material respects to the description
thereof contained in the Prospectus; to such
counsel's knowledge, all of the issued shares of
capital stock of each Premier Subsidiary and each Six
Flags Subsidiary have been duly and validly
authorized and issued and are fully paid,
non-assessable and, except for the capital stock of
Walibi that is subject to the Walibi Tender Offer,
are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or
claims, except for liens, encumbrances, equities or
claims arising under the Credit Facilities and the
Subordinated Indemnity Agreement; and 100% of the
partnership interest in each of the Premier
Partnerships and each of the Six Flags Partnerships
is held directly or indirectly by the Company, except
for the 40% general partnership interest in Fiesta
Partnership held by Fiesta Texas Theme Park, Ltd.,
the 99% limited partnership interest in the Georgia
Co-Venture
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Partnership indirectly held by investors in Six Flags
Fund, Ltd. (L.P.), of which approximately 75% are not
affiliated with the Company, and the 99% limited
partnership interest in the Texas Co- Venture
Partnership indirectly held by investors in Six Flags
Funds II, Ltd. (L.P.), of which approximately % are
not affiliated with the Company, free and clear of
all liens, encumbrances, equities or claims, except
for liens, encumbrances, equities or claims arising
under the Credit Facilities and the Co-Venture Parks
Agreements;
(iii) There are no preemptive or other
rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any
shares of the Securities or the Mandatorily
Convertible Preferred Stock pursuant to the Company's
charter or by-laws or any agreement or other
instrument known to such counsel;
(iv) To the best of such counsel's knowledge
and other than as set forth in the Prospectus, there
are no legal or governmental proceedings pending to
which the Company or any of the Subsidiaries is a
party or of which any property or assets of the
Company or any of the Subsidiaries is the subject
which, if determined adversely to the Company or any
of the Subsidiaries, might have a Material Adverse
Effect; and, to the best of such counsel's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) Based solely upon oral confirmation from
the staff of the Commission, the Registration
Statement was declared effective under the Securities
Act as of the date and time specified in such
opinion; the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on
the date specified therein and no stop order
suspending the effectiveness of the Registration
Statement has been issued and, to the knowledge of
such counsel, no proceeding for that purpose is
pending or threatened by the Commission;
(vi) The Registration Statement and the
Prospectus and any further amendments or
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supplements thereto made by the Company prior to such
Delivery Date (other than the financial statements
and related schedules therein and other financial or
statistical data included therein, as to which such
counsel need express no opinion) comply as to form in
all material respects with the requirements of the
Securities Act and the Rules and Regulations; and the
documents incorporated by reference in the Prospectus
(other than the financial statements and related
schedules therein and other financial or statistical
data included therein, as to which such counsel need
express no opinion), when they were filed with the
Commission, complied as to form in all material
respects with the requirements of the Exchange Act
and the rules and regulations of the Commission
thereunder;
(vii) To the best of such counsel's
knowledge, there are no contracts or other documents
which are required to be described in the Prospectus
or filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations
which have not been described or filed as exhibits to
the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations;
(viii) This Agreement has been duly
authorized, executed and delivered by the Company and
each of the Subsidiaries that is a party hereto;
(ix) The Deposit Agreement relating to the
Securities has been duly authorized, executed and
delivered by the Company, and, assuming due
authorization, execution and delivery thereof by the
Depositary named therein, constitutes a valid and
binding instrument enforceable against the Company in
accordance with its terms (except to the extent that
(a) enforcement thereof may be limited by (1)
bankruptcy, reorganization, insolvency, fraudulent
transfer, moratorium or other laws now or hereafter
in effect relating to creditors' rights generally and
(2) general principles of equity (regardless of
whether at law or in equity) and except to the extent
that rights to contribution and indemnification may
be violative of public policy underlying any law,
rule or regulation (including any Federal or state
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securities law, rule or regulation); assuming payment
of the purchase price by the Underwriters, each of
the Securities represents a one-five hundredth
interest in a validly issued, outstanding, fully paid
and nonassessable share of Mandatorily Convertible
Preferred Stock; and the Securities, when issued
under the Deposit Agreement in accordance with the
provisions of the Deposit Agreement, will be validly
issued, and, assuming due execution and delivery of
the depositary receipts relating to the Securities by
the Depositary pursuant to the Deposit Agreement,
such depositary receipts will entitle the holders
thereof to the benefits provided therein and in the
Deposit Agreement;
(x) The issue and sale of the shares of the
Securities and the issue and exchange of the shares
of Mandatorily Convertible Preferred Stock both being
delivered on such Delivery Date by the Company, the
issuance of Common Stock upon the conversion of or as
dividends on the Mandatorily Convertible Preferred
Stock and the compliance by the Company and each of
the Subsidiaries that is a party hereto with all of
the provisions of this Agreement and the Deposit
Agreement and the consummation of the transactions
contemplated hereby and thereby (including the
offerings of the Company Senior Discount Notes, the
Company Senior Notes and the New SFEC Notes and the
entering into of the Six Flags Credit Facility and
any borrowing thereunder in connection with the Six
Flags Acquisition) will not conflict with or result
in a breach or violation of any of the terms or
provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel
to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the
Subsidiaries is bound or to which any of the property
or assets of the Company or any of the Subsidiaries
is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws
or other constitutive documents of the Company or any
of the Subsidiaries or, assuming that all consents,
approvals, authorizations, registrations or
qualifications as may be required under the Exchange
Act and applicable state or foreign securities laws
in connection with the purchase and distribution of
the Securities by the Underwriters, the exchange of
the Mandatorily Convertible Preferred Stock for
depositary receipts by the Depositary and the
issuance of Common Stock upon the conversion of or as
dividends on the Mandatorily Convertible Preferred
Stock are obtained, any Federal or New York State
statute, the General Corporation Law of the State of
Delaware, or any order, rule or regulation known to
such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of
the Subsidiaries or any of their properties or
assets; and, except for the registration of the
Securities and the Mandatorily Convertible Preferred
Stock under the Securities Act and such consents,
approvals, authorizations, registrations or
qualifications as may be required under the Exchange
Act and
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<PAGE>
applicable state or foreign securities laws in
connection with the purchase and distribution of the
Securities by the Underwriters and the exchange of
the Mandatorily Convertible Preferred Stock for
depositary receipts by the Depositary and the
issuance of Common Stock upon the conversion of
or as dividends on the Mandatorily Convertible
Preferred Stock are obtained, any Federal or New
York State statute, the General Corporation Law of
the State of Delaware, or any order, rule or
regulation known to such counsel of any court or
governmental agency or body having jurisdiction
over the Company or any of the Subsidiaries or any
of their properties or assets; and, except for the
registration of the Securities and the Mandatorily
Convertible Preferred Stock under the Securities
Act and such consents, approvals, authorizations,
registrations or qualifications as may be required
under the Exchange Act and applicable state or
foreign securities laws in connection with the
purchase and distribution of the Securities by the
Underwriters and the exchange of the Mandatorily
Convertible Preferred Stock for depositary
receipts by the Depositary, no consent, approval,
authorization or order of, or filing or
registration with, any such court or governmental
agency or body is required for the execution,
delivery and performance of this Agreement or the
Deposit Agreement by the Company or any of the
Subsidiaries that is a party hereto and the
consummation of the transactions contemplated hereby
and thereby; and
(xi) To the best of such counsel's
knowledge, no holders of securities of the Company
have rights to require the Company to include such
securities with the Securities or the Mandatorily
Convertible Preferred Stock registered pursuant to
the Registration Statement.
In rendering such opinion, such counsel may state
that its opinion is limited to matters governed by the Federal
laws of the United States of America, the laws of the State of
New York and the General Corporation Law of the State of
Delaware and that such counsel is not admitted in any state
other than New York; and, in respect of matters of fact, may
rely upon certificates of
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officers of the Company or the Subsidiaries, provided that
such counsel shall state that it believes that both the
Underwriters and it are justified in relying upon such
certificates. Such counsel shall also have furnished to the
Underwriters a written statement, addressed to the
Underwriters and dated such Delivery Date, in form
satisfactory to the Underwriters, to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis
(although the Company is also represented with respect to the
Walibi Acquisition, the Walibi Tender Offer, the Six Flags
Acquisition, litigation matters, regulatory matters and
certain other matters, by other outside counsel), has acted as
counsel to the Company in connection with financing
transactions since February 1992 and has acted as counsel to
the Company in connection with the preparation of the
Registration Statement and (y) based on the foregoing, no
facts have come to the attention of such counsel which lead it
to believe that (I) the Registration Statement (other than the
financial statements and other financial and statistical data
contained therein, as to which such counsel need express no
belief), as of the Effective Date, contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the
Prospectus (other than the financial statements and other
financial and statistical data contained therein, as to which
such counsel need express no belief) contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading or (II) any documents
incorporated by reference in the Prospectus (other than the
financial statements and other financial and statistical data
contained therein, as to which such counsel need express no
belief) when they were filed with the Commission contained an
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. In rendering such statement, such
counsel may rely upon the opinion and statement delivered by
Weil Gotshal & Manges LLP pursuant to Section 5(e) hereto with
respect to the information covered by such opinion and
statement. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does
not assume any responsibility for
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the accuracy or fairness with respect to the information
required to be shown under the Securities Act and the Rules
and Regulations of the statements contained in the
Registration Statement or the Prospectus except for the
statements made in the Prospectus under the captions
"Prospectus Summary--Other Recent Developments--Walibi",
"Business--Intercompany Services Agreement", "Business--Tax
Sharing Agreement", "Description of Indebtedness",
"Description of Securities", "Description of PInES" and
"Description of Depositary Arrangements" insofar as such
statements describe the terms of the Walibi Acquisition and
Walibi Tender Offer, the documents or agreements referred to
therein, the Stock, the Seller Convertible Redeemable
Preferred Stock, the Company's debt instruments or other
securities, or the registration rights referred to therein and
concern legal matters.
(e) Weil Gotshal & Manges LLP shall have furnished to
the Underwriters its written opinion, as special counsel to
the Company, addressed to the Underwriters and dated such
Delivery Date, in form reasonably satisfactory to the
Underwriters, as to certain matters set forth in Section 7(d)
and to the effect that the statements set forth in the
Prospectus under the captions "Business-- Licenses" and
"Description of Six Flags Agreement", insofar as such
statements describe the terms of the documents or agreements
referred to therein, are accurate, complete and fair.
In rendering such opinion, such counsel may state
that its opinion is limited to matters governed by the Federal
laws of the United States of America, the laws of the State of
New York and the General Corporation Law of the State of
Delaware and, in respect of matters of fact, may rely upon
certificates of officers of the Company or the Subsidiaries,
provided that such counsel shall state that it believes that
both the Underwriters and it are justified in relying upon
such certificates. Such counsel shall also have furnished to
the Underwriters a written statement, addressed to the
Underwriters and dated such Delivery Date, in form
satisfactory to the Underwriters, to the effect that (x) such
counsel has acted as counsel to the Company in connection with
the Walibi Acquisition, the Walibi Tender Offer and the Six
Flags Acquisition and has reviewed the information (the
"Walibi and Six Flags Information") in the Registration
Statement relating to the Walibi Acquisition, the Walibi
Tender Offer, the Six Flags
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<PAGE>
Acquisition and the business and operations of Walibi and its
subsidiaries and SFEC and its subsidiaries and (y) based on
the foregoing, no facts have come to the attention of such
counsel which lead it to believe that (I) the Registration
Statement (other than the financial statements and other
financial and statistical data contained therein, as to which
such counsel need express no belief), as of the Effective
Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not
misleading, or that the Prospectus (other than the financial
statements and other financial and statistical data contained
therein, as to which such counsel need express no belief)
contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading
or (II) any documents incorporated by reference in the
Prospectus (other than the financial statements and other
financial and statistical data contained therein, as to which
such counsel need express no belief) when they were filed with
the Commission contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading. The foregoing
statement may be qualified by a statement to the effect that
the statement's scope is limited to the Walibi and Six Flags
Information.
(f) Richards, Layton & Finger shall have furnished to
the Underwriters its written opinion, as special Delaware
counsel to the Company, addressed to the Underwriters and
dated such Delivery Date, in form reasonably satisfactory to
the Underwriters, to the effect that, in connection with the
Premier Merger, no shareholder vote was required under
applicable Delaware law and, in connection with the Six Flags
Acquisition, no shareholder vote is required under applicable
Delaware law, and that the Premier Merger and the Six Flags
Acquisition otherwise comply in all respects with applicable
Delaware law.
(g) The Underwriters shall have received from
Cravath, Swaine & Moore, counsel for the Underwriters, such
opinion or opinions and such statement or statements, dated
such Delivery Date, with respect to the
33
<PAGE>
issuance and sale of the Stock, the Registration Statement,
the Prospectus and other related matters as the Underwriters
may reasonably require, and the Company and the Subsidiaries
shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass
upon such matters.
(h) At the time of execution of this Agreement, the
Underwriters shall have received from (I) KPMG Peat Marwick
LLP a letter, in form and substance satisfactory to the
Underwriters, addressed to the Underwriters and dated the date
hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments
since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more
than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial
information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection
with registered public offerings, except for the financial
information and other matters covered in the letters from
Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy &
Bressler described immediately hereinafter; (II) Ernst & Young
LLP a letter, in form and substance satisfactory to the
Underwriters, addressed to the Underwriters and dated the date
hereof (i) confirming that they are independent accountants
within the meaning of the Securities Act and are in compliance
with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof, the
conclusions and findings of such firm with respect to certain
financial information and other matters relating to SFEC and
its subsidiaries as have been previously agreed to by such
firm and the Underwriters; (III) Coopers & Lybrand a letter,
in form and substance satisfactory to the Underwriters,
addressed to the Underwriters and dated the date hereof (i)
confirming that they are independent accountants within the
meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof, the
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<PAGE>
conclusions and findings of such firm with respect to certain
financial information and other matters relating to Walibi and
its subsidiaries, as have been previously agreed to by such
firm and the Underwriters; and (IV) Carpenter Mountjoy &
Bressler a letter, in form and substance satisfactory to the
Underwriters, addressed to the Underwriters and dated the date
hereof (i) confirming that they are independent accountants
within the meaning of the Securities Act and are in compliance
with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof, the
conclusions and findings of such firm with respect to certain
financial information and other matters relating to Kentucky
Kingdom, as have been previously agreed to by such firm and
the Underwriters.
(i) With respect to the letters of KPMG Peat Marwick
LLP, Ernst & Young LLP, Coopers & Lybrand and Carpenter
Mountjoy & Bressler referred to in the preceding paragraph and
delivered to the Underwriters concurrently with the execution
of this Agreement (the "initial letters"), the Company shall
have furnished to the Underwriters a letter (the "bring-down
letters") of each of such accountants, addressed to the
Underwriters and dated such Delivery Date (i) confirming that
they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, in the
case of the letter of KPMG Peat Marwick LLP, with respect to
matters involving changes or developments since the respective
dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to
the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial
information and other matters covered by the initial letter
and (iii) confirming in all material respects the conclusions
and findings set forth in the initial letter.
(j) The Company shall have furnished to the
Underwriters a certificate, dated such Delivery Date, of its
Chairman of the Board, its President or a Vice President and
its chief financial officer stating that:
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<PAGE>
(i) The representations, warranties and
agreements of the Company and each of Premier
Operations, SFEC and SFTP in Section 1 are true and
correct as of such Delivery Date; the Company and
each of the Subsidiaries that is a party hereto have
complied with all their agreements contained herein;
and the conditions set forth in Sections 7(a) and
7(k) have been fulfilled; and
(ii) They have carefully examined the
Registration Statement and the Prospectus and, in
their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include
any untrue statement of a material fact and did not
omit to state a material fact required to be stated
therein or necessary to make the statements therein
not misleading, and (B) since the Effective Date no
event has occurred which should have been set forth
in a supplement or amendment to the Registration
Statement or the Prospectus.
(k) Since the date of the latest audited financial
statements included or incorporated by reference in the
Prospectus there shall not have been any change in the capital
stock (or partners' equity, as applicable) other than the
Premier Merger or long-term debt of the Company or any of the
Subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity (or
partners' equity, as applicable) or results of operations of
the Company and its subsidiaries, otherwise, in each case,
than as set forth or contemplated in the Prospectus, the
effect of which, in any such case, is, in the judgment of the
Underwriters, so material (to the Company and its
Subsidiaries, taken as a whole) and adverse as to make it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities being delivered on
such Delivery Date on the terms and in the manner contemplated
in the Prospectus.
(l) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) of
the Rules and Regulations and (ii) no
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<PAGE>
such organization shall have publicly announced that it has
under surveillance or review, with possible negative
implications, its rating of any of the Company's debt
securities.
(m) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market,
shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged
in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a
material adverse change in general economic, political or
financial conditions (or the effect of international
conditions on the financial markets in the United States shall
be such) as to make it, in the judgment of a majority in
interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of
the Securities being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(n) The Six Flags Acquisition shall have been or
shall be consummated concurrently with the Offering and
without any material waiver of any of the conditions precedent
to any of the parties' obligations under the Merger Agreement.
(o) Each of the offerings by the Company of the
Company Senior Discount Notes, the Company Senior Notes and
the Concurrent Common Stock shall have been or shall be
consummated concurrently with the Offering.
(p) The offering by SFEC of the New SFEC Notes shall
be consummated immediately following the Offering.
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<PAGE>
(q) Each of the Premier Credit Facility and the Six
Flags Credit Facility shall be in effect and available for
borrowing.
(r) No default or event which, with notice or lapse
of time or both, would constitute such a default shall have
occurred and be continuing, or would result from the
transactions contemplated hereby to occur prior to,
concurrently with or immediately following the consummation of
the Offering, under (i) the Merger Agreement, (ii) the
indentures relating to any of the Company Senior Discount
Notes, the Company Senior Notes, the 1995 Premier Notes, the
1997 Premier Notes, the SFEC Zero Coupon Notes, the SFTP
Senior Subordinated Notes and the New SFEC Notes, (iii) the
credit agreement relating to either the Premier Credit
Facility or the Six Flags Credit Facility, (iv) the Walibi
Agreement or (v) the Deposit Agreement.
(s) The Premier Merger shall have been consummated.
(t) Each of (i) the License Agreement, (ii) the
Subordinated Indemnity Agreement, (iii) the Intercompany
Services Agreement, (iv) the Tax Sharing Agreement and (v) the
Deposit Agreement shall have been entered into by the parties
thereto with the provisions described in the Prospectus.
(u) An authorized officer shall have executed this
Agreement on behalf of each of the Six Flags Subsidiaries.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and
scope reasonably satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company and the Subsidiaries that are parties
hereto, jointly and severally, shall indemnify and hold
harmless each Underwriter (including any Underwriter in its
role as qualified independent underwriter pursuant to the
rules of the NASD), its officers and employees and each
person, if any, who controls any Underwriter within the
meaning of the Securities Act, from and against any loss,
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<PAGE>
claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss,
claim, damage, liability or action relating to purchases and
sales of the Securities), to which that Underwriter, officer,
employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment
or supplement thereto or (B) in any blue sky application or
other document prepared or executed by the Company (or based
upon any written information furnished by the Company)
specifically for the purpose of qualifying any or all of the
Securities under the securities laws of any jurisdiction (any
such application, document or information being hereinafter
called a "Blue Sky Application"), (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment
or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to
make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to,
the Securities or the Offering contemplated hereby, and which
is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided that the
Company and the Subsidiaries that are parties hereto shall not
be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall
reimburse each Underwriter and each such officer, employee or
controlling person promptly upon demand for any legal or other
expenses reasonably incurred by that Underwriter, officer,
employee or controlling person in connection with
investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company and the
Subsidiaries that are parties hereto shall not be liable in
any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the
39
<PAGE>
Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application, in
reliance upon and in conformity with written information
concerning any Underwriter furnished to the Company by any
Underwriter specifically for inclusion therein; and provided
further that with respect to any such untrue statement or
omission made in the Preliminary Prospectus, the indemnity
agreement contained in this Section 8(a) shall not enure to
the benefit of the Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased the
Securities concerned if, to the extent that such sale was an
initial sale by such Underwriter and any such loss, claim,
damage or liability of such Underwriter is a result of the
fact that both (A) a copy of the Prospectus was not sent or
given to such person at or prior to the written confirmation
of the sale of such Securities to such person, and (B) the
untrue statement or omission in the Preliminary Prospectus was
corrected in the Prospectus unless, in either case, such
failure to deliver the Prospectus was a result of
noncompliance by the Company with Section 5(c). The foregoing
indemnity agreement is in addition to any liability which the
Company or any of the Subsidiaries that are parties hereto may
otherwise have to any Underwriter or to any officer, employee
or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly,
shall indemnify and hold harmless the Company and the
Subsidiaries that are parties hereto, each of their respective
officers and employees, each of their respective directors,
and each person, if any, who controls the Company or any
Subsidiary that is a party hereto within the meaning of the
Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof,
to which the Company or any Subsidiary that is a party hereto
or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of,
or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state
in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or
in any Blue Sky Application any material fact required to be
stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the
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<PAGE>
untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity
with written information concerning such Underwriter furnished
to the Company by that Underwriter specifically for inclusion
therein, and shall reimburse the Company, any such Subsidiary
and any such director, officer or controlling person for any
legal or other expenses reasonably incurred by the Company,
any such Subsidiary or any such director, officer or
controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to the Company, any
such Subsidiary, or any such director, officer, employee or
controlling person.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of any claim or the
commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement
of that action; provided, however, that the failure to notify
the indemnifying party shall not relieve it from any liability
which it may have under this Section 8 except to the extent it
has been materially prejudiced by such failure and, provided
further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 8. If
any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation;
provided, however, that the Underwriters shall have the right,
upon written notice to the Company, to employ counsel to
represent jointly the Underwriters and their respective
officers, employees and controlling persons who may be subject
to liability arising out of any claim in respect of which
41
<PAGE>
indemnity may be sought by the Underwriters against the
Company and the Subsidiaries that are parties hereto under
this Section 8 if, in the reasonable judgment of the
Underwriters, it is advisable for the Underwriters, officers,
employees and controlling persons to be jointly represented by
separate counsel, and in that event the reasonable fees and
expenses of such separate counsel shall be paid, jointly and
severally, by the Company and the Subsidiaries that are
parties hereto. It is understood that the indemnifying party
or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more
than one separate firm of attorneys (in addition to any local
counsel) at any one time for all such indemnified party or
parties. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual
or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss
or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this
Section 8 shall for any reason be unavailable to or
insufficient to hold harmless an indemnified party under
Section 8(a) or 8(c) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such
loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the
Subsidiaries that are parties hereto on the one hand and the
Underwriters on the other from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not
42
<PAGE>
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the
Company and the Subsidiaries that are parties hereto on the
one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative
benefits received by the Company and the Subsidiaries that are
parties hereto on the one hand and the Underwriters on the
other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the
offering of the Securities purchased under this Agreement
(before deducting expenses) received by the Company on the one
hand, and the total underwriting discounts and commissions
received by the Underwriters with respect to the shares of the
Securities purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the offering of the
shares of the Securities under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus.
The relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriters,
the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such
statement or omission. For purposes of the preceding two
sentences, the net proceeds deemed to be received by the
Company shall be deemed to be also for the benefit of the
Subsidiaries that are parties hereto and information supplied
by the Company shall also be deemed to have been supplied by
the Subsidiaries that are parties hereto. The Company, the
Subsidiaries that are parties hereto and the Underwriters
agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were to be determined by pro
rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in
this Section shall be deemed to include, for purposes of this
Section 8(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Underwriter shall be
required to contribute any amount in excess of the amount by
which the total price at which the
43
<PAGE>
Securities underwritten by it and distributed to the public
was offered to the public exceeds the amount of any damages
which such Underwriter has otherwise paid or become liable to
pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute
as provided in this Section 8(d) are several in proportion to
their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the
Company and the Subsidiaries that are parties hereto
acknowledge that the statements with respect to the public
offering of the Securities by the Underwriters set forth in
the first and last paragraphs on the cover page of, the legend
concerning stabilization on the third page of and statements
under the caption "Underwriting" including but not limited to
the concession and reallowance figures, the Prospectus
constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration
Statement and the Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriter shall be obligated to purchase the
Securities which the defaulting Underwriter agreed but failed to
purchase on such Delivery Date; provided, however, that the remaining
non-defaulting Underwriter shall not be obligated to purchase any of
the Securities on such Delivery Date if the total number of shares of
the Securities which the defaulting Underwriter agreed but failed to
purchase on such date exceeds 9.09% of the total number of shares of
the Securities to be purchased on such Delivery Date, and the remaining
non-defaulting Underwriter shall not be obligated to purchase more than
110% of the number of shares of the Securities which it agreed to
purchase on such Delivery Date pursuant to the terms of Section 2. If
the foregoing maximums are exceeded, the remaining non-defaulting
Underwriter, or those other underwriters satisfactory to the
non-defaulting Underwriter who so agree, shall have the right, but
shall not be obligated, to purchase,
44
<PAGE>
in such proportion as may be agreed upon among them, all the Securities
to be purchased on such Delivery Date. If the remaining Underwriter or
other underwriters satisfactory to the remaining Underwriter do not
elect to purchase the shares which the defaulting Underwriter agreed
but failed to purchase on such Delivery Date, this Agreement (or, with
respect to the Second Delivery Date, the obligation of the Underwriters
to purchase, and of the Company to sell, the Option Securities) shall
terminate without liability on the part of the non-defaulting
Underwriter or the Company, except that the Company will continue to be
liable for the payment of expenses to the extent set forth in Section
6. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any
party not listed in Schedule 1 hereto who, pursuant to this Section 9,
purchases Securities which a defaulting Underwriter agreed but failed
to purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages
caused by its default. If other underwriters are obligated or agree to
purchase the Securities of a defaulting or withdrawing Underwriter,
either the non-defaulting Underwriter or the Company may postpone the
Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for
the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder
may be terminated by the Underwriters by notice given to and received
by the Company prior to delivery of and payment for the Firm Securities
if, prior to that time, any of the events described in Sections 7(k),
7(l) or 7(m) shall have occurred or if the Underwriters shall decline
to purchase the Securities for any reason permitted under this
Agreement.
11. Reimbursement of Underwriters' Expenses. If the Company
shall fail to tender the Securities for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Company
to perform any agreement on its part to be performed, or because any
other condition of the Underwriters' obligations hereunder required to
be fulfilled by the Company is not fulfilled (other than by reason of
any events described in Section 7(m) except for the
45
<PAGE>
suspension of trading or minimum prices of the securities of the
Company), the Company will reimburse the Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of
counsel) incurred by the Underwriters in connection with this Agreement
and the proposed purchase of the Securities, and promptly following
demand the Company shall pay the full amount thereof to the
Underwriters. If this Agreement is terminated pursuant to Section 9 by
reason of the default of one or more Underwriters, the Company shall
not be obligated to reimburse any defaulting Underwriter on account of
those expenses.
12. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or
sent by mail, telex or facsimile transmission to Lehman
Brothers Inc., Three World Financial Center, New York, New
York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice pursuant
to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., 3 World Financial
Center, 10th Floor, New York, NY 10285;
(b) if to the Company or any of the Subsidiaries,
shall be delivered or sent by mail, telex or facsimile
transmission to 122 East 42nd Street, 49th Floor, New York, NY
10168, Attention: Kieran E. Burke (Fax: 212- 949-6203);
provided, however, that any notice to a Underwriter pursuant to Section
8(c) shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its
acceptance telex , which address will be supplied to any other party
hereto by the Underwriters upon request. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof.
The Company shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the
Underwriters by Lehman Brothers Inc. on behalf of the Underwriters.
13. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the
Company, the Subsidiaries that are parties hereto and their respective
successors. This Agreement and the terms and provisions hereof are for
the sole
46
<PAGE>
benefit of only those persons, except that (A) the representations,
warranties, indemnities and agreements of the Company and the
applicable Subsidiaries contained in this Agreement shall also be
deemed to be for the benefit of the officers and employees of each
Underwriter and the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the Securities Act and
(B) the indemnity agreement of the Underwriters contained in Section
8(b) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within
the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other
than the persons referred to in this Section 13, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the applicable Subsidiaries
and the Underwriters contained in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall survive
the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any investigation made by or on behalf
of any of them or any person controlling any of them.
15. Definition of the Terms "Business Day", "Premier
Subsidiary", "Premier Partnership", "Six Flags Subsidiary", "Six Flags
Partnership", "Subsidiary" and "Co-Venture Parks Agreements". For
purposes of this Agreement, (a) "business day" means any day on which
the New York Stock Exchange, Inc. is open for trading, (b) "Premier
Subsidiary" means each of Premier Operations, Walibi, Funtime Parks,
Inc., an Ohio corporation, Funtime, Inc., an Ohio corporation, Wyandot
Lake, Inc., an Ohio corporation, Darien Lake Theme Park and Camping
Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware
corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier
City Properties, Inc., an Oklahoma corporation, Stuart Amusement
Company, a Massachusetts corporation, Premier Waterworld Concord Inc.,
a California corporation, Premier Waterworld Sacramento Inc., a
California corporation, Premier Parks of Colorado Inc., a Colorado
corporation, Great Escape Holding Inc., a New York corporation, Great
Escape LLC, a New York limited liability company, Great Escape Theme
Park LLC,
47
<PAGE>
a New York limited liability company, Riverside Park Enterprises, Inc.,
a Massachusetts corporation, Riverside Park Food Services, Inc., a
Massachusetts corporation, KKI, LLC, a Delaware limited liability
company, Park Management Corp., a California corporation, Indiana
Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio
corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier
International Holdings, Inc., a Delaware corporation and [other Premier
entities held in corporate form and as limited liability companies],
(c) "Premier Partnership" means each of Frontier City Partners, Limited
Partnership, an Oklahoma limited partnership, Elitch Gardens, L.P., a
Colorado limited partnership and [other Premier entities held as
limited partnerships], (d) "Six Flags Subsidiary" means each of SFEC,
SFTP, [S.F. Holdings, Inc., a Delaware corporation, SFTP Inc., a
Delaware corporation, S.F. Sponsorship Services, Inc., a Delaware
corporation, Six Flags Over Georgia, Inc., a Delaware corporation, SFOG
II, Inc., a Delaware corporation, SFOG II Employee, Inc., a Delaware
corporation, SFOG Acquisition A, Inc., a Delaware corporation, SFOG
Acquisition B, LLC, a Delaware limited liability company, Six Flags
Over Texas, Inc., a Delaware corporation, SFOT Employee, Inc., a
Delaware corporation, SFOT Acquisition I, Inc.,, a Delaware
corporation, SFOT Acquisition II, Inc., a Delaware corporation, SFOT
II, Inc., a Delaware corporation, American National Indemnity Co., a
Vermont corporation, Six Flags Beverages, Inc., a Texas corporation,
Funtircity Family Entertainment Parks, Inc., a Delaware corporation,
Funtricity Vicksburg Family Entertainment Park Inc., a Delaware
corporation, Pennrec, Co., a Delaware corporation, Six Flags Admiral,
Inc., a Delaware corporation, Six Flags Management Corp., a Delaware
corporation, Six Flags Power Plant, Inc., a Delaware corporation, Six
Flags Services, Inc., a Delaware Corporation, Six Flags Services of
Georgia, Inc., a Georgia corporation, Six Flags Services of Illinois,
Inc. , a Delaware corporation, Six Flags Services of Missouri, Inc., a
Delaware corporation, Six Flags Services of Texas, Inc., a Delaware
corporation, Stars Hall of Fame, Inc., a Delaware corporation, San
Antonio Park GP, LLC, a Delaware limited liability company, SFTP San
Antonio GP, Inc., a Delaware corporation, Texas Flags Ltd., a Texas
corporation, and SFTP San Antonio, Inc., a Delaware corporation], (e)
"Six Flags Partnership" means each of Fiesta Partnership, the Georgia
Co-Venture Partnership, the Texas Co-Venture Partnership and [Six Flags
San Antonio, L.P., a Delaware limited partnership], (f) "Subsidiary"
means each of the Premier Subsidiaries, the Premier Partnerships, the
Six Flags Subsidiaries and the Six Flags Partnerships; provided,
however, that the term
48
<PAGE>
"Subsidiary" shall include the Six Flags Subsidiaries and the Six Flags
Partnerships only as of and after the First Delivery Date, and
"Co-Venture Parks Agreements" means (i) the Overall Agreement, dated as
of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family
Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia,
Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc.,
SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags
Services of Georgia, Inc., SFTP and SFEC and the Related Agreements (as
defined therein), (ii) the Overall Agreement, dated as of November 24,
1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C.,
FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition
I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., SFTP
and SFEC and the Related Agreements (as defined therein), and (iii) the
Lease Agreement with Option to Purchase, dated as of March 9, 1996,
among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership, San
Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the
Transaction Documents (as defined therein), in each case, as the same
may be modified or amended from time to time.
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
17. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all
such counterparts shall together constitute one and the same
instrument.
18. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the
meaning or interpretation of, this Agreement.
49
<PAGE>
If the foregoing correctly sets forth the agreement among the
Company, the Subsidiaries that are parties hereto and the Underwriters,
please indicate your acceptance in the space provided for that purpose
below.
Very truly yours,
Premier Parks Inc.
By
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Subsidiaries (as
listed in Section 15 but
not including Walibi)
By
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Partnerships (as
listed in Section 15)
By Each of their respective
General Partners
By
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Six Flags Subsidiaries (as
listed in Section 15)
By
Name: Kieran E. Burke
50
<PAGE>
Title: Chairman of the
Board and Chief
Executive Officer
Accepted:
Lehman Brothers Inc.
Smith Barney Inc.
By Lehman Brothers Inc.
By
----------------------
Authorized Representative
51
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Number
Underwriters of Firm Shares
- ------------- ---------------
<S> <C>
Lehman Brothers Inc.........................
Smith Barney Inc............................
----------
Total.................................
----------
----------
</TABLE>
<PAGE>
Exhibit 1.(e)
L&W Draft--3/19/98
PREMIER PARKS INC.
$___________ Aggregate Principal Amount at Maturity of
__% Senior Discount Notes due 2008
$280,000,000 _% Senior Notes due 2006
UNDERWRITING AGREEMENT
, 1998
Lehman Brothers Inc.
Salomon Brothers Inc
NationsBanc Montgomery Securities LLC
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Premier Parks Inc., a Delaware corporation (the "Company"), proposes to
sell to the several Underwriters (the "Offering") named on Schedule 1 hereto
(the "Underwriters") $___________ aggregate principal amount at maturity of __%
Senior Discount Notes due 2008 of the Company (the "Company Senior Discount
Notes") and $280,000,000 __% Senior Notes due 2006 of the Company (the "Company
Senior Notes" and, together with the Company Senior Discount Notes, the
"Notes"). The Notes are to be issued under two separate indentures, to be
entered into and to be dated as of _______, 1998 (the "Indentures") between the
Company and The Bank of New York, as Trustee. In addition, the Company will
enter into a pledge, escrow and disbursement agreement (the "Discount Note
Escrow Agreement") which will secure certain of the Company's obligations under
the Company Senior Discount Notes and a pledge, escrow and disbursement
agreement (the "Senior Note Escrow Agreement" and together with the Discount
Note Escrow Agreement, the "Escrow Agreements") which will secure certain of the
Company's obligations under the Company Senior Notes.
It is also understood by all parties that the Company is undertaking the
Offering in connection with its acquisition (the "Six Flags Acquisition") from
the current stockholders (the "Sellers") of all of the capital stock of
<PAGE>
2
Six Flags Entertainment Corporation ("SFEC"), and that, in connection with the
Six Flags Acquisition, the Company is concurrently offering (the "Common Stock
Offering"), with the over-allotment option, _______ shares of its Common Stock
(the "Stock") and, with the over-allotment option, 5,750,000 Premium Income
Equity Securities ("PInES") representing interests in the Company's mandatorily
convertible preferred stock (the "Mandatorily Convertible Preferred Stock") with
estimated gross proceeds of $228.2 million. In addition, it is understood by all
parties that Six Flags Theme Parks Inc. ("SFTP") is concurrently entering into a
new $472 million senior secured credit facility (the "Six Flags Credit
Facility") under a credit agreement dated the date of this Agreement among it,
certain of the Six Flags Subsidiaries (as defined in Section 15) and Lehman
Commercial Paper, Inc., and Premier Operations Inc. ("Premier Operations") has
entered into a $300 million senior secured credit facility (the "Premier Credit
Facility" and, together with the Six Flags Credit Facility, the "Credit
Facilities") under a credit agreement among the Company, certain of the Premier
Subsidiaries and Premier Partnerships (each as defined in Section 15) and Lehman
Commercial Paper, Inc. It is further understood by all parties that, immediately
following the Offering, SFEC will offer $170 million aggregate principal amount
of senior notes due 2006 (the "New SFEC Notes"), and that, concurrently with the
Offering, the Company may issue depositary shares (the "Seller Depositary
Shares") representing interests in up to $200 million of the Company's
convertible redeemable preferred stock (the "Seller Convertible Redeemable
Preferred Stock") to the Sellers as part of the consideration for the Six Flags
Acquisition.
1. Representations, Warranties and Agreements of the Company and
Certain of the Subsidiaries. The Company and Premier Operations and, as of the
First Delivery Date (as hereinafter defined), SFEC and SFTP represent, warrant
and agree, jointly and severally, that:
(a) A registration statement on Form S-3 (file number 333-46167),
and amendments thereto, with respect to the Notes has (i) been prepared by
the Company in conformity in all material respects with the requirements
of the United States Securities Act of 1933 (the "Securities Act") and the
rules and regulations (the "Rules and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder, (ii)
been filed with the Commission under the Securities Act and (iii) become
effective under the Securities Act. Copies of such registration statement
and amendments thereto have been delivered by the Company to you as the
representatives (the "Representatives") of the Underwriters. Upon your
written request, but not without your agreement, the Company will also
file a Rule 462(b) Registration Statement in accordance with Rule 462(b).
As used in
<PAGE>
3
this Agreement, "Effective Time" means the date and the time as of which
such registration statement, the most recent post-effective amendment
thereto, if any, or any Rule 462(b) Registration Statement became or
becomes effective; "Effective Date" means the date of the Effective Time;
"Preliminary Prospectus" means each prospectus included in such
registration statement, or amendments thereof, before it became effective
under the Securities Act and any prospectus relating to the Notes filed
with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules and Regulations; "Registration
Statement" means such registration statement, as amended at the Effective
Time, including any documents incorporated by reference therein at such
time and all information contained in the final prospectus relating to the
Notes filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 5(a) hereof and deemed to be a part
of the registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations and, in the event
any Rule 462(b) Registration Statement becomes effective prior to the
First Delivery Date, also means such registration statement as so amended,
unless the context otherwise requires; "Prospectus" means such final
prospectus, as first filed with the Commission pursuant to paragraph (1)
or (4) of Rule 424(b) of the Rules and Regulations; and "Rule 462(b)
Registration Statement" means the registration statement and any
amendments thereto filed pursuant to Rule 462(b) of the Rules and
Regulations relating to the offering covered by the initial Registration
Statement (file number 333-46167). Reference made herein to any
Preliminary Prospectus or to the Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be. The
Commission has not issued any order preventing or suspending the use of
any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus, any
further amendments or supplements to the Registration Statement or the
Prospectus and any Rule 462(b) Registration Statement will, when they
become effective or are filed with the Commission, as the case may be,
conform in all material respects to the requirements of the Securities Act
and the Rules and Regulations and do not and will not, as of the
applicable Effective Time (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a
<PAGE>
4
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for
inclusion therein.
(c) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects to
the requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules and regulations of the Commission thereunder, and none
of such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(d) The Company, each of the Premier Subsidiaries and, as of the
First Delivery Date, each of the Six Flags Subsidiaries have been or will
be, as applicable, duly incorporated and are or will be, as applicable,
validly existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation; each of the Premier
Partnerships and, as of the First Delivery Date, each of the Six Flags
Partnerships (as defined in Section 15) is or will be, as applicable,
validly existing as a limited partnership in good standing under the laws
of their respective jurisdictions of formation; the Company, each of the
Premier Subsidiaries and each of the Premier Partnerships and, as of the
First Delivery Date, each of the Six Flags Subsidiaries and each of the
Six Flags Partnerships are or will be, as applicable, duly qualified to do
business and are or will be, as applicable, in good standing as foreign
entities in each jurisdiction in which their respective ownership or lease
of property or the conduct of their respective businesses requires or will
require, as applicable, such qualification, except where the failure to so
qualify would not have in the aggregate a material adverse effect on the
consolidated financial position, stockholders' equity (or partners'
equity, as applicable), results of operations, business or prospects of
the Company and the Subsidiaries taken as a whole (a "Material Adverse
Effect") and have or will have, as applicable, all corporate or
partnership power and authority, as the case may be, necessary to own or
hold their respective properties and to conduct the businesses in which
they are or will be, as applicable, engaged; none of the subsidiaries (as
defined in Rule 405 of the Rules and Regulations) of the Company
<PAGE>
5
(other than the Subsidiaries) is a "significant subsidiary", as such term
is defined in Rule 405 of the Rules and Regulations; and the assets,
liabilities and operations of such other subsidiaries are immaterial to
the assets, liabilities, operations and prospects of the Company and the
Subsidiaries taken as a whole.
(e) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the description
thereof contained in the Prospectus. All of the issued shares of capital
stock of each Premier Subsidiary (in the case of Walibi, S.A. ("Walibi"),
a Belgian corporation, to our knowledge) have been, and all of the issued
shares of capital stock of each Six Flags Subsidiary, as of the First
Delivery Date, will be, duly and validly authorized and issued and are or
will be, as applicable, fully paid and non-assessable and, except for the
capital stock of Walibi that is subject to the Walibi Tender Offer (as
defined in Section 1(ai)), are or will be, as applicable, owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims except for liens, encumbrances, equities or claims
arising under the Credit Facilities and the subordinated indemnity
agreement among the Company and certain of its affiliates, SFEC and
certain of its affiliates and Time Warner Inc. and certain of its
affiliates dated , 1998 (the "Subordinated Indemnity Agreement"). 100% of
the partnership interest in the Premier Partnerships is held and, as of
the First Delivery Date, 100% of the partnership interest in the Six Flags
Partnerships, except for the 40% general partnership interest in San
Antonio Theme Park, L.P. ("Fiesta Partnership") held by Fiesta Texas Theme
Park, Ltd., the 99% limited partnership interest in Six Flags Over Georgia
II, L.P. (the "Georgia Co-Venture Partnership") indirectly held by
investors in Six Flags Fund, Ltd. (L.P.), of which approximately 75% are
not affiliated with the Company, and the 99% limited partnership interest
in Texas Flags, Ltd. (the "Texas Co-Venture Partnership") indirectly held
by investors in Six Flags Fund II, Ltd. (L.P.), of which approximately %
are not affiliated with the Company, will be, as applicable, held directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims except for liens, encumbrances, equities or claims
under the Credit Facilities and the Co-Venture Parks Agreements (as
defined in Section 15).
(f) The unissued shares of the Stock to be issued and sold by the
Company pursuant to the Common Stock
<PAGE>
6
Offering have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and non-assessable.
(g) This Agreement has been duly authorized, executed and delivered
by the Company, each of the Premier Subsidiaries and each of the Premier
Partnerships that is a party hereto, and, as of the First Delivery Date,
will be duly authorized, executed and delivered by each of the Six Flags
Subsidiaries that is a party hereto.
(h) The execution, delivery and performance of this Agreement, the
Indentures and the Escrow Agreements by the Company and each of the
Subsidiaries that are parties hereto or thereto, and the consummation of
the transactions contemplated hereby and thereby, will not conflict with
or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or assets of the
Company or any of the Subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws or
other constitutive documents of the Company or any of the Subsidiaries or,
assuming that all consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state and foreign securities laws in connection with the purchase and
distribution of the Notes by the Underwriters are obtained, any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries or any of
their properties or assets except, in each case, breaches, violations or
defaults which, in the aggregate, are not reasonably likely to have a
Material Adverse Effect; and except for the registration of the Notes
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act
and applicable state and foreign securities laws in connection with the
purchase and distribution of the Notes by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any
such court or governmental agency or body is required or, with respect to
the Six Flags Subsidiaries will be required, for the execution, delivery
and performance of this Agreement, the Indentures or the Escrow Agreements
by the Company or any of the Subsidiaries
<PAGE>
7
that are parties hereto or thereto and the consummation of the
transactions contemplated hereby and thereby.
(i) Except as disclosed in the Prospectus and as to those rights
which have been duly and validly waived, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under the Securities
Act.
(j) The Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S of,
the Securities Act, other than (i) 121,671 shares issued pursuant to the
Company's acquisition of all of the membership interests of KKI, LLC on
November 7, 1997, (ii) 228,855 shares issued pursuant to the Company's
acquisition of at least 49% of the outstanding capital stock of Walibi on
March , 1998 (the "Walibi Acquisition"), (iii) an aggregate of 450,000
restricted shares issued to the Company's Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer, (iv) 768 shares issued to
certain directors of the Company and (v) shares issued pursuant to the
Company's employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants, which, in each case, are disclosed in the Prospectus.
(k) Neither the Company nor any of the Subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any loss or interference with its business from fire,
explosion, flood, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus, except losses or interferences which will not, in the
aggregate, have a Material Adverse Effect; and, since such date, there has
not been any change in the capital stock other than in connection with the
Premier Merger (as defined in Section 1(ag)) or long-term debt of the
Company or any of the Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs,
<PAGE>
8
management, financial position, stockholders' equity (or partners' equity,
as applicable) or results of operations of the Company and its
Subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(l) The historical financial statements (including the related notes
and supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby at the
dates and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles in the United States (or, in
the case of Walibi, generally accepted accounting principles in Belgium)
applied on a consistent basis throughout the periods involved, and, in the
case of Walibi, have been reconciled to accounting principles generally
accepted in the United States to the extent required by the applicable
accounting requirements of the Securities Act and the Rules and
Regulations. The pro forma financial statements included in the Prospectus
have been prepared on a basis consistent with such historical financial
statements, except for the pro forma adjustments specified therein, and
comply in all material respects with Regulation S-X under the Securities
Act, and the pro forma adjustments have been properly applied to
historical amounts in the compilation of such pro forma financial
statements.
(m) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company, Ernst & Young LLP, who have certified certain
financial statements of SFEC, Coopers & Lybrand, who have certified
certain financial statements of Walibi and Carpenter Mountjoy & Bressler,
who have certified certain financial statements of Kentucky Kingdom, Inc.
("Kentucky Kingdom") whose reports appear in the Prospectus or are
incorporated by reference therein and who have each delivered the
respective initial letters referred to in Section 7(h) hereof, are
independent public accountants as required by the Securities Act and the
Rules and Regulations.
(n) The Company and each of the Subsidiaries (in the case of Walibi,
to our knowledge) have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects
except for such liens arising under the Credit Facilities or contemplated
in Section 1(e) hereof as are described in the Prospectus or such as would
not have a Material Adverse Effect; and all real property and buildings
held under lease by
<PAGE>
9
the Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases, with such exceptions as would not have a Material
Adverse Effect.
(o) The Company and each of the Subsidiaries (in the case of Walibi,
to our knowledge) carry, or are covered by insurance in such amounts and
covering such risks (including the risk of earthquakes) as the Company has
reasonably concluded, based on its experience, is adequate for the conduct
of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses
in similar industries.
(p) The Company and each of the Subsidiaries (in the case of Walibi,
to our knowledge) own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights and
licenses necessary for the conduct of their respective businesses as
presently conducted and, with respect to the Amended and Restated License
Agreement among certain affiliates of Warner Bros., SFTP and the Company
dated February 9, 1998 (the "License Agreement"), as contemplated by the
Prospectus, and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others with such
exceptions as would not have a Material Adverse Effect.
(q) Except as otherwise disclosed in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of
the Subsidiaries is a party or of which any property or assets of the
Company or any of the Subsidiaries is the subject which, if determined
adversely to the Company or any of the Subsidiaries, might have a Material
Adverse Effect or are otherwise required to be disclosed in the
Prospectus; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(r) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(s) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have
not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated
<PAGE>
10
therein by reference as permitted by the Rules and Regulations.
(t) No relationship, direct or indirect, exists between or among the
Company or any Subsidiary on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any Subsidiary on
the other hand, which is required to be described or incorporated by
reference in the Prospectus which is not so described or incorporated by
reference.
(u) No labor disturbance by the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent which
might be reasonably expected to have a Material Adverse Effect.
(v) The Company is and, as of the First Delivery Date, SFEC will be
in compliance in all material respects with all presently and then
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has
occurred or, with respect to SFEC, as of the First Delivery Date will have
occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company or SFEC, as applicable, would have any material
liability; the Company has not incurred and, as of the First Delivery
Date, SFEC will not have incurred and neither the Company expects nor
SFEC, as of the First Delivery Date, will expect to incur material
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company or SFEC, as applicable, would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred or, with
respect to SFEC, as of the First Delivery Date, will have occurred whether
by action or by failure to act, which might reasonably be expected to
cause the loss of such qualification.
(w) The Company and each of the Subsidiaries (in the case of Walibi,
to our knowledge) are in compliance in all respects with (i) all presently
applicable provisions of the Occupational Safety and Health Act of 1970,
as amended, including all applicable regulations thereunder and (ii) all
presently applicable state and local laws and regulations relating to the
safety of its theme park and water park operations, with such exceptions
as would not have a Material Adverse Effect.
<PAGE>
11
(x) The Company has filed and, as of the First Delivery Date, SFEC
and its subsidiaries will have filed all federal, and all material state
and local income and franchise tax returns required to be filed through
the date hereof or the First Delivery Date, as applicable, other than
those filings being contested in good faith. The Company has paid and, as
of the First Delivery Date, SFEC will have paid all taxes of which it has
notice or will have notice, as applicable, are due thereon, other than
those being contested in good faith and for which adequate reserves have
been provided or will have been provided, as applicable, or those
currently payable or payable as of the First Delivery Date, as applicable,
without penalty or interest and no tax deficiency has been determined
adversely to the Company or any of the Subsidiaries which has had, nor
does the Company have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of the Subsidiaries, might be
reasonably expected to have, a Material Adverse Effect.
(y) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted any
securities or (ii) declared or paid any dividend on its capital stock, and
neither the Company nor any of its Subsidiaries has (i) incurred any
material liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business or (ii) entered into any material transaction not in the ordinary
course of business other than the Six Flags Acquisition.
(z) The Company and each of its Subsidiaries (in the case of Walibi,
to our knowledge) (i) make and keep accurate books and records and (ii)
maintain internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to
permit preparation of their financial statements in conformity with
generally accepted accounting principles in the United States (or, in the
case of Walibi, generally accepted accounting principles in Belgium) and
to maintain accountability for their assets, (C) access to their assets is
permitted only in accordance with management's authorization and (D) the
recorded accountability for their assets is compared with existing assets
at reasonable intervals.
(aa) Neither the Company nor any of the Subsidiaries (in the case of
Walibi, to our knowledge) (i) is in violation of its charter or by-laws
(or its partnership agreement, as applicable), (ii) is in
<PAGE>
12
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which it is a party or by which
it is bound or to which any of its properties or assets is subject or
(iii) is in violation in any material respect of any material law,
ordinance, governmental rule, regulation or court decree to which it or
its property or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or to
the conduct of its business.
(ab) Neither the Company nor any of the Subsidiaries (in the case of
Walibi, to our knowledge), nor, to its knowledge, any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or any of the Subsidiaries, has used any corporate or partnership
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(ac) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of
the Subsidiaries (in the case of Walibi, to our knowledge) (or, to the
knowledge of the Company, any of their predecessors in interest) at, upon
or from any of the property now or previously owned or leased by the
Company or the Subsidiaries in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or any of the
Subsidiaries or
<PAGE>
13
with respect to which the Company or any of the Subsidiaries have
knowledge, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not have or would not be
reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes",
"toxic wastes", "hazardous substances" and "medical wastes" shall have the
meanings specified in any applicable local, state, federal and foreign
laws or regulations with respect to environmental protection.
(ad) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act
of 1940 and the rules and regulations of the Commission thereunder.
(ae) At the First Delivery Date, (i) the Six Flags Acquisition shall
be consummated in accordance with the terms of the Agreement and Plan of
Merger dated February 9, 1998 among the Company, Premier Operations,
Premier Parks Merger Corporation, PPStar I, Inc., SFEC and the Sellers
(the "Merger Agreement"), and without any material waiver of any of the
conditions precedent to any of the parties' obligations under the Merger
Agreement, (ii) each of the concurrent offerings by the Company of the
Stock and the PInES shall be consummated, (iii) the offering by SFEC of
the New SFEC Notes shall be consummated immediately following the
Offering, (iv) each of the Credit Facilities shall be in effect and
available for borrowing and (v) no default or event which, with notice or
lapse of time or both, would constitute such a default shall have occurred
and be continuing, or shall result from the transactions contemplated
hereby to occur prior to, concurrently with or immediately following the
consummation of the Offering, under (A) the Merger Agreement, (B) the
Indentures, Premier Operations' 12% Senior Notes due 2003 (the "1995
Premier Notes"), Premier Operations' 9 3/4% Senior Notes due 2007 (the
"1997 Premier Notes"), SFEC's Zero Coupon Notes due 1999 (the "SFEC Zero
Coupon Notes"), SFTP's Senior Subordinated Notes due 2005 (the "SFTP
Senior Subordinated Notes") and the New SFEC Notes, (C) the credit
agreements relating to either of the Credit Facilities or (D) the Stock
Purchase Agreement dated December 15, 1997 between Premier Operations (or
a to be formed Belgian corporation) and Centrag, S.A., Karaba N.V. and
Westkoi N.V. (the "Walibi Agreement").
(af) The statements set forth in the Prospectus under the captions
"Business--Licenses", "Business--Intercompany Services Agreement",
"Business--Tax
<PAGE>
14
Sharing Agreement", "Description of Six Flags Agreement", "Description of
Other Indebtedness," "Description of Capital Stock," "Certain United
States Federal Income Tax Considerations" and "Description of Notes",
insofar as they describe the terms of the agreements and securities
referred to therein, are accurate and fairly present the information
required to be shown.
(ag) The merger (the "Premier Merger") of the company formerly known
as Premier Parks Inc. with a wholly owned subsidiary of Premier Parks
Holdings Corporation has been effected, and, in connection therewith, no
stockholder vote was required under applicable Delaware law and the
Premier Merger otherwise complies in all respects with the General
Corporation Law of the State of Delaware.
(ah) No stockholder vote is required under applicable Delaware law
in connection with the Six Flags Acquisition, and the Six Flags
Acquisition otherwise complies in all respects with the General
Corporation Law of the State of Delaware.
(ai) The Company has effected the Walibi Acquisition and has
commenced a tender offer (the "Walibi Tender Offer") for the remainder of
the outstanding capital stock of Walibi as described in the Prospectus.
(aj) On or prior to the First Delivery Date, the License Agreement,
the Subordinated Indemnity Agreement, the Intercompany Services Agreement
and the Tax Sharing Agreement shall have been entered into by the parties
thereto with the provisions described in the Prospectus.
(ak) The Company has full power and authority to enter into the
Indentures; the Indentures have been duly authorized by the Company; and
on the First Delivery Date, the Indentures will have been duly executed
and delivered by the Company and, assuming due authorization, execution
and delivery of the Indentures by the Trustee, the Indentures will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except that the enforcement
thereof may be subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).
(al) The Company has full power and authority to offer and sell the
Notes; the Notes have been duly
<PAGE>
15
authorized by the Company; and when the Notes are delivered and paid for
pursuant to this Agreement on the First Delivery Date, such Notes will
have been duly executed, authenticated, issued and delivered (assuming due
authentication of the Notes by the Trustee) and, assuming due
authentication of the Notes by the Trustee, such Notes will constitute
valid and legally binding obligations of the Company, entitled to the
benefits of the Indentures and enforceable in accordance with their terms,
except that the enforcement thereof may be subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity
or at law).
(am) The Company has full power and authority to enter into the
Escrow Agreements; the Escrow Agreements have been duly authorized by the
Company; and when duly executed and delivered by the Company (assuming due
authorization, execution and delivery by the Trustee), will be valid and
legally binding obligations of the Company, enforceable against the
Company in accordance with their terms, except that the enforcement
thereof may be subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).
(an) The Indentures, the Escrow Agreements and the Notes conform in
all material respects to the descriptions thereof contained in the
Prospectus.
(ao) Neither the Company nor any Subsidiary has taken, directly or
indirectly, any action which is designed to or which has constituted or
which might reasonably have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the Offering.
(ap) The Indentures shall have been qualified under and will comply
in all material respects with the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
2. Purchase of the Notes by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell to the several
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company, (i) the Company Senior Notes at a purchase price of
100% of the principal amount thereof and
<PAGE>
16
(ii) the Company Senior Discount Notes at a purchase price of __% of the
principal amount at maturity thereof, in each case, plus accrued interest, if
any, from March __, 1998, to the First Delivery Date, the respective principal
amounts of Notes set forth opposite that Underwriter's name in Schedule 1
hereto.
3. Offering of Notes by the Underwriters.
Upon authorization by the Representatives of the release of the
Notes, the several Underwriters propose to offer the Notes for sale upon the
terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Notes. Delivery of and payment
for the Notes shall be made at the office of Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time,
on the fifth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered several Notes in definitive form, registered in the
name of Cede & Co., nominee of The Depository Trust Company ("DTC"), or such
other names as the Underwriters may request upon at least two business days'
notice to the Company (collectively, the "Global Notes") to the Representatives
against payment by the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence (except that the
Company will not be responsible for any delay resulting from any action or
inaction of any Underwriter) and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligations of each
Underwriter hereunder. For the purpose of expediting the checking and packaging
of the Global Notes, the Company shall make the certificates representing the
Global Notes available for inspection by the Representatives in New York, New
York, not later than 2:00 P.M., New York City time, on the business day prior to
the First Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than Commission's close of business on the
second business day following the execution and delivery of this Agreement
or, if applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act; to make no further amendment or any supplement
to the Registration Statement or to the Prospectus and to
<PAGE>
17
file no Rule 462(b) Registration Statement except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been filed
or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with copies
thereof; upon your request, to cause the Rule 462(b) Registration
Statement, properly completed, to be filed with the Commission pursuant to
Rule 462(b) and to provide evidence satisfactory to the Representatives of
such filing; to advise the Representatives, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus, of the suspension of the qualification of the Notes for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its reasonable best efforts to obtain its
withdrawal;
(b) To furnish reasonably promptly to each of the Representatives
and to counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, each amendment thereto
and any Rule 462(b) Registration Statement filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with
the Commission, each amendment thereto (in each case excluding exhibits
other than this Agreement and the computation of per share earnings) and
any Rule 462(b) Registration Statement, (ii) each Preliminary Prospectus,
the Prospectus and any amended or supplemented Prospectus and (iii) any
document incorporated by reference in the Prospectus (excluding exhibits
thereto); and, if the delivery of a prospectus is required at any time
after the Effective Time in connection with the offering or sale of the
Notes or any other securities relating thereto and if at such time any
events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to
<PAGE>
18
make the statements therein, in the light of the circumstances under which
they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Securities Act or
the Exchange Act, to notify the Representatives and, upon their request,
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or
effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus, any Prospectus pursuant to
Rule 424 of the Rules and Regulations or any Rule 462(b) Registration
Statement to furnish a copy thereof to the Representatives and counsel for
the Underwriters and obtain the consent of the Representatives to the
filing;
(f) As soon as practicable after the Effective Date (it being
understood that the Company shall have until at least 410 days after the
end of the Company's current fiscal quarter), to make generally available
to the Company's security holders and to deliver to the Representatives an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the Rules
and Regulations (including, at the option of the Company, Rule 158);
(g) For so long as any of the Notes are outstanding, to deliver
without charge to the Underwriters and the Trustee, promptly upon their
becoming available, copies of (i) all reports or other publicly available
information that the Company shall mail or otherwise make available to its
securities holders and (ii) all reports, financial statements and proxy or
information statements filed by the Company with the Commission or any
national securities exchange and such other publicly available information
concerning the Company or its Subsidiaries;
<PAGE>
19
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Notes for offering
and sale (or obtain an exemption from registration) under the securities
laws of such jurisdictions as the Representatives may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Notes; provided, however, that the
Company shall not be required to qualify as a foreign corporation or a
dealer in securities or to execute a general consent to service of process
in any jurisdiction in any action other than one arising out of the
offering or sale of the Notes;
(i) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (i) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any [debt securities issued or guaranteed by the
Company or any Subsidiary and having a maturity of more than one year from
the date of issue, any] shares of Common Stock or any securities
convertible into or exchangeable for Common Stock (other than the Stock,
the PInES, the Mandatorily Convertible Preferred Stock, the Seller
Depositary Shares, the Seller Convertible Redeemable Preferred Stock,
shares issued pursuant to employee benefit plans, qualified stock option
plans or other employee compensation plans existing on the date hereof or
pursuant to currently outstanding options, warrants or rights or upon the
conversion of the Seller Convertible Redeemable Preferred Stock or the
Mandatorily Convertible Preferred Stock, and other than shares issued by
the Company as consideration to any seller of assets or stock that the
Company or any of the Subsidiaries is acquiring, provided that any shares
so issued to such seller or sellers, including any shares issued after the
date of the Prospectus pursuant to the Walibi Acquisition or the Walibi
Tender Offer, in the aggregate, do not exceed one-[third] of the total
equity of the Company outstanding at the time of the first such issuance,
and further provided that such seller or sellers (other than the sellers
of Walibi) contemporaneously with any such issuance or issuances enter
into an agreement with the Representatives in substantially the same form
as the agreement described in this paragraph (i) for the remainder of the
90 day period), or sell or grant options, rights or warrants with respect
to any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the grant of options pursuant to
option plans existing on the date hereof) or (ii) enter
<PAGE>
20
into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of
such shares of Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or
other securities, in cash or otherwise, in each case without the prior
written consent of Lehman Brothers Inc.; and to cause each officer and
director of the Company and Hanseatic Corporation, Richland Ventures,
L.P., Richland Ventures II, L.P., Lawrence, Tyrrell, Ortale & Smith,
Lawrence, Tyrrell, Ortale & Smith II, L.P., Windcrest Partners, [JG
Partnership, Ltd.,] [J. David Grissom] and Robert J. Gellert (in the case
of Robert J. Gellert only, limited to (A) shares held for his own account
and (B) shares beneficially owned by Lexfor Corporation) to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters, in
form and substance satisfactory to counsel for the Underwriters, pursuant
to which each such person shall agree not to, directly or indirectly,
(iii) offer for sale, sell, pledge or otherwise dispose of (or enter into
any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of) any
shares of Common Stock or any securities convertible into or exchangeable
for Common Stock or (iv) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the
economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (iii) or (iv) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case for a period of 90 days from the date of the
Prospectus, without the prior written consent of Lehman Brothers Inc.;
(j) To take such steps as shall be necessary to ensure that neither
the Company nor any subsidiary shall become an "investment company" within
the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder;
(k) To cause an authorized officer to execute this Agreement on
behalf of each of the Six Flags Subsidiaries on the First Delivery Date;
(l) Not to waive the lock-up agreements executed by the Sellers in
connection with the Six Flags Acquisition whereby each of the Sellers
agreed to not sell any Seller Convertible Redeemable Preferred Stock (or
shares of Common Stock issuable upon conversion thereof) during the period
of 90 days from the date of
<PAGE>
21
the Prospectus, without the prior written consent of Lehman Brothers Inc.;
and
(m) To make an offer to purchase the SFTP Senior Subordinated Notes
following the Six Flags Acquisition in accordance with the provisions of
the indenture for the SFTP Senior Subordinated Notes relating to offers to
purchase the SFTP Senior Subordinated Notes upon a change of control of
SFTP.
(n) In connection with the Offering, until the Representatives shall
have notified the Company and the other Underwriters of the completion of
the resale of the Notes, none of the Company nor any of its affiliates has
or will, either alone or with one or more other persons, bid for or
purchase for any account in which it or any of its affiliates has a
beneficial interest any Notes or attempt to induce any person to purchase
any Notes; and neither it nor any of its affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active trading
in, or of raising the price of, the Notes;
(o) To not take, directly or indirectly, any action which is
designed to stabilize or manipulate, or which constitutes or which might
reasonably be expected to cause or result in stabilization or
manipulation, of the price of any security of the Company in connection
with the offering of the Notes;
(p) Upon the closing of the offering of the Notes, (i) to deposit
with and pledge to the Trustee for the benefit of holders of the Company
Senior Notes $_______ which shall be used to purchase Government
Securities (as defined in the Escrow Agreements) in such amount as will be
sufficient upon receipt of scheduled interest and principal payments of
such securities, in the opinion of a nationally recognized firm of public
accountants selected by the Company, to provide for payment in full of the
Scheduled Interest Payments (as defined in the Senior Note Escrow
Agreement) and (ii) to deposit with and pledge to the Trustee for the
benefit of holders of the Company Senior Discount Notes $_______ which
shall be used to purchase Government Securities. The Company will take all
actions necessary to pledge, assign and set over to the Trustee, for the
benefit of holders of the respective Notes, and irrevocably grant to the
Trustee for the benefit of the holders of the respective Notes a first
priority security interest in all of its right, title and interest in such
Government Securities held by the Trustee or on its behalf, in order to
secure the respective obligations of the Company as set forth in the
Escrow Agreements; and
<PAGE>
22
(q) To use its best efforts to do and perform all things necessary
to perfect, to the extent permitted by law, a first priority security
interest in favor of the Trustee for the benefit of the holders of the
respective Notes, in the Escrow Account and the Restricted Cash Account.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Notes and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
costs of producing and distributing this Agreement, the Indentures, the Escrow
Agreements, the Notes and any other related documents in connection with the
offering, purchase, sale and delivery of the Notes; (e) the filing fees incident
to securing any required review by the National Association of Securities
Dealers, Inc. (the "NASD") of the terms of sale of the Notes; (f) listing or
other fees incident to the inclusion of the Common Stock (including the Stock)
for listing on the New York Stock Exchange; (g) the fees and expenses, if
applicable, of qualifying the Notes under the securities laws of the several
jurisdictions as provided in Section 5(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (h) if one is required pursuant to the rules of
the NASD, all fees and expenses of a qualified independent underwriter; (i) the
fees and expenses of the Trustee including fees and disbursements of counsel)
under the Escrow Agreements; (j) all fees and expenses (including fees and
expenses of counsel) of the Company in connection with approval of the Notes by
DTC for "book-entry" transfer and (k) all other costs and expenses incident to
the performance of the obligations of the Company or any of the Subsidiaries
under this Agreement; provided that, except as provided in this Section 6 and in
Section 11, the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Notes which
they may sell and the expenses of advertising any offering of the Notes made by
the Underwriters.
7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on the First Delivery Date, of the representations and warranties of the
Company, Premier Operations, SFEC and SFTP contained herein, to the
<PAGE>
23
performance by the Company and each of the Subsidiaries that is a party hereto
of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated
or threatened by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to the First Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Latham &
Watkins, counsel for the Underwriters, is material or omits to state a
fact which, in the opinion of such counsel, is material and is required to
be stated therein or is necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Indentures,
the Escrow Agreements, the Notes, the Registration Statement and the
Prospectus, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Underwriters, and the Company shall
have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Baer Marks & Upham LLP shall have furnished to the
Representatives its written opinion, as counsel to the Company, addressed
to the Underwriters and dated the First Delivery Date, in form reasonably
satisfactory to the Representatives, to the effect that:
(i) The Company and each of the Premier Subsidiaries and each
of the Six Flags Subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation; each of the Premier
Partnerships and each of the Six Flags Partnerships is validly
existing as a limited partnership in good standing
<PAGE>
24
under the laws of its jurisdiction of formation; and the Company,
the Premier Subsidiaries, the Premier Partnerships, the Six Flags
Subsidiaries and the Six Flags Partnerships are each duly qualified
to do business and are in good standing as foreign corporations in
each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification except where the failure to so qualify would not have
a Material Adverse Effect and have all corporate or partnership
power and authority necessary to own or hold their respective
properties and conduct the businesses in which they are engaged as
described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of
the Company now outstanding (including the shares of Stock being
delivered on the First Delivery Date) have been duly and validly
authorized and issued, are fully paid and non-assessable and conform
in all material respects to the description thereof contained in the
Prospectus; all of the shares of Stock have been duly authorized
and, when issued and delivered to the Representatives for the
account of each Underwriter against payment therefor as provided
herein, shall be validly issued, fully paid and non-assessable; to
such counsel's knowledge, all of the issued shares of capital stock
of each Premier Subsidiary and each Six Flags Subsidiary have been
duly and validly authorized and issued and are fully paid,
non-assessable and, except for the capital stock of Walibi that is
subject to the Walibi Tender Offer, are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities
or claims, except for liens, encumbrances, equities or claims
arising under the Credit Facilities and the Subordinated Indemnity
Agreement; and 100% of the partnership interest in each of the
Premier Partnerships and each of the Six Flags Partnerships is held
directly or indirectly by the Company, except for the 40% general
partnership interest in Fiesta Partnership held by Fiesta Texas
Theme Park, Ltd., the 99% limited partnership interest in the
Georgia Co-Venture Partnership indirectly held by investors in Six
Flags Fund, Ltd. (L.P.), of which approximately 75% are not
affiliated with the Company, and the 99% limited partnership
interest in the Texas Co-Venture Partnership indirectly held by
investors in Six Flags Funds II, Ltd. (L.P.), of which approximately
% are not
<PAGE>
25
affiliated with the Company, free and clear of all liens,
encumbrances, equities or claims, except for liens, encumbrances,
equities or claims arising under the Credit Facilities and the
Co-Venture Parks Agreements;
(iii) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of,
any shares of the Stock pursuant to the Company's charter or by-laws
or any agreement or other instrument known to such counsel;
(iv) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of the Subsidiaries
is a party or of which any property or assets of the Company or any
of the Subsidiaries is the subject which, if determined adversely to
the Company or any of the Subsidiaries, might have a Material
Adverse Effect; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(v) Based solely upon oral confirmation from the staff of the
Commission, the Registration Statement was declared effective under
the Securities Act as of the date and time specified in such
opinion; the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and no stop
order suspending the effectiveness of the Registration Statement has
been issued and, to the knowledge of such counsel, no proceeding for
that purpose is pending or threatened by the Commission;
(vi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior
to the First Delivery Date (other than the financial statements and
related schedules therein and other financial or statistical data
included therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of
the Securities Act and the Rules and Regulations; and the documents
incorporated by reference in the Prospectus (other than the
financial statements and related schedules therein and other
financial or statistical data included therein, as to which
<PAGE>
26
such counsel need express no opinion), when they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the Commission thereunder;
(vii) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described in
the Prospectus or filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations which have not
been described or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Subsidiaries that is a
party hereto;
(ix) The issue and sale of the Notes being delivered on the
First Delivery Date by the Company and the compliance by the Company
and each of the Subsidiaries that is a party hereto with all of the
provisions of this Agreement, the Escrow Agreements and the
Indentures and the consummation of the transactions contemplated
hereby and by the Six Flags Acquisition (including the offerings of
the Stock and the New SFEC Notes and the entering into of the Six
Flags Credit Facility and any borrowing thereunder in connection
with the Six Flags Acquisition) will not conflict with or result in
a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such
counsel to which the Company or any of the Subsidiaries is a party
or by which the Company or any of the Subsidiaries is bound or to
which any of the property or assets of the Company or any of the
Subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws or other
constitutive documents of the Company or any of the Subsidiaries or,
assuming that all consents, approvals, authorizations, registrations
or qualifications as may be required under the Exchange Act and
applicable state or foreign securities laws in connection with the
purchase and distribution of the Notes by the Underwriters are
obtained, any Federal or New York State statute, the General
Corporation Law of the State of Delaware, or any order, rule or
regulation known to such counsel of any court or governmental agency
or body having
<PAGE>
27
jurisdiction over the Company or any of the Subsidiaries or any of
their properties or assets; and, except for the registration of the
Notes under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state or foreign securities
laws in connection with the purchase and distribution of the Notes
by the Underwriters, no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement, the Indentures or the Escrow
Agreements by the Company or any of the Subsidiaries that is a party
hereto or thereto and the consummation of the transactions
contemplated hereby and thereby;
(x) To the best of such counsel's knowledge, no holders of
securities of the Company have rights to require the Company to
include such securities with the Notes registered pursuant to the
Registration Statement;
(xi) The Company has full power and authority to enter into
the Indentures; the Indentures have been duly authorized, executed
and delivered by the Company and, assuming due authorization,
execution and delivery of the Indentures by the Trustee, the
Indentures constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, except that the
enforcement thereof may be subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law);
(xii) The Company has full power and authority to offer and
sell the Notes; the Notes have been duly authorized, executed,
authenticated, issued and delivered (assuming due authentication of
the Notes by the Trustee) and, assuming due authentication of the
Notes by the Trustee, such Notes constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Indentures and enforceable in accordance with their terms, except
that the enforcement thereof may be subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally and general
<PAGE>
28
equitable principles (whether considered in a proceeding in equity
or at law);
(xiii) The Company has full power and authority to enter into
the Escrow Agreements; the Escrow Agreements have been duly
authorized, executed and delivered by the Company (assuming due
authorization, execution and delivery by the Trustee), and are be
valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms, except that the
enforcement thereof may be subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law);
(xiv) The Indentures, the Escrow Agreements and the Notes
conform in all material respects to the descriptions thereof
contained in the Prospectus; and
(xv) The Indentures have been qualified under and comply in
all material respects with the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the General Corporation Law
of the State of Delaware and that such counsel is not admitted in any
state other than New York; and, in respect of matters of fact, may rely
upon certificates of officers of the Company or the Subsidiaries, provided
that such counsel shall state that it believes that both the Underwriters
and it are justified in relying upon such certificates. Such counsel shall
also have furnished to the Representatives a written statement, addressed
to the Underwriters and dated the First Delivery Date, in form
satisfactory to the Representatives, to the effect that (x) such counsel
has acted as counsel to the Company on a regular basis (although the
Company is also represented with respect to the Walibi Acquisition, the
Walibi Tender Offer, the Six Flags Acquisition, litigation matters,
regulatory matters and certain other matters, by other outside counsel),
has acted as counsel to the Company in connection with financing
transactions since February
<PAGE>
29
1992 and has acted as counsel to the Company in connection with the
preparation of the Registration Statement and (y) based on the foregoing,
no facts have come to the attention of such counsel which lead it to
believe that (I) the Registration Statement (other than the financial
statements and other financial and statistical data contained therein, as
to which such counsel need express no belief), as of the Effective Date,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or that the Prospectus (other than
the financial statements and other financial and statistical data
contained therein, as to which such counsel need express no belief)
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading or (II) any documents incorporated by reference
in the Prospectus (other than the financial statements and other financial
and statistical data contained therein, as to which such counsel need
express no belief) when they were filed with the Commission contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. In rendering
such statement, such counsel may rely upon the opinion and statement
delivered by Weil Gotshal & Manges LLP pursuant to Section 7(e) hereto
with respect to the information covered by such opinion and statement. The
foregoing opinion and statement may be qualified by a statement to the
effect that such counsel does not assume any responsibility for the
accuracy or fairness with respect to the information required to be shown
under the Securities Act and the Rules and Regulations of the statements
contained in the Registration Statement or the Prospectus except for the
statements made in the Prospectus under the captions "Prospectus
Summary--Other Recent Developments--Walibi", "Business--Intercompany
Services Agreement", "Business--Tax Sharing Agreement", "Description of
Other Indebtedness", "Description of Notes", "Description of Capital
Stock", and "Certain United States Federal Income Tax Considerations"
insofar as such statements describe the terms of the Walibi Acquisition
and Walibi Tender Offer, the documents or agreements referred to therein,
the Notes, the Stock, the Seller Convertible Redeemable Preferred Stock,
the Company's other debt instruments or other securities, or the
registration rights referred to therein and concern legal matters.
<PAGE>
30
(e) Weil Gotshal & Manges LLP shall have furnished to the
Representatives its written opinion, as special counsel to the Company,
addressed to the Underwriters and dated the First Delivery Date, in form
reasonably satisfactory to the Representatives, as to certain matters set
forth in Section 7(d) and to the effect that the statements set forth in
the Prospectus under the captions "Business--Licenses" and "Description of
Six Flags Agreement", insofar as such statements describe the terms of the
documents or agreements referred to therein, are accurate, complete and
fair.
In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the General Corporation Law of
the State of Delaware and, in respect of matters of fact, may rely upon
certificates of officers of the Company or the Subsidiaries, provided that such
counsel shall state that it believes that both the Underwriters and it are
justified in relying upon such certificates. Such counsel shall also have
furnished to the Representatives a written statement, addressed to the
Underwriters and dated the First Delivery Date, in form satisfactory to the
Representatives, to the effect that (x) such counsel has acted as counsel to the
Company in connection with the Walibi Acquisition, the Walibi Tender Offer and
the Six Flags Acquisition and has reviewed the information (the "Walibi and Six
Flags Information") in the Registration Statement relating to the Walibi
Acquisition, the Walibi Tender Offer, the Six Flags Acquisition and the business
and operations of Walibi and its subsidiaries and SFEC and its subsidiaries and
(y) based on the foregoing, no facts have come to the attention of such counsel
which lead it to believe that (I) the Registration Statement (other than the
financial statements and other financial and statistical data contained therein,
as to which such counsel need express no belief), as of the Effective Date,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus (other than the financial
statements and other financial and statistical data contained therein, as to
which such counsel need express no belief) contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading or (II) any documents incorporated by
reference in the Prospectus (other than the financial statements and other
financial and statistical data contained therein, as to which such counsel need
express no belief) when they were filed with the Commission contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the
<PAGE>
31
circumstances under which they were made, not misleading. The foregoing
statement may be qualified by a statement to the effect that the statement's
scope is limited to the Walibi and Six Flags Information.
(f) Richards, Layton & Finger shall have furnished to the
Representatives its written opinion, as special Delaware counsel to the
Company, addressed to the Underwriters and dated such Delivery Date, in
form reasonably satisfactory to the Representatives, to the effect that,
in connection with the Premier Merger, no shareholder vote was required
under applicable Delaware law and, in connection with the Six Flags
Acquisition, no shareholder vote is required under applicable Delaware
law, and that the Premier Merger and the Six Flags Acquisition otherwise
comply in all respects with applicable Delaware law.
(g) The Representatives shall have received from Latham & Watkins,
counsel for the Underwriters, such opinion or opinions and such statement
or statements, dated the First Delivery Date, with respect to the issuance
and sale of the Notes, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably require, and
the Company and the Subsidiaries shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(h) At the time of execution of this Agreement, the Representatives
shall have received from (I) KPMG Peat Marwick LLP a letter, in form and
substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of a
date not more than five days prior to the date hereof), the conclusions
and findings of such firm with respect to the financial information and
other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings, except for
the financial information and other matters covered in the letters from
Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler
described immediately hereinafter; (II) Ernst & Young LLP a letter, in
form and substance satisfactory to the Representatives, addressed to the
Underwriters and
<PAGE>
32
dated the date hereof (i) confirming that they are independent accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the
date hereof, the conclusions and findings of such firm with respect to
certain financial information and other matters relating to SFEC and its
subsidiaries as have been previously agreed to by such firm and the
Representatives; (III) Coopers & Lybrand a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and
dated the date hereof (i) confirming that they are independent accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the
date hereof, the conclusions and findings of such firm with respect to
certain financial information and other matters relating to Walibi and its
subsidiaries, as have been previously agreed to by such firm and the
Representatives; and (IV) Carpenter Mountjoy & Bressler a letter, in form
and substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are
independent accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof, the conclusions and
findings of such firm with respect to certain financial information and
other matters relating to Kentucky Kingdom, as have been previously agreed
to by such firm and the Representatives.
(i) With respect to the letters of KPMG Peat Marwick LLP, Ernst &
Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler referred to
in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "initial letters"),
the Company shall have furnished to the Representatives a letter (the
"bring-down letters") of each of such accountants, addressed to the
Underwriters and dated the First Delivery Date (i) confirming that they
are independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or, in
the case of the letter of KPMG Peat Marwick LLP, with respect to matters
involving changes or developments since the respective dates as of which
<PAGE>
33
specified financial information is given in the Prospectus, as of a date
not more than five days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth
in the initial letter.
(j) The Company shall have furnished to the Representatives a
certificate, dated the First Delivery Date, of its Chairman of the Board,
its President or a Vice President and its chief financial officer stating
that:
(i) The representations, warranties and agreements of the
Company and each of Premier Operations, SFEC and SFTP in Section 1
are true and correct as of the First Delivery Date; the Company and
each of the Subsidiaries that is a party hereto have complied with
all their agreements contained herein; and the conditions set forth
in Sections 7(a) and 7(k) have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective
Date, the Registration Statement and Prospectus did not include any
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the Effective Date
no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the
Prospectus.
(k) Since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus there shall not
have been any change in the capital stock (or partners' equity, as
applicable) other than the Premier Merger or long-term debt of the Company
or any of the Subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity (or partners' equity, as
applicable) or results of operations of the Company and its subsidiaries,
otherwise, in each case, than as set forth or contemplated in the
Prospectus, the effect of which, in any such case, is, in the judgment of
the Representatives, so material (to the Company and its Subsidiaries,
taken as a whole) and adverse as to make it impracticable or inadvisable
to proceed with the
<PAGE>
34
public offering or the delivery of the Notes being delivered on the First
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(l) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's
debt securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes of
Rule 436(g)(2) of the Rules and Regulations and (ii) no such organization
shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of the Company's
debt securities.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii)
a banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment
of a majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Notes
being delivered on the First Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(n) The Six Flags Acquisition shall have been or shall be
consummated concurrently with the Offering and without any material waiver
of any of the conditions precedent to any of the parties' obligations
under the Merger Agreement.
(o) Each of the offerings by the Company of the Stock and the PInES
shall have been or shall be consummated concurrently with the Offering.
<PAGE>
35
(p) The offering by SFEC of the New SFEC Notes shall be consummated
immediately following the Offering.
(q) Each of the Premier Credit Facility and the Six Flags Credit
Facility shall be in effect and available for borrowing.
(r) No default or event which, with notice or lapse of time or both,
would constitute such a default shall have occurred and be continuing, or
would result from the transactions contemplated hereby to occur prior to,
concurrently with or immediately following the consummation of the
Offering, under (i) the Merger Agreement, (ii) the indentures relating to
any of the Company Senior Discount Notes, the Company Senior Notes, the
1995 Premier Notes, the 1997 Premier Notes, the SFEC Zero Coupon Notes,
the SFTP Senior Subordinated Notes and the New SFEC Notes, (iii) the
credit agreement relating to either the Premier Credit Facility or the Six
Flags Credit Facility or (iv) the Walibi Agreement.
(s) The Premier Merger shall have been consummated.
(t) Each of (i) the License Agreement, (ii) the Subordinated
Indemnity Agreement, (iii) the Intercompany Services Agreement and (iv)
the Tax Sharing Agreement shall have been entered into by the parties
thereto with the provisions described in the Prospectus.
(u) An authorized officer shall have executed this Agreement on
behalf of each of the Six Flags Subsidiaries.
(v) The Company and the Trustee shall have entered into the
Indentures and the Escrow Agreements and the Underwriters shall have
received counterparts, conformed as executed, thereof and the Notes shall
have been duly executed and delivered by the Company and authenticated by
the Trustee.
(w) After the First Delivery Date, no lien will exist upon the
Restricted Cash Account and Escrow Account (and no right or option to
acquire the same will exist in favor of any other person or entity),
except for the pledge and security interest in favor of the Trustee to be
created or provided for in the Escrow Agreements, which pledge and
security interest constitute a first priority perfected pledge and
security interest in and to the Restricted Cash Account and Escrow
Account.
<PAGE>
36
(x) The Underwriters shall have received an opinion of a nationally
recognized firm of public accountants selected by the Company, which
provides that the amount of proceeds deposited with the Trustee pursuant
to the Senior Note Escrow Agreement is of an amount that will be
sufficient upon receipt of scheduled interest and principal payments of
Government Securities purchased thereunder to provide for payment in full
of the Scheduled Interest Payments.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and scope reasonably satisfactory to
counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company and the Subsidiaries that are parties hereto,
jointly and severally, shall indemnify and hold harmless each Underwriter
(including any Underwriter in its role as qualified independent underwriter
pursuant to the rules of the NASD), its officers and employees and each person,
if any, who controls any Underwriter within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Notes), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto or (B) in any blue sky application or other document prepared
or executed by the Company (or based upon any written information furnished by
the Company) specifically for the purpose of qualifying any or all of the Notes
under the securities laws of any jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky Application"), (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Notes or the Offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company and the
Subsidiaries that are parties hereto shall not be liable under this clause (iii)
to the extent
<PAGE>
37
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct), and shall
reimburse each Underwriter and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company and the Subsidiaries that are parties hereto shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application, in reliance upon and in
conformity with written information concerning any Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein; and provided further that with respect to
any such untrue statement or omission made in the Preliminary Prospectus, the
indemnity agreement contained in this Section 8(a) shall not enure to the
benefit of the Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased the Notes concerned if, to the extent
that such sale was an initial sale by such Underwriter and any such loss, claim,
damage or liability of such Underwriter is a result of the fact that both (A) a
copy of the Prospectus was not sent or given to such person at or prior to the
written confirmation of the sale of such Notes to such person, and (B) the
untrue statement or omission in the Preliminary Prospectus was corrected in the
Prospectus unless, in either case, such failure to deliver the Prospectus was a
result of noncompliance by the Company with Section 5(c). The foregoing
indemnity agreement is in addition to any liability which the Company or any of
the Subsidiaries that are parties hereto may otherwise have to any Underwriter
or to any officer, employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company and the Subsidiaries that are parties hereto, each of
their respective officers and employees, each of their respective directors, and
each person, if any, who controls the Company or any Subsidiary that is a party
hereto within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or any Subsidiary that is a party hereto or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage,
<PAGE>
38
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, and shall reimburse the Company, any such Subsidiary and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company, any such Subsidiary or any such director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Underwriter may otherwise have to the Company, any such
Subsidiary, or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable
<PAGE>
39
costs of investigation; provided, however, that the Representatives shall have
the right, upon written notice to the Company, to employ counsel to represent
jointly the Representatives and those other Underwriters and their respective
officers, employees and controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Underwriters against the Company and the Subsidiaries that are parties hereto
under this Section 8 if, in the reasonable judgment of the Representatives, it
is advisable for the Representatives and those Underwriters, officers, employees
and controlling persons to be jointly represented by separate counsel, and in
that event the reasonable fees and expenses of such separate counsel shall be
paid, jointly and severally, by the Company and the Subsidiaries that are
parties hereto. It is understood that the indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm of attorneys (in addition to any local counsel)
at any one time for all such indemnified party or parties. No indemnifying party
shall (i) without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
the consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(c) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Subsidiaries that are parties hereto on the one
hand and the Underwriters on the other from the offering of the Notes or (ii) if
the allocation provided by clause (i) above is not
<PAGE>
40
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Subsidiaries that are parties hereto on the one
hand and the Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Subsidiaries that are parties
hereto on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Notes purchased under this Agreement (before deducting
expenses) received by the Company on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Notes purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the Notes under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. For purposes of the preceding two sentences, the net proceeds deemed
to be received by the Company shall be deemed to be also for the benefit of the
Subsidiaries that are parties hereto and information supplied by the Company
shall also be deemed to have been supplied by the Subsidiaries that are parties
hereto. The Company, the Subsidiaries that are parties hereto and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were to be determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8(d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Notes underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the
<PAGE>
41
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 8(d) are several in proportion to their
respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company and the
Subsidiaries that are parties hereto acknowledge that the statements with
respect to the public offering of the Notes by the Underwriters set forth in the
first and last paragraphs on the cover page of, the legend concerning
stabilization on the third page of and statements under the caption
"Underwriting" including but not limited to the concession and reallowance
figures, the Prospectus constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Notes which the
defaulting Underwriter agreed but failed to purchase on the First Delivery Date
in the respective proportions which the aggregate principal amount of Notes set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total aggregate principal amount of Notes set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Notes on the First Delivery Date if the total
aggregate principal amount of Notes which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total aggregate principal amount of Notes to be purchased on the First Delivery
Date, and any remaining non-defaulting Underwriter shall not be obligated to
purchase more than 110% of the aggregate principal amount of Notes which it
agreed to purchase on the First Delivery Date pursuant to the terms of Section
2. If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Notes to be purchased
on the First Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting Underwriter or Underwriters agreed but failed to purchase on the
First Delivery Date, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Company, except that
<PAGE>
42
the Company will continue to be liable for the payment of expenses to the extent
set forth in Section 6. As used in this Agreement, the term "Underwriter"
includes, for all purposes of this Agreement unless the context requires
otherwise, any party not listed in Schedule 1 hereto who, pursuant to this
Section 9, purchases Notes which a defaulting Underwriter agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Notes of a defaulting
or withdrawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Notes if, prior to that time,
any of the events described in Sections 7(k), 7(l) or 7(m) shall have occurred
or if the Underwriters shall decline to purchase the Notes for any reason
permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If the Company shall
fail to tender the Notes for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled (other than by reason of any events described in Section 7(m)
except for the suspension of trading or minimum prices of the securities of the
Company), the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Notes, and promptly following demand the Company shall pay the full amount
thereof to the Representatives. If this Agreement is terminated pursuant to
Section 9 by reason of the default of one or more Underwriters, the Company
shall not be obligated to reimburse any defaulting Underwriter on account of
those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman
<PAGE>
43
Brothers Inc., Three World Financial Center, New York, New York 10285,
Attention: Syndicate Department (Fax: 212-526-6588), with a copy, in the
case of any notice pursuant to Section 8(c), to the Director of
Litigation, Office of the General Counsel, Lehman Brothers Inc., 3 World
Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company or any of the Subsidiaries, shall be delivered
or sent by mail, telex or facsimile transmission to 122 East 42nd Street,
49th Floor, New York, NY 10168, Attention: Kieran E. Burke (Fax:
212-949-6203);
provided, however, that any notice to a Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the
Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, the
Subsidiaries that are parties hereto and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and
agreements of the Company and the applicable Subsidiaries contained in this
Agreement shall also be deemed to be for the benefit of the officers and
employees of each Underwriter and the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Underwriters contained in Section 8(b) of this
Agreement shall be deemed to be for the benefit of directors of the Company,
officers of the Company who have signed the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the applicable Subsidiaries and the
Underwriters contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and
<PAGE>
44
payment for the Notes and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
15. Definition of the Terms "Business Day", "Premier Subsidiary",
"Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership",
"Subsidiary" and "Co-Venture Parks Agreements". For purposes of this Agreement,
(a) "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) "Premier Subsidiary" means each of Premier Operations,
Walibi, Funtime Parks, Inc., an Ohio corporation, Funtime, Inc., an Ohio
corporation, Wyandot Lake, Inc., an Ohio corporation, Darien Lake Theme Park and
Camping Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware
corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier City
Properties, Inc., an Oklahoma corporation, Stuart Amusement Company, a
Massachusetts corporation, Premier Waterworld Concord Inc., a California
corporation, Premier Waterworld Sacramento Inc., a California corporation,
Premier Parks of Colorado Inc., a Colorado corporation, Great Escape Holding
Inc., a New York corporation, Great Escape LLC, a New York limited liability
company, Great Escape Theme Park LLC, a New York limited liability company,
Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside Park
Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware limited
liability company, Park Management Corp., a California corporation, Indiana
Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio
corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier
International Holdings, Inc., a Delaware corporation and [other Premier entities
held in corporate form and as limited liability companies], (c) "Premier
Partnership" means each of Frontier City Partners, Limited Partnership, an
Oklahoma limited partnership, Elitch Gardens, L.P., a Colorado limited
partnership and [other Premier entities held as limited partnerships], (d) "Six
Flags Subsidiary" means each of SFEC, SFTP and [other Six Flags entities held in
corporate form or as limited liability companies], (e) "Six Flags Partnership"
means each of Fiesta Partnership, the Georgia Co-Venture Partnership, the Texas
Co-Venture Partnership and [other Six Flags entities held as limited
partnerships], (f) "Subsidiary" means each of the Premier Subsidiaries, the
Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships;
provided, however, that the term "Subsidiary" shall include the Six Flags
Subsidiaries and the Six Flags Partnerships only as of and after the First
Delivery Date, and "Co-Venture Parks Agreements" means (i) the Overall
Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.),
Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia,
<PAGE>
45
Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG
Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of
Georgia, Inc., SFTP and SFEC and the Related Agreements (as defined therein),
(ii) the Overall Agreement, dated as of November 24, 1997, among Six Flags Over
Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd.,
SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six
Flags Over Texas, Inc., SFTP and SFEC and the Related Agreements (as defined
therein), and (iii) the Lease Agreement with Option to Purchase, dated as of
March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership,
San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and the
Transaction Documents (as defined therein), in each case, as the same may be
modified or amended from time to time.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
46
If the foregoing correctly sets forth the agreement among the
Company, the Subsidiaries that are parties hereto and the Underwriters, please
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
Premier Parks Inc.
By
--------------------------------
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Subsidiaries (as listed
in Section 15 but not
including Walibi)
By
--------------------------------
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Partnerships (as listed
in Section 15)
By Each of their respective
General Partners
By
--------------------------------
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Six Flags Subsidiaries (as
listed in Section 15)
By
--------------------------------
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
Accepted:
<PAGE>
47
Lehman Brothers Inc.
Salomon Brothers Inc
NationsBanc Montgomery Securities LLC
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By Lehman Brothers Inc.
By
--------------------------------
Authorized Representative
<PAGE>
SCHEDULE 1
Aggregate
Principal Amount
at Maturity of
Company Senior
Underwriters Discount Notes
- ------------ --------------
Lehman Brothers Inc...............................
Salomon Brothers Inc..............................
NationsBanc Montgomery Securities LLC.............
----------
Total......................................... ==========
Aggregate
Principal Amount
of Company Senior
Underwriters Notes
- ------------ -----------------
Lehman Brothers Inc...............................
Salomon Brothers Inc..............................
NationsBanc Montgomery Securities LLC.............
----------
Total......................................... ==========
<PAGE>
L&W Draft--3/23/98
Exhibit 1(f)
SIX FLAGS ENTERTAINMENT CORPORATION
PREMIER PARKS INC.
$170,000,000 _% Senior Notes due 2006
UNDERWRITING AGREEMENT
, 1998
Lehman Brothers Inc.
Salomon Brothers Inc
NationsBanc Montgomery Securities LLC
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Six Flags Entertainment Corporation, a Delaware corporation
("SFEC"), proposes to sell to the several Underwriters (the "Offering") named on
Schedule 1 hereto (the "Underwriters") $170,000,000 __% Senior Notes due 2006 of
the Company (the "Notes"). The Notes will be fully and unconditionally
guaranteed (the "Guarantee" on a fully subordinated basis by Premier Parks Inc.,
a Delaware corporation (the "Company"). The Notes are to be issued under an
indenture, to be entered into and to be dated as of _______, 1998 (the
"Indenture") between the Company, SFEC and The Bank of New York, as Trustee. In
addition, SFEC will enter into a pledge, escrow and disbursement agreement (the
"Escrow Agreement") which will secure certain of the Company's and SFEC's
obligations under the Notes.
It is also understood by all parties that SFEC is undertaking the
Offering in connection with the Company's acquisition (the "Six Flags
Acquisition") from the current stockholders (the "Sellers") of all of the
capital stock of SFEC, and that, in connection with the Six Flags Acquisition,
the Company is concurrently offering (the "Common Stock Offering"), with the
over-allotment option, _______ shares of its Common Stock (the "Stock"),
$________ million aggregate principal amount at maturity of its senior discount
notes due
<PAGE>
2
2008 (the "Company Senior Discount Notes") with estimated gross proceeds of $250
million, $280 million aggregate principal amount of its senior notes due 2006
(the "Company Senior Notes") and, with the over-allotment option, 5,750,000
Premium Income Equity Securities ("PInES") representing interests in the
Company's mandatorily convertible preferred stock (the "Mandatorily Convertible
Preferred Stock") with estimated gross proceeds of $228.2 million. In addition,
it is understood by all parties that Six Flags Theme Parks Inc. ("SFTP") is
concurrently entering into a new $472 million senior secured credit facility
(the "Six Flags Credit Facility") under a credit agreement dated the date of
this Agreement among it, certain of the Six Flags Subsidiaries (as defined in
Section 15) and Lehman Commercial Paper, Inc., and Premier Operations Inc.
("Premier Operations") has entered into a $300 million senior secured credit
facility (the "Premier Credit Facility" and, together with the Six Flags Credit
Facility, the "Credit Facilities") under a credit agreement among the Company,
certain of the Premier Subsidiaries and Premier Partnerships (each as defined in
Section 15) and Lehman Commercial Paper, Inc. It is further understood by all
parties that, concurrently with the Offering, the Company may issue depositary
shares (the "Seller Depositary Shares") representing interests in up to $200
million of the Company's convertible redeemable preferred stock (the "Seller
Convertible Redeemable Preferred Stock") to the Sellers as part of the
consideration for the Six Flags Acquisition.
1. Representations, Warranties and Agreements of the Company, SFEC
and Certain of the Subsidiaries. The Company and Premier Operations (as to
themselves and their subsidiaries) and, SFEC and SFTP (as to themselves and
their subsidiaries) represent, warrant and agree, jointly and severally, that:
(a) A registration statement on Form S-3 (file number 333-46897),
and amendments thereto, with respect to the Notes has (i) been prepared by
the Company and SFEC in conformity in all material respects with the
requirements of the United States Securities Act of 1933 (the "Securities
Act") and the rules and regulations (the "Rules and Regulations") of the
United States Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities Act
and (iii) become effective under the Securities Act. Copies of such
registration statement and amendments thereto have been delivered by the
Company and SFEC to you as the representatives (the "Representatives") of
the Underwriters. Upon your written request, but not without your
agreement, the Company and SFEC will also file a Rule 462(b) Registration
Statement in accordance with Rule 462(b). As used in this Agreement,
<PAGE>
3
"Effective Time" means the date and the time as of which such registration
statement, the most recent post-effective amendment thereto, if any, or
any Rule 462(b) Registration Statement became or becomes effective;
"Effective Date" means the date of the Effective Time; "Preliminary
Prospectus" means each prospectus included in such registration statement,
or amendments thereof, before it became effective under the Securities Act
and any prospectus relating to the Notes filed with the Commission by the
Company and SFEC with the consent of the Representatives pursuant to Rule
424(a) of the Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time, including any
documents incorporated by reference therein at such time and all
information contained in the final prospectus relating to the Notes filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations
in accordance with Section 5(a) hereof and deemed to be a part of the
registration statement as of the Effective Time pursuant to paragraph (b)
of Rule 430A of the Rules and Regulations and, in the event any Rule
462(b) Registration Statement becomes effective prior to the First
Delivery Date, also means such registration statement as so amended,
unless the context otherwise requires; "Prospectus" means such final
prospectus, as first filed with the Commission pursuant to paragraph (1)
or (4) of Rule 424(b) of the Rules and Regulations; and "Rule 462(b)
Registration Statement" means the registration statement and any
amendments thereto filed pursuant to Rule 462(b) of the Rules and
Regulations relating to the offering covered by the initial Registration
Statement (file number 333-46897). Reference made herein to any
Preliminary Prospectus or to the Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be. The
Commission has not issued any order preventing or suspending the use of
any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus, any
further amendments or supplements to the Registration Statement or the
Prospectus and any Rule 462(b) Registration Statement will, when they
become effective or are filed with the Commission, as the case may be,
conform in all material respects to the requirements of the Securities Act
and the Rules and Regulations and do not and will not, as of the
applicable Effective Time (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a
<PAGE>
4
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company and SFEC
through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects to
the requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules and regulations of the Commission thereunder, and none
of such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(d) The Company, each of the Premier Subsidiaries and, each of the
Six Flags Subsidiaries have been duly incorporated and are validly
existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation; each of the Premier
Partnerships and each of the Six Flags Partnerships (as defined in Section
15) is validly existing as a limited partnership in good standing under
the laws of their respective jurisdictions of formation; the Company, each
of the Premier Subsidiaries and each of the Premier Partnerships and each
of the Six Flags Subsidiaries and each of the Six Flags Partnerships are
duly qualified to do business and are in good standing as foreign entities
in each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification, except where the failure to so qualify would not have in
the aggregate a material adverse effect on the consolidated financial
position, stockholders' equity (or partners' equity, as applicable),
results of operations, business or prospects of the Company and the
Subsidiaries taken as a whole and the Six Flags Subsidiaries taken as a
whole (a "Material Adverse Effect") and have or will have, as applicable,
all corporate or partnership power and authority, as the case may be,
necessary to own or hold their respective properties and to conduct the
businesses in which they are or will be, as applicable, engaged; none of
the subsidiaries (as defined in Rule 405 of the Rules and Regulations) of
the Company (other than the Subsidiaries) and none of the subsidiaries of
SFEC (other than the remaining Six Flags Subsidiaries) is a "significant
subsidiary", as such term is defined in Rule 405 of the Rules and
<PAGE>
5
Regulations; and the assets, liabilities and operations of such other
subsidiaries are immaterial to the assets, liabilities, operations and
prospects of the Company, and the Subsidiaries taken as a whole and the
Six Flags Subsidiaries taken as a whole.
(e) The Company and SFEC has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock of
the Company and SFEC have been duly and validly authorized and issued, are
fully paid and non-assessable and conform in all material respects to the
description thereof contained in the Prospectus. All of the issued shares
of capital stock of each Premier Subsidiary (in the case of Walibi, S.A.
("Walibi"), a Belgian corporation, to our knowledge) have been, and all of
the issued shares of capital stock of each Six Flags Subsidiary, has been
duly and validly authorized and issued, are fully paid and non-assessable
and, except for the capital stock of Walibi that is subject to the Walibi
Tender Offer (as defined in Section 1(ai)), are owned directly or
indirectly by the Company and SFEC, as the case may be, free and clear of
all liens, encumbrances, equities or claims except for liens,
encumbrances, equities or claims arising under the Credit Facilities and
the subordinated indemnity agreement among the Company and certain of its
affiliates, SFEC and certain of its affiliates and Time Warner Inc. and
certain of its affiliates dated , 1998 (the "Subordinated Indemnity
Agreement"). 100% of the partnership interest in the Premier Partnerships
is held and, as of the First Delivery Date, 100% of the partnership
interest in the Six Flags Partnerships, except for the 40% general
partnership interest in San Antonio Theme Park, L.P. ("Fiesta
Partnership") held by Fiesta Texas Theme Park, Ltd., the 99% limited
partnership interest in Six Flags Over Georgia II, L.P. (the "Georgia
Co-Venture Partnership") indirectly held by investors in Six Flags Fund,
Ltd. (L.P.), of which approximately 75% are not affiliated with the
Company, and the 99% limited partnership interest in Texas Flags, Ltd.
(the "Texas Co-Venture Partnership") indirectly held by investors in Six
Flags Fund II, Ltd. (L.P.), of which approximately % are not affiliated
with the Company, will be, as applicable, held directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or claims
except for liens, encumbrances, equities or claims under the Credit
Facilities and the Co-Venture Parks Agreements (as defined in Section 15).
(f) The unissued shares of the Stock to be issued and sold by the
Company pursuant to the Common Stock Offering have been duly and validly
authorized and, when issued and delivered against payment therefor as
<PAGE>
6
provided herein, will be duly and validly issued, fully paid and
non-assessable.
(g) This Agreement has been duly authorized, executed and delivered
by the Company, SFEC, each of the Premier Subsidiaries and each of the
Premier Partnerships that is a party hereto, and, has been duly
authorized, executed and delivered by each of the Six Flags Subsidiaries
that is a party hereto.
(h) The execution, delivery and performance of this Agreement, the
Indenture and the Escrow Agreement by the Company and each of the
Subsidiaries that are parties hereto or thereto, and the consummation of
the transactions contemplated hereby and thereby, will not conflict with
or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or assets of the
Company or any of the Subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws or
other constitutive documents of the Company or any of the Subsidiaries or,
assuming that all consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state and foreign securities laws in connection with the purchase and
distribution of the Notes by the Underwriters are obtained, any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries or any of
their properties or assets except, in each case, breaches, violations or
defaults which, in the aggregate, are not reasonably likely to have a
Material Adverse Effect; and except for the registration of the Notes
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act
and applicable state and foreign securities laws in connection with the
purchase and distribution of the Notes by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any
such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement, the Indenture or the Escrow
Agreement by the Company or any of the Subsidiaries that are parties
hereto or thereto and the consummation of the transactions contemplated
hereby and thereby.
(i) Except as disclosed in the Prospectus and as to those rights
which have been duly and validly waived, there are no contracts,
agreements or
<PAGE>
7
understandings between the Company, SFEC and any person granting such
person the right to require the Company and SFEC to file a registration
statement under the Securities Act with respect to any securities of the
Company and SFEC owned or to be owned by such person or to require the
Company and SFEC to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company and SFEC under the Securities Act.
(j) The Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S of,
the Securities Act, other than (i) 121,671 shares issued pursuant to the
Company's acquisition of all of the membership interests of KKI, LLC on
November 7, 1997, (ii) 228,855 shares issued pursuant to the Company's
acquisition of at least 49% of the outstanding capital stock of Walibi on
March , 1998 (the "Walibi Acquisition"), (iii) an aggregate of 450,000
restricted shares issued to the Company's Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer, (iv) 768 shares issued to
certain directors of the Company and (v) shares issued pursuant to the
Company's employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants, which, in each case, are disclosed in the Registration
Statement.
(k) Neither the Company nor any of the Subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Registration Statement, any loss or interference with its business from
fire, explosion, flood, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Registration Statement, except losses or interferences which will not, in
the aggregate, have a Material Adverse Effect; and, since such date, there
has not been any change in the capital stock other than in connection with
the Premier Merger (as defined in Section 1(ag)) or long-term debt of the
Company or any of the Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity (or partners' equity, as applicable) or results of
operations of the Company and the Subsidiaries, otherwise than as set
forth or contemplated in the Registration Statement.
<PAGE>
8
(l) The historical financial statements (including the related notes
and supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby at the
dates and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles in the United States (or, in
the case of Walibi, generally accepted accounting principles in Belgium)
applied on a consistent basis throughout the periods involved, and, in the
case of Walibi, have been reconciled to accounting principles generally
accepted in the United States to the extent required by the applicable
accounting requirements of the Securities Act and the Rules and
Regulations. The pro forma financial statements included in the Prospectus
have been prepared on a basis consistent with such historical financial
statements, except for the pro forma adjustments specified therein, and
comply in all material respects with Regulation S-X under the Securities
Act, and the pro forma adjustments have been properly applied to
historical amounts in the compilation of such pro forma financial
statements.
(m) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company, Ernst & Young LLP, who have certified certain
financial statements of SFEC, Coopers & Lybrand, who have certified
certain financial statements of Walibi and Carpenter Mountjoy & Bressler,
who have certified certain financial statements of Kentucky Kingdom, Inc.
("Kentucky Kingdom") whose reports appear in the Registration Statement or
are incorporated by reference therein and who have each delivered the
respective initial letters referred to in Section 7(h) hereof, are
independent public accountants as required by the Securities Act and the
Rules and Regulations.
(n) The Company and each of the Subsidiaries (in the case of Walibi,
to our knowledge) have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects
except for such liens arising under the Credit Facilities or contemplated
in Section 1(e) hereof as are described in the Registration Statement or
such as would not have a Material Adverse Effect; and all real property
and buildings held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases, with such
exceptions as would not have a Material Adverse Effect.
<PAGE>
9
(o) The Company and each of the Subsidiaries (in the case of Walibi,
to our knowledge) carry, or are covered by insurance in such amounts and
covering such risks (including the risk of earthquakes) as the Company and
SFEC has reasonably concluded, based on their respective experience, is
adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in
similar businesses in similar industries.
(p) The Company and each of the Subsidiaries (in the case of Walibi,
to our knowledge) own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights and
licenses necessary for the conduct of their respective businesses as
presently conducted and, with respect to the Amended and Restated License
Agreement among certain affiliates of Warner Bros., SFTP and the Company
dated February 9, 1998 (the "License Agreement"), as contemplated by the
Prospectus, and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others with such
exceptions as would not have a Material Adverse Effect.
(q) Except as otherwise disclosed in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of
the Subsidiaries is a party or of which any property or assets of the
Company or any of the Subsidiaries is the subject which, if determined
adversely to the Company or any of the Subsidiaries, might have a Material
Adverse Effect or are otherwise required to be disclosed in the
Prospectus; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(r) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(s) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have
not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as permitted
by the Rules and Regulations.
<PAGE>
10
(t) No relationship, direct or indirect, exists between or among the
Company or any Subsidiary on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any Subsidiary on
the other hand, which is required to be described or incorporated by
reference in the Prospectus which is not so described or incorporated by
reference.
(u) No labor disturbance by the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company or SFEC, is imminent
which might be reasonably expected to have a Material Adverse Effect.
(v) The Company and SFEC are in compliance in all material respects
with all presently and then applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company or SFEC, as
applicable, would have any material liability; the Company or SFEC have
not incurred and neither the Company nor SFEC expects, to incur material
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company or SFEC, as applicable, would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred whether by
action or by failure to act, which might reasonably be expected to cause
the loss of such qualification.
(w) The Company and each of the Subsidiaries (in the case of Walibi,
to our knowledge) are in compliance in all respects with (i) all presently
applicable provisions of the Occupational Safety and Health Act of 1970,
as amended, including all applicable regulations thereunder and (ii) all
presently applicable state and local laws and regulations relating to the
safety of its theme park and water park operations, with such exceptions
as would not have a Material Adverse Effect.
(x) The Company, SFEC and their subsidiaries have filed all federal,
and all material state and local income and franchise tax returns required
to be filed through the date hereof other than those filings being
contested in good faith. The Company and SFEC have paid all taxes of which
each of them has notice are due thereon, other than those being contested
in good faith and for which adequate reserves have been provided or
<PAGE>
11
those currently payable without penalty or interest and no tax deficiency
has been determined adversely to the Company or any of the Subsidiaries
which has had, nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of the
Subsidiaries, might be reasonably expected to have, a Material Adverse
Effect.
(y) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Registration Statement, neither the Company nor SFEC has
(i) issued or granted any securities or (ii) declared or paid any dividend
on its capital stock, and neither the Company nor any of its Subsidiaries
has (i) incurred any material liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred in
the ordinary course of business or (ii) entered into any material
transaction not in the ordinary course of business other than the Six
Flags Acquisition.
(z) The Company and each of its Subsidiaries (in the case of Walibi,
to our knowledge) (i) make and keep accurate books and records and (ii)
maintain internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to
permit preparation of their financial statements in conformity with
generally accepted accounting principles in the United States (or, in the
case of Walibi, generally accepted accounting principles in Belgium) and
to maintain accountability for their assets, (C) access to their assets is
permitted only in accordance with management's authorization and (D) the
recorded accountability for their assets is compared with existing assets
at reasonable intervals.
(aa) Neither the Company nor any of the Subsidiaries (in the case of
Walibi, to our knowledge) (i) is in violation of its charter or by-laws
(or its partnership agreement, as applicable), (ii) is in default in any
material respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets is subject or (iii) is in
violation in any material respect of any material law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject or has failed to
<PAGE>
12
obtain any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its
property or to the conduct of its business.
(ab) Neither the Company nor any of the Subsidiaries (in the case of
Walibi, to our knowledge), nor, to its knowledge, any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or any of the Subsidiaries, has used any corporate or partnership
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(ac) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of
the Subsidiaries (in the case of Walibi, to our knowledge) (or, to the
knowledge of the Company or SFEC, any of their predecessors in interest)
at, upon or from any of the property now or previously owned or leased by
the Company or the Subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which
would require remedial action under any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit, except for any violation or
remedial action which would not have, or could not be reasonably likely to
have, singularly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or any of the
Subsidiaries or with respect to which the Company or any of the
Subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or
would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and the terms "hazardous
wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall
have the meanings specified in any applicable local, state,
<PAGE>
13
federal and foreign laws or regulations with respect to environmental
protection.
(ad) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act
of 1940 and the rules and regulations of the Commission thereunder.
(ae) At the First Delivery Date, (i) the Six Flags Acquisition shall
be consummated in accordance with the terms of the Agreement and Plan of
Merger dated February 9, 1998 among the Company, Premier Operations,
Premier Parks Merger Corporation, PPStar I, Inc., SFEC and the Sellers
(the "Merger Agreement"), and without any material waiver of any of the
conditions precedent to any of the parties' obligations under the Merger
Agreement, (ii) each of the concurrent offerings by the Company of the
Stock, Company Senior Notes, Company Discount Notes and the PInES shall be
consummated, (iii) the offering by SFEC of the Notes shall be consummated
immediately following Offering of the Stock, (iv) each of the Credit
Facilities shall be in effect and available for borrowing and (v) no
default or event which, with notice or lapse of time or both, would
constitute such a default shall have occurred and be continuing, or shall
result from the transactions contemplated hereby to occur prior to,
concurrently with or immediately following the consummation of the
Offering, under (A) the Merger Agreement, (B) the indentures relating to
the Company Senior Notes, the Company Discount Notes, Premier Operations'
12% Senior Notes due 2003 (the "1995 Premier Notes"), Premier Operations'
9 3/4% Senior Notes due 2007 (the "1997 Premier Notes"), SFEC's Zero
Coupon Notes due 1999 (the "SFEC Zero Coupon Notes"), SFTP's Senior
Subordinated Notes due 2005 (the "SFTP Senior Subordinated Notes") and the
Notes, (C) the credit agreements relating to either of the Credit
Facilities or (D) the Stock Purchase Agreement dated December 15, 1997
between Premier Operations (or a to be formed Belgian corporation) and
Centrag, S.A., Karaba N.V. and Westkoi N.V. (the "Walibi Agreement").
(af) The statements set forth in the Prospectus under the captions
"Business--Licenses", "Certain Transactions", "Description of Six Flags
Agreement", "Description of Other Company Indebtedness", and "Description
of Notes", insofar as they describe the terms of the agreements and
securities referred to therein, are accurate and fairly present the
information required to be shown.
(ag) The merger (the "Premier Merger") of the company formerly known
as Premier Parks Inc. with a wholly owned subsidiary of Premier Parks
Holdings
<PAGE>
14
Corporation has been effected, and, in connection therewith, no
stockholder vote was required under applicable Delaware law and the
Premier Merger otherwise complies in all respects with the General
Corporation Law of the State of Delaware.
(ah) No stockholder vote is required under applicable Delaware law
in connection with the Six Flags Acquisition, and the Six Flags
Acquisition otherwise complies in all respects with the General
Corporation Law of the State of Delaware.
(ai) The Company has effected the Walibi Acquisition and has
commenced a tender offer (the "Walibi Tender Offer") for the remainder of
the outstanding capital stock of Walibi as described in the Prospectus.
(aj) the License Agreement, the Subordinated Indemnity Agreement,
the Intercompany Services Agreement and the Tax Sharing Agreement shall
have been entered into by the parties thereto with the provisions
described in the Prospectus.
(ak) The Company and SFEC have full power and authority to enter
into the Indenture; the Indenture has been duly authorized by the Company
and SFEC; and the Indenture will have been duly executed and delivered by
the Company and SFEC and, assuming due authorization, execution and
delivery of the Indenture by the Trustee, the Indenture will constitute
valid and legally binding obligations of the Company and SFEC, enforceable
in accordance with its terms, except that the enforcement thereof may be
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered in a
proceeding in equity or at law).
(al) SFEC has full power and authority to offer and sell the Notes;
the Notes have been duly authorized by SFEC; and when the Notes are
delivered and paid for pursuant to this Agreement on the First Delivery
Date; such Notes will have been duly executed, authenticated, issued and
delivered (assuming due authentication of the Notes by the Trustee) and,
assuming due authentication of the Notes by the Trustee, such Notes will
constitute valid and legally binding obligations of SFEC, entitled to the
benefits of the Indenture and enforceable in accordance with its terms,
except that the enforcement thereof may be subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general
<PAGE>
15
equitable principles (whether considered in a proceeding in equity or at
law).
(am) The SFEC has full power and authority to enter into the Escrow
Agreement; the Escrow Agreement has been duly authorized by SFEC; and when
duly executed and delivered by SFEC (assuming due authorization, execution
and delivery by the Trustee), will be valid and legally binding
obligations of SFEC, enforceable against SFEC in accordance with its
terms, except that the enforcement thereof may be subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity
or at law).
(an) The Indenture, the Escrow Agreement, the Guarantee and the
Notes conform in all material respects to the descriptions thereof
contained in the Prospectus.
(ao) Neither the Company nor any Subsidiary has taken, directly or
indirectly, any action which is designed to or which has constituted or
which might reasonably have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
or SFEC in connection with the Offering.
(ap) The Indenture shall have been qualified under and will comply
in all material respects with the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
(aq) The Guarantee endorsed on the Notes has been duly authorized by
the Company, and, when the Notes are executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid
for by the Underwriters in accordance with this Agreement, the Guarantee
will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms and will be
entitled to the benefits of the Indenture, except that the enforcement
thereof may be subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).
2. Purchase of the Notes by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, SFEC agrees to sell to the several Underwriters
and each of
<PAGE>
16
the Underwriters, severally and not jointly, agrees to purchase from SFEC, (i)
the Notes at a purchase price of 100% of the principal amount thereof plus
accrued interest, if any, from March __, 1998, to the First Delivery Date, the
respective principal amounts of Notes set forth opposite that Underwriter's name
in Schedule 1 hereto.
3. Offering of Notes by the Underwriters.
Upon authorization by the Representatives of the release of the
Notes, the several Underwriters propose to offer the Notes for sale upon the
terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Notes. Delivery of and payment
for the Notes shall be made at the office of Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, NY 10019, at 10:00 A.M., New York City time,
on the fifth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company or SFEC shall
deliver or cause to be delivered Notes in definitive form, registered in the
name of Cede & Co., nominee of The Depository Trust Company ("DTC"), or such
other names as the Underwriters may request upon at least two business days'
notice to SFEC (collectively, the "Global Notes") to the Representatives against
payment by the Company or SFEC of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence (except that the
Company or SFEC will not be responsible for any delay resulting from any action
or inaction of any Underwriter) and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligations of each
Underwriter hereunder. For the purpose of expediting the checking and packaging
of the Global Notes, the Company or SFEC shall make the certificates
representing the Global Notes available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
5. Further Agreements of the Company and SFEC. Each of the Company
and SFEC, jointly and not severally, agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than Commission's close of business on the
second business day following the execution and delivery of this Agreement
or, if applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities
<PAGE>
17
Act; to make no further amendment or any supplement to the Registration
Statement or to the Prospectus and to file no Rule 462(b) Registration
Statement except as permitted herein; to advise the Representatives,
promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish the Representatives with copies thereof; upon your request, to
cause the Rule 462(b) Registration Statement, properly completed, to be
filed with the Commission pursuant to Rule 462(b) and to provide evidence
satisfactory to the Representatives of such filing; to advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Notes for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, to use
promptly its reasonable best efforts to obtain its withdrawal;
(b) To furnish reasonably promptly to each of the Representatives
and to counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, each amendment thereto
and any Rule 462(b) Registration Statement filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with
the Commission, each amendment thereto (in each case excluding exhibits
other than this Agreement and the computation of per share earnings) and
any Rule 462(b) Registration Statement, (ii) each Preliminary Prospectus,
the Prospectus and any amended or supplemented Prospectus and (iii) any
document incorporated by reference in the Prospectus (excluding exhibits
thereto); and, if the delivery of a prospectus is required at any time
after the Effective Time in connection with the offering or sale of the
Notes or any other securities relating thereto and if at such time any
events shall have occurred as a result of which the Prospectus as then
amended or supplemented
<PAGE>
18
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Securities Act or the Exchange Act, to notify the
Representatives and, upon their request, to file such document and to
prepare and furnish without charge to each Underwriter and to any dealer
in securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company the Representatives,
be required by the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus, any Prospectus pursuant to
Rule 424 of the Rules and Regulations or any Rule 462(b) Registration
Statement to furnish a copy thereof to the Representatives and counsel for
the Underwriters and obtain the consent of the Representatives to the
filing;
(f) As soon as practicable after the Effective Date (it being
understood that the Company and SFEC shall have until at least 410 days
after the end of the Company's current fiscal quarter), to make generally
available to the Company's and SFEC's security holders and to deliver to
the Representatives an earnings statement of the Company and SFEC and
their subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company Rule 158);
(g) For so long as any of the Notes are outstanding, to deliver
without charge to the Underwriters and the Trustee, promptly upon their
becoming available, copies of (i) all reports or other publicly available
information that the Company or SFEC shall mail or otherwise make
available to its securities holders and (ii) all reports, financial
statements and proxy or information statements filed by
<PAGE>
19
the Company or SFEC with the Commission or any national securities
exchange and such other publicly available information concerning the
Company or the Subsidiaries;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Notes for offering
and sale (or obtain an exemption from registration) under the securities
laws of such jurisdictions as the Representatives may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Notes; provided, however, that the
Company and SFEC shall not be required to qualify as a foreign corporation
or a dealer in securities or to execute a general consent to service of
process in any jurisdiction in any action other than one arising out of
the offering or sale of the Notes;
(i) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, sell, contract to sell, grant any option to
purchase, issue any instrument convertible into or exchangeable for, or
otherwise transfer or dispose of, any debt securities of any of the Six
Flags Subsidiaries having a maturity of more than one year from the date
of issue of such securities, except with the prior written consent of
Lehman Brothers Inc;
(j) To take such steps as shall be necessary to ensure that neither
the Company, SFEC nor any of their subsidiaries shall become an
"investment company" within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of the Commission
thereunder;
(k) To cause an authorized officer to execute this Agreement on
behalf of each of the Six Flags Subsidiaries on the First Delivery Date;
(l) Not to waive the lock-up agreements executed by the Sellers in
connection with the Six Flags Acquisition whereby each of the Sellers
agreed to not sell any Seller Convertible Redeemable Preferred Stock (or
shares of Common Stock issuable upon conversion thereof) during the period
of 90 days from the date of the Prospectus, without the prior written
consent of Lehman Brothers Inc.; and
(m) To make an offer to purchase the SFTP Senior Subordinated Notes
following the Six Flags Acquisition in accordance with the provisions of
the indenture for the SFTP Senior Subordinated Notes relating to offers
<PAGE>
20
to purchase the SFTP Senior Subordinated Notes upon a change of control of
SFTP.
(n) In connection with the Offering, until the Representatives shall
have notified the Company and SFEC and the other Underwriters of the
completion of the resale of the Notes, none of the Company, SFEC nor any
of their affiliates has or will, either alone or with one or more other
persons, bid for or purchase for any account in which it or any of its
affiliates has a beneficial interest any Notes or attempt to induce any
person to purchase any Notes; and neither it nor any of its affiliates
will make bids or purchases for the purpose of creating actual, or
apparent, active trading in, or of raising the price of, the Notes;
(o) To not take, directly or indirectly, any action which is
designed to stabilize or manipulate, or which constitutes or which might
reasonably be expected to cause or result in stabilization or
manipulation, of the price of any security of SFEC in connection with the
offering of the Notes;
(p) Upon the closing of the offering of the Notes, to deposit with
and pledge to the Trustee for the benefit of holders of the Notes $_______
which shall be used to purchase Government Securities (as defined in the
Escrow Agreement) in such amount as will be sufficient upon receipt of
scheduled interest and principal payments of such securities, in the
opinion of a nationally recognized firm of public accountants selected by
the Company, to provide for payment in full at maturity of the SFEC Zero
Coupon Senior Notes. SFEC will take all actions necessary to pledge,
assign and set over to the Trustee, for the benefit of holders of the
Notes, and irrevocably grant to the Trustee for the benefit of the holders
of the Notes a first priority security interest in all of its right, title
and interest in such Government Securities held by the Trustee or on its
behalf, in order to secure the respective obligations of SFEC as set forth
in the Escrow Agreement; and
(q) To use its best efforts to do and perform all things necessary
to perfect, to the extent permitted by law, a first priority security
interest in favor of the Trustee for the benefit of the holders of the
respective Notes, in the Escrow Account.
6. Expenses. The Company and SFEC agree to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Notes and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits
<PAGE>
21
thereto; (c) the costs of distributing the Registration Statement as originally
filed and each amendment thereto and any post-effective amendments thereof
(including, in each case, exhibits), any Preliminary Prospectus, the Prospectus
and any amendment or supplement to the Prospectus or any document incorporated
by reference therein, all as provided in this Agreement; (d) the costs of
producing and distributing this Agreement, the Indenture, the Escrow Agreement,
the Notes and any other related documents in connection with the offering,
purchase, sale and delivery of the Notes; (e) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of sale of the Notes; (f) listing or other fees
incident to the inclusion of the Common Stock (including the Stock) for listing
on the New York Stock Exchange; (g) the fees and expenses, if applicable, of
qualifying the Notes under the securities laws of the several jurisdictions as
provided in Section 5(h) and of preparing, printing and distributing a Blue Sky
Memorandum (including related fees and expenses of counsel to the Underwriters);
(h) if one is required pursuant to the rules of the NASD, all fees and expenses
of a qualified independent underwriter; (i) the fees and expenses of the Trustee
including fees and disbursements of counsel) under the Escrow Agreement; (j) all
fees and expenses (including fees and expenses of counsel) of SFEC in connection
with approval of the Notes by DTC for "book-entry" transfer and (k) all other
costs and expenses incident to the performance of the obligations of the Company
or any of the Subsidiaries under this Agreement; provided that, except as
provided in this Section 6 and in Section 11, the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Notes which they may sell and the expenses of advertising
any offering of the Notes made by the Underwriters.
7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on the First Delivery Date, of the representations and warranties of the
Company, Premier Operations, SFEC and SFTP contained herein, to the performance
by the Company and each of the Subsidiaries that is a party hereto of its
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated
or threatened by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement or
<PAGE>
22
the Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to the First Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Latham &
Watkins, counsel for the Underwriters, is material or omits to state a
fact which, in the opinion of such counsel, is material and is required to
be stated therein or is necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Indenture, the
Escrow Agreement, the Notes, the Registration Statement and the
Prospectus, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Underwriters, and the Company and
SFEC shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(d) Baer Marks & Upham LLP shall have furnished to the
Representatives its written opinion, as counsel to the Company, addressed
to the Underwriters and dated the First Delivery Date, in form reasonably
satisfactory to the Representatives, to the effect that:
(i) The Company and each of the Premier Subsidiaries and each
of the Six Flags Subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation; each of the Premier
Partnerships and each of the Six Flags Partnerships is validly
existing as a limited partnership in good standing under the laws of
its jurisdiction of formation; and the Company, the Premier
Subsidiaries, the Premier Partnerships, the Six Flags Subsidiaries
and the Six Flags Partnerships are each duly qualified to do
business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification except where the failure to so qualify would not have
a Material Adverse Effect and have all corporate or partnership
power and authority necessary to own
<PAGE>
23
or hold their respective properties and conduct the businesses in
which they are engaged as described in the Prospectus;
(ii) Each of the Company and SFEC has an authorized
capitalization as set forth in the Prospectus, and all of the issued
shares of capital stock of the Company now outstanding (including
the shares of Stock being delivered on the First Delivery Date) have
been duly and validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the
description thereof contained in the Prospectus; all of the shares
of Stock have been duly authorized and, when issued and delivered to
the Representatives for the account of each Underwriter against
payment therefor as provided herein and in the Registration
Statement, shall be validly issued, fully paid and non-assessable;
to such counsel's knowledge, all of the issued shares of capital
stock of each Premier Subsidiary and each Six Flags Subsidiary have
been duly and validly authorized and issued and are fully paid,
non-assessable and, except for the capital stock of Walibi that is
subject to the Walibi Tender Offer, are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities
or claims, except for liens, encumbrances, equities or claims
arising under the Credit Facilities and the Subordinated Indemnity
Agreement; and 100% of the partnership interest in each of the
Premier Partnerships and each of the Six Flags Partnerships is held
directly or indirectly by the Company, except for the 40% general
partnership interest in Fiesta Partnership held by Fiesta Texas
Theme Park, Ltd., the 99% limited partnership interest in the
Georgia Co-Venture Partnership indirectly held by investors in Six
Flags Fund, Ltd. (L.P.), of which approximately 75% are not
affiliated with the Company, and the 99% limited partnership
interest in the Texas Co-Venture Partnership indirectly held by
investors in Six Flags Funds II, Ltd. (L.P.), of which approximately
% are not affiliated with the Company, free and clear of all liens,
encumbrances, equities or claims, except for liens, encumbrances,
equities or claims arising under the Credit Facilities and the
Co-Venture Parks Agreements;
(iii) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of,
any shares of the Stock pursuant to the Company's and
<PAGE>
24
SFEC's charter or by-laws or any agreement or other instrument known
to such counsel;
(iv) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of the Subsidiaries
is a party or of which any property or assets of the Company or any
of the Subsidiaries is the subject which, if determined adversely to
the Company or any of the Subsidiaries, might have a Material
Adverse Effect; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(v) Based solely upon oral confirmation from the staff of the
Commission, the Registration Statement was declared effective under
the Securities Act as of the date and time specified in such
opinion; the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and no stop
order suspending the effectiveness of the Registration Statement has
been issued and, to the knowledge of such counsel, no proceeding for
that purpose is pending or threatened by the Commission;
(vi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company or
SFEC prior to the First Delivery Date (other than the financial
statements and related schedules therein and other financial or
statistical data included therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and the Rules and
Regulations; and the documents incorporated by reference in the
Prospectus (other than the financial statements and related
schedules therein and other financial or statistical data included
therein, as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder;
(vii) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described in
the Prospectus or filed as exhibits to the Registration Statement by
<PAGE>
25
the Securities Act or by the Rules and Regulations which have not
been described or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Subsidiaries that is a
party hereto;
(ix) The issue and sale of the Notes being delivered on the
First Delivery Date by SFEC (including, without limitation, the
Guarantee) and the compliance by the Company and each of the
Subsidiaries that is a party hereto with all of the provisions of
this Agreement, the Escrow Agreement and the Indenture and the
consummation of the transactions contemplated hereby and by the Six
Flags Acquisition (including the offerings of the Stock, the Company
Senior Notes and Company Discount Notes and the entering into of the
Six Flags Credit Facility and any borrowing thereunder in connection
with the Six Flags Acquisition) will not conflict with or result in
a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such
counsel to which the Company or any of the Subsidiaries is a party
or by which the Company or any of the Subsidiaries is bound or to
which any of the property or assets of the Company or any of the
Subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws or other
constitutive documents of the Company or any of the Subsidiaries or,
assuming that all consents, approvals, authorizations, registrations
or qualifications as may be required under the Exchange Act and
applicable state or foreign securities laws in connection with the
purchase and distribution of the Notes by the Underwriters are
obtained, any Federal or New York State statute, the General
Corporation Law of the State of Delaware, or any order, rule or
regulation known to such counsel of any court or governmental agency
or body having jurisdiction over the Company or any of the
Subsidiaries or any of their properties or assets; and, except for
the registration of the Notes under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications
as may be required under the Exchange Act and applicable state or
foreign securities laws in connection with the purchase and
distribution of the Notes by the Underwriters,
<PAGE>
26
no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement, the Indenture or the Escrow Agreement by the Company or
any of the Subsidiaries that is a party hereto or thereto and the
consummation of the transactions contemplated hereby and thereby;
and
(x) To the best of such counsel's knowledge, no holders of
securities of the Company or SFEC have rights to require the Company
or SFEC to include such securities with the Notes registered
pursuant to the Registration Statement.
(xi) The Company and SFEC have full power and authority to
enter into the Indenture; the Indenture has been duly authorized,
executed and delivered by the Company and SFEC and, assuming due
authorization, execution and delivery of the Indenture by the
Trustee, the Indenture constitutes valid and legally binding
obligations of the Company and SFEC, enforceable in accordance with
its terms, except that the enforcement thereof may be subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
(xii) SFEC has full power and authority to offer and sell the
Notes; the Notes have been duly authorized, executed, authenticated,
issued and delivered (assuming due authentication of the Notes by
the Trustee) and, assuming due authentication of the Notes by the
Trustee, such Notes constitute valid and legally binding obligations
of the Company and SFEC, entitled to the benefits of the Indenture
and enforceable in accordance with their terms, except that the
enforcement thereof may be subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law).
(xiii) SFEC has full power and authority to enter into the
Escrow Agreement; the Escrow Agreement has been duly authorized,
executed and delivered by SFEC (assuming due authorization,
execution and delivery by the Trustee), and is a valid and legally
binding obligation of SFEC,
<PAGE>
27
enforceable against SFEC in accordance with its terms, except that
the enforcement thereof may be subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law).
(xiv) The Indenture, the Escrow Agreement and the Notes
conform in all material respects to the descriptions thereof
contained in the Prospectus.
(xv) The Indenture has been qualified under and comply in all
material respects with the Trust Indenture Act.
(xvi) The Guarantee endorsed on the Notes has been duly
authorized by the Company, and, when the Notes are executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with
this Agreement, the Guarantee will constitute the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms and will be entitled to the benefits of
the Indenture, except that the enforcement thereof may be subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
[Perfection opinions relating to the
Escrow Accounts to come]
In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the General Corporation Law
of the State of Delaware and that such counsel is not admitted in any
state other than New York; and, in respect of matters of fact, may rely
upon certificates of officers of the Company or the Subsidiaries, provided
that such counsel shall state that it believes that both the Underwriters
and it are justified in relying upon such certificates. Such counsel shall
also have furnished to the Representatives a written statement, addressed
to the Underwriters and dated the First Delivery Date, in form
satisfactory to the Representatives, to the effect that (x) such counsel
has acted as counsel to the Company on a regular basis
<PAGE>
28
(although the Company is also represented with respect to the Walibi
Acquisition, the Walibi Tender Offer, the Six Flags Acquisition,
litigation matters, regulatory matters and certain other matters, by other
outside counsel), has acted as counsel to the Company in connection with
financing transactions since February 1992 and has acted as counsel to the
Company in connection with the preparation of the Registration Statement
and (y) based on the foregoing, no facts have come to the attention of
such counsel which lead it to believe that (I) the Registration Statement
(other than the financial statements and other financial and statistical
data contained therein, as to which such counsel need express no belief),
as of the Effective Date, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or that
the Prospectus (other than the financial statements and other financial
and statistical data contained therein, as to which such counsel need
express no belief) contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading or (II) any documents
incorporated by reference in the Prospectus (other than the financial
statements and other financial and statistical data contained therein, as
to which such counsel need express no belief) when they were filed with
the Commission contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. In rendering such statement, such counsel may rely upon the
opinion and statement delivered by Weil Gotshal & Manges LLP pursuant to
Section 7(e) hereto with respect to the information covered by such
opinion and statement. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does not assume
any responsibility for the accuracy or fairness with respect to the
information required to be shown under the Securities Act and the Rules
and Regulations of the statements contained in the Registration Statement
or the Prospectus except for the statements made in the Prospectus under
the captions "Prospectus Summary--Other Recent Developments--Walibi",
"Certain Transactions", "Description of Other Company Indebtedness" and
"Description of Notes", insofar as such statements describe the terms of
the Walibi Acquisition and Walibi Tender Offer, the documents or
agreements referred to therein, the Notes, the Stock, the Seller
Convertible Redeemable Preferred Stock, the Company's other debt
instruments or other securities,
<PAGE>
29
or the registration rights referred to therein and concern legal matters.
(e) Weil Gotshal & Manges LLP shall have furnished to the
Representatives its written opinion, as special counsel to the Company,
addressed to the Underwriters and dated the First Delivery Date, in form
reasonably satisfactory to the Representatives, as to certain matters set
forth in Section 7(d) and to the effect that the statements set forth in
the Prospectus under the captions "Business--Licenses" and "Description of
Six Flags Agreement", insofar as such statements describe the terms of the
documents or agreements referred to therein, are accurate, complete and
fair.
In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the General Corporation Law of
the State of Delaware and, in respect of matters of fact, may rely upon
certificates of officers of the Company or the Subsidiaries, provided that such
counsel shall state that it believes that both the Underwriters and it are
justified in relying upon such certificates. Such counsel shall also have
furnished to the Representatives a written statement, addressed to the
Underwriters and dated the First Delivery Date, in form satisfactory to the
Representatives, to the effect that (x) such counsel has acted as counsel to the
Company in connection with the Walibi Acquisition, the Walibi Tender Offer and
the Six Flags Acquisition and has reviewed the information (the "Walibi and Six
Flags Information") in the Registration Statement relating to the Walibi
Acquisition, the Walibi Tender Offer, the Six Flags Acquisition and the business
and operations of Walibi and its subsidiaries and SFEC and its subsidiaries and
(y) based on the foregoing, no facts have come to the attention of such counsel
which lead it to believe that (I) the Registration Statement (other than the
financial statements and other financial and statistical data contained therein,
as to which such counsel need express no belief), as of the Effective Date,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus (other than the financial
statements and other financial and statistical data contained therein, as to
which such counsel need express no belief) contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading or (II) any documents incorporated by
reference in the Prospectus (other than the financial statements and other
financial and statistical data contained therein, as to which such counsel need
express no belief) when they were filed
<PAGE>
30
with the Commission contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
foregoing statement may be qualified by a statement to the effect that the
statement's scope is limited to the Walibi and Six Flags Information.
(f) Richards, Layton & Finger shall have furnished to the
Representatives its written opinion, as special Delaware counsel to the
Company, addressed to the Underwriters and dated such Delivery Date, in
form reasonably satisfactory to the Representatives, to the effect that,
in connection with the Premier Merger, no shareholder vote was required
under applicable Delaware law and, in connection with the Six Flags
Acquisition, no shareholder vote is required under applicable Delaware
law, and that the Premier Merger and the Six Flags Acquisition otherwise
comply in all respects with applicable Delaware law.
(g) The Representatives shall have received from Latham & Watkins,
counsel for the Underwriters, such opinion or opinions and such statement
or statements, dated the First Delivery Date, with respect to the issuance
and sale of the Notes, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably require, and
the Company and the Subsidiaries shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(h) At the time of execution of this Agreement, the Representatives
shall have received from (I) KPMG Peat Marwick LLP a letter, in form and
substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of a
date not more than five days prior to the date hereof), the conclusions
and findings of such firm with respect to the financial information and
other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings, except for
the financial information and other matters covered in the letters from
Ernst & Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler
described
<PAGE>
31
immediately hereinafter; (II) Ernst & Young LLP a letter, in form and
substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are
independent accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof, the conclusions and
findings of such firm with respect to certain financial information and
other matters relating to SFEC and its subsidiaries as have been
previously agreed to by such firm and the Representatives; (III) Coopers &
Lybrand a letter, in form and substance satisfactory to the
Representatives, addressed to the Underwriters and dated the date hereof
(i) confirming that they are independent accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation
S-X of the Commission and (ii) stating, as of the date hereof, the
conclusions and findings of such firm with respect to certain financial
information and other matters relating to Walibi and its subsidiaries, as
have been previously agreed to by such firm and the Representatives; and
(IV) Carpenter Mountjoy & Bressler a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and
dated the date hereof (i) confirming that they are independent accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the
date hereof, the conclusions and findings of such firm with respect to
certain financial information and other matters relating to Kentucky
Kingdom, as have been previously agreed to by such firm and the
Representatives.
(i) With respect to the letters of KPMG Peat Marwick LLP, Ernst &
Young LLP, Coopers & Lybrand and Carpenter Mountjoy & Bressler referred to
in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "initial letters"),
the Company shall have furnished to the Representatives a letter (the
"bring-down letters") of each of such accountants, addressed to the
Underwriters and dated the First Delivery Date (i) confirming that they
are independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-
<PAGE>
32
down letter (or, in the case of the letter of KPMG Peat Marwick LLP, with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by the initial
letter and (iii) confirming in all material respects the conclusions and
findings set forth in the initial letter.
(j) The Company and SFEC shall have furnished to the Representatives
a certificate, dated the First Delivery Date, of its Chairman of the
Board, its President or a Vice President and its chief financial officer
stating that:
(i) The representations, warranties and agreements of the
Company and each of Premier Operations, SFEC and SFTP in Section 1
are true and correct as of the First Delivery Date; the Company and
each of the Subsidiaries that is a party hereto have complied with
all their agreements contained herein; and the conditions set forth
in Sections 7(a) and 7(k) have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective
Date, the Registration Statement and Prospectus did not include any
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the Effective Date
no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the
Prospectus.
(k) Since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus there shall not
have been any change in the capital stock (or partners' equity, as
applicable) other than the Premier Merger or long-term debt of the Company
or any of the Subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity (or partners' equity, as
applicable) or results of operations of the Company and its subsidiaries,
otherwise, in each case, than as set forth or contemplated in the
Prospectus, the effect of which, in any such case, is, in the judgment of
the
<PAGE>
33
Representatives, so material (to the Company and its Subsidiaries, taken
as a whole) and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Notes being
delivered on the First Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's or
SFEC's debt securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes of
Rule 436(g)(2) of the Rules and Regulations and (ii) no such organization
shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of any of the Company's or
SFEC's debt securities.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the
Company or SFEC on any exchange or in the over-the-counter market, shall
have been suspended or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii)
a banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment
of a majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Notes
being delivered on the First Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(n) The Six Flags Acquisition shall have been or shall be
consummated concurrently with the Offering and without any material waiver
of any of the conditions precedent to any of the parties' obligations
under the Merger Agreement.
<PAGE>
34
(o) Each of the offerings by the Company of the Stock and the PInES
shall have been or shall be consummated concurrently with the Offering.
(p) Each of the Premier Credit Facility and the Six Flags Credit
Facility shall be in effect and available for borrowing.
(q) No default or event which, with notice or lapse of time or both,
would constitute such a default shall have occurred and be continuing, or
would result from the transactions contemplated hereby to occur prior to,
concurrently with or immediately following the consummation of the
Offering, under (i) the Merger Agreement, (ii) the indentures relating to
any of the Company Senior Discount Notes, the Company Senior Notes, the
1995 Premier Notes, the 1997 Premier Notes, the SFEC Zero Coupon Notes,
the SFTP Senior Subordinated Notes and the SFEC, (iii) the credit
agreement relating to either the Premier Credit Facility or the Six Flags
Credit Facility or (iv) the Walibi Agreement.
(r) The Premier Merger shall have been consummated.
(s) Each of (i) the License Agreement, (ii) the Subordinated
Indemnity Agreement, (iii) the Intercompany Services Agreement and (iv)
the Tax Sharing Agreement shall have been entered into by the parties
thereto with the provisions described in the Prospectus.
(t) An authorized officer shall have executed this Agreement on
behalf of each of the Six Flags Subsidiaries.
(u) The Company and the Trustee shall have entered into the
Indenture and the Escrow Agreement and the Underwriters shall have
received counterparts, conformed as executed, thereof and the Notes shall
have been duly executed and delivered by the Company and authenticated by
the Trustee.
(v) After the First Delivery Date, no lien will exist upon the
Escrow Account (and no right or option to acquire the same will exist in
favor of any other person or entity), except for the pledge and security
interest in favor of the Trustee to be created or provided for in the
Escrow Agreement, which pledge and security interest constitutes a first
priority perfected pledge and security interest in and to the Escrow
Account.
<PAGE>
35
(w) The Underwriters shall have received an opinion of a nationally
recognized firm of public accountants selected by the Company, which
provides that the amount of proceeds deposited with the Trustee pursuant
to the Senior Note Escrow Agreement is of an amount that will be
sufficient upon receipt of scheduled interest and principal payments of
Government Securities purchased thereunder to defease the SFEC Zero Coupon
Senior Notes.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and scope reasonably satisfactory to
counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company and the Subsidiaries that are parties hereto,
jointly and severally, shall indemnify and hold harmless each Underwriter
(including any Underwriter in its role as qualified independent underwriter
pursuant to the rules of the NASD), its officers and employees and each person,
if any, who controls any Underwriter within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Notes), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto or (B) in any blue sky application or other document prepared
or executed by the Company (or based upon any written information furnished by
the Company) specifically for the purpose of qualifying any or all of the Notes
under the securities laws of any jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky Application"), (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Notes or the Offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company and the
<PAGE>
36
Subsidiaries that are parties hereto shall not be liable under this clause (iii)
to the extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct), and
shall reimburse each Underwriter and each such officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company and the Subsidiaries that are parties hereto shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application, in reliance upon and in
conformity with written information concerning any Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein; and provided further that with respect to
any such untrue statement or omission made in the Preliminary Prospectus, the
indemnity agreement contained in this Section 8(a) shall not enure to the
benefit of the Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased the Notes concerned if, to the extent
that such sale was an initial sale by such Underwriter and any such loss, claim,
damage or liability of such Underwriter is a result of the fact that both (A) a
copy of the Prospectus was not sent or given to such person at or prior to the
written confirmation of the sale of such Notes to such person, and (B) the
untrue statement or omission in the Preliminary Prospectus was corrected in the
Prospectus unless, in either case, such failure to deliver the Prospectus was a
result of noncompliance by the Company or SFEC with Section 5(c). The foregoing
indemnity agreement is in addition to any liability which the Company or any of
the Subsidiaries that are parties hereto may otherwise have to any Underwriter
or to any officer, employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company and the Subsidiaries that are parties hereto, each of
their respective officers and employees, each of their respective directors, and
each person, if any, who controls the Company or any Subsidiary that is a party
hereto within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or any Subsidiary that
<PAGE>
37
is a party hereto or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information concerning such Underwriter furnished to the Company or SFEC
through the Representatives by or on behalf of that Underwriter specifically for
inclusion therein, and shall reimburse the Company, any such Subsidiary and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company, any such Subsidiary or any such director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Underwriter may otherwise have to the Company, any such
Subsidiary, or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the
<PAGE>
38
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right, upon written notice to the Company, to
employ counsel to represent jointly the Representatives and those other
Underwriters and their respective officers, employees and controlling persons
who may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriters against the Company and the
Subsidiaries that are parties hereto under this Section 8 if, in the reasonable
judgment of the Representatives, it is advisable for the Representatives and
those Underwriters, officers, employees and controlling persons to be jointly
represented by separate counsel, and in that event the reasonable fees and
expenses of such separate counsel shall be paid, jointly and severally, by the
Company and the Subsidiaries that are parties hereto. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. No indemnifying party shall (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(c) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the
<PAGE>
39
Subsidiaries that are parties hereto on the one hand and the Underwriters on the
other from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Subsidiaries that are
parties hereto on the one hand and the Underwriters on the other with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Subsidiaries that are parties hereto on the one hand and the Underwriters on the
other with respect to such offering shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Notes purchased under this
Agreement (before deducting expenses) received by SFEC on the one hand, and the
total underwriting discounts and commissions received by the Underwriters with
respect to the shares of the Notes purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the shares of the
Notes under this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or SFEC or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. For purposes of the preceding two sentences, the net
proceeds deemed to be received by the SFEC shall be deemed to be also for the
benefit of Company and the Subsidiaries that are parties hereto and information
supplied by the Company or SFEC shall also be deemed to have been supplied by
the Subsidiaries that are parties hereto. The Company, the Subsidiaries that are
parties hereto and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section shall
be deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay
<PAGE>
40
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The Underwriters severally confirm and the Company and the
Subsidiaries that are parties hereto acknowledge that the statements with
respect to the public offering of the Notes by the Underwriters set forth in the
first and last paragraphs on the cover page of, the legend concerning
stabilization on the fourth page of and statements under the caption
"Underwriting" including but not limited to the concession and reallowance
figures, the Prospectus constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Notes which the
defaulting Underwriter agreed but failed to purchase on the First Delivery Date
in the respective proportions which the aggregate principal amount of Notes set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total aggregate principal amount of Notes set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Notes on the First Delivery Date if the total
aggregate principal amount of Notes which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total aggregate principal amount of Notes to be purchased on the First Delivery
Date, and any remaining non-defaulting Underwriter shall not be obligated to
purchase more than 110% of the aggregate principal amount of Notes which it
agreed to purchase on the First Delivery Date pursuant to the terms of Section
2. If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Notes to be purchased
on the First Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase
<PAGE>
41
the shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase on the First Delivery Date, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Section 6. As used in this Agreement, the term "Underwriter"
includes, for all purposes of this Agreement unless the context requires
otherwise, any party not listed in Schedule 1 hereto who, pursuant to this
Section 9, purchases Notes which a defaulting Underwriter agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Notes of a defaulting
or withdrawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company and SFEC prior to delivery of and payment for the Notes if, prior to
that time, any of the events described in Sections 7(k), 7(l) or 7(m) shall have
occurred or if the Underwriters shall decline to purchase the Notes for any
reason permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If SFEC shall fail to
tender the Notes for delivery to the Underwriters by reason of any failure,
refusal or inability on the part of the Company to perform any agreement on its
part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company or SFEC is not
fulfilled (other than by reason of any events described in Section 7(m) except
for the suspension of trading or minimum prices of the securities of the
Company), the Company and SFEC will reimburse the Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of counsel)
incurred by the Underwriters in connection with this Agreement and the proposed
purchase of the Notes, and promptly following demand the Company shall pay the
full amount thereof to the Representatives. If this Agreement is terminated
pursuant to Section 9 by reason of the default of one or more Underwriters, the
Company shall not be obligated to reimburse any defaulting Underwriter on
account of those expenses.
<PAGE>
42
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-526-6588), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th
Floor, New York, NY 10285;
(b) if to the Company or any of the Subsidiaries, shall be delivered
or sent by mail, telex or facsimile transmission to 122 East 42nd Street,
49th Floor, New York, NY 10168, Attention: Kieran E. Burke (Fax:
212-949-6203);
provided, however, that any notice to a Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the
Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, the
Subsidiaries that are parties hereto and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and
agreements of the Company and the applicable Subsidiaries contained in this
Agreement shall also be deemed to be for the benefit of the officers and
employees of each Underwriter and the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Underwriters contained in Section 8(b) of this
Agreement shall be deemed to be for the benefit of directors of the Company and
SFEC, officers of the Company and SFEC who have signed the Registration
Statement and any person controlling the Company and SFEC within the meaning of
Section 15 of the Securities Act. Nothing in this Agreement is intended or shall
be construed to give any person, other than the persons referred to in this
Section 13, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
<PAGE>
43
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the applicable Subsidiaries and the
Underwriters contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Notes and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
15. Definition of the Terms "Business Day", "Premier Subsidiary",
"Premier Partnership", "Six Flags Subsidiary", "Six Flags Partnership",
"Subsidiary" and "Co-Venture Parks Agreements". For purposes of this Agreement,
(a) "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) "Premier Subsidiary" means each of Premier Operations,
Walibi, Funtime Parks, Inc., an Ohio corporation, Funtime, Inc., an Ohio
corporation, Wyandot Lake, Inc., an Ohio corporation, Darien Lake Theme Park and
Camping Resort, Inc., a New York corporation, Tierco Maryland, Inc., a Delaware
corporation, Tierco Water Park, Inc., an Oklahoma corporation, Frontier City
Properties, Inc., an Oklahoma corporation, Stuart Amusement Company, a
Massachusetts corporation, Premier Waterworld Concord Inc., a California
corporation, Premier Waterworld Sacramento Inc., a California corporation,
Premier Parks of Colorado Inc., a Colorado corporation, Great Escape Holding
Inc., a New York corporation, Great Escape LLC, a New York limited liability
company, Great Escape Theme Park LLC, a New York limited liability company,
Riverside Park Enterprises, Inc., a Massachusetts corporation, Riverside Park
Food Services, Inc., a Massachusetts corporation, KKI, LLC, a Delaware limited
liability company, Park Management Corp., a California corporation, Indiana
Parks, Inc., an Indiana corporation, Aurora Campground, Inc., an Ohio
corporation, Ohio Campgrounds Inc., an Ohio corporation and Premier
International Holdings, Inc., a Delaware corporation and [other Premier entities
held in corporate form and as limited liability companies], (c) "Premier
Partnership" means each of Frontier City Partners, Limited Partnership, an
Oklahoma limited partnership, Elitch Gardens, L.P., a Colorado limited
partnership and [other Premier entities held as limited partnerships], (d) "Six
Flags Subsidiary" means each of SFEC, SFTP and [other Six Flags entities held in
corporate form or as limited liability companies], (e) "Six Flags Partnership"
means each of Fiesta Partnership, the Georgia Co-Venture Partnership, the Texas
Co-Venture Partnership and [other Six Flags entities held as limited
partnerships], (f) "Subsidiary" means each of the Premier Subsidiaries, the
Premier Partnerships, the Six Flags Subsidiaries and the Six Flags Partnerships;
and "Co-Venture Parks Agreements" means (i) the Overall Agreement, dated as of
February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG,
<PAGE>
44
Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG
II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six
Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., SFTP and SFEC and
the Related Agreements (as defined therein), (ii) the Overall Agreement, dated
as of November 24, 1997, among Six Flags Over Texas Fund, Ltd., Flags'
Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT
Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., SFTP
and SFEC and the Related Agreements (as defined therein), and (iii) the Lease
Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta Texas
Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and
Six Flags San Antonio, L.P. and the Transaction Documents (as defined therein),
in each case, as the same may be modified or amended from time to time.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
19. Effect of SFEC Execution. For all purposes hereunder, the
representations, warranties and agreements of SFEC hereunder shall only take
effect and be enforceable on the First Delivery Date, and shall do so as if
agreed to and entered into as of the date hereof.
<PAGE>
45
If the foregoing correctly sets forth the agreement among the
Company, the Subsidiaries that are parties hereto and the Underwriters, please
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
Premier Parks Inc.
By ____________________________________
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Subsidiaries (as listed
in Section 15 but not
including Walibi)
By ____________________________________
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Premier Partnerships (as listed
in Section 15)
By Each of their respective
General Partners
By ____________________________________
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
The Six Flags Subsidiaries (as
listed in Section 15)
By ____________________________________
Name: Kieran E. Burke
Title: Chairman of the
Board and Chief
Executive Officer
<PAGE>
46
Accepted:
Lehman Brothers Inc.
Salomon Brothers Inc
NationsBanc Montgomery Securities LLC
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By Lehman Brothers Inc.
By _______________________________
Authorized Representative
<PAGE>
SCHEDULE 1
Aggregate
Principal
Amount of
Underwriters Notes
- ------------ ---------
Lehman Brothers Inc...............................
Salomon Brothers Inc..............................
NationsBanc Montgomery Securities LLC.............
---------
Total.........................................
=========
<PAGE>
Exhibit 2(b)
SUBORDINATED INDEMNITY AGREEMENT
SUBORDINATED INDEMNITY AGREEMENT, dated as of _____________, 1998 (this
"Agreement"), by and among Six Flags Entertainment Corporation ("SFEC"), Six
Flags Theme Parks Inc. ("SFTP"), SFOG II, Inc. ("SFOG") and SFT Holdings,
Inc. ("SFT Holdings" and, together with SFEC, SFTP, SFOG and SFT Holdings,
the "Six Flags Parties"), Time Warner Inc. ("TWX"), Time Warner Entertainment
Company, L.P. ("TWE") and TW-SPV Co. ("TW-SPV Co.") and, together with TWX
and TWE, the "TW Parties"), Premier Parks Inc. ("Holdco") and [GP Holdings],
a wholly-owned subsidiary of Holdco ("GP Holdings" and, together with Holdco,
the "Premier Parties".)
W I T N E S S E T H :
WHEREAS, Holdco, certain subsidiaries of Holdco, SFEC, TWE, and the other
holders of the capital stock of SFEC, are parties to the Agreement and Plan
of Merger, dated as of February 9, 1998 (the "Merger Agreement"), pursuant to
which, among other things, a wholly-owned subsidiary of Holdco will be merged
into and with SFEC, Holdco will become the holder of all of the outstanding
and issued capital stock of SFEC, and SFEC will thereby become a wholly-owned
subsidiary of Holdco (the "Merger");
WHEREAS, SFEC and certain of its subsidiaries are party to (i) the
Overall Agreement, dated as of February 15, 1997 ( the "Georgia Overall
Agreement"); (ii) the Related Agreements (as defined in the Georgia Overall
<PAGE>
2
Agreement) and identified on Schedule 2 attached hereto (the "Georgia Related
Agreements" and, together with the Georgia Overall Agreement, the "Georgia
Agreements"); (iii) the Overall Agreement, dated as of November 24, 1997 (the
"Texas Overall Agreement"); and (iv) the Related Agreements (as defined in the
Texas Overall Agreement and identified on Schedule 3 attached hereto) (the
"Texas Related Agreements" and, together with the Texas Overall Agreement, the
"Texas Agreements");
WHEREAS, pursuant to the Georgia Agreements, the Georgia Obligors (as
defined below) (A) are required to make or guarantee pursuant to an Other
Guarantee (as defined below) certain payments, to the extent there is not
"Available Cash" to make such payments, including without limitation (i) the
payments by the Georgia Partnership (as defined below) of "Minimum Amount
Distributions" and "Percentage Distributions" pursuant to Article VI of the
Georgia Partnership Agreement (as defined below), (ii) the payments by the
Georgia Partnership of "Base Rent" under Article IV of the Georgia Park Lease
(as defined below) and (iii) the expenditure of certain amounts on capital
expenditures in the Georgia Park (as defined below) pursuant to Section C of
Article XVII of the Georgia Partnership Agreement, and (B) are required to
perform and comply or guarantee pursuant to an Other Guarantee performance
and compliance with certain covenants, agreements and obligations, including
without limitation the purchase by the Georgia Acquisition Subsidiaries (as
defined below) of Georgia Units (as defined below) on an annual basis
pursuant to Article III of the Georgia Overall Agreement, in each case when
and as the
<PAGE>
3
same shall be required to be paid, performed or complied with under the
Georgia Agreements (the payments of all of the amounts required to be paid, and
the performance and compliance with all of the covenants, agreements, and
obligations, by the Georgia Obligors under the Georgia Agreements are referred
to herein as the "Georgia Agreements Obligations");
WHEREAS, to support the performance of the Georgia Agreements Obligations
for the benefit of the Georgia Beneficiaries (as defined below), (i) SFOG
Acquisition A, Inc. ("SFOG Acquisition A") and SFOG Acquisition B, L.L.C.
("SFOG Acquisition B" and, together with SFOG Acquisition A, the "Georgia
Acquisition Subsidiaries") executed and delivered to Six Flags Fund, Ltd.
(L.P.) ("Georgia Fund"), SFG-I, L.L.C. ("SFG-I") and Six Flags Over Georgia,
L.L.C. ("Flags Georgia, L.L.C." and, together with SFG-I and Georgia Fund,
the "Georgia Beneficiaries") that certain Secured General Continuing
Guarantee and Pledge Agreement, dated as of March 18, 1997 (the "Georgia
Acquisition Subsidiaries Guarantee"), (ii) SFTP and SFEC executed and
delivered to the Georgia Beneficiaries the General Continuing Guarantee,
dated as of March 18, 1997 (the "SFEC/SFTP Georgia Guarantee"), and (iii) TWX
and TWE executed and delivered to the Georgia Beneficiaries the General
Continuing Guarantee and Non-Competition Agreement, dated as of February 15,
1997 (the "Georgia Guarantee");
WHEREAS, pursuant to the Texas Agreements, the Texas Obligors (as defined
below) (A) are required to make or guarantee pursuant to an Other Guarantee
certain payments, to the extent there is not "Available Cash" to make such
payments,
<PAGE>
4
including without limitation (i) the payments by the Texas Partnership (as
defined below) of "Minimum Amount Distributions" and "Percentage
Distributions" pursuant to Article VI of the Texas Partnership Agreement (as
defined below), (ii) the payments by the Texas Partnership of "Base Rent"
under Article IV of the Texas Park Lease (as defined below), (iii) the
expenditures of certain amounts on capital expenditures in the Texas Park (as
defined below) pursuant to Section C. of Article XVII of the Texas
Partnership Agreement, and (B) are required to perform and comply or
guarantee pursuant to an Other Guarantee performance or compliance with
certain covenants, agreements and obligations, including without limitation
the purchase by the Texas Acquisition Subsidiaries (as defined below) of
Texas Units (as defined below) on an annual basis pursuant to Article III of
the Texas Overall Agreement, in each case when and as the same shall be
required to be paid, performed or complied with in the Texas Agreements (the
payments of all of the amounts required to be paid, and the performance and
compliance with all of the covenants, agreements, and obligations, by the
Texas Obligors under the Texas Agreements are referred to herein as the
"Texas Agreements Obligations");
WHEREAS, to secure and support the performance of the Texas Agreements
Obligations for the benefit of the Texas Beneficiaries (as defined below) in
connection with the Texas Overall Agreement, (i) SFOT Acquisition I, Inc.
("SFOT Acquisition I") and SFOT Acquisition II, Inc. ("SFOT Acquisition II"
and, together with SFOT Acquisition I, the "Texas Acquisition Subsidiaries")
executed and delivered to Six Flags Over Texas Fund, Ltd. ("Texas Fund"),
Flags' Directors,L.L.C. ("Flags'
<PAGE>
5
Directors") and Six Flags Fund II, Ltd. ("Texas Fund II" and,
together with Texas Fund and Flags' Directors, the "Texas Beneficiaries") the
General and Continuing Guarantee, dated as of January 6, 1998 (the "Texas
Acquisition Subsidiaries Guarantee"), (ii) SFTP and SFEC executed and delivered
to the Texas Beneficiaries that certain General Continuing Guarantee, dated as
of January 6, 1998 (the "SFTP/SFEC Texas Guarantee"), and (iii) TWX and TWE
executed and delivered the General Continuing Guarantee and Non-Competition
Agreement, dated as of November 24, 1997 (the "Texas Guarantee" and, together
with the Georgia Guarantee, the "TW Guarantees");
WHEREAS, pursuant to the Indenture, dated as of December 16, 1992, by
SFEC and TWE to United States Trust of New York, as trustee thereunder ("ZCN
Trustee"), as amended by the First Supplemental Indenture, dated as of
February 22, 1993 and the Second Supplemental Indenture, dated as of November
8, 1995 (as the same may be amended, the "Zero Coupon Notes Indenture") TWE
has guaranteed the obligations of SFEC under the Zero Coupon Senior Notes due
1999 of SFEC (the "Zero Coupon Notes") issued pursuant to the Zero Coupon
Notes Indenture;
WHEREAS, in order to support the obligations of the Holdco Parties
hereunder, the record ownership of the outstanding capital stock of certain
subsidiaries of SFEC will be transferred to TW-SPV Co., a special purpose
bankruptcy remote subsidiary of TWE, in connection with the transactions
contemplated hereby; and WHEREAS, in order to induce TWE, as holder of all
of the outstanding Class B Common Stock and Class B Preferred Stock of SFEC,
and Holdco to enter into
<PAGE>
6
the Merger Agreement, Holdco, GP Holdings and the Six Flags Parties desire to
enter into this Agreement with the TW Parties and the TW Parties and the
Holdco Parties desire to make the agreements provided for herein in
consideration of, inter alia, the undertakings of the Holdco Parties and the TW
Parties set forth herein. The Merger Agreement and all agreements relating
thereto shall be conclusively presumed to have been entered into by TWE and
Holdco in reliance upon this Agreement.
NOW, THEREFORE, for good and valuable consideration, including the
covenants and agreements hereinafter set forth, the adequacy and validity of
which the parties hereby acknowledge, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings ascribed to them in this Section 1.1 (such meanings
to be applicable equally to both singular and plural forms of the terms
defined).
1.1.1 "Accelerated Put" shall have the meaning ascribed to such term
in Section 6.1 of the Georgia Acquisition Subsidiaries Guarantee and Section
6.1 of the Texas Acquisition Subsidiaries Guarantee, respectively.
1.1.2 "Accelerated Put Price" shall mean the "Put Price" as such
term is defined in the Texas Acquisition Subsidiaries Guarantee and the
Georgia Acquisition Subsidiaries Guarantee, respectively.
<PAGE>
7
1.1.3 "Acquisition Companies" shall mean the Acquisition
Subsidiaries and the Acquisition Holding Companies.
1.1.4 "Acquisition Holding Companies" shall mean SFOT Acquisition I
Holdings, Inc. ("SFOT I Holdings"), SFOT Acquisition II Holdings, Inc. ("SFOT
II Holdings"), SFOG Acquisition A Holdings, Inc. ("SFOG A Holdings") and SFOG
Acquisition B Holdings, Inc. ("SFOG B Holdings").
1.1.5 "Acquisition Subsidiaries" shall mean the Georgia Acquisition
Subsidiaries and the Texas Acquisition Subsidiaries.
1.1.6 "affiliate" with respect to any Person, shall mean any Person
controlling, controlled by or under common control with such Person.
1.1.7 "Aggregate Georgia End-of-Term Option Payment" shall mean all
sums necessary to consummate the Georgia End-of-Term Option Transactions.
1.1.8 "Aggregate Texas End-of-Term Option Payment" shall mean all
sums necessary to consummate the Texas End-of-Term Option Transactions.
1.1.9 "Beneficiaries" shall mean, collectively, (i) the Georgia
Beneficiaries and any successors thereto, (ii) the Texas Beneficiaries and any
successors thereto and (iii) the holders from time to time of the Zero Coupon
Notes and the ZCN Trustee.
1.1.10 "Business Day" shall mean any day other than a Saturday,
Sunday or Federal holiday on which banking institutions in New York, New York
are permitted to be closed for the purpose of transacting business.
<PAGE>
8
1.1.11 "Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with Generally Accepted Accounting Principles,
either would be required to be classified and accounted for as a capital
lease on the balance sheet of such Person or otherwise be disclosed as such
in a note to such balance sheet, other than any such lease under which such
Person is the lessor.
1.1.12 "Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with Generally Accepted Accounting Principles, would appear on the
balance sheet of such lessee in respect of such Capital Lease or otherwise be
disclosed in a note to such balance sheet.
1.1.13 "control" (including the terms "controlling," "controlled by"
and "under common control") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
1.1.14 "Covenant Defeasance" shall mean discharge or defeasance of
the Zero Coupon Notes Indenture (i) pursuant to Section 401 or 403 thereof,
provided TWE is furnished with satisfactory evidence of such discharge
ordefeasance or (ii) pursuant to Section 402(A) thereof without regard to
Sections 402(B), (C), (D) and (E); provided that the Trustee referred to in
paragraph (A) need not be the Trustee under the Zero Coupon Indenture but
must be a trustee or escrow agent not affiliated with Holdco that is
reasonably satisfactory to TWE pursuant to a trust
<PAGE>
9
agreement, security agreement or escrow agreement, reasonably satisfactory to
TWE, and with respect to which TWE is a third party beneficiary and that
otherwise meets all of the other requirements of paragraph (A) of Section 402.
1.1.15 "Designated Leverage Amount" shall mean (a) $950,000,000
minus (b) the aggregate amounts of Indebtedness repaid pursuant to clause
(ii) of Section 6.1.1(b).
1.1.16 "Eligible Unitholder" shall mean a Unitholder that delivers a
valid and appropriate Notice of Election to Exercise in connection with an
Accelerated Put.
1.1.17 "End-of-Term Option" shall have the meaning ascribed to such
term in the Texas Guarantee and the Georgia Guarantee, respectively.
1.1.18 "End-of-Term Option Exercise Date" (i) with respect to an
End-of-Term Option under the Texas Overall Agreement, shall mean the earlier
to occur of (x) December 31, 2025 or (y) the date that is 30 days after
notice from Texas Fund to the Texas Acquisition Subsidiaries (which notice
the TW Parties shall promptly deliver to Holdco and SFEC) that the
End-of-Term Option must be exercised or will lapse, and (ii) with respect to
an End-of-Term Option under the Georgia Overall Agreement shall mean the
earlier to occur of (x) December 31, 2024 or (y) the date that is 30 days
after notice from Georgia Fund to the Georgia Acquisition Subsidiaries (which
notice the TW Parties shall promptly deliver to Holdco and SFEC) that the
End-of-Term Option must be exercised or will lapse.
<PAGE>
10
1.1.19 "End-of-Term Option Settlement Date" with respect to an
End-of-Term Option under the Georgia Overall Agreement or an End-of-Term
Option (or Accelerated End-of-Term Option) under the Texas Overall Agreement,
shall mean the date on which the End-of-Term Option Price (or other payments)
must be paid to the applicable Unitholders (or the applicable general partner
(or general partners) in case of an Accelerated End-of-Term Option) pursuant
to the provisions of each such agreement, respectively.
1.1.20 "Equity Interests" means capital stock and all warrants,
options or other rights to acquire capital stock (but excluding any debt
security that is convertible into, or exchangeable for, capital stock.)
1.1.21 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute thereto.
1.1.22 "Excluded Obligations" shall mean the obligations of the TW
Parties set forth herein, in the Merger Agreement, the Georgia Litigation
Indemnity Agreement and the License Agreement.
1.1.23 "Generally Accepted Accounting Principles" shall mean United
States generally accepted accounting principles as in effect from time to
time.
1.1.24 "Georgia End-of-Term Transactions" shall mean the
transactions described in clauses (b), (c) and (d) of Section 8.2 and clauses
(a) and (b) of Section 8.4 of the Georgia Overall Agreement.
1.1.25 "Georgia Fund Interests" shall mean, in the case of
End-of-Term Option, all interests in Georgia Fund, Six Flags Over Georgia II,
L.P.
<PAGE>
11
and Six Flags Over Georgia, Ltd. described in clauses (b) through (d) of
Section 8.2 of the Georgia Overall Agreement.
1.1.26 "Georgia General Partner" shall mean the Salkin Family Trust
(created by Declaration of Trust dated May 15, 1980, as amended) or any
successor managing general partner of Georgia Fund.
1.1.27 "GL" shall have the meaning ascribed to such term in the Merger
Agreement.
1.1.28 "Georgia Obligors" shall mean SFEC, SFTP, Six Flags Services of
Georgia Inc., SFOG, the Georgia Acquisition Subsidiaries, SFOG II Employee, Inc.
and the Georgia Partnership.
1.1.29 "Georgia Park" shall mean the amusement park commonly known, on
the date hereof, as Six Flags Over Georgia.
1.1.30 "Georgia Park Lease" shall mean the agreement identified as
"Amusement Park Ground Lease" on Schedule 2.
1.1.31 "Georgia Partnership" shall mean Six Flags Over Georgia II,
L.P., a Delaware limited partnership and the owner of the improvements
that comprise the Georgia Park, and the lessee of the land upon which is
situated the Georgia Park.
1.1.32 "Georgia Partnership Agreement" shall mean the Limited
Partnership Agreement of Six Flags Over Georgia II, L.P., dated as of March 18,
1997.
<PAGE>
12
1.1.33 "Georgia Units" shall mean units of limited partnership
interests in Georgia Fund, of which there are 100- 1/31.71 outstanding as of the
date hereof.
1.1.34 "GP Holdings" shall mean "GP Holdings" as defined in the
Preamble hereto, which shall be a wholly-owned, "bankruptcy remote" special
purpose Subsidiary of Holdco (capitalized by Holdco with a contribution of cash
in the amount of $1,000), the Organizational Documents of which shall include,
among other things, the provisions set forth in Exhibit A hereto.
1.1.35 "GP Holdings Preferred Stock" shall mean the preferred stock,
par value $0.01 per share, of GP Holdings having the terms set forth in Exhibit
B hereto.
1.1.36 "guarantee" or "guaranty" means any obligation, contingent or
otherwise, of any Person, direct or indirect, guaranteeing any Indebtedness
or the performance of any other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part). The term "guarantee" or "guaranty" or
"guaranteed" used as a verb has a corresponding meaning.
<PAGE>
13
1.1.37 "Holdco Notes" shall mean the notes to be issued in a public or
Rule 144A offering by Holdco (including the Indentures pursuant to which such
notes are issued) to finance, in part, the transactions contemplated by the
Merger Agreement, and any subsequently issued notes or other Indebtedness, to
the extent that the proceeds of which are used directly to refinance or pay
expenses directly relating to, and having a principal amount (which shall
include accrued but unpaid interest, any accretions on such principal in respect
of discounted principal or paid-in-kind interest) not in excess immediately
prior to such refinancing of, such notes or such subsequently issued notes or
other Indebtedness.
1.1.38 "Holdco Parties" shall mean the Premier Parties and, for
purposes of this Agreement, upon and following the Effective Time of the Merger,
the Six Flags Parties.
1.1.39 "Indebtedness" of any Person shall mean (i) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (including without limitation reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers' acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
<PAGE>
14
property), (iv) all Capital Lease Obligations of such Person, (v) all
Indebtedness guaranteed by such Person to the extent of such guarantee, (vi)
all Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including without limitation accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, but only to the extent of the value of the
property, and (vii) any obligations requiring payments in excess of the
counter-party obligations under any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement
or derivative agreement of such Person; provided, however, that the Zero
Coupon Notes shall not be deemed Indebtedness to the extent a Covenant
Defeasance has been effected.
1.1.40 "License Agreement" shall have the meaning ascribed to such term
in the Merger Agreement.
1.1.41 "Lien" shall mean any encumbrance, charge, security interest,
mortgage, pledge, hypothecation, title defect, title retention agreement, lease,
sublease, license, occupancy agreement, easement, covenant running with the
land, encroachment, voting trust agreement, restriction, option, right of first
offer or refusal, proxy or lien, including, but not limited to, liens for taxes,
other than a lien for taxes not yet due and payable.
1.1.42 "Losses" shall mean any and all losses, damages (excluding
consequential damages), deficiencies, awards, assessments, amounts paid in
<PAGE>
15
good faith settlement, judgments, fines, penalties, interest, costs and expenses
(including, without limitation, reasonable legal and other advisory fees, costs
and expenses).
1.1.43 "Minimum Net Worth" shall mean stockholder's equity, as
determined in accordance with Generally Accepted Accounting Principles, of SFEC
immediately following consummation of the transactions contemplated by the
Merger Agreement. For purposes of Sections 1.1.43 and 1.1.44, in determining
Minimum Net Worth and Net Worth, the Zero Coupon Notes and any securities or
other assets supporting a Covenant Defeasance shall be disregarded.
1.1.44 "Net Worth" shall mean stockholders' equity or its equivalent as
determined in accordance with Generally Accepted Accounting Principles; provided
that in calculating Net Worth, the following principles shall apply: (i) the
amortization of goodwill arising solely out of purchase accounting treatment of
the S Merger (as such term is defined in the Merger Agreement) shall not be
deemed to have been charged, (ii) if any intangible asset is reserved against or
"written down" then such Net Worth shall be calculated using the carrying value
of such asset as so reserved against or written down, (iii) if any intangible
asset is sold or otherwise disposed of then such Net Worth shall be calculated
using the carrying value of the proceeds (whether cash, securities or other
assets) received in such sale or disposition and (iv) the depreciation of the
incremental increase in the basis of an asset arising solely out of purchase
accounting treatment of the Merger shall not be deemed to have been charged. In
determining Net Worth in accordance with the foregoing, there shall
<PAGE>
16
be no "double-counting" (e.g., upon the sale of any asset where depreciation
with respect to such asset has been disregarded in accordance with the
foregoing clause (iv), gain resulting from such sale shall be calculated with
reference to the basis of such asset after adding back an amount equal to
such disregarded depreciation).
1.1.45 "Obligors" shall mean, collectively, the Georgia Obligors and
the Texas Obligors.
1.1.46 "Organizational Documents" shall mean (a) with respect to a
corporation, its articles of incorporation and by-laws, (b) with respect to a
partnership, its partnership agreement and its certificate of limited
partnership (if a limited partnership) and (c) with respect to a limited
liability company, its limited liability company operating agreement (or the
equivalent thereof) and its certificate of formation (or the equivalent
thereof), in each case as amended.
1.1.47 "Other Guarantee" shall mean the Texas Acquisition Subsidiaries
Guarantee, the Georgia Acquisition Subsidiaries Guarantee, the SFEC/SFTP Georgia
Guarantee and the SFEC/SFTP Texas Guarantee.
1.1.48 "Permitted Liens" means, with respect to any Person, (a) pledges
or deposits by such Person pursuant to a Covenant Defeasance or under workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases (other than Capital Leases) to which such
Person is a party, or deposits to secure public or statutory obligations of such
Person or deposits or cash or United States government bonds to secure surety or
appeal bonds to which
<PAGE>
17
such Person is a party, or deposits as security for contested taxes or import
duties or for the payment of rent, in each case incurred in the ordinary
course of business; (b) Liens imposed by law, such as carriers',
warehousemen's and mechanics' Liens, in each case for sums not yet due or
being contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such Person with respect to which
such Person shall then be proceeding in good faith with an appeal or other
good faith proceeding for review; (c) Liens for property taxes not yet due or
payable or subject to penalties for nonpayment or those which are being
contested in good faith by appropriate proceedings; (d) Liens in favor of
issuers of surety bonds or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of its business;
(e) survey exceptions, encumbrances, easements or reservations of, or rights
of others for, licenses, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions
as to the use of real properties or Liens (i) existing as of the date hereof
or (ii) incidental to the conduct of the business of such Person or to the
ownership of its properties which were not incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect
the value of any SF Theme Park or materially impair the use in the operation
of the business of any such SF Theme Park; (f) Liens on property or shares of
stock of a Person at the time such Person becomes a Subsidiary; provided,
however, that such Liens are not created, incurred or assumed in connection
with, or in contemplation of, such other Person becoming a Subsidiary;
provided further, however, that any such Lien may not extend to any other
property
<PAGE>
18
owned by SFEC or any of its Subsidiaries; (g) Liens on property at the time SFEC
or a Subsidiary of SFEC acquired the property, including any acquisition by
means of a merger or consolidation with or into SFEC or any Subsidiary of SFEC;
provided, however, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such acquisition; provided further,
however, that such Liens may not extend to any other property owned by SFEC or
any Subsidiary; (1) Liens to secure the payment of all or a part of the purchase
price of, or Capitalized Lease Obligations with respect to, assets or property
acquired or constructed after the date hereof; provided, however, that (i) the
Indebtedness secured by such Liens is otherwise permitted to be incurred under
this Agreement, (ii) such Liens only extend to or cover such acquired or
constructed property and do not encumber any other assets or property of SFEC or
any Subsidiary thereof, (iii) such Liens are created within 180 days of
construction or acquisition of such assets or property, (iv) the principal
amount of any Indebtedness secured by any such Lien does not exceed the cost of
assets or property so acquired or constructed and (v) the amount of Indebtedness
secured by any such Lien is not subsequently increased; (m) Liens arising by
reason of any judgment, decree or order of any court or arbitrator, so long as
such judgment, decree or order is being contested in good faith and any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment, decree or order shall not have been finally terminated and the
period within which such proceedings may be initiated shall not have expired;
and (n) Liens securing Senior Indebtedness.
<PAGE>
19
1.1.49 "Person" shall mean and include an individual, a partnership, a
joint venture, a limited liability company, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
1.1.50 "Relevant Agreements" shall mean, collectively, the Texas
Agreements, the Georgia Agreements and the Zero Coupon Notes Indenture.
1.1.51 "Required Obligations" shall mean, collectively, the Georgia
Agreements Obligations, Texas Agreements Obligations and Zero Coupon Notes
Obligations; provided that the Required Obligations shall not include (i) any
obligations of the Georgia Acquisition Subsidiaries or the Texas Acquisition
Subsidiaries to purchase any Units pursuant to the Accelerated Put provisions
under the Texas Agreements and the Georgia Agreements, except as specifically
provided in Section 4.2 hereunder; or (ii) the Excluded Obligations.
1.1.52 "Restricted Payments" shall mean (i) the payment of any dividend
or the making of any distribution on account of the Equity Interests of SFEC or
of any Non-Qualified Subsidiary (including, without limitation, any payment
in connection with any merger or consolidation involving either SFEC or such
NonQualified Subsidiary) or to the direct or indirect holders of the Equity
Interests of SFEC or such Non-Qualified Subsidiary in their capacity as such
(other than dividends or distributions by SFEC payable in Equity Interests of
the issuer thereof (or accretions thereon); (ii) the purchase, redemption, or
other acquisition or retirement for value (including, without limitation, in
connection with any merger or consolidation involving SFEC or such Non-Qualified
Subsidiary) of any Equity Interests of SFEC or
<PAGE>
20
any Non-Qualified Subsidiary, or any other affiliate of SFEC (other than any
such Equity Interests owned by SFEC or any wholly-owned Subsidiary of SFEC or
Units). For purposes of this definition, "Non-Qualified Subsidiaries" shall mean
Subsidiaries in which SFEC owns less than all of the equity interests and in
which Holdco and its Subsidiaries or affiliates (other than SFEC and its
Subsidiaries) owns an equity interest.
1.1.53 "Senior Indebtedness" with respect to any Person, shall mean
Indebtedness of such Person for borrowed money that is not by its terms
subordinated to any other Indebtedness of such Person.
1.1.54 "SFEC Entities" or "SFEC Entity" shall mean, individually or
collectively, SFEC, SFTP, SFT Holdings, SFOT Employee, Inc., Six Flags Over
Texas, Inc. ("SFOT"), SFOT Acquisition I, SFOT Acquisition II, SFOT I
Holdings, SFOT II Holdings, SFOG, SFOG II Employee, Inc., SFOG Acquisition A,
SFOG Acquisition B, SFOG A Holdings, SFOG B Holdings, Six Flags Over Georgia,
Inc., Six Flags Services of Georgia, Inc. and, to the extent applicable, any
SFEC Subsidiaries.
1.1.55 "SF Theme Parks" shall mean, collectively, the theme parks
set forth on Exhibit C hereto and any additional theme parks hereinafter
acquired by SFEC and its Subsidiaries.
1.1.56 "Subsidiary" with respect to any Person, shall mean any
corporation 50% or more of the outstanding voting power of which, or any
partnership, joint venture, limited liability company or other entity 50% or
more of the total equity interest of which, is directly or indirectly owned
or controlled by such
<PAGE>
21
Person or which such Person is directly or indirectly a general partner or
managing member (or acts in similar such capacity). For purposes of this
Agreement, all references to "Subsidiaries" of a Person shall be deemed to mean
"Subsidiary" if such Person has only one Subsidiary.
1.1.57 "Tax" or "Taxes" shall mean all taxes, charges, fees, levies or
other assessments, and all estimated payments thereof, including, but not
limited to, income, excise, property, sales, use, value added, franchise,
payroll, transfer, transfer gain, gross receipts, withholding, social security
and unemployment taxes or other taxes of any kind, imposed by any foreign,
Federal, state, county or local government, or any subdivision or agency
thereof, and any interest, penalty and expense relating to such taxes, charges,
fees, levies or other assessments.
1.1.58 "Texas End-of-Term Option Transactions" shall mean the
transactions described in clauses (b), (c) and (d) of Section 7.2 and clauses
(a) and (b) of Section 7.4 of the Texas Overall Agreement.
1.1.59 "Texas Fund Interests" shall mean, in the case of an End-of-Term
Option, all interests in the Texas Fund, Texas Flags, Ltd. ("Flags") and Six
Flags Fund II, Ltd. ("Texas Fund II") described in clauses (b) through (d) of
Section 7.2 of the Texas Overall Agreement, and, in the case of an Accelerated
End-of-Term Option, all interests in Texas Fund, Flags and Texas Fund II
described in clauses (a) and (b) of Section 7.7 of the Texas Overall Agreement.
1.1.60 "Texas General Partner" shall mean Jack D. Knox, or any
successor managing general partner of Texas Fund.
<PAGE>
22
1.1.61 "Texas Obligors" shall mean SFEC, SFTP, SFOT, the Texas
Acquisition Subsidiaries, SFOT Employee, Inc. and the Texas Partnership.
1.1.62 "Texas Park" shall mean the amusement park commonly known, on
the date hereof, as Six Flags Over Texas.
1.1.63 "Texas Park Lease" shall mean the agreement identified as
"Amusement Park Ground Lease" in Schedule 3.
1.1.64 "Texas Partnership" shall mean Texas Flags, Ltd., a Texas
limited partnership and the owner of the improvements that comprise the Texas
Park, and the lessee of the land upon which is situated the Texas Park.
1.1.65 "Texas Partnership Agreement" shall mean the Amended and
Restated Limited Partnership Agreement of Texas Flags, Ltd., dated as of January
6, 1998.
1.1.66 "Texas Units" shall mean units of limited partnership interests
in Texas Fund, of which there are an aggregate of 240.32422 outstanding on the
date hereof.
1.1.67 "Transfer" shall mean sell, lease, assign, transfer or otherwise
dispose of, hypothecate, mortgage, pledge, or otherwise encumber, in each case
directly or indirectly, or by operation of law.
1.1.68 "Triggering Default" shall mean (i) a "Default" as such term is
defined in the Georgia Agreements (other than a Default that results from the
failure of the TW Parties to perform their obligations with respect to an
Accelerated Put as described in Section 4.3 hereof), (ii) a "Default" as such
term is defined in the
<PAGE>
23
Texas Agreements (other than a Default that results from the failure of the TW
Parties to perform their obligations with respect to an Accelerated Put as
described in Section 4.3 hereof), (iii) an "Event of Default" as such term is
defined in the Zero Coupon Note Indenture, other than as a result of TWE's
failure to comply with the provisions of Section 6.2.2 hereof, (iv) a default by
any of the Holdco Parties of their covenants, agreements or obligations
hereunder (other than an immaterial default that can be cured upon notice), or
(v) a failure by the Holdco Parties to pay any amounts owed to the TW Parties
hereunder or to otherwise reimburse the TW Parties for any
amounts paid by either of such parties under the Georgia Guarantee or the Texas
Guarantee.
1.1.69 "TWE Notes Guarantee" shall have the meaning set forth in
Section 1201 of the Zero Coupon Notes Indenture.
1.1.70 "Units" shall mean the Texas Units and the Georgia Units.
1.1.71 "Unitholders" shall mean the holders of Units.
1.1.72 "ZCN Trustee" shall mean the Trustee under the Zero Coupon Notes
Indenture, or any successor trustee thereunder. 1.2 Other Defined Terms:
1.2.1 For purposes of this Agreement, the following terms shall have
the meanings ascribed to them in the Section of this Agreement or in the
Relevant Agreement set forth opposite them below:
<TABLE>
<CAPTION>
Term Section/Agreement
------- -------------------
<S> <C>
Accelerated End-of-Term Option 4.5.1
</TABLE>
<PAGE>
24
<TABLE>
<CAPTION>
Term Section/Agreement
-------- -------------------
<S> <C>
Accelerated End-of-Term Option Notice 4.5.1
Accelerated Option Notice Date 4.5.1
Accreted Value Amount Zero Coupon Note Indenture
Aggregate Liquidity Put Price 4.2.2
Asserted Third Party Liability 7.3.1
Beneficial Shares 3.3
Beneficial Share Assignment 3.3
Claims Notice 7.3.1
Direct Claim 7.3.3
Direct Claim Notice 7.3.3
Eligible Securities 8.2
End-of-Term Option Texas Overall Agreement and
Georgia Overall Agreement
Escrow Agent 7.3.4
Escrow Amounts 7.3.4
ETO Exercise Notice 4.4.1
Flags' Directors Preamble
Flags Georgia L.L.C. Preamble
Georgia Acquisition Subsidiaries Preamble
Georgia Acquisition Subsidiaries Guarantee Preamble
Georgia Agreements Preamble
Georgia Agreements Obligations Preamble
Georgia AP Units 4.3.1
Georgia AP Units Cash Flow Assignment 4.3.1
Georgia Beneficiaries Preamble
Georgia Fund Preamble
</TABLE>
<PAGE>
25
<TABLE>
<CAPTION>
Term Section/Agreement
-------- -------------------
<S> <C>
Georgia Guarantee Preamble
Georgia Overall Agreement Preamble
Georgia Related Agreements Preamble
Georgia Units Purchaser 4.2.2
Indemnitee 7.3
Indemnitor 7.3
Liquidity Put Certificate 4.2.2
Liquidity Put Notice 4.2.1
Liquidity Put Settlement Date Texas Overall Agreement and
Georgia Overall Agreement
Liquidity Put Texas Overall Agreement and
Georgia Overall Agreement
Merger Preamble
Merger Agreement Preamble
Maturity Zero Coupon Note Indenture
Notice of Election to Exercise Texas Overall Agreement and
Georgia Overall Agreement
Offer to Purchase Zero Coupon Note Indenture
Payment Blockage Notice 8.1
Payment Blockage Period 8.1
Principal Amount Zero Coupon Note Indenture
Repaid Georgia AP Units 4.3.1
Repaid Texas AP Units 4.3.1
Selling Unitholder 4.2.2
SFEC Subsidiary 6.1.5
SFG-I Preamble
SFOG Acquisition A Preamble
</TABLE>
<PAGE>
26
<TABLE>
<CAPTION>
Term Section/Agreement
-------- -------------------
<S> <C>
SFOG Acquisition B Preamble
SFOG BH Capital Stock 3.1
SFOG Capital Stock 3.1
SFOG IIH Capital Stock 3.1
SFOGA AH Capital Stock 3.1
SFOT Acquisition I Preamble
SFOT Acquisition II Preamble
SFOT IH Capital Stock 3.1
SFEC/SFTP Georgia Guarantee Preamble
SFT H Capital Stock 3.1
SFTP/SFEC Texas Guarantee Preamble
Stated Maturity Zero Coupon Note Indenture
Subordinated Indemnity Escrow Agreement 7.3.4
Subordination Obligations 8.1
Termination Date 9.1
Texas Agreements Obligations Preamble
Texas Acquisition Subsidiaries Preamble
Texas Acquisition Subsidiaries Guarantee Preamble
Texas AP Units 4.3.1
Texas AP Units Cash Flow Assignment 4.3.1
Texas Agreements Preamble
Texas Beneficiaries Preamble
Texas Fund Preamble
Texas Fund II Preamble
Texas Overall Agreement Preamble
</TABLE>
<PAGE>
27
<TABLE>
<CAPTION>
Term Section/Agreement
-------- -------------------
<S> <C>
Texas Related Agreements Preamble
Texas Guarantee Preamble
Texas Units Purchaser 4.2.2
Texas Guarantee Preamble
TW Guarantees Preamble
12 1/4Debentures 6.1.5
12 1/4Debentures Indenture 6.1.5
ZCN Trustee Preamble
Zero Coupon Notes Preamble
Zero Coupon Notes Obligations 2.1
Zero Coupon Notes Indenture Preamble
</TABLE>
ARTICLE 2
PERFORMANCE OF OBLIGATIONS
2.1 Zero Coupon Notes. In each case for the sole and exclusive benefit of
TWE only, (a) SFEC hereby agrees to, and (b) Holdco agrees to cause SFEC to,
perform all of SFEC's obligations under the Zero Coupon Notes Indenture and
the Zero Coupon Notes, including, without limitation, the due and punctual
payment of the Principal Amount of the Zero Coupon Notes at the Stated
Maturity or the Accreted Value Amount upon an acceleration of Maturity and
all other amounts due and payable under the Zero Coupon Notes and the Zero
Coupon Notes Indenture by SFEC (collectively, the "Zero Coupon Notes
Obligations"), when and as the same shall become due and payable, according
to the terms of the Zero Coupon Notes and the
<PAGE>
28
Zero Coupon Notes Indenture, and (c) SFEC and Holdco each guarantees the
payment of all such amounts and the performance of all such obligations
thereunder.
2.2 Georgia Obligations. In each case for the sole and exclusive benefit
of the TW Parties only, each of the Holdco Parties (a) shall cause the
Georgia Obligors to perform the Georgia Agreement Obligations when and as the
same shall be payable or required to be performed under the Georgia
Agreements and (b) guarantees the payment of all amounts required to be paid
and the performance of all covenants, agreements and obligations required to
be performed or complied with by the Georgia Obligors thereunder.
2.3 Texas Obligations. In each case for the sole and exclusive benefit of
the TW Parties only, each of the Holdco Parties (a) shall cause the Texas
Obligors to perform the Texas Agreement Obligations when and as the same
shall be payable or required to be performed under the Texas Agreements and
(b) guarantees the payments of all amounts required to be paid and the
performance of all covenants, agreements and obligations required to be
performed or complied with by the Texas Obligors thereunder.
2.4 Continuing and Irrevocable Obligations. The obligations of the Holdco
Parties under Sections 2.1 through 2.3 including the guarantees thereunder
shall be, except as provided in Article 8, absolute, unconditional and
irrevocable, joint and several and shall not terminate unless and until the
Required Obligations have been indefeasibly paid and performed in full or
otherwise satisfied or waived by the TW Parties or the Texas Beneficiaries
and the Georgia Beneficiaries (in a manner that
<PAGE>
29
legally relieves and discharges the parties from any liability with respect to
the TW Guarantees).
2.5 Nature of Obligations.
(a) The liability of each Holdco Party hereunder is independent of
and not in consideration of the liability of the Obligors or any other Holdco
Party and a separate action or actions may be brought and prosecuted by the
TW Parties and their respective permitted successors and assigns, as the case
may be, against any Holdco Party and its permitted successors and assigns,
whether or not any action is brought or prosecuted against any Obligor or any
other Holdco Party or whether or not any Obligor or any other Holdco Party is
joined in any such action or actions. The guarantee of each of the Holdco
Parties under Sections 2.1 through 2.3 hereof shall be construed as a
continuing, absolute, unconditional and irrevocable guarantee of payment and
performance (and not merely of collection) without regard to:
(i) the legality, validity or enforceability of any of the Texas
Agreements, the Georgia Agreements, the Zero Coupon Notes Indenture, the Zero
Coupon Notes, the Merger Agreement or any agreement related thereto (other
than this Agreement), any of the Required Obligations, any collateral or any
Other Guarantee;
(ii) any defense (other than indefeasible payment or an
applicable statute of limitations), set-off or counterclaim (other than a
set-off or counterclaim arising from the failure of the TW Parties to perform
their
<PAGE>
30
obligations hereunder) that may at any time be available to any Obligor or
any Holdco Party against, and any right of set-off at any time held by, the
Beneficiaries (or any one of them), the TW Parties or any other Holdco Party;
or
(iii) any other circumstance whatsoever (with or without notice
to or knowledge of any Holdco Party or any Obligor, but excluding
circumstances resulting from the failure of the TW Parties to perform the
Excluded Obligations), whether or not similar to any of the foregoing, that
constitutes, or might be construed to constitute, an equitable or legal
discharge of any Obligor or any Holdco Party, in bankruptcy or in any other
instance.
(b) In the event of default by any Obligor in payment or performance
of the Required Obligations, or any part thereof, when such payment or
performance becomes due, either by its terms or as the result of the exercise
of any power to accelerate, the Holdco Parties, as applicable, shall, pay the
amount due thereon to the applicable Beneficiaries or perform or observe the
Required Obligations, and it shall not be necessary for the Beneficiaries
(and each Holdco Party expressly waives any rights it might otherwise have to
require the Beneficiaries or the TW Parties) to proceed against any Obligor,
any collateral or any other Person.
(c) Suit may be brought or demand may be made against any Obligor or
any other Holdco Party, as applicable, separately or together, without
impairing the rights of the TW Parties against any Holdco Party or any other
Person.
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31
2.6 Authorization. Subject to Section 6.2.5, following and during the
continuance of a Triggering Default, each Holdco Party authorizes the TW
Parties, without notice to or further assent by such Holdco Party and without
affecting such Holdco Party's liability hereunder (regardless of whether any
subrogation or similar right that such Holdco Party may have or any other
right or remedy of such Holdco Party is extinguished or impaired), from time
to time, to:
(a) terminate, release, compromise, subordinate, extend, or otherwise
change the amount or time, manner or place of payment or performance of, or
rescind any demand for payment or performance of, the Required Obligations or
any part thereof, provided, that, if any such action taken without the
consent of such Holdco Party has the effect of increasing the amount of any
Required Obligation, then, as to such Holdco Party, the guarantees thereof
under Sections 2.1 through 2.3 hereof shall extend only to the Required
Obligations without giving effect to such increase in amount; provided,
further, that a change in the condition (financial or other) of any Obligor
resulting from a forbearance, extension or equivalent of either will not be
deemed to be an increase of or to cause an increase of the amount of any
Required Obligation within the meaning of the preceding proviso;
(b) to the extent permitted by the Georgia Agreements and the Texas
Agreements, take and hold any stock of the Acquisition Companies and the
preferred stock or assets of GP Holdings, perfect or refrain from perfecting
a lien on such stock and assets, and exchange, enforce, subordinate, release
(whether
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32
intentionally or unintentionally), or take or fail to take any other action
in respect of any such stock and assets or lien or any part thereof;
(c) exercise, fail to exercise, waive, suspend, terminate or suffer
expiration of any of the remedies or rights of the TW Parties against any
Obligor or any Holdco Party in respect of any Required Obligations or any
collateral, as the TW Parties may elect in their discretion;
(d) release, partially, release, add or settle with any Obligor or
any Holdco Party, whether expressly, by operation of law or without
limitation otherwise;
(e) accept partial payments on the Required Obligations and apply all
payments or recoveries from any Obligor or any Holdco Party or collateral to
such of the Required Obligations as the TW Parties may elect in their
discretion, whether or not such Required Obligations are secured or
guaranteed; and
(f) otherwise deal with any Obligor or any Holdco Party and any
collateral as the TW Parties may elect in their discretion.
2.7 Certain Agreements and Waivers by Each Holdco Party. Each Holdco
Party hereby agrees that neither any TW Party's rights or remedies nor any
Holdco Party's obligations under this Article 2 shall be released,
diminished, impaired, reduced or affected by any one or more of the following
events, actions, facts or circumstances, and the liability of each Holdco
Party under this Article 2 shall be absolute, unconditional and irrevocable
irrespective of:
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33
(a) the death, insolvency, bankruptcy, disability, dissolution,
liquidation, termination, receivership, reorganization, merger,
consolidation, change of form, structure or ownership, sale of all assets, or
lack of corporate, partnership, limited partnership, limited liability
company or other power of any Obligor or any Holdco Party or any other Person
at any time liable for the payment or performance of any or all of the
Required Obligations;
(b) all rights and benefits under applicable law purporting to reduce
a guarantor's obligations in proportion to the obligation of the principal or
providing that the obligation of a surety or guarantor must neither be larger
nor in other respects more burdensome than that of the principal;
(c) any requirement of marshaling or any other principle of election
of remedies and all rights and defenses arising out of an election of
remedies by any TW Party by, even though that election of remedies has
destroyed any Holdco Party's rights of subrogation and reimbursement against
any Obligor;
(d) any right to assert against any TW Party any defense (legal or
equitable), set-off, counterclaim and other right that any Holdco Party may
now or any time hereafter have against any Obligor;
(e) presentment, diligence in making demands hereunder, demand on any
other Holdco Party, notice of dishonor or nonperformance, protest, acceptance
and notice of acceptance of the guarantees under Sections 2.1 through 2.3
hereof;
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34
(f) any order, ruling or plan of reorganization emanating from any
proceeding under the Bankruptcy Code with respect to any Obligor or any other
Person, including any extension, reduction, composition, or other alteration
of the Required Obligations, whether or not consented to by the Holdco
Parties; or
(g) except to the extent otherwise provided in Section 2.5(a), any
rights, defenses and other benefits any Holdco Party may have under the
provisions of Section 34.02 of the Texas Business and Commerce Code or
Section 10-7-24 of the Official Code of Georgia Annotated, as applicable.
2.8 Duty of Inquiry. Each Holdco Party assumes the responsibility for
being and keeping itself informed of the financial condition of each Obligor
and of all other circumstances bearing upon the risk of nonpayment or
nonperformance of the Required Obligations that diligent inquiry would
reveal, and agrees that the TW Parties shall have no duty to advise any
Holdco Party of information regarding such condition or any such
circumstances.
2.9 Bankruptcy No Discharge.
(a) The guarantees of any Holdco Party under Section 2.1 hereof shall
not be discharged or otherwise affected, with respect to any other Holdco
Party, by any bankruptcy, reorganization or similar proceeding commenced by
or against any Obligor, including (i) any discharge of, or bar to stay
against collecting, all or any part of the Required Obligations in or as a
result of any such proceeding, whether or not assented to by the TW Parties,
or (ii) any disallowance of all or any portion of the TW Parties' claim for
repayment or performance of the Required
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35
Obligations. If acceleration of the time for payment or performance of any
Required Obligations is stayed or delayed as a result of any such proceeding,
all such amounts shall nonetheless be payable by each Holdco Party, on demand
by the TW Parties.
(b) If a payment of any Required Obligation by any Obligor is made
and is later determined not to have been indefeasibly made in whole or in
part, such payment by any such Obligor to the Beneficiaries or the TW
Parties, as the case may be, shall not constitute a release of any Holdco
Party from any liability hereunder, and (i) the guarantees of the Holdco
Parties under Sections 2.1 through 2.3 hereof (and any lien on any collateral
securing such guarantees or the Required Obligations) shall continue to be
effective or shall be reinstated notwithstanding any prior release, surrender
or discharge by any TW Party of the guarantees of the Holdco Parties under
Sections 2.1 through 2.3 and /or of any Holdco Party, and (ii) the guarantees
of the Holdco Parties under Sections 2.1 through 2.3 (and any lien on any
collateral securing such guarantees or the Required Obligations) shall apply
to any and all amounts so refunded by any Beneficiaries or the TW Parties or
paid by any Beneficiaries or the TW Parties to another Person (including any
interest included in such amount), all as though such payment had not been
made or such proceeds had not been received.
2.10 Limitation on Obligations. The obligations of each Holdco Party
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Sections 544 or 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable law.
<PAGE>
36
ARTICLE 3
TRANSFERS OF CAPITAL STOCK
3.1 Capital Stock of SFOG A Holdings, SFOG B Holdings, SFOT I Holdings,
SFOT II Holdings, SFOG and SFT Holdings. Immediately following the Effective
Time of the Merger:
(a) SFEC shall sell, assign, transfer, and convey to TW-SPV Co. all
right, title and interest of SFEC in and to the capital stock of SFOG B
Holdings (the "SFOG BH Capital Stock") in consideration of $1.00 in cash.
Immediately prior to such transfer, SFEC shall cause SFOG B Holdings to incur
$_____ of indebtedness, the proceeds of which will immediately be distributed
to SFEC.1/
(b) SFEC shall sell, assign, transfer and convey to TW-SPV Co. all
right, title and interest of SFEC in and to the capital stock of SFOT II
Holdings (the "SFOT IIH Capital Stock") in consideration of $1.00 in cash.
Immediately prior to such transfer, SFEC shall cause SFOT II Holdings to
incur $_____ of indebtedness, the proceeds of which will immediately be
distributed to SFEC.2/
(c) SFTP shall sell, assign, transfer and convey to TW-SPV Co. all
right, title and interest of SFTP in and to the capital stock of SFOG A
Holdings (the "SFOG AH Capital Stock") in consideration of $1.00 in cash.
Immediately prior
- --------
1/ The amount of debt shall equal fair market value of SFOG B Holdings
less $1.00.
2/ The amount of debt shall equal the fair market value of SFOT II
Holdings less $1.00.
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37
to such transfer, Holdco will cause SFOG A Holdings to incur $________3/ of
indebtedness, the proceeds of which will immediately be distributed to SFTP.
(d) SFTP shall sell, assign, transfer and convey to TW-SPV Co. all
right, title and interest of SFTP in and to the capital stock of SFOT I
Holdings (the "SFOT IH Capital Stock") in consideration of $1.00 in cash. 3/
The amount of debt shall equal (a) the number of Georgia Units then held by
SFOG Acquisition A, multiplied by (b) the acquisition price paid for each
such unit (e.g., $2,383,589), less (c) $1.00. Immediately prior to such
transfer, Holdco will cause SFOT I Holdings to incur $________4/ of
indebtedness, the proceeds of which will immediately be distributed to SFTP.
(e) SFEC shall sell, assign, transfer and convey to GP Holdings all
right, title and interest of SFEC in and to the capital stock of SFOG (the
"SFOG Capital Stock") in consideration of $1.00 in cash. Immediately prior to
such transfer, Holdco shall cause SFOG to incur $_____5/ of indebtedness, the
proceeds of which will immediately be distributed to SFEC.
(f) SFTP shall sell, assign, transfer and convey to GP Holdings all
right, title and interest of SFTP in and to the capital stock of SFT Holdings
(the "SFT H Capital Stock") in consideration of $1.00 in cash. Immediately
- --------
3/ The amount of debt shalle equal (a) the number of Georgia Units then held
by SFOG Acquisition A, multiplied by (b) the acquisition price paid for
each such unit (e.g., $2,383,589), less (c) $1.00.
4/ The amount of debt shall equal (a) the number of Texas Units then held
by SFOT Acquisition I, multiplied by (b) the acquisition price of each
such unit (e.g., $1,457,323), less $1.00.
5/ The amount of debt shall equal the fair market value of the Georgia
General Partner, less $1.00
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38
prior to such transfer, SFTP will cause SFT Holdings to incur $___6/ of
indebtedness, the proceeds of which will immediately be distributed to SFTP.
(g) In furtherance of the provisions of this Section 3.1, concurrently
with the consummation of each of the transactions described in the foregoing
clauses (a) through (f), SFTP and SFEC shall deliver to TW-SPV Co. or GP
Holdings, as applicable, such certificate or certificates representing the
SFOG BH Capital Stock, the SFOT IIH Capital Stock, SFOG AH Capital Stock,
SFOT IH Capital Stock, the SFOG Capital Stock and the SFT H Capital Stock, as
applicable, in each case, duly endorsed in blank or accompanied by stock
powers duly executed in blank, in form for transfer to TW-SPV Co. or GP
Holdings, as applicable, with all appropriate stock transfer tax stamps
affixed, in each case, against payment to SFEC or SFTP, as applicable, of the
cash consideration due in respect thereof.
3.2 Preferred Stock of GP Holdings. Immediately following the Effective
Time of the Mergers, GP Holdings shall, and Holdco shall cause GP Holdings
to, issue to TWE 100 fully paid and non-assessable shares of GP Holdings
Preferred Stock in consideration of $1.00 in cash.
3.3 Beneficial Assignment of Interests. Immediately following
consummation of the transactions contemplated by Section 3.1 hereof, TW-SPV
Co. and Holdco shall execute and deliver the Beneficial Share Assignment
Agreement substantially in the form Exhibit D (the "Beneficial Share
Assignment"), pursuant to
- --------
6/ The amount of debt shall equal the fair market value of the Texas
General Partner less $1.00.
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39
which, among other things, (A) Holdco shall pay to TW-SPV Co. $4.00 in cash
(which payment shall be made immediately following consummation of the
transactions contemplated by Section 3.1), and (B) in consideration of such
payment, TW-SPV Co. shall take all reasonable actions necessary so that
Holdco shall be afforded the economic benefits to be conferred by the
ownership of the SFOG AH Capital Stock, SFOG BH Capital Stock, SFOT IH
Capital Stock and the SFOT IIH Capital Stock (collectively, the "Beneficial
Shares"), by assigning to Holdco, until the occurrence and continuance of a
Triggering Default, (x) the right to receive, all cash flow derived from such
Beneficial Shares, including all cash flow derived from the Units owned by
the Acquisition Subsidiaries on and after the date hereof; such cash flow to
be paid to Holdco as soon as practicable, but in no event later than two
Business Days, following the receipt thereof by TW-SPV Co. and (y) the right
to vote such Beneficial Shares including with respect to the election and
removal of directors. In furtherance of the foregoing, the Persons entitled
to vote the Beneficial Shares shall cause the Acquisition Subsidiaries and
the Acquisition Holding Companies to pay to the holders of its capital stock
all cash received in respect of Units, as soon as practicable, but in no
event later than two Business Days, following receipt thereof.
3.4 Preferred Stock of Acquisition Companies. TW-SPV Co. shall cause each
of the Acquisition Holding Companies to issue to Holdco in consideration of
$1.00 a class of preferred stock of each such Acquisition Holding Company,
the terms of which will provide the holder of such stock, without
duplication, the economic
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40
benefits and voting rights (upon the same terms and subject to the same
limitations) intended to be conferred upon Holdco under the Beneficial Share
Assignment.
3.5 Tax Matters. Solely for all federal, state and local income tax and
accounting purposes, (i) the sales, transfers, conveyances and assignments
pursuant to Sections 3.1 and 3.3 shall be deemed to be distributions of the
Beneficial Shares to Holdco and (ii) Holdco will be deemed the owner of all
Beneficial Shares throughout the term of this Agreement and will include all
Acquisition Companies in its consolidated federal income tax returns and
appropriate combined or unitary returns filed by Holdco or its affiliates.
The parties hereto agree to report and otherwise take actions solely for all
income tax and accounting purposes with respect to the foregoing transactions
consistent with the description contained in the preceding sentence. Holdco
will pay (i) all Taxes of all of the Acquisition Companies and of TW-SPV Co.,
except as is attributable to a breach by the TW Parties of their obligations
hereunder and except for any Taxes of TW-SPV Co. arising by reason of being
part of any affiliated, combined or unitary group including TWX or any of its
affiliates and their respective successors and (ii) all Taxes for which any
of them may be liable by reason of being part of any affiliated, combined or
unitary group including Holdco, SFEC or any of their respective affiliates or
successors and all Taxes of GP Holdings and its successors. Holdco and its
affiliates hereby waive any rights of contribution from or subrogation to the
Acquisition Companies or TW-SPV Co. with respect to payments of any Taxes or
other amounts required to be paid by Holdco pursuant to this Section 3.5.
<PAGE>
41
ARTICLE 4
LIQUIDITY PUTS; ACCELERATED PUTS; END-OF-TERM OPTIONS
4.1 General. Without limiting any of the rights or obligations of the
parties under Article 2 hereof, the provisions of this Article 4 shall govern
the respective rights and obligations of the parties with respect to any
Liquidity Put, Accelerated Put, or End-of-Term Option (including any
accelerated End-of-Term Option). Notwithstanding the provisions of the Texas
Agreements and the Georgia Agreements to the contrary and except as
specifically provided for under this Agreement, none of the TW Parties, the
Holdco Parties or their respective affiliates shall purchase, offer or agree
to purchase or otherwise acquire any Units or take any action that would
increase the purchase price of any Units under the Georgia Agreements or the
Texas Agreements.
4.2 Procedures Relating to Liquidity Puts.
4.2.1 Liquidity Put Notices.
(a) Subject to the further provisions of Section 4.2, the Holdco
Parties shall on behalf of the Texas Acquisition Subsidiaries and the Georgia
Acquisition Subsidiaries, as the case may be (and for the sole and exclusive
benefit of the TW Parties only), administer, observe, comply with and
perform, at the sole cost and expense of the Holdco Parties, any and all of
the obligations of the Texas Acquisition Subsidiaries and the Georgia
Acquisition Subsidiaries with respect to any Liquidity Put, including,
without limitation, the preparation and dissemination of notices (each such
notice a "Liquidity Put Notice") in respect of such Liquidity Put in
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42
accordance with the respective terms and provisions of the Texas Overall
Agreement and the Georgia Overall Agreement, the calculation of the Put Price
in respect of such Liquidity Put, the determination of the Liquidity Put
Number and the payments of amounts necessary to acquire Units in respect of
such Liquidity Put.
(b) Without limiting SFEC's obligations under Section 4.2.1(a), or
any party's obligations under Section 10.2 hereof, (i) each of the
Acquisition Subsidiaries shall, and the Persons entitled to vote the
Beneficial Shares shall cause each of them to, deliver all information within
its possession relating to and in connection with any Liquidity Put to SFEC;
and (ii) SFEC shall, not later than five Business Days prior to the date upon
which any Liquidity Put Notice is, pursuant to the Texas Overall Agreement or
the Georgia Overall Agreement, as applicable, required to be given to the
applicable Unitholders, furnish to the TW Parties (a) the form of any such
Liquidity Put Notice for its approval (which approval shall not be
unreasonably withheld or delayed, provided that, if such Liquidity Put Notice
is in the form of Exhibits 3.4(b) and 3.5(b) of the Texas Overall Agreement
or the Georgia Overall Agreement, respectively, or if the TW Parties shall
fail to approve or disapprove any Liquidity Put Notice within three Business
Days following receipt thereof, then, in either case, such Liquidity Put
Notice shall be deemed to have been approved by the TW Parties) and (b)
copies of all other documents relating to such Liquidity Put Notice,
including, without limitation, any information provided to SFEC by the Texas
General Partner or the Georgia General Partner in respect thereof. All
Liquidity Put Notices shall designate SFEC, acting on behalf of the Texas
Acquisition Subsidiaries
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43
and the Georgia Acquisition Subsidiaries, as applicable, as the recipient of
all Notices of Election to Exercise delivered in respect of any such
Liquidity Put Notice.
4.2.2 Payment of Put Price. With respect to each Liquidity Put:
(a) Not later than 10 Business Days after April 15 of any year in
which Unitholders may, pursuant to the Texas Overall Agreement or the Georgia
Overall Agreement, as applicable, exercise Liquidity Put rights, SFEC shall,
to the extent any Unitholders exercise such rights, furnish to the TW Parties
a certificate (each a "Liquidity Put Certificate") of the Chief Financial
Officer of SFEC and Holdco, respectively, setting forth the aggregate number
of Texas Units or Georgia Units, as the case may be, to be purchased pursuant
to such Liquidity Put, the identity of each Unitholder that delivers a Notice
of Election to Exercise in connection with such Liquidity Put (each such
Unitholder, a "Selling Unitholder"), the Put Price to be paid to each such
Selling Unitholder and the aggregate Put Price to be paid to all such Selling
Unitholders (the "Aggregate Liquidity Put Price").
(b) All Texas Units and all Georgia Units for which a valid and
appropriate Notice of Election to Exercise is delivered in respect of such
Liquidity Put shall, subject to the pro-ration cut-back provisions of Section
3.3(b) of the Texas Overall Agreement and the Georgia Overall Agreement,
respectively be purchased by SFOT Acquisition II (the "Texas Units
Purchaser") or SFOG Acquisition B (the "Georgia Units Purchaser"), as
applicable, unless the parties otherwise agree.
(c) Not later than two Business Days prior to the Liquidity Put
Settlement Date applicable to such Liquidity Put, (i) the Holdco Parties
shall (for
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44
the sole and exclusive benefit of the TW Parties only) pay to the Texas Units
Purchaser or the Georgia Units Purchaser, as applicable, the Aggregate
Liquidity Put Price for such Liquidity Put in immediately available funds in
United States Dollars in an account of such Texas Units Purchaser or Georgia
Units Purchaser, as the case may be. The Texas Units Purchaser or the Georgia
Units Purchaser, as applicable, shall use such funds to purchase from and pay
the applicable Put Price (or portion thereof) to each Selling Unitholder in
respect of such Selling Unitholder's Texas Units or Georgia Units set forth
in the Notice of Election to Exercise delivered by such Selling Unitholder in
connection with such Liquidity Put. By virtue of the Beneficial Share
Assignment, unless a Triggering Default occurs and is continuing, all cash
flow derived from the Units acquired pursuant to this Section 4.2 shall be
paid over to Holdco upon receipt by TW-SPV Co. thereof.
4.3 Procedures Relating to Accelerated Puts.
4.3.1 Notice of an Accelerated Put. If at any time there shall occur
an event which requires the Texas Acquisition Subsidiaries or the Georgia
Acquisition Subsidiaries, as the case may be, to purchase Units pursuant to
an Accelerated Put (as defined in Section 6.1 of the Texas Acquisition
Subsidiaries Guarantee and the Georgia Acquisition Subsidiaries Guarantee,
respectively), then the following shall apply:
(a) The TW Parties shall make available to the Georgia Units
Purchaser sufficient funds to purchase from and pay to each Eligible
Unitholder the Accelerated Put Price applicable to such Accelerated Put. The
parties
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45
hereby agree to take all actions, and execute all amendments to this
Agreement and the Beneficial Share Assignment, reasonably necessary to cause
the Georgia Units Purchaser to assign to TWE all cash flow derived from the
Georgia Units (the "Georgia AP Units Cash Flow Assignment") purchased
pursuant to an Accelerated Put (collectively, "Georgia AP Units"). All
Georgia AP Units held by the Georgia Units Purchaser and TWE's rights to the
cash flow derived from such Georgia AP Units shall be subject to the
provisions of clause (b) of this Section 4.3.1.
(b) On the Liquidity Put Settlement Date for each Liquidity Put
following the purchase of Georgia AP Units pursuant to clause (a) above,
Holdco shall pay to the TW Parties an amount equal to the product of (i)
Liquidity Put Number for such Liquidity Put, less any Georgia Units that are
actually tendered pursuant to such Liquidity Put (but in no event greater
than the number of Georgia AP Units in respect of which payments have not
been made by Holdco hereunder (the "Repaid Georgia AP Units")), multiplied by
(ii) the lesser of (x) the Put Price for such Liquidity Put (as such Put
Price is determined in accordance with Section 3.2 of the Georgia Overall
Agreement) and (y) the applicable Accelerated Put Price. Upon any such
payment, the Repaid Georgia AP Units shall no longer be subject to the
Georgia AP Units Cash Flow Assignment.
(c) The TW Parties shall make available to the Texas Units Purchaser
sufficient funds to purchase from and pay to each Eligible Unitholder the
Accelerated Put Price applicable to such Accelerated Put. The parties hereby
agree to take all actions, including executing all amendments to this
Agreement and the
<PAGE>
46
Beneficial Share Assignment, reasonably necessary to cause the Texas Units
Purchaser to assign to TWE all cash flow derived from the Texas Units (the
"Texas AP Units Cash Flow Assignment") purchased pursuant to an Accelerated
Put (collectively, "Texas AP Units"). All Texas AP Units held by the Texas
Units Purchaser and TWE's rights to the cash flow derived from such Texas AP
Units shall be subject to the further provisions of clause (d) of this
Section 4.3.1.
(d) On the Liquidity Put Settlement Date for each Liquidity Put
following the purchase of Texas AP Units pursuant to clause (c) above, Holdco
shall pay to the TW Parties an amount equal to the product of (i) Liquidity
Put Number for such Liquidity Put, less any Texas Units that are actually
tendered pursuant to such Liquidity Put (but in no event greater than the
number of Texas AP Units in respect of which payments have not been made by
Holdco hereunder (the "Repaid Texas AP Units")), multiplied by the lesser of
(x) the Put Price for such Liquidity Put (as such Put Price is determined in
accordance with Section 3.2 of the Texas Overall Agreement) and (y) the
applicable Accelerated Put Price. Upon any such payment, the Repaid Texas AP
Units shall no longer be subject to the Texas AP Units Cash Flow Assignment.
(e) Solely for all income tax and accounting purposes during the
period the cash flow from the Georgia AP Units is assigned to TWE pursuant to
the Georgia AP Units Cash Flow Assignment, TWE shall be deemed to be the
owner of such Georgia AP Units and as such owner shall be deemed to transfer
such Georgia AP Units to the Georgia Units Purchaser pursuant to Section
4.3.1(b)
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47
above at such time as the Georgia AP Units are no longer subject to the
Georgia AP Units Cash Flow Assignment. Solely for accounting and all income
tax purposes during the period the cash flow from the Texas AP Units is
assigned to TWE pursuant to the Texas AP Units Cash Flow Assignment, TWE
shall be deemed to be the owner of such Texas AP Units and as such owner
shall be deemed to transfer of such Texas AP Units to the Texas Units
Purchaser pursuant to Section 4.3.1(d) above at such time as the Texas AP
Units are no longer subject to the Texas AP Units Cash Flow Assignment. The
parties agree to report and otherwise take actions consistent with the
foregoing.
4.4 Procedures Relating to End-of-Term Options. The following provisions
shall apply to any End-of-Term Option, other than an Accelerated End-of-Term
Option under Section 7.7 of the Texas Overall Agreement, which shall be
subject to Section 4.5 hereof.
4.4.1 End-of-Term Option Notices. If the Holdco Parties desire to
have the Georgia Units Purchaser or the Texas Units Purchaser exercise the
End-of-Term Option under the Georgia Overall Agreement and the Texas Overall
Agreement, respectively, then, not later than 30 days prior to the applicable
End-of-Term Option Exercise Date, the Holdco Parties shall give written
notice (an "ETO Exercise Notice") to the Georgia Units Purchaser or Texas
Units Purchaser, as applicable (with a copy of such notice to the TW
Parties), instructing the Georgia Units Purchaser or the Texas Units
Purchaser, as the case may be, to exercise such End-of-Term Option, such
notice to set forth the date upon which such End-of-Term Option shall be
exercised and
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48
include forms of all notices or such other information necessary to effect
the exercise of the relevant End-of-Term Option. If any such End-of-Term
Option shall lapse without the exercise thereof, the rights and
responsibilities with respect to the Units so affected shall be as otherwise
provided in this Agreement and the disposition of the Georgia Park and the
Texas Park shall be as provided in the Georgia Overall Agreement and the
Texas Overall Agreement, respectively. Upon exercise of an End-of-Term
Option, the following shall apply:
4.4.2 Actions in respect an End-of-Term Option.
(a) With respect to an End-of-Term Option under the Georgia Overall
Agreement, provided the Holdco Parties have given a valid and effective ETO
Exercise Notice, the Holdco Parties shall have the right and obligation to
administer, observe, comply with and perform all obligations of the Georgia
Units Purchaser under such End-of-Term Option and shall, not later than three
Business Days prior to the End-of-Term Option Settlement Date, pay to the
Georgia Units Purchaser (in immediately available funds in United States
Dollars in the account of the Georgia Units Purchaser designated by the TW
Parties) the Aggregate Georgia-End-of-Term Option Payment.
(b) With respect to an End-of-Term Option under the Texas Overall
Agreement, provided the Holdco Parties have given a valid and effective ETO
Exercise Notice, the Holdco Parties shall have the right and obligation to
administer, observe, comply with and perform all obligations of the Texas
Units Purchaser under such End-of-Term Option and shall, not later than three
Business Days prior to the
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49
End-of-Term Option Settlement Date, pay to the Texas Units Purchaser (in
immediately available funds in United States Dollars in the account of such
Texas Units Purchaser designated by the TW Parties) the Aggregate Texas
End-of-Term Option Payment.
4.4.3 Casualty or Loss Accelerated End-of-Term Option. If an
End-of-Term Option is deemed accelerated and exercised pursuant to Section
7.6 or 8.6 of the Texas Overall Agreement and Georgia Overall Agreement,
respectively, then the Holdco Parties shall be deemed to have given an ETO
Exercise Notice in respect of such End-of-Term Option, shall observe, comply
with and perform all of the obligations of the applicable Acquisition
Subsidiary in respect of such End-of-Term Option and shall undertake the
actions described in Sections 4.4.2(a) and 4.4.2(b), as applicable.
4.5 Procedures Relating to An Accelerated End-of-Term Option.
4.5.1 End-of-Term Option Notices. If at any time prior to the 90th
day immediately preceding the End-of-Term Option Exercise Date (the
"Accelerated Option Notice Date"), the Texas Units Purchaser or affiliates
thereof, or the Holdco Parties, or affiliates thereof, shall have acquired
all of the Texas Units and the Holdco Parties desire to have the Texas Units
Purchaser accelerate the End-of-Term Option as provided under Section 7.7 of
the Texas Overall Agreement (an "Accelerated End-of-Term Option"), the Holdco
Parties shall by written notice (the "Accelerated End-of-Term Option Notice")
to the Texas Units Purchaser, given not later than the Accelerated Option
Notice Date (with a copy to the TW Parties), instruct
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50
Texas Units Purchaser to effect such Accelerated End-of-Term Option. The
Accelerated End-of-Term Option Notice shall set forth the date upon which the
Accelerated End-of-Term Option is to be effected and shall include forms of
all notices and such other information necessary to effect the Accelerated
End-of-Term Option in compliance with the Texas Overall Agreement. If the
Holdco Parties shall request the Texas Units Purchaser to effect the
Accelerated End-of-Term Option, the following shall apply:
4.5.2 Actions in respect an Accelerated End-of-Term Option. Provided
the Holdco Parties shall have delivered a valid and effective Accelerated
End-of-Term Option Notice on or prior to the Accelerated Option Notice Date,
the Holdco Parties shall have the right and obligation to administer,
observe, comply with and perform all obligations of the Texas Units Purchaser
with respect to the Accelerated End-of-Term Option. In furtherance of the
foregoing, not later than three Business Days prior to the End-of-Term Option
Settlement Date, the Holdco Parties shall pay to the Texas Units Purchaser
(in immediately available funds in United States Dollars in the account of
such Texas Units Purchaser designated by the TW Parties) all sums necessary
to acquire the interests of each applicable general partner pursuant to the
Accelerated End-of-Term Option provisions of the Texas Overall Agreement.
4.6 Certain Actions Following a Triggering Default. Without limiting the
obligations of the Holdco Parties hereunder, following and during the
continuation of a Triggering Default, the TW Parties and TW-SPV Co. may take
all
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51
action necessary to permit the Acquisition Companies to purchase Units
pursuant to the terms of the Georgia Agreements and the Texas Agreements.
4.7 Certain Third Party Claims.
(a) The Holdco Parties shall indemnify and hold harmless the
Acquisition Companies and the TW Parties from and against any Losses arising
out of or relating to actions or claims brought by or on behalf of
Unitholders in connection with the Acquisition Companies' purchase of Units
and their performance of obligations, from and after the Effective Time of
the Mergers, under Articles III and VIII of the Georgia Overall Agreement and
Articles III and VII of the Texas Overall Agreement.
(b) The TW Parties shall indemnify and hold harmless the Holdco
Parties from and against any Losses arising out of or relating to actions or
claims brought by or on behalf of Unitholders in connection with the
Acquisition Companies' purchase of Units and their performance of
obligations, prior to the Effective Time of the Mergers, under Articles III
and VIII of the Georgia Overall Agreement and Articles III and VII of the
Texas Overall Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of Holdco and GP Holdings. Holdco and
GP Holdings, jointly and severally, represent and warrant to the TW Parties
that:
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5.1.1 Corporate Existence and Power. Each of Holdco and GP Holdings
is duly organized and existing in good standing under the laws of its
jurisdiction of incorporation, and has all corporate power and authority and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
5.1.2 Corporate and Governmental Authorization; Contravention. The
execution, delivery and performance by each of Holdco and GP Holdings of this
Agreement are within its corporate power, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official and do not contravene, or
constitute a default under any provision of, applicable law or regulations or
the Organizational Documents of Holdco or GP Holdings or any agreement,
judgment, injunction, order, decree or other instrument binding upon Holdco
or GP Holdings or its assets.
5.1.3 Binding Effect. This Agreement constitutes a valid and binding
agreement of each of Holdco and GP Holdings, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or
similar laws affecting enforcement of creditors' rights generally and general
principles of equity (whether considered in a proceeding at law or in equity).
5.2 Representations and Warranties of the TW Parties. TWX and TWE,
jointly and severally, represent and warrant to Holdco and GP Holdings that:
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5.2.1 Corporate Existence and Power. Each of TWX and TWE is duly
organized and existing in good standing under the laws of its jurisdiction of
incorporation or organization, and has all requisite power and authority and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
5.2.2 Corporate and Governmental Authorization; Contravention. The
execution, delivery and performance by each of TWX and TWE of this Agreement
are within its corporate or partnership power, as applicable, have been duly
authorized by all necessary corporate or partnership action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under any provision
of, applicable law or regulations or the Organizational Documents of TWX or
TWE, or any agreement, judgment, injunction, order, decree or other
instrument binding upon TWX or TWE or its assets.
5.2.3 Binding Effect. This Agreement constitutes a valid and binding
agreement of each of TWX and TWE, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer or similar laws
affecting enforcement of creditors' rights generally and general principles
of equity (whether considered in a proceeding at law or in equity).
5.3 Representations and Warranties of the Six Flags Parties. Each of
the Six Flags Parties, jointly and severally, represents and warrants, that:
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54
5.3.1 Corporate Existence and Power. Each such Six Flags Party is
duly organized and existing in good standing under the laws of its
jurisdiction of incorporation or organization, and has all requisite power
and authority and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
5.3.2 Corporate and Governmental Authorization; Contravention. The
execution, delivery and performance by each such Six Flags Party of this
Agreement are within its corporate or partnership power, as applicable, have
been duly authorized by all necessary partnership or corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default under any
provision of, applicable law or regulations or the Organizational Documents
of such Six Flags Party or any agreement, judgment, injunction, order, decree
or other instrument binding upon such Six Flags Party or its assets.
5.3.3 Binding Effect. This Agreement constitutes a valid and binding
agreement of each such Six Flags Party, enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer or similar laws
affecting enforcement of creditors' rights generally and general principles
of equity (whether considered in a proceeding at law or in equity).
5.3.4 Stock Ownership of Certain Subsidiaries. Schedule 5.3.4 lists
at the Effective Time of the Mergers (i) the authorized number of shares of
each
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55
class or series of capital stock or other equity interest of each of the
Acquisition Companies; (ii) the number of issued and outstanding shares of
each such class or series or other equity interest; and (iii) the names of
the record owners of the capital stock of, or equity interest in, each such
entity and the number of shares of such capital stock or the percentage of
such equity interest owned by them.
5.3.5 Effective Time of Representations and Warranties. The
representations and warranties of each Six Flags Party shall be deemed to be
made to (i) the Holdco Parties prior to the Effective Time of the Mergers and
(ii) the TW Parties immediately following the Effective Time of the Mergers.
ARTICLE 6
COVENANTS
6.1 Covenants of the Holdco Parties. In order to induce the TW Parties to
enter into this Agreement and the Merger Agreement, the Holdco Parties, as
applicable, further covenant and agree as follows:
6.1.1 Maintenance of Ownership.
(a) From and after the date hereof and until such time as all issued
and outstanding Zero Coupon Notes have been paid in full or SFEC shall have
effected a Covenant Defeasance with respect to the Zero Coupon Notes
Indenture, (i) SFEC shall not (and the Holdco Parties shall cause SFEC not
to) Transfer any interest in the capital stock of SFTP; and (ii) SFTP shall
not (and the Holdco Parties shall cause SFTP not to) Transfer any SF Theme
Park or any material portion thereof
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56
(it being understood that the sale or disposition of a ride or attraction in
good faith in the ordinary course of business shall for purposes of this
Section 6.1 not be deemed a material portion of an SF Theme Park) in any
transaction or series of related transactions; provided, however, that (A)
Liens may be granted by SFEC and its Subsidiaries in (i) the capital stock of
SFTP or any Subsidiary of SFTP or (ii) any SF Theme Park or material portion
thereof, in each case solely in connection with bona fide (x) borrowings from
an investment bank, a commercial bank, insurance company or similar
institutional lender or (y) debt issuances to Persons unaffiliated with
Holdco, in each case under any Senior Indebtedness of SFEC or its
Subsidiaries permitted under Section 6.1.2 and (B) Liens securing Senior
Indebtedness may be foreclosed.
(b) Following the repayment in full of all issued and outstanding
Zero Coupon Notes or upon the happening of a Covenant Defeasance with respect
to the Zero Coupon Notes Indenture, SFEC may not Transfer any SF Theme Park
or material portion thereof, unless, (A) such Transfer is a Lien securing
Senior Indebtedness or (B) (i) such Transfer is a sale on arm's-length terms
to an unaffiliated third party or, with the consent of the TW Parties (such
consent not to be unreasonably withheld) to affiliates of SFEC, in each case
for fair value in cash, (ii) the net proceeds of such Transfer are used to
repay Indebtedness of SFEC, or its Subsidiaries and (iii) after giving effect
to such Transfer, the Net Worth of SFEC shall not be less than the Minimum
Net Worth; provided, further, that SFEC may make Transfers pursuant to this
clause (b) without complying with the foregoing clause (iii), only if (A)(x)
such
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Transfer is required to cure a default or an event which, with the giving of
notice or the passage of time, would become a default under, or otherwise
maintain compliance with, the financial covenants contained in the agreements
governing any of SFEC's or its Subsidiaries' Senior Indebtedness that could
not reasonably be cured or complied with without such Transfer and (y) such
Transfer otherwise complies with clauses (i) and (ii) above, or (B) such
Transfer is a foreclosure of Lien. Following the repayment of any
Indebtedness required by the foregoing clause (ii), SFEC may not make any
Restricted Payment if after giving effect to such Restricted Payment, (i)
SFEC's consolidated indebtedness is then greater than the Designated Leverage
Amount and (ii) SFEC's Net Worth would be less than the Minimum Net Worth.
(c) At least five Business Days prior to any Transfer of a SF Theme
Park or any material portion thereof or the making of any Restricted Payment
following any such Transfer, the Holdco Parties shall provide the TW Parties
with written notice thereof including a certificate of the chief financial
officer of Holdco certifying as to the compliance of such transfer with the
provisions of Sections 6.1.1, including a calculation, if applicable, of the
Net Worth of SFEC or the Designated Leverage Amount showing with reasonable
specificity the changes from Net Worth shown on SFEC's most recent audited
balance sheet.
(d) For purposes of this Section 6.1.1, Transfers shall not include
the granting of Permitted Liens.
6.1.2 Indebtedness. SFEC and its Subsidiaries shall not (i)
guarantee any Indebtedness of any Person other than Indebtedness of SFEC or
any
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of its Subsidiaries or (ii) secure any Indebtedness of any Person (other than
SFEC or any of its Subsidiaries) by a Lien upon or in property owned by SFEC
or any of its Subsidiaries. SFEC and its Subsidiaries shall not incur or
suffer to exist any Indebtedness if such Indebtedness is guaranteed by any
Person (other than SFEC and its Subsidiaries) or secured by a Lien upon or in
assets owned by such Person other than Indebtedness of SFEC, the proceeds of
which are used solely to effect the Covenant Defeasance.
6.1.3 Amendment of Documents Relating to the Required Obligations.
SFEC shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of or waive any rights under any of the Relevant
Agreements without the prior written consent of the TW Parties, which consent
shall not be unreasonably withheld or delayed; provided that the TW Parties
may not withhold their consent if the effect of any such amendment, change or
waiver would not increase the obligations of the TW Parties under any
Relevant Agreement or otherwise would adversely affect the obligations of the
TW Parties under or in respect of the TW Guarantee, the Texas Guarantee or
the Georgia Guarantee.
6.1.4 Repayment of Zero Coupon Notes. Upon the acceleration or at
Stated Maturity of the Zero Coupon Notes, SFEC shall, and Holdco shall cause
SFEC to (in each case for the sole and exclusive benefit of the TW Parties
only) pay all amounts due in respect of the Zero Coupon Notes and any other
amounts due and payable under the Zero Coupon Notes Indenture, including
without limitation, the Principal Amount, Accreted Value Amount and Default
Interest, if any, in respect of
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59
each such Zero Coupon Note; and, in furtherance of SFEC's obligation under
this Section 6.1.4, SFEC shall cause SFTP to provide all funds necessary for
SFEC to fulfill such obligations, including, without limitation, the
declaration of a one-time dividend, or the making of a one-time loan, by SFTP
to SFEC in accordance with Section 4.04(3)(b)(vi) of the Indenture, dated
June 23, 1995, among SFTP, SFOG, SFOT, Inc. and S.F. Partnership and UST, as
amended. The Holdco Parties hereby acknowledge and agree that any refinancing
of the Zero Coupon Notes shall be effected without any guarantee (or similar
undertaking) of such refinancing by TWE or any affiliate thereof.
6.1.5 Other Agreements. Unless a Covenant Defeasance has been
effected or the Zero Coupon Notes have otherwise been repaid in full, none of
the Holdco Parties shall enter into or become obligated under any agreement
the terms and provisions of which would contractually restrict or prohibit
the ability of SFTP to make the restrictive payments contemplated by Section
4.04(b)(vii) under the Indenture, dated as of June 23, 1995, as amended (the
"12-1/4% Debentures Indenture") , of SFTP relating to its 12-1/4% Senior
Subordinated Discount Notes due 2005 (the "12-1/4% Debentures").
6.1.6 SFEC Subsidiaries. The Holdco Parties, as applicable, shall,
subject to the Holdco Parties' being reasonably satisfied as to compliance
with the 12-1/4% Debenture Indenture, cause each direct or indirect
Subsidiary of SFEC not currently a party hereto (each, a "SFEC Subsidiary")
to execute and deliver to the TW Parties an instrument in form and substance
reasonably satisfactory to the TW Parties
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60
pursuant to which it will become a party to this Agreement and agree that all
such SFEC Subsidiaries shall be bound by the terms of this Agreement;
provided that, the foregoing requirement shall not apply to any SFEC
Subsidiary that (a) holds immaterial assets and (b) is not liable with
respect to any material liabilities. For purposes of this agreement the terms
"SF Subsidiaries," "Six Flags Parties" and "Holdco Parties" shall
automatically be amended to include such SFEC Subsidiary. If any SFEC
Subsidiary is unable to become a party to this Agreement pursuant to the
foregoing provisions of this Section 6.1.6, then such Subsidiary shall not
(and the Holdco Parties shall cause such Subsidiary not to) incur any
Indebtedness other than guarantees of Senior Indebtedness incurred by SFTP or
SFEC.
6.1.7 Amendment of Certain Organizational Documents; No Liens; No
Transfers. The Holdco Parties shall not, and shall not permit GP Holdings to,
amend the Organizational Documents of GP Holdings. The Holdco Parties will
not take any action that will result in a Lien being imposed upon the
Beneficial Shares, the capital stock of the Acquisition Subsidiaries or the
Units, other than pursuant to the Georgia Acquisition Subsidiaries Guarantee
and the Texas Acquisition Subsidiaries Guarantee. None of the Holdco Parties
shall Transfer any interest in the Beneficial Shares or any shares of capital
stock of the Acquisition Companies or GP Holdings or any interests in any of
the foregoing.
6.1.8 Repayment of SFOG B Holdings, SFOT II Holdings, SFOG A
Holdings, SFOT I Holdings, SFOG, and SFT Holdings Debt. Immediately following
the closing of the transactions contemplated by the Merger Agreement and
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61
the execution and delivery of the Beneficial Share Assignment, Holdco shall
repay, or cause to be repaid, the indebtedness (and satisfy, or cause to be
satisfied, any related liabilities and obligations) incurred by SFOG B
Holdings, SFOT II Holdings, SFOG A Holdings, SFOT I Holdings, SFOG and SFT
Holdings pursuant to Sections 3.1(a) through (f), respectively.
6.1.9 Mergers. No Holdco Party shall merge or consolidate with or into,
or transfer all or substantially all of its assets to, any Person, unless the
surviving entity or transferee, as the case may be, executes an instrument, in
form and substance reasonably satisfactory to the TW Parties, pursuant to which
it assumes all of the obligations of such Holdco Party hereunder.
6.2 Covenants of the TW Parties. In order to induce the Holdco Parties to
enter into this Agreement and the Merger Agreement, the TW Parties further
agree as follows:
6.2.1 Non-Compete Provisions. The TW Parties shall, and shall cause
the Warner Bros. division of TWE (or any successor to Warner Bros.) to
observe and comply with the non-competition provisions set forth in Article V
of the Georgia Guarantee and the Texas Guarantee, respectively.
6.2.2 TWE Zero Coupon Notes Covenants. Subject to the provisions of
Section 6.1.4 hereof, until the earlier to occur of (i) payment in full of
all issued and outstanding Zero Coupon Notes or (ii) a Covenant Defeasance
with respect to the Zero Coupon Notes Indenture, TWE shall, and TWX shall
cause TWE to, observe, perform and comply with in all material respects the
provisions set forth in
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Sections 803, 1004, 1008, 1009, 1010 and 1011 (to the extent arising out of a
default by TWE and not a default by SFEC) of the Zero Coupon Notes Indenture.
6.2.3 Amendment of Certain Organizational Documents. Prior to the
Effective Time of the Mergers, SFEC shall cause the Acquisition Companies,
and TWE shall cause TW-SPV Co. and the Acquisition Companies to amend their
respective Organizational Documents to include the provisions set forth in
Exhibit A hereto, and the TW Parties and the Holdco Parties shall not permit
further amendments of such Organizational Documents.
6.2.4 Ownership of the Acquisition Subsidiaries. None of the TW
Parties shall Transfer the GP Holdings Preferred Stock, or any interest
therein, any interest in TW-SPV Co., or the Acquisition Companies or the
Georgia AP Units Cash Flow Assignment or the Texas AP Units Cash Flow
Assignment or otherwise take any action that would violate the Georgia
Agreements or the Texas Agreements; provided, that TWE may Transfer interests
in TW-SPV Co. to TWX or one or more wholly-owned Subsidiaries thereof. The TW
Parties will not take any action that would result in a Lien being imposed on
the Beneficial Shares, the Georgia AP Units Cash Flow Assignment, the Texas
AP Units Cash Flow Assignment, the capital stock of the Acquisition
Subsidiaries or the Units, other than pursuant to the Georgia Acquisition
Subsidiaries Guarantee and the Texas Acquisition Subsidiaries Guarantee. The
TW Parties hereby covenant and agree to cause TW-SPV Co. not to engage in any
business or other activity other than the record ownership of the Beneficial
Shares and the activities related thereto and to otherwise comply with its
obligations hereunder.
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6.2.5 Ownership of Texas Units and Georgia Units. None of the TW
Parties, TW-SPV Co., the Acquisition Companies or the Person entitled to vote
the Beneficial Shares, to the extent it is within their respective control,
and the Holdco Parties shall permit the Transfer of any interest in any Texas
Units or Georgia Units held by the Acquisition Companies.
ARTICLE 7
INDEMNIFICATION
7.1 Obligation of the Holdco Parties to Indemnify. Subject to the further
terms of this Article 7, each of the Holdco Parties, jointly and severally,
agrees to indemnify, defend and hold harmless each of TWE and TWX from and
against all Losses based upon, arising out of, relating to or otherwise in
respect of (i) the failure of any Holdco Party or Obligor, as applicable, to
perform on a full and timely basis any of the Required Obligations, (ii) the
failure of any Holdco Party to perform on a full or timely basis its
obligations under this Agreement, or under the Subordinated Indemnity Escrow
Agreement, (iii) payments made by the TW Parties in respect of the Georgia
Guarantee or the Texas Guarantee (other than payments made in respect of any
Excluded Obligations), (iv) payments made by the TW Parties or their
affiliates in respect of any Required Obligations; and (v) any breach or
violation of any covenants, representations or agreements of the Holdco
Parties under this Agreement.
7.2 Obligation of the TW Parties to Indemnify. Subject to the further
terms of this Article 7, each of TWE and TWX, jointly and severally, agrees to
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64
indemnify, defend and hold harmless each of the Holdco Parties from and
against all Losses based upon, arising out of, relating to or otherwise in
respect of any breach or violation of any covenants, representations or
agreements of the TW Parties under this Agreement.
7.3 Procedures Relating to Indemnification. The party making a claim
under this Article 7 is referred to as the "Indemnitee," and the party
against whom such claims are asserted under this Article 7 is referred to as
the "Indemnitor":
7.3.1 Notice of Asserted Third Party Liability. With respect to
third party claims, all claims for indemnification by any Indemnitee under
this Article 7 shall be asserted and resolved as follows:
(a) Promptly after receipt by an Indemnitee of notice of any demand,
claim or circumstances which, with the lapse of time, would give rise to a
claim or the commencement (or the threatened commencement) of any action,
proceeding or investigation (an "Asserted Third Party Liability") that may
result in Losses which are subject to indemnification under Section 7.1 or
7.2, as applicable, the Indemnitee shall give notice thereof (the "Claims
Notice") to the Indemnitor. The Claims Notice shall describe the Asserted
Third Party Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary, and to the extent feasible) of the Losses that have
been or may be suffered by the Indemnitee. The failure of an Indemnitee to
provide a Claims Notice with reasonable promptness shall not adversely affect
any indemnification obligations hereunder except to the extent that the
Indemnitor is actually prejudiced thereby.
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7.3.2 Procedures with Respect to Asserted Third Party Liabilities.
The Indemnitor may elect to compromise or defend, at its own expense and by
its own counsel, any Asserted Third Party Liability. If the Indemnitor elects
to compromise or defend such Asserted Third Party Liability, it shall, within
30 days (or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnitor, in the compromise of, or defense
against, such Asserted Third Party Liability. If the Indemnitor elects not to
compromise or defend the Asserted Third Party Liability, fails to notify the
Indemnitee of its election as herein provided or contests its obligations to
defend under this Agreement, the Indemnitee may pay, compromise or defend
such Asserted Third Party Liability (at the Indemnifying Party's sole cost
and expense). Notwithstanding the foregoing, neither the Indemnitor nor the
Indemnitee may settle or compromise any claim over the objection of the
other; provided, however, that if the settlement or compromise does not
result in any liability to the Indemnitor, consent to settlement or
compromise shall not be unreasonably withheld. In any event, the Indemnitee
and the Indemnitor may participate at their own expense, in defense of such
Asserted Third Party Liability. If the Indemnitor chooses to defend any
claim, the Indemnitee shall make available to the Indemnitor any books,
records or other documents within its control that are necessary or
appropriate for such defense (in the judgment of counsel engaged by the
Indemnitor).
The Indemnitee has the right to employ its own counsel in any
compromise of, or defense against, any Asserted Third Party Liability, or in
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66
connection with the Indemnitee's provision of reasonable cooperation and
assistance to the Indemnitor or the Indemnitor's counsel as provided above,
but the fees, expenses and other charges of such counsel employed by the
Indemnitee will be at the expense of the Indemnitee unless (i) the employment
of counsel by the Indemnitee has been authorized in writing by the Indemnitor
or (ii) the Indemnitor has not in fact employed counsel to compromise or
defend against the Asserted Third Party Liability within a reasonable time,
in each of which cases the reasonable fees, disbursements and other charges
of counsel retained by the Indemnitee will be at the expense of the
Indemnitor. It is understood that the Indemnitor shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time
retained by the Indemnitee unless the employment of more than one counsel has
been authorized in writing by the Indemnitor.
7.3.3 Direct Claim. In the event that an Indemnitee has a claim for
indemnification that does not involve a claim by a third party (a "Direct
Claim"), the Indemnitee shall notify the Indemnitor of such Direct Claim at
the time such Indemnitee desires to proceed with such claim, specifying, to
the extent known, the nature, circumstances and amount of such Direct Claim
(a "Direct Claim Notice"), provided, however, the failure of an Indemnitee to
provide such Direct Claim Notice with reasonable promptness shall not
adversely affect any indemnification obligations hereunder, which shall
survive until such claim is resolved hereunder.
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7.3.4 Escrow Agreement. Holdco, TWE and TWX covenant and agree to
enter into concurrently with the execution of this Agreement an escrow
agreement (the "Subordinated Indemnity Escrow Agreement") pursuant to which
an escrow agent (the "Escrow Agent") reasonably satisfactory to the TW
Parties shall maintain an escrow fund, the funding for which shall be
determined on an annual basis and shall equal the sum of the "Escrow Amounts"
in respect of each of Texas Fund and Georgia Fund. For purposes of the
Subordinated Indemnity Escrow Agreement, "Escrow Amounts" shall mean, for
each year, with respect to each of Six Flags Over Texas Fund, Ltd. and Six
Flags Fund, Ltd. (L.P.) (with reference to the Texas Overall Agreement and
the Georgia Overall Agreement, respectively), (x) the excess of (i) the sum
of (A) the "Minimum Amount" for such year, plus (B) the "Base Rent" for such
year, over (ii) twice the earnings before depreciation and amortization and
after minimum mandatory capital expenditures and cash interest expense for
Texas Fund and Georgia Fund, as applicable, for the prior year, multiplied by
(y) the percentage of the Texas Units or Georgia Units, as the case may be,
owned by Persons other than the Acquisition Companies. The Escrow Amounts
shall be determined not later than March 31 of each such year7/ and, without
limiting any of Holdco's other obligations, Holdco shall deposit such amounts
as shall be necessary to equal the Escrow Amounts with the Escrow Agent
within five Business Days thereafter, and all amounts held in the Escrow
Account in excess of the Escrow Amount shall be returned promptly to
- --------
7/ With respect to determining payments for the first year, 1998 numbers
for Texas park will be doubled. Actual 1997 and 1998 results for
Georgia will be used.
<PAGE>
68
Holdco. All amounts held in escrow shall be used, at the election of the TW
Parties, to satisfy amounts owing to the TW Parties under the this Agreement,
but only after all cash flow derived from the Texas Units and the Georgia
Units then subject to the Beneficial Share Assignments have been applied to
such amounts so owing.
ARTICLE 8
SUBORDINATION
8.1 Subordination Agreement. (a) Notwithstanding any provision to the
contrary set forth herein, the parties agree that all monetary obligations of
Holdco pursuant to this Agreement (the "Subordinated Obligations") including,
without limitation, all obligations of Holdco with respect to the Required
Obligations as set forth in Sections 2.1 through 2.3 hereof, its obligations
in respect of the Zero Coupon Notes pursuant to Section 6.1.4 hereof, and its
indemnification obligations set forth in Section 7.1 hereof, shall be
subordinated to the prior payment in full in cash of all obligations with
respect to the Holdco Notes (including interest accruing on such Holdco Notes
after the commencement of a bankruptcy case or proceeding at the contract
rate whether or not a claim for such interest is an allowed claim in such
case or proceeding), and agree that no payment of, on, or on account of, the
Subordinated Obligations shall be made by Holdco, if (i) a default has
occurred and is continuing with respect to any payment obligation on or with
respect to the Holdco Notes; or (ii) a default, other than a payment default,
on the Holdco Notes occurs and is continuing that then permits, or with the
passage of time or the giving of notice would permit,
<PAGE>
69
holders of the Holdco Notes to accelerate their maturity and the TW Parties
receive a notice of default (a "Payment Blockage Notice") from a Person
authorized to give it under the Holdco Notes or the Holdco Notes Indenture.
No new Payment Blockage Period (defined below) may be commenced unless and
until 365 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice, and in no event may the total number of days during
which any Payment Blockage Period is in effect exceed 179 days in the
aggregate during any 365 day consecutive period. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been cured or waived for a period of
not less than 180 days. Without limiting the foregoing, a Payment Blockage
Notice shall remain in effect until the earlier of (x) the date on which such
nonpayment default is cured or waived, (y) 179 days after the date on which
the applicable Payment Blockage Notice is received or (z) such Payment
Blockage Notice shall be rescinded by written notice to the TW Parties from
the holders of a majority of the outstanding principal amount of the Holdco
Notes or their trustee or authorized representative who delivered such notice
("Payment Blockage Period").
(b) In the event that either (i) a default shall have occurred and be
continuing with respect to any payment obligation on or with respect to the
Holdco Notes or (ii) a Payment Blockage Period is in effect, then,
notwithstanding the foregoing provisions, any payment received by the TW
Parties in respect of the Subordinated Obligations in contravention of the
provisions of the foregoing clause (a)
<PAGE>
70
shall, until such default has been cured or waived or such Payment Blockage
Period has expired, as applicable, be held in trust for the benefit of and
shall, to the extent that at such time all Holdco Notes have not been paid or
provided for in full, be paid over to the trustee, or equivalent thereof, in
respect of the Holdco Notes, for application to the payment of the Holdco
Notes until such default has been cured or waived, such Payment Blockage
Period shall have expired or until all such Holdco Notes shall have been paid
in full, whichever shall occur first.
8.2 Dissolution, Etc. In the event of any dissolution, winding-up,
liquidation or reorganization of Holdco (whether voluntary or involuntary and
whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshaling of the assets
and liabilities of Holdco or otherwise):
(a) all obligations with respect to the Holdco Notes shall be
indefeasibly paid in full in cash (including interest accruing on such Holdco
Notes after the commencement of a bankruptcy case or proceeding at the
contract rate whether or not a claim for such interest is an allowed claim in
such case or proceeding) before the TW Parties are entitled to receive any
payment on or in respect of the Subordinated Obligations (provided that the
TW Parties may receive securities ("Eligible Securities") that are
subordinated to at least the same extent as the Subordinated Obligations to
(a) the Holdco Notes and (b) any securities issued in exchange for Holdco
Notes); and
(b) in the event that any payment or distribution of assets of Holdco
of any kind or character (other than Eligible Securities) shall be received
by the
<PAGE>
71
TW Parties in respect of the Subordinated Obligations before all Holdco Notes
(including, as applicable, interest accruing on, or original issue discount
accreting with respect to, such Holdco Notes after the commencement of a
bankruptcy case or proceeding at the contract rate whether or not such
interest is an allowed claim in such case or proceeding) are indefeasibly
paid in full in cash, such payment or distribution shall be received in trust
and shall, to the extent that at such time all Holdco Notes have not been
indefeasibly paid in full in cash, be paid over to the holders of the Holdco
Notes, for application to the payment of obligations with respect to Holdco
Notes until all such obligations shall have been indefeasibly paid in full in
cash.
The consolidation of Holdco with, or the merger of Holdco into, another
entity shall not be deemed a dissolution, winding-up, liquidation or
reorganization for purpose of these subordination provisions.
8.3 Subrogation. Subject to the Holdco Notes being paid in full in cash
or Cash Equivalents, the TW Parties shall be subrogated to the rights of the
holders of the Holdco Notes, or their respective representatives, to receive
payments or distributions of assets of Holdco applicable to the Holdco Notes
until all amounts owing, if any, in respect of the Subordinated Obligations,
shall be paid in full, and for the purpose of such subrogation, no payments
or distributions to the holders of the Holdco Notes, or their respective
representatives, as the case may be, by or on behalf of Holdco or by or on
behalf of the TW Parties, which otherwise would have been made to the TW
Parties shall, as between Holdco and its creditors, be deemed to be payment
by Holdco to or on account of the holders of the Holdco Notes, or their
<PAGE>
72
respective representatives, as the case may be, it being understood that
these subordination provisions are intended solely for the purpose of
defining the relative rights of the TW Parties, on the one hand, and the
holders of the Holdco Notes and their respective representatives, on the
other hand.
8.4 Obligation to Pay Unconditional. Except as expressly provided herein,
nothing in this Article 8 is intended to or shall (i) impair, as between the
Holdco Parties and the TW Parties, the obligation of the Holdco Parties,
which is absolute and unconditional, to pay and perform the Required
Obligations as and when the same shall become due and payable in accordance
with the terms of this Agreement or (ii) affect any rights the TW Parties may
have to set-off and apply any and all payments received by the Texas
Acquisition Subsidiaries or the Georgia Acquisition Subsidiaries in respect
of any Texas Units or Georgia Units, respectively, against any and all of the
Required Obligations now or hereafter existing.
ARTICLE 9
TERMINATION
9.1 Termination. Unless terminated earlier by the written consent of
Holdco, SFEC and the TW Parties, on the date (the "Termination Date") upon
which no obligations (including the Required Obligations), whether absolute,
accrued, contingent, inchoate or otherwise are owing or outstanding under the
Relevant Documents (including the Georgia Guarantee and the Texas Guarantee),
or this Agreement, the Holdco Parties may request that this Agreement be
terminated, in
<PAGE>
73
which event, provided the foregoing condition shall have been satisfied, the TW
Parties shall agree to such termination and this Agreement shall be terminated
effective on the Termination Date.
9.2 Termination of Obligation. The provisions of this Section 9.2 shall
survive any termination of this Agreement until the transactions contemplated
under this Section 9.2 are completed. At such time as all Texas Units and all
Georgia Units are held by one or more of the TW Parties, the Texas
Acquisition Subsidiaries, the Georgia Acquisition Subsidiaries and/or Holdco,
the parties shall take all reasonable actions to terminate all obligations
(including the Required Obligations), whether absolute, accrued, contingent,
inchoate or otherwise under the Relevant Agreements (other than the Zero
Coupon Note Indenture, but including the Georgia Guarantee and the Texas
Guarantee).
9.3 Actions Upon Termination. Upon the termination of this Agreement,
TW-SPV Co. shall, and the TW Parties shall cause TW-SPV Co. to, sell, assign,
transfer and convey to Holdco or its designee, all right, title and interest
of TWE in and to the SFOG BH Capital Stock, the SFOT IIH Capital Stock, the
SFOG AH Capital Stock, the SFOT IH Capital Stock and the GP Holdings
Preferred Stock in return for payment of $1.00. In furtherance of the
foregoing, TWE shall, upon receipt of such payment, deliver to Holdco, or its
designee, such certificates (or other indicia of ownership) representing such
capital stock, duly endorsed in blank or accompanied by stock powers (or
similar documents of conveyance) duly executed in
<PAGE>
74
blank, in form for transfer to Holdco, or its designee and with all
appropriate stock transfer tax stamps affixed.
ARTICLE 10
MISCELLANEOUS
10.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person,
by telecopier (with a confirmed receipt thereof) or registered or certified mail
(postage prepaid, return receipt requested), and on the next business day when
sent by overnight courier service, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Holdco Parties, to:
Premier Parks Inc.
122 East 42nd Street, Suite 4906
New York, New York 10168
Attention: Kieran E. Burke
Telecopier: (212) 599-4694
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New Yrk 10022
Attention: Howard Chatzinoff, Esq.
Telecopier: (212) 310-8000
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attention: Glenn D. West, Esq.
<PAGE>
75
Telecopier: (214) 746-7700
(b) if to TWE Parties, to:
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Attention: Peter R. Haje,
Executive Vice President,
General Counsel
Telecopier: (212) 956-7281
with a copy to:
Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Robert B. Schumer, Esq.
Telecopier: (212) 757-3990
10.2 Notice Under Georgia and Texas Agreements. The parties hereto will
take all action necessary to ensure that each of Holdco and the TW Parties
receive all notices received or delivered by any party pursuant to the
Georgia Agreements and the Texas Agreements.
10.3 Waiver of Compliance; Consents. Any failure of the Holdco Parties,
on the one hand, or the TW Parties, on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Holdco
or TWE, respectively, only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires
<PAGE>
76
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 10.
10.4 Amendments. Subject to applicable law, this Agreement may be
amended, modified or supplemented only by a written agreement signed by each
of the parties hereto with respect to any of the terms contained herein.
10.5 Successors and Assigns; No Third Party Beneficiaries. The provisions
of this Agreement (including any provision that is expressly by its terms for
the sole benefit of or exclusive to a party) shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted
successors and assigns; provided that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the written consent of the other parties; provided
further that any Person that through a sale or merger succeeds to all or
substantially all of the assets of a party to this Agreement shall be deemed
a "permitted" successor and assignee of such party. Nothing contained in this
Agreement shall be deemed to confer upon anyone other than the parties hereto
(and their permitted successors and assigns) any right to insist upon or to
enforce the performance or observance of any of the obligations contained
herein.
10.6 Waiver of Subrogation; No Contribution. Except with respect to
Excluded Obligations, the Holdco Parties shall not exercise and hereby waive
any rights that they may now or hereafter acquire against any TW Party, the
Texas Acquisition Subsidiaries or the Georgia Acquisition Subsidiaries that
arise from the
<PAGE>
77
existence, payment, performance or enforcement of the Required Obligations
under this Agreement or any Relevant Agreement, including, without
limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of the Person against any TW Party, the Texas Acquisition Subsidiaries
or the Georgia Acquisition Subsidiaries, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right.
10.7 Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements
made and to be performed entirely within such State, without regard to the
choice of law principles thereof.
10.8 Judicial Proceedings. (a) EACH OF THE PARTIES HERETO AGREES THAT ANY
ACTION, SUIT OR PROCEEDING AGAINST ANY OF THE PARTIES HERETO ARISING UNDER OR
RELATING IN ANY WAY TO THIS AGREEMENT OR A TRANSACTION CONTEMPLATED HEREBY
MAY ONLY BE BROUGHT OR ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF EACH
SUCH COURT IN RESPECT OF ANY SUCH ACTION, SUIT OR PROCEEDING. EACH OF THE
PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY
SUCH ACTION, SUIT OR PROCEEDING BY THE MAILING
<PAGE>
78
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PRE-PAID, RETURN
RECEIPT REQUESTED, TO SUCH PARTY AT ITS ADDRESSES PROVIDED FOR NOTICES
HEREUNDER.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE THE LAYING OF VENUE OF ANY ACTION, SUIT OR
PROCEEDING ARISING UNDER OR RELATING IN ANY WAY TO DISAGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY IN ANY COURT LOCATED IN THE STATE OF NEW
YORK AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT A COURT LOCATED IN
THE STATE OF NEW YORK IS NOT A CONVENIENT FORUM FOR ANY SUCH ACTION, SUIT OR
PROCEEDING.
10.9 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
10.10 Offsetting Payments. The parties hereby agree and acknowledge that
all dividends and distributions made in respect of the GP Holdings Preferred
Stock and all amounts received by the TW Parties in respect of the GP
Holdings Preferred Stock upon any voluntary or involuntary liquidation,
dissolution or winding up of GP Holdings shall be applied against any amounts
due hereunder.
10.11 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement
<PAGE>
79
of the parties and shall not in any way affect the meaning or interpretation
of this Agreement. All references to the term "as of the date hereof" shall
mean the date of this Agreement.
10.12 Entire Agreement. This Agreement (including the schedules,
exhibits, documents or instruments referred to herein) constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, among the parties, or between any of them, with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year
first above written.
[Holdco]
By:
-----------------------------------------
Name:
Title:
[INSERT OTHER SIGNATORIES]
<PAGE>
Exhibit A
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SUBORDINATED INDEMNITY AGREEMENT
dated
______________, 1998
among
PREMIER PARKS INC. and [GP HOLDINGS],
TIME WARNER INC., TIME WARNER
ENTERTAINMENT COMPANY, L.P. and TW-SPV CO.,
and
SIX FLAGS ENTERTAINMENT CORPORATION,
SIX FLAGS THEME PARKS INC.,
SFOG II, INC., and
SFT HOLDINGS, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-------
<S> <C>
ARTICLE 1 DEFINED TERMS................................................................... 6
1.1 Definitions..................................................................... 6
1.2 Other Defined Terms............................................................ 24
ARTICLE 2 PERFORMANCE OF OBLIGATIONS..................................................... 28
2.1 Zero Coupon Notes.............................................................. 28
2.2 Georgia Obligations............................................................ 28
2.3 Texas Obligations.............................................................. 29
2.4 Continuing and Irrevocable Obligations......................................... 29
2.5 Nature of Obligations.......................................................... 29
2.6 Authorization.................................................................. 31
2.7 Certain Agreements and Waivers by Each Holdco Party............................ 33
2.8 Duty of Inquiry................................................................ 34
2.9 Bankruptcy No Discharge........................................................ 35
2.10 Limitation on Obligations...................................................... 36
ARTICLE 3 TRANSFERS OF CAPITAL STOCK..................................................... 36
3.1 Capital Stock of SFOG A Holdings, SFOG B Holdings,
SFOT I Holdings, SFOT II Holdings, SFOG and SFT
Holdings....................................................................... 36
3.2 Preferred Stock of GP Holdings................................................. 39
3.3 Beneficial Assignment of Interests............................................. 39
3.4 Preferred Stock of Acquisition Companies....................................... 40
3.5 Tax Matters.................................................................... 40
ARTICLE 4 LIQUIDITY PUTS; ACCELERATED PUTS;
END-OF-TERM OPTIONS............................................................ 41
4.1 General........................................................................ 41
4.2 Procedures Relating to Liquidity Puts.......................................... 42
4.3 Procedures Relating to Accelerated Puts........................................ 45
4.4 Procedures Relating to End-of-Term Options..................................... 48
4.5 Procedures Relating to An Accelerated End-of-Term Option....................... 50
4.6 Certain Actions Following a Triggering Default................................. 51
4.7 Certain Third Party Claims..................................................... 51
ARTICLE 5 REPRESENTATIONS AND WARRANTIES................................................ 52
5.1 Representations and Warranties of Holdco and GP Holdings....................... 52
5.2 Representations and Warranties of the TW Parties............................... 53
5.3 Representations and Warranties of the Six Flags Parties........................ 54
ARTICLE 6 COVENANTS...................................................................... 56
6.1 Covenants of the Holdco Parties................................................ 56
6.2 Covenants of the TW Parties.................................................... 62
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
-------
<S> <C>
ARTICLE 7 INDEMNIFICATION................................................................ 64
7.1 Obligation of the Holdco Parties to Indemnify.................................. 64
7.2 Obligation of the TW Parties to Indemnify...................................... 64
7.3 Procedures Relating to Indemnification......................................... 65
ARTICLE 8 SUBORDINATION.................................................................. 69
8.1 Subordination Agreement........................................................ 69
8.2 Dissolution, Etc............................................................... 71
8.3 Subrogation.................................................................... 72
8.4 Obligation to Pay Unconditional................................................ 73
ARTICLE 9 TERMINATION.................................................................... 73
9.1 Termination.................................................................... 73
9.2 Termination of Obligation...................................................... 74
9.3 Actions Upon Termination....................................................... 74
ARTICLE 10 MISCELLANEOUS.................................................................. 75
10.1 Notices........................................................................ 75
10.2 Notice Under Georgia and Texas Agreements...................................... 76
10.3 Waiver of Compliance; Consents................................................. 76
10.4 Amendments..................................................................... 77
10.5 Successors and Assigns; No Third Party Beneficiaries........................... 77
10.6 Waiver of Subrogation; No Contribution......................................... 77
10.7 Governing Law.................................................................. 78
10.8 Judicial Proceedings........................................................... 78
10.9 Counterparts; Effectiveness.................................................... 79
10.11 Interpretation................................................................. 80
10.12 Entire Agreement............................................................... 80
</TABLE>
Exhibits
Exhibit A - Organizational Documents Provisions
Exhibit B - GP Holdings Preferred Stock
Exhibit C - SF Theme Parks
Exhibit D - Beneficial Share Assignment Agreement
Schedules
Schedule 1 - [Intentionally omitted] Schedule 2 - Georgia Agreements
Schedule 3 - Texas Agreements
Schedule 5.3.4 - Ownership of Acquisition Companies.
ii
<PAGE>
Exhibit 4(o)
L&W DRAFT 3/18/98
================================================================================
PREMIER PARKS INC.
$280,000,000
__% SENIOR NOTES DUE 2006
-------------------------------
INDENTURE
Dated as of __________, 1998
-------------------------------
-------------------------------
THE BANK OF NEW YORK
as Trustee
-------------------------------
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
(a) Trust Indenture
Act Section Indenture Section
310 (a)(1)..........................................................7.10
(a)(2) .............................................................7.10
(a)(3)..............................................................N.A.
(a)(4)..............................................................N.A.
(a)(5)..............................................................7.10
(i)(b)..............................................................7.10
(ii)(c).............................................................N.A.
311(a)..............................................................7.11
(b).................................................................7.11
(iii(c).............................................................N.A.
312 (a).............................................................2.05
(b).................................................................11.03
(iv)(c).............................................................11.03
313(a)..............................................................7.06
(b)(1)..............................................................10.03
(b)(2)..............................................................7.07
(v)(c)..............................................................7.06;
11.02
(vi)(d).............................................................7.06
314(a)..............................................................4.03;
11.02
(A)(b)..............................................................10.02
(c)(1)..............................................................11.04
(c)(2)..............................................................11.04
(c)(3)..............................................................N.A.
(d).................................................................10.03,
10.04, 10.05
(vii)(e)............................................................11.05
(f).................................................................NA
315 (a).............................................................7.01
(b).................................................................7.05,
11.02
(A)(c)..............................................................7.01
(d).................................................................7.01
(e).................................................................6.11
316 (a)(last sentence)..............................................2.09
(a)(1)(A)...........................................................6.05
(a)(1)(B)...........................................................6.04
(a)(2)..............................................................N.A.
(b).................................................................6.07
(B)(c)..............................................................2.12
317 (a)(1)..........................................................6.08
(a)(2)..............................................................6.09
<PAGE>
(b).................................................................2.04
318 (a).............................................................11.01
(b).................................................................N.A.
(c).................................................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
2
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1
Section 1.01. Definitions..................................................1
Section 1.02. Other Definitions...........................................16
Section 1.03. ............................................................17
Section 1.04. Rules of Construction.......................................17
ARTICLE 2. THE NOTES........................................................17
Section 2.01. Form and Dating.............................................17
Section 2.02. Execution and Authentication................................18
Section 2.03. Registrar and Paying Agent..................................19
Section 2.04. Paying Agent to Hold Money in Trust.........................19
Section 2.05. Holder Lists................................................19
Section 2.06. Transfer and Exchange.......................................19
Section 2.07. Replacement Notes...........................................22
Section 2.08. Outstanding Notes...........................................22
Section 2.09. Treasury Notes..............................................23
Section 2.10. Temporary Notes.............................................23
Section 2.11. Cancellation................................................23
Section 2.12. Defaulted Interest..........................................23
ARTICLE 3. REDEMPTION AND PREPAYMENT........................................24
Section 3.01. Notices to Trustee..........................................24
Section 3.02. Selection of Notes to Be Redeemed...........................24
Section 3.03. Notice of Redemption........................................24
Section 3.04. Effect of Notice of Redemption..............................25
i
<PAGE>
Section 3.05. Deposit of Redemption Price.................................25
Section 3.06. Notes Redeemed in Part......................................25
Section 3.07. Optional Redemption.........................................26
Section 3.08. Mandatory Redemption........................................26
Section 3.09. Offer to Purchase by Application of Excess Proceeds.........26
ARTICLE 4. COVENANTS........................................................28
Section 4.01. Payment of Notes............................................28
Section 4.02. Maintenance of Office or Agency.............................28
Section 4.03. Reports.....................................................29
Section 4.04. Compliance Certificate......................................29
Section 4.05. Taxes.......................................................30
Section 4.06. Stay, Extension and Usury Laws..............................30
Section 4.07. Restricted Payments.........................................30
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................32
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock..33
Section 4.10. Asset Sales.................................................35
Section 4.11. Transactions with Affiliates................................36
Section 4.12. Liens.......................................................37
Section 4.13. Line of Business............................................37
Section 4.14. Corporate Existence.........................................37
Section 4.15. Offer to Repurchase Upon Change of Control..................37
Section 4.16. Limitation on Sale and Leaseback Transactions...............38
Section 4.17. Limitation on Issuances and Sales of Equity Interests of
Restricted Subsidiaries.....................................38
Section 4.18. Payments for Consent........................................39
Section 4.19. Pledge and Escrow Agreement Deposit.........................39
ARTICLE 5. SUCCESSORS.......................................................39
ii
<PAGE>
Section 5.01. Merger, Consolidation, or Sale of Assets....................39
Section 5.02. Successor Corporation Substituted...........................39
ARTICLE 6. DEFAULTS AND REMEDIES............................................40
Section 6.01. Events of Default...........................................40
Section 6.02. Acceleration................................................41
Section 6.03. Other Remedies..............................................42
Section 6.04. Waiver of Past Defaults.....................................42
Section 6.05. Control by Majority.........................................43
Section 6.06. Limitation on Suits.........................................43
Section 6.07. Rights of Holders of Notes to Receive Payment...............43
Section 6.08. Collection Suit by Trustee..................................43
Section 6.09. Trustee May File Proofs of Claim............................44
Section 6.10. Priorities..................................................44
Section 6.11. Undertaking for Costs.......................................44
ARTICLE 7. TRUSTEE..........................................................45
Section 7.01. Duties of Trustee...........................................45
Section 7.02. Rights of Trustee...........................................46
Section 7.03. Individual Rights of Trustee................................46
Section 7.04. Trustee's Disclaimer........................................46
Section 7.05. Notice of Defaults..........................................46
Section 7.06. Reports by Trustee to Holders of the Notes..................47
Section 7.07. Compensation and Indemnity..................................47
Section 7.08. Replacement of Trustee......................................48
Section 7.09. Successor Trustee by Merger, etc............................49
Section 7.10. Eligibility; Disqualification...............................49
Section 7.11. Preferential Collection of Claims Against Company...........49
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ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................49
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....49
Section 8.02. Legal Defeasance and Discharge..............................49
Section 8.03. Covenant Defeasance.........................................50
Section 8.04. Conditions to Legal or Covenant Defeasance..................50
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.......................51
Section 8.06. Repayment to Company........................................52
Section 8.07. Reinstatement...............................................52
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................52
Section 9.01. Without Consent of Holders of Notes.........................52
Section 9.02. With Consent of Holders of Notes............................53
Section 9.03. Compliance with Trust Indenture Act.........................54
Section 9.04. Revocation and Effect of Consents...........................54
Section 9.05. Notation on or Exchange of Notes............................55
Section 9.06. Trustee to Sign Amendments, etc.............................55
ARTICLE 10 COLLATERAL AND SECURITY..........................................55
Section 10.01. Pledge, Escrow and Disbursement Agreement..................55
Section 10.02. Recording and Opinions.....................................56
Section 10.03. Release of Collateral......................................56
Section 10.04. Certificates of the Company................................57
Section 10.05. Authorization of Actions to be Taken by the Trustee Under
the Pledge and Escrow Agreement............................57
Section 10.06. Authorization of Receipt of Funds by the Trustee Under
the Pledge and Escrow Agreement............................57
Section 10.07. Termination of Security Interest...........................58
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ARTICLE 11. MISCELLANEOUS...................................................58
Section 11.01. Trust Indenture Act Controls...............................58
Section 11.02. Notices....................................................58
Section 11.03. Communication by Holders of Notes with Other Holders of
Notes......................................................59
Section 11.04. Certificate and Opinion as to Conditions Precedent.........59
Section 11.05. Statements Required in Certificate or Opinion..............59
Section 11.06. Rules by Trustee and Agents................................60
Section 11.07. No Personal Liability of Directors, Officers, Employees
and Stockholders...........................................60
Section 11.08. Governing Law..............................................60
Section 11.09. No Adverse Interpretation of Other Agreements..............60
Section 11.10. Successors.................................................60
Section 11.11. Severability...............................................60
Section 11.12. Counterpart Originals......................................60
Section 11.13. Table of Contents, Headings, etc...........................61
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
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INDENTURE dated as of __________, 1998 between Premier Parks Inc., a
Delaware corporation (the "Company"), and The Bank of New York, as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the __% Senior
Notes due 2006 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by Section 4.15 and/or Section
5.01 and not by Section 4.10 hereof), and (ii) the issue or sale by the Company
or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Restricted Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $10.0 million or (b) for net proceeds in
excess of $10.0 million. Notwithstanding the foregoing, the following items
shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company
to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or to
another Restricted Subsidiary, (ii) an issuance of Equity Interests by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary, (iii)
the transfer of Equity Interests in any Restricted Subsidiary pursuant to the
Subordinated Indemnity Agreement or the Partnership Parks Agreements, (iv) the
issuance of Equity Interests by a Restricted Subsidiary to any employee thereof
or as consideration for the acquisition of all or substantially all of the
assets of, or a majority of the Voting Stock of, any Person (or a business unit
or division of such Person), provided that the primary business of such Person
(or such unit or division) is a Permitted Business, (v) the substitution of
property in accordance with the terms of the Parcel Lease, dated November 7,
1997, between Marine World and Park Management Corp. as the same may be modified
or amended from time to time after the date of this Indenture, provided such
modification or amendment does not adversely
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affect the interests of the Holders in any material respect, and (vi) a
Restricted Payment that is permitted Section 4.07 hereof.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Beneficial Share Assignment Agreement" means the Beneficial Share
Assignment Agreement, dated as of the date of the consummation of the Six Flags
Acquisition, between TW-SPV Co. and the Company.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars or foreign
currency, (ii) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than one year from the date of
acquisition, (iii) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Credit Facilities or with
any commercial bank having capital and surplus in excess of $500.0 million and a
Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than thirty days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
one year after the date of acquisition, (vi) securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory,
the securities of which state, commonwealth, territory, political subdivision or
taxing authority (as the case may be) are rated at least "A" by Standard &
Poor's Corporation or "A" by Moody's Investors Service, Inc. and (vii) money
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market funds at least 95% of the assets of which constitute Cash Equivalents of
the kinds described in clauses (i) through (vi) of this definition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Subsidiaries taken
as a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
more than 35% of the Voting Stock of the Company, or (iv) the first day on which
a majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Common Stock" means the common stock, par value $.05 per share of
the Company.
"Common Stock Offering" means the offering of 13,000,000 shares of
Common Stock and up to an additional 1,950,000 shares of Common Stock to cover
over-allotments.
"Company" means Premier Parks Inc., and any and all successors
thereto.
"Company Notes" means the Notes and the Senior Discount Notes.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (ii) Consolidated
Interest Expense of such Person and its Restricted Subsidiaries for such period,
to the extent that any such expense was deducted in computing such Consolidated
Net Income, plus (iii) depreciation, amortization (including any depreciation or
amortization arising out of purchases by the Company or any Restricted
Subsidiary of Equity Interests in the partners of the Co-Venture Partnerships
and amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (iv) non-cash items increasing
such Consolidated Net Income for such period, in each case, on a consolidated
basis and determined in accordance with GAAP (other than accrual of income in
the ordinary course of business in respect of a future cash payment).
Notwithstanding any other provision of this Indenture to the contrary,
"Consolidated Cash Flow" of the Company for any period will be deemed to include
100% of the cash distributions to the Company or any of its Restricted
Subsidiaries in respect of such period from the Co-Venture Partnerships,
directly or indirectly, out of the Consolidated Cash Flow of the Co-Venture
Partnerships in respect of such period.
"Consolidated Indebtedness" means, with respect to any Person as of
any date of determination, the sum, without duplication, of (i) the total amount
of Indebtedness and Attributable Debt of such Person and its Restricted
Subsidiaries, plus (ii) the total amount of Indebtedness and Attributable Debt
of any other Person, to the extent that the same has been guaranteed by the
referent Person or one or more of its Restricted Subsidiaries, plus (iii) the
aggregate liquidation value of all
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Disqualified Stock of such Person and all preferred stock of Restricted
Subsidiaries of such Person, in each case, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the sum of (i) the consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization or original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations) and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness or Attributable Debt of another
Person that is guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such guarantee or Lien is called upon). The term
"Consolidated Interest Expense" shall not include the consolidated interest
expense of any Person with respect to (i) any obligations in respect of the SFEC
Zero Coupon Senior Notes so long as (x) the SFEC Pledge and Escrow Agreement is
in full force and effect and the trustee under the indenture governing the New
SFEC Notes maintains a valid and perfected security interest in cash or
Government Securities in an amount at least equal to the outstanding principal
amount of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or
(y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance
with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any
obligations of the Company or any Restricted Subsidiary under the Partnership
Parks Agreements, the Marine World Agreements or the Subordinated Indemnity
Agreement.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, and prior to any
deduction in respect of dividends on any series of preferred stock of such
Person, determined in accordance with GAAP; provided that (i) the Net Income
(but not loss) of any Person that is not a Restricted Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the referent
Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded and (iii) the cumulative
effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity (including stated capital,
additional paid-in capital and retained earnings) of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
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"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 11.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Co-Venture Partnerships" means (i) Six Flags Over Georgia, Ltd., a
Georgia Limited Partnership, (ii) Texas Flags, Ltd., a Texas Limited Partnership
and (iii) Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership.
"Credit Facilities" means, with respect to the Company or any of its
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the Premier Credit Facility and the Six Flags Credit Facility) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Debt to Cash Flow Ratio" means, as of any date of determination,
the ratio of (a) the Consolidated Indebtedness of the Company as of such date to
(b) the Consolidated Cash Flow of the Company for the four most recent full
fiscal quarters ending immediately prior to such date for which financial
statements have been filed with the SEC, determined on a pro forma basis after
giving effect to all acquisitions or Asset Sales made by the Company and its
Restricted Subsidiaries from the beginning of such four-quarter period through
and including such date of determination (including any related financing
transactions) as if such acquisitions and dispositions had occurred at the
beginning of such four-quarter period. In addition, for purposes of making the
computation referred to above, (i) acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four- quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (ii) of the
proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A hereto except that such Note
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shall not bear the Global Note Legend and shall not have the "Schedule of
Exchanges of Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock (other than the Seller
Preferred Stock) that, by its terms (or by the terms of any security into which
it is convertible, or for which it is exchangeable, at the option of the holder
thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Company Notes mature; provided,
however, that any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require the Company to repurchase
such Capital Stock upon the occurrence of a Change of Control or an Asset Sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 4.07.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Escrow Account" means the escrow account for the initial deposit of
approximately $76.3 million dollars of the net proceeds from the sale of the
Notes under the Pledge and Escrow Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means up to $______ million in aggregate
principal amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Premier Credit Facility and the Six Flags Credit
Facility) in existence on the date of this Indenture, until such amounts are
repaid.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Global Note" means the Global Note in the form of Exhibit A hereto
issued in accordance with Section 2.01 hereof.
"Global Note Legend" means the legend set forth in Section 2.06(f),
which is required to be placed on the Global Note issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
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"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness. The term
"Indebtedness" shall not include (i) any obligations in respect of the SFEC Zero
Coupon Senior Notes so long as (x) the SFEC Pledge and Escrow Agreement is in
full force and effect and the trustee under the indenture governing the New SFEC
Notes maintains a valid and perfected security interest in cash or Government
Securities in an amount sufficient to pay the aggregate principal amount at
maturity of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or
(y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance
with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any
obligations of the Company or any Restricted Subsidiary under the Partnership
Parks Agreements, the Marine World Agreements or the Subordinated Indemnity
Agreement.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees and any deposit or advance made pursuant to
any contract entered into in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company (other than
pursuant to the terms of the Partnership Parks Agreements or the Subordinated
Indemnity Agreement) such that, after giving effect to any such sale or
disposition, such Person is no
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longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of Section 4.07
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Mandatorily Convertible Preferred Stock" means the Company's ___%
Mandatorily Convertible Preferred Stock.
"Marine World" means the Marine World Joint Powers Authority or any
successor thereto.
"Marine World Agreements" mean (i) the Parcel Lease, dated November
7, 1997, between Marine World and Park Management Corp. ("PMC"), (ii) the
Reciprocal Easement Agreement, dated November 7, 1997, between Marine World and
PMC, (iii) the Revenue Sharing Agreement, dated November 7, 1997, among Marine
World, PMC and the Redevelopment Agency of the City of Vallejo (the "Agency"),
(iv) the Purchase Option Agreement, dated as of August 29, 1997, among Marine
World, the Agency, the City of Vallejo and PMC and (v) the 1997 Management
Agreement, dated as of February 1, 1997, between Marine World and PMC, as
amended, in each case, as the same may be modified or amended from time to time
after the date of this Indenture, provided such modification or amendment does
not adversely affect the interests of the Holders in any material respects.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain or loss, together with any related provision for taxes on such gain or
loss, realized in connection with any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) and (ii) any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a
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Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"New SFEC Notes" means SFEC's ___ % Senior Notes due 2006.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offerings" means the offerings of the Notes, Common Stock, Senior
Discount Notes and Mandatorily Convertible Preferred Stock by the Company and
the offering of the New SFEC Notes by SFEC all consummated on the date hereof.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means a Person who has an account with the Depositary.
"Partnership Parks Agreements" means (i) the Overall Agreement,
dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family
Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG
II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B,
L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., Six
Flags Theme Parks Inc. and Six Flags Entertainment Corporation and the Related
Agreements (as defined therein), (ii) Overall Agreement, dated as of November
24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C.,
FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc.,
SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., Six Flags Theme Parks
Inc. and Six Flags Entertainment Corporation and the Related Agreements (as
defined therein), and (iii) the
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Lease Agreement with Option to Purchase, dated as of March 9, 1996, among Fiesta
Texas Theme Park, Ltd., a Texas Limited Partnership, San Antonio Theme Park,
L.P., and Six Flags San Antonio, L.P. and the Transaction Documents (as defined
therein), in each case, as the same may be modified or amended from time to time
after the date of this Indenture provided such modification or amendment does
not adversely affect the interests of the Holders in any material respect.
"Permitted Business" means any business related, ancillary or
complementary to the businesses of the Company and its Restricted Subsidiaries
on the date of this Indenture.
"Permitted Distributions" means (i) the purchase, redemption,
retirement or other acquisition by the Company or any Restricted Subsidiary of
the Company of partnership interests in the Co-Venture Partnerships or the
limited partners thereof, or their successors, in accordance with and in the
manner required or permitted by the terms of the Partnership Parks Agreements
(ii) the payment of any other obligation under the terms of the Partnership
Parks Agreements or the Subordinated Indemnity Agreement and (iii) the payment
of dividends on the Seller Preferred Stock and the Mandatorily Convertible
Preferred Stock in accordance with the terms thereof as in effect on the date of
this Indenture.
"Permitted Investments" means an Investment by the Company or any
Restricted Subsidiary in (i) cash or Cash Equivalents, (ii) the Company, a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary; provided, however, that the primary
business of such Restricted Subsidiary is a Permitted Business; (iii) another
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets (or the assets of any business unit or division of such Person) to, the
Company or a Restricted Subsidiary; provided, however, that such Person's (or
such unit's or division's) primary business is a Permitted Business; (iv)
another Person if the aggregate amount of all Investments in all such other
Persons does not exceed $25.0 million at any one time outstanding (with each
Investment being valued as of the date made and without giving effect to
subsequent changes in value); provided, however, that such Person's primary
business is a Permitted Business; (v) promissory notes received as consideration
for an Asset Sale which are secured by a Lien on the asset subject to such Asset
Sale; provided that the aggregate amount of all such promissory notes at any one
time outstanding does not exceed $5.0 million; (vi) non-cash consideration from
an Asset Sale that was made pursuant to and in compliance with Section 4.10;
(vii) assets acquired solely in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of the Company; (viii) receivables owing to the
Company or any Restricted Subsidiary, if created or acquired in the ordinary
course of business; (ix) payroll, travel and similar advances that are made in
the ordinary course of business; (x) loans or advances to employees made in the
ordinary course of business consistent with past practices of the Company or
such Restricted Subsidiary; (xi) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; and (xii)
other Investments in any Person at any time outstanding (each such Investment
being measured on the date each such Investment was made and without giving
effect to subsequent changes in value) not to exceed 50% of the aggregate amount
of net cash proceeds received by the Company from the Common Stock Offering in
excess of $700.0 million; provided, however, that any proceeds that are used as
a basis for a Restricted Payment under clause (ii) of the second paragraph of
Section 4.07 or otherwise will be disregarded for purposes of this clause (xii).
"Permitted Liens" means (a) Liens to secure Indebtedness of a
Restricted Subsidiary of the Company that was permitted to be incurred under
this Indenture; (b) Liens existing on the Issue Date; (c) Liens on property or
shares of Capital Stock of another Person at the time such other Person becomes
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a Restricted Subsidiary of such Person; provided, however, that such Liens are
not created, incurred or assumed in connection with, or in contemplation of,
such other Person becoming such a Restricted Subsidiary; provided further,
however, that such Lien may not extend to any other property owned by such
Person or any of its Restricted Subsidiaries; (d) Liens on property at the time
such Person or any of its Restricted Subsidiaries acquires the property,
including any acquisition by means of a merger or consolidation with or into
such Person or a Restricted Subsidiary of such Person; provided, however, that
such Liens are not created, incurred or assumed in connection with, or in
contemplation of, such acquisition; provided further, however, that the Liens
may not extend to any other property owned by such Person or any of its
Restricted Subsidiaries; (e) Liens securing Indebtedness or other obligations of
a Restricted Subsidiary of such Person owing to such Person or a Restricted
Subsidiary of such Person; (f) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under this Indenture, secured by
a Lien on the same type of property securing such Hedging Obligations; (g) Liens
to secure any Permitted Refinancing Indebtedness; provided, however, that (x)
such new Lien shall be limited to all or part of the same property that secured
the original Lien (plus improvements on such property) and (y) the Indebtedness
secured by such Lien at such time is not increased to any amount greater than
the sum of (A) the outstanding principal amount or, if greater, committed amount
of the Indebtedness refinanced at the time the original Lien became a Permitted
Lien and (B) an amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension, renewal or
replacement; (h)(i) mortgages, liens, security interests, restrictions or
encumbrances that have been placed by any developer, landlord or other third
party on property over which the Company or any Restricted Subsidiary of the
Company has easement rights or on any real property leased by the Company or any
Restricted Subsidiary of the Company and subordination or similar agreements
relating thereto and (ii) any condemnation or eminent domain proceedings
affecting any real property; (i) pledges or deposits by such Person under
workmen's compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts (other than
for the payment of Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or deposits of
cash or United States government bonds to secure surety or appeal bonds to which
such Person is a party, or deposits as security for contested taxes or import
duties or for the payment of rent, in each case incurred in the ordinary course
of business; (j) Liens imposed by law, such as carriers', warehousemen's and
mechanic's Liens, in each case for sums not yet due or being contested in good
faith by appropriate proceedings or other Liens arising out of judgments or
awards against such Person with respect to which such Person shall then be
proceeding with an appeal or other proceedings for review; (k) Liens for
property taxes not yet due or payable or subject to penalties for non-payment or
which are being contested in good faith and by appropriate proceedings; (l)
minor survey exceptions, minor encumbrances, easements or reservations of, or
rights of others for, licenses, rights of way, sewers, electric lines, telegraph
and telephone lines and other similar purposes, or zoning or other restrictions
as to the use of real properties or Liens incidental to the conduct of the
business of such Person or to the ownership of its properties which were not
incurred in connection with Indebtedness and which do not in the aggregate
materially impair the use of such properties in the operation of the business of
such Person; (m) Liens securing Purchase Money Indebtedness; provided, however,
that (i) the Indebtedness secured by such Liens is otherwise permitted to be
incurred under this Indenture, (ii) the principal amount of any Indebtedness
secured by any such Lien does not exceed the cost of assets or property so
acquired or constructed and (iii) the amount of Indebtedness secured by any such
Lien is not subsequently increased; (n) Liens arising out of the transactions
contemplated by the Partnership Parks Agreements, the Marine World Agreements,
the Subordinated Indemnity Agreement or the Six Flags Agreement; and (o) Liens
incurred in the ordinary course of business of the Company or any Subsidiary of
the Company with respect to obligations that do not exceed $20.0 million at any
one time outstanding.
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"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses,
including premiums, incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Company Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Notes on terms at least
as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Pledge and Escrow Agreement" means the Pledge, Escrow and
Disbursement Agreement, dated as of the date of this Indenture, by and between
the Company and the Trustee governing the disbursement of funds from the Escrow
Account, as amended from time to time in accordance with this Indenture.
"Pledged Collateral" means the Collateral (as defined in the Pledge
and Escrow Agreement) under the Pledge and Escrow Agreement.
"Premier Credit Facility" means that certain $300.0 million senior
secured credit facility between ________ and Premier Operations dated as of
_____, 1998.
"Premier Operations" means Premier Parks Operations Inc., a wholly
owned subsidiary of the Company.
"Public Equity Offering" means an underwritten primary public
offering of common stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of
the deferred purchase price of property, conditional sale obligations,
obligation under any title retention agreement and other purchase money
obligations, in each case where the maturity of such Indebtedness does not
exceed the anticipated useful life of the asset being financed, and (ii)
incurred to finance the acquisition by the Company or a Restricted Subsidiary of
the Company of such asset, including additions and improvements; provided,
however, that any Lien arising in connection with any such Indebtedness shall be
limited to the specified asset being financed or, in the case of real property
or fixtures, including additions and improvements, the real property on which
such asset is attached; and provided further, that
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such Indebtedness is incurred within 180 days after such acquisition, addition
or improvement by the Company or Restricted Subsidiary of such asset.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Cash Escrow Agreement" means the Pledge, Escrow and
Disbursement Agreement, dated as of the date of the Senior Discount Note
Indenture, by and between the Company and the Senior Discount Note Trustee
governing the disbursement of funds from the restricted cash account thereto, as
amended from time to time in accordance with the Senior Discount Note Indenture.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Preferred Stock" means the Company's Convertible Redeemable
Preferred Stock issued to the sellers of SFEC common stock pursuant to the Six
Flags Agreement.
"Senior Discount Note Indenture" means that certain indenture, dated
as of the date hereof, between the Company and The Bank of New York, as trustee,
as amended or supplemented from time to time, relating to the Senior Discount
Notes.
"Senior Discount Note Trustee" means the trustee under the Senior
Discount Notes until a successor replaces it in accordance with the applicable
provisions of the Senior Discount Note Indenture and thereafter means the
successor serving hereunder.
"Senior Discount Notes" means the Company's ___% Senior Discount
Notes due 2008 issued pursuant to the Senior Discount Note Indenture.
"SFEC" means Six Flags Entertainment Corporation, a wholly owned
subsidiary of the Company.
"SFEC Pledge and Escrow Agreement" means the Pledge, Escrow and
Disbursement Agreement dated as of the date hereof, by and between SFEC and The
Bank of New York, as trustee, as amended from time to time in accordance with
the indenture governing the New SFEC Notes.
"SFEC Zero Coupon Senior Notes" means SFEC's Zero Coupon Senior
Notes due 1999.
"SFTP" means Six Flags Theme Parks Inc., a wholly owned subsidiary
of SFEC.
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"Six Flags Acquisition" means the acquisition by the Company by
merger of all of the capital stock of SFEC from its current stockholders
pursuant to the Six Flags Agreement.
"Six Flags Agreement" means that certain Agreement and Plan of
Merger dated as of February 9, 1998, by and among the Company, Premier Parks
Holdings Corporation, a Delaware Corporation, Premier Parks Merger Corporation,
a Delaware Corporation, a certain group of sellers listed therein and SFEC.
"Six Flags Credit Facility" means that $472.0 million senior secured
credit facility between SFTP and _____ dated as of ______, 1998.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Specified Amount" means, as of any date, (i) the product of (a) the
Consolidated Cash Flow of the Company for the most recently ended four-quarter
period for which financial statements have been filed with the SEC determined on
a pro forma basis after giving effect to all acquisitions or Asset Sales made by
the Company and its Restricted Subsidiaries from the beginning of such
four-quarter period through and including such date of determination (including
any related financing transactions) as if such acquisitions and dispositions had
occurred at the beginning of such four-quarter period, times (b) 0.75.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Strategic Equity Investment" means a cash contribution to the
common equity capital of the Company or a purchase from the Company of common
Equity Interests (other than Disqualified Stock), in either case by or from a
Strategic Equity Investor and for aggregate cash consideration of at least $25.0
million.
"Strategic Equity Investor" means, as of any date, any Person (other
than an Affiliate of the Company) engaged in a Permitted Business which, as of
the day immediately before such date, had a Total Equity Market Capitalization
of at least $1.0 billion.
"Subordinated Indemnity Agreement" means the Subordinated Indemnity
Agreement, dated as of the date of the consummation of the Six Flags
Acquisition, among the Company, SFEC and its subsidiaries, Time Warner Inc.,
Time Warner Entertainment Company, L.P. and TW-SPV Co. , as the same may be
modified or amended from time to time after the date hereof, provided such
modification or amendment does not adversely affect the interests of the Holders
in any material fashion.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% (49% in the case of
Walibi, S.A.) of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination
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thereof); provided that, notwithstanding the foregoing, each of SFOG A Holdings,
SFOG B Holdings, SFOT I Holdings and SFOT II Holdings shall be deemed to be a
Subsidiary of the Company for all purposes under this Indenture so long as (x)
the Subordinated Indemnity Agreement and the Beneficial Share Assignment
Agreement shall each be in full force and effect and no default or event of
default shall have occurred thereunder, and (ii) any partnership or limited
liability company (a) the sole general partner or the managing general partner
(or equivalent) of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Total Equity Market Capitalization" of any Person means, as of any
day of determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such Person) multiplied by (B) the
average closing price of such common stock listed on a national securities
exchange or the Nasdaq National Market System over the 20 consecutive business
days immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Trustee" means the party named as such in the preamble hereto until
a successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than
Premier Operations or SFTP or any successor to either of them) that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Trustees by filing with the Trustees a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.07. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09, the Company shall be in default of
such covenant). The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any
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outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under Section
4.09, calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote by the holder thereof in the
election of the Board of Directors (or comparable body) of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person or by such Person and one or more Wholly
Owned Restricted Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"..............................4.11
"Asset Sale".........................................4.10
"Asset Sale Offer"...................................3.09
"Authentication Order"...............................2.02
"Bankruptcy Law".....................................4.01
"Basket Period"......................................4.07
"Change of Control Offer"............................4.15
"Change of Control Payment"..........................4.15
"Change of Control Payment Date" ....................4.15
"Covenant Defeasance"................................8.03
"Event of Default"...................................6.01
"Excess Proceeds"....................................4.10
"incur"..............................................4.09
"Legal Defeasance" ..................................8.02
"Offer Amount".......................................3.09
"Offer Period".......................................3.09
"Paying Agent".......................................2.03
"Permitted Debt".....................................4.09
"Purchase Date"......................................3.09
"Registrar"..........................................2.03
"Restricted Payments"................................4.07
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SECTION 1.03.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
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The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Global Note. Notes issued in global form shall be substantially in the
form of Exhibit A attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any
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Holder. The Company shall notify the Trustee in writing of the name and address
of any Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent or
Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Note.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Note.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and will notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of the Global Note. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. A Global Note will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
in writing that the Depositary it is unwilling or unable to continue to act as a
depositary and the Company is unable to locate a qualified successor within 90
days or (ii) the Company in its sole discretion determines that the Global Note
(in whole but not in part) should be exchanged for Definitive Notes and delivers
a written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. A Global Note also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and
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delivered in the form of, and shall be, a Global Note. A Global Note may not be
exchanged for another Note other than as provided in this Section 2.06(a),
however, beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.06(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Note. The
transfer and exchange of beneficial interests in the Global Note shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the rules and procedures of the Depositary. Transfers of
beneficial interests in the Global Note also shall require compliance with
subparagraph (i) below:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in a Global Note. No written
orders or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(c) Transfer or Exchange of Beneficial Interests in the Global Note for
Definitive Notes. If any holder of a beneficial interest in a Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Note, then the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(g) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests in
the Global Note. A Holder of a Definitive Note may exchange such Note for a
beneficial interest in a Global Note or transfer such Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a
Global Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Definitive Note and increase
or cause to be increased the aggregate principal amount of the Global Note.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e). A Holder of Definitive Notes may transfer such Notes to a Person who
takes delivery thereof in the form of a Definitive Note.
(f) Global Note Legend. The following legend shall appear on the face of
the Global Note issued under this Indenture in substantially the following form,
unless specifically stated otherwise in the applicable provisions of this
Indenture:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
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BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE
INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY
BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF
THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(g) Cancellation and/or Adjustment of the Global Note. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate the Global Note and Definitive
Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) The Global Note and Definitive Notes issued upon any registration of
transfer or exchange of a Global Note or Definitive Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Global Note or Definitive Notes
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so
selected for
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redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (c) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate the Global Note and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on
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and after that date such Notes shall be deemed to be no longer outstanding and
shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate;
provided that, subject to the limitations described above, the Company may, at
its option, elect to redeem either Senior Discount Notes, Notes, or both Senior
Discount Notes and Notes; and provided further that no Company Notes of $1,000
or less shall be redeemed in part. In the event of partial redemption by lot,
the particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
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(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
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SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to __________, 2002. Thereafter, the Notes will be subject to redemption
at any time at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on ___________ of the years indicated below:
Year Percentage
2002........................................ _______%
2003........................................ _______
2004........................................ _______
2005 and thereafter......................... 100.000%
(b) Notwithstanding the foregoing, during the first 36 months after the
date of original issuance of the Notes, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes originally
issued under this Indenture at a redemption price of ___% of the principal
amount thereof on the redemption date with the net cash proceeds of one or more
Public Equity Offerings and/or the net cash proceeds of a Strategic Equity
Investment; provided that at least 65% of the aggregate principal amount of
Notes originally issued remains outstanding immediately after the occurrence of
each such redemption (excluding the Notes held by the Company and its
Subsidiaries); and provided, further, that any such redemption shall occur
within 60 days of the date of the closing of each such Public Equity Offering
and/or Strategic Equity Investment.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth in Sections 4.10 and 4.15, the Company shall not
be required to make mandatory redemption or sinking fund payments with respect
to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
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If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes
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tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to
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the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes the
financial condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports, in each
case, within the time periods specified in the SEC's rules and regulations. In
addition, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA ss. 314(a).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and the Pledge and Escrow Agreement, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and the Pledge and
Escrow Agreement and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture or the Pledge and
Escrow Agreement (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for
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certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 hereof or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company and each of the
Guarantors (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of any Equity Interests of the
Company (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) or to the direct or indirect
holders of any Equity Interests of the Company in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire
or retire for value (including, without limitation, in connection with any
merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness of the Company that is subordinated to the
Company Notes, except a payment of interest or principal at Stated Maturity; or
(iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
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(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash
Flow test set forth in the first paragraph of Section 4.09; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments declared or made after the date of this Indenture
(excluding Restricted Payments permitted by clauses (ii) and (iii) of the next
succeeding paragraph) shall not exceed, at the date of determination, the sum,
without duplication, of (i) an amount equal to the Company's Consolidated Cash
Flow for the period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the date of this Indenture to the end of
the Company's most recently ended full fiscal quarter for which financial
statements have been filed with the SEC (the "Basket Period") less the product
of 1.4 times the Company's Consolidated Interest Expense for the Basket Period,
plus (ii) 100% of the aggregate net cash proceeds received by the Company after
the date of this Indenture as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale after the date of this Indenture
of Disqualified Stock or debt securities of the Company that have been converted
into such Equity Interests (other than (w) Equity Interests (or Disqualified
Stock or convertible debt securities) sold to a Subsidiary of the Company, (x)
Equity Interests sold in the Offerings and (y) any sale of Equity Interests of
the Company the net cash proceeds of which are applied pursuant to clause (ii)
of the immediately succeeding paragraph), plus (iii) to the extent that any
Restricted Investment that was made after the date of this Indenture is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment,
plus (iv) to the extent that any Unrestricted Subsidiary is redesignated as a
Restricted Subsidiary after the date of this Indenture, the fair market value of
the Company's or its Restricted Subsidiary's, as the case may be, Investment in
such Subsidiary as of the date of such redesignation.
The foregoing provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale including in the Offerings (other than to a Subsidiary of the Company) of,
Equity Interests of the Company (other than Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from (a) clause (c)(ii) of the preceding paragraph and (b) clause (xii)
of the definition of "Permitted Investments;" (iii) the defeasance, redemption,
repurchase or other acquisition of subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) so long
as no Event of Default or Default shall have occurred and be continuing (or
would result therefrom), the purchase, redemption, retirement or other
acquisition by the Company or any Restricted Subsidiary of the Company of
partnership interests held by the partners in the limited partners of the
Co-Venture Partnerships, the co-general partner of the Co-Venture Partnerships
or, in each case, their successors, in accordance with and in the manner
required or permitted by the terms of the Partnership Parks Agreements; (v) so
long as no Event of Default or Default shall have occurred and be continuing (or
would result therefrom), any transactions pursuant to or contemplated by, and
payments made in connection with, and in accordance with the terms of, the
Partnership Parks Agreements and the Marine World Agreements; (vi) so long as no
Event of Default or Default shall have occurred and be continuing (or would
result therefrom), any transactions pursuant to or contemplated by, and payments
made in connection with, and in accordance with the terms of, the Subordinated
Indemnity Agreement; (vii) so long as no Event of Default or Default
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shall have occurred and be continuing (or would result therefrom), the payment
of dividends on the Seller Preferred Stock and the Mandatorily Convertible
Preferred Stock in accordance with the terms thereof as in effect on the date of
this Indenture; (viii) in the event the Company issues common stock in exchange
for or upon conversion of Seller Preferred Stock or Mandatorily Convertible
Preferred Stock, cash payments made in lieu of the issuance of fractional shares
of common stock, not to exceed $250,000 in the aggregate in any fiscal year; and
(ix) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company from employees, former employees, directors
or former directors of the Company or any of its Restricted Subsidiaries (or
permitted transferees of such employees, former employees, directors or former
directors); provided, however, that the aggregate amount of such repurchases
shall not exceed $5.0 million in any twelve-month period.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the business currently operated by Premier
Operations or SFTP be transferred to or held by an Unrestricted Subsidiary. For
purposes of making such determination, all outstanding Investments held by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors of the Company whose resolution with respect thereto shall be
delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $10.0 million. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 4.07 were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness as in effect on the date of this Indenture,
(b) the Partnership Parks Agreements, the Marine World Agreements or the
Subordinated Indemnity Agreement, (c) the terms of any Indebtedness permitted by
this Indenture to be incurred by any Restricted Subsidiary of the Company, (d)
this Indenture and the Company Notes, (e) applicable law, (f) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any
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of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms of
this Indenture to be incurred, (g) customary non-assignment provisions in
leases, licenses or other contracts entered into in the ordinary course of
business, (h) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (i) any agreement for the sale of a
Restricted Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale, (j) obligations otherwise permitted to be incurred pursuant to
the provisions of Section 4.12 that limits the right of the obligee to dispose
of the assets securing such obligations, (k) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements
and other similar agreements entered into in the ordinary course of business and
(l) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and that the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock and the Company's Subsidiaries may incur Indebtedness or
issue shares of preferred stock if the Company's Debt to Cash Flow Ratio at the
time of incurrence of such Indebtedness or the issuance of such Disqualified
Stock or such preferred stock, as the case may be, after giving pro forma effect
to such incurrence or issuance as of such date and to the use of the proceeds
therefrom as if the same had occurred at the beginning of the most recently
ended four full fiscal quarter period of the Company for which financial
statements have been filed with the SEC, would have been no greater than (a) 6.0
to 1, if such incurrence or issuance is on or prior to March 31, 1999, (b) 5.75
to 1, if such incurrence or issuance is on or prior to March 31, 2000 and after
March 31, 1999, and (c) 5.5 to 1, if such incurrence or issuance is after March
31, 2000.
The Company shall not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Company Notes on substantially identical terms; provided, however, that no
Indebtedness of the Company shall be deemed to be contractually subordinated in
right of payment to any other Indebtedness of the Company solely by virtue of
being unsecured.
The provisions of the first paragraph of this Section 4.09 will not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company and its Restricted Subsidiaries of
additional term Indebtedness under Credit Facilities in an aggregate
principal amount at any one time outstanding not to exceed $275.0 million
less the aggregate amount of all mandatory or scheduled repayments of the
principal of any such additional term Indebtedness (other than repayments
that are immediately reborrowed) that have actually been made since the date
of this Indenture;
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(ii) the incurrence by the Company and its Restricted Subsidiaries of
additional revolving credit Indebtedness and letters of credit pursuant to
Credit Facilities in an aggregate principal amount (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability of the Company and its Restricted Subsidiaries thereunder) at any
one time outstanding not to exceed the Specified Amount as of such date of
incurrence; provided that, that the aggregate principal amount of all
Indebtedness incurred pursuant to this clause (ii) is reduced to an
outstanding balance of $1.0 million or less for at least 30 consecutive days
in each fiscal year;
(iii) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(iv) the incurrence by the Company and SFEC of Indebtedness represented by
the Company Notes and the New SFEC Notes;
(v) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Restricted Subsidiary, in an aggregate principal amount not
to exceed $25.0 million at any time outstanding;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness and Indebtedness incurred pursuant to clauses (i)
and (ii) above) that was permitted by this Indenture to be incurred;
(vii) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, however, that (i) if the Company is the
obligor on any such Indebtedness, such Indebtedness is expressly subordinated
to the prior payment in full in cash of all Obligations with respect to the
Company Notes and (ii)(A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other
than the Company or a Restricted Subsidiary thereof and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the Company
or a Restricted Subsidiary thereof shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by this
clause (vii);
(viii) the incurrence by the Company or any of its Restricted Subsidiaries
of (a) Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture to be incurred and (b)
Currency Agreements that do not increase the Indebtedness of the Company and
its Restricted Subsidiaries outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by
reason of fees, indemnities and compensation payable thereunder;
(ix) Indebtedness in respect of performance bonds, letters of credits,
surety or appeal bonds, prior to any drawing thereunder, for or in connection
with pledges, deposits or payments made or given in the ordinary course of
business;
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(x) the guarantee by the Company or any of its Restricted Subsidiaries of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this Section 4.09
(including, without limiting the generality of the forgoing, the guarantee by
any Restricted Subsidiary of the Company of Existing Indebtedness and the
guarantee by the Company of the New SFEC Notes);
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to
be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary
of the Company that was not permitted by this clause (xi); and
(xii) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (xii), not to exceed $50.0
million.
For purposes of determining compliance with this Section 4.09, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (xii) above or
is entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09 and such item of Indebtedness
will be treated as having been incurred pursuant to one or more of such clauses
and/or pursuant to the first paragraph hereof, as the Company shall specify. In
connection with the Six Flags Acquisition and the Offerings occurring on the
date of this Indenture, the Company shall be permitted to incur a portion of the
Indebtedness to be incurred on that date pursuant to the Debt to Cash Flow Ratio
set forth in the first paragraph of this Section 4.09 to the extent permitted by
such Debt to Cash Flow Ratio calculated without regard to any Permitted Debt
incurred on such date. Accrual of interest, accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
preferred stock in the form of additional shares of the same class of preferred
stock will not be deemed to be an incurrence of Indebtedness or an issuance of
preferred stock for purposes of this Section 4.09; provided, in each such case,
that the amount thereof is included in Consolidated Indebtedness of the Company
as accrued.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustees) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinate to the Company Notes) that are assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from further liability or, in
the case of the sale of Capital Stock, that are assumed by the transferee by
operation of law and (y) any securities, notes or other obligations received by
the Company or such Restricted Subsidiary from such transferee that are promptly
(subject to ordinary settlement periods) converted by the Company or such
Restricted
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Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or the applicable Restricted Subsidiary may apply such Net
Proceeds (a) to repay or repurchase Indebtedness of a Restricted Subsidiary of
the Company (and to correspondingly reduce commitments with respect thereto in
the case of revolving credit borrowings), (b) to the acquisition of all or
substantially all of the assets of, or a majority of the Voting Stock of,
another Person (or business unit or division of such Person); provided, that the
primary business of such Person (or unit or division) is a Permitted Business,
(c) to fund obligations of the Company or any Restricted Subsidiary under the
Partnership Parks Agreements or the Subordinated Indemnity Agreement, (d) to the
acquisition of Capital Stock of a Restricted Subsidiary of the Company held by
Persons other than the Company or any Restricted Subsidiary, (e) to the making
of a capital expenditure or (f) to the acquisition of other long-term assets
that are used or useful in a Permitted Business. Pending the final application
of any such Net Proceeds, the Company or such Restricted Subsidiary may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company
will be required to make an offer to all Holders of Notes and all holders of
other pari passu Indebtedness of the Company containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes and such other pari passu Indebtedness of the
Company that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the date of repurchase, in accordance with
the procedures set forth in this Indenture and such other Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount at maturity or
accreted value (as applicable) of Company Notes and such other Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
Trustee shall select the Company Notes and such other Indebtedness to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view
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issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of
business, or any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment or
indemnification arrangements, stock options and stock ownership plans approved
by the Board of Directors, or the grant of stock options or similar rights to
employees and directors of the Company pursuant to plans approved by the Board
of Directors, (ii) transactions between or among the Company and/or its
Restricted Subsidiaries, (iii) payment of reasonable directors fees to Persons
who are not otherwise employees of the Company or its Restricted Subsidiaries,
(iv) loans or advances to employees in the ordinary course of business, (v)
Restricted Payments that are permitted by Section 4.07, (vi) transactions
pursuant to or contemplated by, and in accordance with, the terms of the
Subordinated Indemnity Agreement, (vii) transactions pursuant to or contemplated
by and payments in connection with, and, in each case, in accordance with, the
terms of the Partnership Parks Agreements and (viii) transactions pursuant to or
contemplated by, and in accordance with, the Marine World Agreements.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist
any Lien securing trade payables, Attributable Debt or Indebtedness on any asset
now owned or hereafter acquired, except Permitted Liens.
SECTION 4.13. LINE OF BUSINESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes at an offer price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase. Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase
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Notes pursuant to the procedures required by this Indenture and described in
such notice. The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or a Restricted Subsidiary of the Company may enter into a sale and
leaseback transaction if (i) the Company could have (a) incurred Indebtedness in
an amount equal to the Attributable Debt relating to such sale and leaseback
transaction pursuant to the Debt to Cash Flow test set forth in the first
paragraph of Section 4.09 or pursuant to clause (vi) of the second paragraph of
Section 4.09 and (b) incurred a Lien to secure such Indebtedness pursuant to
Section 4.12, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction and (iii) the transfer of assets in such sale and
leaseback transaction is permitted by, and the Company or such Restricted
Subsidiary applies the proceeds of such transaction in compliance with, Section
4.10 hereof.
SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS OF
RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Restricted Subsidiary of the Company to any
Person (other than the Company or a Restricted Subsidiary of the Company and
other than transactions contemplated by the Partnership Parks Agreements and the
Subordinated Indemnity Agreement), unless (a)(1) such transfer, conveyance,
sale, lease or other disposition is of all the Equity Interests in such
Restricted Subsidiary or (2) after giving effect thereto, such Restricted
Subsidiary will still constitute a Restricted Subsidiary and (b) the cash Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with Section 4.10 hereof, and (ii) will not permit any
Restricted Subsidiary of the Company to issue any of its Equity Interests (other
than, if necessary, shares of its Capital Stock constituting directors'
qualifying shares) to any Person other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company if, after giving effect thereto, such
Restricted Subsidiary will not be a direct or indirect Subsidiary of the
Company.
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SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.19. PLEDGE AND ESCROW AGREEMENT DEPOSIT
Upon consummation of the initial sale of the Notes offered hereby on
the date hereof, the Company will deposit $76.3 million of the net proceeds from
the sale of the Notes, in the Escrow Account with the Trustee. The Escrow
Account shall be governed by the terms of the Pledge and Escrow Agreement
attached as Exhibit B hereto.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the
Company Notes, this Indenture, the Senior Discount Note Indenture, the
Restricted Cash Escrow Agreement and the Pledge and Escrow Agreement pursuant to
supplemental indentures in forms reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Wholly Owned
Restricted Subsidiary of the Company, the Company or the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, both at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash
Flow test set forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made
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shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on the Notes
and such default continues for a period of 30 days except, if prior to ________,
2001, the Company fails to pay interest on the Notes within two days of when
interest is due, that would constitute an immediate Event of Default;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply (i) for a period of 30 days with any of
the provisions of Section 4.10, 4.15 or 4.19 hereof or (ii) with any of the
provisions of Article Four or Section 5.01 hereof for 30 days after notice to
the Company by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding voting as a single class;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, the Notes or the
Pledge and Escrow Agreement for 60 days after notice to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding voting as a single class;
(e) the Company or any Restricted Subsidiary fails to pay Indebtedness
within any applicable grace period after final maturity or the acceleration of
any Indebtedness by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated at any time exceeds $10.0
million;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $10.0 million;
(g) the Company or any Restricted Subsidiary that constitutes a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary pursuant to or within the
meaning of Bankruptcy Law:
(i) commences a voluntary case,
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(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Restricted Subsidiary that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Company or any Restricted Subsidiary that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Company or any Restricted
Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary; or
(iii) orders the liquidation of the Company or any Restricted Subsidiary
that constitutes a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(i) the Company shall materially breach any representation, warranty or
agreement set forth in the Pledge and Escrow Agreement, or a material default by
the Company in the performance of any covenant set forth in the Pledge and
Escrow Agreement, or repudiation by the Company of its obligations under the
Pledge and Escrow Agreement, or the Pledge and Escrow Agreement shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Restricted Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable immediately. Upon any such declaration, the Notes shall
become due and payable immediately. Notwithstanding the foregoing, if an Event
of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with
respect to the Company, any Restricted Subsidiary that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any
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judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
If an Event of Default occurs on or after ____________, 2002 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to __________,
2002 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on ______ of the years set
forth below, as set forth below (expressed as a percentage of the amount that
would otherwise be due but for the provisions of this paragraph, plus accrued
interest, if any, to the date of payment):
Year Percentage
---- ----------
1998............................................... _______%
1999............................................... _______%
2000............................................... _______%
2001............................................... _______%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
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SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, and
interest on the Note, on or after the respective due dates expressed in the Note
(including in connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
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SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article or the
Pledge and Escrow Agreement, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to
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Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
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SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90
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days after it occurs. Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest on any Note, the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
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When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in
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connection therewith and (d) this Article Eight. Subject to compliance with this
Article Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(d) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
outstanding Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
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(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article Eight concurrently
with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that on the 91st
day following the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
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Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, the Pledge and Escrow Agreement
or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
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(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Sections 3.09, 4.10
and 4.15 hereof), the Pledge and Escrow Agreement and the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
Notes). Without the consent of at least 75% in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for, or purchase of, such Notes), no waiver or amendment to
either this Indenture or the Pledge and Escrow Agreement may make any change in
the provisions of Section 4.19 or Article 10 hereof or the Pledge and Escrow
Agreement that adversely affects the rights of any Holder of Notes. Section 2.08
hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
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It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof);
(g) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes; or
(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall
be set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note
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or portion of a Note that evidences the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any Note. However, any such
Holder of a Note or subsequent Holder of a Note may revoke the consent as to its
Note if the Trustee receives written notice of revocation before the date the
waiver, supplement or amendment becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds every
Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT.
The due and punctual payment of the principal of and interest, if
any, on the Notes when and as the same shall be due and payable, whether on an
interest payment date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Notes and performance of all other obligations
of the Company to the Holders of Notes or the Trustee under this Indenture and
the Notes, according to the terms hereunder or thereunder, shall be secured as
provided in the Pledge and Escrow Agreement which the Company has entered into
simultaneously with the execution of this Indenture and which is attached as
Exhibit B hereto. Each Holder of Notes, by its acceptance thereof, consents and
agrees to the terms of the Pledge and Escrow Agreement (including, without
limitation, the provisions providing for foreclosure and release of Escrow
Funds) as the same may be in effect or may be amended from time to time in
accordance with its terms and authorizes and directs the Trustee to enter into
the Pledge and Escrow Agreement and to perform its obligations and exercise its
rights thereunder in accordance therewith. The Company shall deliver to the
Trustee copies of all documents pursuant to the Pledge and Escrow Agreement, and
shall do or cause to be done all such acts and things as may be necessary or
proper, or as may be required by the provisions of the Pledge and Escrow
Agreement, to assure and confirm to the Trustee the security interest in the
Escrow Funds contemplated hereby, by the Pledge
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and Escrow Agreement or any part thereof, as from time to time constituted, so
as to render the same available for the security and benefit of this Indenture
and of the Notes secured hereby, according to the intent and purposes herein
expressed. The Company shall take, or shall cause its Subsidiaries to take, upon
request of the Trustee, any and all actions reasonably required to cause the
Pledge and Escrow Agreement to create and maintain, as security for the
Obligations of the Company hereunder, a valid and enforceable perfected first
priority Lien in and on all the Pledged Collateral, in favor of the Trustee for
the benefit of the Holders of Notes, superior to and prior to the rights of all
third Persons and subject to no other Liens than Permitted Liens.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by the Pledge and Escrow Agreement, and reciting with respect to the
security interests in the Pledged Collateral, the details of such action, or
(ii) stating that, in the opinion of such counsel, no such action is necessary
to make such Lien effective.
(b) The Company shall furnish to the Trustee on May 1 in each year
beginning with May 1, 1998, an Opinion of Counsel, dated as of such date, either
(i) (A) stating that, in the opinion of such counsel, action has been taken with
respect to the recording, registering, filing, re-recording, re-registering and
refiling of all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is necessary to maintain
the Lien of the Pledge and Escrow Agreement and reciting with respect to the
security interests in the Pledged Collateral the details of such action or
referring to prior Opinions of Counsel in which such details are given, (B)
stating that, based on relevant laws as in effect on the date of such Opinion of
Counsel, all financing statements and continuation statements have been executed
and filed that are necessary as of such date and during the succeeding 12 months
fully to preserve and protect, to the extent such protection and preservation
are possible by filing, the rights of the Holders of Notes and the Trustee
hereunder and under the Pledge and Escrow Agreement with respect to the security
interests in the Pledged Collateral, or (ii) stating that, in the opinion of
such counsel, no such action is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of TIA
ss.314(b).
SECTION 10.03. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03, Pledged
Collateral may be released from the Lien and security interest created by the
Pledge and Escrow Agreement at any time or from time to time in accordance with
the provisions of the Pledge and Escrow Agreement or as provided hereby.
(b) No Pledged Collateral shall be released from the Lien and security
interest created by the Pledge and Escrow Agreement pursuant to the provisions
of the Pledge and Escrow Agreement unless there shall have been delivered to the
Trustee the certificate required by this Section 10.03.
(c) At any time when a Default or Event of Default shall have occurred and
be continuing and the maturity of the Notes shall have been accelerated (whether
by declaration or otherwise) and the
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Trustee has knowledge of such Default or Event of Default, no release of Pledged
Collateral pursuant to the provisions of the Pledge and Escrow Agreement shall
be effective as against the Holders of Notes.
(d) The release of any Pledged Collateral from the terms of this Indenture
and the Pledge and Escrow Agreement shall not be deemed to impair the security
under this Indenture in contravention of the provisions hereof if and to the
extent the Pledged Collateral is released pursuant to the terms of the Pledge
and Escrow Agreement. To the extent applicable, the Company shall cause TIA ss.
313(b), relating to reports, and TIA ss. 314(d), relating to the release of
property or securities from the Lien and security interest of the Pledge and
Escrow Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Pledge and
Escrow Agreement, to be complied with. Any certificate or opinion required by
TIA ss. 314(d) may be made by an Officer of the Company except in cases where
TIA ss. 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee in the exercise of reasonable
care.
SECTION 10.04. CERTIFICATES OF THE COMPANY.
(a) The Company shall furnish to the Trustee, prior to each proposed
release of Pledged Collateral pursuant to the Pledge and Escrow Agreement, (i)
all documents required by TIA ss. 314(d) and (ii) an Opinion of Counsel, which
may be rendered by internal counsel to the Company, to the effect that such
accompanying documents constitute all documents required by TIA ss. 314(d). The
Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as
conclusive evidence of compliance with the foregoing provisions the appropriate
statements contained in such documents and such Opinion of Counsel.
SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
PLEDGE AND ESCROW AGREEMENT.
Subject to the provisions of Section 7.01 and 7.02 hereof, the
Trustee may, in its sole discretion and without the consent of the Holders of
Notes, take, on behalf of the Holders of Notes, all actions it deems necessary
or appropriate in order to (a) enforce any of the terms of the Pledge and Escrow
Agreement and (b) collect and receive any and all amounts payable in respect of
the Obligations of the Company hereunder. The Trustee shall have power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Pledged Collateral by any acts that may be
unlawful or in violation of the Pledge and Escrow Agreement or this Indenture,
and such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders of Notes in the Pledged
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders of Notes or of the Trustee).
SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE PLEDGE
AND ESCROW AGREEMENT.
The Trustee is authorized to receive any funds for the benefit of
the Holders of Notes distributed under the Pledge and Escrow Agreement, and to
make further distributions of such funds to the Holders of Notes according to
the provisions of this Indenture.
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SECTION 10.07. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company under
this Indenture and the Notes, or upon Legal Defeasance, the Trustee shall
release the Liens pursuant to this Indenture and the Pledge and Escrow
Agreement.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address
If to the Company:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Chief Financial Officer
Facsimile number: (405) ___________
Telephone number: (405) 475-2500
With a copy to:
James M. Coughlin, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Facsimile number: (212) 702-5810
Telephone number: (212) 702-5700
If to the Trustee:
The Bank of New York
__________________________________
__________________________________
Facsimile number: ________________
Attention: _______________________
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
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All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or the Pledge and
Escrow Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
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SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of ____________, 1998
PREMIER PARKS INC.
BY: _________________________________
Name:
Title:
Attest:
_________________________
Name:
Title:
THE BANK OF NEW YORK
BY: _________________________________
Name:
Title:
Attest:
_________________________
Authorized Signatory
Date:
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EXHIBIT A
(Face of Note)
================================================================================
(a) CUSIP _________________
__% Senior Discount Notes due 2006
No. ___ $ ____________
PREMIER PARKS INC.
promises to pay to _____________________________________________________________
or registered assigns,
the principal sum of _____________________________________________________
Dollars on ____________, 2006.
Interest Payment Dates: ____________, and ____________
Record Dates: ____________, and ____________
DATED: ____________, 1998
PREMIER PARKS INC.
BY: _________________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By: ______________________________
================================================================================
A-1
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(Back of Note)
___% Senior Notes due 2006
THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTES OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Premier Parks Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
___% per annum from _____________, 1998 until maturity. The Company will pay
interest semi-annually on _____________ and _____________ of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be _____________, 1998. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the _____________ or _____________ next preceding
the Interest Payment Date, even if such Notes are cancelled after such record
date and on or before such Interest Payment Date, except as provided in Section
2.12 of the Indenture with respect to defaulted interest. The Notes will be
payable as to principal, premium, if any, and interest at the office or agency
of the Company maintained for such purpose within or without the City and State
of New York, or, at the option of the Company, payment of interest may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium on,
the Global Note and all other Notes the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
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3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE AND PLEDGE AND ESCROW AGREEMENT. The Company issued the
Notes under an Indenture dated as of _____________, 1998 ("Indenture") between
the Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
indenture shall govern and be controlling. The Notes are obligations of the
Company limited to $ _____________ million in aggregate principal amount. The
Notes are secured by a pledge of Government Securities pursuant to the Pledge
and Escrow Agreement referred to in the Indenture.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to _____________,
2002. Thereafter, the Company shall have the option to redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on _____________ of the years
indicated below:
Year Percentage
- ---- ----------
2002..................................... _______%
2003..................................... _______%
2004..................................... _______%
2005 and thereafter...................... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, during the first 36 months after the date of original issuance of
the Notes, the Company may on any one or more occasions redeem up to 35% of the
aggregate principal amount of Notes originally issued under the Indenture at a
redemption price of ____% of the principal amount thereof on the redemption date
with the net cash proceeds of one or more Public Equity Offerings and/or the net
cash proceeds of a Strategic Equity Investment; provided that at least 65% of
the aggregate principal amount of Notes originally issued remains outstanding
immediately after the occurrence of each such redemption (excluding the Notes
held by the Company and its Subsidiaries); and provided, further, that any such
redemption shall occur within 60 days of the date of the closing of each such
Public Equity Offering and/or Strategic Equity Investment.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
A-3
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7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of purchase (the
"Change of Control Payment") , the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $20.0 million, the
Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date fixed for the closing
of such offer, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. If the aggregate amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Pledge and Escrow Agreement or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes voting as a single class, and any existing
default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes voting as a single class. However, without the consent of
at least 75% in principal
A-4
<PAGE>
amount of the Notes then outstanding (including consents obtained in connection
with a tender offer or exchange offer for, or purchase of, such Notes), no
waiver or amendment to either the Indenture or the Pledge and Escrow Agreement
may make any change in the provisions of Section 4.19 or Article 10 of the
Indenture or the Pledge and Escrow Agreement that adversely affects the rights
of any Holder of Notes. Without the consent of any Holder of a Note, the
Indenture or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
obligations to Holders of the Notes in case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on the Notes, except, if prior
to _____, 2001, default for two days in payment when due of interest on the
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Notes when the same becomes due and payable, upon redemption (including in
connection with an offer to purchase) or otherwise, (iii) failure by the Company
to comply (A) for a period of 30 days with any of the provisions of Section
4.10, 4.15 or 4.19 of the Indenture and (B) with any of the provisions of
Article Four or Section 5.01 of the Indenture for 30 days after notice to the
Company by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding voting as a single class; (iv) failure by
the Company for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding voting
as a single class to comply with certain other agreements in the Indenture, the
Notes or the Pledge and Escrow Agreement; (v) default under certain other
agreements relating to Indebtedness of the Company which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries; and (viii) the breach of certain
representations, warranties or agreements set forth in the Pledge and Escrow
Agreement, or a material default by the Company in the performance of any
covenant set forth in the Pledge and Escrow Agreement, or repudiation by the
Company of its obligations under the Pledge and Escrow Agreement, or the Pledge
and Escrow Agreement shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
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13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN NET (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Corporate Secretary
A-6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ------------------------------------------------------------------------------
Date: _____________________
Your Signature: ______________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: _____________ Your Signature:________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No:__________________
Signature Guarantee.
A-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of
decrease in increase in this Global Note Signature of
Principal Amount Principal Amount following such authorized officer of
of of decrease (or Trustee or Note
Date of Exchange this Global Note this Global Note increase) Custodian
- ---------------- ---------------- ---------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A-9
<PAGE>
EXHIBIT B
FORM OF PLEDGE AND ESCROW AGREEMENT
B-1
<PAGE>
L&W DRAFT 3/18/98
================================================================================
- --------------------------------------------------------------------------------
SENIOR DISCOUNT NOTES
PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
by and between
PREMIER PARKS INC.
and
THE BANK OF NEW YORK
as Trustee
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
THIS PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"),
dated as of __________, 1998, is by and between PREMIER PARKS INC. (the
"Company") and The Bank of New York, as trustee under the Indenture referred to
below (the "Trustee").
RECITALS
A. The Senior Discount Notes. Pursuant to that certain Indenture (the
"Indenture"), dated as of ______________, 1998, by and between the Company and
the Trustee, the Company will issue $_______________ in aggregate principal
amount at maturity of ___% Senior Discount Notes due 2008 (collectively, the
"Senior Discount Notes"). Immediately after receipt of payment for the Senior
Discount Notes (the "Deposit Time"), the Company will deposit $75,000,000.00
(together with such other funds as may be received by the Company or any of its
Restricted Subsidiaries in the future and that are required to be deposited into
the Restricted Cash Account pursuant to Section 5(d) below, "Escrow Funds"),
into a segregated cash collateral trust account with the Trustee at its office
at ____________, New York, New York, in the name of The Bank of New York, as
Trustee, "Restricted Cash Account for Senior Discount Notes" (such account is
herein referred to as the "Restricted Cash Account"). The Restricted Cash
Account and all balances and investments from time to time therein shall be
under the sole control and dominion of the Trustee, for the benefit of the
Trustee and the ratable benefit of the Holders of the Senior Discount Notes.
B. Purpose. The parties hereto desire to set forth their agreement with
regard to the administration of the Restricted Cash Account, the creation of a
security interest in the Collateral (as defined herein) and the conditions upon
which funds will be released from the Restricted Cash Account.
C. Definitions. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Indenture.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Security Interest.
(a) Pledge and Assignment of Collateral. The Company hereby
irrevocably pledges, assigns and sets over to the Trustee, and grants to the
Trustee, for the benefit of the Trustee and the ratable benefit of the Holders
of the Senior Discount Notes, a first priority continuing security interest in
all of the Company's right, title and interest in and to all of the following,
whether now owned or existing or hereafter acquired or created (collectively,
the "Collateral"):
<PAGE>
(i) all funds from time to time held in the Restricted Cash Account,
including, without limitation, the Escrow Funds and all certificates and
instruments, if any, from time to time representing or evidencing the
Restricted Cash Account or the Escrow Funds;
(ii) all investments of funds in the Restricted Cash Account, which
all shall constitute Government Securities, and whether held by or
registered in the name of the Trustee or otherwise and all certificates
and instruments, if any, from time to time representing or evidencing any
such Government Securities;
(iii) all notes, certificates of deposit, deposit accounts, checks
and other instruments evidencing such Government Securities from time to
time hereafter delivered to or otherwise possessed by the Trustee, for or
on behalf of the Company, in substitution for or in addition to any or all
of the then existing Collateral;
(iv) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the then existing Collateral; and
(v) all proceeds of any of the foregoing, including, without
limitation, cash proceeds.
(b) Secured Obligations. This Agreement secures the due and punctual
payment and performance of all Obligations of the Company, whether now or
hereafter existing, under the Senior Discount Notes and the Indenture including,
without limitation, interest and premium, if any, accrued on the Senior Discount
Notes after the commencement of a bankruptcy, reorganization or similar
proceeding involving the Company to the extent permitted by applicable law
(collectively, the "Secured Obligations").
(c) Delivery of Collateral. All certificates or instruments, if any,
representing or evidencing the Collateral shall be held by or on behalf of the
Trustee pursuant hereto and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignments
in blank, all in form and substance reasonably satisfactory to the Trustee. All
securities in uncertificated or book-entry form and all security entitlements,
if any, in each case representing or evidencing the Collateral shall be
registered in the name of the Trustee (or any of its nominees) as the registered
owner thereof by book-entry or as otherwise appropriate so as to properly
identify the interest of the Trustee therein. In addition, the Trustee shall
have the right, at any time following the occurrence of an Event of Default, to
transfer to or to register in the name of the Trustee or any of its nominees any
or all other Collateral. Except as otherwise provided herein, all Collateral
shall be deposited and held in the Restricted Cash Account. The Trustee shall
have the right at any time to exchange certificates or instruments representing
or evidencing all or any portion of the Collateral for certificates or
instruments of smaller or larger denominations in the same aggregate amount.
2
<PAGE>
(d) Further Assurances. Prior to, contemporaneously herewith, and at
any time and from time to time hereafter, the Company will, at the Company's
expense, execute and deliver to the Trustee such other instruments and
documents, and take all further action as it deems necessary or advisable or as
the Trustee may reasonably request including an Opinion of Counsel, upon which
the Trustee may conclusively rely, to confirm or perfect the security interest
of the Trustee granted or purported to be granted hereby or to enable the
Trustee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral and the Company will take all necessary action to preserve and
protect the security interest created hereby as a first priority, perfected Lien
and encumbrance upon the Collateral. The Company will pay all costs incurred in
connection with any of the foregoing.
(e) Establishing and Maintaining Accounts. So long as this Agreement
is in full force and effect:
(i) the Company shall establish and maintain the Restricted Cash
Account with the Trustee in New York, New York. The Collateral shall at
all times be subject to the sole dominion and control of the Trustee,
which shall hold the Collateral and administer the Restricted Cash Account
subject to the terms and conditions of this Agreement. The Company shall
have no right of withdrawal from the Restricted Cash Account nor any other
right or power with respect to the Collateral, except as expressly
provided herein; and
(ii) it shall be a term and condition of the Restricted Cash
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to the Restricted Cash Account and except as
otherwise provided by the provisions of Article 3 of this Agreement, that
no amount in the Restricted Cash Account (including, without limitation,
interest on or other proceeds of the Restricted Cash Account or on any
Government Securities held therein) shall be paid or released to or for
the account of, or withdrawn by or for the account of, the Company or any
other person or entity other than the Trustee or its designated agent.
(f) Transfers and Other Liens. Until termination of this Agreement
pursuant to Section 8, the Company agrees that it will not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral or (ii) create or permit to exist any Lien
upon or with respect to any of the Collateral, except for the security interest
under this Agreement.
(g) Trustee Appointed Attorney-in-Fact. In addition to all of the
powers granted to the Trustee pursuant to Article 7 of the Indenture, the
Company hereby irrevocably appoints the Trustee as the Company's
attorney-in-fact, coupled with an interest, with full authority in the place and
stead of the Company and in the name of the Company or otherwise, from time to
time in the Trustee's discretion to take any action and to execute any
instrument which the Trustee may deem necessary or advisable to accomplish the
purposes of this
3
<PAGE>
Agreement, including, without limitation, to receive, endorse and collect all
instruments made payable to the Company representing any interest payment,
dividend or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same, and the expenses of the Trustee
incurred in connection therewith shall be payable by the Company.
(h) Trustee May Perform. Without limiting the authority granted
under Section 1(g) and except with respect to the failure of the Company to
deliver investment instructions, which shall be governed by Section 2(b) hereof,
if the Company fails to perform any agreement contained herein, the Trustee may,
but shall not be obligated to, itself perform, or cause performance of, such
agreement, and the expenses of the Trustee incurred in connection therewith
shall be payable by the Company. In the event that the Trustee performs pursuant
to this Section 1(h), the Company shall indemnify the Trustee in the manner
provided in Section 7.07 of the Indenture.
2. Investment and Liquidation of Funds in Restricted Cash Account. Funds
deposited in the Restricted Cash Account shall be invested and reinvested by the
Trustee on the following terms and conditions:
(a) Investments. The Company shall immediately deposit all Escrow
Funds into the Restricted Cash Account. Funds deposited in the Restricted Cash
Account may, subject to the provisions of Articles 2 and 3 of this Agreement, be
invested and reinvested in the name of and by the Trustee, at the written
direction of the Company, in direct obligations of, or obligations guaranteed
by, the United States of America for the payment of which guarantee or
obligations the full faith and credit of the United States of America is pledged
("Government Securities").
(b) Investment Instructions. If the Company fails to give written
investment instructions to the Trustee by 12:00 noon (New York time) on any
Business Day on which there is uninvested cash and/or maturing Government
Securities in the Restricted Cash Account, the Trustee is hereby unconditionally
instructed and authorized and directed to invest any such cash or the proceeds
of any maturing Government Securities in the Restricted Cash Account in
Government Securities maturing on the next Business Day. The Company's failure
to give such investment instructions shall not constitute a default or an event
of default hereunder.
(c) Interest. All interest earned on funds invested in Government
Securities shall be held in the Restricted Cash Account and reinvested in
accordance with the terms hereof and will be subject to the security interest
granted hereunder to the Trustee.
(d) Limitation of Trustee's Liability. In no event shall the Trustee
have any liability to the Company or any other Person for investing the funds
from time to time in the Restricted Cash Account in accordance with the
provisions of this Article 2, regardless of whether greater income or a higher
yield could have been obtained had the Trustee invested such funds in different
Government Securities, or for any loss (including breakage costs or loss of
principal) associated with the sale or liquidation of Government Securities in
accordance with the
4
<PAGE>
terms of this Agreement, in each case other than with respect to gross
negligence or willful misconduct of the Trustee.
(e) Liquidation of Funds. In liquidating any Government Securities
in accordance with Article 3 of this Agreement, the Company may, so long as no
Event of Default has occurred and is continuing, direct the Trustee as to which
Government Securities shall be liquidated.
3. Release of Collateral Funds for Permitted Distributions. So long as no
Event of Default shall have occurred and be continuing, if the Company delivers
to the Trustee a duly completed and executed Permitted Distributions Certificate
substantially in the form of Exhibit A hereto, the Trustee shall, within five
(5) Business Days after its receipt of such Permitted Distributions Certificate,
liquidate such amount of Government Securities in the Restricted Cash Account as
may be necessary to obtain in cash the amount requested in such Permitted
Distributions Certificate. The Permitted Distributions Certificate shall be
accompanied by a supporting budget or other supporting documentation reasonably
satisfactory to the Trustee detailing the Company's expected Permitted
Distributions (as defined herein) for the immediately succeeding three (3)
months. Upon receipt of the foregoing, unless a Trust Officer of the Trustee has
actual knowledge that any statement in such Permitted Distributions Certificate
is untrue (and provided that, after application of the funds requested in the
applicable Permitted Distributions Certificate, the Company would be in
compliance with Section 4(d) hereof), the Trustee shall transfer the amount set
forth in such Permitted Distributions Certificate in immediately available funds
in accordance with the terms of such Permitted Distributions Certificate.
4. Representations and Warranties. The Company hereby represents and
warrants to the Trustee and the Holders of the Senior Discount Notes that:
(a) The execution, delivery and performance by the Company of this
Agreement are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or result
in the creation or imposition of any Lien on any assets of the Company, except
for the security interests granted under this Agreement.
(b) The Company is the record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any person or entity (except
for the security interests granted under this Agreement). No financing statement
covering the Collateral is on file in any public office other than the financing
statements filed pursuant to this Agreement.
(c) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or general principles of equity and commercial
reasonableness.
5
<PAGE>
(d) The pledge of the Collateral pursuant to this Agreement creates
a valid and perfected first priority security interest in and to the Collateral,
securing the payment of the Secured Obligations for the benefit of the Trustee
and the ratable benefit of the Holders of Senior Discount Notes, enforceable as
such against all creditors of the Company and any persons purporting to purchase
any of the Collateral from the Company other than as permitted by the Indenture.
(e) Except as set forth in Section 4(d) above, no consent of any
other Person and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (1) for the pledge by the Company of the Collateral pursuant to
this Agreement or for the execution, delivery or performance of this Agreement
by the Company or (2) for the exercise by the Trustee of the rights provided for
in this Agreement or the remedies in respect of the Collateral pursuant to this
Agreement.
(f) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Company, threatened by or against the Company with respect to this Agreement or
any of the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Agreement is not
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System).
5. Covenants. The Company covenants and agrees with the Trustee and the
Holders of Senior Discount Notes from and after the date of this Agreement until
the Termination Date as follows:
(a) The Company (i) will not (A) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Collateral or (B) create
or permit to exist any Lien upon or with respect to any of the Collateral
(except for the Lien created pursuant to this Agreement) and (ii) except as
otherwise provided in this Agreement, at all times will be the sole beneficial
owner of the Collateral.
(b) The Company will not (a) enter into any agreement or
understanding that purports to or may restrict or inhibit the Trustee's rights
or remedies hereunder, including, without limitation, the Trustee's right to
sell or otherwise dispose of the Collateral in accordance with the terms of this
Agreement or (b) fail to pay or discharge any tax, assessment or levy of any
nature not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to the Collateral.
(c) The Company will use the Escrow Funds released hereunder only
for Permitted Distributions as set forth in each Permitted Distributions
Certificate. As used in this Agreement, the term "Permitted Distributions" means
(i) the purchase, redemption, retirement or
6
<PAGE>
other acquisition by the Company or any Restricted Subsidiary of the Company of
partnership interests in the Co-Venture Partnerships or the limited partners
thereof, or their successors, in accordance with and in the manner required or
permitted by the terms of the Partnership Parks Agreements, (ii) the payment of
any other obligation under the terms of the Partnership Parks Agreements or the
Subordinated Indemnity Agreement and (iii) the payment of dividends on the
Seller Preferred Stock and the Mandatorily Convertible Preferred Stock in
accordance with the terms thereof as in effect on the date hereof.
(d) Until _______, 2003, the Company, shall, in accordance with the
terms of the Indenture, deposit into the Restricted Cash Account all cash
actually dividended or otherwise distributed to or received by the Company or
any of its Restricted Subsidiaries in respect of any general or limited
partnership interests held in the Co-Venture Partnerships; provided that, in no
event, shall the Company be required to deposit in the Restricted Cash Account
any funds if, after giving effect thereto, the aggregate amount of cash and
Government Securities (valued at their accreted value or principal amount, as
appropriate) then held in the Restricted Cash Account would exceed $75.0
million.
6. Remedies upon Default. If any Event of Default shall have occurred and
be continuing:
(a) The Trustee may, without notice to the Company and at any time
or from time to time, liquidate all Government Securities and transfer all funds
in the Restricted Cash Account to the Paying Agent to apply such funds in
accordance with Section 2.04 of the Indenture.
(b) The Trustee may also exercise in respect of the Collateral, in
addition to the other rights and remedies provided for herein or in the
Indenture or otherwise available to it, all the rights and remedies of a secured
party after a default under the Uniform Commercial Code in effect at that time
in the State of New York (the "Code") (whether or not the Code applies to the
affected Collateral).
(c) Any cash held by the Trustee as Collateral and all proceeds
received by the Trustee in respect of any sale or liquidation of, collection
from, or other realization upon all or any part of the Collateral may, in the
discretion of the Trustee, be held by the Trustee as collateral for, and/or then
or at any time thereafter be applied (after payment of any costs and expenses
incurred in connection with any sale, liquidation or disposition of or
realization upon the Collateral and the payment of any amounts payable to the
Trustee) in whole or in part by the Trustee for the ratable benefit of the
Holders of the Senior Discount Notes against all or any part of the Secured
Obligations in such order as the Trustee shall elect. Any surplus of such cash
or cash proceeds held by the Trustee and remaining after payment in full of all
the Secured Obligations and the costs and expenses incurred by and amounts
payable to the Trustee hereunder or under the Indenture shall be paid over to
the Company or to whomsoever shall be lawfully entitled to receive such surplus.
7
<PAGE>
For the avoidance of doubt, if any Event of Default shall have
occurred and be continuing, the Trustee shall not release any Collateral to, or
at the direction of, the Company.
7. Indemnity and Authority of the Trustee.
The Company shall indemnify the Trustee against any and all loses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance of administration of its duties under this Agreement, including the
costs and expenses of enforcing this Agreement against the Company (including
this Section 7) and defending itself against any claim (whether asserted by the
Company or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its gross
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7 shall survive
the satisfaction and discharge of this Agreement.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) of the Indenture occurs, the
expenses and compensation for the services (including the fees and expenses of
its agent and counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.
The Trustee may conclusively rely upon any Officer's Certificate or
Opinion of Counsel it receives pursuant to Section 7.02 of the Indenture.
8. Termination.
(a) This Agreement shall create a continuing security interest in
and to the Collateral and such security interest shall, unless otherwise
provided in the Indenture or in this Agreement, remain in full force and effect
until ___________, 2003, provided that no Default or Event of Default shall have
then occurred and be continuing (the "Termination Date"). This Agreement shall
be binding upon the Company, its successors and assigns, and shall inure,
together with the rights and remedies of the Trustee hereunder, to the benefit
of the Trustee, the Holders of Senior Discount Notes and their respective
successors, transferees and assigns.
(b) Subject to the provisions of Section 9(c) hereof, this Agreement
shall terminate upon the Termination Date. At such time, the Trustee shall, at
the written request of the Company, reassign and redeliver to the Company all of
the Collateral hereunder that has not been sold, disposed of, retained or
applied by the Trustee in accordance with the terms of this Agreement and the
Indenture. Such reassignment and redelivery shall be without warranty
8
<PAGE>
(either express or implied) by or recourse to the Trustee, except as to the
absence of any prior assignments by or encumbrances created by the Trustee on
its interest in the Collateral, and shall be at the expense of the Company.
9. Miscellaneous.
(a) Waiver. Either party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party, and
specifically designates the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(c) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the termination of
this Agreement; provided, however that the Company's obligations pursuant to
Section 7 hereof shall survive the termination of this Agreement (including any
termination under applicable bankruptcy laws) or the resignation or removal of
the Trustee.
(d) Assignment. This Agreement shall inure to and be binding upon
the parties and their respective successors and permitted assigns; provided,
however, that the Company may not assign its rights or obligations hereunder
without the express prior written consent of the Trustee, acting at the
direction of the Holders as provided in the Indenture.
(e) Entire Agreement; Amendments. This Agreement and the Indenture
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede any and all prior agreements, understandings and
commitments with respect thereto, whether oral or written; provided, however,
that this Agreement is executed and accepted by the Trustee subject to all terms
and conditions of its acceptance of the trust under the Indenture, as fully as
if said terms and conditions were set forth at length herein. This Agreement may
be amended only by a writing signed by duly authorized representatives of both
parties. The Trustee may execute an amendment to this Agreement only if the
requisite consent of the Holders of the Senior Discount Notes required by
Section 9.02 of the Indenture has been obtained, unless no such consent is
required by such Section 9.02 of the Indenture.
(f) Notices. Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered in person or
mailed by first class mail (registered or certified return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
9
<PAGE>
If to the Company:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Chief Financial Officer
Facsimile number: (405) ________
Telephone number: (405) 475-2500
With a copy to:
James M. Coughlin, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Facsimile number: (212) 702-5810
Telephone number: (212) 702-5700
If to the Trustee:
The Bank of New York
___________________
___________________
Attention: ___________________
Facsimile number: (212) ___________
Telephone number: (212) ___________
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other that those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
(g) Expenses. The Company shall pay to the Trustee from time to time
such compensation for its acceptance of this Agreement and services hereunder as
the Company and the Trustee have separately agreed. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
10
<PAGE>
(h) Security Interest Absolute. All rights of the Trustee and the
Holders of Senior Discount Notes and security interests hereunder, and all
obligations of the Company hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto; (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of or any consent to any
departure from the Indenture; (c) any exchange, surrender, release or
non-perfection of any Liens on any other collateral for all or any of the
Secured Obligations; or (d) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Company in respect of the Secured Obligations or of this
Agreement.
(i) Counterpart Originals. The parties may sign any number of copies
of this Agreement. Each signed copy shall be an original, but all of them
represent the same agreement.
(j) Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that they will not render this
Agreement not entitled to be recorded, registered or filed under provisions of
any applicable law.
(k) Rights of Holders of Senior Discount Notes. No Holder of Senior
Discount Notes shall have any independent rights hereunder other than those
rights granted to individual Holders of Senior Discount Notes pursuant to
Section 6.07 of the Indenture; provided that nothing in this subsection shall
limit any rights granted to the Trustee under the Senior Discount Notes or the
Indenture.
(l) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE COMPANY, THE TRUSTEE AND THE HOLDERS OF SENIOR DISCOUNT NOTES
IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE
STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS
CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SENIOR
DISCOUNT NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TO PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM
JURISDICTION OVER THE COMPANY OR ITS PROPERTY, AS THE CASE MAY BE) TO
ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT
11
<PAGE>
OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE COMPANY AGREES
THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS CLAIMS IN ANY
PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT
FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN
ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE
COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
IN WHICH THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY AND THE TRUSTEE EACH WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NEITHER THE TRUSTEE NOR ANY
HOLDER OF SENIOR DISCOUNT NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY
THE COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO,
THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT
OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF SENIOR
DISCOUNT NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF
ACTS OR OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDER OF SENIOR
DISCOUNT NOTES, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF
NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY
HOLDER OF SENIOR DISCOUNT NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE
SECURED OBLIGATIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
COMPANY WAIVES THE POSTING OF ANY BOND
12
<PAGE>
OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER OF SENIOR DISCOUNT NOTES
IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION
OF, REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE
SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED
IN FAVOR OF THE TRUSTEE OR ANY HOLDER OF SENIOR DISCOUNT NOTES, OR TO
ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR
PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT
OR DOCUMENT BETWEEN THE COMPANY ON THE ONE HAND AND THE TRUSTEE AND/OR THE
HOLDERS OF SENIOR DISCOUNT NOTES ON THE OTHER HAND.
[SIGNATURE PAGE FOLLOWS]
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Pledge, Escrow and Disbursement Agreement as of the day first written
above.
COMPANY: PREMIER PARKS INC.
By: __________________________________
Name:
Title:
TRUSTEE: THE BANK OF NEW YORK
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT A
[Form of]
Permitted Distributions Certificate
PREMIER PARKS INC.
Date:__________________
The undersigned executive officers of Premier Parks Inc., a Delaware
corporation (the "Company"), hereby certify, pursuant to Section 3(a) of the
Pledge, Escrow and Disbursement Agreement, dated as of ___________, 1998 (the
"Escrow Agreement"), by and between the Company and The Bank of New York, as
trustee (the "Trustee"), under the Indenture dated as of __________, 1998 (the
"Indenture"), between the Company and the Trustee, that:
1. This request for release of funds has been duly authorized by all
necessary corporate action and does not contravene, or constitute a
default under, any provision of applicable law or regulation or the
certificate of incorporation of the Company or of the Escrow
Agreement, the Indenture or any other agreement, judgment,
injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any Lien on any
assets of the Company;
2. The Company will use the Necessary Funds (as defined below) for the
following Permitted Distributions (as defined in the Escrow
Agreement) within two Business Days of receipt thereof:
3. Attached hereto is supporting documentation detailing the Company's
expected Permitted Distributions for the immediately succeeding
three (3) months; and
4. To date, the Company has received $____________ from the Restricted
Cash Account.
5. No Event of Default has occurred and is continuing under the
Indenture.
The Company hereby requests the Trustee to liquidate $_________
worth of Government Securities in the Restricted Cash Account by not later than
12:00 noon (New York time) on _________ __, _____ and to transfer $________ (the
"Necessary Funds") in immediately available funds to _________ at _________.
B-1
<PAGE>
Capitalized terms used herein without definition shall have the
meanings set forth in the Indenture.
By: __________________________________
Name: ________________________________
Title: _______________________________
By: __________________________________
Name: ________________________________
Title: _______________________________
B-2
<PAGE>
Exhibit 4(p)
L&W DRAFT 3/18/98
================================================================================
PREMIER PARKS INC.
$
__% SENIOR DISCOUNT NOTES DUE 2008
-------------------------------
INDENTURE
Dated as of __________, 1998
-------------------------------
-------------------------------
THE BANK OF NEW YORK
as Trustee
-------------------------------
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
(a) Trust Indenture
Act Section Indenture Section
310 (a)(1)..........................................................7.10
(a)(2) .............................................................7.10
(a)(3)..............................................................N.A.
(a)(4)..............................................................N.A.
(a)(5)..............................................................7.10
(i)(b)..............................................................7.10
(ii)(c).............................................................N.A.
311(a)..............................................................7.11
(b).................................................................7.11
(iii(c).............................................................N.A.
312 (a).............................................................2.05
(b).................................................................11.03
(iv)(c).............................................................11.03
313(a)..............................................................7.06
(b)(1)..............................................................10.03
(b)(2)..............................................................7.07
(v)(c)..............................................................7.06;
11.02
(vi)(d).............................................................7.06
314(a)..............................................................4.03;
11.02
(A)(b)..............................................................10.02
(c)(1)..............................................................11.04
(c)(2)..............................................................11.04
(c)(3)..............................................................N.A.
(d).................................................................10.03,
10.04, 10.05
(vii)(e)............................................................11.05
(f).................................................................NA
315 (a).............................................................7.01
(b).................................................................7.05,
11.02
(A)(c)..............................................................7.01
(d).................................................................7.01
(e).................................................................6.11
316 (a)(last sentence)..............................................2.09
(a)(1)(A)...........................................................6.05
(a)(1)(B)...........................................................6.04
(a)(2)..............................................................N.A.
<PAGE>
(b).................................................................6.07
(B)(c)..............................................................2.12
317 (a)(1)..........................................................6.08
(a)(2)..............................................................6.09
(b).................................................................2.04
318 (a).............................................................11.01
(b).................................................................N.A.
(c).................................................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
2
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1
Section 1.01. Definitions..................................................1
Section 1.02. Other Definitions...........................................16
Section 1.03..............................................................17
Section 1.04. Rules of Construction.......................................17
ARTICLE 2. THE NOTES........................................................18
Section 2.01. Form and Dating.............................................18
Section 2.02. Execution and Authentication................................18
Section 2.03. Registrar and Paying Agent..................................19
Section 2.04. Paying Agent to Hold Money in Trust.........................19
Section 2.05. Holder Lists................................................19
Section 2.06. Transfer and Exchange.......................................19
Section 2.07. Replacement Notes...........................................22
Section 2.08. Outstanding Notes...........................................22
Section 2.09. Treasury Notes..............................................23
Section 2.10. Temporary Notes.............................................23
Section 2.11. Cancellation................................................23
Section 2.12. Defaulted Interest..........................................23
ARTICLE 3. REDEMPTION AND PREPAYMENT........................................24
Section 3.01. Notices to Trustee..........................................24
Section 3.02. Selection of Notes to Be Redeemed...........................24
Section 3.03. Notice of Redemption........................................24
Section 3.04. Effect of Notice of Redemption..............................25
i
<PAGE>
Section 3.05. Deposit of Redemption Price.................................25
Section 3.06. Notes Redeemed in Part......................................26
Section 3.07. Optional Redemption.........................................26
Section 3.08. Mandatory Redemption........................................26
Section 3.09. Offer to Purchase by Application of Excess Proceeds.........26
ARTICLE 4. COVENANTS........................................................28
Section 4.01. Payment of Notes............................................28
Section 4.02. Maintenance of Office or Agency.............................28
Section 4.03. Reports.....................................................29
Section 4.04. Compliance Certificate......................................29
Section 4.05. Taxes.......................................................30
Section 4.06. Stay, Extension and Usury Laws..............................30
Section 4.07. Restricted Payments.........................................30
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................32
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock..33
Section 4.10. Asset Sales.................................................35
Section 4.11. Transactions with Affiliates................................36
Section 4.12. Liens.......................................................37
Section 4.13. Line of Business............................................37
Section 4.14. Corporate Existence.........................................37
Section 4.15. Offer to Repurchase Upon Change of Control..................38
Section 4.16. Limitation on Sale and Leaseback Transactions...............38
Section 4.17. Limitation on Issuances and Sales of Equity Interests of
Restricted Subsidiaries.....................................38
Section 4.18. Payments for Consent........................................39
Section 4.19. Restricted Cash Escrow Agreement............................39
ii
<PAGE>
ARTICLE 5. SUCCESSORS.......................................................39
Section 5.01. Merger, Consolidation, or Sale of Assets....................39
Section 5.02. Successor Corporation Substituted...........................40
ARTICLE 6. DEFAULTS AND REMEDIES............................................40
Section 6.01. Events of Default...........................................40
Section 6.02. Acceleration................................................42
Section 6.03. Other Remedies..............................................42
Section 6.04. Waiver of Past Defaults.....................................43
Section 6.05. Control by Majority.........................................43
Section 6.06. Limitation on Suits.........................................43
Section 6.07. Rights of Holders of Notes to Receive Payment...............43
Section 6.08. Collection Suit by Trustee..................................44
Section 6.09. Trustee May File Proofs of Claim............................44
Section 6.10. Priorities..................................................44
Section 6.11. Undertaking for Costs.......................................45
ARTICLE 7. TRUSTEE..........................................................45
Section 7.01. Duties of Trustee...........................................45
Section 7.02. Rights of Trustee...........................................46
Section 7.03. Individual Rights of Trustee................................46
Section 7.04. Trustee's Disclaimer........................................46
Section 7.05. Notice of Defaults..........................................47
Section 7.06. Reports by Trustee to Holders of the Notes..................47
Section 7.07. Compensation and Indemnity..................................47
Section 7.08. Replacement of Trustee......................................48
Section 7.09. Successor Trustee by Merger, etc............................49
Section 7.10. Eligibility; Disqualification...............................49
iii
<PAGE>
Section 7.11. Preferential Collection of Claims Against Company...........49
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................49
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....49
Section 8.02. Legal Defeasance and Discharge..............................49
Section 8.03. Covenant Defeasance.........................................50
Section 8.04. Conditions to Legal or Covenant Defeasance..................50
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.......................51
Section 8.06. Repayment to Company........................................52
Section 8.07. Reinstatement...............................................52
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................53
Section 9.01. Without Consent of Holders of Notes.........................53
Section 9.02. With Consent of Holders of Notes............................53
Section 9.03. Compliance with Trust Indenture Act.........................55
Section 9.04. Revocation and Effect of Consents...........................55
Section 9.05. Notation on or Exchange of Notes............................55
Section 9.06. Trustee to Sign Amendments, etc.............................55
ARTICLE 10 COLLATERAL AND SECURITY..........................................55
Section 10.01. Pledge, Escrow and Disbursement Agreement..................55
Section 10.02. Recording and Opinions.....................................56
Section 10.03. Release of Collateral......................................57
Section 10.04. Certificates of the Company................................57
Section 10.05. Authorization of Actions to Be Taken by the Trustee Under
the Restricted Cash Escrow Agreement.......................57
Section 10.06. Authorization of Receipt of Funds by the Trustee Under
the Restricted Cash Escrow Agreement......................58
Section 10.07. Termination of Security Interest..........................58
iv
<PAGE>
ARTICLE 11. MISCELLANEOUS...................................................58
Section 11.01. Trust Indenture Act Controls...............................58
Section 11.02. Notices....................................................58
Section 11.03. Communication by Holders of Notes with Other Holders
of Notes...................................................59
Section 11.04. Certificate and Opinion as to Conditions Precedent.........59
Section 11.05. Statements Required in Certificate or Opinion..............60
Section 11.06. Rules by Trustee and Agents................................60
Section 11.07. No Personal Liability of Directors, Officers, Employees
and Stockholders...........................................60
Section 11.08. Governing Law..............................................60
Section 11.09. No Adverse Interpretation of Other Agreements..............61
Section 11.10. Successors.................................................61
Section 11.11. Severability...............................................61
Section 11.12. Counterpart Originals......................................61
Section 11.13. Table of Contents, Headings, etc...........................61
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
v
<PAGE>
INDENTURE dated as of __________, 1998 between Premier Parks Inc., a
Delaware corporation (the "Company"), and The Bank of New York, as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the __% Senior
Discount Notes due 2008 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Accreted Value" means, as of any date of determination prior
to_______, 2003, with respect to any Note, the sum of (a) the initial offering
price (which shall be calculated by discounting the aggregate principal amount
at maturity of such Note at a rate of ___% per annum, compounded semi-annually
on each ________ and _______ from _______, 2003 to the date of issuance) of such
Note and (b) the portion of the excess of the principal amount of such Note over
such initial offering price that shall have been accreted thereon through such
date, such amount to be so accreted on a daily basis at __% per annum of the
initial offering price of such Note, compounded semi-annually on each _____ and
_________ from the date of issuance of the Notes through the date of
determination, computed on the basis of a 360-day year of twelve 30-day months;
provided that, on and after ______, 2003, the Accreted Value of each Note shall
be equal to the principal amount at maturity of such Note.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by Section 4.15 and/or Section
5.01 and not by Section 4.10 hereof), and (ii) the issue or sale by the Company
or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Restricted Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $10.0 million or (b) for net proceeds in
excess of $10.0 million. Notwithstanding the foregoing, the following items
shall not be deemed to be
<PAGE>
Asset Sales: (i) a transfer of assets by the Company to a Restricted Subsidiary
or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary, (iii) the transfer of Equity
Interests in any Restricted Subsidiary pursuant to the Subordinated Indemnity
Agreement or the Partnership Parks Agreements, (iv) the issuance of Equity
Interests by a Restricted Subsidiary to any employee thereof or as consideration
for the acquisition of all or substantially all of the assets of, or a majority
of the Voting Stock of, any Person (or a business unit or division of such
Person), provided that the primary business of such Person (or such unit or
division) is a Permitted Business, (v) the substitution of property in
accordance with the terms of the Parcel Lease, dated November 7, 1997, between
Marine World and Park Management Corp. as the same may be modified or amended
from time to time after the date of this Indenture, provided such modification
or amendment does not adversely affect the interests of the Holders in any
material respect, and (vi) a Restricted Payment that is permitted Section 4.07
hereof.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Beneficial Share Assignment Agreement" means the Beneficial Share
Assignment Agreement, dated as of the date of the consummation of the Six Flags
Acquisition, between TW-SPV Co. and the Company.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars or foreign
currency, (ii) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than one year from the date of
acquisition, (iii) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case
2
<PAGE>
with any lender party to the Credit Facilities or with any commercial bank
having capital and surplus in excess of $500.0 million and a Thompson Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than thirty days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within one year after the date of
acquisition, (vi) securities with maturities of six months or less from the date
of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing authority
of any such state, commonwealth or territory, the securities of which state,
commonwealth, territory, political subdivision or taxing authority (as the case
may be) are rated at least "A" by Standard & Poor's Corporation or "A" by
Moody's Investors Service, Inc. and (vii) money market funds at least 95% of the
assets of which constitute Cash Equivalents of the kinds described in clauses
(i) through (vi) of this definition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Subsidiaries taken
as a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
more than 35% of the Voting Stock of the Company, or (iv) the first day on which
a majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Common Stock" means the common stock, par value $.05 per share of
the Company.
"Common Stock Offering" means the offering of 13,000,000 shares of
Common Stock and up to an additional 1,950,000 shares of Common Stock to cover
over-allotments.
"Company" means Premier Parks Inc., and any and all successors
thereto.
"Company Notes" means the Notes and the Senior Notes.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (ii) Consolidated
Interest Expense of such Person and its Restricted Subsidiaries for such period,
to the extent that any such expense was deducted in computing such Consolidated
Net Income, plus (iii) depreciation, amortization (including any depreciation or
amortization arising out of purchases by the Company or any Restricted
Subsidiary of Equity Interests in the partners of the Co-Venture Partnerships
and amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (iv) non-cash items increasing
such Consolidated Net Income for such period, in each case, on a consolidated
basis and determined in accordance with GAAP (other than
3
<PAGE>
accrual of income in the ordinary course of business in respect of a future cash
payment). Notwithstanding any other provision of this Indenture to the contrary,
"Consolidated Cash Flow" of the Company for any period will be deemed to include
100% of the cash distributions to the Company or any of its Restricted
Subsidiaries in respect of such period from the Co-Venture Partnerships,
directly or indirectly, out of the Consolidated Cash Flow of the Co-Venture
Partnerships in respect of such period.
"Consolidated Indebtedness" means, with respect to any Person as of
any date of determination, the sum, without duplication, of (i) the total amount
of Indebtedness and Attributable Debt of such Person and its Restricted
Subsidiaries, plus (ii) the total amount of Indebtedness and Attributable Debt
of any other Person, to the extent that the same has been guaranteed by the
referent Person or one or more of its Restricted Subsidiaries, plus (iii) the
aggregate liquidation value of all Disqualified Stock of such Person and all
preferred stock of Restricted Subsidiaries of such Person, in each case,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the sum of (i) the consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization or original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations) and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness or Attributable Debt of another
Person that is guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such guarantee or Lien is called upon). The term
"Consolidated Interest Expense" shall not include the consolidated interest
expense of any Person with respect to (i) any obligations in respect of the SFEC
Zero Coupon Senior Notes so long as (x) the SFEC Pledge and Escrow Agreement is
in full force and effect and the trustee under the indenture governing the New
SFEC Notes maintains a valid and perfected security interest in cash or
Government Securities in an amount at least equal to the outstanding principal
amount of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or
(y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance
with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any
obligations of the Company or any Restricted Subsidiary under the Partnership
Parks Agreements, the Marine World Agreements or the Subordinated Indemnity
Agreement.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, and prior to any
deduction in respect of dividends on any series of preferred stock of such
Person, determined in accordance with GAAP; provided that (i) the Net Income
(but not loss) of any Person that is not a Restricted Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the referent
Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded and (iii) the cumulative
effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity (including stated capital,
additional paid-in capital and retained earnings) of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of
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preferred stock (other than Disqualified Stock) that by its terms is not
entitled to the payment of dividends unless such dividends may be declared and
paid only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of this Indenture in the book value of any
asset owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 11.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Co-Venture Partnerships" means (i) Six Flags Over Georgia, Ltd., a
Georgia Limited Partnership, (ii) Texas Flags, Ltd., a Texas Limited Partnership
and (iii) Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership.
"Credit Facilities" means, with respect to the Company or any of its
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the Premier Credit Facility and the Six Flags Credit Facility) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Debt to Cash Flow Ratio" means, as of any date of determination,
the ratio of (a) the Consolidated Indebtedness of the Company as of such date to
(b) the Consolidated Cash Flow of the Company for the four most recent full
fiscal quarters ending immediately prior to such date for which financial
statements have been filed with the SEC, determined on a pro forma basis after
giving effect to all acquisitions or Asset Sales made by the Company and its
Restricted Subsidiaries from the beginning of such four-quarter period through
and including such date of determination (including any related financing
transactions) as if such acquisitions and dispositions had occurred at the
beginning of such four-quarter period. In addition, for purposes of making the
computation referred to above, (i) acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date
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shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (ii) of the proviso set forth in the definition
of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock (other than the Seller
Preferred Stock) that, by its terms (or by the terms of any security into which
it is convertible, or for which it is exchangeable, at the option of the holder
thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Company Notes mature; provided,
however, that any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require the Company to repurchase
such Capital Stock upon the occurrence of a Change of Control or an Asset Sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 4.07.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Escrow Account" means the escrow account for the initial deposit of
approximately $76.3 million dollars of the net proceeds from the sale of the
Senior Notes under the Pledge and Escrow Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means up to $______ million in aggregate
principal amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Premier Credit Facility and the Six Flags Credit
Facility) in existence on the date of this Indenture, until such amounts are
repaid.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
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other statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect from time to time.
"Global Note" means the Global Note in the form of Exhibit A hereto
issued in accordance with Section 2.01 hereof.
"Global Note Legend" means the legend set forth in Section 2.06(f),
which is required to be placed on the Global Note issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness. The term
"Indebtedness" shall not include (i) any obligations in respect of the SFEC Zero
Coupon Senior Notes so long as (x) the SFEC Pledge and Escrow Agreement is in
full force and effect and the trustee under the indenture governing the New SFEC
Notes maintains a valid and perfected security interest in cash or Government
Securities in an amount sufficient to pay the aggregate principal amount at
maturity of such SFEC Zero Coupon Senior Notes pursuant to the terms thereof or
(y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance
with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any
obligations of the Company or any Restricted Subsidiary under the Partnership
Parks Agreements, the Marine World Agreements or the Subordinated Indemnity
Agreement.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
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"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees and any deposit or advance made pursuant to
any contract entered into in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company (other than
pursuant to the terms of the Partnership Parks Agreements or the Subordinated
Indemnity Agreement) such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Mandatorily Convertible Preferred Stock" means the Company's ___%
Mandatorily Convertible Preferred Stock.
"Marine World" means the Marine World Joint Powers Authority or any
successor thereto.
"Marine World Agreements" mean (i) the Parcel Lease, dated November
7, 1997, between Marine World and Park Management Corp. ("PMC"), (ii) the
Reciprocal Easement Agreement, dated November 7, 1997, between Marine World and
PMC, (iii) the Revenue Sharing Agreement, dated November 7, 1997, among Marine
World, PMC and the Redevelopment Agency of the City of Vallejo (the "Agency"),
(iv) the Purchase Option Agreement, dated as of August 29, 1997, among Marine
World, the Agency, the City of Vallejo and PMC and (v) the 1997 Management
Agreement, dated as of February 1, 1997, between Marine World and PMC, as
amended, in each case, as the same may be modified or amended from time to time
after the date of this Indenture, provided such modification or amendment does
not adversely affect the interests of the Holders in any material respects.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends,
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excluding, however, (i) any gain or loss, together with any related provision
for taxes on such gain or loss, realized in connection with any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) and (ii) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that were
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"New SFEC Notes" means SFEC's ___ % Senior Notes due 2006.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offerings" means the offerings of the Notes, Common Stock, Senior
Notes and Mandatorily Convertible Preferred Stock by the Company and the
offering of the New SFEC Notes by SFEC all consummated on the date hereof.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
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"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means a Person who has an account with the Depositary.
"Partnership Parks Agreements" means (i) the Overall Agreement,
dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family
Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG
II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B,
L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., Six
Flags Theme Parks Inc. and Six Flags Entertainment Corporation and the Related
Agreements (as defined therein), (ii) Overall Agreement, dated as of November
24, 1997, among Six Flags Over Texas Fund, Ltd., Flags' Directors, L.L.C.,
FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc.,
SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., Six Flags Theme Parks
Inc. and Six Flags Entertainment Corporation and the Related Agreements (as
defined therein), and (iii) the Lease Agreement with Option to Purchase, dated
as of March 9, 1996, among Fiesta Texas Theme Park, Ltd., a Texas Limited
Partnership, San Antonio Theme Park, L.P., and Six Flags San Antonio, L.P. and
the Transaction Documents (as defined therein), in each case, as the same may be
modified or amended from time to time after the date of this Indenture provided
such modification or amendment does not adversely affect the interests of the
Holders in any material respect.
"Permitted Business" means any business related, ancillary or
complementary to the businesses of the Company and its Restricted Subsidiaries
on the date of this Indenture.
"Permitted Distributions" means (i) the purchase, redemption,
retirement or other acquisition by the Company or any Restricted Subsidiary of
the Company of partnership interests in the Co-Venture Partnerships or the
limited partners thereof, or their successors, in accordance with and in the
manner required or permitted by the terms of the Partnership Parks Agreements
(ii) the payment of any other obligation under the terms of the Partnership
Parks Agreements or the Subordinated Indemnity Agreement and (iii) the payment
of dividends on the Seller Preferred Stock and the Mandatorily Convertible
Preferred Stock in accordance with the terms thereof as in effect on the date of
this Indenture.
"Permitted Investments" means an Investment by the Company or any
Restricted Subsidiary in (i) cash or Cash Equivalents, (ii) the Company, a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary; provided, however, that the primary
business of such Restricted Subsidiary is a Permitted Business; (iii) another
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets (or the assets of any business unit or division of such Person) to, the
Company or a Restricted Subsidiary; provided, however, that such Person's (or
such unit's or division's) primary business is a Permitted Business; (iv)
another Person if the aggregate amount of all Investments in all such other
Persons does not exceed $25.0 million at any one time outstanding (with each
Investment being valued as of the date made and without giving effect to
subsequent changes in value); provided, however, that such Person's primary
business is a Permitted Business; (v) promissory notes received as consideration
for an Asset Sale which are secured by a Lien on the asset subject to such Asset
Sale; provided that the aggregate amount of all such promissory notes at any one
time outstanding does not exceed $5.0 million; (vi) non-cash consideration from
an Asset Sale that was made pursuant to and in compliance with Section 4.10;
(vii) assets acquired solely in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of the Company; (viii) receivables owing to the
Company or any
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Restricted Subsidiary, if created or acquired in the ordinary course of
business; (ix) payroll, travel and similar advances that are made in the
ordinary course of business; (x) loans or advances to employees made in the
ordinary course of business consistent with past practices of the Company or
such Restricted Subsidiary; (xi) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; and (xii)
other Investments in any Person at any time outstanding (each such Investment
being measured on the date each such Investment was made and without giving
effect to subsequent changes in value) not to exceed 50% of the aggregate amount
of net cash proceeds received by the Company from the Common Stock Offering in
excess of $700.0 million; provided, however, that any proceeds that are used as
a basis for a Restricted Payment under clause (ii) of the second paragraph of
Section 4.07 or otherwise will be disregarded for purposes of this clause (xii).
"Permitted Liens" means (a) Liens to secure Indebtedness of a
Restricted Subsidiary of the Company that was permitted to be incurred under
this Indenture; (b) Liens existing on the Issue Date; (c) Liens on property or
shares of Capital Stock of another Person at the time such other Person becomes
a Restricted Subsidiary of such Person; provided, however, that such Liens are
not created, incurred or assumed in connection with, or in contemplation of,
such other Person becoming such a Restricted Subsidiary; provided further,
however, that such Lien may not extend to any other property owned by such
Person or any of its Restricted Subsidiaries; (d) Liens on property at the time
such Person or any of its Restricted Subsidiaries acquires the property,
including any acquisition by means of a merger or consolidation with or into
such Person or a Restricted Subsidiary of such Person; provided, however, that
such Liens are not created, incurred or assumed in connection with, or in
contemplation of, such acquisition; provided further, however, that the Liens
may not extend to any other property owned by such Person or any of its
Restricted Subsidiaries; (e) Liens securing Indebtedness or other obligations of
a Restricted Subsidiary of such Person owing to such Person or a Restricted
Subsidiary of such Person; (f) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under this Indenture, secured by
a Lien on the same type of property securing such Hedging Obligations; (g) Liens
to secure any Permitted Refinancing Indebtedness; provided, however, that (x)
such new Lien shall be limited to all or part of the same property that secured
the original Lien (plus improvements on such property) and (y) the Indebtedness
secured by such Lien at such time is not increased to any amount greater than
the sum of (A) the outstanding principal amount or, if greater, committed amount
of the Indebtedness refinanced at the time the original Lien became a Permitted
Lien and (B) an amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension, renewal or
replacement; (h)(i) mortgages, liens, security interests, restrictions or
encumbrances that have been placed by any developer, landlord or other third
party on property over which the Company or any Restricted Subsidiary of the
Company has easement rights or on any real property leased by the Company or any
Restricted Subsidiary of the Company and subordination or similar agreements
relating thereto and (ii) any condemnation or eminent domain proceedings
affecting any real property; (i) pledges or deposits by such Person under
workmen's compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts (other than
for the payment of Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or deposits of
cash or United States government bonds to secure surety or appeal bonds to which
such Person is a party, or deposits as security for contested taxes or import
duties or for the payment of rent, in each case incurred in the ordinary course
of business; (j) Liens imposed by law, such as carriers', warehousemen's and
mechanic's Liens, in each case for sums not yet due or being contested in good
faith by appropriate proceedings or other Liens arising out of judgments or
awards against such Person with respect to which such Person shall then be
proceeding with an appeal or other proceedings for review; (k) Liens for
property taxes not yet due or payable or subject to penalties for non-payment or
which are being contested in good faith and
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by appropriate proceedings; (l) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, licenses, rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real properties or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not incurred in connection with
Indebtedness and which do not in the aggregate materially impair the use of such
properties in the operation of the business of such Person; (m) Liens securing
Purchase Money Indebtedness; provided, however, that (i) the Indebtedness
secured by such Liens is otherwise permitted to be incurred under this
Indenture, (ii) the principal amount of any Indebtedness secured by any such
Lien does not exceed the cost of assets or property so acquired or constructed
and (iii) the amount of Indebtedness secured by any such Lien is not
subsequently increased; (n) Liens arising out of the transactions contemplated
by the Partnership Parks Agreements, the Marine World Agreements, the
Subordinated Indemnity Agreement or the Six Flags Agreement; and (o) Liens
incurred in the ordinary course of business of the Company or any Subsidiary of
the Company with respect to obligations that do not exceed $20.0 million at any
one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses,
including premiums, incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Company Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Senior Notes on terms
at least as favorable to the Holders of Senior Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Pledge and Escrow Agreement" means the Pledge, Escrow and
Disbursement Agreement, dated as of the date of this Indenture, by and between
the Company and the Senior Note Trustee governing the disbursement of funds from
the Escrow Account, as amended from time to time in accordance with the Senior
Note Indenture.
"Pledged Collateral" means the Collateral (as defined in the
Restricted Cash Escrow Agreement) under the Restricted Cash Escrow Agreement.
"Premier Credit Facility" means that certain $300.0 million senior
secured credit facility between ________ and Premier Operations dated as of
_____, 1998.
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"Premier Operations" means Premier Parks Operations Inc., a wholly
owned subsidiary of the Company.
"Public Equity Offering" means an underwritten primary public
offering of common stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of
the deferred purchase price of property, conditional sale obligations,
obligation under any title retention agreement and other purchase money
obligations, in each case where the maturity of such Indebtedness does not
exceed the anticipated useful life of the asset being financed, and (ii)
incurred to finance the acquisition by the Company or a Restricted Subsidiary of
the Company of such asset, including additions and improvements; provided,
however, that any Lien arising in connection with any such Indebtedness shall be
limited to the specified asset being financed or, in the case of real property
or fixtures, including additions and improvements, the real property on which
such asset is attached; and provided further, that such Indebtedness is incurred
within 180 days after such acquisition, addition or improvement by the Company
or Restricted Subsidiary of such asset.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Cash Escrow Agreement" means the Pledge, Escrow and
Disbursement Agreement, dated as of the date of this Indenture, by and between
the Company and the Trustee governing the disbursement of funds from the
Restricted Cash Account, as amended from time to time in accordance with this
Indenture.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Preferred Stock" means the Company's Convertible Redeemable
Preferred Stock issued to the sellers of SFEC common stock pursuant to the Six
Flags Agreement.
"Senior Note Indenture" means that certain indenture, dated as of
the date hereof, between the Company and The Bank of New York, as trustee, as
amended or supplemented from time to time, relating to the Senior Notes.
"Senior Note Trustee" means the trustee under the Senior Notes until
a successor replaces it in accordance with the applicable provisions of the
Senior Note Indenture and thereafter means the successor serving hereunder.
"Senior Notes" means the Company's ___% Senior Notes due 2006 issued
pursuant to the Senior Note Indenture.
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"SFEC" means Six Flags Entertainment Corporation, a wholly owned
subsidiary of the Company.
"SFEC Pledge and Escrow Agreement" means the Pledge, Escrow and
Disbursement Agreement dated as of the date hereof, by and between SFEC and The
Bank of New York, as trustee, as amended from time to time in accordance with
the indenture governing the New SFEC Notes.
"SFEC Zero Coupon Senior Notes" means SFEC's Zero Coupon Senior
Notes due 1999.
"SFTP" means Six Flags Theme Parks Inc., a wholly owned subsidiary
of SFEC.
"Six Flags Acquisition" means the acquisition by the Company by
merger of all of the capital stock of SFEC from its current stockholders
pursuant to the Six Flags Agreement.
"Six Flags Agreement" means that certain Agreement and Plan of
Merger dated as of February 9, 1998, by and among the Company, Premier Parks
Holdings Corporation, a Delaware Corporation, Premier Parks Merger Corporation,
a Delaware Corporation, a certain group of sellers listed therein and SFEC.
"Six Flags Credit Facility" means that $472.0 million senior secured
credit facility between SFTP and _____ dated as of ______, 1998.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Specified Amount" means, as of any date, (i) the product of (a) the
Consolidated Cash Flow of the Company for the most recently ended four-quarter
period for which financial statements have been filed with the SEC determined on
a pro forma basis after giving effect to all acquisitions or Asset Sales made by
the Company and its Restricted Subsidiaries from the beginning of such
four-quarter period through and including such date of determination (including
any related financing transactions) as if such acquisitions and dispositions had
occurred at the beginning of such four-quarter period, times (b) 0.75.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Strategic Equity Investment" means a cash contribution to the
common equity capital of the Company or a purchase from the Company of common
Equity Interests (other than Disqualified Stock), in either case by or from a
Strategic Equity Investor and for aggregate cash consideration of at least $25.0
million.
"Strategic Equity Investor" means, as of any date, any Person (other
than an Affiliate of the Company) engaged in a Permitted Business which, as of
the day immediately before such date, had a Total Equity Market Capitalization
of at least $1.0 billion.
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"Subordinated Indemnity Agreement" means the Subordinated Indemnity
Agreement, dated as of the date of the consummation of the Six Flags
Acquisition, among the Company, SFEC and its subsidiaries, Time Warner Inc.,
Time Warner Entertainment Company, L.P. and TW-SPV Co. , as the same may be
modified or amended from time to time after the date hereof, provided such
modification or amendment does not adversely affect the interests of the Holders
in any material fashion.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% (49% in the case of
Walibi, S.A.) of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); provided that, notwithstanding the
foregoing, each of SFOG A Holdings, SFOG B Holdings, SFOT I Holdings and SFOT II
Holdings shall be deemed to be a Subsidiary of the Company for all purposes
under this Indenture so long as (x) the Subordinated Indemnity Agreement and the
Beneficial Share Assignment Agreement shall each be in full force and effect and
no default or event of default shall have occurred thereunder, and (ii) any
partnership or limited liability company (a) the sole general partner or the
managing general partner (or equivalent) of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or one
or more Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Total Equity Market Capitalization" of any Person means, as of any
day of determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such Person) multiplied by (B) the
average closing price of such common stock listed on a national securities
exchange or the Nasdaq National Market System over the 20 consecutive business
days immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Trustee" means the party named as such in the preamble hereto until
a successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than
Premier Operations or SFTP or any successor to either of them) that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer
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of the Company or any of its Restricted Subsidiaries. Any such designation by
the Board of Directors shall be evidenced to the Trustees by filing with the
Trustees a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.07. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09, the Company shall be in default of
such covenant). The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.09, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote by the holder thereof in the
election of the Board of Directors (or comparable body) of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person or by such Person and one or more Wholly
Owned Restricted Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"..............................4.11
"Asset Sale".........................................4.10
"Asset Sale Offer"...................................3.09
"Authentication Order"...............................2.02
"Bankruptcy Law".....................................4.01
"Basket Period"......................................4.07
"Change of Control Offer"............................4.15
"Change of Control Payment"..........................4.15
"Change of Control Payment Date" ....................4.15
"Covenant Defeasance"................................8.03
"Event of Default"...................................6.01
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"Excess Proceeds"....................................4.10
"incur"..............................................4.09
"Legal Defeasance" ..................................8.02
"Offer Amount".......................................3.09
"Offer Period".......................................3.09
"Paying Agent".......................................2.03
"Permitted Debt".....................................4.09
"Purchase Date"......................................3.09
"Registrar"..........................................2.03
"Restricted Cash Account"............................4.19
"Restricted Payments"................................4.07
SECTION 1.03.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
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(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Global Note. Notes issued in global form shall be substantially in the
form of Exhibit A attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount at maturity of outstanding Notes from time to time endorsed thereon and
that the aggregate principal amount at maturity of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount at
maturity of outstanding Notes represented thereby shall be made by the Trustee
or the Note Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes
for the Company by manual or facsimile signature. The Company's seal shall be
reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount at maturity stated in paragraph 4 of the
Notes. The aggregate principal amount at maturity of Notes outstanding at any
time may not exceed such amount except as provided in Section 2.07 hereof.
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The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office
or agency where Notes may be presented for registration of transfer or for
exchange ("Registrar") and an office or agency where Notes may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the Notes and
of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Note.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Note.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent will hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal, premium, if any, or
interest on the Notes, and will notify the Trustee of any default by the Company
in making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of the Global Note. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. A Global Note will be exchanged by the
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Company for Definitive Notes if (i) the Company delivers to the Trustee notice
in writing that the Depositary it is unwilling or unable to continue to act as a
depositary and the Company is unable to locate a qualified successor within 90
days or (ii) the Company in its sole discretion determines that the Global Note
(in whole but not in part) should be exchanged for Definitive Notes and delivers
a written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. A Global Note also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Note. The
transfer and exchange of beneficial interests in the Global Note shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the rules and procedures of the Depositary. Transfers of
beneficial interests in the Global Note also shall require compliance with
subparagraph (i) below:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in a Global
Note. No written orders or instructions shall be required to be delivered
to the Registrar to effect the transfers described in this Section
2.06(b)(i).
(c) Transfer or Exchange of Beneficial Interests in the Global Note for
Definitive Notes. If any holder of a beneficial interest in a Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Note, then the Trustee shall cause the aggregate principal
amount at maturity of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(g) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests in
the Global Note. A Holder of a Definitive Note may exchange such Note for a
beneficial interest in a Global Note or transfer such Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a
Global Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Definitive Note and increase
or cause to be increased the aggregate principal amount at maturity of the
Global Note.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required
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pursuant to the following provisions of this Section 2.06(e). A Holder of
Definitive Notes may transfer such Notes to a Person who takes delivery thereof
in the form of a Definitive Note.
(f) Global Note Legend. The following legend shall appear on the face of
the Global Note issued under this Indenture in substantially the following form,
unless specifically stated otherwise in the applicable provisions of this
Indenture:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND
(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(g) Cancellation and/or Adjustment of the Global Note. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate the Global Note and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
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(iv) The Global Note and Definitive Notes issued upon any
registration of transfer or exchange of a Global Note or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Note
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (c) to register
the transfer of or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate the Global Note and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
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If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest.
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At least 15 days before the special record date, the Company (or, upon the
written request of the Company, the Trustee in the name and at the expense of
the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate;
provided that, subject to the limitations described above, the Company may, at
its option, elect to redeem either Senior Notes, Notes, or both Senior Notes and
Notes; and provided further that no Company Notes of $1,000 or less shall be
redeemed in part. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
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(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion shall be issued upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
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SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to __________, 2003. Thereafter, the Notes will be subject to redemption
at any time at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on ___________ of the years indicated below:
Year Percentage
2003........................................ _______%
2004........................................ _______
2005........................................ _______
2006 and thereafter......................... 100.000%
(b) Notwithstanding the foregoing, during the first 36 months after the
date of original issuance of the Notes, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount at maturity of
Notes originally issued under this Indenture at a redemption price of ___% of
the Accreted Value thereof on the redemption date with the net cash proceeds of
one or more Public Equity Offerings and/or the net cash proceeds of a Strategic
Equity Investment; provided that at least 65% of the aggregate principal amount
at maturity of Notes originally issued remains outstanding immediately after the
occurrence of each such redemption (excluding the Notes held by the Company and
its Subsidiaries); and provided, further, that any such redemption shall occur
within 60 days of the date of the closing of each such Public Equity Offering
and/or Strategic Equity Investment.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth in Sections 4.10 and 4.15, the Company shall not
be required to make mandatory redemption or sinking fund payments with respect
to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the
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"Offer Period"). No later than five Business Days after the termination of the
Offer Period (the "Purchase Date"), the Company shall purchase the principal
amount of Notes required to be purchased pursuant to Section 4.10 hereof (the
"Offer Amount") or, if less than the Offer Amount has been tendered, all Notes
tendered in response to the Asset Sale Offer. Payment for any Notes so purchased
shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount at maturity of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
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(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required
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office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes the
financial condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports, in each
case, within the time periods specified in the SEC's rules and regulations. In
addition, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA ss. 314(a).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and the Restricted Cash Escrow Agreement, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and the Restricted
Cash Escrow Agreement and is not in default in the performance or observance of
any of the terms, provisions and conditions of this Indenture or the Restricted
Cash Escrow Agreement (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which
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payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company and each of the
Guarantors (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of any Equity Interests of the
Company (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) or to the direct or indirect
holders of any Equity Interests of the Company in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire
or retire for value (including, without limitation, in connection with any
merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness of the Company that is subordinated to the
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Company Notes, except a payment of interest or principal at Stated Maturity; or
(iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash
Flow test set forth in the first paragraph of Section 4.09; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments declared or made after the date of this Indenture
(excluding Restricted Payments permitted by clauses (ii) and (iii) of the next
succeeding paragraph) shall not exceed, at the date of determination, the sum,
without duplication, of (i) an amount equal to the Company's Consolidated Cash
Flow for the period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the date of this Indenture to the end of
the Company's most recently ended full fiscal quarter for which financial
statements have been filed with the SEC (the "Basket Period") less the product
of 1.4 times the Company's Consolidated Interest Expense for the Basket Period,
plus (ii) 100% of the aggregate net cash proceeds received by the Company after
the date of this Indenture as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale after the date of this Indenture
of Disqualified Stock or debt securities of the Company that have been converted
into such Equity Interests (other than (w) Equity Interests (or Disqualified
Stock or convertible debt securities) sold to a Subsidiary of the Company, (x)
Equity Interests sold in the Offerings and (y) any sale of Equity Interests of
the Company the net cash proceeds of which are applied pursuant to clause (ii)
of the immediately succeeding paragraph), plus (iii) to the extent that any
Restricted Investment that was made after the date of this Indenture is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment,
plus (iv) to the extent that any Unrestricted Subsidiary is redesignated as a
Restricted Subsidiary after the date of this Indenture, the fair market value of
the Company's or its Restricted Subsidiary's, as the case may be, Investment in
such Subsidiary as of the date of such redesignation.
The foregoing provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale including in the Offerings (other than to a Subsidiary of the Company) of,
Equity Interests of the Company (other than Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from (a) clause (c)(ii) of the preceding paragraph and (b) clause (xii)
of the definition of "Permitted Investments;" (iii) the defeasance, redemption,
repurchase or other acquisition of subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) so long
as no Event of Default or Default shall have occurred and be continuing (or
would result therefrom), the purchase, redemption, retirement or other
acquisition by the Company or any Restricted Subsidiary of the Company of
partnership interests held by the partners in the limited partners of the
Co-Venture Partnerships, the
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co-general partner of the Co-Venture Partnerships or, in each case, their
successors, in accordance with and in the manner required or permitted by the
terms of the Partnership Parks Agreements; (v) so long as no Event of Default or
Default shall have occurred and be continuing (or would result therefrom), any
transactions pursuant to or contemplated by, and payments made in connection
with, and in accordance with the terms of, the Partnership Parks Agreements and
the Marine World Agreements; (vi) so long as no Event of Default or Default
shall have occurred and be continuing (or would result therefrom), any
transactions pursuant to or contemplated by, and payments made in connection
with, and in accordance with the terms of, the Subordinated Indemnity Agreement;
(vii) so long as no Event of Default or Default shall have occurred and be
continuing (or would result therefrom), the payment of dividends on the Seller
Preferred Stock and the Mandatorily Convertible Preferred Stock in accordance
with the terms thereof as in effect on the date of this Indenture; (viii) in the
event the Company issues common stock in exchange for or upon conversion of
Seller Preferred Stock or Mandatorily Convertible Preferred Stock, cash payments
made in lieu of the issuance of fractional shares of common stock, not to exceed
$250,000 in the aggregate in any fiscal year; and (ix) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company from employees, former employees, directors or former directors
of the Company or any of its Restricted Subsidiaries (or permitted transferees
of such employees, former employees, directors or former directors); provided,
however, that the aggregate amount of such repurchases shall not exceed $5.0
million in any twelve-month period.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the business currently operated by Premier
Operations or SFTP be transferred to or held by an Unrestricted Subsidiary. For
purposes of making such determination, all outstanding Investments held by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors of the Company whose resolution with respect thereto shall be
delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $10.0 million. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 4.07 were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness
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owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or
advances to the Company or any of its Restricted Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of its Restricted
Subsidiaries. However, the foregoing restrictions will not apply to encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of this Indenture, (b) the Partnership Parks Agreements, the
Marine World Agreements or the Subordinated Indemnity Agreement, (c) the terms
of any Indebtedness permitted by this Indenture to be incurred by any Restricted
Subsidiary of the Company, (d) this Indenture and the Company Notes, (e)
applicable law, (f) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to be incurred, (g)
customary non-assignment provisions in leases, licenses or other contracts
entered into in the ordinary course of business, (h) purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (i) any agreement for the sale of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending its sale, (j)
obligations otherwise permitted to be incurred pursuant to the provisions of
Section 4.12 that limits the right of the obligee to dispose of the assets
securing such obligations, (k) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other similar
agreements entered into in the ordinary course of business and (l) restrictions
on cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and that the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock and the Company's Subsidiaries may incur Indebtedness or
issue shares of preferred stock if the Company's Debt to Cash Flow Ratio at the
time of incurrence of such Indebtedness or the issuance of such Disqualified
Stock or such preferred stock, as the case may be, after giving pro forma effect
to such incurrence or issuance as of such date and to the use of the proceeds
therefrom as if the same had occurred at the beginning of the most recently
ended four full fiscal quarter period of the Company for which financial
statements have been filed with the SEC, would have been no greater than (a) 6.0
to 1, if such incurrence or issuance is on or prior to March 31, 1999, (b) 5.75
to 1, if such incurrence or issuance is on or prior to March 31, 2000 and after
March 31, 1999, and (c) 5.5 to 1, if such incurrence or issuance is after March
31, 2000.
The Company shall not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Company Notes on substantially identical terms; provided, however, that no
Indebtedness of the Company shall be deemed to be contractually subordinated in
right of payment to any other Indebtedness of the Company solely by virtue of
being unsecured.
The provisions of the first paragraph of this Section 4.09 will not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
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(i) the incurrence by the Company and its Restricted Subsidiaries of
additional term Indebtedness under Credit Facilities in an aggregate
principal amount at any one time outstanding not to exceed $275.0 million
less the aggregate amount of all mandatory or scheduled repayments of the
principal of any such additional term Indebtedness (other than repayments
that are immediately reborrowed) that have actually been made since the
date of this Indenture;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of additional revolving credit Indebtedness and letters of credit pursuant
to Credit Facilities in an aggregate principal amount (with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries
thereunder) at any one time outstanding not to exceed the Specified Amount
as of such date of incurrence; provided that, that the aggregate principal
amount of all Indebtedness incurred pursuant to this clause (ii) is
reduced to an outstanding balance of $1.0 million or less for at least 30
consecutive days in each fiscal year;
(iii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iv) the incurrence by the Company and SFEC of Indebtedness
represented by the Company Notes and the New SFEC Notes;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $25.0 million at any time outstanding;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness and Indebtedness
incurred pursuant to clauses (i) and (ii) above) that was permitted by
this Indenture to be incurred;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; provided, however, that (i) if the
Company is the obligor on any such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the Company Notes and (ii)(A) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary thereof and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Restricted
Subsidiary thereof shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause
(vii);
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of (a) Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
incurred and (b) Currency Agreements that do not increase the Indebtedness
of the Company and its Restricted Subsidiaries outstanding at any time
other than as a result of fluctuations in foreign currency
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exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder;
(ix) Indebtedness in respect of performance bonds, letters of
credits, surety or appeal bonds, prior to any drawing thereunder, for or
in connection with pledges, deposits or payments made or given in the
ordinary course of business;
(x) the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of this
Section 4.09 (including, without limiting the generality of the forgoing,
the guarantee by any Restricted Subsidiary of the Company of Existing
Indebtedness and the guarantee by the Company of the New SFEC Notes);
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xi); and
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (xii), not to
exceed $50.0 million.
For purposes of determining compliance with this Section 4.09, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (xii) above or
is entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09 and such item of Indebtedness
will be treated as having been incurred pursuant to one or more of such clauses
and/or pursuant to the first paragraph hereof, as the Company shall specify. In
connection with the Six Flags Acquisition and the Offerings occurring on the
date of this Indenture, the Company shall be permitted to incur a portion of the
Indebtedness to be incurred on that date pursuant to the Debt to Cash Flow Ratio
set forth in the first paragraph of this Section 4.09 to the extent permitted by
such Debt to Cash Flow Ratio calculated without regard to any Permitted Debt
incurred on such date. Accrual of interest, accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
preferred stock in the form of additional shares of the same class of preferred
stock will not be deemed to be an incurrence of Indebtedness or an issuance of
preferred stock for purposes of this Section 4.09; provided, in each such case,
that the amount thereof is included in Consolidated Indebtedness of the Company
as accrued.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustees) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted
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Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinate to the Company Notes) that are assumed by the transferee of
any such assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability or, in the case of
the sale of Capital Stock, that are assumed by the transferee by operation of
law and (y) any securities, notes or other obligations received by the Company
or such Restricted Subsidiary from such transferee that are promptly (subject to
ordinary settlement periods) converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or the applicable Restricted Subsidiary may apply such Net
Proceeds (a) to repay or repurchase Indebtedness of a Restricted Subsidiary of
the Company (and to correspondingly reduce commitments with respect thereto in
the case of revolving credit borrowings), (b) to the acquisition of all or
substantially all of the assets of, or a majority of the Voting Stock of,
another Person (or business unit or division of such Person); provided, that the
primary business of such Person (or unit or division) is a Permitted Business,
(c) to fund obligations of the Company or any Restricted Subsidiary under the
Partnership Parks Agreements or the Subordinated Indemnity Agreement, (d) to the
acquisition of Capital Stock of a Restricted Subsidiary of the Company held by
Persons other than the Company or any Restricted Subsidiary, (e) to the making
of a capital expenditure or (f) to the acquisition of other long-term assets
that are used or useful in a Permitted Business. Pending the final application
of any such Net Proceeds, the Company or such Restricted Subsidiary may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company
will be required to make an offer to all Holders of Notes and all holders of
other pari passu Indebtedness of the Company containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes and such other pari passu Indebtedness of the
Company that may be purchased out of the Excess Proceeds, at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the date of repurchase or, if prior to
__________, 2003, at a purchase price equal to 100% of the of the Accreted Value
thereof to the date of repurchase, in accordance with the procedures set forth
in this Indenture and such other Indebtedness. To the extent that any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by this Indenture.
If the aggregate principal amount at maturity or Accreted Value (as applicable)
of Company Notes and such other Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Company
Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
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obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of
business, or any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment or
indemnification arrangements, stock options and stock ownership plans approved
by the Board of Directors, or the grant of stock options or similar rights to
employees and directors of the Company pursuant to plans approved by the Board
of Directors, (ii) transactions between or among the Company and/or its
Restricted Subsidiaries, (iii) payment of reasonable directors fees to Persons
who are not otherwise employees of the Company or its Restricted Subsidiaries,
(iv) loans or advances to employees in the ordinary course of business, (v)
Restricted Payments that are permitted by Section 4.07, (vi) transactions
pursuant to or contemplated by, and in accordance with, the terms of the
Subordinated Indemnity Agreement, (vii) transactions pursuant to or contemplated
by and payments in connection with, and, in each case, in accordance with, the
terms of the Partnership Parks Agreements and (viii) transactions pursuant to or
contemplated by, and in accordance with, the Marine World Agreements.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist
any Lien securing trade payables, Attributable Debt or Indebtedness on any asset
now owned or hereafter acquired, except Permitted Liens.
SECTION 4.13. LINE OF BUSINESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
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SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes at an offer price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase or, in the case of repurchases of Notes prior to ________, 2003, at a
purchase price equal to 101% of the Accreted Value thereof as of the date of
repurchase. Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by this Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Notes as a
result of a Change of Control.
(b) On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount at maturity of Notes or portions thereof being
purchased by the Company. The Paying Agent will promptly mail to each Holder of
Notes so tendered the Change of Control Payment for such Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or a Restricted Subsidiary of the Company may enter into a sale and
leaseback transaction if (i) the Company could have (a) incurred Indebtedness in
an amount equal to the Attributable Debt relating to such sale and leaseback
transaction pursuant to the Debt to Cash Flow test set forth in the first
paragraph of Section 4.09 or pursuant to clause (vi) of the second paragraph of
Section 4.09 and (b) incurred a Lien to secure such Indebtedness pursuant to
Section 4.12, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction and (iii) the transfer of assets in such sale and
leaseback transaction is permitted by, and the Company or such Restricted
Subsidiary applies the proceeds of such transaction in compliance with, Section
4.10 hereof.
SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS OF
RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Restricted Subsidiary of the Company to any
Person (other than the Company or a Restricted Subsidiary of the Company and
other than transactions contemplated by the Partnership Parks Agreements and the
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Subordinated Indemnity Agreement), unless (a)(1) such transfer, conveyance,
sale, lease or other disposition is of all the Equity Interests in such
Restricted Subsidiary or (2) after giving effect thereto, such Restricted
Subsidiary will still constitute a Restricted Subsidiary and (b) the cash Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with Section 4.10 hereof, and (ii) will not permit any
Restricted Subsidiary of the Company to issue any of its Equity Interests (other
than, if necessary, shares of its Capital Stock constituting directors'
qualifying shares) to any Person other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company if, after giving effect thereto, such
Restricted Subsidiary will not be a direct or indirect Subsidiary of the
Company.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.19. RESTRICTED CASH ESCROW AGREEMENT DEPOSIT.
Upon consummation of the initial sale of the Notes offered hereby on
the date hereof, the Company will deposit $75.0 million of the net proceeds of
the Offerings in an account (the "Restricted Cash Account") with the Trustee.
The Restricted Cash Account shall be governed by the terms of the Restricted
Cash Escrow Agreement attached as Exhibit B hereto. The Company shall, until
_______, 2003, cause all cash actually dividended or otherwise distributed to or
received by the Company or any of its Restricted Subsidiaries in respect of any
general or limited partnership interests held in the Co-Venture Partnerships to
be deposited in the Restricted Cash Account; provided that, in no event, shall
the Company be required to deposit in the Restricted Cash Account any funds if,
after giving effect thereto, the aggregate amount of cash and Government
Securities (valued at their accreted value or principal amount, as appropriate)
then held in the Restricted Cash Account would exceed $75.0 million.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the
Company Notes, this Indenture, the Senior Note Indenture, the Pledge and Escrow
Agreement and the Restricted Cash Escrow Agreement pursuant to supplemental
indentures in forms reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) except in
the case
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of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of
the Company, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) will, both at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Debt to Cash Flow test set
forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on the Notes
and such default continues for a period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply (i) for a period of 30 days with any of
the provisions of Section 4.10, 4.15 or 4.19 hereof or (ii) with any of the
provisions of Article Four or Section 5.01 hereof for 30 days after notice to
the Company by the Trustee or the Holders of at least 25% in aggregate principal
amount at maturity of the Notes then outstanding voting as a single class;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, the Notes or the
Restricted Cash Escrow Agreement for 60 days after notice to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount at maturity
of the Notes then outstanding voting as a single class;
(e) the Company or any Restricted Subsidiary fails to pay Indebtedness
within any applicable grace period after final maturity or the acceleration of
any Indebtedness by the holders thereof
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because of a default and the total amount of such Indebtedness unpaid or
accelerated at any time exceeds $10.0 million;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $10.0 million;
(g) the Company or any Restricted Subsidiary that constitutes a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary pursuant to or within the
meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Restricted Subsidiary that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Company or any Restricted Subsidiary that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Company or any Restricted
Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary; or
(iii) orders the liquidation of the Company or any Restricted Subsidiary
that constitutes a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(i) the Company shall materially breach any representation, warranty or
agreement set forth in the Restricted Cash Escrow Agreement, or a material
default by the Company in the performance of any covenant set forth in the
Restricted Cash Escrow Agreement, or repudiation by the Company of its
obligations under the Restricted Cash Escrow Agreement, or the Restricted Cash
Escrow Agreement shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect.
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SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Restricted Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable immediately. Upon any such declaration, the Notes shall
become due and payable immediately. Notwithstanding the foregoing, if an Event
of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with
respect to the Company, any Restricted Subsidiary that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount at maturity of the then outstanding Notes by
written notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
If an Event of Default occurs on or after ____________, 2003 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to __________,
2003 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on ______ of the years set
forth below, as set forth below (expressed as a percentage of the Accreted Value
to the date of payment that would otherwise be due but for the provisions of
this sentence):
Year Percentage
---- ----------
1998..............................................._______%
1999..............................................._______%
2000..............................................._______%
2001..............................................._______%
2002..............................................._______%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount at
maturity of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount at maturity of the then
outstanding Notes may rescind an acceleration and its consequences, including
any related payment default that resulted from such acceleration). Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, and
interest on the Note, on or after the respective due dates expressed in the Note
(including in connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
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SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article or the
Restricted Cash Escrow Agreement, it shall pay out the money in the following
order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
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(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any
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provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
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The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount at maturity of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and the Company in writing. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount at maturity of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount at maturity of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding"
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only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article Eight. Subject to compliance with this Article Eight, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(d) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
outstanding Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming
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that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article Eight concurrently
with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that on the 91st
day following the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and
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to become due thereon in respect of principal, premium, if any, and interest,
but such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
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ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, the Restricted Cash Escrow
Agreement or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Sections 3.09, 4.10
and 4.15 hereof), the Restricted Cash Escrow Agreement and the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount at maturity of the Notes then outstanding voting as a single
class (including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount at
maturity of the then outstanding Notes voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes). Without the consent of at least 75% in principal amount
at maturity of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, such
Notes), no waiver or amendment to either this Indenture or the Restricted Cash
Escrow Agreement may make any change in the provisions of Section 4.19 or
Article 10 hereof or the Restricted Cash Escrow Agreement that
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adversely affects the rights of any Holder of Notes. Section 2.08 hereof shall
determine which Notes are considered to be "outstanding" for purposes of this
Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount at maturity of the Notes then outstanding
voting as a single class may waive compliance in a particular instance by the
Company with any provision of this Indenture or the Notes. However, without the
consent of each Holder affected, an amendment or waiver under this Section 9.02
may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
at maturity of the then outstanding Notes and a waiver of the payment default
that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof);
(g) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes; or
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(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall
be set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT.
The due and punctual payment of the principal of and interest, if
any, on the Notes when and as the same shall be due and payable, whether on an
interest payment date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Notes and performance of all other obligations
of the Company to the Holders of Notes or the Trustee under this Indenture and
the Notes, according to the
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terms hereunder or thereunder, shall be secured as provided in the Restricted
Cash Escrow Agreement which the Company has entered into simultaneously with the
execution of this Indenture and which is attached as Exhibit B hereto. Each
Holder of Notes, by its acceptance thereof, consents and agrees to the terms of
the Restricted Cash Escrow Agreement (including, without limitation, the
provisions providing for foreclosure and release of Escrow Funds) as the same
may be in effect or may be amended from time to time in accordance with its
terms and authorizes and directs the Trustee to enter into the Restricted Cash
Escrow Agreement and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company shall deliver to the Trustee
copies of all documents pursuant to the Restricted Cash Escrow Agreement, and
shall do or cause to be done all such acts and things as may be necessary or
proper, or as may be required by the provisions of the Restricted Cash Escrow
Agreement, to assure and confirm to the Trustee the security interest in the
Escrow Funds contemplated hereby, by the Restricted Cash Escrow Agreement or any
part thereof, as from time to time constituted, so as to render the same
available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purposes herein expressed. The
Company shall take, or shall cause its Subsidiaries to take, upon request of the
Trustee, any and all actions reasonably required to cause the Restricted Cash
Escrow Agreement to create and maintain, as security for the Obligations of the
Company hereunder, a valid and enforceable perfected first priority Lien in and
on all the Pledged Collateral, in favor of the Trustee for the benefit of the
Holders of Notes, superior to and prior to the rights of all third Persons and
subject to no other Liens than Permitted Liens.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by the Restricted Cash Escrow Agreement, and reciting with respect to
the security interests in the Pledged Collateral, the details of such action, or
(ii) stating that, in the opinion of such counsel, no such action is necessary
to make such Lien effective.
(b) The Company shall furnish to the Trustee on May 1 in each year
beginning with May 1, 1998, an Opinion of Counsel, dated as of such date, either
(i) (A) stating that, in the opinion of such counsel, action has been taken with
respect to the recording, registering, filing, re-recording, re-registering and
refiling of all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is necessary to maintain
the Lien of the Restricted Cash Escrow Agreement and reciting with respect to
the security interests in the Pledged Collateral the details of such action or
referring to prior Opinions of Counsel in which such details are given, (B)
stating that, based on relevant laws as in effect on the date of such Opinion of
Counsel, all financing statements and continuation statements have been executed
and filed that are necessary as of such date and during the succeeding 12 months
fully to preserve and protect, to the extent such protection and preservation
are possible by filing, the rights of the Holders of Notes and the Trustee
hereunder and under the Restricted Cash Escrow Agreement with respect to the
security interests in the Pledged Collateral, or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such Lien and
assignment.
(c) The Company shall otherwise comply with the provisions of TIA
ss.314(b).
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SECTION 10.03. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03, Pledged
Collateral may be released from the Lien and security interest created by the
Restricted Cash Escrow Agreement at any time or from time to time in accordance
with the provisions of the Restricted Cash Escrow Agreement or as provided
hereby.
(b) No Pledged Collateral shall be released from the Lien and security
interest created by the Restricted Cash Escrow Agreement pursuant to the
provisions of the Restricted Cash Escrow Agreement unless there shall have been
delivered to the Trustee the certificate required by this Section 10.03.
(c) At any time when a Default or Event of Default shall have occurred and
be continuing and the maturity of the Notes shall have been accelerated (whether
by declaration or otherwise) and the Trustee has knowledge of such Default or
Event of Default, no release of Pledged Collateral pursuant to the provisions of
the Restricted Cash Escrow Agreement shall be effective as against the Holders
of Notes.
(d) The release of any Pledged Collateral from the terms of this Indenture
and the Restricted Cash Escrow Agreement shall not be deemed to impair the
security under this Indenture in contravention of the provisions hereof if and
to the extent the Pledged Collateral is released pursuant to the terms of the
Restricted Cash Escrow Agreement. To the extent applicable, the Company shall
cause TIA ss. 313(b), relating to reports, and TIA ss. 314(d), relating to the
release of property or securities from the Lien and security interest of the
Restricted Cash Escrow Agreement and relating to the substitution therefor of
any property or securities to be subjected to the Lien and security interest of
the Restricted Cash Escrow Agreement, to be complied with. Any certificate or
opinion required by TIA ss. 314(d) may be made by an Officer of the Company
except in cases where TIA ss. 314(d) requires that such certificate or opinion
be made by an independent Person, which Person shall be an independent engineer,
appraiser or other expert selected or approved by the Trustee in the exercise of
reasonable care.
SECTION 10.04. CERTIFICATES OF THE COMPANY.
(a) The Company shall furnish to the Trustee, prior to each proposed
release of Pledged Collateral pursuant to the Restricted Cash Escrow Agreement,
(i) all documents required by TIA ss. 314(d) and (ii) an Opinion of Counsel,
which may be rendered by internal counsel to the Company, to the effect that
such accompanying documents constitute all documents required by TIA ss. 314(d).
The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such documents and such Opinion of Counsel.
SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
RESTRICTED CASH ESCROW AGREEMENT.
Subject to the provisions of Section 7.01 and 7.02 hereof, the
Trustee may, in its sole discretion and without the consent of the Holders of
Notes, take, on behalf of the Holders of Notes, all actions it deems necessary
or appropriate in order to (a) enforce any of the terms of the Restricted Cash
Escrow Agreement and (b) collect and receive any and all amounts payable in
respect of the Obligations of the Company hereunder. The Trustee shall have
power to institute and maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Pledged Collateral by any acts that
may be unlawful or in violation of the Restricted Cash Escrow Agreement or this
Indenture, and
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such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders of Notes in the Pledged
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders of Notes or of the Trustee).
SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
RESTRICTED CASH ESCROW AGREEMENT.
The Trustee is authorized to receive any funds for the benefit of
the Holders of Notes distributed under the Restricted Cash Escrow Agreement, and
to make further distributions of such funds to the Holders of Notes according to
the provisions of this Indenture.
SECTION 10.07. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company under
this Indenture and the Notes, or upon Legal Defeasance, the Trustee shall
release the Liens pursuant to this Indenture and the Restricted Cash Escrow
Agreement.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address
If to the Company:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Chief Financial Officer
Facsimile number: (405) ___________
Telephone number: (405) 475-2500
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With a copy to:
James M. Coughlin, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Facsimile number: (212) 702-5810
Telephone number: (212) 702-5700
If to the Trustee:
The Bank of New York
________________________________
________________________________
Facsimile number: ______________
Attention: _____________________
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
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(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or the Restricted
Cash Escrow Agreement or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
61
<PAGE>
SIGNATURES
Dated as of ____________, 1998
PREMIER PARKS INC.
BY: _________________________________
Name:
Title:
Attest:
_________________________
Name:
Title:
THE BANK OF NEW YORK
BY: _________________________________
Name:
Title:
Attest:
_________________________
Authorized Signatory
Date:
62
<PAGE>
EXHIBIT A
(Face of Note)
================================================================================
(a) CUSIP _________________
__% Senior Discount Notes due 2008
No. ___ $ ____________
PREMIER PARKS INC.
promises to pay to _____________________________________________________________
or registered assigns,
the principal sum of _____________________________________________________
Dollars on ____________, 2008.
Interest Payment Dates: ____________, and ____________
Record Dates: ____________, and ____________
DATED: ____________, 1998
PREMIER PARKS INC.
BY: _________________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By: ______________________________
================================================================================
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<PAGE>
(Back of Note)
___% Senior Discount Notes due 2008
THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTES OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Premier Parks Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at %
per annum from _______________, 2003 until maturity. The Company will pay
interest semi-annually on _______________ and _______________ of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be _______________, 2003.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the _______________ or _______________ next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium, if any, and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium on,
the Global Note and all other Notes the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
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<PAGE>
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE AND RESTRICTED CASH ESCROW AGREEMENT. The Company
issued the Notes under an Indenture dated as of _______________, 1998
("Indenture") between the Company and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the indenture shall govern and be controlling. The Notes are
obligations of the Company limited to $_______________ million in aggregate
principal amount at maturity. The Notes are secured by a pledge of Government
Securities pursuant to the Restricted Cash Escrow Agreement referred to in the
Indenture.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to _______________,
2003. Thereafter, the Company shall have the option to redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on _______________ of the
years indicated below:
Year Percentage
- ---- ----------
2003..................................... _______%
2004..................................... _______%
2005..................................... _______%
2006 and thereafter...................... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, during the first 36 months after the date of original issuance of
the Notes, the Company may on any one or more occasions redeem up to 35% of the
aggregate principal amount at maturity of Notes originally issued under the
Indenture at a redemption price of ____% of the Accreted Value thereof on the
redemption date with the net cash proceeds of one or more Public Equity
Offerings and/or the net cash proceeds of a Strategic Equity Investment;
provided that at least 65% of the aggregate principal amount of maturity of
Notes originally issued remains outstanding immediately after the occurrence of
each such redemption (excluding the Notes held by the Company and its
Subsidiaries); and provided, further, that any such redemption shall occur
within 60 days of the date of the closing of each such Public Equity Offering
and/or Strategic Equity Investment.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
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<PAGE>
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the Accreted Value thereof on the date of
purchase if prior to _____________, 2003 or 101% of the aggregate principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase if on or after _____________, 2003 (in either case, the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder setting forth the procedures governing the
Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $20.0 million, the
Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the Accreted Value thereof on the
date fixed for the closing of such offer if prior to _____________, 2003 or 100%
of the principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date fixed for the closing of such offer is on or after _________,
2003, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. If the Accreted Value of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Restricted Cash Escrow Agreement or the Notes may be amended
or supplemented with
A-4
<PAGE>
the consent of the Holders of at least a majority in principal amount at
maturity of the then outstanding Notes voting as a single class, and any
existing default or compliance with any provision of the Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
at maturity of the then outstanding Notes voting as a single class.). However,
without the consent of at least 75% in principal amount at maturity of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for, or purchase of, such Notes), no waiver or amendment to
either the Indenture or the Restricted Cash Escrow Agreement may make any change
in the provisions of Section 4.19 or Article 10 of the Indenture or the
Restricted Cash Escrow Agreement that adversely affects the rights of any Holder
of Notes. Without the consent of any Holder of a Note, the Indenture or the
Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on the Notes; (ii) default in
payment when due of principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption (including in connection
with an offer to purchase) or otherwise, (iii) failure by the Company to comply
(A) for a period of 30 days with any of the provisions of Section 4.10, 4.15 or
4.19 of the Indenture and (B) with any of the provisions of Article Four or
Section 5.01 of the Indenture for 30 days after notice to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount at maturity
of the Notes then outstanding voting as a single class; (iv) failure by the
Company for 60 days after notice to the Company by the Trustee or the Holders of
at least 25% in principal amount of the Notes then outstanding voting as a
single class to comply with certain other agreements in the Indenture, the Notes
or the Restricted Cash Escrow Agreement; (v) default under certain other
agreements relating to Indebtedness of the Company which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries; and (viii) the breach of certain
representations, warranties or agreements set forth in the Restricted Cash
Escrow Agreement, or a material default by the Company in the performance of any
covenant set forth in the Restricted Cash Escrow Agreement, or repudiation by
the Company of its obligations under the Restricted Cash Escrow Agreement, or
the Restricted Cash Escrow Agreement shall be held in any judicial proceeding to
be unenforceable or invalid or shall cease for any reason to be in full force
and effect. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount at maturity of the then outstanding
Notes may declare all the Notes to be due and payable. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount at maturity of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount at maturity of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company
A-5
<PAGE>
is required upon becoming aware of any Default or Event of Default, to deliver
to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN NET (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Corporate Secretary
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ------------------------------------------------------------------------------
Date: _____________________
Your Signature: ______________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: _____________ Your Signature:________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No:__________________
Signature Guarantee.
A-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of at maturity of
decrease in increase in this Global Note Signature of
Principal Amount Principal Amount following such authorized officer of
at maturity of at maturity of decrease (or Trustee or Note
Date of Exchange this Global Note this Global Note increase) Custodian
- ---------------- ---------------- ---------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A-9
<PAGE>
EXHIBIT B
FORM OF PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
B-1
<PAGE>
L&W DRAFT 3/18/98
================================================================================
SENIOR NOTES
PLEDGE AND ESCROW AGREEMENT
by and between
PREMIER PARKS INC.
and
THE BANK OF NEW YORK
as Trustee
================================================================================
<PAGE>
THIS PLEDGE AND ESCROW AGREEMENT (this "Agreement"), dated as of
__________, 1998, is by and between PREMIER PARKS INC. (the "Company") and The
Bank of New York, as trustee under the Indenture referred to below (the
"Trustee").
RECITALS
A. The Senior Notes. Pursuant to that certain Indenture (the "Indenture"),
dated as of ______________, 1998, by and between the Company and the Trustee,
the Company will issue $280,000,000 in aggregate principal amount of ___% Senior
Notes due 2006 (collectively, the "Senior Notes"). Immediately after receipt of
payment for the Senior Notes (the "Deposit Time"), the Company will deposit
$76,300,000.00 (the "Escrow Funds"), into a segregated cash collateral trust
account with the Trustee at its office at ____________, New York, New York, in
the name of The Bank of New York, as Trustee, "Escrow Account for Senior Notes"
(such account is herein referred to as the "Escrow Account"). The Escrow Account
and all balances and investments from time to time therein shall be under the
sole control and dominion of the Trustee, for the benefit of the Trustee and the
ratable benefit of the Holders of the Senior Notes.
B. Purpose. The parties hereto desire to set forth their agreement with
regard to the administration of the Escrow Account, the creation of a security
interest in the Collateral (as defined herein) and the conditions upon which
funds will be released from the Escrow Account.
C. Definitions. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Indenture.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Security Interest.
(a) Pledge and Assignment of Collateral. The Company hereby
irrevocably pledges, assigns and sets over to the Trustee, and grants to the
Trustee, for the benefit of the Trustee and the ratable benefit of the Holders
of the Senior Notes, a first priority continuing security interest in all of the
Company's right, title and interest in and to all of the following, whether now
owned or existing or hereafter acquired or created (collectively, the
"Collateral"):
(i) all funds from time to time held in the Escrow Account,
including, without limitation, the Escrow Funds and all certificates and
instruments, if any, from time to time representing or evidencing the
Escrow Account or the Escrow Funds;
(ii) all investments of funds in the Escrow Account, which all shall
constitute Government Securities, and whether held by or registered in the
name
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<PAGE>
of the Trustee or otherwise and all certificates and instruments, if any,
from time to time representing or evidencing any such Government
Securities;
(iii) all notes, certificates of deposit, deposit accounts, checks
and other instruments evidencing such Government Securities from time to
time hereafter delivered to or otherwise possessed by the Trustee, for or
on behalf of the Company, in substitution for or in addition to any or all
of the then existing Collateral;
(iv) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the then existing Collateral; and
(v) all proceeds of any of the foregoing, including, without
limitation, cash proceeds.
(b) Secured Obligations. This Agreement secures the due and punctual
payment and performance of all Obligations of the Company, whether now or
hereafter existing, under the Senior Notes and the Indenture including, without
limitation, interest and premium, if any, accrued on the Senior Notes after the
commencement of a bankruptcy, reorganization or similar proceeding involving the
Company to the extent permitted by applicable law (collectively, the "Secured
Obligations").
(c) Delivery of Collateral. All certificates or instruments, if any,
representing or evidencing the Collateral shall be held by or on behalf of the
Trustee pursuant hereto and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignments
in blank, all in form and substance reasonably satisfactory to the Trustee. All
securities in uncertificated or book-entry form and all security entitlements,
if any, in each case representing or evidencing the Collateral shall be
registered in the name of the Trustee (or any of its nominees) as the registered
owner thereof by book-entry or as otherwise appropriate so as to properly
identify the interest of the Trustee therein. In addition, the Trustee shall
have the right, at any time following the occurrence of an Event of Default, to
transfer to or to register in the name of the Trustee or any of its nominees any
or all other Collateral. Except as otherwise provided herein, all Collateral
shall be deposited and held in the Escrow Account. The Trustee shall have the
right at any time to exchange certificates or instruments representing or
evidencing all or any portion of the Collateral for certificates or instruments
of smaller or larger denominations in the same aggregate amount.
(d) Further Assurances. Prior to, contemporaneously herewith, and at
any time and from time to time hereafter, the Company will, at the Company's
expense, execute and deliver to the Trustee such other instruments and
documents, and take all further action as it deems necessary or advisable or as
the Trustee may reasonably request including an Opinion of Counsel, upon which
the Trustee may conclusively rely, to confirm or perfect the security interest
of the Trustee granted or purported to be granted hereby or to enable the
Trustee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral and the
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<PAGE>
Company will take all necessary action to preserve and protect the security
interest created hereby as a first priority, perfected Lien and encumbrance upon
the Collateral. The Company will pay all costs incurred in connection with any
of the foregoing.
(e) Establishing and Maintaining Accounts. So long as this Agreement
is in full force and effect:
(i) the Company shall establish and maintain the Escrow Account with
the Trustee in New York, New York. The Collateral shall at all times be
subject to the sole dominion and control of the Trustee, which shall hold
the Collateral and administer the Escrow Account subject to the terms and
conditions of this Agreement. The Company shall have no right of
withdrawal from the Escrow Account nor any other right or power with
respect to the Collateral, except as expressly provided herein; and
(ii) it shall be a term and condition of the Escrow Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Escrow Account and except as otherwise provided
by the provisions of Article 3 of this Agreement, that no amount in the
Escrow Account (including, without limitation, interest on or other
proceeds of the Escrow Account or on any Government Securities held
therein) shall be paid or released to or for the account of, or withdrawn
by or for the account of, the Company or any other person or entity other
than the Trustee or its designated agent.
(f) Transfers and Other Liens. Until termination of this Agreement
pursuant to Section 8, the Company agrees that it will not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral or (ii) create or permit to exist any Lien
upon or with respect to any of the Collateral, except for the security interest
under this Agreement.
(g) Trustee Appointed Attorney-in-Fact. In addition to all of the
powers granted to the Trustee pursuant to Article 7 of the Indenture, the
Company hereby irrevocably appoints the Trustee as the Company's
attorney-in-fact, coupled with an interest, with full authority in the place and
stead of the Company and in the name of the Company or otherwise, from time to
time in the Trustee's discretion to take any action and to execute any
instrument which the Trustee may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to receive, endorse
and collect all instruments made payable to the Company representing any
interest payment, dividend or other distribution in respect of the Collateral or
any part thereof and to give full discharge for the same, and the expenses of
the Trustee incurred in connection therewith shall be payable by the Company.
(h) Trustee May Perform. Without limiting the authority granted
under Section 1(g) and except with respect to the failure of the Company to
deliver investment instructions, which shall be governed by Section 2(b) hereof,
if the Company fails to perform any agreement contained herein, the Trustee may,
but shall not be obligated to, itself perform, or
4
<PAGE>
cause performance of, such agreement, and the expenses of the Trustee incurred
in connection therewith shall be payable by the Company. In the event that the
Trustee performs pursuant to this Section 1(h), the Company shall indemnify the
Trustee in the manner provided in Section 7.07 of the Indenture.
2. Investment and Liquidation of Funds in Escrow Account. Funds deposited
in the Escrow Account shall be invested and reinvested by the Trustee on the
following terms and conditions:
(a) Investments. The Company shall immediately deposit all Escrow
Funds into the Escrow Account. Funds deposited in the Escrow Account may,
subject to the provisions of Articles 2 and 3 of this Agreement, be invested and
reinvested in the name of and by the Trustee, at the written direction of the
Company, in direct obligations of, or obligations guaranteed by, the United
States of America for the payment of which guarantee or obligations the full
faith and credit of the United States of America is pledged ("Government
Securities"); provided, however, that the maturity dates of the Government
Securities in which the Escrow Account are invested and reinvested shall be
structured so as to ensure that sufficient funds are available to make the
payments of interest on the Senior Notes that are due on each of [list dates of
first six interest payments] (the "Scheduled Interest Payments").
(b) Investment Instructions. If the Company fails to give written
investment instructions to the Trustee by 12:00 noon (New York time) on any
Business Day on which there is uninvested cash and/or maturing Government
Securities in the Escrow Account, the Trustee is hereby unconditionally
instructed and authorized and directed to invest any such cash or the proceeds
of any maturing Government Securities in the Escrow Account in Government
Securities maturing on the next Business Day. The Company's failure to give such
investment instructions shall not constitute a default or an event of default
hereunder.
(c) Interest. All interest earned on funds invested in Government
Securities shall be held in the Escrow Account and reinvested in accordance with
the terms hereof and will be subject to the security interest granted hereunder
to the Trustee.
(d) Limitation of Trustee's Liability. In no event shall the Trustee
have any liability to the Company or any other Person for investing the funds
from time to time in the Escrow Account in accordance with the provisions of
this Article 2, regardless of whether greater income or a higher yield could
have been obtained had the Trustee invested such funds in different Government
Securities, or for any loss (including breakage costs or loss of principal)
associated with the sale or liquidation of Government Securities in accordance
with the terms of this Agreement, in each case other than with respect to gross
negligence or willful misconduct of the Trustee.
5
<PAGE>
(e) Liquidation of Funds. In liquidating any Government Securities
in accordance with Article 3 of this Agreement, the Company may, so long as no
Event of Default has occurred and is continuing, direct the Trustee as to which
Government Securities shall be liquidated.
3. Interest Payments. Pursuant to Section 1 of the Senior Notes, the
Company is obligated to make payments of interest on the Senior Notes on the
dates and at the rates specified in the Senior Notes. Payment of the Scheduled
Interest Payments due on the Senior Notes may be made (i) from amounts held in
the Escrow Account in accordance with the procedures set forth in subsection (a)
below or (ii) from other sources of funds available to the Company, as
anticipated in subsection (b) below, or from any combination of (i) and (ii)
above; provided that nothing herein shall be construed as limiting the Company's
obligation to make all interest payments due on the Senior Notes at the times
and in the amounts required by the Senior Notes, which obligation shall be
absolute and unconditional.
(a) Payment of Interest. Not later than five (5) Business Days prior
to the date of any of the Scheduled Interest Payments, the Company shall,
pursuant to a duly completed and executed Certificate of Release in the form of
Exhibit A hereto, direct the Trustee to transfer from the Escrow Account to the
Paying Agent funds necessary to provide for payment in full (or, if the Company
intends to make a portion of such interest payment with funds in the Escrow
Account and the remainder of such interest payment with funds other than those
in the Escrow Account, such portion) of the next Scheduled Interest Payment on
the Senior Notes. If the Company does not intend to utilize the funds in the
Escrow Account to make any such interest payment in full, then the Company shall
comply with Section 3(b) below. Upon receipt of such Certificate of Release, the
Trustee will transfer to the Paying Agent for payment to the Holders of Senior
Notes the amount set forth in the applicable Certificate of Release.
(b) Release of Funds to the Company Due to Direct Payment of
Interest by the Company. If the Company makes any of the Scheduled Interest
Payments or a portion of any of the Scheduled Interest Payments from a source of
funds other than the Escrow Account ("Company Funds"), the Company may, after
payment in full of such Scheduled Interest Payment, direct the Trustee, so long
as no Event of Default has occurred and is continuing pursuant to a duly
completed and executed Certificate of Release in the form of Exhibit B hereto,
to release to the Company or at the direction of the Company an amount of funds
from the Escrow Account less than or equal to the amount of Company Funds so
expended. Upon receipt of such Certificate of Release, the Trustee shall pay
over to the Company the requested amount.
(c) Release of Funds to Company Due to Overfunding. If at any time
the amount of Collateral in the Escrow Account exceeds 125% of the amount
sufficient, in the written opinion of a nationally recognized firm of
independent public accountants selected by the Company and furnished to the
Trustee, to provide for payment in full of all then remaining Scheduled Interest
Payments due on the Senior Notes, the Company may, so long as no Event of
Default has occurred and is continuing, pursuant to a duly completed and
executed Certificate of Release in the form of Exhibit B hereto, direct the
Trustee to release any such overfunding to it.
6
<PAGE>
(d) No Duplicate Payments. With respect to the conditions permitting
the release to the Company of any funds in the Escrow Account pursuant to
Sections 3(b) or 3(c) above, the Company shall not request, and the Trustee
shall not make, any full or partial duplicate payment thereunder.
(e) Termination of Security Interest. Upon payment in full of the
Scheduled Interest Payments, the security interest evidenced by this Agreement
in any Collateral remaining in the Escrow Account will terminate and be of no
further force and effect. Furthermore, upon the release of any Collateral from
the Escrow Account in accordance with the terms of this Agreement, whether upon
release of such Collateral to Holders as payment of interest on the Senior
Notes, to the Company pursuant to Sections 3(b) or 3(c) or otherwise, the
security interest evidenced by this Agreement in such Collateral so released
will terminate and be of no further force and effect.
4. Representations and Warranties. The Company hereby represents and
warrants to the Trustee and the Holders of the Senior Notes that:
(a) The execution, delivery and performance by the Company of this
Agreement are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or result
in the creation or imposition of any Lien on any assets of the Company, except
for the security interests granted under this Agreement.
(b) The Company is the record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any person or entity (except
for the security interests granted under this Agreement). No financing statement
covering the Collateral is on file in any public office other than the financing
statements filed pursuant to this Agreement.
(c) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or general principles of equity and commercial
reasonableness.
(d) The pledge of the Collateral pursuant to this Agreement creates
a valid and perfected first priority security interest in and to the Collateral,
securing the payment of the Secured Obligations for the benefit of the Trustee
and the ratable benefit of the Holders of Senior Notes, enforceable as such
against all creditors of the Company and any persons purporting to purchase any
of the Collateral from the Company other than as permitted by the Indenture.
(e) Except as set forth in Section 4(d) above, no consent of any
other Person and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (1) for the pledge by the Company
7
<PAGE>
of the Collateral pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by the Company or (2) for the exercise by the
Trustee of the rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement.
(f) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Company, threatened by or against the Company with respect to this Agreement or
any of the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Agreement is not
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System).
5. Covenants. The Company covenants and agrees with the Trustee and the
Holders of Senior Notes from and after the date of this Agreement until the
Termination Date as follows:
(a) The Company (i) will not (A) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Collateral or (B) create
or permit to exist any Lien upon or with respect to any of the Collateral
(except for the Lien created pursuant to this Agreement) and (ii) except as
otherwise provided in this Agreement, at all times will be the sole beneficial
owner of the Collateral.
(b) The Company will not (a) enter into any agreement or
understanding that purports to or may restrict or inhibit the Trustee's rights
or remedies hereunder, including, without limitation, the Trustee's right to
sell or otherwise dispose of the Collateral in accordance with the terms of this
Agreement or (b) fail to pay or discharge any tax, assessment or levy of any
nature not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to the Collateral.
6. Remedies upon Default. If any Event of Default shall have occurred and
be continuing:
(a) The Trustee may, without notice to the Company and at any time
or from time to time, liquidate all Government Securities and transfer all funds
in the Escrow Account to the Paying Agent to apply such funds in accordance with
Section 2.04 of the Indenture.
(b) The Trustee may also exercise in respect of the Collateral, in
addition to the other rights and remedies provided for herein or in the
Indenture or otherwise available to it, all the rights and remedies of a secured
party after a default under the Uniform Commercial Code in effect at that time
in the State of New York (the "Code") (whether or not the Code applies to the
affected Collateral).
(c) Any cash held by the Trustee as Collateral and all proceeds
received by the Trustee in respect of any sale or liquidation of, collection
from, or other realization upon all or any part of the Collateral may, in the
discretion of the Trustee, be held by the Trustee as
8
<PAGE>
collateral for, and/or then or at any time thereafter be applied (after payment
of any costs and expenses incurred in connection with any sale, liquidation or
disposition of or realization upon the Collateral and the payment of any amounts
payable to the Trustee) in whole or in part by the Trustee for the ratable
benefit of the Holders of the Senior Notes against all or any part of the
Secured Obligations in such order as the Trustee shall elect. Any surplus of
such cash or cash proceeds held by the Trustee and remaining after payment in
full of all the Secured Obligations and the costs and expenses incurred by and
amounts payable to the Trustee hereunder or under the Indenture shall be paid
over to the Company or to whomsoever shall be lawfully entitled to receive such
surplus.
For the avoidance of doubt, if any Event of Default shall have occurred
and be continuing, the Trustee shall not release any Collateral to, or at the
direction of, the Company.
7. Indemnity and Authority of the Trustee.
The Company shall indemnify the Trustee against any and all loses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance of administration of its duties under this Agreement, including the
costs and expenses of enforcing this Agreement against the Company (including
this Section 7) and defending itself against any claim (whether asserted by the
Company or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its gross
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7 shall survive the
satisfaction and discharge of this Agreement.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) of the Indenture occurs, the
expenses and compensation for the services (including the fees and expenses of
its agent and counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.
The Trustee may conclusively rely upon any Officer's Certificate or
Opinion of Counsel it receives pursuant to Section 7.02 of the Indenture.
8. Termination.
(a) This Agreement shall create a continuing security interest in
and to the Collateral and such security interest shall, unless otherwise
provided in the Indenture or in this Agreement, remain in full force and effect
until ___________, 2001, provided that the provisions of Section 3(e) have been
satisfied (the "Termination Date"). This Agreement shall be binding
9
<PAGE>
upon the Company, its successors and assigns, and shall inure, together with the
rights and remedies of the Trustee hereunder, to the benefit of the Trustee, the
Holders of Senior Notes and their respective successors, transferees and
assigns.
(b) Subject to the provisions of Section 9(c) hereof, this Agreement
shall terminate upon the Termination Date. At such time, the Trustee shall, at
the written request of the Company, reassign and redeliver to the Company all of
the Collateral hereunder that has not been sold, disposed of, retained or
applied by the Trustee in accordance with the terms of this Agreement and the
Indenture. Such reassignment and redelivery shall be without warranty (either
express or implied) by or recourse to the Trustee, except as to the absence of
any prior assignments by or encumbrances created by the Trustee on its interest
in the Collateral, and shall be at the expense of the Company.
9. Miscellaneous.
(a) Waiver. Either party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party, and
specifically designates the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(c) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the termination of
this Agreement; provided, however that the Company's obligations pursuant to
Section 7 hereof shall survive the termination of this Agreement (including any
termination under applicable bankruptcy laws) or the resignation or removal of
the Trustee.
(d) Assignment. This Agreement shall inure to and be binding upon
the parties and their respective successors and permitted assigns; provided,
however, that the Company may not assign its rights or obligations hereunder
without the express prior written consent of the Trustee, acting at the
direction of the Holders as provided in the Indenture.
(e) Entire Agreement; Amendments. This Agreement and the Indenture
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede any and all prior agreements, understandings and
commitments with respect thereto, whether oral or written; provided, however,
that this Agreement is executed and accepted by the Trustee subject to all terms
and conditions of its acceptance of the trust under the Indenture, as fully as
if said terms and conditions were set forth at length herein. This Agreement may
be amended only by a writing signed by duly authorized representatives of both
parties. The Trustee may execute an amendment to this Agreement only if the
requisite consent of the Holders of the Senior Notes required by Section 9.02 of
the Indenture has been obtained, unless no such consent is required by such
Section 9.02 of the Indenture.
10
<PAGE>
(f) Notices. Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered in person or
mailed by first class mail (registered or certified return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Chief Financial Officer
Facsimile number: (405) ________
Telephone number: (405) 475-2500
With a copy to:
James M. Coughlin, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Facsimile number: (212) 702-5810
Telephone number: (212) 702-5700
If to the Trustee:
The Bank of New York
___________________
___________________
Attention: ___________________
Facsimile number: (212) ___________
Telephone number: (212) ___________
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other that those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
(g) Expenses. The Company shall pay to the Trustee from time to time
such compensation for its acceptance of this Agreement and services hereunder as
the Company and the Trustee have separately agreed. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made
11
<PAGE>
by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
(h) Security Interest Absolute. All rights of the Trustee and the
Holders of Senior Notes and security interests hereunder, and all obligations of
the Company hereunder, shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of the Indenture or any other agreement
or instrument relating thereto; (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from the
Indenture; (c) any exchange, surrender, release or non-perfection of any Liens
on any other collateral for all or any of the Secured Obligations; or (d) to the
extent permitted by applicable law, any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Company in respect of
the Secured Obligations or of this Agreement.
(i) Counterpart Originals. The parties may sign any number of copies
of this Agreement. Each signed copy shall be an original, but all of them
represent the same agreement.
(j) Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that they will not render this
Agreement not entitled to be recorded, registered or filed under provisions of
any applicable law.
(k) Rights of Holders of Senior Notes. No Holder of Senior Notes
shall have any independent rights hereunder other than those rights granted to
individual Holders of Senior Notes pursuant to Section 6.07 of the Indenture;
provided that nothing in this subsection shall limit any rights granted to the
Trustee under the Senior Notes or the Indenture.
(l) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE COMPANY, THE TRUSTEE AND THE HOLDERS OF SENIOR NOTES IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE
STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS
CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SENIOR
NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM
JURISDICTION OVER
12
<PAGE>
THE COMPANY OR ITS PROPERTY, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO
REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT
ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS CLAIMS IN ANY PROCEEDING
BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE
TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY AND THE TRUSTEE EACH WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NEITHER THE TRUSTEE NOR ANY
HOLDER OF SENIOR NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT
OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF SENIOR NOTES,
AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
ON THE PART OF THE TRUSTEE OR SUCH HOLDER OF SENIOR NOTES, AS THE CASE MAY
BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS OF
NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY
HOLDER OF SENIOR NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY,
ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE
13
<PAGE>
SECURED OBLIGATIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
COMPANY WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE
OR ANY HOLDER OF SENIOR NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS, TO ENFORCE ANY
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE OR ANY
HOLDER OF SENIOR NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT
OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON THE ONE HAND AND
THE TRUSTEE AND/OR THE HOLDERS OF SENIOR NOTES ON THE OTHER HAND.
[SIGNATURE PAGE FOLLOWS]
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Pledge, Escrow and Disbursement Agreement as of the day first written above.
COMPANY: PREMIER PARKS INC.
By: ___________________________
Name:
Title:
TRUSTEE: THE BANK OF NEW YORK
By: ___________________________
Name:
Title:
<PAGE>
EXHIBIT A
[Form of]
Certificate of Release of Funds in Escrow Account to Paying Agent
PREMIER PARKS INC.
Date:_____________
The undersigned executive officers of Premier Parks Inc., a Delaware
corporation (the "Company"), hereby certify, pursuant to Section 3(a) of the
Pledge and Escrow Agreement, dated as of ___________________, 1998 (the "Escrow
Agreement"), by and between the Company and The Bank of New York, as trustee
(the "Trustee"), under the Indenture dated as of ___________________, 1998 (the
"Indenture"), between the Company and the Trustee, that:
1. This request for release of funds has been duly authorized by all
necessary corporate action and does not contravene, or constitute a
default under, any provision of applicable law or regulation or the
certificate of incorporation of the Company or of the Escrow
Agreement, the Indenture or any other agreement, judgment,
injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any Lien on any
assets of the Company; and
2. The funds released pursuant hereto shall be applied by the Paying
Agent toward payment of interest due on the Senior Notes on
________, ____ and for no other purpose.
The Company hereby requests the Trustee to liquidate $_________ worth of
Government Securities in the Escrow Account by not later than 12:00 noon (New
York time) on _________ __, _____ and to transfer $________ in immediately
available funds to the Paying Agent.
Capitalized terms used herein without definition shall have the meanings
set forth in the Indenture.
By: ___________________________
Name: _________________________
Title: ________________________
A-1
<PAGE>
By: ___________________________
Name: _________________________
Title: ________________________
A-2
<PAGE>
EXHIBIT B
[Form of]
Certificate of Release of Funds in Escrow Account to Company
PREMIER PARKS INC.
Date:_____________
The undersigned executive officers of Premier Parks Inc., a Delaware
corporation (the "Company"), hereby certify, pursuant to Section [3(b)][3(c)] of
the Pledge and Escrow Agreement, dated as of _________________, 1998 (the
"Escrow Agreement"), by and between the Company and The Bank of New York, as
trustee (the "Trustee"), under the Indenture dated as of __________________,
1998 (the "Indenture"), between the Company and the Trustee, that:
1. This request for release of funds has been duly authorized by all
necessary corporate action and does not contravene, or constitute a
default under, any provision of applicable law or regulation or the
certificate of incorporation of the Company or of the Escrow
Agreement, the Indenture or any other agreement, judgment,
injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any Lien on any
assets of the Company; and
2. [The amount of funds requested to be released pursuant hereto is no
greater than the amount of funds previously used by the Company from
sources other than the Escrow Account to make the payment of
interest due on the Senior Notes on ________ (and not previously
released to the Company from the Escrow Account), which interest
payment has been paid in full.] [After giving effect to the release
of funds from the Escrow Account as provided below, the amount of
funds and Government Securities remaining in the Escrow Account will
be at least 125% of the amount sufficient to pay in full the
remainder of the Scheduled Interest Payments on the Senior Notes not
already paid in full, as confirmed in the attached written opinion
of __________, a nationally recognized firm of independent public
accountants.]
3. No Event of Default has occurred and is continuing under the
Indenture.
The Company hereby requests the Trustee to liquidate $_________ worth of
Government Securities in the Escrow Account by not later than 12:00 noon (New
York time) on _________, and to transfer $________ in immediately available
funds to the Company.
B-1
<PAGE>
Capitalized terms used herein without definition shall have the meanings
set forth in the Indenture.
By: ___________________________
Name: _________________________
Title: ________________________
By: ___________________________
Name: _________________________
Title: ________________________
B-2
<PAGE>
Exhibit 4(q)
L&W DRAFT 3/18/98
================================================================================
SIX FLAGS ENTERTAINMENT CORPORATION
$170,000,000
__% SENIOR NOTES DUE 2006
-------------------------------
INDENTURE
Dated as of __________, 1998
-------------------------------
------------------------------
THE BANK OF NEW YORK
as Trustee
-------------------------------
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
(a) Trust Indenture
Act Section Indenture Section
310(a)(1)...........................................................7.10
(a)(2) ..........................................................7.10
(a)(3)...........................................................N.A.
(a)(4)...........................................................N.A.
(a)(5)...........................................................7.10
(i)(b)...........................................................7.10
(ii)(c)..........................................................N.A.
311(a)..............................................................7.11
(b)..............................................................7.11
(iii)(c).........................................................N.A.
312(a)..............................................................2.05
(b)..............................................................11.03
(iv)(c)..........................................................11.03
313(a)...........................................................7.06
(b)(1)...........................................................10.03
(b)(2)...........................................................7.07
(v)(c)...........................................................7.06;
11.02
(vi)(d)..........................................................7.06
314(a)..............................................................4.03;
11.02
(A)(b)...........................................................10.02
(c)(1)...........................................................11.04
(c)(2)...........................................................11.04
(c)(3)...........................................................N.A.
(d)..............................................................10.03,
10.04, 10.05
(vii)(e).........................................................11.05
(f)..............................................................NA
315(a)..............................................................7.01
(b)..............................................................7.05,
11.02
(A)(c)...........................................................7.01
(d)..............................................................7.01
(e)..............................................................6.11
316(a)(last sentence)...............................................2.09
(a)(1)(A)........................................................6.05
(a)(1)(B)........................................................6.04
(a)(2)...........................................................N.A.
(b)..............................................................6.07
(B)(c)...........................................................2.12
317(a)(1)...........................................................6.08
(a)(2)...........................................................6.09
(b)..............................................................2.04
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318(a)..............................................................11.01
(b)..............................................................N.A.
(c)..............................................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
2
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TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1
Section 1.01. Definitions..................................................1
Section 1.02. Other Definitions...........................................16
Section 1.03..............................................................16
Section 1.04. Rules of Construction.......................................17
ARTICLE 2. THE NOTES........................................................17
Section 2.01. Form and Dating.............................................17
Section 2.02. Execution and Authentication................................18
Section 2.03. Registrar and Paying Agent..................................18
Section 2.04. Paying Agent to Hold Money in Trust.........................18
Section 2.05. Holder Lists................................................19
Section 2.06. Transfer and Exchange.......................................19
Section 2.07. Replacement Notes...........................................21
Section 2.08. Outstanding Notes...........................................22
Section 2.09. Treasury Notes..............................................22
Section 2.10. Temporary Notes.............................................22
Section 2.11. Cancellation................................................22
Section 2.12. Defaulted Interest..........................................23
ARTICLE 3. REDEMPTION AND PREPAYMENT........................................23
Section 3.01. Notices to Trustee..........................................23
Section 3.02. Selection of Notes to Be Redeemed...........................23
Section 3.03. Notice of Redemption........................................24
Section 3.04. Effect of Notice of Redemption..............................24
Section 3.05. Deposit of Redemption Price.................................24
Section 3.06. Notes Redeemed in Part......................................25
Section 3.07. Optional Redemption.........................................25
Section 3.08. Mandatory Redemption........................................26
Section 3.09. Offer to Purchase by Application of Excess Proceeds.........26
ARTICLE 4. COVENANTS........................................................27
Section 4.01. Payment of Notes...........................................27
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Section 4.02. Maintenance of Office or Agency.............................28
Section 4.03. Reports.....................................................28
Section 4.04. Compliance Certificate......................................28
Section 4.05. Taxes.......................................................29
Section 4.06. Stay, Extension and Usury Laws..............................29
Section 4.07. Restricted Payments.........................................29
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................32
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock..33
Section 4.10. Asset Sales.................................................35
Section 4.11. Transactions with Affiliates................................36
Section 4.12. Liens.......................................................37
Section 4.13. Line of Business............................................37
Section 4.14. Corporate Existence.........................................37
Section 4.15. Offer to Repurchase Upon Change of Control..................37
Section 4.16. Limitation on Sale and Leaseback Transactions...............38
Section 4.17. Limitation on Issuances and Sales of Equity Interests of
Restricted Subsidiaries.....................................38
Section 4.18. Payments for Consent........................................38
Section 4.19. Pledge and Escrow Agreement Deposit.........................38
ARTICLE 5. SUCCESSORS.......................................................39
Section 5.01. Merger, Consolidation, or Sale of Assets....................39
Section 5.02. Successor Corporation Substituted...........................39
ARTICLE 6. DEFAULTS AND REMEDIES............................................39
Section 6.01. Events of Default...........................................39
Section 6.02. Acceleration................................................41
Section 6.03. Other Remedies..............................................42
Section 6.04. Waiver of Past Defaults.....................................42
Section 6.05. Control by Majority.........................................42
Section 6.06. Limitation on Suits.........................................42
Section 6.07. Rights of Holders of Notes to Receive Payment...............43
Section 6.08. Collection Suit by Trustee..................................43
Section 6.09. Trustee May File Proofs of Claim............................43
Section 6.10. Priorities..................................................44
Section 6.11. Undertaking for Costs.......................................44
ARTICLE 7. TRUSTEE..........................................................44
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Section 7.01. Duties of Trustee...........................................44
Section 7.02. Rights of Trustee...........................................45
Section 7.03. Individual Rights of Trustee................................46
Section 7.04. Trustee's Disclaimer........................................46
Section 7.05. Notice of Defaults..........................................46
Section 7.06. Reports by Trustee to Holders of the Notes..................46
Section 7.07. Compensation and Indemnity..................................47
Section 7.08. Replacement of Trustee......................................47
Section 7.09. Successor Trustee by Merger, etc............................48
Section 7.10. Eligibility; Disqualification...............................48
Section 7.11. Preferential Collection of Claims Against Company...........49
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................49
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....49
Section 8.02. Legal Defeasance and Discharge..............................49
Section 8.03. Covenant Defeasance.........................................49
Section 8.04. Conditions to Legal or Covenant Defeasance..................50
Section 8.05. Deposited Money and Government Securities to be Held in
` Trust; Other Miscellaneous Provisions.......................51
Section 8.06. Repayment to Company........................................51
Section 8.07. Reinstatement...............................................52
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................52
Section 9.01. Without Consent of Holders of Notes.........................52
Section 9.02. With Consent of Holders of Notes............................53
Section 9.03. Compliance with Trust Indenture Act.........................54
Section 9.04. Revocation and Effect of Consents...........................54
Section 9.05. Notation on or Exchange of Notes............................54
Section 9.06. Trustee to Sign Amendments, etc.............................55
ARTICLE 10 COLLATERAL AND SECURITY..........................................55
Section 10.01. Pledge, Escrow and Disbursement Agreement..................55
Section 10.02. Recording and Opinions.....................................55
Section 10.03. Release of Collateral......................................56
Section 10.04. Certificates of the Company................................57
Section 10.05. Authorization of Actions to Be Taken by the Trustee Under
the Pledge and Escrow Agreement............................57
Section 10.06. Authorization of Receipt of Funds by the Trustee Under the
Pledge and Escrow Agreement................................57
Section 10.07. Termination of Security Interest...........................57
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ARTICLE 11. NOTE GUARANTEES.................................................57
Section 11.01. Guarantee..................................................57
Section 11.02. Subordination of Note Guarantee............................58
Section 11.03. Limitation on Guarantor Liability..........................58
Section 11.04. Execution and Delivery of Note Guarantee...................59
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms.........59
Section 11.06. Releases Following Sale of Assets..........................60
ARTICLE 12. MISCELLANEOUS...................................................60
Section 12.01. Trust Indenture Act Controls...............................60
Section 12.02. Notices....................................................60
Section 12.03. Communication by Holders of Notes with Other Holders of
Notes......................................................61
Section 12.04. Certificate and Opinion as to Conditions Precedent.........61
Section 12.05. Statements Required in Certificate or Opinion..............62
Section 12.06. Rules by Trustee and Agents................................62
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders.................................62
Section 12.08. Governing Law..............................................62
Section 12.09. No Adverse Interpretation of Other Agreements..............63
Section 12.10. Successors.................................................63
Section 12.11. Severability...............................................63
Section 12.12. Counterpart Originals......................................63
Section 12.13. Table of Contents, Headings, etc...........................63
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF NOTATION OF GUARANTEE
Exhibit C FORM OF PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
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<PAGE>
INDENTURE dated as of __________, 1998 between Premier Parks Inc., a
Delaware corporation (the "Company"), and The Bank of New York, as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the __% Senior
Notes due 2006 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by Section 4.15 and/or Section
5.01 and not by Section 4.10 hereof), and (ii) the issue or sale by the Company
or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Restricted Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $5.0 million or (b) for net proceeds in
excess of $5.0 million. Notwithstanding the foregoing, the following items shall
not be deemed to be Asset Sales: (i) a transfer of assets by the Company to a
Restricted Subsidiary or by a Restricted Subsidiary to the Company or to another
Restricted Subsidiary, (ii) an issuance of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary, (iii) the
transfer of Equity Interests in any Restricted Subsidiary pursuant to the
Subordinated Indemnity Agreement or the Partnership Parks Agreements, (iv) the
issuance of Equity Interests by a Restricted Subsidiary to any employee thereof
or as consideration for the acquisition of all or substantially all of the
assets of, or a majority of the Voting Stock of, any Person (or a business unit
or division of such Person) provided that the primary business of such Person
(or such unit or division) is a Permitted Business and (v) a Restricted Payment
that is permitted Section 4.07 hereof.
"Asset Value" of any asset, as of the date of determination thereof,
means the greater of the depreciated book value (as of the end of the fiscal
quarter ended immediately prior to such date of
<PAGE>
determination as to which financial statements are available) and the appraised
value of such asset; provided, however, that any such appraisal (i) shall not
have been made more than two years prior to such date of determination and (ii)
shall have been made by a qualified, independent and nationally recognized
appraiser.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars or foreign
currency, (ii) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than one year from the date of
acquisition, (iii) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Credit Facilities or with
any commercial bank having capital and surplus in excess of $500.0 million and a
Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than thirty days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
one year after the date of acquisition, (vi) securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory,
the securities of which state, commonwealth, territory, political subdivision or
taxing authority (as the case may be) are rated at least "A" by Standard &
Poor's Corporation or "A" by Moody's Investors Service, Inc. and (vii) money
market funds at least 95% of the assets of which constitute Cash Equivalents of
the kinds described in clauses (i) through (vi) of this definition.
2
<PAGE>
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole, or Premier and its Subsidiaries, taken as a whole, to any
"person" (as such term is used in Section 13(d)(3) of the Exchange Act) other
than, in case of the Company, to Premier or a Wholly Owned Subsidiary of
Premier, (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company or Premier, (iii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that any
"person" becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 35%
of the Voting Stock of Premier, (iv) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that Premier ceases to be the direct or indirect owner of less than 75% of
the voting power of the outstanding Equity Interests of the Company or (v) the
first day on which a majority of the members of the Board of Directors of the
Company or Premier are not Continuing Directors.
"Company" means Six Flags Entertainment Corporation, and any and all
successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (ii) Consolidated
Interest Expense of such Person and its Restricted Subsidiaries for such period,
to the extent that any such expense was deducted in computing such Consolidated
Net Income, plus (iii) depreciation, amortization (including any depreciation or
amortization arising out of purchases by the Company or any Restricted
Subsidiary of Equity Interests in the partners of the Co-Venture Partnerships
and amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (iv) non-cash items increasing
such Consolidated Net Income for such period, in each case, on a consolidated
basis and determined in accordance with GAAP (other than accrual of income in
the ordinary course of business in respect of a future cash payment).
Notwithstanding any other provision of this Indenture to the contrary,
"Consolidated Cash Flow" of the Company for any period will be deemed to include
100% of the cash distributions to the Company or any of its Restricted
Subsidiaries in respect of such period from the Co-Venture Partnerships,
directly or indirectly, out of the Consolidated Cash Flow of the Co-Venture
Partnerships in respect of such period.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the sum of (i) the consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization or original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations) and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness or Attributable Debt of another
Person that is guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of
3
<PAGE>
such Person or one of its Restricted Subsidiaries (whether or not such guarantee
or Lien is called upon). The term "Consolidated Interest Expense" shall not
include the consolidated interest expense of any Person with respect to (i) any
obligations in respect of the SFEC Zero Coupon Senior Notes so long as (x) the
Pledge and Escrow Agreement is in full force and effect and the Trustee
maintains a valid and perfected security interest in cash or Government
Securities in an amount sufficient to pay the aggregate principal amount at
maturity of the SFEC Zero Coupon Senior Notes pursuant to the terms thereof or
(y) the SFEC Zero Coupon Senior Notes shall have been defeased in accordance
with the indenture governing the SFEC Zero Coupon Senior Notes or (ii) any
obligations of the Company or any Restricted Subsidiary under the Partnership
Parks Agreements, the Marine World Agreements or the Subordinated Indemnity
Agreement.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, and prior to any
deduction in respect of dividends on any series of preferred stock of such
Person, determined in accordance with GAAP; provided that (i) the Net Income
(but not loss) of any Person that is not a Restricted Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the referent
Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of
any Person acquired in a pooling of interests transaction for any period prior
to the date of such acquisition shall be excluded and (iii) the cumulative
effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity (including stated capital,
additional paid-in capital and retained earnings) of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 11.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Co-Venture Partnerships" means (i) Six Flags Over Georgia, Ltd., a
Georgia Limited Partnership, (ii) Texas Flags, Ltd., a Texas Limited Partnership
and (iii) Fiesta Texas Theme Park, Ltd., a Texas Limited Partnership.
4
<PAGE>
"Credit Facilities" means, with respect to the Company or any of its
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the Six Flags Credit Facility) or commercial paper facilities with
banks or other institutional lenders providing for revolving credit loans, term
loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07.
"Eligible Indebtedness" means any Indebtedness for money borrowed
incurred by one or more Restricted Subsidiaries of the Company, provided that
such Indebtedness for money borrowed is (other than as permitted by the Six
Flags Credit Facility) contractually pari passu with and secured equally and
ratably with all other Indebtedness for money borrowed of such Restricted
Subsidiaries.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
5
<PAGE>
"Escrow Account" means the escrow account for the initial deposit of
$[175.0] million dollars of the net proceeds from the sale of the Notes and cash
in hand under the Pledge and Escrow Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means up to $______ million in aggregate
principal amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Six Flags Credit Facility) in existence on the date of
this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the Consolidated Interest Expense of such
Person and its Restricted Subsidiaries for such period and (ii) the product of
(a) all dividend payments, whether or not in cash, on any series of preferred
stock of such Person or any of its Restricted Subsidiaries, other than dividend
payments on any such preferred stock payable solely in Equity Interests of the
Company or such Restricted Subsidiary (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person for
the fiscal year immediately preceding the date of such calculation, expressed as
a decimal, in each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of (a) the Consolidated Cash Flow of such Person for such
period to (b) the Fixed Charges of such Person for such period. In the event
that the referent Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (ii) of the
proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
6
<PAGE>
"Global Note" means the Global Note in the form of Exhibit A hereto
issued in accordance with Section 2.01 hereof.
"Global Note Legend" means the legend set forth in Section 2.06(f),
which is required to be placed on the Global Note issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Guarantor" means Premier Parks Inc. and its respective successors
and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness. The term
"Indebtedness" shall not include (i) any obligations in respect of the SFEC Zero
Coupon Senior Notes so long as (x) the Pledge and Escrow Agreement is in full
force and effect and the Trustee maintains a valid and perfected security
interest in cash or Government Securities in an amount sufficient to pay the
aggregate principal amount at maturity of such SFEC Zero Coupon Senior Notes
pursuant to the terms thereof or (y) the SFEC Zero Coupon Senior Notes shall
have been defeased in accordance with the indenture governing the SFEC Zero
Coupon Senior Notes or (ii) any obligations of the Company or any Restricted
Subsidiary under the Partnership Parks Agreements, the Marine World Agreements
or the Subordinated Indemnity Agreement.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
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"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees and any deposit or advance made pursuant to
any contract entered into in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company (other than
pursuant to the terms of the Partnership Parks Agreements or the Subordinated
Indemnity Agreement) such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Mandatorily Convertible Preferred Stock" means Premier's ___%
Mandatorily Convertible Preferred Stock.
"Marine World" means the Marine World Joint Powers Authority or any
successor thereto.
"Marine World Agreements" mean (i) the Parcel Lease, dated November
7, 1997, between Marine World and Park Management Corp. ("PMC"), (ii) the
Reciprocal Easement Agreement, dated November 7, 1997, between Marine World and
PMC, (iii) the Revenue Sharing Agreement, dated November 7, 1997, among Marine
World, PMC and the Redevelopment Agency of the City of Vallejo (the "Agency"),
(iv) the Purchase Option Agreement, dated as of August 29, 1997, among Marine
World, the Agency, the City of Vallejo and PMC and (v) the 1997 Management
Agreement, dated as of February 1, 1997, between Marine World and PMC, as
amended, in each case, as the same may be modified or amended from time to time
after the date of this Indenture, provided such modification or amendment does
not adversely affect the interests of the Holders in any material respects.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends,
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excluding, however, (i) any gain or loss, together with any related provision
for taxes on such gain or loss, realized in connection with any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) and (ii) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that were
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Note Guarantee" means the Guarantee by the Guarantor of the
Company's payment obligations under this Indenture and the Notes, executed
pursuant to the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means a Person who has an account with the Depositary.
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"Partnership Parks Agreements" means (i) the Overall Agreement,
dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family
Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG
II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B,
L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., Six
Flags Theme Parks Inc. and the Company and the Related Agreements (as defined
therein), (ii) Overall Agreement, dated as of November 24, 1997, among Six Flags
Over Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags,
Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc.,
Six Flags Over Texas, Inc., Six Flags Theme Parks Inc. and the Company and the
Related Agreements (as defined therein), and (iii) the Lease Agreement with
Option to Purchase, dated as of March 9, 1996, among Fiesta Texas Theme Park,
Ltd., a Texas Limited Partnership, San Antonio Theme Park, L.P., and Six Flags
San Antonio, L.P. and the Transaction Documents (as defined therein), in each
case, as the same may be modified or amended from time to time after the date of
this Indenture provided such modification or amendment does not adversely affect
the interests of the Holders in any material respect.
"Permitted Business" means any business related, ancillary or
complementary to the businesses of the Company and its Restricted Subsidiaries
on the date of this Indenture.
"Permitted Investments" means an Investment by the Company or any
Restricted Subsidiary in (i) cash or Cash Equivalents, (ii) the Company, a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary; provided, however, that the primary
business of such Restricted Subsidiary is a Permitted Business; (iii) another
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets (or the assets of any business unit or division of such Person) to, the
Company or a Restricted Subsidiary; provided, however, that such Person's (or
such unit's or division's) primary business is a Permitted Business; (iv)
another Person if the aggregate amount of all Investments in all such other
Persons does not exceed $15.0 million at any one time outstanding (with each
Investment being valued as of the date made and without giving effect to
subsequent changes in value); provided, however, that such Person's primary
business is a Permitted Business; (v) promissory notes received as consideration
for an Asset Sale which are secured by a Lien on the asset subject to such Asset
Sale; provided that the aggregate amount of all such promissory notes at any one
time outstanding does not exceed $5.0 million; (vi) non-cash consideration from
an Asset Sale that was made pursuant to and in compliance with Section 4.10;
(vii) assets acquired solely in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of the Company; (viii) receivables owing to the
Company or any Restricted Subsidiary, if created or acquired in the ordinary
course of business; (ix) payroll, travel and similar advances that are made in
the ordinary course of business; (x) loans or advances to employees made in the
ordinary course of business consistent with past practices of the Company or
such Restricted Subsidiary; and (xi) stock, obligations or securities received
in settlement of debts created in the ordinary course of business and owing to
the Company or any Restricted Subsidiary or in satisfaction of judgments.
"Permitted Liens" means (a) Liens to secure the Six Flags Credit
Facility; (b) Liens to secure Eligible Indebtedness that was permitted to be
incurred pursuant to the provisions of Section 4.09 of this Indenture; (c) Liens
existing on the Issue Date; (d) Liens on property or shares of Capital Stock of
another Person at the time such other Person becomes a Restricted Subsidiary of
such Person; provided, however, that such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such other Person becoming
such a Restricted Subsidiary; provided further, however, that such Lien may not
extend to any other property owned by such Person or any of its Restricted
Subsidiaries; (e) Liens on property at the time such Person or any of its
Restricted Subsidiaries acquires the property, including any
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<PAGE>
acquisition by means of a merger or consolidation with or into such Person or a
Restricted Subsidiary of such Person; provided, however, that such Liens are not
created, incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens may not extend to any
other property owned by such Person or any of its Restricted Subsidiaries; (f)
Liens securing Indebtedness or other obligations of a Restricted Subsidiary of
such Person owing to such Person or a Restricted Subsidiary of such Person; (g)
Liens securing Hedging Obligations so long as the related Indebtedness is, and
is permitted to be under this Indenture, secured by a Lien on the same type of
property securing such Hedging Obligations; (h) Liens to secure any Permitted
Refinancing Indebtedness; provided, however, that (x) such new Lien shall be
limited to all or part of the same property that secured the original Lien (plus
improvements on such property) and (y) the Indebtedness secured by such Lien at
such time is not increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of the
Indebtedness refinanced at the time the original Lien became a Permitted Lien
and (B) an amount necessary to pay any fees and expenses, including premiums,
related to such refinancing, refunding, extension, renewal or replacement;
(i)(a) mortgages, liens, security interests, restrictions or encumbrances that
have been placed by any developer, landlord or other third party on property
over which the Company or any Restricted Subsidiary of the Company has easement
rights or on any real property leased by the Company and subordination or
similar agreements relating thereto and (b) any condemnation or eminent domain
proceedings affecting any real property; (j) pledges or deposits by such Person
under workmen's compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such Person is a
party, or deposits to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure surety or appeal
bonds to which such Person is a party, or deposits as security for contested
taxes or import duties or for the payment of rent, in each case incurred in the
ordinary course of business; (k) Liens imposed by law, such as carriers',
warehousemen's and mechanic's Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or other Liens arising out of
judgments or awards against such Person with respect to which such Person shall
then be proceeding with an appeal or other proceedings for review; (l) Liens for
property taxes not yet due or payable or subject to penalties for non-payment or
which are being contested in good faith and by appropriate proceedings; (m)
minor survey exceptions, minor encumbrances, easements or reservations of, or
rights of others for, licenses, rights of way, sewers, electric lines, telegraph
and telephone lines and other similar purposes, or zoning or other restrictions
as to the use of real properties or Liens incidental to the conduct of the
business of such Person or to the ownership of its properties which were not
incurred in connection with Indebtedness and which do not in the aggregate
materially impair the use of such properties in the operation of the business of
such Person; (n) Liens securing Purchase Money Indebtedness; provided, however,
that (i) the Indebtedness secured by such Liens is otherwise permitted to be
incurred under this Indenture, (ii) the principal amount of any Indebtedness
secured by any such Lien does not exceed the cost of assets or property so
acquired or constructed and (iii) the amount of Indebtedness secured by any such
Lien is not subsequently increased, (o) Liens arising out of the transactions
contemplated by the Partnership Parks Agreements, the Marine World Agreements,
the Subordinated Indemnity Agreement or the Six Flags Agreement; and (p) Liens
incurred in the ordinary course of business of the Company or any Subsidiary of
the Company with respect to obligations that do not exceed $10.0 million at any
one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of
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<PAGE>
(or accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses, including premiums, incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Pledge and Escrow Agreement" means the Pledge, Escrow and
Disbursement Agreement, dated as of the date of this Indenture, by and between
the Company and the Trustee governing the disbursement of funds from the Escrow
Account, as amended from time to time in accordance with this Indenture.
"Pledged Collateral" means the Collateral (as defined in the Pledge
and Escrow Agreement) under the Pledge and Escrow Agreement.
"Premier" means Premier Parks Inc., a Delaware corporation.
"Premier Operations" means Premier Parks Operations Inc., a wholly
owned subsidiary of Premier.
"Public Equity Offering" means an underwritten primary public
offering of common stock of any person pursuant to an effective registration
statement under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of
the deferred purchase price of property, conditional sale obligations,
obligation under any title retention agreement and other purchase money
obligations, in each case where the maturity of such Indebtedness does not
exceed the anticipated useful life of the asset being financed, and (ii)
incurred to finance the acquisition by the Company or a Restricted Subsidiary of
the Company of such asset, including additions and improvements; provided,
however, that any Lien arising in connection with any such Indebtedness shall be
limited to the specified asset being financed or, in the case of real property
or fixtures, including additions and improvements, the real property on which
such asset is attached; and provided further, that such Indebtedness is incurred
within 180 days after such acquisition, addition or improvement by the Company
or Restricted Subsidiary of such asset.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
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<PAGE>
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Preferred Stock" means Premier's Convertible Redeemable
Preferred Stock issued to the sellers of SFEC common stock pursuant to the Six
Flags Agreement.
"SFEC Zero Coupon Senior Notes" means the Company's Zero Coupon
Senior Notes due 1999.
"SFTP" means Six Flags Theme Parks Inc., a wholly owned subsidiary
of the Company.
"Shared Services Agreement" means the Shared Services Agreement
among the Company, Premier and Premier Operations as the same may be modified or
amended from time to time after the date of this Indenture, provided such
modification or amendment does not adversely affect the interests of the Holders
in any material respect.
"Six Flags Acquisition" means the acquisition by Premier by merger
of all of the capital stock of the Company from its current stockholders
pursuant to the Six Flags Agreement.
"Six Flags Agreement" means that certain Agreement and Plan of
Merger dated as of February 9, 1998, by and among Premier, Premier Parks
Holdings Corporation, a Delaware Corporation, Premier Parks Merger Corporation,
a Delaware Corporation, a certain group of sellers listed therein and the
Company.
"Six Flags Credit Facility" means that $472.0 million senior secured
credit facility between SFTP and _____ dated as of ______, 1998.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Specified Amount" means, as of any date, (i) the product of (a) the
Consolidated Cash Flow of the Company for the most recently ended four-quarter
period for which financial statements have been filed with the SEC determined on
a pro forma basis after giving effect to all acquisitions or Asset Sales made by
the Company and its Restricted Subsidiaries from the beginning of such
four-quarter period through and including such date of determination (including
any related financing transactions) as if such acquisitions and dispositions had
occurred at the beginning of such four-quarter period, times (b) 0.75.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid
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in the original documentation governing such Indebtedness, and shall not include
any contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
"Strategic Equity Investment" means a cash contribution to the
common equity capital of any Person or a purchase from any Person of common
Equity Interests (other than Disqualified Stock), in either case by or from a
Strategic Equity Investor and for aggregate cash consideration of at least $25.0
million.
"Strategic Equity Investor" means, as of any date, any Person (other
than an Affiliate of the Company) engaged in a Permitted Business which, as of
the day immediately before such date, had a Total Equity Market Capitalization
of at least $1.0 billion.
"Subordinated Indemnity Agreement" means the Subordinated Indemnity
Agreement, dated as of the date of the consummation of the Six Flags
Acquisition, among Premier, the Company and its subsidiaries, Time Warner Inc.,
Time Warner Entertainment Company, L.P. and TW-SPV Co., as the same may be
modified or amended from time to time after the date hereof, provided such
modification or amendment does not adversely affect the interests of the Holders
in any material respect.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% (49% in the case of
Walibi, S.A.) of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and (ii) any partnership or limited
liability company (a) the sole general partner or the managing general partner
(or equivalent) of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Tax Sharing Agreement" means that certain Tax Sharing Agreement
between Premier, the Company and the other parties named therein as the same may
be modified or amended from time to time after the date of this Indenture,
provided such modification or amendment does not adversely affect the interests
of the Holders in any material respect.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Total Equity Market Capitalization" of any Person means, as of any
day of determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such Person) multiplied by (B) the
average closing price of such common stock listed on a national securities
exchange or the Nasdaq National Market System over the 20 consecutive business
days immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Trustee" means the party named as such in the preamble hereto until
a successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
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"Unrestricted Subsidiary" means (i) any Subsidiary (other than SFTP
or any successor to SFTP) that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent
that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b)
is not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustees by filing with the
Trustees a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.07. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09, the Company shall be in default of
such covenant). The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.09, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote by the holder thereof in the
election of the Board of Directors (or comparable body) of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person or by such Person and one or more Wholly
Owned Restricted Subsidiaries of such Person.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares)
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shall at the time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"..............................4.11
"Asset Sale".........................................4.10
"Asset Sale Offer"...................................3.09
"Authentication Order"...............................2.02
"Bankruptcy Law".....................................4.01
"Basket Period"......................................4.07
"Change of Control Offer"............................4.15
"Change of Control Payment"..........................4.15
"Change of Control Payment Date" ....................4.15
"Covenant Defeasance"................................8.03
"Event of Default"...................................6.01
"Excess Proceeds"....................................4.10
"incur"..............................................4.09
"Legal Defeasance" ..................................8.02
"Offer Amount".......................................3.09
"Offer Period".......................................3.09
"Paying Agent".......................................2.03
"Permitted Debt".....................................4.09
"Purchase Date"......................................3.09
"Registrar"..........................................2.03
"Restricted Payments"................................4.07
SECTION 1.03.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
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SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Guarantor and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Note. Notes issued in global form shall be substantially in the
form of Exhibit A attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
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SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes
for the Company by manual or facsimile signature. The Company's seal shall be
reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office
or agency where Notes may be presented for registration of transfer or for
exchange ("Registrar") and an office or agency where Notes may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the Notes and
of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Note.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Note.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent will hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal, premium, if any, or
interest on the Notes, and will notify the Trustee of any default by the Company
in making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
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SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of the Global Note. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. A Global Note will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
in writing that the Depositary it is unwilling or unable to continue to act as a
depositary and the Company is unable to locate a qualified successor within 90
days or (ii) the Company in its sole discretion determines that the Global Note
(in whole but not in part) should be exchanged for Definitive Notes and delivers
a written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. A Global Note also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Note. The
transfer and exchange of beneficial interests in the Global Note shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the rules and procedures of the Depositary. Transfers of
beneficial interests in the Global Note also shall require compliance with
subparagraph (i) below:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in a Global Note. No written
orders or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(c) Transfer or Exchange of Beneficial Interests in the Global Note for
Definitive Notes. If any holder of a beneficial interest in a Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Note, then the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(g) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant.
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(d) Transfer and Exchange of Definitive Notes for Beneficial Interests in
the Global Note. A Holder of a Definitive Note may exchange such Note for a
beneficial interest in a Global Note or transfer such Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a
Global Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Definitive Note and increase
or cause to be increased the aggregate principal amount of the Global Note.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e). A Holder of Definitive Notes may transfer such Notes to a Person who
takes delivery thereof in the form of a Definitive Note.
(f) Global Note Legend. The following legend shall appear on the face of
the Global Note issued under this Indenture in substantially the following form,
unless specifically stated otherwise in the applicable provisions of this
Indenture:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND
(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(g) Cancellation and/or Adjustment of the Global Note. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
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(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate the Global Note and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(iv) The Global Note and Definitive Notes issued upon any
registration of transfer or exchange of a Global Note or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Note
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (c) to register
the transfer of or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate the Global Note and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
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Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for
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registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all cancelled Notes shall
be delivered to the Company. The Company may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate;
provided that, no Notes of $1,000 or less shall be redeemed in part. In the
event of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
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SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
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If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to __________, 2002. Thereafter, the Notes will be subject to redemption
at any time at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on ___________ of the years indicated below:
Year Percentage
2002........................................ _______%
2003........................................ _______
2004........................................ _______
2005 and thereafter......................... 100.000%
(b) Notwithstanding the foregoing, during the first 36 months after the
date of original issuance of the Notes, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes originally
issued under this Indenture at a redemption price of ___% of the principal
amount thereof on the redemption date with the net cash proceeds of one or more
Public Equity Offerings by and/or the net cash proceeds of a Strategic Equity
Investment in (i) the Company or (ii) Premier to the extent the net cash
proceeds thereof are contributed to the Company as a capital contribution to the
common equity of the Company; provided that in each case at least 65% of the
aggregate principal amount of Notes originally issued remains outstanding
immediately after the occurrence of each such redemption (excluding Notes held
by Premier, the Company and its Subsidiaries); and provided, further, that any
such redemption shall occur within 60 days of the date of the closing of each
such Public Equity Offering and/or Strategic Equity Investment.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
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SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth in Sections 4.10 and 4.15, the Company shall not
be required to make mandatory redemption or sinking fund payments with respect
to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders, with
a copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
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(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, each of the Company and Premier shall furnish
to the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Company and Premier were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its consolidated Subsidiaries and Premier and its consolidated
subsidiaries, respectively (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's and Premier's certified
independent accountants and (ii) all current reports that would be required to
be filed with the SEC on Form 8-K if the Company and Premier were required to
file such reports, in each case, within the time periods specified in the SEC's
rules and regulations. In addition, whether or not required by the rules and
regulations of the SEC, the Company and Premier shall file a copy of all such
information and reports with the SEC for public availability within the time
periods specified in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. The Company and Premier shall at all
times comply with TIA ss. 314(a).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view
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to determining whether the Company has kept, observed, performed and fulfilled
its obligations under this Indenture and Pledge and Escrow Agreement, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and the Pledge and
Escrow Agreement and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture or the Pledge and
Escrow Agreement (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company and each of the
Guarantors (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on
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account of any Equity Interests of the Company (including, without limitation,
any payment in connection with any merger or consolidation involving the
Company) or to the direct or indirect holders of any Equity Interests of the
Company in their capacity as such (other than dividends or distributions payable
in Equity Interests (other than Disqualified Stock) of the Company); (ii)
purchase, redeem or otherwise acquire or retire for value (including, without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company; (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness of the Company
that is subordinated to the Notes, except a payment of interest or principal at
Stated Maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments declared or made after the date of this Indenture
(excluding Restricted Payments permitted by clauses (ii) and (iii) of the next
succeeding paragraph) shall not exceed, at the date of determination, the sum,
without duplication, of (i) an amount equal to the Company's Consolidated Cash
Flow for the period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the date of this Indenture to the end of
the Company's most recently ended full fiscal quarter for which financial
statements have been filed with the SEC (the "Basket Period") less the product
of 1.4 times the Company's Consolidated Interest Expense for the Basket Period,
plus (ii) 100% of the aggregate net cash proceeds received by the Company after
the date of this Indenture as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale after the date of this Indenture
of Disqualified Stock or debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or Disqualified Stock
or convertible debt securities) sold to a Subsidiary of the Company and any sale
of Equity Interests of the Company the net cash proceeds of which are applied
pursuant to clause (ii) of the immediately succeeding paragraph), plus (iii) to
the extent that any Restricted Investment that was made after the date of this
Indenture is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial amount of
such Restricted Investment, plus (iv) to the extent that any Unrestricted
Subsidiary is redesignated as a Restricted Subsidiary after the date of this
Indenture, the fair market value of the Company's or its Restricted
Subsidiary's, as the case may be, Investment in such Subsidiary as of the date
of such redesignation.
The foregoing provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, Equity Interests of the
Company (other than Disqualified Stock); provided that the amount of any such
net cash proceeds that are utilized for any such redemption, repurchase,
retirement,
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defeasance or other acquisition shall be excluded from clause (c)(ii) of the
preceding paragraph; (iii) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness; (iv) so long as no Event of
Default or Default shall have occurred and be continuing (or would result
therefrom), (a) the purchase, redemption, retirement or other acquisition by the
Company or any Restricted Subsidiary of the Company of partnership interests
held by the partners in the limited partners of the Co-Venture Partnerships, the
co-general partner of the Co-Venture Partnerships or, in each case, their
successors, in accordance with and in the manner required or permitted by the
terms of the Partnership Parks Agreements and (b) dividends or other
distributions to Premier to enable Premier or its Restricted Subsidiaries to
purchase, redeem, retire or otherwise acquire partnership interests held by the
limited partners or co-general partner in the Co-Venture Partnerships, or their
successors, in accordance with and in the manner required or permitted by the
terms of the Partnership Parks Agreements; (v) so long as no Event of Default or
Default shall have occurred and be continuing (or would result therefrom), (a)
any transactions pursuant to or contemplated by, and payments made in connection
with, and in accordance with the terms of, the Partnership Parks Agreements and
(b) dividends or other distributions to Premier to enable Premier or its
Restricted Subsidiaries to engage in any transactions pursuant to or
contemplated by, and make any payments in connection with, and in accordance
with the terms of, the Partnership Parks Agreements; (vi) so long as no Event of
Default or Default shall have occurred and be continuing (or would result
therefrom), (a) any transactions pursuant to or contemplated by, and payments
made in connection with, and in accordance with the terms of, the Subordinated
Indemnity Agreement and (b) dividends or other distributions to Premier to
enable Premier or its Restricted Subsidiaries to engage in any transactions
pursuant to or contemplated by, and make any payments in connection with, and in
accordance with the terms of, the Subordinated Indemnity Agreement; (vii) in the
event Premier issues common stock in exchange for or upon conversion of Seller
Preferred Stock or Mandatorily Convertible Preferred Stock, dividends to Premier
to allow Premier to make cash payments made in lieu of the issuance of
fractional shares of common stock, not to exceed $250,000 in the aggregate in
any fiscal year; (viii) so long as no Event of Default or Default shall have
occurred and be continuing (or would result therefrom), the payment of dividends
or other distributions to Premier to enable Premier to pay dividends on the
Seller Preferred Stock in accordance with the terms thereof as in effect on the
date of this Indenture; (ix) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company from employees,
former employees, directors or former directors of the Company or any of its
Restricted Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors); provided, however, that the aggregate
amount of such repurchases shall not exceed $2.5 million in any twelve-month
period; (x) so long as no Event of Default or Default shall have occurred and be
continuing (or would result therefrom), any payment by the Company to Premier to
permit Premier to pay any federal, state, local or other taxes that are then
actually due and owing by Premier; provided that such amounts do not exceed the
amounts that, without recognizing any tax attribute carryforwards or carrybacks,
would otherwise be due and owing if the Company were an independent taxpayer;
and (xi) so long as no Event of Default or Default shall have occurred and be
continuing (or would result therefrom), any payment made pursuant to the Shared
Services Agreement.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the business currently operated by SFTP be
transferred to or held by an Unrestricted Subsidiary. For purposes of making
such determination, all outstanding Investments held by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to
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constitute Investments in an amount equal to the fair market value of such
Investments at the time of such designation. Such designation will only be
permitted if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors of the Company whose resolution with respect thereto shall be
delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $10.0 million. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 4.07 were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness as in effect on the date of this Indenture,
(b) the Partnership Parks Agreements, the Marine World Agreements or the
Subordinated Indemnity Agreement, (c) the Six Flags Credit Facility as in effect
on the date of this Indenture, (d) Eligible Indebtedness that was permitted to
be incurred pursuant to the provisions of Section 4.09; provided that such
Eligible Indebtedness is no more restrictive, taken as a whole, with respect to
such dividends and other payment restrictions than those contained in the Six
Flags Credit Facility, as the same was in effect on the date of this Indenture,
(e) this Indenture and the Notes, (f) applicable law, (g) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms of
this Indenture to be incurred, (h) customary non-assignment provisions in
leases, licenses or other contracts entered into in the ordinary course of
business, (i) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (j) any agreement for the sale of a
Restricted Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale, (k) obligations otherwise permitted to be incurred pursuant to
the provisions of Section 4.12 that limits the right of the obligee to dispose
of the assets securing such obligations, (l) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements
and other similar agreements entered into in the ordinary course of business,
(m) Permitting Refinancing Indebtedness so long as such Permitted Refinancing
Indebtedness is no more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those
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contained in the Indebtedness refinanced thereby and (n) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and that the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock and the Company's Restricted Subsidiaries may incur
Indebtedness if the Company's Fixed Charge Coverage Ratio at the time of
incurrence of such Indebtedness or the issuance of such Disqualified Stock after
giving pro forma effect thereto as if the same had occurred at the beginning of
the most recently ended four full fiscal quarter period of the Company for which
financial statements have been filed with the SEC, would have been at least 2.0
to 1.
The Company shall not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Notes on substantially identical terms; provided, however, that no Indebtedness
of the Company shall be deemed to be contractually subordinated in right of
payment to any other Indebtedness of the Company solely by virtue of being
unsecured.
The provisions of the first paragraph of this Section 4.09 will not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company and its Restricted Subsidiaries of
additional term Indebtedness under Credit Facilities in an aggregate
principal amount at any one time outstanding not to exceed $200.0 million
less the aggregate amount of all mandatory or scheduled repayments of the
principal of any such additional term Indebtedness (other than repayments
that are immediately reborrowed) that have actually been made since the
date of this Indenture;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of additional revolving credit Indebtedness and letters of credit pursuant
to Credit Facilities in an aggregate principal amount (with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries
thereunder) at any one time outstanding not to exceed the Specified Amount
as of such date of incurrence; provided that, that the aggregate principal
amount of all Indebtedness incurred pursuant to this clause (ii) is
reduced to an outstanding balance of $1.0 million or less for at least 30
consecutive days in each fiscal year;
(iii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iv) the incurrence by the Company of Indebtedness represented by
the Notes;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or
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such Restricted Subsidiary, in an aggregate principal amount not to exceed
$20.0 million at any time outstanding;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness and Indebtedness
incurred pursuant to clauses (i) and (ii) above) that was permitted by
this Indenture to be incurred;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; provided, however, that (i) if the
Company is the obligor on any such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the Notes and (ii)(A) any subsequent issuance
or transfer of Equity Interests that results in any such Indebtedness
being held by a Person other than the Company or a Restricted Subsidiary
thereof and (B) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Restricted Subsidiary thereof
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case may
be, that was not permitted by this clause (vii);
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of (a) Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
incurred and (b) Currency Agreements that do not increase the Indebtedness
of the Company and its Restricted Subsidiaries outstanding at any time
other than as a result of fluctuations in foreign currency exchange rates
or interest rates or by reason of fees, indemnities and compensation
payable thereunder;
(ix) Indebtedness in respect of performance bonds, letters of
credits, surety or appeal bonds, prior to any drawing thereunder, for or
in connection with pledges, deposits or payments made or given in the
ordinary course of business;
(x) the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of this
Section 4.09 (including, without limiting the generality of the forgoing,
the guarantee by any Restricted Subsidiary of the Company of Existing
Indebtedness);
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xi); and
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (xii), not to
exceed $40.0 million.
For purposes of determining compliance with this Section 4.09, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (xii) above or
is entitled to be incurred pursuant to the first paragraph of this Section
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4.09, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this Section 4.09 and such item of
Indebtedness will be treated as having been incurred pursuant to one or more of
such clauses and/or pursuant to the first paragraph hereof, as the Company shall
specify. In connection with the Six Flags Acquisition and the related offerings
occurring on the date of this Indenture, the Company shall be permitted to incur
a portion of the Indebtedness to be incurred on that date pursuant to the Fixed
Charge Coverage Ratio set forth in the first paragraph of this Section 4.09 to
the extent permitted by such Fixed Charge Coverage Ratio calculated without
regard to any Permitted Debt incurred on such date. Accrual of interest,
accretion or amortization of original issue discount, the payment of interest on
any Indebtedness in the form of additional Indebtedness with the same terms, and
the payment of dividends on preferred stock in the form of additional shares of
the same class of preferred stock will not be deemed to be an incurrence of
Indebtedness or an issuance of preferred stock for purposes of this Section
4.09; provided, in each such case, that the amount thereof is included in Fixed
Chareges of the Company as accrued.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustees) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinate to the Notes) that are assumed by the transferee
of any such assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability or, in the case of
the sale of Capital Stock, that are assumed by the transferee by operation of
law and (y) any securities, notes or other obligations received by the Company
or such Restricted Subsidiary from such transferee that are promptly (subject to
ordinary settlement periods) converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or the applicable Restricted Subsidiary may apply such Net
Proceeds (a) to repay or repurchase Indebtedness of a Restricted Subsidiary of
the Company (and to correspondingly reduce commitments with respect thereto in
the case of revolving credit borrowings), (b) to the acquisition of all or
substantially all of the assets of, or a majority of the Voting Stock of,
another Person (or business unit or division of such Person); provided, that the
primary business of such Person (or unit or division) is a Permitted Business,
(c) to fund obligations of the Company or any Restricted Subsidiary under the
Partnership Parks Agreements or the Subordinated Indemnity Agreement, (d) to the
acquisition of Capital Stock of a Restricted Subsidiary of the Company held by
Persons other than the Company or any Restricted Subsidiary, (e) to the making
of a capital expenditure or (f) to the acquisition of other long-term assets
that are used or useful in a Permitted Business. Pending the final application
of any such Net Proceeds, the Company or such Restricted Subsidiary may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
will be required to make an offer to all Holders of Notes and all holders of
other pari passu Indebtedness of the Company containing provisions similar to
those
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set forth in this Indenture with respect to offers to purchase or redeem with
the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness of the Company
that may be purchased out of the Excess Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of repurchase, in accordance with the
procedures set forth in this Indenture and such other Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes and
such other Indebtedness tendered into such Asset Sale Offer exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes and such other
Indebtedness to be purchased on a pro rata basis. Upon completion of such offer
to purchase, the amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of
business, or any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment or
indemnification arrangements, stock options and stock ownership plans approved
by the Board of Directors, or the grant of stock options or similar rights to
employees and directors of the Company pursuant to plans approved by the Board
of Directors, (ii) transactions between or among the Company and/or its
Restricted Subsidiaries, (iii) payment of reasonable directors fees to Persons
who are not otherwise employees of the Company or its Restricted Subsidiaries,
(iv) loans or advances to employees in the ordinary course of business, (v)
Restricted Payments that are permitted by Section 4.07, (vi) transactions
pursuant to or contemplated by, and in accordance with, the terms of the
Subordinated Indemnity Agreement, (vii) transactions pursuant to or contemplated
by, and in accordance with the terms of, the Shared Services Agreement, (viii)
transactions pursuant to or contemplated by, and in accordance with the terms
of, the Tax Sharing Agreement, (ix) transactions pursuant to and payments in
connection with, and, in each case, in accordance with, the terms of the
Partnership Parks Agreements and (x) transactions pursuant to or contemplated
by, and in accordance with, the Marine World Agreements.
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SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist
any Lien securing trade payables, Attributable Debt or Indebtedness on any asset
now owned or hereafter acquired, except Permitted Liens.
SECTION 4.13. LINE OF BUSINESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder of Notes to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes at an offer price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase. Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by this Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Notes as a
result of a Change of Control.
(b) On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will
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publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.16. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or a Restricted Subsidiary of the Company may enter into a sale and
leaseback transaction if (i) the Company could have (a) incurred Indebtedness in
an amount equal to the Attributable Debt relating to such sale and leaseback
transaction pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 or pursuant to clause (vi) of the second
paragraph of Section 4.09 and (b) incurred a Lien to secure such Indebtedness
pursuant to Section 4.12, (ii) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as determined
in good faith by the Board of Directors and set forth in an Officers'
Certificate delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the Company or such
Restricted Subsidiary applies the proceeds of such transaction in compliance
with, Section 4.10 hereof.
SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS OF
RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Restricted Subsidiary of the Company to any
Person (other than the Company or a Restricted Subsidiary of the Company and
other than transactions contemplated by the Partnership Parks Agreements and the
Subordinated Indemnity Agreement), unless (a)(1) such transfer, conveyance,
sale, lease or other disposition is of all the Equity Interests in such
Restricted Subsidiary or (2) after giving effect thereto, such Restricted
Subsidiary will still constitute a Restricted Subsidiary and (b) the cash Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with Section 4.10 hereof, and (ii) will not permit any
Restricted Subsidiary of the Company to issue any of its Equity Interests (other
than, if necessary, shares of its Capital Stock constituting directors'
qualifying shares) to any Person other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company if, after giving effect thereto, such
Restricted Subsidiary will not be a direct or indirect Subsidiary of the
Company.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.19. PLEDGE AND ESCROW AGREEMENT DEPOSIT.
Upon consummation of the initial sale of the Notes offered hereby on
the date hereof, the Company shall deposit $[175.0] million of the net proceeds
from the sale of the Notes and cash in hand, in the Escrow Account with the
Trustee. The Escrow Account shall be governed by the terms of the Pledge and
Escrow Agreement attached as Exhibit C hereto.
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ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes,
this Indenture, the Pledge and Escrow Agreement pursuant to a supplemental
Indenture in form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) except in
the case of a merger of the Company with or into a Wholly Owned Restricted
Subsidiary of the Company, the Company or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction, provided that this clause (A) shall not
apply to a merger of the Company with or into its direct parent or with or into
a Wholly Owned Subsidiary of its direct parent and (B) will, both at the time of
such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
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(a) the Company defaults in the payment when due of interest on the Notes
and such default continues for a period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable, upon
redemption (including in connection with an offer to purchase) or otherwise;
(c) the Company fails to comply (i) for a period of 30 days with any of
the provisions of Section 4.10, 4.15 or 4.19 hereof or (ii) with any of the
provisions of Article Four or Section 5.01 hereof for 30 days after notice to
the Company by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding voting as a single class;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, the Notes, the
Note Guarantee or the Pledge and Escrow Agreement for 60 days after notice to
the Company by the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding voting as a single class;
(e) the Company or any Restricted Subsidiary fails to pay Indebtedness
within any applicable grace period after final maturity or the acceleration of
any Indebtedness by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated at any time exceeds $10.0
million;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $10.0 million;
(g) the Company or any Restricted Subsidiary that constitutes a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary pursuant to or within the
meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Restricted Subsidiary
that constitutes a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary in an involuntary case;
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(ii) appoints a Custodian of the Company or any Restricted
Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary or for all or substantially all of the property of
the Company or any Restricted Subsidiary that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any Restricted
Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days;
(i) the Company shall materially breach any representation, warranty or
agreement set forth in the Pledge and Escrow Agreement, or a material default by
the Company in the performance of any covenant set forth in the Pledge and
Escrow Agreement, or repudiation by the Company of its obligations under the
Pledge and Escrow Agreement, or the Pledge and Escrow Agreement shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect; or
(j) except as permitted by this Indenture, any Note Guarantee is held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or the Guarantor, or any Person acting on
behalf of the Guarantor, shall deny or disaffirm its obligations under such
Guarantor's Note Guarantee.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Restricted Subsidiary that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable immediately. Upon any such declaration, the Notes shall
become due and payable immediately. Notwithstanding the foregoing, if an Event
of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with
respect to the Company, any Restricted Subsidiary that constitutes a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. The Holders of a majority
in aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
If an Event of Default occurs on or after ____________, 2002 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to __________,
2002 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be
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immediately due and payable in an amount, for each of the years beginning on
______ of the years set forth below, as set forth below (expressed as a
percentage of the amount that would otherwise be due but for the provisions of
this paragraph plus accrued interest, if any, to the date of payment):
Year Percentage
---- ----------
1998..............................................._______%
1999..............................................._______%
2000..............................................._______%
2001..............................................._______%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
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(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium, if any, and
interest on the Note, on or after the respective due dates expressed in the Note
(including in connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or
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otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article or the
Pledge and Escrow Agreement, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this
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Indenture and no others, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
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(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in
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accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee
when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
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(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article Eight. Subject to compliance with this Article Eight, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with
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and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
outstanding Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article Eight concurrently
with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
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(f) the Company shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that on the 91st
day following the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may
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at the expense of the Company cause to be published once, in the New York Times
and The Wall Street Journal (national edition), notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such notification or publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantor and the Trustee may amend or supplement this Indenture, the Pledge and
Escrow Agreement, the Note Guarantee or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's or Guarantor's
obligations to the Holders of the Notes by a successor to the Company or
Guarantor pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
(f) to allow the Guarantor to execute a supplemental indenture and/or a
Note Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and
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the Guarantor in the execution of any amended or supplemental Indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental
Indenture that affects its own rights, duties or immunities under this Indenture
or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Sections 3.09, 4.10
and 4.15 hereof) and the Notes may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding voting as a single class (including consents obtained in connection
with a tender offer or exchange offer for, or purchase of, the Notes), and,
subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes). Without the
consent of at least 75% in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, such Notes), no waiver or amendment to either this
Indenture or the Pledge and Escrow Agreement may make any change in the
provisions of Section 4.19 or Article 10 hereof or the Pledge and Escrow
Agreement that adversely affects the rights of any Holder of Notes. Section 2.08
hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
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(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof);
(g) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions; or
(i) release the Guarantor from any of its obligations under its Note
Guarantee or this Indenture or change the Note Guarantee in any way that would
adversely affect the Holders, except in accordance with the terms of this
Indenture.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall
be set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
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Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT.
The due and punctual payment of the principal of and interest, if
any, on the Notes when and as the same shall be due and payable, whether on an
interest payment date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Notes and performance of all other obligations
of the Company to the Holders of Notes or the Trustee under this Indenture and
the Notes, according to the terms hereunder or thereunder, shall be secured as
provided in the Pledge and Escrow Agreement which the Company has entered into
simultaneously with the execution of this Indenture and which is attached as
Exhibit C hereto. Each Holder of Notes, by its acceptance thereof, consents and
agrees to the terms of the Pledge and Escrow Agreement (including, without
limitation, the provisions providing for foreclosure and release of Escrow
Funds) as the same may be in effect or may be amended from time to time in
accordance with its terms and authorizes and directs the Trustee to enter into
the Pledge and Escrow Agreement and to perform its obligations and exercise its
rights thereunder in accordance therewith. The Company shall deliver to the
Trustee copies of all documents pursuant to the Pledge and Escrow Agreement, and
shall do or cause to be done all such acts and things as may be necessary or
proper, or as may be required by the provisions of the Pledge and Escrow
Agreement, to assure and confirm to the Trustee the security interest in the
Escrow Funds contemplated hereby, by the Pledge and Escrow Agreement or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture and of the Notes secured hereby,
according to the intent and purposes herein expressed. The Company shall take,
or shall cause its Subsidiaries to take, upon request of the Trustee, any and
all actions reasonably required to cause the Pledge and Escrow Agreement to
create and maintain, as security for the Obligations of the Company hereunder, a
valid and enforceable perfected first priority Lien in and on all the Pledged
Collateral, in favor of the Trustee for the benefit of the Holders of Notes,
superior to and prior to the rights of all third Persons and subject to no other
Liens than Permitted Liens.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all
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action has been taken with respect to the recording, registering and filing of
this Indenture, financing statements or other instruments necessary to make
effective the Lien intended to be created by the Pledge and Escrow Agreement,
and reciting with respect to the security interests in the Pledged Collateral,
the details of such action, or (ii) stating that, in the opinion of such
counsel, no such action is necessary to make such Lien effective.
(b) The Company shall furnish to the Trustee on May 1 in each year
beginning with May 1, 1998, an Opinion of Counsel, dated as of such date, either
(i) (A) stating that, in the opinion of such counsel, action has been taken with
respect to the recording, registering, filing, re-recording, re-registering and
refiling of all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is necessary to maintain
the Lien of the Pledge and Escrow Agreement and reciting with respect to the
security interests in the Pledged Collateral the details of such action or
referring to prior Opinions of Counsel in which such details are given, (B)
stating that, based on relevant laws as in effect on the date of such Opinion of
Counsel, all financing statements and continuation statements have been executed
and filed that are necessary as of such date and during the succeeding 12 months
fully to preserve and protect, to the extent such protection and preservation
are possible by filing, the rights of the Holders of Notes and the Trustee
hereunder and under the Pledge and Escrow Agreement with respect to the security
interests in the Pledged Collateral, or (ii) stating that, in the opinion of
such counsel, no such action is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of TIA
ss.314(b).
SECTION 10.03. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03, Pledged
Collateral may be released from the Lien and security interest created by the
Pledge and Escrow Agreement at any time or from time to time in accordance with
the provisions of the Pledge and Escrow Agreement or as provided hereby.
(b) No Pledged Collateral shall be released from the Lien and security
interest created by the Pledge and Escrow Agreement pursuant to the provisions
of the Pledge and Escrow Agreement unless there shall have been delivered to the
Trustee the certificate required by this Section 10.03.
(c) At any time when a Default or Event of Default shall have occurred and
be continuing and the maturity of the Notes shall have been accelerated (whether
by declaration or otherwise) and the Trustee has knowledge of such Default or
Event of Default, no release of Pledged Collateral pursuant to the provisions of
the Pledge and Escrow Agreement shall be effective as against the Holders of
Notes.
(d) The release of any Pledged Collateral from the terms of this Indenture
and the Pledge and Escrow Agreement shall not be deemed to impair the security
under this Indenture in contravention of the provisions hereof if and to the
extent the Pledged Collateral is released pursuant to the terms of the Pledge
and Escrow Agreement. To the extent applicable, the Company shall cause TIA ss.
313(b), relating to reports, and TIA ss. 314(d), relating to the release of
property or securities from the Lien and security interest of the Pledge and
Escrow Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Pledge and
Escrow Agreement, to be complied with. Any certificate or opinion required by
TIA ss. 314(d) may be made by an Officer of the Company except in cases where
TIA ss. 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee in the exercise of reasonable
care.
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SECTION 10.04. CERTIFICATES OF THE COMPANY.
(a) The Company shall furnish to the Trustee, prior to each proposed
release of Pledged Collateral pursuant to the Pledge and Escrow Agreement, (i)
all documents required by TIA ss. 314(d) and (ii) an Opinion of Counsel, which
may be rendered by internal counsel to the Company, to the effect that such
accompanying documents constitute all documents required by TIA ss. 314(d). The
Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as
conclusive evidence of compliance with the foregoing provisions the appropriate
statements contained in such documents and such Opinion of Counsel.
SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
PLEDGE AND ESCROW AGREEMENT.
Subject to the provisions of Section 7.01 and 7.02 hereof, the
Trustee may, in its sole discretion and without the consent of the Holders of
Notes, take, on behalf of the Holders of Notes, all actions it deems necessary
or appropriate in order to (a) enforce any of the terms of the Pledge and Escrow
Agreement and (b) collect and receive any and all amounts payable in respect of
the Obligations of the Company hereunder. The Trustee shall have power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Pledged Collateral by any acts that may be
unlawful or in violation of the Pledge and Escrow Agreement or this Indenture,
and such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders of Notes in the Pledged
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders of Notes or of the Trustee).
SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE PLEDGE
AND ESCROW AGREEMENT.
The Trustee is authorized to receive any funds for the benefit of
the Holders of Notes distributed under the Pledge and Escrow Agreement, and to
make further distributions of such funds to the Holders of Notes according to
the provisions of this Indenture.
SECTION 10.07. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company under
this Indenture and the Notes, or upon Legal Defeasance, the Trustee shall
release the Liens pursuant to this Indenture and the Pledge and Escrow
Agreement.
ARTICLE 11.
NOTE GUARANTEE
SECTION 11.01. GUARANTEE.
Subject to this Article 11, the Guarantor hereby, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the obligations of the
Company hereunder or thereunder, that: (a) the principal of and interest on the
Notes will be
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promptly paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of and interest on the
Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such other
obligations, that same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Guarantor shall be obligated to pay the same immediately. The Guarantor agrees
that this is a guarantee of payment and not a guarantee of collection.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. The Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantor or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantor, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
The Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. The Guarantor
further agrees that, as between the Guarantor, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantor for
the purpose of this Note Guarantee.
SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE.
The Obligations of the Guarantor under its Note Guarantee pursuant
to this Article 11 shall be junior and subordinated to all indebtedness that is
not specifically by its terms made pari passu with or junior to the Note
Guarantee of the Guarantor.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
The Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
the Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantor hereby
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irrevocably agree that the obligations of the Guarantor under its Note Guarantee
and this Article 11 shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
the Guarantor that are relevant under such laws, result in the obligations of
the Guarantor under its Note Guarantee not constituting a fraudulent transfer or
conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.01, the
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit B shall be endorsed by an Officer of the Guarantor
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of the Guarantor by its President or one of its Vice
Presidents.
The Guarantor hereby agrees that its Note Guarantee set forth in
Section 11.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
The Guarantor may not consolidate with or merge with or into
(whether or not the Guarantor is the surviving Person) another Person whether or
not affiliated with the Guarantor unless:
(a) subject to Section 11.05 hereof, the Person formed by or
surviving any such consolidation or merger (if other than the Guarantor)
unconditionally assumes all the obligations of the Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set
forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default
or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Note Guarantee endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of this Indenture to be performed by the
Guarantor, such successor Person shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor.
Such successor Person thereupon may cause to be signed any or all of the Note
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Note Guarantees so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Note Guarantee theretofore
and thereafter issued in accordance with the terms of this Indenture as though
all of such Note Guarantees had been issued at the date of the execution hereof.
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Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets of
the Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of the Guarantor, then the Guarantor (in
the event of a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the capital stock of the Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of the Guarantor) will be released and relieved
of any obligations under its Note Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof, the Trustee shall execute any
documents reasonably required in order to evidence the release of the Guarantor
from its obligations under its Note Guarantee.
If the Guarantor is not released from its obligations under its Note
Guarantee the Guarantor shall remain liable for the full amount of principal of
and interest on the Notes and for the other obligations of the Guarantor under
this Indenture as provided in this Article 11.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address
If to the Company:
Six Flags Entertainment Corporation
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Chief Financial Officer
Facsimile number: (405) ___________
Telephone number: (405) 475-2500
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With a copy to:
James M. Coughlin, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Facsimile number: (212) 702-5810
Telephone number: (212) 702-5700
If to the Trustee:
The Bank of New York
______________________
______________________
Facsimile number:
Attention:
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
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(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or the Pledge and
Escrow Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of ____________, 1998
SIX FLAGS ENTERTAINMENT CORPORATION
BY: _______________________________
Name:
Title:
Attest:
______________________________
Name:
Title:
THE BANK OF NEW YORK
BY: _______________________________
Name:
Title:
Attest:
______________________________
Authorized Signatory
Date:
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EXHIBIT A
(Face of Note)
================================================================================
(a) CUSIP ________________
__% Senior Notes due 2006
No. ________ $ ____________
SIX FLAGS ENTERTAINMENT CORPORATION
promises to pay to __________________________________________________________ or
registered assigns,
the principal sum of _____________________________________________________
Dollars on ___________, 2006.
Interest Payment Dates: ____________, and ____________
Record Dates: ____________, and ____________
DATED: ____________, 1998
SIX FLAGS ENTERTAINMENT CORPORATION
BY: _______________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By: _____________________________
================================================================================
A-1
<PAGE>
(Back of Note)
___% Senior Notes due 2006
THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTES OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Six Flags Entertainment Corporation, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at ___% per annum from , 1998 until maturity. The Company will pay
interest semi-annually on and of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest, and if
this Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; provided, further, that the first
Interest Payment Date shall be ______, 1998. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1% per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the or next preceding the Interest Payment Date,
even if such Notes are cancelled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Notes will be payable as to principal,
premium, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium on, the Global Note and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
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<PAGE>
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE AND PLEDGE AND ESCROW AGREEMENT. The Company issued the
Notes under an Indenture dated as of , 1998 ("Indenture") between the Company
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the indenture shall
govern and be controlling. The Notes are obligations of the Company limited to
$170.0 million in aggregate principal amount. The Notes are secured by a pledge
of Government Securities pursuant to the Pledge and Escrow Agreement referred to
in the Indenture.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to __________, 2002.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on __________ of the years
indicated below:
Year Percentage
- ---- ----------
2002..................................... _______%
2003..................................... _______%
2004..................................... _______%
2005 and thereafter...................... 100.000 %
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, during the first 36 months after the date of original issuance of
the Notes, the Company may on any one or more occasions redeem up to 35% of the
aggregate principal amount of the Notes originally issued under the Indenture at
a redemption price of ____% of the principal amount thereof on the redemption
date with the net cash proceeds of one or more Public Equity Offerings and/or
the net cash proceeds of a Strategic Equity Investment (i) the Company or (ii)
Premier to the extent the net cash proceeds thereof are contributed to the
Company as a capital contribution to the common equity of the Company; provided
that in each case at least 65% of the aggregate principal amount of maturity of
the Notes originally issued remains outstanding immediately after the occurrence
of each such redemption (excluding the Notes held by Premier, the Company and
its Subsidiaries); and provided, further, that any such redemption shall occur
within 60 days of the date of the closing of each such Public Equity Offering
and/or Strategic Equity Investment.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
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<PAGE>
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date fixed for the closing
of such offer in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Pledge and Escrow Agreement or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes voting as a single class, and any existing
default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes voting as a single class. However, without the consent of
at least 75% in principal amount of the
A-4
<PAGE>
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for, or purchase of, such Notes), no waiver or amendment
to either the Indenture or the Pledge and Escrow Agreement may make any change
in the provisions of Section 4.19 or Article 10 of the Indenture or the Pledge
and Escrow Agreement that adversely affects the rights of any Holder of Notes.
Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on the Notes; (ii) default in
payment when due of principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption (including in connection
with an offer to purchase) or otherwise, (iii) failure by the Company to comply
(A) for a period of 30 days with any of the provisions of Section 4.10, 4.15 or
4.19 of the Indenture and (B) with any of the provisions of Article Four or
Section 5.01 of the Indenture for 30 days after notice to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding voting as a single class; (iv) failure by the Company for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in principal amount of the Notes then outstanding voting as a single class
to comply with certain other agreements in the Indenture, the Notes, the Note
Gurantee or the Pledge and Escrow Agreement; (v) default under certain other
agreements relating to Indebtedness of the Company which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries; (viii) the breach of certain
representations, warranties or agreements set forth in the Pledge and Escrow
Agreement, or a material default by the Company in the performance of any
covenant set forth in the Pledge and Escrow Agreement, or repudiation by the
Company of its obligations under the Pledge and Escrow Agreement, or the Pledge
and Escrow Agreement shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect; and (ix) except as permitted by the Indenture, any Note Guarantee is
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or the Guarantor, or any Person
acting on behalf of the Guarantor, shall deny or disaffirm its obligations under
such Guarantor's Note Guarantee. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company
A-5
<PAGE>
is required upon becoming aware of any Default or Event of Default, to deliver
to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN NET (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Six Flags Entertainment Corporation
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Corporate Secretary
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date: ____________________
Your Signature: ______________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee.
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: ____________________ Your Signature: ___________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No: ____________________
Signature Guarantee.
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<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of
decrease in increase in this Global Note Signature of
Principal Amount Principal Amount following such authorized officer of
of of decrease (or Trustee or Note
Date of Exchange this Global Note this Global Note increase) Custodian
- ---------------- ---------------- ---------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A-9
<PAGE>
EXHIBIT B
FORM OF NOTATION OF GUARANTEE
For value received, the Guarantor, Premier Parks, Inc. (which term
includes any successor Person under the Indenture) has, unconditionally
guaranteed on a fully subordinated basis, to the extent set forth in the
Indenture and subject to the provisions in the Indenture dated as of __________,
1998 (the "Indenture") among Six Flags Entertainment Corporation, Premier Parks
Inc. and The Bank of New York, as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantor to the
Holders of Notes and to the Trustee pursuant to the Note Guarantee and the
Indenture are expressly set forth in Article 11 of the Indenture and reference
is hereby made to the Indenture for the precise terms of the Note Guarantee.
Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination of this Note Guarantee as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose; provided,
however, that the Indebtedness evidenced by this Note Guarantee shall cease to
be so subordinated and subject in right of payment upon any defeasance of this
Note in accordance with the provisions of the Indenture.
Premier Parks Inc.
By: ________________________________
Name:
Title:
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<PAGE>
L&W DRAFT 3/18/98
================================================================================
SENIOR NOTES
PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT
by and between
SIX FLAGS ENTERTAINMENT CORPORATION
and
THE BANK OF NEW YORK
as Trustee
================================================================================
<PAGE>
THIS PLEDGE, ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"), dated
as of __________, 1998, is by and between SIX FLAGS ENTERTAINMENT CORPORATION
(the "Company") and The Bank of New York, as trustee under the Indenture
referred to below (the "Trustee").
RECITALS
A. The Senior Notes. Pursuant to that certain Indenture (the "Indenture"),
dated as of ______________, 1998, by and between the Company and the Trustee,
the Company will issue $170,000,000 in aggregate principal amount of ___% Senior
Notes due 2006 (collectively, the "Senior Notes"). Immediately after receipt of
payment for the Senior Notes (the "Deposit Time"), the Company will deposit
$175,000,000.00 (the "Escrow Funds"), into a segregated cash collateral trust
account with the Trustee at its office at ____________, New York, New York, in
the name of The Bank of New York, as Trustee, "Escrow Account for Senior Notes"
(such account is herein referred to as the "Escrow Account"). The Escrow Account
and all balances and investments from time to time therein shall be under the
sole control and dominion of the Trustee, for the benefit of the Trustee and the
ratable benefit of the Holders of the Senior Notes.
B. Purpose. The parties hereto desire to set forth their agreement with
regard to the administration of the Escrow Account, the creation of a security
interest in the Collateral (as defined herein) and the conditions upon which
funds will be released from the Escrow Account.
C. Definitions. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Indenture.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Security Interest.
(a) Pledge and Assignment of Collateral. The Company hereby
irrevocably pledges, assigns and sets over to the Trustee, and grants to the
Trustee, for the benefit of the Trustee and the ratable benefit of the Holders
of the Senior Notes, a first priority continuing security interest in all of the
Company's right, title and interest in and to all of the following, whether now
owned or existing or hereafter acquired or created (collectively, the
"Collateral"):
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<PAGE>
(i) all funds from time to time held in the Escrow Account,
including, without limitation, the Escrow Funds and all certificates and
instruments, if any, from time to time representing or evidencing the
Escrow Account or the Escrow Funds;
(ii) all investments of funds in the Escrow Account, which all shall
constitute Government Securities, and whether held by or registered in the
name of the Trustee or otherwise and all certificates and instruments, if
any, from time to time representing or evidencing any such Government
Securities;
(iii) all notes, certificates of deposit, deposit accounts, checks
and other instruments evidencing such Government Securities from time to
time hereafter delivered to or otherwise possessed by the Trustee, for or
on behalf of the Company, in substitution for or in addition to any or all
of the then existing Collateral;
(iv) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the then existing Collateral; and
(v) all proceeds of any of the foregoing, including, without
limitation, cash proceeds.
(b) Secured Obligations. This Agreement secures the due and punctual
payment and performance of all Obligations of the Company, whether now or
hereafter existing, under the Senior Notes and the Indenture including, without
limitation, interest and premium, if any, accrued on the Senior Notes after the
commencement of a bankruptcy, reorganization or similar proceeding involving the
Company to the extent permitted by applicable law (collectively, the "Secured
Obligations").
(c) Delivery of Collateral. All certificates or instruments, if any,
representing or evidencing the Collateral shall be held by or on behalf of the
Trustee pursuant hereto and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignments
in blank, all in form and substance reasonably satisfactory to the Trustee. All
securities in uncertificated or book-entry form and all security entitlements,
if any, in each case representing or evidencing the Collateral shall be
registered in the name of the Trustee (or any of its nominees) as the registered
owner thereof by book-entry or as otherwise appropriate so as to properly
identify the interest of the Trustee therein. In addition, the Trustee shall
have the right, at any time following the occurrence of an Event of Default, to
transfer to or to register in the name of the Trustee or any of its nominees any
or all other Collateral. Except as otherwise provided herein, all Collateral
shall be deposited and held in the Escrow Account. The Trustee shall have the
right at any time to exchange certificates or instruments representing
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<PAGE>
or evidencing all or any portion of the Collateral for certificates or
instruments of smaller or larger denominations in the same aggregate amount.
(d) Further Assurances. Prior to, contemporaneously herewith, and at
any time and from time to time hereafter, the Company will, at the Company's
expense, execute and deliver to the Trustee such other instruments and
documents, and take all further action as it deems necessary or advisable or as
the Trustee may reasonably request including an Opinion of Counsel, upon which
the Trustee may conclusively rely, to confirm or perfect the security interest
of the Trustee granted or purported to be granted hereby or to enable the
Trustee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral and the Company will take all necessary action to preserve and
protect the security interest created hereby as a first priority, perfected Lien
and encumbrance upon the Collateral. The Company will pay all costs incurred in
connection with any of the foregoing.
(e) Establishing and Maintaining Accounts. So long as this Agreement
is in full force and effect:
(i) the Company shall establish and maintain the Escrow Account with
the Trustee in New York, New York. The Collateral shall at all times be
subject to the sole dominion and control of the Trustee, which shall hold
the Collateral and administer the Escrow Account subject to the terms and
conditions of this Agreement. The Company shall have no right of
withdrawal from the Escrow Account nor any other right or power with
respect to the Collateral, except as expressly provided herein; and
(ii) it shall be a term and condition of the Escrow Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Escrow Account and except as otherwise provided
by the provisions of Article 3 of this Agreement, that no amount in the
Escrow Account (including, without limitation, interest on or other
proceeds of the Escrow Account or on any Government Securities held
therein) shall be paid or released to or for the account of, or withdrawn
by or for the account of, the Company or any other person or entity other
than the Trustee or its designated agent.
(f) Transfers and Other Liens. Until termination of this Agreement
pursuant to Section 8, the Company agrees that it will not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral or (ii) create or permit to exist any Lien
upon or with respect to any of the Collateral, except for the security interest
under this Agreement.
(g) Trustee Appointed Attorney-in-Fact. In addition to all of the
powers granted to the Trustee pursuant to Article 7 of the Indenture, the
Company hereby irrevocably appoints the Trustee as the Company's
attorney-in-fact, coupled with an interest, with full
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<PAGE>
authority in the place and stead of the Company and in the name of the Company
or otherwise, from time to time in the Trustee's discretion to take any action
and to execute any instrument which the Trustee may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to the Company
representing any interest payment, dividend or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same, and
the expenses of the Trustee incurred in connection therewith shall be payable by
the Company.
(h) Trustee May Perform. Without limiting the authority granted
under Section 1(g) and except with respect to the failure of the Company to
deliver investment instructions, which shall be governed by Section 2(b) hereof,
if the Company fails to perform any agreement contained herein, the Trustee may,
but shall not be obligated to, itself perform, or cause performance of, such
agreement, and the expenses of the Trustee incurred in connection therewith
shall be payable by the Company. In the event that the Trustee performs pursuant
to this Section 1(h), the Company shall indemnify the Trustee in the manner
provided in Section 7.07 of the Indenture.
2. Investment and Liquidation of Funds in Escrow Account. Funds deposited
in the Escrow Account shall be invested and reinvested by the Trustee on the
following terms and conditions:
(a) Investments. The Company shall immediately deposit all Escrow
Funds into the Escrow Account. Funds deposited in the Escrow Account may,
subject to the provisions of Articles 2 and 3 of this Agreement, be invested and
reinvested in the name of and by the Trustee, at the written direction of the
Company, in direct obligations of, or obligations guaranteed by, the United
States of America for the payment of which guarantee or obligations the full
faith and credit of the United States of America is pledged ("Government
Securities").
(b) Investment Instructions. If the Company fails to give written
investment instructions to the Trustee by 12:00 noon (New York time) on any
Business Day on which there is uninvested cash and/or maturing Government
Securities in the Escrow Account, the Trustee is hereby unconditionally
instructed and authorized and directed to invest any such cash or the proceeds
of any maturing Government Securities in the Escrow Account in Government
Securities maturing on the next Business Day. The Company's failure to give such
investment instructions shall not constitute a default or an event of default
hereunder.
(c) Interest. All interest earned on funds invested in Government
Securities shall be held in the Escrow Account and reinvested in accordance with
the terms hereof and will be subject to the security interest granted hereunder
to the Trustee.
(d) Limitation of Trustee's Liability. In no event shall the Trustee
have any liability to the Company or any other Person for investing the funds
from time to time in the Escrow Account in accordance with the provisions of
this Article 2, regardless of whether greater
5
<PAGE>
income or a higher yield could have been obtained had the Trustee invested such
funds in different Government Securities, or for any loss (including breakage
costs or loss of principal) associated with the sale or liquidation of
Government Securities in accordance with the terms of this Agreement, in each
case other than with respect to gross negligence or willful misconduct of the
Trustee.
(e) Liquidation of Funds. In liquidating any Government Securities
in accordance with Article 3 of this Agreement, the Company may, so long as no
Event of Default has occurred and is continuing, direct the Trustee as to which
Government Securities shall be liquidated.
3. Disposition of Collateral Upon Defeasance Payment.
(a) Release of Escrow Funds for Defeasance Payment. So long as no
Event of Default shall have occurred and be continuing, if the Company delivers
to the Trustee a duly completed and executed Defeasance Payment Certificate
substantially in the form of Exhibit A hereto, the Trustee shall, within five
(5) Business Days after its receipt of such Defeasance Payment Certificate,
liquidate such amount of Government Securities in the Escrow Account as may be
necessary to obtain in cash the amount requested in such Defeasance Payment
Certificate. Upon receipt of the foregoing, unless a Trust Officer of the
Trustee has actual knowledge that any statement in such Defeasance Payment
Certificate is untrue (and provided that, after application of the funds
requested in the applicable Defeasance Payment Certificate, the Company would be
in compliance with Section 4(d) hereof), the Trustee shall transfer the amount
set forth in such Defeasance Payment Certificate in immediately available funds
in accordance with the terms of such Defeasance Payment Certificate.
(b) Termination of Security Interest. Upon transfer by the Trustee
of the Escrow Funds to the Paying Agent as set forth in Section 3(a), the
security interest evidenced by this Agreement in the Collateral in the Escrow
Account will terminate and be of no further force and effect. Furthermore, upon
any other release of any Collateral from the Escrow Account in accordance with
the terms of this Agreement, the security interest evidenced by this Agreement
in such Collateral so released will terminate and be of no further force and
effect.
4. Representations and Warranties. The Company hereby represents and
warrants to the Trustee and the Holders of the Senior Notes that:
(a) The execution, delivery and performance by the Company of this
Agreement are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or result
in the creation or imposition of any Lien on any assets of the Company, except
for the security interests granted under this Agreement.
6
<PAGE>
(b) The Company is the record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any person or entity (except
for the security interests granted under this Agreement). No financing statement
covering the Collateral is on file in any public office other than the financing
statements filed pursuant to this Agreement.
(c) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or general principles of equity and commercial
reasonableness.
(d) The pledge of the Collateral pursuant to this Agreement creates
a valid and perfected first priority security interest in and to the Collateral,
securing the payment of the Secured Obligations for the benefit of the Trustee
and the ratable benefit of the Holders of Senior Notes, enforceable as such
against all creditors of the Company and any persons purporting to purchase any
of the Collateral from the Company other than as permitted by the Indenture.
(e) Except as set forth in Section 4(d) above, no consent of any
other Person and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required either (1) for the pledge by the Company of the Collateral pursuant to
this Agreement or for the execution, delivery or performance of this Agreement
by the Company or (2) for the exercise by the Trustee of the rights provided for
in this Agreement or the remedies in respect of the Collateral pursuant to this
Agreement.
(f) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of the
Company, threatened by or against the Company with respect to this Agreement or
any of the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Agreement is not
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System).
5. Covenants. The Company covenants and agrees with the Trustee and the
Holders of Senior Notes from and after the date of this Agreement until the
Termination Date as follows:
(a) The Company (i) will not (A) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Collateral or (B) create
or permit to exist any Lien upon or with respect to any of the Collateral
(except for the Lien created pursuant to this Agreement) and (ii) except as
otherwise provided in this Agreement, at all times will be the sole beneficial
owner of the Collateral.
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<PAGE>
(b) The Company will not (a) enter into any agreement or
understanding that purports to or may restrict or inhibit the Trustee's rights
or remedies hereunder, including, without limitation, the Trustee's right to
sell or otherwise dispose of the Collateral in accordance with the terms of this
Agreement or (b) fail to pay or discharge any tax, assessment or levy of any
nature not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to the Collateral.
(c) The Company will use, within 30 Business Days of receipt
thereof, the Escrow Funds released hereunder only for a Defeasance Payment,
which shall legally defease or redeem the Company's Zero Coupon Senior Notes due
1999. As used in this Agreement, the term "Defeasance Payment" means (i) a
payment sufficient to repay in full all outstanding obligations under the
Company's Zero Coupon Senior Notes due 1999 at maturity or (ii) a payment
pursuant to Section 4.01(ii) of the indenture governing the Company's Zero
Coupon Senior Notes due 1999 sufficient to effect a covenant defeasance of such
notes pursuant to such indenture.
6. Remedies upon Default. If any Event of Default shall have occurred and
be continuing:
(a) The Trustee may, without notice to the Company and at any time
or from time to time, liquidate all Government Securities and transfer all funds
in the Escrow Account to the Paying Agent to apply such funds in accordance with
Section 2.04 of the Indenture.
(b) The Trustee may also exercise in respect of the Collateral, in
addition to the other rights and remedies provided for herein or in the
Indenture or otherwise available to it, all the rights and remedies of a secured
party after a default under the Uniform Commercial Code in effect at that time
in the State of New York (the "Code") (whether or not the Code applies to the
affected Collateral).
(c) Any cash held by the Trustee as Collateral and all proceeds
received by the Trustee in respect of any sale or liquidation of, collection
from, or other realization upon all or any part of the Collateral may, in the
discretion of the Trustee, be held by the Trustee as collateral for, and/or then
or at any time thereafter be applied (after payment of any costs and expenses
incurred in connection with any sale, liquidation or disposition of or
realization upon the Collateral and the payment of any amounts payable to the
Trustee) in whole or in part by the Trustee for the ratable benefit of the
Holders of the Senior Notes against all or any part of the Secured Obligations
in such order as the Trustee shall elect. Any surplus of such cash or cash
proceeds held by the Trustee and remaining after payment in full of all the
Secured Obligations and the costs and expenses incurred by and amounts payable
to the Trustee hereunder or under the Indenture shall be paid over to the
Company or to whomsoever shall be lawfully entitled to receive such surplus.
8
<PAGE>
For the avoidance of doubt, if any Event of Default shall have
occurred and be continuing, the Trustee shall not release any Collateral to, or
at the direction of, the Company.
7. Indemnity and Authority of the Trustee.
The Company shall indemnify the Trustee against any and all loses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance of administration of its duties under this Agreement, including the
costs and expenses of enforcing this Agreement against the Company (including
this Section 7) and defending itself against any claim (whether asserted by the
Company or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its gross
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7 shall survive
the satisfaction and discharge of this Agreement.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) of the Indenture occurs, the
expenses and compensation for the services (including the fees and expenses of
its agent and counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.
The Trustee may conclusively rely upon any Officer's Certificate or
Opinion of Counsel it receives pursuant to Section 7.02 of the Indenture.
8. Termination.
(a) This Agreement shall create a continuing security interest in
and to the Collateral and such security interest shall, unless otherwise
provided in the Indenture or in this Agreement, remain in full force and effect
until the Company makes a Defeasance Payment (the "Termination Date"). This
Agreement shall be binding upon the Company, its successors and assigns, and
shall inure, together with the rights and remedies of the Trustee hereunder, to
the benefit of the Trustee, the Holders of Senior Notes and their respective
successors, transferees and assigns.
(b) Subject to the provisions of Section 9(c) hereof, this Agreement
shall terminate upon the Termination Date. At such time, the Trustee shall, at
the written request of the Company, reassign and redeliver to the Company all of
the Collateral hereunder that has not
9
<PAGE>
been sold, disposed of, retained or applied by the Trustee in accordance with
the terms of this Agreement and the Indenture. Such reassignment and redelivery
shall be without warranty (either express or implied) by or recourse to the
Trustee, except as to the absence of any prior assignments by or encumbrances
created by the Trustee on its interest in the Collateral, and shall be at the
expense of the Company.
9. Miscellaneous.
(a) Waiver. Either party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party, and
specifically designates the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(b) Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(c) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the termination of
this Agreement; provided, however that the Company's obligations pursuant to
Section 7 hereof shall survive the termination of this Agreement (including any
termination under applicable bankruptcy laws) or the resignation or removal of
the Trustee.
(d) Assignment. This Agreement shall inure to and be binding upon
the parties and their respective successors and permitted assigns; provided,
however, that the Company may not assign its rights or obligations hereunder
without the express prior written consent of the Trustee, acting at the
direction of the Holders as provided in the Indenture.
(e) Entire Agreement; Amendments. This Agreement and the Indenture
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede any and all prior agreements, understandings and
commitments with respect thereto, whether oral or written; provided, however,
that this Agreement is executed and accepted by the Trustee subject to all terms
and conditions of its acceptance of the trust under the Indenture, as fully as
if said terms and conditions were set forth at length herein. This Agreement may
be amended only by a writing signed by duly authorized representatives of both
parties. The Trustee may execute an amendment to this Agreement only if the
requisite consent of the Holders of the Senior Notes required by Section 9.02 of
the Indenture has been obtained, unless no such consent is required by such
Section 9.02 of the Indenture.
(f) Notices. Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered in person or
mailed by first class mail
10
<PAGE>
(registered or certified return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
Six Flags Entertainment Corporation
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Chief Financial Officer
Facsimile number: (405) ________
Telephone number: (405) 475-2500
With a copy to:
James M. Coughlin, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Facsimile number: (212) 702-5810
Telephone number: (212) 702-5700
If to the Trustee:
The Bank of New York
_____________________
_____________________
Attention: ___________________
Facsimile number: (212) ___________
Telephone number: (212) ___________
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other that those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
(g) Expenses. The Company shall pay to the Trustee from time to time
such compensation for its acceptance of this Agreement and services hereunder as
the Company and the Trustee have separately agreed. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee
11
<PAGE>
promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
(h) Security Interest Absolute. All rights of the Trustee and the
Holders of Senior Notes and security interests hereunder, and all obligations of
the Company hereunder, shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of the Indenture or any other agreement
or instrument relating thereto; (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from the
Indenture; (c) any exchange, surrender, release or non-perfection of any Liens
on any other collateral for all or any of the Secured Obligations; or (d) to the
extent permitted by applicable law, any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Company in respect of
the Secured Obligations or of this Agreement.
(i) Counterpart Originals. The parties may sign any number of copies
of this Agreement. Each signed copy shall be an original, but all of them
represent the same agreement.
(j) Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that they will not render this
Agreement not entitled to be recorded, registered or filed under provisions of
any applicable law.
(k) Rights of Holders of Senior Notes. No Holder of Senior Notes
shall have any independent rights hereunder other than those rights granted to
individual Holders of Senior Notes pursuant to Section 6.07 of the Indenture;
provided that nothing in this subsection shall limit any rights granted to the
Trustee under the Senior Notes or the Indenture.
(l) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE COMPANY, THE TRUSTEE AND THE HOLDERS OF SENIOR NOTES IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE
STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS
CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF SENIOR
NOTES, HAVE THE RIGHT, TO THE EXTENT
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<PAGE>
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY OR ITS
PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND
HAVING PERSONAL OR IN REM JURISDICTION OVER THE COMPANY OR ITS PROPERTY,
AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
TRUSTEE. THE COMPANY AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS,
SETOFFS OR CROSS CLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO
REALIZE ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR
CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT
OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE TRUSTEE HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
(iii) THE COMPANY AND THE TRUSTEE EACH WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NEITHER THE TRUSTEE NOR ANY
HOLDER OF SENIOR NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT
OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF SENIOR NOTES,
AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
ON THE PART OF THE TRUSTEE OR SUCH HOLDER OF SENIOR NOTES, AS THE CASE MAY
BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY
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<PAGE>
WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE
BY THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES OF ITS RIGHTS DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH
JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR
OTHER SECURITY FOR THE SECURED OBLIGATIONS. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES IN CONNECTION WITH
ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY,
ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR
OF THE TRUSTEE OR ANY HOLDER OF SENIOR NOTES, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE
COMPANY ON THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS OF SENIOR NOTES
ON THE OTHER HAND.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Pledge, Escrow and Disbursement Agreement as of the day
first written above.
COMPANY: SIX FLAGS ENTERTAINMENT CORPORATION
By: __________________________________
Name:
Title:
TRUSTEE: THE BANK OF NEW YORK
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT A
[Form of]
Defeasance Payment Certificate
PREMIER PARKS INC.
Date: ________________
The undersigned executive officers of Six Flags Entertainment Corporation,
a Delaware corporation (the "Company"), hereby certify, pursuant to Section 3(a)
of the Pledge, Escrow and Disbursement Agreement, dated as of __________, 1998
(the "Escrow Agreement"), by and between the Company and The Bank of New York,
as trustee (the "Trustee"), under the Indenture dated as of _________, 1998 (the
"Indenture"), between the Company and the Trustee, that:
1. This request for release of funds constitutes a Defeasance Payment
Certificate (as defined in the Indenture) and has been duly authorized by all
necessary corporate action and does not contravene, or constitute a default
under, any provision of applicable law or regulation or the certificate of
incorporation of the Company or of the Escrow Agreement, the Indenture or any
other agreement, judgment, injunction, order, decree or other instrument binding
upon the Company or result in the creation or imposition of any Lien on any
assets of the Company.
2. No Event of Default has occurred and is continuing under the Indenture.
3. The Company will use the Escrow Funds released hereby within 30
Business Days to legally defease or redeem its Zero Coupon Senior Notes due
1999.
The Company hereby requests the Trustee to liquidate $_________ worth of
Government Securities in the Escrow Account by not later than 12:00 noon (New
York time) on ________, _____ and to transfer $___________ in immediately
available funds to the Paying Agent for payment to _______________ at
________________.
A-1
<PAGE>
Capitalized terms used herein without definition shall have the meanings
set forth in the Indenture.
By: __________________________________
Name: ________________________________
Title: _______________________________
By: __________________________________
Name: ________________________________
Title: _______________________________
A-2
<PAGE>
Exhibit 4(r)
PREMIER PARKS INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
___% CONVERTIBLE REDEEMABLE PREFERRED STOCK,
PAR VALUE $1.00 PER SHARE
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The following resolution was duly adopted by the Board of Directors of
Premier Parks Inc., a Delaware corporation (the "Corporation"), pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, on ____________, 1998, by the unanimous written consent of the Board
of Directors:
RESOLVED that, pursuant to the authority expressly granted to the
Board of Directors of the Corporation by the Certificate of Incorporation of the
Corporation, and pursuant to Section 151(g) of the General Corporation Law of
the State of Delaware, there be created from the 500,000 shares of Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), of the Corporation
authorized to be issued pursuant to the Certificate of Incorporation, a series
of Preferred Stock consisting of _______ shares of ___% Convertible Redeemable
Preferred Stock (the "Redeemable Preferred Stock"), the voting powers,
designations, preferences and relative, participating, optional or other special
rights of which, and qualifications, limitations or restrictions thereof, shall
be as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
1.1 "Accrued Dividends" shall mean, with respect to any share
of Redeemable Preferred Stock, as of any date, the accrued and unpaid dividends
on such share from and including the most recent Dividend Payment Date (or the
Issue Date, if such date is prior to the first Dividend Payment Date) to but not
including such date.
1.2 "Accumulated Dividends" shall mean, with respect to any
share of Redeemable Preferred Stock, as of any date, the aggregate accumulated
and unpaid dividend on such share from the Issue Date until the most recent
Dividend Payment Date prior to such date. There shall be no Accumulated
Dividends with respect to any share of Redeemable Preferred Stock prior to the
first Dividend Payment Date.
<PAGE>
2
1.3 "Affiliate" shall mean, with respect to any Person, any
other Person that, directly or indirectly, controls, is controlled by, or is
under common control with, such first Person. For the purpose of this
definition, "control" shall mean, as to any Person, the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
1.4 "Board of Directors" shall mean the Board of Directors of
the Corporation or, with respect to any action to be taken by the Board of
Directors, any committee of the Board of Directors duly authorized to take such
action.
1.5 "Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in the City of New York are
authorized or required by law or executive order to close.
1.6 "Certificate of Incorporation" shall mean the Certificate
of Incorporation of the Corporation, as amended from time to time.
1.7 "Closing Price" of the Common Stock, as of any day, shall
mean (a) the last reported sale price of such stock (regular way), or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, in either case as reported on the principal national securities exchange
on which such stock is listed or admitted to trading or (b) if the Common Stock
is not listed or admitted to trading on any national securities exchange, the
last reported sale price, or in case no such sale takes place on such day, the
average of the highest reported bid and the lowest reported asked quotation for
the Common Stock, in either case reported on NASDAQ, or a similar service if
NASDAQ is no longer reporting such information.
1.8 "Common Stock" shall mean the class of Common Stock, par
value $.05 per share, of the Corporation or any other class of stock resulting
from successive changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par value, or as a
result of a subdivision or combination.
1.9 "Common Stock Conversion Rate" shall mean, as of any date,
a rate for each share of Redeemable Preferred Stock equal to (i) the Liquidation
Value thereof plus all Accumulated Dividends and Accrued Dividends thereon to
the date of conversion, divided by (ii) the Conversion Price in effect as of
such date.
<PAGE>
3
1.10 "Conversion Price" shall equal $___ per share of
Redeemable Preferred Stock.(1)
1.11 "Current Market Price" shall mean, with respect to each
share of Common Stock as of any date, the weighted average of the daily Closing
Prices per share of Common Stock on the principal national securities exchange
on which such stock is then listed or admitted to trading for the 5 consecutive
Trading Days prior to such date; provided that if on any such date the shares of
Common Stock are not listed or admitted for trading on any national securities
exchange or quoted by NASDAQ or a similar service, the Current Market Price for
a share of Common Stock shall be the fair market value of such share as
determined by three Independent Financial Experts, one selected by the
Corporation (which selection shall be communicated in writing to the holders of
the Redeemable Preferred Stock), one selected by the holders of two-thirds of
the shares of Redeemable Preferred Stock (which selection shall be communicated
in writing to the Corporation) and one selected by the two Independent Financial
Experts so chosen. The determination of fair market value by such Independent
Financial Expert shall be final, binding and conclusive on the Corporation and
all holders of the Redeemable Preferred Stock. All costs and fees of any of the
Independent Financial Experts retained in accordance with the foregoing shall be
borne by the Corporation.
1.12 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.13 "Excluded Securities" means shares of Common Stock issued
upon conversion of the shares of Redeemable Preferred Stock [or upon conversion
of the shares of Mandatorily Redeemable Preferred Stock].
1.14 "Independent Financial Expert" means an independent
nationally recognized investment banking firm.
1.15 "Issue Date" shall mean the Closing Date (as defined in
the Merger Agreement).
1.16 "Junior Stock" shall mean the Common Stock and the shares
of any other class or series of stock of the Corporation which, by the terms of
the Certificate of Incorporation or of the instrument by which the Board of
Directors, acting pursuant to authority granted in the Certificate of
Incorporation, shall fix the
- --------------------
(1) This number, pursuant to the Holdco Preferred Stock term sheet, will equal
___ % of the weighted average of the Closing Price of the Common Stock for
the 20 consecutive trading days ending on the third trading day prior to
the Issue Date.
<PAGE>
4
relative rights, preferences and limitations thereof, shall be junior to the
Redeemable Preferred Stock in respect of the right to receive dividends and to
participate in any distribution of assets other than by way of dividends.
1.17 "Liquidation Value" shall have the meaning assigned to
such term in Section 8.1 hereof.
1.18 "Mandatorily Redeemable Preferred Stock" means the ___%
Mandatorily Redeemable Preferred Stock, par value $1.00 per share, of the
Company issued on the date hereof.
1.19 "Mandatory Redemption Price" of a share of Redeemable
Preferred Stock means the Liquidation Value thereof plus an amount equal to all
Accumulated Dividends and Accrued Dividends thereon to the date of redemption.
1.20 "Merger Agreement" shall mean the Agreement and Plan of
Merger, dated as of February 9, 1998 (as the same may be amended from time to
time, the "Merger Agreement") by and among Premier Parks Inc., Premier Parks
Holdings Corporation, PPStar I, Inc., Holders of the Capital Stock of Six Flags
Entertainment Corporation ("SFEC") and SFEC.
1.21 "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotation System.
1.22 "Optional Redemption Price" of a share of Redeemable
Preferred Stock means, (i) with respect to Section 3.1 hereof, the greater of
(x) the Liquidation Value thereof and (y) the Current Market Price thereof, in
each case plus all Accrued Dividends and Accumulated Dividends thereon to the
date of redemption or (ii) with respect to Section 3.2 hereof, sum of (x) the
Liquidation Value thereof, (y) all Accrued Dividends and Accumulated Dividends
thereon to the date of redemption and (z) an amount equal to the percentage of
the Dividend Rate set forth opposite the 12-month periods commencing on the
anniversary of the Issue Date of the years set forth below in which such
conversion occurs:
Period Percentage of Dividend Rate
------ ---------------------------
2001 70%
2002 62.22%
2003 54.44%
2004 46.66%
2005 38.88%
2006 31.10%
2007 23.32%
2008 15.54%
2009 7.78%
2010 0%
<PAGE>
5
1.23 "Parity Stock" shall mean the Mandatorily Redeemable
Preferred Stock and shares of any other class or series of stock of the
Corporation which, by the terms of the Certificate of Incorporation or of the
instrument by which the Board of Directors, acting pursuant to authority granted
in the Certificate of Incorporation, shall fix the relative rights, preferences
and limitations thereof, shall, in the event that the stated dividends thereon
are not paid in full, be entitled to share ratably with the Redeemable Preferred
Stock in the payment of dividends, including accumulations, if any, in
accordance with the sums which would be payable on such shares if all dividends
were declared and paid in full, and shall, in the event that the amounts payable
thereon on liquidation are not paid in full, be entitled to share ratably with
the Redeemable Preferred Stock in any distribution of assets other than by way
of dividends in accordance with the sums which would be payable in such
distribution if all sums payable were discharged in full; PROVIDED, HOWEVER,
that the term "Parity Stock" shall be deemed to refer (i) in Section 2.2 hereof,
to any stock which is Parity Stock in respect of the right to receive dividends
and (ii) in Section 8 hereof, to any stock which is Parity Stock in respect of
any distribution of assets other than by way of dividends.
1.24 "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust, limited
liability company, unincorporated organization, estate, other entity or
government or any agency or political subdivision thereof.
1.25 "Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or by any of its subsidiaries whether for cash,
shares of capital stock of the Corporation, other securities of the Corporation,
evidences of indebtedness of the Corporation or any other Person or any other
property (including, without limitation, shares of capital stock, other
securities or evidences of indebtedness of a subsidiary of the Corporation), or
any combination thereof, effected while any of the shares of Redeemable
Preferred Stock are outstanding, which purchase is subject to Section 13(e) of
the Exchange Act or is made pursuant to an offer made available to all holders
of Common Stock.
1.26 "Redemption Price" means the Optional Redemption Price if
such price is determined pursuant to Section 3 hereof, or the Mandatory
Redemption Price if such price is determined pursuant to Section 4 hereof.
1.27 "Senior Stock" shall mean the shares of any class or
series of stock of the Corporation which, by the terms of the Certificate of
Incorporation or of the instrument by which the Board of Directors, acting
pursuant to authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall be senior to the
Redeemable Preferred Stock in respect of the right to receive dividends or to
participate in any distribution of assets other than by way of dividends;
PROVIDED, HOWEVER, that after the date hereof,
<PAGE>
6
the Corporation may not issue any Senior Stock while any shares of the
Redeemable Preferred Stock are outstanding.
1.28 "Trading Day" shall mean, so long as the Common Stock is
listed or admitted to trading on a national securities exchange, a day on which
the principal national securities exchange on which the Common Stock is listed
is open for the transaction of business, or, if the Common Stock is not so
listed or admitted for trading on any national securities exchange, a day on
which NASDAQ is open for the transaction of business.
2. DIVIDENDS.
2.1 The holders of shares of the outstanding shares of
Redeemable Preferred Stock shall be entitled, when, as and if declared by the
Board of Directors out of funds legally available therefor, to receive dividends
on each outstanding share of Preferred Stock, payable quarterly, in arrears, at
an annual rate of ___% (the "DIVIDEND RATE"). Dividends payable for each full
dividend period will be computed by dividing (x) the product of the Liquidation
Value times the Dividend Rate by (y) four and shall be payable on the last
Business Day of March, June, September and December in each year (the "Dividend
Payment Date"), commencing on June 30, 1998, to the holders of record of
Redeemable Preferred Stock at the close of business on the preceding Business
Day, or such other dates as are fixed by the Board of Directors within ten (10)
days prior to the Dividend Payment Date (each a "Record Date"). Such dividends
shall be cumulative from the Issue Date and shall accrue on a day-to-day basis,
whether or not earned or declared, from and after the Issue Date and shall be
payable in cash. Dividends on Redeemable Preferred Stock which are not declared
and paid when due will compound quarterly on each Dividend Payment Date at the
Dividend Rate. Dividends payable for any partial dividend period shall be
computed on the basis of actual days elapsed over a 360-day year consisting of
twelve 30-day months.
2.2 Except as hereinafter provided in this Section 2.2, unless
all dividends on the outstanding shares of Redeemable Preferred Stock and any
Parity Stock that shall have accrued and become payable as of any date shall
have been paid, or declared and funds shall have been set apart for payment
thereof, no dividend or other distribution (payable other than in shares of
Junior Stock) shall be paid to the holders of Junior Stock or Parity Stock, and
no shares of Redeemable Preferred Stock, Parity Stock or Junior Stock shall be
purchased or redeemed by the Corporation or any of its subsidiaries (except by
conversion into or exchange for, or out of the net cash proceeds from the
concurrent sale of, Junior Stock), nor shall any monies be paid or made
available for a sinking fund for the purchase or redemption of any Redeemable
Preferred Stock, Junior Stock or Parity Stock; PROVIDED, HOWEVER, that nothing
herein shall prevent the Corporation from completing the purchase of Redeemable
Preferred Stock, Parity Stock or Junior Stock for which a purchase contract was
entered into, or the notice of redemption of which was originally
<PAGE>
7
published, prior to the date on which any such dividends were first required to
be paid. When dividends are not paid in full upon the shares of Redeemable
Preferred Stock and any Parity Stock, all dividends declared upon shares of
Redeemable Preferred Stock and all Parity Stock shall be declared pro rata so
that the amount of dividends declared per share on Redeemable Preferred Stock
and all such Parity Stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the shares of Redeemable Preferred Stock and
all such Parity Stock bear to each other. Holders of shares of Redeemable
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends, as herein provided,
on Redeemable Preferred Stock. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
Redeemable Preferred Stock which may be in arrears.
2.3 The holders of shares of Redeemable Preferred Stock at the
close of business on a Record Date will be entitled to receive the dividend
payment on those shares (except that holders of shares called for redemption on
a redemption date between such Record Date and the Dividend Payment Date will be
entitled to receive such dividend on such redemption date as indicated in
Section 2.1 hereof) on the corresponding Dividend Payment Date notwithstanding
the subsequent conversion thereof or the Company's default in payment of the
dividend due on that Dividend Payment Date. However, shares of Redeemable
Preferred Stock surrendered for conversion during the period between the close
of business on any Record Date and the close of business on the day immediately
preceding the applicable Dividend Payment Date (except for shares called for
redemption on a redemption date during that period) must be accompanied by
payment of an amount equal to the dividend payable on the shares on that
Dividend Payment Date. A holder of shares of Redeemable Preferred Stock on a
Record Date who (or whose transferee) tenders any shares for conversion on a
Dividend Payment Date will receive the dividend payable by the Company on the
Redeemable Preferred Stock on that date, and the converting holder need not
include payment in the amount of such dividend upon surrender of shares of
Redeemable Preferred Stock for conversion. Except as provided above, the
Company shall make no payment or allowance for unpaid dividends, whether or not
in arrears, on converted shares or for dividends on the shares of Common Stock
issued upon conversion.
3. OPTIONAL REDEMPTION.
3.1 The Corporation may, at its sole option, subject to the
provisions of Section 2.2, redeem at any time during the 90-day period following
the Issue Date, out of funds legally available therefor, all of the outstanding
shares of Redeemable Preferred Stock at a redemption price for each share of
Redeemable Preferred Stock called for redemption pursuant to this Section 3.1
equal to the Optional Redemption Price. With respect to each share of
Redeemable Preferred Stock properly tendered for redemption pursuant to this
Section 3.1, if the
<PAGE>
8
Corporation fails to pay the Optional Redemption Price on the date fixed for
redemption, the Corporation shall also pay an amount equal to interest on the
amount determined in the above sentence at 12% per annum, compounded on a
quarterly basis, from the date fixed for redemption to the date the Redemption
Price is actually paid (such interest shall be in addition to, and not in lieu
of, any other remedies available to the holders of shares of Redeemable
Preferred for failure by the Corporation to pay the Optional Redemption Price as
provided herein).
3.2 The Corporation may, at its sole option, subject to the
provisions of Section 2.2, redeem at any time following the third anniversary of
the Issue Date, out of funds legally available therefor, all or less than all of
the outstanding shares of Redeemable Preferred Stock at a redemption price for
each share of Redeemable Preferred Stock called for redemption pursuant to this
Section 3.2 equal to the Optional Redemption Price. With respect to each share
of Redeemable Preferred Stock properly tendered for redemption pursuant to this
Section 3.2, if the Corporation fails to pay the Optional Redemption Price on
the date fixed for redemption, the Corporation shall also pay an amount equal to
interest on the amount determined in the above sentence at 12% per annum,
compounded on a quarterly basis, from the date fixed for redemption to the date
the Optional Redemption Price is actually paid (such interest shall be in
addition to, and not in lieu of, any other remedies available to the holders of
shares of Redeemable Preferred for failure by the Corporation to pay the
Optional Redemption Price as provided herein). In the event that fewer than all
the outstanding shares of Redeemable Preferred Stock are to be redeemed pursuant
to this Section 3.2, the number of shares to be redeemed shall be redeemed on a
pro rata basis based on the number of shares held by each holder thereof.
4. MANDATORY REDEMPTION. On the twelfth anniversary of the Issue
Date (or, if such date is not a Business Day, on the first Business Day after
such date), the Corporation shall, subject to the provisions of Section 2.2,
redeem out of funds legally available therefor, all of the outstanding shares of
Redeemable Preferred Stock at a redemption price for each share equal to the
Mandatory Redemption Price. With respect to each share of Redeemable Preferred
Stock properly tendered for redemption pursuant to this Section 4, if the
Corporation fails to pay the Mandatory Redemption Price on the date fixed for
redemption, the Corporation shall also pay an amount equal to interest on the
amount determined in the above sentence at 12% per annum, compounded on a
quarterly basis, from the date fixed for redemption to the date the Mandatory
Redemption Price is actually paid (such interest shall be in addition to, and
not in lieu of, any other remedies available to the holders of shares of
Redeemable Preferred for failure by the Corporation to pay the Mandatory
Redemption Price as provided herein).
<PAGE>
9
5. PROCEDURES FOR REDEMPTION
5.1 In the event the Corporation shall elect to redeem shares
of Redeemable Preferred Stock pursuant to Section 3, or is obligated to redeem
shares of Redeemable Preferred Stock pursuant to Section 4, it shall provide
notice of such redemption by first class mail, postage prepaid, mailed not less
than thirty (30) nor more than sixty (60) days prior to the redemption date, to
each record holder of the shares to be redeemed, at such holder's address as the
same appears on the books of the Corporation. Each such notice shall state:
(i) the time and date as of which the redemption shall occur; (ii) the total
number of shares of Redeemable Preferred Stock to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (iii) the Redemption Price; (iv) that shares of
Redeemable Preferred Stock called for redemption may be converted at any time
prior to the time and date fixed for redemption (unless (x) the Corporation
shall default in the payment of the Redemption Price, in which case such right
shall not terminate at such time and date or (y) the holders of such shares do
not yet have the right to convert such shares under Section 6 below); (v) the
Common Stock Conversion Rate; (vi) the place or places where certificates for
such shares are to be surrendered for payment of the Redemption Price; and
(vii) that dividends on the shares to be redeemed will cease to accrue on such
redemption date.
5.2 If notice of redemption shall have been given by the
Corporation as provided in Section 5.1, dividends on the shares of Redeemable
Preferred Stock so called for redemption shall cease to accrue, such shares
shall no longer be deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation with respect to shares so called for
redemption (except the right to receive from the Corporation the Redemption
Price without interest and except the right to convert such shares in accordance
with Section 6) shall cease (including any right to receive dividends otherwise
payable on any Dividend Payment Date that would have occurred after the time and
date of redemption) from and after the time and date fixed in the notice of
redemption as the time and date of redemption (unless the Corporation shall
default in the payment of the Redemption Price, in which case such rights shall
not terminate at such time and date). Upon surrender (in accordance with the
notice of redemption) of the certificate or certificates for any shares to be so
redeemed (properly endorsed or assigned for transfer, if the Corporation shall
so require and the notice of redemption shall so state), such shares shall be
redeemed by the Corporation at the Redemption Price. In case fewer than all the
shares represented by any such certificate are to be redeemed, a new certificate
shall be issued representing the unredeemed shares, without cost to the holder
thereof, together with the amount of cash, if any, in lieu of fractional shares.
Subject to applicable escheat laws, any moneys so set aside by the Corporation
and unclaimed at the end of one year from the redemption date shall revert to
the general funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Corporation for the
<PAGE>
10
payment of the redemption price without interest. Any interest accrued on funds
so deposited shall be paid to the Corporation from time to time.
6. CONVERSION RIGHTS.
6.1 Each holder of a share of Redeemable Preferred Stock shall
have the right, at any time after the 90th day following the Issue Date, or, as
to any share of Redeemable Preferred Stock called for redemption with a date
fixed for redemption which is after the 90th day following the Issue Date, at
any time prior to the time and date fixed for such redemption (unless the
Corporation defaults in the payment of the Redemption Price, in which case such
right shall not terminate at such time and date), to convert such share into
fully paid and nonassessable shares of Common Stock equal to the Common Stock
Conversion Rate as of the date of conversion.
6.2 No fractional shares or scrip representing fractions of
shares of Common Stock shall be issued upon conversion of Redeemable Preferred
Stock. Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of Redeemable Preferred
Stock, the Corporation shall, subject to Section 6.5(e), make a cash payment
(calculated to the nearest $.01) equal to such fraction multiplied by the
Closing Price of the Common Stock on the last Trading Day prior to the date of
conversion; provided, that, if on any such date the shares of Common Stock are
not listed or admitted for trading on any national securities exchange or quoted
by NASDAQ or a similar service, the Closing Price for a share of Common Stock
shall be the fair market value as determined by three Independent Financial
Experts, one selected by the Corporation (which selection shall be communicated
in writing to the holder of the Redeemable Preferred Stock exercising its
conversion right hereunder), one selected by the holders of the shares of
Redeemable Preferred Stock exercising its conversion right hereunder (which
selection shall be communicated in writing to the Corporation) and one selected
by the two Independent Financial Experts so chosen. The determination of fair
market value by such Financial Expert shall be final, binding and conclusive on
the Corporation and the holder of Redeemable Preferred Stock exercising its
conversion right hereunder. All costs and fees of any of the Independent
Financial Experts retained in accordance with the foregoing shall be borne by
the Corporation.
6.3 Any holder of shares of Redeemable Preferred Stock
electing to convert such shares into Common Stock shall surrender the
certificate or certificates for such shares at the offices of the Corporation
(or at such other place as the Corporation may designate by notice to the
holders of shares of Redeemable Preferred Stock) during regular business hours,
duly endorsed to the Corporation or in blank, or accompanied by instruments of
transfer to the Corporation or in blank, in form reasonably satisfactory to the
Corporation, and shall give written notice to the Corporation at such offices
that such holder elects to convert such shares of
<PAGE>
11
Redeemable Preferred Stock. As soon as practicable (but in no event later than
three (3) Business Days) after any holder deposits certificates for shares of
Redeemable Preferred Stock, accompanied by the written notice above prescribed,
the Corporation shall issue and deliver at such office to the holder for whose
account such shares were surrendered, or to his nominee, certificates
representing the number of shares of Common Stock and the cash in lieu of
fractional shares, if any, to which such holder is entitled upon such
conversion.
6.4 Conversion shall be deemed to have been made as of the
date that certificates for the shares of Redeemable Preferred Stock to be
converted and the written notice, are received by the Corporation; and the
Person entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder of such Common Stock on such
date. The Corporation shall not be required to deliver certificates for shares
of Common Stock while the stock transfer books for such stock or for Redeemable
Preferred Stock are duly closed for any purpose, but certificates for shares of
Common Stock shall be issued and delivered as soon as practicable after the
opening of such books.
6.5 The Common Stock Conversion Rate shall be adjusted from
time to time as follows:
(a) If the Corporation shall, at any time or from time
to time while any shares of the Redeemable Preferred Stock are outstanding,
(i) pay a dividend on its Common Stock in shares of its capital stock,
(ii) combine its outstanding shares of Common Stock into a smaller number of
shares, (iii) subdivide its outstanding shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock any shares of capital stock of
the Corporation, then the Common Stock Conversion Rate in effect immediately
before such action shall be adjusted so that the holders of the Redeemable
Preferred Stock, upon conversion of shares thereof immediately following such
action, shall be entitled to receive the kind and amount of shares of capital
stock of the Corporation which they would have owned or been entitled to receive
upon or by reason of such event if such shares of Redeemable Preferred Stock had
been converted immediately before the record date or effective date for such
action. An adjustment made pursuant to this Section 6.5(a) shall become
effective retroactively immediately after the record date in the case of a
dividend or distribution and shall become effective retroactively immediately
after the effective date in the case of a subdivision, combination or
reclassification. For the purposes of this Section 6.5(a) if the kind or amount
of securities receivable upon the payment of any dividend, subdivision,
combination or reclassification is subject to an election to be made by the
holders of Common Stock, then each holder of Redeemable Preferred Stock shall be
deemed to have failed to exercise any such right to make such election (provided
that if the kind or amount of securities receivable upon such dividend,
subdivision, combination or reclassification is not the same for each
nonelecting share, then the kind and amount of securities receivable upon such
dividend, subdivision, combination or reclassification for each nonelecting
share shall
<PAGE>
12
be deemed to be the kind and amount so receivable per share by a plurality of
the nonelecting shares).
(b) If the Corporation shall, at any time or from time
to time while any of the Redeemable Preferred Stock is outstanding, issue rights
or warrants to all or substantially all holders of shares of its Common Stock
entitling them (for a period expiring within 45 days after the record date for
such issuance) to subscribe for or purchase shares of Common Stock (or
securities exercisable, convertible or exchangeable for or into shares of Common
Stock) at a price per share less than the Current Market Price of the Common
Stock at such record date (treating the price per share of the securities
exercisable, convertible or exchangeable for or into Common Stock as equal to
(x) the sum of (i) the price for a unit of the security exercisable, convertible
or exchangeable for or into Common Stock plus (ii) any additional consideration
initially payable upon the exercise, conversion or exchange of such security for
or into Common Stock divided by (y) the number of shares of Common Stock
initially underlying such exercisable, convertible or exchangeable security),
the Common Stock Conversion Rate shall be adjusted so that it shall equal the
rate determined by multiplying the Common Stock Conversion Rate in effect
immediately prior to the date of issuance of such rights or warrants by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock offered for subscription or purchase (or
into or for which the exercisable, convertible or exchangeable securities so
offered are initially exercisable, convertible or exchangeable), and the
denominator of which shall be the number of shares of Common Stock outstanding
on the date of issuance of such rights or warrants plus the number of shares
which the aggregate offering price of the total number of shares so offered for
subscription or purchase (or the aggregate purchase price of the exercisable,
convertible or exchangeable securities so offered plus the aggregate amount of
any additional consideration initially payable upon exercise, conversion or
exchange for or into Common Stock) would purchase at such Current Market Price
of the Common Stock. Such adjustment shall become effective retroactively
immediately after the record date for the determination of stockholders entitled
to receive such rights or warrants.
(c) If the Corporation shall, at any time or from time
to time while any of the Redeemable Preferred Stock is outstanding, distribute
to all or substantially all holders of shares of its Common Stock (including any
such distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation and the Common Stock is
not changed or exchanged) cash, evidences of indebtedness, securities or other
assets (excluding dividends payable in shares of Common Stock for which
adjustment is made under Section 6.5(a)) or rights, options or warrants to
subscribe for or purchase securities of the Corporation (excluding those for
which adjustment is made under Section 6.5(b)), then in each such case the
Common Stock Conversion Rate shall be adjusted so that it shall equal the rate
determined by multiplying the Common Stock
<PAGE>
13
Conversion Rate in effect immediately prior to the date of such distribution by
a fraction, the numerator of which shall be the Current Market Price of the
Common Stock on the record date referred to below, and the denominator of which
shall be such Current Market Price of the Common Stock less the then fair market
value (as determined by the Board of Directors in good faith or, if requested by
the holders of two-thirds of the Redeemable Preferred Stock, by an Independent
Financial Expert selected in the manner described in the definition of the term
"Current Market Price") of the portion of the cash, evidences of indebtedness,
securities or other assets so distributed or of such rights, options or warrants
applicable to one share of Common Stock (provided that such denominator shall
never be less than $.01).
(d) If the Corporation or any subsidiary thereof
shall, at any time or from time to time while any of the Redeemable Preferred
Stock is outstanding, make a Pro Rata Repurchase, the Common Stock Conversion
Rate shall be adjusted by multiplying the Common Stock Conversion Rate in effect
immediately prior to such action by a fraction (which in no event shall be less
than one (1)), the numerator of which shall be the product of (i) the number of
shares of Common Stock outstanding immediately before such Pro Rata Repurchase
minus the number of shares of Common Stock repurchased in such Pro Rata
Repurchase and (ii) the Current Market Price of the Common Stock as of the day
immediately preceding the first public announcement by the Corporation of the
intent to effect such Pro Rata Repurchase, and the denominator of which shall be
(i) the product of (x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the Current Market Price of
the Common Stock as of the day immediately preceding the first public
announcement by the Corporation of the intent to effect such Pro Rata Repurchase
minus (ii) the aggregate purchase price of the Pro Rata Repurchase (provided
that such denominator shall never be less than $.01).
(e) All calculations under this Section 6.5 shall be
made to the nearest $.01 (with $.005 being rounded upward), one-hundredth of a
share (with .005 being rounded upward) or, in the case of a conversion rate, one
ten-thousandth (with .00005 being rounded upward). Notwithstanding any other
provision of this Section 6.5, the Corporation shall not be required to make any
adjustment of the Common Stock Conversion Rate unless such adjustment would
require an increase or decrease of at least 0.01% of such rate. Any lesser
adjustment shall be carried forward and shall be made at the time of and
together with the next subsequent adjustment which, together with any adjustment
or adjustments so carried forward, shall amount to an increase or decrease of at
least 0.01% in such rate. Any adjustments under this Section 6.5 shall be made
successively whenever an event requiring such an adjustment occurs.
(f) Whenever an adjustment in the Common Stock
Conversion Rate is required, the Corporation shall promptly cause to be mailed
(but in any event not later than five (5) days after the date of the event
giving rise to such adjustment) first-class postage prepaid, to the holders of
record of the outstanding
<PAGE>
14
shares of Redeemable Preferred Stock, notice of such adjustment and a
certificate of a firm of independent public accountants of recognized national
standing selected by the Board of Directors (who shall be appointed at the
Corporation's expense and who may be the independent public accountants
regularly employed by the Corporation) setting forth the adjusted Common Stock
Conversion Rate in effect as of such date determined as provided herein. Such
notice and certificate shall set forth in reasonable detail such facts as shall
be necessary to show the reason for and the manner of computing such adjustment.
(g) In the event that at any time as a result of an
adjustment made pursuant to this Section 6.5, the holder of any share of
Redeemable Preferred Stock thereafter surrendered for conversion shall become
entitled to receive any shares of stock of the Corporation other than shares of
Common Stock, the conversion rate of such other shares so receivable upon
conversion of any such share of Redeemable Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in
subparagraphs (a) through (f) and (h) of this Section 6.5, and the provisions of
this Section 6 with respect to the Common Stock shall apply on like or similar
terms to any such other shares.
(h) No adjustment shall be made pursuant to this
Section if the effect thereof would be to reduce the Conversion Price below the
par value of the Common Stock and the Corporation shall not take any action if
the effect thereof would be to reduce the Conversion Price below the par value
of the Common Stock.
6.6 In case of either (a) any consolidation or merger to which
the Corporation is a party, other than a merger or consolidation in which the
Corporation is the surviving or continuing corporation and which does not result
in any reclassification of, or change (other than a change in par value or from
par value to no par value or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of Common Stock or (b) any
sale or conveyance of all or substantially all of the property and assets of the
Corporation, then each share of Redeemable Preferred Stock then outstanding
shall be converted in such merger or consolidation or shall be convertible from
and after such sale or conveyance of property and assets into the kind and
amount of shares of stock or other securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock into which such shares of Redeemable Preferred Stock could have
been converted immediately prior to such consolidation, merger, sale or
conveyance, subject to adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 6 (and assuming that
if the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, sale or conveyance is subject to an election to be made
by the holders of Common Stock, each holder of Common Stock shall be deemed to
have failed to exercise any such right to make such election
<PAGE>
15
(provided that if the kind or amount of securities, cash or other property
receivable upon such consolidation, merger, sale or conveyance is not the same
for each non-electing share, then the kind and amount of securities, cash or
other property receivable upon such consolidation, merger, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the nonelecting shares)). The
Corporation shall not enter into any of the transactions referred to in
clause (a) or (b) of the preceding sentence unless effective provision shall be
made so as to give effect to the provisions set forth in this Section 6.6 and
the surviving or continuing corporation shall agree to be bound by the
provisions of this Section 6.6 for the benefit of the holders of Redeemable
Preferred Stock. The provisions of this Section 6.6 shall apply similarly to
successive consolidations, mergers, sales or conveyances.
6.7 The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
stock, for the purpose of effecting the conversion of the shares of Redeemable
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Redeemable Preferred Stock into such Common Stock at any
time (assuming that, at the time of the computation of such number of shares,
all such Common Stock would be held by a single holder). The Corporation shall
from time to time, in accordance with the laws of the State of Delaware, use its
best efforts to cause the authorized amount of Common Stock to be increased if
the aggregate of the authorized amount of the Common Stock remaining unissued
and the issued shares of such Common Stock in its treasury (other than any
shares of such Common Stock reserved for issuance in any other connection) shall
not be sufficient to permit the conversion of the shares of Redeemable Preferred
Stock into the Common Stock. The Corporation covenants that any shares of
Common Stock issued upon conversions of the Redeemable Preferred Stock shall be
validly issued, fully paid and nonassessable.
6.8 If any shares of Common Stock which would be issuable upon
conversion of shares of Redeemable Preferred Stock hereunder require
registration with or approval of any governmental authority before such shares
may be issued upon conversion, the Corporation will in good faith and as
expeditiously as possible cause such shares to be duly registered or approved,
as the case may be.
6.9 The Corporation shall pay any and all issue or other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock on conversion of shares of Redeemable Preferred Stock pursuant hereto.
The Corporation shall not, however, be required to pay any tax which is payable
in respect of any transfer involved in the issue or delivery of Common Stock in
a name other than that in which the shares of Redeemable Preferred Stock so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of such tax, or has established, to the satisfaction of the Corporation,
that such tax has been paid.
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16
6.10 For purposes of this Section 6, the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation or any
subsidiary. The Corporation shall not pay a dividend or make any distribution
on shares of Common Stock held in the treasury of the Corporation.
6.11 If any action or transaction would require adjustment of
the Common Stock Conversion Rate pursuant to more than one paragraph of this
Section 6, only one adjustment shall be made and each such adjustment shall be
the amount of adjustment that has the highest absolute value.
6.12 In case:
(a) of a consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of the
Corporation is required; or
(b) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation; or
(c) of any Pro Rata Repurchase or other action
triggering an adjustment to the Common Stock Conversion Rate pursuant to
this Section 6;
then, in each case, the Corporation shall cause to be mailed, first-class
postage prepaid, to the holders of record of the outstanding shares of
Redeemable Preferred Stock, at least twenty (20) days prior to the applicable
record date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of any distribution or grant of rights or
warrants triggering an adjustment to the Common Stock Conversion Rate pursuant
to this Section 6, or, if a record is not to be taken, the date as of which the
holders of record of Common Stock entitled to such distribution, rights or
warrants are to be determined, or (y) the date on which any reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation, winding up or
Pro Rata Repurchase is expected to become effective, and the date as of which it
is expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation, winding up or Pro Rata Repurchase. Failure to give the notice
specified hereunder shall have no effect on the status or effectiveness of the
action to which the required notice relates.
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17
7. VOTING.
7.1 The shares of Redeemable Preferred Stock shall have no
voting rights except as required by law or as set forth below:
(a) If the Corporation fails to pay dividends for an
aggregate of six quarters (whether consecutive or nonconsecutive), then on the
day following the sixth such Dividend Payment Date on which the quarterly
dividend payment was not made by the Corporation pursuant to Section 4(a)
hereof, the number of directors constituting the Board of Directors shall be
increased by two (2) (in addition to any such increase in directorships required
by any similar provision of the Certificate of Incorporation or the certificate
of designation in respect of any other class or series of preferred stock of the
Corporation) and the holders of shares of Redeemable Preferred Stock (in
addition to all other rights) shall have the exclusive right, voting separately
as a class, to elect two (2) directors of the Corporation. Such voting rights
shall continue in effect until the Corporation pays quarterly dividends pursuant
to Section 4(a) hereof on four (4) consecutive Dividend Payment Dates.
(b) Such voting rights may be exercised initially either
by written consent or at a special meeting of the holders of the shares of
Redeemable Preferred Stock having such voting rights, called as hereinafter
provided, or at any annual meeting of stockholders held for the purpose of
electing directors, and thereafter at each such annual meeting until such time
as shares of Redeemable Preferred Stock are no longer outstanding, at which time
or times such voting rights and the term of the directors elected pursuant to
Section 7.1(a) shall terminate.
(c) At any time when such voting rights shall have
vested in holders of shares of Redeemable Preferred Stock described in
Section 7.1(a), and if such rights shall not already have been exercised by
written consent, a proper officer of the Corporation may call, and, upon the
written request, addressed to the Secretary of the Corporation, of the record
holders of shares representing twenty-five percent (25%) of the voting power of
the shares then outstanding of Redeemable Preferred Stock, shall call, a special
meeting of the holders of shares of Redeemable Preferred Stock. Such meeting
shall be held at the earliest practicable date upon the notice required for
annual meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation, or, if none, at a place designated by the Board
of Directors. Notwithstanding the provisions of this Section 7.1(c), no such
special meeting shall be called during a period within 60 days immediately
preceding the date fixed for the next annual meeting of stockholders.
(d) At any meeting held for the purpose of electing
directors at which the holders of shares of Redeemable Preferred Stock shall
have the right to elect directors as provided herein, the presence in person or
by proxy of the holders of shares representing more than sixty-six and
two-thirds percent (66 2/3%) in
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18
voting power of the then outstanding shares of Redeemable Preferred Stock having
such right shall be required and shall be sufficient to constitute a quorum of
such class for the election of directors by such class.
(e) Any director elected by holders of shares of
Redeemable Preferred Stock pursuant to the voting right created under this
Section 7.1 shall hold office until the next annual meeting of stockholders
(unless such term has previously terminated pursuant to Section 7.1(b)) and any
vacancy in respect of any such director shall be filled only by vote of the
remaining director so elected, or if there be no such remaining director, by the
holders of shares of Redeemable Preferred Stock by written consent or at a
special meeting called in accordance with the procedures set forth in
Section 7.1(c), or, if no such special meeting is called or written consent
executed, at the next annual meeting of stockholders. Upon any termination of
such voting right, subject to applicable law, the term of office of all
directors elected by holders of shares of Redeemable Preferred Stock voting
separately as a class pursuant to this Section 7.1 shall terminate.
(f) So long as any shares of Redeemable Preferred
Stock remain outstanding, unless a greater percentage shall then be required by
law, the Corporation shall not, without the affirmative vote at a meeting or the
written consent with or without a meeting of the holders of shares of Redeemable
Preferred Stock representing at least sixty-six and two-thirds percent (662/3%)
of the aggregate voting power of shares of Redeemable Preferred Stock, voting as
a separate class, (i) after the Issue Date, authorize or issue any Senior Stock
or Parity Stock or reclassify any Junior Stock as Parity Stock or Senior Stock
or reclassify any Parity Stock as Senior Stock, (ii) amend, alter or repeal any
of the provisions of the Certificate of Incorporation, so as in any such case to
materially and adversely affect the preferences, special rights, powers or
privileges of the shares of Redeemable Preferred Stock, or (iii) consolidate or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, any person or entity
unless (A) the entity formed by such consolidation or merger (if other than the
Corporation) or to which such sale, assignment, transfer, lease or conveyance or
other disposition shall have been made shall be a corporation organized or
existing under the laws of the United State or any State thereof or the District
of Columbia and (B) the Redeemable Preferred Stock shall be converted into or
exchanged for and shall become shares of such successor, transferee or resulting
corporation or a parent corporation of such corporation, having in respect of
such successor, transferee or resulting corporation or a parent corporation the
identical powers, preferences and relative participating, optional or other
special rights, and the qualifications, limitations or restrictions thereon,
that the Redeemable Preferred Stock had immediately prior to such transaction.
(g) In exercising the voting rights set forth in this
Section 7.1, each share of Redeemable Preferred Stock shall have a number of
votes equal to its Liquidation Value.
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19
7.2 No consent of holders of shares of Redeemable Preferred
Stock shall be required for (i) the creation of any indebtedness of any kind of
the Corporation or (ii) the authorization or issuance of any class of Junior
Stock.
8. LIQUIDATION RIGHTS.
8.1 Upon the dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of
Redeemable Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders, in preference to the
holders of, and before any payment or distribution shall be made on, Junior
Stock, the amount of $50 per share (the "Liquidation Value"), plus an amount
equal to all Accumulated Dividends and Accrual Dividends thereon to the date of
final distribution (whether or not declared).
8.2 Neither the sale, exchange or other conveyance (for cash,
shares of stock, securities or other consideration) of all or substantially all
the property and assets of the Corporation nor the merger or consolidation of
the Corporation into or with any other corporation, or the merger or
consolidation of any other corporation into or with the Corporation, shall be
deemed to be a dissolution, liquidation or winding up, voluntary or involuntary,
for the purposes of this Section 8.
8.3 After the payment to the holders of the shares of
Redeemable Preferred Stock of full preferential amounts provided for in this
Section 8, the holders of Redeemable Preferred Stock as such shall have no right
or claim to any of the remaining assets of the Corporation.
8.4 In the event the assets of the Corporation available for
distribution to the holders of shares of Redeemable Preferred Stock upon any
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Section 8.1, no such distribution shall be made
on account of any shares of any Parity Stock upon such dissolution, liquidation
or winding up unless proportionate distributive amounts shall be paid on account
of the shares of Redeemable Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all Parity Stock are entitled upon
such dissolution, liquidation or winding up.
9. OTHER PROVISIONS.
9.1 Shares of Redeemable Preferred Stock issued and reacquired
will, upon compliance with the applicable requirements of Delaware law, have the
status of authorized but unissued shares of Preferred Stock of the Corporation
undesignated as to series and may with any and all other authorized but
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20
unissued shares of Preferred Stock of the Corporation be designated or
redesignated and issued or reissued, as the case may be, as part of any series
of Preferred Stock of the Corporation, except that any issuance or reissuance of
shares of Redeemable Preferred Stock must be in compliance with this certificate
of designation.
9.2 The Corporation shall be entitled to recognize the
exclusive right of a Person registered on its records as the holder of shares of
Redeemable Preferred Stock, and such record holder shall be deemed the holder of
such shares for all purposes.
9.3 All notice periods referred to herein shall commence on
the date of the mailing of the applicable notice.
IN WITNESS WHEREOF, Premier Parks Inc. has caused this certificate to
be signed and attested this ___ day of April 1998.
PREMIER PARKS INC.
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4(s)
[Draft--3/22/98]
CERTIFICATE OF DESIGNATION
OF
% MANDATORILY CONVERTIBLE PREFERRED STOCK
OF
PREMIER PARKS INC.
-------------
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
-------------
PREMIER PARKS INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company"), does
hereby certify that the following resolution was duly adopted by the Board of
Directors of the Company (the "Board") in a unanimous written consent dated
, 1998:
RESOLVED, that pursuant to the authority conferred upon the
Board by the provisions of the Company's Restated Certificate of Incorporation
(the "Certificate") and in accordance with Section 151 of the General
Corporation Law of the State of Delaware, the Board hereby creates, from the
500,000 shares of preferred stock, $1.00 par value per share (the "Preferred
Stock"), of the Company, authorized to be issued pursuant to the Certificate, a
series of Preferred Stock consisting of 11,500 shares of % Mandatorily
Convertible Preferred Stock and hereby fixes the voting powers, designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions of such preferences and/or rights,
of the shares of that series as follows:
Section 1. Designation. (a) The shares of the series will be
designated as the % Mandatorily Convertible Preferred Stock (the
"Mandatorily Convertible Preferred Stock"). The total number of authorized
shares of the Mandatorily Convertible Preferred Stock will be 11,500.
(b) Any shares of the Mandatorily Convertible Preferred Stock
that at any time have been acquired upon conversion or otherwise acquired by the
Company shall, after such conversion or other acquisition, resume the status of
authorized and unissued shares of Preferred Stock without designation as to
series until such shares are once more designated as part of a particular series
by the Board.
Section 2. Rank.
<PAGE>
The shares of Mandatorily Convertible Preferred Stock will
rank on parity, both as to payment of dividends and distribution of assets upon
liquidation, with (i) any Preferred Stock issued by the Company to the sellers
of the capital stock of Six Flags Entertainment Corporation (the "Seller
Preferred Stock") in connection with the Company's acquisition of such capital
stock and (ii) any other Preferred Stock issued by the Company in the future
that by its terms ranks pari passu with the shares of Mandatorily Convertible
Preferred Stock.
Section 3. Dividends. (a) The holders of record of the
shares of Mandatorily Convertible Preferred Stock shall be entitled to
receive, when, as and if declared by the Board out of funds legally available
therefor, dividends ("Preferred Dividends") from the date of the initial
issuance of the shares of Mandatorily Convertible Preferred Stock at the rate
of $ per annum or $ per quarter per share of Mandatorily Convertible
Preferred Stock, payable quarterly in arrears on January 1, April 1, July 1
and October 1 or, if any such date is not a business day (as defined in
Section 7 hereof), the Preferred Dividend due on such date shall be payable
on the next succeeding business day (each such payment date being a "Regular
Dividend Payment Date"). The first dividend period will be from the date of
initial issuance of the shares of Mandatorily Convertible Preferred Stock to
but excluding July 1, 1998 and will be payable on July 1, 1998. Preferred
Dividends shall cease to accrue on shares of Mandatorily Convertible
Preferred Stock on the Mandatory Conversion Date (as defined in Section 4
hereof) or on the date of their earlier conversion. Preferred Dividends shall
be payable to holders of record of shares of Mandatorily Convertible
Preferred Stock as they appear on the stock register of the Company on record
dates not less than 15 nor more than 60 days preceding the payment date
thereof, as shall be fixed by the Board. Preferred Dividends payable on
shares of Mandatorily Convertible Preferred Stock for any period less than a
full quarterly dividend period (or, in the case of the first Preferred
Dividend, from the date of initial issuance of the shares of Mandatorily
Convertible Preferred Stock to the first Regular Dividend Payment Date) will
be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed in any period less than one month. Preferred
Dividends shall accrue on a daily basis (computed as set forth in the
immediately preceding sentence) whether or not there are funds of the Company
legally available for the payment of such Preferred Dividends and whether or
not such Preferred Dividends are declared. Accrued but unpaid Preferred
Dividends shall cumulate as of the Regular Dividend Payment Date on which
they first become payable, but no interest shall accrue on accumulated but
unpaid Preferred Dividends.
(b) Preferred Dividends may be paid, at the election of the
Company, (i) out of funds legally available therefor, (ii) through the delivery
of shares of the Company's common stock, par value $0.05 per share (the "Common
Stock") or
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(iii) through any combination of the foregoing, provided that a Preferred
Dividend may be paid in whole or in part by delivery of shares of Common Stock
only if paid on the Regular Dividend Payment Date for such dividend. If the
Company elects to pay any Preferred Dividend, in whole or in part, by delivery
of shares of Common Stock, the Company shall deliver to holders of record of
shares of Mandatorily Convertible Preferred Stock on the related record date for
such Preferred Dividend payment (determined as set forth in Section 2(a)
hereof), a number of shares of Common Stock for each share of Mandatorily
Convertible Preferred Stock held thereby determined by dividing the dollar
amount of such Preferred Dividend payment which is to be paid per share of
Mandatorily Convertible Preferred Stock in shares of Common Stock by an amount
(the "Cash Equivalent Amount") equal to 95% of the average Closing Price (as
defined in Section 7 hereof) per share of Common Stock on the ten Trading Days
(as defined in Section 7 hereof) ending on the third Trading Day preceding the
related record date (the "Dividend Stock Price") (appropriately adjusted in such
manner as the Board in good faith deems appropriate to take into account any
stock dividend on the Common Stock, or any subdivision, split, combination or
reclassification of the Common Stock that occurs, or the ex-dividend date for
which occurs, during the period following the first Trading Day in such
ten-Trading Day Period and ending on the last full Trading Day immediately
preceding the payment of the Preferred Dividend). The Dividend Stock Price for
any Preferred Dividend which shall be paid, in whole or in part, through the
delivery of shares of Common Stock shall be determined on the related record
date for such Preferred Dividend payment. Any portion of a Preferred Dividend
that is declared and not paid by the Company through delivery of shares of
Common Stock on the related Regular Dividend Payment Date will be paid in cash.
If the Company elects to make a Preferred Dividend payment, in whole or in part,
through the delivery of shares of Common Stock, it will give notice of such
determination (including the amount of the Preferred Dividend per share of
Mandatorily Convertible Preferred Stock which is to be paid through the delivery
of shares of Common Stock and the Cash Equivalent Amount) by publication, on the
related record date for such Preferred Dividend payment, in a daily newspaper of
national circulation.
(c) Whether or not the Mandatory Conversion Date has occurred,
(i) no dividends (other than dividends payable in shares of,
or warrants, rights or options exercisable for or convertible into
shares of, any capital stock, including without limitation, the Common
Stock, of the Company ranking junior to the Mandatorily Convertible
Preferred Stock as to the payment of dividends and the distribution of
assets upon liquidation (collectively "Junior Stock") and cash in lieu
of fractional shares in connection with any such dividend) may be paid
or declared in cash or otherwise, nor may any other distribution by
made
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<PAGE>
(other than a distribution payable in Junior Stock and cash in lieu of
fractional shares in connection with any such distribution), on any
Junior Stock;
(ii) no shares of any Junior Stock may be purchased, redeemed
or otherwise acquired by the Company or any of its subsidiaries (except
in connection with a reclassification or exchange of any Junior Stock
through the issuance of other Junior Stock (and cash in lieu of
fractional shares in connection therewith) or the purchase, redemption
or other acquisition of any Junior Stock (x) with any Junior Stock (and
cash in lieu of fractional shares in connection therewith) or (y) in
connection with purchases in an aggregate amount up to $5.0 million
from employees of the Company on termination of their employment for
whatever reason) nor may any funds be set aside or made available for
any sinking funds for the purchase, redemption or acquisition of any
Junior Stock; and
(iii) no dividends or other distributions may be declared or
paid on any Preferred Stock (including the Mandatorily Convertible
Preferred Stock) that does not constitute Junior Stock ("Parity
Preferred Stock") (other than dividends or other distributions payable
in Junior Stock and cash in lieu of fractional shares in connection
therewith), and the Company may not purchase, redeem or otherwise
acquire any Parity Preferred Stock (except with any Junior Stock and
cash in lieu of fractional shares in connection therewith and except
with the right, subject to the requirement set out following clause (D)
of this paragraph and any similar requirement of any other Preferred
Stock, to receive accrued and unpaid dividends)
unless, in the case of either (i) or (ii) or (iii):
(A) full dividends on Parity Preferred Stock have been paid,
or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such dividend, distribution,
purchase, redemption, acquisition, setting aside or making available,
as applicable, to the extent such dividends are cumulative,
(B) dividends in full for the current quarterly dividend
period have been paid, or declared and set aside for payment, on all
Parity Preferred Stock to the extent such dividends are cumulative,
(C) the Company has paid or set aside all amounts, if any,
then or theretofore required to be paid or set aside for all purchase,
retirement and sinking funds, if any, for any Parity Preferred Stock,
and
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<PAGE>
(D) the Company is not in default on any of its obligations to
redeem any Parity Preferred Stock,
or, in the case of (iii) only, with respect to the declaration and payment of
dividends on Parity Preferred Stock, any such dividends are declared and paid
pro rata so that the amounts of any dividends declared and paid per share of
Mandatorily Convertible Preferred Stock and each other share of Parity Preferred
Stock will in all cases bear to each other the same ratio that accrued and
unpaid dividends (including any accumulation with respect to unpaid dividends
for prior dividend periods, if such dividends are cumulative) per share of
Mandatorily Convertible Preferred Stock and such other share of Parity Preferred
Stock bear to each other.
Section 4. Conversion Rights. (a) Unless previously
converted at the option of the holder into Common Stock in accordance with
the provisions of Section 4(c), on , 2001 (the "Mandatory
Conversion Date") each outstanding share of Mandatorily Convertible Preferred
Stock will convert automatically (the "Mandatory Conversion") into a number
of shares of Common Stock at the Conversion Rate (as defined below) in effect
on the Mandatory Conversion Date and the holder thereof shall have the right
to receive an amount in cash equal to all accrued and unpaid Preferred
Dividends on such share of Mandatorily Convertible Preferred Stock (other
than previously declared Preferred Dividends payable to a holder of record as
of a prior date) to the Mandatory Conversion Date, whether or not declared,
out of funds legally available for the payment of Preferred Dividends,
subject to the requirement set forth following clause (D) of Section 3(c)
above and any similar requirement of any other Certificate of Designations
for Preferred Stock. The "Conversion Rate" is initially equal to (i) if the
Conversion Price (as defined in Section 7 hereof) is greater than or equal to
$ (the "Threshold Appreciation Price"), shares of Common Stock per share
of Mandatorily Convertible Preferred Stock, (ii) if the Conversion Price is
less than the Threshold Appreciation Price but is greater than $ (the
"Initial Price"), (A) a fraction equal to the Initial Price divided by the
Conversion Price of (B) 500 shares of Common Stock per share of Mandatorily
Convertible Preferred Stock and (iii) if the Conversion Price is less than or
equal to the Initial Price, 500 shares of Common Stock per share of
Mandatorily Convertible Preferred Stock. The ratios of shares of Common Stock
per share of Mandatorily Convertible Preferred Stock specified in clauses
(i), (ii) and (iii) of the immediately preceding sentence are hereinafter
referred to as the "Share Components". The Conversion Rate, the Threshold
Appreciation Price and the Initial Price are subject to adjustment as set
forth in Sections 4(e), 4(f) and 4(g).
(b) Preferred Dividends on the shares of Mandatorily
Convertible Preferred Stock shall cease to accrue and such shares of Mandatorily
Convertible Preferred Stock shall cease to be outstanding on the Mandatory
Conversion Date. The
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<PAGE>
Company shall make such arrangements as it deems appropriate for the issuance of
certificates representing shares of Common Stock and for the payment of cash in
respect of accrued and unpaid dividends on the Mandatorily Convertible Preferred
Stock, if any, or cash in lieu of fractional shares, if any, without interest,
in exchange for and contingent upon surrender of certificates representing the
shares of Mandatorily Convertible Preferred Stock, and the Company may defer the
payment of dividends on such shares of Common Stock and the voting thereof
until, and make such payment and voting contingent upon, the surrender of
certificates representing the shares of Mandatorily Convertible Preferred Stock,
provided that the Company shall give the holders of the shares of Mandatorily
Convertible Preferred Stock such notice of any such actions as the Company deems
appropriate and upon such surrender such holders shall be entitled to receive
such dividends declared and paid, if any, without interest, on such shares of
Common Stock subsequent to the Mandatory Conversion Date.
(c) Shares of Mandatorily Convertible Preferred Stock are
convertible, in whole or in part, at the option of the holders thereof
("Optional Conversion"), at any time prior to the Mandatory Conversion Date,
into shares of Common Stock at a rate of shares of Common Stock for each
share of Mandatorily Convertible Preferred Stock (the "Optional Conversion
Rate"), subject to adjustment as set forth in Sections 4(e) and 4(f).
Optional Conversion of shares of Mandatorily Convertible Preferred Stock may
be effected by delivering certificates evidencing such shares, together with
written notice of conversion and proper assignment of such certificates to
the Company or in blank (and, if Optional Conversion is to occur after the
close of business on a record date for any payment of declared Preferred
Dividends and before the opening of business on the next succeeding dividend
payment date, payment in cash of an amount equal to the Preferred Dividend
payable on such date on such shares), to the office of any transfer agent for
the shares of Mandatorily Convertible Preferred Stock or to any other office
or agency maintained by the Company for that purpose and otherwise in
accordance with Optional Conversion procedures established by the Company.
Each Optional Conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the foregoing
requirements shall have been satisfied. The Optional Conversion shall be at
the Optional Conversion Rate in effect at such time on such date.
(d) Holders of shares of Mandatorily Convertible Preferred
Stock at the close of business on a record date for any payment of declared
Preferred Dividends shall be entitled to receive the Preferred Dividend so
declared on such shares of Mandatorily Convertible Preferred Stock on the
corresponding dividend payment date notwithstanding the Optional Conversion of
such shares of Mandatorily Convertible Preferred Stock following such record
date and prior to such dividend payment date. However, shares of Mandatorily
Convertible Preferred Stock surrendered for Optional Conversion after the close
of business on a record date for any payment of declared Preferred Dividends and
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<PAGE>
before the opening of business on the next succeeding dividend payment date must
be accompanied by payment in cash of an amount equal to the Preferred Dividend
payable on such date on such shares. Except as provided above, upon any Optional
Conversion of shares of Mandatorily Convertible Preferred Stock, the Company
shall make no payment of or allowance for unpaid Preferred Dividends, whether or
not in arrears, on such shares of Mandatorily Convertible Preferred Stock as to
which Optional Conversion has been effected or previously declared dividends or
distributions on the shares of Common Stock issued upon such Optional
Conversion.
(e) The Conversion Rate and the Optional Conversion Rate are
each subject to adjustment from time to time as provided below in this Section
4(e).
(i) If the Company shall pay or make a dividend or other
distribution with respect to its Common Stock in shares of Common Stock
(including by way of reclassification of any shares of its Common Stock
(other than pursuant to any of the transactions set forth in Section
4(f)), each of the Share Components and the Optional Conversion Rate in
effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend
or other distribution shall be increased by multiplying such Share
Components and Optional Conversion Rate by a fraction of which the
numerator shall be the sum of the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination, excluding the effect of such dividend or distribution,
plus the total number of shares of Common Stock constituting such
dividend or other distribution, and of which the denominator shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination, excluding the effect
of such dividend or distribution, such increase to become effective at
the opening of business on the day following the date fixed for such
determination. For the purposes of this Section 4(e)(i), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Company and the number of shares
constituting such dividend or other distribution shall include shares
represented by cash issued in lieu of fractional shares of Common
Stock.
(ii) In case shares of Common Stock outstanding shall be
subdivided or split into a greater number of shares of Common Stock,
each of the Share Components and the Optional Conversion Rate in effect
at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately
increased, and, conversely, in case outstanding shares of Common Stock
shall be combined into a lesser number of shares of Common Stock, each
of the Share Components and the Optional Conversion Rate in effect at
the opening of business on the day following the day
7
<PAGE>
upon which such combination becomes effective shall be proportionately
reduced, such increases or reductions, as the case may be, to become
effective at the opening of business on the day following the day upon
which such subdivision or split or combination becomes effective.
(iii) If the Company shall, after the date hereof, issue rights or
warrants to all holders of its Common Stock entitling them to subscribe
for or purchase shares of Common Stock at a price per share less than
the Current Market Price (as defined in Section 7 hereof) of the Common
Stock on the record date for the determination of stockholders entitled
to receive such rights or warrants, then in each case each of the Share
Components and the Optional Conversion Rate shall be adjusted by
multiplying such Share Components and the Optional Conversion Rate in
effect on such record date by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the close of
business on the record date for issuance of such rights or warrants,
excluding the effect of such issuance, plus the number of additional
shares of Common Stock offered for subscription or purchase pursuant to
such rights or warrants, and of which the denominator shall be the
number of shares of Common Stock outstanding at the close of business
on the record date for issuance of such rights or warrants, excluding
the effect of such issuance, plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of
Common Stock so offered for subscription or purchase pursuant to such
rights or warrants would purchase at such Current Market Price
(determined by multiplying such total number of offered shares by the
exercise price of such rights or warrants and dividing the product so
obtained by such Current Market Price). Such adjustment shall become
effective at the opening of business on the business day next following
the record date for the determination of stockholders entitled to
receive such rights or warrants. Shares of Common Stock held by the
Company or by another company of which a majority of the shares
entitled to vote in the election of directors are held, directly or
indirectly, by the Company shall not be deemed to be outstanding for
purposes of such computation. Any shares of Common Stock issuable in
payment of a dividend shall be deemed to have been issued immediately
prior to the close of business on the record date for such dividend for
purposes of calculating the number of outstanding shares of Common
Stock under this Section 4(e)(iii). To the extent that shares of Common
Stock are not delivered by reason of the expiration of such rights or
warrants, each of the Share Components and the Optional Conversion Rate
shall be readjusted to the Share Components and the Optional Conversion
Rate which would then be in effect had the adjustments made by reason
of the issuance of such rights or warrants been made upon the basis of
the issuance of rights or warrants in respect of only the number of
shares of Common Stock actually delivered.
8
<PAGE>
(iv) If the Company shall pay a dividend or make a
distribution to all holders of Common Stock consisting of evidences of
its indebtedness, cash or other assets (including shares of capital
stock of the Company other than dividends or distributions of Common
Stock (or other common stock of the Company issued by way of
reclassification) referred to in Section 4(e)(i) above but excluding
any cash dividends or distributions, other than Extraordinary Cash
Distributions (as defined below)), or shall issue to all holders of
Common Stock rights or warrants to subscribe for or purchase any of its
securities (other than those referred to in Section 4(e)(iii) above),
then in each such case each of the Share Components and the Optional
Conversion Rate shall be adjusted by multiplying such Share Components
and the Optional Conversion Rate in effect on the record date for such
dividend or distribution or for the determination of stockholders
entitled to receive such rights or warrants, as the case may be, by a
fraction of which the numerator shall be the Current Market Price per
share of the Common Stock on such record date, and of which the
denominator shall be such Current Market Price per share of Common
Stock less either (A) the fair market value (as determined by the
Board, whose determination shall be conclusive) on such record date of
the portion of the assets or evidences of indebtedness so distributed,
or of such rights or warrants, applicable to one share of Common
Stock or (B) if applicable, the amount of the Extraordinary Cash
Distribution applicable to one share of Common Stock. Such adjustment
shall become effective at the opening of business on the business day
next following the record date for such dividend or distribution or for
the determination of holders entitled to receive such rights or
warrants, as the case may be. "Extraordinary Cash Distribution" means,
with respect to any cash dividend or distribution paid on any date, the
amount, if any, by which all cash dividends or distributions on the
Common Stock paid during the consecutive 12-month period ending on and
including such date (other than cash dividends and cash distributions
for which a prior adjustment to each of the Share Components and
Optional Conversion Rate was previously made), exceeds, on a per share
of Common Stock basis, ten percent (10%) of the average daily Closing
Price of the Common Stock over such consecutive 12-month period.
(v) Anything in this Section 4 notwithstanding, the Company
shall be entitled (but shall not be required) to make such upward
adjustments in each of the Share Components and the Optional Conversion
Rate in addition to those set forth by this Section 4, as the Company,
in its sole discretion, shall determine to be advisable, in order that
any stock dividend, subdivision or split of stock, distribution of
rights to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock (or any transaction that
could be treated as any of the foregoing transactions pursuant to
Section 305 of the Internal
9
<PAGE>
Revenue Code of 1986, as amended, or any successor provision) hereafter
made by the Company to its stockholders will not be taxable in whole or
in part.
(vi) All adjustments to each of the Share Components and the
Optional Conversion Rate shall be calculated to the nearest 1/100th of
a share of Common Stock. No adjustment in the Share Components or the
Optional Conversion Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) therein;
provided, however, that any adjustments which by reason of this
subsection are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All adjustments to the
Share Components and the Optional Conversion Rate shall be made
successively.
(vii) Prior to taking any action that could result in
adjustment affecting the Conversion Rate or the Optional Conversion
Rate such that the imputed conversion price for shares of Common Stock
issued upon Mandatory Conversion or upon Optional Conversion would be
below the then par value of the Common Stock, the Company shall take
any corporate action which may, in the opinion of its Board, be
necessary in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock at the Conversion Rate or
the Optional Conversion Rate as so adjusted.
(f) In case of any consolidation or merger to which the
Company is a party (other than a merger or consolidation in which the Company is
the surviving or continuing corporation and in which each share of Common Stock
outstanding immediately prior to the merger or consolidation remains unchanged
in all material respects), or in case of any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with another
corporation (other than in connection with a merger or acquisition), each share
of Mandatorily Convertible Preferred Stock shall, after consummation of such
transaction, be subject to (i) conversion at the option of the holder into the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Common
Stock (including fractional shares for this purpose) into which such share of
Mandatorily Convertible Preferred Stock might have been converted immediately
prior to consummation of such transaction and (ii) conversion on the Mandatory
Conversion Date into the kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock (including fractional shares for this purpose) into which
such share of Mandatorily Convertible Preferred Stock would have been converted
if the conversion on the Mandatory Conversion Date had occurred immediately
prior to the date of consummation of such transaction, plus the right, subject
to the requirement set forth following
10
<PAGE>
clause (D) of Section 3(c) and any similar requirement of any other Certificate
of Designations for Preferred Stock, to receive cash in an amount equal to all
accrued and unpaid dividends on such share of Mandatorily Convertible Preferred
Stock (other than previously declared dividends payable to a holder of record as
of a prior date); and assuming in each case that such holder of shares of Common
Stock failed to exercise rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon consummation of such
transaction (provided that, if the kind or amount of securities, cash or other
property receivable upon consummation of such transaction is not the same for
each non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into or
for which the shares of Mandatorily Convertible Preferred Stock shall be
convertible after consummation of such transaction shall be subject to
adjustment as described in Section 4(e) following the date of consummation of
such transaction. The Company may not become a party to any such transaction
unless the terms thereof are consistent with the foregoing.
(g) If an adjustment is made to the Conversion Rate pursuant
to any of Sections 4(e)(i) through 4(e)(iv), an adjustment shall also be made to
the Threshold Appreciation Price and the Initial Price as such terms are used to
determine which of clauses (i), (ii) or (iii) of the definition of "Conversion
Rate" will apply at the Mandatory Conversion Date and for purposes of
calculating the fraction in sub-clause (ii)(A) of the definition of Conversion
Rate. The required adjustments to the Threshold Appreciation Price and the
Initial Price shall be made at the Mandatory Conversion Date by multiplying each
of the Threshold Appreciation Price and the Initial Price by the inverse of the
cumulative number or fraction determined pursuant to the Share Component
adjustment procedures described in Section 4(e). In the case of the
reclassification of any shares of Common Stock into any common stock other than
Common Stock, such common stock shall be deemed Common Stock solely to determine
the Threshold Appreciation Price and the Initial Price and to apply the
Conversion Rate at the Mandatory Conversion Date. Each such adjustment to the
Threshold Appreciation Price or the Initial Price shall be made successively.
(h) Whenever the Conversion Rate and the Optional Conversion
Rate are adjusted as provided in Section 4(e), the Company shall:
(i) forthwith compute the adjusted Conversion Rate, Optional
Conversion Rate, Threshold Appreciation Price and Initial Price in
accordance with this Section 4 and prepare a certificate signed by the
Chief Financial Officer, any Vice President, the Treasurer or the
Controller of the Company setting forth the adjusted Conversion Rate,
Optional Conversion Rate, Threshold Appreciation
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<PAGE>
Price and Initial Price, the method of calculation thereof in
reasonable detail and the facts requiring such adjustment and upon
which such adjustment is based, which certificate shall be conclusive,
final and binding evidence of the correctness of the adjustment, and
shall file such certificate forthwith with the transfer agent or agents
for the shares of Mandatorily Convertible Preferred Stock and any
depositary for any shares of Mandatorily Convertible Preferred Stock
represented by depositary shares;
(ii) make a prompt public announcement stating that the
Conversion Rate, Optional Conversion Rate, Threshold Appreciation Price
and Initial Price have been adjusted and setting forth the adjusted
Conversion Rate, Optional Conversion Rate, Threshold Appreciation Price
and Initial Price, including, in the event any shares of Mandatorily
Convertible Preferred Stock are represented by depositary shares, the
adjusted Conversion Rate or Optional Conversion Rate on a per
depositary share basis; and
(iii) mail a notice stating that the Conversion Rate, Optional
Conversion Rate, Threshold Appreciation Price and Initial Price have
been adjusted, the facts requiring such adjustment and upon which such
adjustment is based and setting forth the adjusted Conversion Rate,
Optional Conversion Rate, Threshold Appreciation Price and Initial
Price to the holders of record of the outstanding shares of the
Mandatorily Convertible Preferred Stock, and, in the event any shares
of Mandatorily Convertible Preferred Stock are represented by
depositary shares, to the holders of record of the depositary receipts
evidencing such depositary shares, no later than 45 days after the end
of the Company's fiscal quarter period during which the facts requiring
such adjustment occurred.
(i) In case, at any time while any of the shares of
Mandatorily Convertible Preferred Stock are outstanding,
(i) the Company shall declare a dividend (or any other
distribution) on the Common Stock, excluding any cash dividends other
than Extraordinary Cash Distributions, or
(ii) the Company shall authorize the issuance to all holders
of the Common Stock of rights or warrants to subscribe for or purchase
shares of the Common Stock or of any other subscription rights or
warrants, or
(iii) the Company shall authorize any reclassification of the
Common Stock (other than a subdivision, split or combination thereof)
or of any consolidation or merger to which the Company is a party and
for which approval
12
<PAGE>
of any stockholders of the Company is required (except for a merger of
the Company into one of its subsidiaries solely for the purpose of
changing the corporate domicile of the Company to another state of the
United States and in connection with which there is no substantive
change in the rights or privileges of any securities of the Company
other than changes resulting from differences in the corporate statutes
of the state the Company was then domiciled in and the new state of
domicile), or of the sale or transfer of all or substantially all the
assets of the Company (except to one or more wholly-owned
subsidiaries),
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of Mandatorily Convertible Preferred
Stock, and shall cause to be mailed to the holders of shares of Mandatorily
Convertible Preferred Stock at their last addresses as they shall appear on the
stock register, and, in the event any shares of Mandatorily Convertible
Preferred Stock are represented by depositary shares, to the holders of record
of the depositary receipts evidencing such depositary shares, at least 10
business days before the date specified in clause (A) or (B) below (or the
earlier of such specified dates, in the event that more than one date is
specified), a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution, or issuance of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, or issuance of
rights or warrants are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale or transfer is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property (including cash), if any, deliverable upon such reclassification,
consolidation, merger, sale or transfer. The failure to give or receive the
notice required by this subsection (i) or any defect therein shall not affect
the legality or validity of any such dividend, distribution, issuance of any
right or warrant or other action.
5. No Fractional Shares. (a) No fractional shares of Common
Stock shall be issued upon the conversion of any shares of the Mandatorily
Convertible Preferred Stock. In lieu of any fractional share otherwise issuable
in respect of the aggregate number of shares of Mandatorily Convertible
Preferred Stock of any holder that are converted upon Mandatory Conversion or
any Optional Conversion, such holder shall be entitled to receive an amount in
cash (computed to the nearest cent) equal to the same fraction of the Closing
Price of the Common Stock determined (a) as of the fifth Trading Day immediately
preceding the Mandatory Conversion Date, in the case of Mandatory Conversion, or
(b) as of the second Trading Day immediately preceding the effective date of
conversion, in the case of an Optional Conversion by a holder. If more than one
share of Mandatorily Convertible Preferred Stock shall be surrendered for
conversion at one time by or for the same holder, the number of shares of Common
Stock issuable upon
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<PAGE>
conversion thereof shall be computed on the basis of the aggregate number of
shares of Mandatorily Convertible Preferred Stock so converted. No fractional
shares of Common Stock shall be issued in connection with the Company's delivery
of shares of Common Stock in payment of any dividend on the Mandatorily
Convertible Preferred Stock on the Regular Dividend Payment Date for such
dividend. In lieu of any fractional share otherwise so issuable by the Company,
the holder of Mandatorily Convertible Preferred Stock otherwise entitled to such
fractional share shall be entitled to receive an amount in cash (computed to the
nearest cent) equal to the same fraction of the Closing Price of the Common
Stock determined as of the fifth Trading Day immediately preceding the related
Regular Dividend Payment Date. On the Mandatory Conversion Date, the fractional
share of Common Stock that any holder of Mandatorily Convertible Preferred Stock
would otherwise be entitled to receive shall be determined by adding all the
fractional shares such holder would be entitled to receive (i) on the mandatory
conversion of all shares of Mandatorily Convertible Preferred Stock held by such
holder and (ii) on the payment of the regular quarterly dividend on all shares
of Mandatorily Convertible Preferred Stock held by such holder at the related
record date. On the Mandatory Conversion Date, the Company may, at its option,
deliver any whole number of shares of Common Stock resulting from the addition
of fractional shares resulting from (i) and (ii) above in shares of Common Stock
and any resulting fractional shares in cash.
(b) If payment in cash in lieu of fractional shares of Common
Stock in accordance with the preceding paragraph would result in the Company's
failure to be in compliance with any debt instrument to which it is a party, the
Company shall be entitled to deliver a whole share of Common Stock in lieu of
cash to holders of shares of Mandatorily Convertible Preferred Stock entitled to
fractional shares of Common Stock (beginning with the holders entitled to the
largest fractional shares) until delivery of cash in lieu of fractional shares
of Common Stock to the remaining holders of shares of Mandatorily Convertible
Preferred Stock would no longer result in the Company's failure to be in
compliance with such debt instrument.
6. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized and unissued Common Stock,
solely for issuance upon the conversion of shares of Mandatorily Convertible
Preferred Stock as herein provided, free from any preemptive rights, such
maximum number of shares of Common Stock as shall from time to time be issuable
upon the Mandatory Conversion or Optional Conversion of all the shares of
Mandatorily Convertible Preferred Stock then outstanding.
14
<PAGE>
7. Certain Definitions. As used in this Certificate of
Designations:
(i) the term "business day" shall mean any day other than a
Saturday, a Sunday or a day on which the NYSE, banking institutions or
trust companies in New York, New York, are authorized or obligated by
law or executive order to close;
(ii) the term "Closing Price" of any security shall mean on
any date of determination (i) the closing sale price (or, if no closing
sale price is reported, the last reported sale price) of such security
(regular way) on the New York Stock Exchange (the "NYSE") on such date,
(ii) if such security is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal
United States securities exchange on which such security is so listed,
(iii) if such security is not so listed on a United States national or
regional securities exchange, as reported by the NASDAQ Stock Market,
(iv) if such security is not so reported, the last quoted bid price for
such security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization, or (v) if such
security is not so quoted, the average of the mid-point of the last bid
and ask prices for such security from each of at least three nationally
recognized investment banking firms selected by the Company for such
purpose;
(iii) the term "Conversion Price" shall mean the average
Closing Price per share of Common Stock for the 20 Trading Days
immediately prior to (but not including) the Mandatory Conversion Date;
provided, however, that, if there are not 20 Trading Days for the
Common Stock occurring later than the 60th calendar day immediately
prior to, but not including, the Mandatory Conversion Date, the
"Conversion Price" shall be the market value per share of Common Stock
as of the Mandatory Conversion Date as determined by a nationally
recognized investment banking firm retained for such purpose by the
Company;
(iv) the term "Current Market Price" means, as of any date of
determination, the average Closing Price per share of Common Stock for
the 20 Trading Days immediately prior to the date of determination;
provided, however, that if there are not 20 Trading Days for the Common
Stock occurring later than the 60th calendar day immediately prior to,
but not including, such date, the Current Market Price shall be
determined as the market value per share of Common Stock as of such
date as determined by a nationally recognized investment banking firm
retained for such purpose by the Company;
15
<PAGE>
(v) the term "record date" shall be such date as is from time
to time fixed by the Board with respect to the receipt of dividends or
the taking of any action or exercise of any voting rights permitted
hereby; and
(vi) the term "Trading Day" shall mean a business day on which
the security, the Closing Price of which is being determined, (A) is
not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of
business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is
the primary market for the trading of such security.
8. Payment of Taxes. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on the conversion of shares of
Mandatorily Convertible Preferred Stock pursuant to Section 4; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any registration or transfer involved in the issue or
delivery of shares of Common Stock in a name other than that of the registered
holder of shares of Mandatorily Convertible Preferred Stock converted or to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Company the amount of
any such tax or has established, to the satisfaction of the Company, that such
tax has been paid.
9. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, and
subject to the rights of the holders of any other series of Preferred Stock,
the holders of outstanding shares of Mandatorily Convertible Preferred Stock
are entitled to receive the sum of $ per share, plus an amount equal to
any accrued and unpaid dividends thereon, out of the assets of the Company
available for distribution to stockholders, before any distribution of assets
is made to holders of Junior Stock upon liquidation, dissolution or winding
up. If upon any voluntary or involuntary liquidation, dissolution, or winding
up of the Company, the assets of the Company are insufficient to permit the
payment of the full preferential amounts payable with respect to shares of
Mandatorily Convertible Preferred Stock and all other series of Parity
Preferred Stock, the holders of shares of Mandatorily Convertible Preferred
Stock and of all other series of Parity Preferred Stock shall share ratably
in any distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment of
the full amount of the liquidating distribution to which they are entitled,
the holders of shares of Mandatorily Convertible Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Company. A consolidation or merger of the Company with one or more
corporations or a sale or transfer of substantially all the assets of the
16
<PAGE>
Company shall not be deemed to be a liquidation, dissolution, or winding up of
the Company.
10. Voting Rights. The holders of shares of Mandatorily
Convertible Preferred Stock shall not be entitled to any voting rights, except
as required by applicable state law or as described below.
(a) In the event that dividends on the shares of Mandatorily
Convertible Preferred Stock or any other series of Preferred Stock shall be in
arrears and unpaid for six quarterly dividend periods, or if any other series of
Preferred Stock shall be entitled for any other reason to exercise voting
rights, separate from the Common Stock, to elect any Directors of the Company
("Preferred Stock Directors"), the holders of the shares of Mandatorily
Convertible Preferred Stock (voting separately as a class with holders of all
other series of Preferred Stock which does not have a separate class vote and
upon which like voting rights have been conferred and are exercisable), with
each share of Mandatorily Convertible Preferred Stock entitled to 500 votes on
this and other matters in which Preferred Stock votes as a group, shall be
entitled to vote for the election of two Preferred Stock Directors, such
Directors to be in addition to the number of Directors constituting the Board
immediately prior to the accrual of such right. Such right, when vested, shall
continue until all dividends in arrears on the shares of Mandatorily Convertible
Preferred Stock and such other series of Preferred Stock shall have been paid in
full and the right of any other series of Preferred Stock to exercise voting
rights, separate from the Common Stock, to elect any Preferred Stock Directors
shall terminate or have terminated, and, when so paid and such termination
occurs or has occurred, such right of the holders of the shares of Mandatorily
Convertible Preferred Stock shall cease. Upon any termination of the aforesaid
voting right, subject to the requirements of the Delaware corporation law and
the Certificate, such Preferred Stock Directors shall cease to be Directors of
the Company and shall resign.
(b) The Company will not, without the approval of the holders
of at least 66-2/3% of all the shares of Mandatorily Convertible Preferred Stock
then outstanding: (i) amend, alter, or repeal any of the provisions of the
Certificate or the By-laws of the Company so as to affect adversely the powers,
preferences or rights of the holders of the shares of Mandatorily Convertible
Preferred Stock then outstanding or reduce the minimum time required for any
notice to which only the holders of the shares of Mandatorily Convertible
Preferred Stock then outstanding may be entitled (an amendment of the
Certificate to authorize or create, or to increase the authorized amount of or
to issue, Junior Stock, Preferred Stock ranking on parity with the shares of
Mandatorily Convertible Preferred Stock or any stock of any class ranking on
parity with the shares of Mandatorily
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<PAGE>
Convertible Preferred Stock shall be deemed not to affect adversely the powers,
preferences or rights of the holders of the shares of Mandatorily Convertible
Preferred Stock); (ii) create any series of Preferred Stock ranking prior to the
shares of Mandatorily Convertible Preferred Stock as to payment of dividends or
the distribution of assets upon liquidation; or (iii) authorize or create, or
increase the authorized amount of, any capital stock, or any security
convertible into capital stock, of any class ranking prior to the shares of
Mandatorily Convertible Preferred Stock as to payment of dividends or the
distribution of assets upon liquidation.
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<PAGE>
11. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
IN WITNESS WHEREOF, Premier Parks Inc. has caused this
Certificate of Designations to be signed by Kieran E. Burke, its Chairman and
Chief Executive Officer, and attested by James M. Coughlin, its Assistant
Secretary, as of this day of , 1998.
PREMIER PARKS INC.,
By
-------------------------------------
Name: Kieran E. Burke
Title: Chairman and Chief Executive
Officer
Attest:
By
-------------------------------
Name: James M. Coughlin
Title: Assistant Secretary
19
<PAGE>
EXHIBIT 4(u)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PREMIER PARKS INC.
As Issuer
AND
THE BANK OF NEW YORK
As Depositary
AND
OWNERS AND HOLDERS OF DEPOSITARY RECEIPTS
Deposit Agreement
Dated as of April , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of April , 1998 among PREMIER PARKS INC.,
incorporated under the laws of Delaware (herein called the Issuer), THE BANK OF
NEW YORK, a New York banking corporation (herein called the Depositary), and all
Owners and holders from time to time of Depositary Receipts issued hereunder.
W I T N E S S E T H :
WHEREAS, the Issuer desires to provide, as hereinafter set forth in
this Deposit Agreement, for the deposit of Shares (as hereinafter defined) of
the Issuer with the Depositary for the purposes set forth in this Deposit
Agreement, for the creation of Depositary Shares representing the Shares so
deposited and for the execution and delivery of Depositary Receipts
evidencing the Depositary Shares; and
WHEREAS, the Depositary Receipts are to be substantially in the form of
Exhibit A annexed hereto, with appropriate insertions, modifications and
omissions, as hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties hereto as follows:
ARTICLE I
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
clearly indicated, apply to the respective terms used in this Deposit Agreement:
SECTION 1.1 Depositary Shares.
The term "Depositary Shares" shall mean the securities
representing the interests in the Deposited Securities and evidenced by the
Receipts issued hereunder. Each Depositary Share shall represent 1/500 of a
Share and the same proportional interest in any and all other securities,
property and cash received by the Depositary in respect thereof and held
hereunder, until there shall occur
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a change in Deposited Securities covered by Section 4.8 with respect to which
additional Receipts are not executed and delivered, and thereafter Depositary
Shares shall evidence the amount of Shares or Deposited Securities specified in
such Sections.
SECTION 1.2 Article; Section.
Wherever references are made in this Deposit Agreement to an
"Article" or "Articles" or to a "Section" or "Sections", such references shall
mean an article or articles or a section or sections of this Deposit Agreement,
unless otherwise required by the context.
SECTION 1.3 Certificate of Designation.
The term "Certificate of Designation" shall mean the
Certificate of Designation adopted by the Board of Directors of the Issuer
establishing and setting forth the rights, preferences, privileges and
limitations of the Shares.
SECTION 1.4 Closing Price.
The term "Closing Price" of any security shall mean on any
date of determination (i) the closing sale price (or, if no closing sale price
is reported, the last reported sale price) of such security (regular way) on the
New York Stock Exchange (the "NYSE") on such date, (ii) if such security is not
listed for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which such
security is so listed, (iii) if such security is not so listed on a United
States national or regional securities exchange, as reported by the NASDAQ Stock
Market, (iv) if such security is not so reported, the last quoted bid price for
such security in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or (v) if such security is not so
quoted, the average of the mid-point of the last bid and ask prices for such
security from each of at least three nationally recognized investment banking
firms selected by the Issuer for such purpose.
SECTION 1.5 Commission.
The term "Commission" shall mean the Securities and Exchange
Commission of the United States or any successor governmental agency in the
United States.
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SECTION 1.6 Deposit Agreement.
The term "Deposit Agreement" shall mean this Agreement, as the
same may be amended from time to time in accordance with the provisions hereof.
SECTION 1.7 Depositary; Corporate Trust Office.
The term "Depositary" shall mean The Bank of New York, a New
York banking corporation and any successor as depositary hereunder. The term
"Corporate Trust Office", when used with respect to the Depositary, shall mean
the office of the Depositary which at the date of this Agreement is 101 Barclay
Street, New York, New York, 10286.
SECTION 1.8 Deposited Securities.
The term "Deposited Securities" as of any time shall mean
Shares at such time deposited under this Deposit Agreement and any and all
other securities, property and cash received by the Depositary in respect
thereof and at such time held hereunder.
SECTION 1.9 Issuer.
The term "Issuer" shall mean Premier Parks Inc., incorporated
under the laws of Delaware, and its successors.
SECTION 1.10 Owner.
The term "Owner" shall mean the person in whose name a Receipt
is registered on the books of the Depositary maintained for such purpose.
SECTION 1.11 Receipts.
The term "Receipts" shall mean the Depositary Receipts issued
hereunder evidencing Depositary Shares.
SECTION 1.12 Registrar.
The term "Registrar" shall mean any bank or trust company
having an office in the Borough of Manhattan, The City of New York, which shall
be appointed to register Receipts and transfers of Receipts as herein provided.
SECTION 1.13 Restricted Securities.
The term "Restricted Securities" shall mean Shares, or
Receipts evidencing Depositary Shares representing such Shares, which are
acquired directly or indirectly from the Issuer or its affiliates (as defined in
Rule 144 under the Securities Act of 1933) in a transaction or chain of
transactions not involving any public offering or which are subject to resale
limitations under Regulation
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D under that Act or both, or which are held by an officer, director (or persons
performing similar functions) or other affiliate of the Issuer, or which are
subject to other restrictions on sale or deposit under the laws of the United
States, or under a shareholder agreement or the Restated Certificate of
Incorporation or by-laws of the Issuer.
SECTION 1.14 Securities Act of 1933.
The term "Securities Act of 1933" shall mean the United States
Securities Act of 1933, as from time to time amended.
SECTION 1.15 Shares.
The term "Shares" shall mean the Issuer's % Mandatorily
Convertible Preferred Stock, par value $1.00 per share, heretofore validly
issued and outstanding and fully paid, nonassessable and free of any pre-emptive
rights of the holders of outstanding capital stock of the Issuer or hereafter
validly issued and outstanding and fully paid, nonassessable and free of any
pre-emptive rights of the holders of outstanding capital stock of the Issuer or
interim certificates representing such Shares.
SECTION 1.16 Trading Day.
The term "Trading Day" shall mean a business day on which the
security, the Closing Price of which is being determined, (i) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (ii) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security.
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF SHARES,
EXECUTION AND DELIVERY, TRANSFER
AND SURRENDER OF RECEIPTS
SECTION 2.1 Form and Transferability of Receipts.
Definitive Receipts shall be substantially in the form set
forth in Exhibit A annexed to this Deposit Agreement, with appropriate
insertions, modifications and
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omissions, as hereinafter provided. No Receipt shall be entitled to any benefits
under this Deposit Agreement or be valid or obligatory for any purpose, unless
such Receipt shall have been executed by the Depositary by the manual or
facsimile signature of a duly authorized signatory of the Depositary and, if a
Registrar for the Receipts shall have been appointed, countersigned by the
manual or facsimile signature of a duly authorized officer of the Registrar. The
Depositary shall maintain books on which each Receipt so executed and delivered
as hereinafter provided and the transfer of each such Receipt shall be
registered. Receipts bearing the manual or facsimile signature of a duly
authorized signatory of the Depositary who was at any time a proper signatory of
the Depositary shall bind the Depositary, notwithstanding that such signatory
has ceased to hold such office prior to the execution and delivery of such
Receipts by the Registrar or did not hold such office on the date of issuance of
such Receipts.
The Receipts may be endorsed with or have incorporated in the
text thereof such legends or recitals or modifications not inconsistent with the
provisions of this Deposit Agreement as may be required by the Depositary or
required to comply with any applicable law or regulations thereunder or with the
rules and regulations of any securities exchange upon which Depositary Shares
may be listed or to indicate any special limitations or restrictions to which
any particular Receipts are subject by reason of the date of issuance of the
underlying Deposited Securities or otherwise.
Title to a Receipt (and to the Depositary Shares evidenced
thereby), when properly endorsed or accompanied by proper instruments of
transfer, shall be transferable by delivery with the same effect as in the case
of a negotiable instrument; provided, however, that the Depositary,
notwithstanding any notice to the contrary, may treat the Owner thereof as the
absolute owner thereof for the purpose of determining the person entitled to
distribution of dividends or other distributions or to any notice provided for
in this Deposit Agreement and for all other purposes.
SECTION 2.2 Deposit of Shares.
Subject to the terms and conditions of this Deposit
Agreement, Shares may be deposited by delivery thereof by the Issuer to the
Depositary on any closing date for the sale of the Depositary Shares
representing such Shares to an underwriter in connection with the public
offering of such Depositary Shares, accompanied by any appropriate instrument
or
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instruments of transfer, or endorsement, in form satisfactory to the
Depositary, together with all such certifications as may be required by the
Depositary in accordance with the provisions of this Deposit Agreement, and,
if the Depositary requires, together with a written order directing the
Depositary to execute and deliver to, or upon the written order of, the
Issuer, a Receipt or Receipts for the number of Depositary Shares
representing such deposit. All shares so deposited shall be recorded in the
name of the Depositary on the books of the Issuer.
Deposited Securities shall be held by the Depositary for the
account and to the order of the Depositary or at such other place or places as
the Depositary shall determine.
SECTION 2.3 Execution and Delivery of Receipts.
Upon receipt by the Depositary of any deposit pursuant to
Section 2.2 hereunder (and in addition, if the transfer books of the Issuer are
open, the Depositary may in its sole discretion require a proper acknowledgment
or other evidence from the Issuer that any Deposited Securities have been
recorded upon the books of the Issuer in the name of the Depositary or its
nominee), together with the other documents required as above specified, the
Depositary, subject to the terms and conditions of this Deposit Agreement, shall
execute and deliver at its Corporate Trust Office, to or upon the written order
of the Issuer,
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a Receipt or Receipts, registered in the name or names and evidencing any
authorized number of Depositary Shares deliverable in respect of such deposit
requested by the Issuer, but only upon payment to the Depositary of all taxes
and governmental charges and stock transfer and registration fees payable in
connection with such deposit and the transfer of the Deposited Securities.
SECTION 2.4 Transfer of Receipts; Combination and Split-up of Receipts.
The Depositary, subject to the terms and conditions of this
Deposit Agreement, shall register transfers of Receipts on its transfer books
from time to time, upon any surrender of a Receipt, by the Owner in person or by
a duly authorized attorney, properly endorsed or accompanied by proper
instruments of transfer, and duly stamped as may be required by the laws of the
State of New York and of the United States of America. Thereupon the Depositary
shall execute a new Receipt or Receipts and deliver the same to or upon the
order of the person entitled thereto.
The Depositary, subject to the terms and conditions of this
Deposit Agreement, shall upon surrender of a Receipt or Receipts for the purpose
of effecting a split-up or combination of such Receipt or Receipts, execute and
deliver a new Receipt or Receipts for any authorized number of Depositary Shares
requested, evidencing the same aggregate number of Depositary Shares as the
Receipt or Receipts surrendered.
The Depositary may appoint one or more co-transfer agents for
the purpose of effecting transfers, combinations and split-ups of Receipts at
designated transfer offices on behalf of the Depositary. In carrying out its
functions, a co-transfer agent may require evidence of authority and compliance
with applicable laws and other requirements by Owners or persons entitled to
Receipts and will be entitled to protection and indemnity to the same extent as
the Depositary.
SECTION 2.5 Surrender of Receipts and Withdrawal of Shares.
Upon surrender at the Corporate Trust Office of the Depositary
of a Receipt for the purpose of withdrawal of the Deposited Securities (it being
understood that, with
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respect to any withdrawal of Shares, only whole Shares may be withdrawn)
represented by the Depositary Shares evidenced by such Receipt, and upon payment
of all taxes and governmental charges payable in connection with such surrender
and withdrawal of the Deposited Securities, and subject to the terms and
conditions of this Deposit Agreement, the Owner of such Receipt shall be
entitled to delivery, to him or upon his order, of the amount of Deposited
Securities at the time represented by the Depositary Shares evidenced by such
Receipt. Delivery of such Deposited Securities may be made by the delivery of
(i) certificates for Shares being withdrawn in the name of such Owner or as
ordered by him or by certificates for Shares being withdrawn properly endorsed
or accompanied by proper instruments of transfer to such Owner or as ordered by
him and (ii) any other securities, property and cash to which such Owner is then
entitled in respect of such Receipt to such Owner or as ordered by him. Such
delivery shall be made, as hereinafter provided, without unreasonable delay.
A Receipt surrendered for such purposes may be required by the
Depositary to be properly endorsed in blank or accompanied by proper instruments
of transfer in blank, and if the Depositary so requires, the Owner thereof shall
execute and deliver to the Depositary a written order directing the Depositary
to cause the Deposited Securities being withdrawn to be delivered to or upon the
written order of a person or persons designated in such order. Thereupon the
Depositary shall, subject to Sections 2.6, 3.1 and 3.2 and to the other terms
and conditions of this Deposit Agreement, deliver at the Corporate Trust Office
to or upon the written order of the person or persons designated in the order
delivered to the Depositary as above provided, the amount of Deposited
Securities represented by the Depositary Shares evidenced by such Receipt.
SECTION 2.6 Limitations on Execution and Delivery, Transfer and
Surrender of Receipts.
As a condition precedent to the execution and delivery,
registration of transfer, split-up, combination or surrender of any Receipt or
withdrawal of any Deposited Securities or the exercise of any conversion right
referred to in Section 2.10, the Depositary, any of the Depositary's agents or
the Registrar may require any or all of the following: (i) payment to it of a
sum sufficient to reimburse it for any tax or other governmental charge and any
stock transfer or registration fee with respect thereto
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(including any such tax or charge and fee with respect to Shares being deposited
or withdrawn or with respect to the Common Stock (as defined in Section 2.9) of
the Issuer being delivered upon conversion); (ii) the production of proof
satisfactory to it as to the identity and genuineness of any signature and (iii)
compliance with any regulations the Depositary may establish consistent with the
provisions of this Deposit Agreement, including, without limitation, this
Section 2.6.
The transfer of Receipts in particular instances may be
refused or the registration of transfer of outstanding Receipts generally may
be suspended, during any period when the transfer books of the Depositary are
closed, or if any such action is deemed necessary or advisable by the
Depositary or the Issuer at any time or from time to time because of any
requirement of law or of any government or governmental body or commission,
or under any provision of this Deposit Agreement, or, with the approval of
the Issuer, for any other reason. Notwithstanding any other provision of this
Deposit Agreement or the Receipts, the surrender of outstanding Receipts and
withdrawal of Deposited Securities may not be suspended subject only to (i)
temporary delays caused by closing the transfer books of the Depositary or
the Issuer or the payment of dividends, (ii) the payment of taxes, stock
transfer or registration fees and similar charges, and (iii) compliance with
any U.S. laws or governmental regulations relating to the Receipts or to the
withdrawal of the Deposited Securities.
SECTION 2.7 Lost Receipts, etc.
In case any Receipt shall be mutilated, destroyed, lost or
stolen, the Depositary shall execute and deliver a new Receipt of like tenor in
exchange and substitution for such mutilated Receipt upon cancelation thereof,
or in lieu of and in substitution for such destroyed, lost or stolen Receipt.
Before the Depositary shall execute and deliver a new Receipt in substitution
for a destroyed, lost or stolen Receipt, the Owner thereof shall have (i) filed
with the Depositary (a) a request for such execution and delivery before the
Depositary has notice that the Receipt has been acquired by a bona fide
purchaser and (b) a sufficient indemnity bond and (ii) satisfied any other
reasonable requirements imposed by the Depositary.
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SECTION 2.8 Cancelation and Destruction of Surrendered Receipts.
All Receipts surrendered to the Depositary shall be canceled
by the Depositary. The Depositary is authorized to destroy Receipts so canceled.
SECTION 2.9 Mandatory Conversion of Shares into Common Stock.
On the date fixed for mandatory conversion of the Shares by
the Certificate of Designation (the "Mandatory Conversion Date"), all then
outstanding Shares other than Shares represented by Depositary Shares shall
mandatorily convert into (i) shares of common stock, par value $0.05 per
share (the "Common Stock"), of the Issuer at the applicable rate specified in
the Certificate of Designation, (ii) cash in lieu of fractional shares of
Common Stock otherwise deliverable by the Issuer upon such conversion and
(iii) the right to receive amounts in cash equal to all accrued and unpaid
dividends on such Shares to the Mandatory Conversion Date (other than
previously declared dividends payable to a holder of record of the Shares as
of a prior date), all as provided in and subject to the Certificate of
Designation.
From and after the Mandatory Conversion Date, Shares
represented by Depositary Shares shall also be mandatorily converted, and
such Depositary Shares shall be deemed no longer outstanding and all rights
of the Owners of the Receipts evidencing such Depositary Shares (except the
right to receive (i) the Common Stock to which such Owner is entitled upon
conversion, (ii) any cash payable with respect to any fractional shares of
Common Stock otherwise deliverable by the Depositary upon conversion, (iii)
any cash for accrued and unpaid dividends on such Shares (other than
previously declared dividends payable to an Owner as of a prior date) and
(iv) any other securities, property or cash to which such Owner is entitled
hereunder) shall cease and terminate. Upon surrender of the Receipts
evidencing such Depositary Shares at the Corporate Trust Office or at such
office or to such agent of the Depositary as the Depositary may designate for
such purpose (properly endorsed or assigned for transfer, as the Depositary
or such agent shall so require), such Depositary Shares shall be converted
into, subject to adjustment as provided in the Certificate of Designation and
this Deposit Agreement, (i) a number of shares of Common Stock per Depositary
Share equal to one-five hundredth of the number (including fractional shares)
of shares of Common Stock which each Share converted into at the applicable
rate
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specified in the Certificate of Designation, (ii) cash in lieu of fractional
shares of Common Stock otherwise deliverable by the Depositary upon such
conversion, calculated in accordance with Section 4.12 hereof, (iii) the right
to receive cash for any accrued and unpaid dividends on the Shares represented
by such Depositary Shares (other than previously declared dividends payable to
an Owner as of a prior date) and (iv) the right to receive any other securities,
property or cash to which Owners are entitled hereunder.
On the Mandatory Conversion Date, for each Owner of a
Receipt or Receipts, the Issuer shall deposit with the Depositary (i)
certificates for the number of shares of Common Stock and (ii) the amount of
cash in lieu of fractional shares determined as set forth in the preceding
paragraph into which the Depositary Shares evidenced by such Receipt or
Receipts shall convert on the Mandatory Conversion Date (assuming proper
surrender of such Receipt or Receipts to the Depositary or any of its agents)
and (iii) subject to the Certificate of Designation, an amount in cash equal
to all accrued and unpaid dividends on the Shares represented by such
Depositary Shares to the Mandatory Conversion Date (other than previously
declared dividends payable to an Owner as of a prior date). With respect to
Owners which hold a Receipt or Receipts eveidencing more than one Depositary
Share on the Mandatory Conversion Day, the number of shares of Common Stock
and the amount of cash in lieu of fractional shares to be deposited by the
Issuer with the Depositary on that date shall be computed on the basis of the
aggregate number of Depositary Shares evidenced by such Receipt or Receipts.
Using such shares of Common Stock and cash, the Depositary shall as promptly
as practicable deliver to each Owner of a Receipt or Receipts which properly
delivers such Receipt or Receipts to the Depositary or any of its agents
certificates for the number of shares of Common Stock and the amount of cash,
without interest, to which such Owner is entitled pursuant to the preceding
provisions.
No fractional shares of Common Stock will be delivered by the
Depositary in connection with mandatory conversion of Shares represented by
Depositary Shares on the Mandatory Conversion Date.
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SECTION 2.10 Optional Conversion of Shares into Common Stock.
Subject to the terms and conditions of this Deposit
Agreement, an Owner of a Receipt or Receipts evidencing Depositary Shares
representing whole or fractional Shares may surrender such Receipt or
Receipts at the Corporate Trust Office or at such office or to such agents of
the Depositary as the Depositary may designate for such purpose, together
with a notice of conversion duly completed and executed, thereby directing
the Depositary or any such agent to instruct the Issuer to cause the
conversion (which may include partial conversions) of the number of Shares
(which instruction may be given by reference to the number of Depositary
Shares representing such Shares) specified in such notice of conversion into
shares of Common Stock at the rate specified in the Certificate of
Designation, and an assignment of such Receipt or Receipts to the Issuer or
in blank, duly completed and executed (and, if such conversion is to occur
after the close of business on a record date for any payment of declared
dividends on the Shares and before the opening of business on the next
succeeding dividend payment date, payment in cash of an amount equal to the
dividend payable on such date on the Shares so converted). To the extent that
an Owner delivers to the Depositary for conversion a Receipt or Receipts
evidencing Depositary Shares representing Shares which in the aggregate
(including fractional Shares) would result in a fractional share of Common
Stock being deliverable by the Issuer upon such Shares' conversion at the
rate specified in the Certificate of Designation, the Issuer shall deliver to
such Owner payment in cash in lieu of such fractional share of Common Stock,
calculated in accordance with Section 4.12 hereof. If a Receipt or Receipts
eveidencing more than one Depositary Share shall be surrendered for
conversion of the Shares represented thereby at one time by the same Owner,
the number of shares of Common Stock and the amount of cash in lieu of
fractional shares deliverable by the Issuer upon such conversion shall be
computed on the basis of the aggregate number of Shares (including fractional
Shares) represented by Depositary Shares evidenced by the Receipt or Receipts
so surrendered.
Upon receipt by the Depositary or an agent of the Depositary
of a Receipt or Receipts, together with a notice of conversion, duly completed
and executed, directing the Depositary or such agent to instruct the Issuer to
cause the conversion (which may be a partial conversion) of a specified number
of Shares (which instruction may be by
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reference to the number of Depositary Shares representing such Shares) at the
rate specified in the Certificate of Designation, and an assignment of such
Receipt or Receipts to the Issuer or in blank, duly completed and executed, the
Depositary or such agent shall instruct the Issuer, subject to adjustment as
provided in the Certificate of Designation and this Deposit Agreement, (i) to
cause the conversion (which may be a partial conversion) at the rate specified
in the Certificate of Designation of the number of Shares represented by the
Depositary Shares evidenced by the Receipt or Receipts so surrendered for
conversion as specified in the written notice to the Depositary or such agent
and (ii) to cause the delivery to the Owner of such Receipt or Receipts of (a) a
certificate or certificates evidencing the number of whole shares of Common
Stock into which the Shares (including fractional Shares) represented by the
Depositary Shares evidenced by such Receipt or Receipts have been converted, and
(b) the amount of cash to which such Owner is entitled in lieu of fractional
shares of Common Stock otherwise deliverable by the Issuer upon such conversion,
calculated in accordance with Section 4.12 hereof. The Issuer shall as promptly
as practicable after receipt thereof cause the delivery of the certificate or
certificates and cash referred to in (a) and (b) above, and such conversion
shall be deemed to have been effected immediately prior to the close of business
on the date of such receipt and shall occur at the rate specified in the
Certificate of Designation in effect at such time and on such date. Upon such
conversion, the Depositary or such agent (i) shall deliver to the Owner a
Receipt evidencing the number of Depositary Shares evidenced by the surrendered
Receipt or Receipts over the number of Depositary Shares evidenced by such
Receipt or Receipts that have been so converted, (ii) shall cancel the
Depositary Shares evidenced by Receipts surrendered for conversion and (iii)
shall deliver to the Issuer or its transfer agent for the Shares for cancelation
the number of Shares (including fractional Shares) represented by the Depositary
Shares evidenced by the Receipts so surrendered and so converted. Upon the
delivery of the Shares to be canceled due to such conversion by the Depositary
or such agent to the Issuer or its transfer agent, the Issuer or its transfer
agent shall deliver to the Depositary or such agent, as applicable, a
certificate or certificates evidencing the number of Shares, if any, that equals
the excess of the number of Shares evidenced by the surrendered certificate over
the number of Shares evidenced by that certificate that have been so
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converted. Depositary Shares converted in connection with conversion of the
Shares represented thereby shall only be converted in whole, and not in part.
The Owner of a Receipt or Receipts on any dividend payment
record date established by the Depositary as provided in Section 4.6 hereof
shall be entitled to receive the dividend payable with respect to the Depositary
Shares evidenced by such Receipt or Receipts on the dividend payment date
notwithstanding the conversion (which may be a partial conversion) subsequent to
such record date of the Shares represented by such Depositary Shares. However,
if a Receipt or Receipts are surrendered for conversion after the close of
business on a dividend payment record date established by the Depositary and
before the opening of business on the next succeeding dividend payment date, the
Owner of such Receipt or Receipts shall pay to the Depositary an amount equal to
the dividend payable on such dividend payment date on the Depositary Shares
evidenced by the Receipt or Receipts being surrendered for conversion. Any Owner
of a Receipt or Receipts on a dividend payment record date established by the
Depositary who (or whose transferee) surrenders such Receipt or Receipts with
instructions to the Depositary for conversion of the underlying Shares on the
next succeeding dividend payment date shall receive the dividend payable with
respect to the Depositary Shares evidenced by such Receipt or such Receipts and
shall not be required to include payment of the amount of such dividend on such
Depositary Shares upon surrender of such Receipt or Receipts for conversion.
Upon the conversion of any Share for which a notice of
conversion has been provided to the Depositary or an agent of the Depositary by
the Owner of the Receipt or Receipts evidencing the Depositary Shares
representing such Share, dividends shall cease to become payable on such
Depositary Shares, such Depositary Shares shall be deemed no longer outstanding,
all rights of the Owner of the Receipt or Receipts evidencing such Depositary
Shares (except the right to receive (i) the Common Stock to which such Owner is
entitled upon conversion, (ii) any cash payable with respect to any fractional
shares of Common Stock otherwise deliverable by the Issuer upon conversion,
(iii) any Receipts evidencing Depositary Shares representing Shares which were
not so converted and (iv) any other securities, property or cash to which such
Owner is entitled hereunder)
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shall cease and terminate, and the Receipt or Receipts evidencing such
Depositary Shares shall be cancelled.
No fractional shares of Common Stock shall be deliverable by
the Issuer upon conversion of the Shares represented by the Depositary Shares.
ARTICLE III
CERTAIN OBLIGATIONS OF OWNERS OF RECEIPTS
SECTION 3.1 Filing Proofs, Certificates and Other
Information.
Any Owner of a Receipt may be required from time to time to
file with the Depositary such proof of citizenship or residence, to execute
such certificates and to make such representations and warranties, as the
Depositary may deem necessary or proper. The Depositary may withhold the
registration of transfer of any Receipt or the distribution of any dividend
or sale or distribution of rights or of the proceeds thereof or the delivery
of any Deposited Securities or the exercise of any conversion right referred
to in Section 2.9 and 2.10 or the delivery of any Common Stock upon such
conversion until such proof or other information is filed or such
certificates are executed or such representations and warranties made.
SECTION 3.2 Liability of Owner for Taxes.
If any tax or other governmental charge shall become payable
with respect to any Receipt or any Deposited Securities represented by
Depositary Shares evidenced by any Receipt or with respect to any conversion
right referred to in Section 2.10, such tax or other governmental charge shall
be payable by the Owner of such Receipt to the Depositary. The Depositary may
refuse to effect any transfer of such Receipt or any withdrawal of Deposited
Securities represented by Depositary Shares evidenced by such Receipt or any
such conversion until such payment is made, and may withhold any dividends or
other distributions, or may sell for the account of the Owner thereof any part
or all of the Deposited Securities represented by the Depositary Shares
evidenced by such Receipt, and may apply such dividends or other distributions
or the proceeds of any such sale in payment of such tax or other governmental
charge and the
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Owner of such Receipt shall remain liable for any deficiency.
SECTION 3.3 Warranties on Deposit of Shares.
The Issuer, upon depositing Shares under this Deposit
Agreement, shall be deemed thereby to represent and warrant that such Shares
and each certificate therefor are validly issued, fully paid, nonassessable
and free of any pre-emptive rights of the holders of outstanding capital
stock of the Issuer and that the person making such deposit is duly
authorized so to do. The Issuer shall also be deemed to represent that the
deposit of such Shares and the sale of Receipts evidencing Depositary Shares
representing Shares by the Issuer are not restricted under the Securities Act
of 1933. Such representations and warranties shall survive the deposit of
Shares and issuance of Receipts.
ARTICLE IV
THE DEPOSITED SECURITIES
SECTION 4.1 Cash Distributions.
Whenever the Depositary shall receive any cash dividend or
other cash distribution on any Deposited Securities (other than cash dividends
or cash distributions paid by the Issuer to the Depositary in lieu of fractional
shares of Common Stock otherwise deliverable by the Issuer upon conversion of
the Depositary Shares or in payment of dividends on the Depositary Shares), the
Depositary shall distribute the dividend or distribution thus received to the
Owners entitled thereto, in proportion, insofar as practicable, to the number of
Depositary Shares representing such Deposited Securities held by them
respectively. In the event that the Issuer or the Depositary shall be required
to withhold and does withhold from any such cash dividend or such other cash
distribution an amount on account of taxes, the amount distributed to the Owner
of the Receipts evidencing Depositary Shares representing such Deposited
Securities shall be reduced accordingly. The Depositary shall distribute only
such amount, however, as can be distributed without attributing to any Owner a
fraction of one cent. Any such fractional amounts shall be rounded to the
nearest whole cent and so distributed to Owners entitled thereto. The Depositary
will forward to the Issuer or its
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agent such information from its records as the Issuer may reasonably request to
enable the Issuer or its agent to file necessary reports with governmental
agencies.
SECTION 4.2 Regular Share Dividends Payable in Common
Stock.
Pursuant to and subject to the terms of the Certificate of
Designation, the Issuer may pay dividends (in whole or in part) on the Shares
through the delivery of shares of Common Stock, so long as shares of Common
Stock delivered in payment of a dividend are delivered on the regular dividend
payment date (as set forth in the Certificate of Designation) for such dividend.
Dividends paid by the Issuer on Shares represented by Depositary Shares shall be
paid to the Depositary, as record holder of such Shares (assuming the Depositary
was also the record holder for such Shares on the related record date for such
dividend payment). The Depositary shall distribute, on the related regular
dividend payment date, shares of Common Stock paid to it by the Issuer as
dividends on the Shares to persons who were Owners on the related record date
for such dividend, as established by the Depositary in accordance with Section
4.6 hereof. The Depositary shall distribute to each such Owner on such date, for
each Depositary Share evidenced by a Receipt or Receipts held by such Owner on
the related record date for such dividend (it being understood that the number
of fractional shares of Common Stock to which such Owner is entitled with
respect to such dividend shall be determined on the basis of its aggregate
holdings of such Depositary Shares), (i) a number of shares (subject to clause
(ii) of this sentence) of Common Stock equal to one-five hundredth of the number
of shares of Common Stock (including fractional shares) payable per Share in
payment of the related dividend as determined pursuant to the Certificate of
Designation and (ii) the amount of cash to which such Owner is entitled in lieu
of fractional shares of Common Stock otherwise distributable by the Depositary
under clause (i), calculated in accordance with Section 4.12 hereof. The Issuer
shall deposit with the Depositary, on or prior to the regular dividend payment
date (as set forth in the Certificate of Designation) for any dividend which the
Issuer has elected to pay in whole or in part in shares of Common Stock, for
each Owner which held a Receipt or Receipts on the related record date for such
dividend as established by the Depositary, (i) certificates for the number of
shares of Common Stock and (ii) the amount of cash
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in lieu of fractional shares to which such Owner is entitled pursuant to the
preceding sentence.
No fractional shares of Common Stock will be delivered by the
Depositary to persons who were Owners on the related record date for a dividend
on the Shares in connection with the Depositary's distribution of a dividend on
the Shares paid by the Issuer to it in shares of Common Stock.
SECTION 4.3 Distributions Other Than Cash, Share Dividends Paid in
Common Stock, Shares or Rights.
Subject to the provisions of Section 4.8, whenever the
Depositary shall receive any distribution other than a distribution described in
Sections 4.1, 4.2, 4.4 or 4.5, the Depositary shall cause the securities or
property received by it to be distributed to the Owners entitled thereto, in
proportion to the number of Depositary Shares representing Deposited Securities
held by them respectively, in any manner that the Depositary may deem equitable
and practicable for accomplishing such distribution; provided, however, that if
in the opinion of the Depositary such distribution cannot be made
proportionately among the Owners entitled thereto, or if for any other reason
(including, but not limited to, any requirement that the Issuer or the
Depositary withhold an amount on account of taxes or other governmental charges
or that such securities must be registered under the Securities Act of 1933 in
order to be distributed to Owners or holders) the Depositary deems such
distribution not to be feasible, the Depositary may adopt such method as it may
deem equitable and practicable for the purpose of effecting such distribution,
including, but not limited to, the public or private sale of the securities or
property thus received, or any part thereof, and the net proceeds of any such
sale shall be distributed by the Depositary to the Owners entitled thereto as in
the case of a distribution received in cash pursuant to Section 4.1.
SECTION 4.4 Distributions in Shares.
If any distribution upon any Deposited Securities consists of
a dividend in, or free distribution of, Shares, the Depositary may, and shall if
the Issuer shall so request, distribute to the Owners of outstanding Receipts
entitled thereto, in proportion to the number of Depositary Shares representing
such Deposited Securities held by them respectively, additional Receipts
evidencing an aggregate number of Depositary Shares representing the amount of
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Shares received as such dividend or free distribution, subject to the terms and
conditions of the Deposit Agreement with respect to the deposit of Shares and
the issuance of Depositary Shares evidenced by Receipts, including the
withholding of any tax or other governmental charge as provided in Section 4.10.
In lieu of delivering Receipts for fractional Depositary Shares in any such
case, the Depositary shall sell the amount of Shares represented by the
aggregate of such fractions and distribute the net proceeds, all in the manner
and subject to the conditions described in Section 4.1, or, if the Depositary
deems such sale and distribution not feasible, the Depositary may adopt such
method as it shall deem equitable and practicable in substitution for delivering
Receipts for fractional Depositary Shares.
SECTION 4.5 Rights.
In the event that the Issuer shall offer or cause to be
offered to the holders of any Deposited Securities any rights to subscribe for
additional Shares or any rights of any other nature, the Depositary shall have
discretion as to the procedure to be followed in making such rights available to
any Owners or in disposing of such rights on behalf of any Owners and making the
net proceeds available to such Owners or, if by the terms of such rights
offering or for any other reason, the Depositary may not either make such rights
available to any Owners or dispose of such rights and make the net proceeds
available to such Owners, then the Depositary shall allow the rights to lapse.
If at the time of the offering of any rights the Depositary determines in its
discretion that it is lawful and feasible to make such rights available to all
Owners or to certain Owners but not to other Owners, the Depositary may
distribute to any Owner to whom it determines the distribution to be lawful and
feasible, in proportion to the number of Depositary Shares held by such Owner,
warrants or other instruments therefor in such form as it deems appropriate.
In circumstances in which rights would otherwise not be
distributed, if an Owner of Receipts requests the distribution of warrants or
other instruments in order to exercise the rights allocable to the Depositary
Shares of such Owner hereunder, the Depositary will make such rights available
to such Owner upon written notice from the Issuer to the Depositary that (i) the
Issuer has elected in its sole discretion to permit such rights to be exercised
and (ii) such Owner has executed such documents as the Issuer
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has determined in its sole discretion are reasonably required under applicable
law.
If the Depositary has distributed warrants or other
instruments for rights to all or certain Owners, then upon instruction from such
an Owner pursuant to such warrants or other instruments to the Depositary from
such Owner to exercise such rights, upon payment by such Owner to the Depositary
for the account of such Owner of an amount equal to the purchase price of the
Shares to be received upon the exercise of the rights, and upon payment of any
other charges as set forth in such warrants or other instruments, the Depositary
shall, on behalf of such Owner, exercise the rights and purchase the Shares, and
the Issuer shall cause the Shares so purchased to be delivered to the Depositary
on behalf of such Owner. As agent for such Owner, the Depositary shall cause the
Shares so purchased to be deposited pursuant to Section 2.2 of this Deposit
Agreement, and shall, pursuant to Section 2.3 of this Deposit Agreement, execute
and deliver Receipts to such Owner. In the case of a distribution pursuant to
the second paragraph of this section, such Receipts shall be legended in
accordance with applicable U.S. laws, and shall be subject to the appropriate
restrictions on sale, deposit, cancelation, and transfer under such laws.
If the Depositary determines in its discretion that it is not
lawful and feasible to make such rights available to all or certain Owners, it
may sell the rights, warrants or other instruments in proportion to the number
of Depositary Shares held by the Owners to whom it has determined it may not
lawfully or feasibly make such rights available, and allocate the net proceeds
of such sales (net of all taxes and governmental charges payable in connection
with such rights and subject to the terms and conditions of this Deposit
Agreement) for the account of such Owners otherwise entitled to such rights,
warrants or other instruments, upon an averaged or other practical basis without
regard to any distinctions among such Owners because of exchange restrictions or
the date of delivery of any Receipt or otherwise.
The Depositary will not offer rights to Owners unless both the
rights and the securities to which such rights relate are either exempt from
registration under the Securities Act of 1933 with respect to a distribution to
Owners or are registered under the provisions of such Act.
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If an Owner of Receipts requests distribution of warrants or other instruments,
notwithstanding that there has been no such registration under such Act, the
Depositary shall not effect such distribution unless it has received an opinion
from recognized counsel in the United States for the Issuer upon which the
Depositary may rely that such distribution to such Owner is exempt from such
registration.
The Depositary shall not be responsible for any failure to
determine that it may be lawful or feasible to make such rights available to
Owners in general or any Owner in particular.
SECTION 4.6 Fixing of Record Date.
Whenever any cash dividend or other cash distribution or any
dividend to be paid by the Issuer in shares of Common Stock shall become payable
or any distribution other than cash shall be made, or whenever rights,
preferences or privileges shall be offered or issued with respect to the
Deposited Securities, or whenever for any reason the Depositary causes a change
in the number of Shares that are represented by each Depositary Share, or
whenever the Depositary shall receive notice of any meeting at which holders of
Shares are entitled to vote or of which holders of Shares are entitled to
notice, the Depositary shall fix a record date (which shall be the same date as
the record date fixed by the Issuer in respect of the Shares) (i) for the
determination of the Owners who shall be (a) entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof or (b) entitled to give instructions for the exercise of voting rights
at any such meeting, or (ii) on or after which each Depositary Share will
represent the changed number of Shares.
SECTION 4.7 Voting of Deposited Securities.
Upon receipt of notice of any meeting at which the holders of
Shares are entitled to vote, the Depositary shall, as soon as practicable
thereafter, mail to the Owners a notice, which shall be provided by the Issuer
and which shall contain (i) such information as is contained in such notice of
meeting, and (ii) a statement that the Owners as of the close of business on a
specified record date fixed pursuant to Section 4.6 shall be entitled, subject
to any applicable provision of law, the Restated Certificate of Incorporation or
the by-laws of the Issuer, to instruct the Depositary as to the exercise of the
voting rights
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pertaining to the amount of Shares or other Deposited Securities represented by
their respective Depositary Shares and (iii) a statement as to the manner in
which such instructions may be given. Upon the written request of an Owner on
such record date, the Depositary shall endeavor, in so far as practicable, to
vote or cause to be voted the amount of Shares or other Deposited Securities
represented by the Depositary Shares evidenced by such Receipt in accordance
with the instructions set forth in such request. The Issuer hereby agrees to
take all reasonable action that may be deemed necessary by the Depositary in
order to enable the Depositary to vote such Shares or cause such Shares to be
voted. In the absence of specific instructions from the Owner of a Receipt, the
Depositary will abstain from voting to the extent of the Shares represented by
the Depositary Shares evidenced by such Receipt.
SECTION 4.8 Changes Affecting Deposited Securities.
In circumstances where the provisions of Section 4.3 do not
apply, upon any change in nominal value, change in par value, split-up,
consolidation or any other reclassification of Deposited Securities, or upon any
recapitalization, reorganization, merger or consolidation or sale of assets
affecting the Issuer or to which it is a party, any securities which shall be
received by the Depositary in exchange for or in conversion of or in respect of
Deposited Securities, shall be treated as new Deposited Securities under this
Deposit Agreement, and Depositary Shares evidenced by Receipts then outstanding
shall thenceforth represent the proportionate interest of Owners thereof in the
new Deposited Securities so received in exchange or conversion, unless
additional Receipts are delivered pursuant to the following sentence. In any
such case the Depositary may, and shall if the Issuer shall so request, execute
and deliver additional Receipts as in the case of a dividend in Shares, or call
for the surrender of outstanding Receipts to be exchanged for new Receipts
specifically describing such new Deposited Securities.
SECTION 4.9 Reports.
The Depositary shall make available for inspection by Owners
at its Corporate Trust Office any reports and communications, including any
proxy soliciting material, received from the Issuer which are both (i) received
by the Depositary as the holder of the Deposited Securities and (ii) made
generally available to the holders of such Deposited Securities by the Issuer.
The Issuer agrees that
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it shall deliver to the Depositary, and the Depositary shall, promptly after
receipt thereof, transmit to the Owners of the Receipts, in each case at the
address recorded in the Depositary's books, copies of all notices and reports
(including financial statements) required by law, by the rules of any national
securities exchange upon which the Depositary Shares are listed or by the
Restated Certificate of Incorporation or the Certificate of Designation to be
furnished by the Issuer to holders of Shares. Such transmission shall be at the
Issuer's expense and the Issuer shall provide the Depositary with such number of
copies of such documents as the Depositary may reasonably request. In addition,
the Depositary will transmit to the Owners of Receipts at the Issuer's expense
such other documents as may be requested by the Issuer.
SECTION 4.10 Lists of Owners.
Promptly upon request by the Issuer, the Depositary shall, at
the expense of the Issuer, furnish to it a list, as of a recent date, of the
names, addresses and holdings of Depositary Shares by all persons in whose names
Receipts are registered on the books of the Depositary.
SECTION 4.11 Withholding.
In the event that the Depositary determines that any
distribution in property (including Shares and rights to subscribe therefor) is
subject to any tax or other governmental charge which the Depositary is
obligated to withhold, the Depositary may by public or private sale dispose of
all or a portion of such property (including Shares and rights to subscribe
therefor) in such amounts and in such manner as the Depositary deems necessary
and practicable to pay any such taxes or charges and the Depositary shall
distribute the net proceeds of any such sale after deduction of such taxes or
charges to the Owners entitled thereto.
SECTION 4.12 Fractional Shares.
No fractional shares of Common Stock will be delivered by the
Issuer or the Depositary, as applicable, to the Owners of Receipts upon
mandatory or optional conversion into shares of Common Stock.
In lieu of any fractional share otherwise deliverable in
respect of the aggregate number of Depositary Shares evidenced by a Receipt
or Receipts of any Owner that are converted upon mandatory conversion, such
Owner shall be entitled to receive an amount in cash equal to the same
fraction of the Closing
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Price (as defined in Section 1.1 hereof) of the Common Stock as of the fifth
Trading Day (as defined in Section 1.1 hereof) immediately preceding the
Mandatory Conversion Date.
In lieu of any fractional share otherwise deliverable in
respect of the aggregate number of Shares represented by Depositary Shares
evidenced by a Receipt or Receipts of any Owner that are converted upon any
optional conversion, such Owner shall be entitled to receive an amount in
cash equal to the same fraction of the Closing Price of the Common Stock as
of the second Trading Day immediately preceding the effective date of
conversion.
If a Receipt or Receipts evidencing more than one
Depositary Share are surrendered for conversion at one time by or for the
same Owner, the number of shares of Common Stock and the amount of cash in
lieu of fractional shares deliverable upon conversion shall be computed on
the basis of the aggregate number of Depositary Shares evidenced by the
Receipt or Receipts so surrendered.
No fractional shares of Common Stock will be delivered by the
Depositary to persons who were Owners on the related record date for a dividend
on the Shares in connection with the Depositary's distribution of a dividend on
the Shares paid by the Issuer to it in shares of Common Stock. In lieu of any
fractional share otherwise so deliverable, such Owners shall be entitled to
receive an amount in cash equal to the same fraction of the Closing Price of the
Common Stock determined as of the fifth Trading Day immediately preceding the
dividend payment date. On the Mandatory Conversion Date, the fractional share of
Common Stock that any Owner would otherwise be entitled to receive shall be
determined by adding all the fractional shares such Owner would be entitled to
receive (i) on the mandatory conversion of all Depositary Shares evidenced by
Receipts held by such Owner and (ii) on the payment of the regular quarterly
dividend on all Depositary Shares evidenced by Receipts held by such Owner at
the related record date. On the Mandatory Conversion Date, the Issuer may, at
its option, deliver any whole number of shares of Common Stock resulting from
the addition of fractional shares resulting from (i) and (ii) above in shares of
Common Stock and any remaining fractional shares in cash.
In the event that (i) mandatory conversion of the Depositary
Shares, (ii) voluntary conversions of the Shares represented by the Depositary
Shares, (iii) the Depositary's delivery of shares of Common Stock as dividends
on the Depositary Shares to persons who were Owners of the Receipts
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evidencing such Depositary Shares on the related record date for such
dividend, (iv) the combination of (i) and (iii) pursuant to the preceding
paragraph or (v) some combination of the foregoing result in any Owner of
Receipts evidencing Depositary Shares being entitled to cash in lieu of a
fractional share on the same date, the Issuer will deliver (either directly
or through the Depositary, as applicable) to all such Owners cash in an
amount equal to the total amount of cash to which all such Owners of Receipts
are entitled in lieu of fractional shares on such date.
If payment in cash in lieu of fractional shares of Common
Stock in accordance with the preceding six paragraphs would result in the
Issuer's failure to be in compliance with any debt instrument to which it is a
party, the Issuer shall be entitled to deliver (either directly or through the
Depositary, as applicable) a whole share of Common Stock in lieu of cash to
Owners entitled to fractional shares of Common Stock (beginning with the Owners
entitled to the largest fractional shares) until delivery of cash in lieu of
fractional shares of Common Stock to the remaining Owners would no longer result
in the Issuer's failure to be in compliance with such debt instrument.
ARTICLE V
THE DEPOSITARY AND THE ISSUER
SECTION 5.1 Maintenance of Office and Transfer Books by the Depositary.
Until termination of this Deposit Agreement in accordance with
its terms, the Depositary shall maintain in the Borough of Manhattan, The City
of New York, facilities for the execution and delivery, registration,
registration of transfers and surrender of Receipts in accordance with the
provisions of this Deposit Agreement.
The Depositary shall keep books for the registration of
Receipts and transfers of Receipts which at all reasonable times shall be open
for inspection by the Owners, provided that such inspection shall not be for the
purpose of communicating with Owners in the interest of a business or object
other than the business of the Issuer or a matter related to this Deposit
Agreement or the Receipts.
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The Depositary may close the transfer books, at any time or
from time to time, when deemed expedient by it in connection with the
performance of its duties hereunder.
If any Receipts or the Depositary Shares evidenced thereby are
listed on one or more stock exchanges in the United States, the Depositary shall
act as Registrar or appoint a Registrar or one or more co-registrars for
registry of such Receipts in accordance with any requirements of such exchange
or exchanges.
SECTION 5.2 Prevention or Delay in Performance by the Depositary or the
Issuer.
Neither the Depositary nor the Issuer shall incur any
liability to any Owner or holder of any Receipt, if by reason of any provision
of any present or future law or regulation of the United States or of any
governmental or regulatory authority or stock exchange, or by reason of any
provision, present or future, of the Restated Certificate of Incorporation or
by-laws of the Issuer, or by reason of any act of God or war or other
circumstances beyond its control, the Depositary or the Issuer shall be
prevented or forbidden from, or be subject to any civil or criminal penalty on
account of, doing or performing any act or thing which by the terms of this
Deposit Agreement it is provided shall be done or performed; nor shall the
Depositary or the Issuer incur any liability to any Owner or holder of any
Receipt by reason of any non-performance or delay, caused as aforesaid, in the
performance of any act or thing which by the terms of this Deposit Agreement it
is provided shall or may be done or performed, or by reason of any exercise of,
or failure to exercise, any discretion provided for in this Deposit Agreement.
Where, by the terms of a distribution pursuant to Sections 4.1, 4.3, or 4.4 of
the Deposit Agreement, or an offering or distribution pursuant to Section 4.5 of
the Deposit Agreement, or for any other reason, such distribution or offering
may not be made available to Owners, and the Depositary may not dispose of such
distribution or offering on behalf of such Owners and make the net proceeds
available to such Owners, then the Depositary shall not make such distribution
or offering, and shall allow any rights, if applicable, to lapse.
SECTION 5.3 Obligations of the Depositary and the Issuer.
The Issuer assumes no obligation nor shall it be subject to
any liability under this Deposit Agreement to
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Owners or holders of Receipts, except that it agrees to perform its obligations
specifically set forth in this Deposit Agreement without negligence or bad
faith.
The Depositary assumes no obligation nor shall it be subject
to any liability under this Deposit Agreement to any Owner or holder of any
Receipt (including, without limitation, liability with respect to the validity
or worth of the Deposited Securities), except that it agrees to perform its
obligations specifically set forth in this Deposit Agreement without negligence
or bad faith.
Neither the Depositary nor the Issuer shall be under any
obligation to appear in, prosecute or defend any action, suit or other
proceeding in respect of any Deposited Securities or in respect of the Receipts,
which in its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability shall be furnished as often
as may be required.
Neither the Depositary nor the Issuer shall be liable for any
action or nonaction by it in reliance upon the advice of or information from
legal counsel, accountants, any person presenting Shares for deposit, any Owner
or any other person believed by it in good faith to be competent to give such
advice or information.
The Depositary shall not be liable for any acts or omissions
made by a successor depositary whether in connection with a previous act or
omission of the Depositary or in connection with any matter arising wholly after
the removal or resignation of the Depositary, provided that in connection with
the issue out of which such potential liability arises the Depositary performed
its obligations without negligence or bad faith while it acted as Depositary.
The Depositary shall not be responsible for any failure to
carry out any instructions to vote any of the Deposited Securities, or for the
manner in which any such vote is cast or the effect of any such vote, provided
that any such action or nonaction is in good faith.
No disclaimer of liability under the Securities Act of 1933 is
intended by any provision of this Deposit Agreement.
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SECTION 5.4 Resignation and Removal of the Depositary.
The Depositary may at any time resign as Depositary hereunder
by written notice of its election so to do delivered to the Issuer, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Issuer by
written notice of such removal effective upon the appointment of a successor
depositary and its acceptance of such appointment as hereinafter provided.
In case at any time the Depositary acting hereunder shall
resign or be removed, the Issuer shall use its best efforts to appoint a
successor depositary, which shall be a bank or trust company having an office in
the Borough of Manhattan, The City of New York and having a combined capital and
surplus of at least $50,000,000. Every successor depositary shall execute and
deliver to its predecessor and to the Issuer an instrument in writing accepting
its appointment hereunder, and thereupon such successor depositary, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor; but such predecessor, nevertheless,
upon payment of all sums due it and on the written request of the Issuer shall
execute and deliver an instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign, transfer and deliver
all right, title and interest in the Deposited Securities to such successor, and
shall deliver to such successor a list of the Owners of all outstanding
Receipts. Any such successor depositary shall promptly mail notice of its
appointment to the Owners.
Any corporation into or with which the Depositary may be
merged or consolidated shall be the successor of the Depositary without the
execution or filing of any document or any further act.
SECTION 5.5 Distribution of Additional Shares, Rights, etc.
The Issuer agrees that in the event of any issuance or
distribution of (1) additional Shares, (2) rights to subscribe for Shares, (3)
securities convertible into Shares, or (4) rights to subscribe for such
securities, (each a "Distribution"), the Issuer will promptly furnish to the
Depositary a written opinion from
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U.S. counsel for the Issuer, which counsel shall be satisfactory to the
Depositary, stating whether or not the Distribution requires a Registration
Statement under the Securities Act of 1933 to be in effect prior to making such
Distribution available to Owners entitled thereto. If in the opinion of such
counsel a Registration Statement is required, such counsel shall furnish to the
Depositary a written opinion as to whether or not there is a Registration
Statement in effect which will cover such Distribution.
The Issuer agrees with the Depositary that neither the Issuer
nor any company controlled by, controlling or under common control with the
Issuer will at any time deposit any Shares, either originally issued or
previously issued and reacquired by the Issuer or any such affiliate, unless a
Registration Statement is in effect as to such Shares under the Securities Act
of 1933.
SECTION 5.6 Indemnification.
The Issuer agrees to indemnify the Depositary, its directors,
employees, agents and affiliates, and hold each of them harmless from, any
liability or expense (including, but not limited to, the fees and expenses of
counsel) which may arise out of acts performed or omitted, in accordance with
the provisions of this Deposit Agreement and of the Receipts, as the same may be
amended, modified or supplemented from time to time, (i) by the Depositary or
its directors, employees, agents and affiliates, except for any liability or
expense arising out of the negligence or bad faith of either of them, or (ii) by
the Issuer or any of its directors, employees, agents and affiliates.
The Depositary agrees to indemnify the Issuer, its directors,
employees, agents and affiliates and hold them harmless from any liability or
expense which may arise out of acts performed or omitted by the Depositary or
its directors, employees, agents and affiliates due to their negligence or bad
faith.
SECTION 5.7 Charges of Depositary.
No fees, charges and expenses of the Depositary or any agent
of the Depositary hereunder or of any Registrar shall be payable by any person
other than the Issuer, except for any taxes (including transfer taxes, if any)
and other governmental charges and except as provided in this Deposit Agreement.
All other fees, charges and expenses of the Depositary and any agent of the
Depositary hereunder and of
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any Registrar incident to the performance of their respective obligations
hereunder shall be paid upon consultation and agreement between the Depositary
and the Issuer as to the amount and nature of such fees, charges and expenses.
The Depositary shall present its statement for fees, charges and expenses to the
Issuer once every month or at such other intervals as the Issuer and the
Depositary may agree.
The Depositary may own and deal in any class of securities of
the Issuer and its affiliates and in Receipts.
SECTION 5.8 Retention of Depositary Documents.
The Depositary is authorized to destroy those documents,
records, bills and other data compiled during the term of this Deposit Agreement
at the times permitted by the laws or regulations governing the Depositary
unless the Issuer requests that such papers be retained for a longer period or
turned over to the Issuer or to a successor depositary.
SECTION 5.9 Exclusivity.
The Issuer agrees not to appoint any other depositary for
issuance of Depositary Receipts so long as The Bank of New York is acting as
Depositary hereunder.
SECTION 5.10 List of Restricted Securities Owners.
From time to time, the Issuer shall provide to the Depositary
a list setting forth, to the actual knowledge of the Issuer, those persons or
entities who beneficially own Restricted Securities and the Issuer shall update
that list on a regular basis. The Issuer agrees to advise in writing each of the
persons or entities so listed that such Restricted Securities are ineligible for
deposit hereunder. The Depositary may rely on such a list or update but shall
not be liable for any action or omission made in reliance thereon.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1 Amendment.
The form of the Receipts and any provision of this Deposit
Agreement may at any time and from time to time be amended by agreement between
the Issuer and the Depositary
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in any respect that they may deem necessary or desirable. Any amendment that
shall impose any fees, taxes or charges (other than taxes and other governmental
charges, fees and expenses provided for herein or in the Receipts), or that
shall otherwise prejudice any substantial existing right of Owners of Receipts,
shall not become effective as to outstanding Receipts until the expiration of 90
days after notice of such amendment shall have been given to the Owners of
outstanding Receipts. Every Owner of an outstanding Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold such Receipt,
to consent and agree to such amendment and to be bound by this Deposit Agreement
as amended thereby. In no event shall any amendment impair the right, subject to
the provisions of this Deposit Agreement, of any Owner to surrender any Receipt
or Receipts evidencing Depositary Shares representing Shares with instructions
to the Depositary or an applicable agent of the Depositary to deliver to the
Owner such Shares or to cause the conversion of such Shares into Common Stock
and cash for fractional shares of Common Stock and, in each case, all securities
and other property, if any, represented thereby, except in order to comply with
mandatory provisions of applicable law.
SECTION 6.2 Termination.
The Deposit Agreement shall terminate at the close of
business on the Mandatory Conversion Date upon distribution by the Depositary
to each Owner entitled thereto of (i) shares of Common Stock and cash
(whether in lieu of fractional shares or otherise) received by the Depositary
from the Issuer for madatory conversion of, and/or dividend payments on, the
Depositary Shares eveidenced by the Receipt or Receipts held by such Owner
and (ii) all other securities property and cash then held by the Depositary
hereunder. On and after the date of termination, the Owner of a Receipt will,
upon surrender of such Receipt at the Corporate Trust Office of the
Depositary and payment of any applicable taxes or governmental charges, be
entitled to delivery, to him or upon his order, of the amount of Deposited
Securities represented by the Depositary Shares evidenced by such Receipt. If
any Receipts shall remain outstanding after the date of termination, the
Depositary thereafter shall discontinue the registration of transfers of
Receipts, shall suspend the distribution of dividends to the Owners thereof,
and shall not give any further notices or perform any further acts under this
Deposit Agreement, except that the Depositary shall continue to collect
dividends and other distributions pertaining to Deposited Securities, shall
sell rights as provided in this Deposit Agreement, and shall continue to
deliver Deposited Securities, together with any dividends or other
distributions received with respect thereto and the net
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proceeds of the sale of any rights or other property, in exchange for
Receipts surrendered to the Depositary (after deducting, in each case, any
applicable taxes or governmental charges). At any time after the expiration
of one year from the date of termination, the Depositary may sell the
Deposited Securities then held hereunder and may thereafter hold uninvested
the net proceeds of any such sale, together with any other cash then held by
it hereunder, unsegregated and without liability for interest, for the pro
rata benefit of the Owners of Receipts which have not theretofore been
surrendered, such Owners thereupon becoming general creditors of the
Depositary with respect to such net proceeds. After making such sale, the
Depositary shall be discharged from all obligations under this Deposit
Agreement, except to account for such net proceeds and other cash (after
deducting, in each case, any applicable taxes or governmental charges). Upon
the termination of this Deposit Agreement, the Issuer shall be discharged
from all obligations under this Deposit Agreement except for its obligations
to the Depositary under Sections 5.6 and 5.7 hereof.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Counterparts.
This Deposit Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of such
counterparts shall constitute one and the same instrument. Copies of this
Deposit Agreement shall be filed with the Depositary and shall be open to
inspection by any holder or Owner of a Receipt during business hours.
SECTION 7.2 No Third Party Beneficiaries.
This Deposit Agreement is for the exclusive benefit of the
parties hereto and shall not be deemed to give any legal or equitable right,
remedy or claim whatsoever to any other person.
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SECTION 7.3 Severability.
In case any one or more of the provisions contained in this
Deposit Agreement or in the Receipts should be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall in no way be affected,
prejudiced or disturbed thereby.
SECTION 7.4 Holders and Owners as Parties; Binding Effect.
The holders and Owners of Receipts from time to time shall be
parties to this Deposit Agreement and shall be bound by all of the terms and
conditions hereof and of the Receipts by acceptance thereof.
SECTION 7.5 Notices.
Any and all notices to be given to the Issuer shall be deemed
to have been duly given if personally delivered or sent by mail or cable, telex
or facsimile transmission confirmed by letter, addressed to Mr. Kieran E. Burke,
Premier Parks Inc., 122 East 42nd Street, 49th Floor, New York, NY 10168
(facsimile: (212) 949-6203) or any other place to which the Issuer may have
transferred its principal office.
Any and all notices to be given to the Depositary shall be
deemed to have been duly given if in English and personally delivered or sent by
mail or cable, telex or facsimile transmission confirmed by letter, addressed to
The Bank of New York, 101 Barclay Street, New York, New York 10286, Attention:
American Depositary Receipt Administration, or any other place to which the
Depositary may have transferred its Corporate Trust Office.
Any and all notices to be given to any Owner shall be deemed
to have been duly given if personally delivered or sent by mail or cable, telex
or facsimile transmission confirmed by letter, addressed to such Owner at the
address of such Owner as it appears on the transfer books for Receipts of the
Depositary, or, if such Owner shall have filed with the Depositary a written
request that notices intended for such Owner be mailed to some other address, at
the address designated in such request.
Delivery of a notice sent by mail or cable, telex or facsimile
transmission shall be deemed to be effected at the time when a duly addressed
letter containing the same
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(or a confirmation thereof in the case of a cable, telex or facsimile
transmission) is deposited, postage prepaid, in a post-office letter box. The
Depositary or the Issuer may, however, act upon any cable, telex or facsimile
transmission received by it, notwithstanding that such cable, telex or facsimile
transmission shall not subsequently be confirmed by letter as aforesaid.
SECTION 7.6 Governing Law.
This Deposit Agreement and the Receipts shall be interpreted
and all rights hereunder and thereunder and provisions hereof and thereof shall
be governed by the laws of the State of New York.
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IN WITNESS WHEREOF, PREMIER PARKS INC. and THE BANK OF NEW YORK have
duly executed this agreement as of the day and year first set forth above and
all Owners shall become parties hereto upon acceptance by them of Receipts
issued in accordance with the terms hereof.
PREMIER PARKS INC., as Issuer
By:
------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Depositary
By:
------------------------------
Name:
Title:
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Exhibit A to Deposit Agreement
N0.
DEPOSITARY SHARES
(Each Depositary Share
represents 1/500 of a
deposited Share)
THE BANK OF NEW YORK
DEPOSITARY RECEIPT FOR _____
SHARES OF THE % MANDATORILY
CONVERTIBLE PREFERRED STOCK,
PAR VALUE $1.00 PER SHARE, OF
PREMIER PARKS INC.
(INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE)
The Bank of New York as depositary (hereinafter called the
"Depositary"), hereby certifies that , or registered assigns IS
THE OWNER OF
DEPOSITARY SHARES
representing interests in deposited shares of % Mandatorily Convertible
Preferred Stock, par value $1.00 per share (herein called "Shares"), of Premier
Parks Inc., incorporated under the laws of the State of Delaware (herein called
the "Issuer"). At the date hereof, each Depositary Share represents 1/500 of a
Share which is deposited under the deposit agreement at the Corporate Trust
Office of the Depositary. The Depositary's Corporate Trust Office is located at
a different address than its principal executive office. Its Corporate Trust
Office is located at 101 Barclay Street, New York, N.Y. 10286, and its principal
executive office is located at 48 Wall Street, New York, N.Y. 10286.
THE DEPOSITARY'S CORPORATE TRUST OFFICE ADDRESS IS
101 BARCLAY STREET, NEW YORK, N.Y. 10286
<PAGE>
1. THE DEPOSIT AGREEMENT.
This Depositary Receipt is one of an issue (herein called
"Receipts"), all issued and to be issued upon the terms and conditions set
forth in the deposit agreement, dated as of , 1998 (herein called
the "Deposit Agreement"), by and among Issuer, the Depositary, and all Owners
and holders from time to time of Receipts issued thereunder, each of whom by
accepting a Receipt agrees to become a party thereto and become bound by all
the terms and conditions thereof. The Deposit Agreement sets forth the rights
of Owners and holders of the Receipts and the rights and duties of the
Depositary in respect of the Shares deposited thereunder and any and all
other securities, property and cash from time to time received in respect of
such Shares and held thereunder (such Shares, securities, property, and cash
are herein called "Deposited Securities"). Copies of the Deposit Agreement
are on file at the Depositary's Corporate Trust Office in New York City.
The statements made on the face and reverse of this Receipt are
summaries of certain provisions of the Deposit Agreement and are qualified by
and subject to the detailed provisions of the Deposit Agreement, to which
reference is hereby made. Capitalized terms not defined herein shall have the
meanings set forth in the Deposit Agreement.
2. SURRENDER OF RECEIPTS AND WITHDRAWAL OF SHARES.
Upon surrender at the Corporate Trust Office of the Depositary of this
Receipt, and subject to the terms and conditions of the Deposit Agreement, the
Owner hereof is entitled to delivery, to him or upon his order, of the amount of
Deposited Securities (it being understood that, with respect to any withdrawal
of Shares, only whole Shares may be withdrawn) at the time represented by the
Depositary Shares for which this Receipt is issued. Delivery of such Deposited
Securities may be made by the delivery of (i) certificates for Shares being
withdrawn in the name of the Owner hereof or as ordered by him or by
certificates for the Shares being withdrawn properly endorsed or accompanied by
proper instruments of transfer to such Owner or as ordered by him and (ii) any
other securities, property and cash to which such Owner is then entitled in
respect of this Receipt to such Owner or as ordered by him. Such delivery will
be made at the Corporate Trust Office of the Depositary. Notwithstanding any
other provision of the Deposit Agreement or this Receipt, the surrender of
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outstanding Receipts and withdrawal of Deposited Securities may be suspended
only for (i) temporary delays caused by closing the transfer books of the
Depositary or Issuer or the payment of dividends, (ii) the payment of taxes,
stock transfer or registration fees and similar charges, and (iii) compliance
with any U.S. laws or governmental regulations relating to the Receipts or to
the withdrawal of the Deposited Securities.
3. MANDATORY CONVERSION OF SHARES INTO COMMON STOCK.
On the date fixed for mandatory conversion of the Shares by the
Certificate of Designation (the "Mandatory Conversion Date"), all then
outstanding Shares other than Shares represented by Depositary Shares shall
mandatorily convert into (i) shares of common stock, par value $0.05 per
share (the "Common Stock"), of the Issuer at the applicable rate specified in
the Certificate of Designation, (ii) cash in lieu of fractional shares of
Common Stock otherwise deliverable by the Issuer upon such conversion and
(iii) the right to receive amounts in cash equal to all accrued and unpaid
dividends on such Shares to the Mandatory Conversion Date (other than
previously declared dividends payable to a holder of record of the Shares as
of a prior date), all as provided in and subject to the Certificate of
Designation.
From and after the Mandatory Conversion Date, Shares represented by
Depositary Shares shall also be manditorily converted, and such Depositary
Shares shall be deemed no longer outstanding and all rights of the Owners of
the Receipts evidencing such Depositary Shares (except the right to receive
(i) the Common Stock to which such Owner is entitled upon conversion, (ii)
any cash payable with respect to any fractional shares of Common Stock
otherwise deliverable by the Depositary upon conversion, (iii) any cash for
accrued and unpaid dividends on such Shares (other than previously declared
dividends payable to an Owner as of a prior date) and (iv) any other
securities, property or cash to which such Owner is entitled under the
Deposit Agreement) shall cease and terminate. Upon surrender of the Receipts
evidencing such Depositary Shares at the Corporate Trust Office or at such
office or to such agent of the Depositary as the Depositary may designate for
such purpose (properly endorsed or assigned for transfer, as the Depositary
or such agent shall so require), such Depositary Shares shall be converted
into, subject to adjustment as provided in the Certificate of Designation and
the Deposit Agreement, (i) a
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<PAGE>
number of shares of Common Stock per Depositary Share equal to one-five
hundredth of the number (including fractional shares) of shares of Common Stock
which each Share converted into at the applicable rate specified in the
Certificate of Designation, (ii) cash in lieu of fractional shares of Common
Stock otherwise deliverable by the Depositary upon such conversion, calculated
in accordance with Section 4.12 of the Deposit Agreement, (iii) the right to
receive cash for any accrued and unpaid dividends on the Shares represented by
such Depositary Shares (other than previously declared dividends payable to an
Owner as of a prior date) and (iv) the right to receive any other securities,
property or cash to which Owners are entitled under the Deposit Agreement.
On the Mandatory Conversion Date, for each Owner of a Receipt or
Receipts, the Issuer shall deposit with the Depositary (i) certificates for
the number of shares of Common Stock and (ii) the amount of cash in lieu of
fractional shares determined as set forth in the preceding paragraph into
which the Depositary Shares evidenced by such Receipt or Receipts shall
convert on the Mandatory Conversion Date (assuming proper surrender of such
Receipt or Receipts to the Depositary or any of its agents) and (iii) subject
to the Certificate of Designation, an amount in cash equal to all accrued and
unpaid dividends on the Shares represented by such Depositary Shares to the
Mandatory Conversion Date (other than previously declared dividends payable
to an Owner as of a prior date). With respect to Owners which hold a Receipt
or Receipts evidencing more than one Depositary Share on the Mandatory
Conversion Day, the number of shares of Common Stock and the amount of cash
in lieu of fractional shares to be deposited by the Issuer with the
Depositary on that date shall be computed on the basis of the aggregate
number of Depositary Shares evidenced by such Receipt or Receipts. Using such
shares of Common Stock and cash, the Depositary shall as promptly as
practicable deliver to each Owner of a Receipt or Receipts which properly
delivers such Receipt or Receipts to the Depositary or any of its agents
certificates for the number of shares of Common Stock and the amount of cash,
without interest, to which such Owner is entitled pursuant to the preceding
provisions.
No fractional shares of Common Stock will be delivered by the
Depositary in connection with mandatory conversion of
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<PAGE>
Shares represented by Depositary Shares on the Mandatory Conversion Date.
4. OPTIONAL CONVERSION OF SHARES INTO COMMON STOCK.
Subject to the terms and conditions of the Deposit Agreement, an
Owner of a Receipt or Receipts evidencing Depositary Shares representing
whole or fractional Shares may surrender such Receipt or Receipts at the
Corporate Trust Office or at such office or to such agents of the Depositary
as the Depositary may designate for such purpose, together with a notice of
conversion duly completed and executed, thereby directing the Depositary or
any such agent to instruct the Issuer to cause the conversion (which may
include partial conversions) of the number of Shares (which instruction may
be given by reference to the number of Depositary Shares representing such
Shares) specified in such notice of conversion into shares of Common Stock at
the rate specified in the Certificate of Designation, and an assignment of
such Receipt or Receipts to the Issuer or in blank, duly completed and
executed (and, if such conversion is to occur after the close of business on
a record date for any payment of declared dividends on the Shares and before
the opening of business on the next succeeding dividend payment date, payment
in cash of an amount equal to the dividend payable on such date on the Shares
so converted). To the extent that an Owner delivers to the Depositary for
conversion a Receipt or Receipts evidencing Depositary Shares representing
Shares which in the aggregate (including fractional Shares) would result in a
fractional share of Common Stock being deliverable by the Issuer upon such
Shares' conversion at the rate specified in the Certificate of Designation,
the Issuer shall deliver to such Owner payment in cash in lieu of such
fractional share of Common Stock, calculated in accordance with Section 4.12
of the Deposit Agreement. If a Receipt or Receipts eveidencing more than one
Depositary Share shall be surrendered for conversion of the Shares
represented thereby at one time by the same Owner, the number of shares of
Common Stock and the amount in cash in lieu of fractional shares deliverable
by the Issuer upon such conversion shall be computed on the basis of the
aggregate number of Shares (including fractional Shares) represented by
Depositary Shares evidenced by the Receipts or Receipts so surrendered.
Upon receipt by the Depositary or an agent of the Depositary of a
Receipt or Receipts, together with a notice of conversion, duly completed and
executed, directing the
5
<PAGE>
Depositary or such agent to instruct the Issuer to cause the conversion (which
may be a partial conversion) of a specified number of Shares (which instruction
may be by reference to the number of Depositary Shares representing such Shares)
at the rate specified in the Certificate of Designation, and an assignment of
such Receipt or Receipts to the Issuer or in blank, duly completed and executed,
the Depositary or such agent shall instruct the Issuer, subject to adjustment as
provided in the Certificate of Designation and this Deposit Agreement, (i) to
cause the conversion (which may be a partial conversion) at the rate specified
in the Certificate of Designation of the number of Shares represented by the
Depositary Shares evidenced by the Receipt or Receipts so surrendered for
conversion as specified in the written notice to the Depositary or such agent
and (ii) to cause the delivery to the Owner of such Receipt or Receipts of (a) a
certificate or certificates evidencing the number of whole shares of Common
Stock into which the Shares (including fractional Shares) represented by the
Depositary Shares evidenced by such Receipt or Receipts have been converted, and
(b) the amount of cash to which such Owner is entitled in lieu of fractional
shares of Common Stock otherwise deliverable by the Issuer upon such conversion,
calculated in accordance with Section 4.12 of the Deposit Agreement. The Issuer
shall as promptly as practicable after receipt thereof cause the delivery of the
certificate or certificates and cash referred to in (a) and (b) above, and such
conversion shall be deemed to have been effected immediately prior to the close
of business on the date of such receipt and shall occur at the rate specified in
the Certificate of Designation in effect at such time and on such date. Upon
such conversion, the Depositary or such agent shall deliver to the Owner a
Receipt evidencing the number of Depositary Shares evidenced by the surrendered
Receipt or Receipts over the number of Depositary Shares evidenced by such
Receipt or Receipts that have been so converted. Depositary Shares converted in
connection with conversion of the Shares represented thereby shall only be
converted in whole, and not in part.
The Owner of a Receipt or Receipts on any dividend payment record date
established by the Depositary as provided in the Deposit Agreement shall be
entitled to receive the dividend payable with respect to the Depositary Shares
evidenced by such Receipt or Receipts on the dividend payment date
notwithstanding the conversion (which may be a partial conversion) subsequent to
such record date of the
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<PAGE>
Shares represented by such Depositary Shares. However, if a Receipt or Receipts
are surrendered for conversion after the close of business on a dividend payment
record date established by the Depositary and before the opening of business on
the next succeeding dividend payment date, the Owner of such Receipt or Receipts
shall pay to the Depositary an amount equal to the dividend payable on such
dividend payment date on the Depositary Shares evidenced by the Receipt or
Receipts being surrendered for conversion. Any Owner of a Receipt or Receipts on
a dividend payment record date established by the Depositary who (or whose
transferee) surrenders such Receipt or Receipts with instructions to the
Depositary for conversion of the underlying Shares on the next succeeding
dividend payment date shall receive the dividend payable with respect to the
Depositary Shares evidenced by such Receipt or such Receipts and shall not be
required to include payment of the amount of such dividend on such Depositary
Shares upon surrender of such Receipt or Receipts for conversion.
Upon the conversion of any Share for which a notice of conversion has
been provided to the Depositary or an agent of the Depositary by the Owner of
the Receipt or Receipts evidencing the Depositary Shares representing such
Share, dividends shall cease to become payable on such Depositary Shares, such
Depositary Shares shall be deemed no longer outstanding, all rights of the Owner
of the Receipt or Receipts evidencing such Depositary Shares (except the right
to receive (i) the Common Stock to which such Owner is entitled upon conversion,
(ii) any cash payable with respect to any fractional shares of Common Stock
otherwise deliverable by the Issuer upon conversion, (iii) any Receipts
evidencing Depositary Shares representing Shares which were not so converted and
(iv) any other securities, property or cash to which such Owner is entitled
under the Deposit Agreement) shall cease and terminate, and the Receipt or
Receipts evidencing such Depositary Shares shall be cancelled.
No fractional shares of Common Stock shall be deliverable by the Issuer
upon conversion of the Shares represented by the Depositary Shares.
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<PAGE>
5. TRANSFERS, SPLIT-UPS, AND COMBINATIONS OF RECEIPTS.
The transfer of this Receipt is registrable on the books of the
Depositary at its Corporate Trust Office by the Owner hereof in person or by a
duly authorized attorney, upon surrender of this Receipt properly endorsed for
transfer or accompanied by proper instruments of transfer and funds sufficient
to pay any applicable transfer taxes and upon compliance with such regulations,
if any, as the Depositary may establish for such purpose. This Receipt may be
split into other such Receipts, or may be combined with other such Receipts into
one Receipt, evidencing the same aggregate number of Depositary Shares as the
Receipt or Receipts surrendered. As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination or surrender of any
Receipt or withdrawal of any Deposited Securities or the exercise of any
optional conversion right with respect to any Depositary Shares, the Depositary,
any of the Depositary's agents or the Registrar may require any or all of the
following: (i) payment to it of a sum sufficient to reimburse it for any tax or
other governmental charge and any stock transfer or registration fee with
respect thereto (including any such tax or charge and fee with respect to Shares
being deposited or withdrawn or with respect to the Common Stock being delivered
upon conversion); (ii) the production of proof satisfactory to it as to the
identity and genuineness of any signature and (iii) compliance with any
regulations the Depositary may establish consistent with the provisions of the
Deposit Agreement.
The transfer of Receipts in particular instances may be refused, or
the registration of transfer of outstanding Receipts generally may be
suspended, during any period when the transfer books of the Depositary are
closed, or if any such action is deemed necessary or advisable by the
Depositary or Issuer at any time or from time to time because of any
requirement of law or of any government or governmental body or commission,
or under any provision of the Deposit Agreement or this Receipt, or, with the
approval of the Issuer, for any other reason.
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<PAGE>
6. LIABILITY OF OWNER FOR TAXES.
If any tax or other governmental charge shall become payable with
respect to any Receipt or any Deposited Securities represented by Depositary
Shares evidenced hereby or with respect to any optional conversion right with
respect to any Depositary Shares, such tax or other governmental charge shall be
payable by the Owner hereof to the Depositary. The Depositary may refuse to
effect any transfer of this Receipt or any withdrawal of Deposited Securities
represented by Depositary Shares evidenced by such Receipt or any such
conversion until such payment is made, and may withhold any dividends or other
distributions, or may sell for the account of the Owner hereof any part or all
of the Deposited Securities represented by the Depositary Shares evidenced by
this Receipt, and may apply such dividends or other distributions or the
proceeds of any such sale in payment of such tax or other governmental charge
and the Owner hereof shall remain liable for any deficiency.
7. WARRANTIES OF DEPOSITORS.
The Issuer, upon depositing Shares under the Deposit Agreement,
shall be deemed thereby to represent and warrant that such Shares and each
certificate therefor are validly issued, fully paid, nonassessable and free
of any pre-emptive rights of the holders of outstanding capital stock of the
Issuer and that the person making such deposit is duly authorized so to do.
The Issuer shall also be deemed to represent that the deposit of such Shares
and the sale of Receipts evidencing Depositary Shares representing such
Shares by the Issuer are not restricted under the Securities Act of 1933.
Such representations and warranties shall survive the deposit of Shares and
issuance of Receipts.
8. FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION.
Any Owner of a Receipt may be required from time to time to file
with the Depositary such proof of citizenship or residence, to execute such
certificates and to make such representations and warranties, as the
Depositary may deem necessary or proper. The Depositary may withhold the
registration of transfer of any Receipt or the distribution of any dividend
or sale or distribution of rights or of the proceeds thereof or the delivery
of any
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<PAGE>
Deposited Securities or the exercise of any conversion right until such proof or
other information is filed or such certificates are executed or such
representations and warranties made.
9. CHARGES OF DEPOSITARY.
The Issuer will pay all fees, charges and expenses of the Depositary,
except for taxes (including transfer taxes, if any) and other governmental
charges and such charges as are expressly provided in the Deposit Agreement.
The Depositary may own and deal in any class of securities of Issuer
and its affiliates and in Receipts.
10. TITLE TO RECEIPTS.
It is a condition of this Receipt and every successive holder and Owner
of this Receipt by accepting or holding the same consents and agrees, that title
to this Receipt when properly endorsed or accompanied by proper instruments of
transfer, is transferable by delivery with the same effect as in the case of a
negotiable instrument; provided, however, that the Depositary, notwithstanding
any notice to the contrary, may treat the person in whose name this Receipt is
registered on the books of the Depositary as the absolute owner hereof for the
purpose of determining the person entitled to distribution of dividends or other
distributions or to any notice provided for in the Deposit Agreement and for all
other purposes.
11. VALIDITY OF RECEIPT.
This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose, unless this Receipt shall
have been executed by the Depositary by the manual or facsimile signature of a
duly authorized signatory of the Depositary and, if a Registrar for the Receipts
shall have been appointed, countersigned by the manual or facsimile signature of
a duly authorized officer of the Registrar.
12. REPORTS, INSPECTION OF TRANSFER BOOKS.
The Depositary will make available for inspection by Owners of Receipts
at its Corporate Trust Office any reports and communications, including any
proxy soliciting material, received from Issuer which are both (i) received by
the Depositary as the holder of the Deposited Securities and (ii) made generally
available to the holders of such
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<PAGE>
Deposited Securities by Issuer. The Issuer will deliver to the Depositary, and
the Depositary will, promptly after receipt thereof, transmit to the Owners of
the Receipts, in each case at the address recorded in the Depositary's books,
copies of all notices and reports (including financial statements) required by
law, by the rules of any national securities exchange upon which the Depositary
Shares are listed or by the Restated Certificate of Incorporation or the
Certificate of Designation to be furnished by the Issuer to holders of Shares.
Such transmission shall be at the Issuer's expense and the Issuer shall provide
the Depositary with such number of copies of such documents as the Depositary
may reasonably request. In addition, the Depositary will transmit to the Owners
of Receipts at the Issuer's expense such other documents as may be requested by
the Issuer.
The Depositary shall keep books for the registration of Receipts and
transfers of Receipts which at all reasonable times shall be open for inspection
by the Owners of Receipts, provided that such inspection shall not be for the
purpose of communicating with Owners of Receipts in the interest of a business
or object other than the business of Issuer or a matter related to the Deposit
Agreement or the Receipts.
13. DIVIDENDS AND DISTRIBUTIONS.
Whenever the Depositary shall receive any cash dividend or other cash
distribution on any Deposited Securities (other than cash dividends or cash
distributions paid by the Issuer to the Depositary in lieu of fractional shares
of Common Stock otherwise deliverable by the Issuer upon conversion of the
Depositary Shares or in payment of dividends on the Depositary Shares), the
Depositary shall distribute the dividend or distribution thus received to the
Owners entitled thereto, in proportion, insofar as practicable, to the number of
Depositary Shares representing such Deposited Securities held by them
respectively. In the event that the Issuer or the Depositary shall be required
to withhold and does withhold from any such cash dividend or such other cash
distribution an amount on account of taxes, the amount distributed to the Owner
of the Receipts evidencing Depositary Shares representing such Deposited
Securities shall be reduced accordingly.
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Pursuant to and subject to the terms of the Certificate of Designation,
the Issuer may pay dividends (in whole or in part) on the Shares through the
delivery of shares of Common Stock, so long as shares of Common Stock delivered
in payment of a dividend are delivered on the regular dividend payment date (as
set forth in the Certificate of Designation) for such dividend. Dividends paid
by the Issuer on Shares represented by Depositary Shares shall be paid to the
Depositary, as record holder of such Shares (assuming the Depositary was also
the record holder for such Shares on the related record date for such dividend
payment). The Depositary shall distribute, on the related regular dividend
payment date, shares of Common Stock paid to it by the Issuer as dividends on
the Shares to persons who were Owners on the related record date for such
dividend, as established by the Depositary in accordance with the Deposit
Agreement. The Depositary shall distribute to each such Owner on such date, for
each Depositary Share evidenced by a Receipt or Receipts held by such Owner on
the related record date for such dividend (it being understood that the number
of fractional shares of Common Stock to which such Owner is entitled with
respect to such dividend shall be determined on the basis of its aggregate
holdings of such Depository Shares), (i) a number of shares (subject to clause
(ii) of this sentence) of Common Stock equal to one-five hundredth of the number
of shares of Common Stock (including fractional shares) payable per Share in
payment of the related dividend as determined pursuant to the Certificate of
Designation and (ii) the amount of cash to which such Owner is entitled in lieu
of fractional shares of Common Stock otherwise distributable by the Depositary
under clause (i), calculated in accordance with Section 4.12 of the Deposit
Agreement. The Issuer shall deposit with the Depositary, on or prior to the
regular dividend payment date (as set forth in the Certificate of Designation)
for any dividend which the Issuer has elected to pay in whole or in part in
shares of Common Stock, for each Owner which held a Receipt or Receipts on the
related record date for such dividend as established by the Depositary, (i)
certificates for the number of shares of Common Stock and (ii) the amount of
cash in lieu of fractional shares to which such Owner is entitled pursuant to
the preceding sentence.
No fractional shares of Common Stock will be delivered by the
Depositary to persons who were Owners on the related record date for a dividend
on the Shares in connection with
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the Depositary's distribution of a dividend on the Shares paid by the Issuer to
it in shares of Common Stock.
Subject to the provisions of Section 4.8, whenever the Depositary shall
receive any distribution other than a distribution described in Sections 4.1,
4.2, 4.4 or 4.5, the Depositary shall cause the securities or property received
by it to be distributed to the Owners entitled thereto, in proportion to the
number of Depositary Shares representing Deposited Securities held by them
respectively, in any manner that the Depositary may deem equitable and
practicable for accomplishing such distribution; provided, however, that if in
the opinion of the Depositary such distribution cannot be made proportionately
among the Owners entitled thereto, or if for any other reason the Depositary
deems such distribution not to be feasible, the Depositary may adopt such method
as it may deem equitable and practicable for the purpose of effecting such
distribution, including, but not limited to, the public or private sale of the
securities or property thus received, or any part thereof, and the net proceeds
of any such sale shall be distributed by the Depositary to the Owners entitled
thereto as in the case of a distribution received in cash pursuant to Section
4.1 of the Deposit Agreement.
If any distribution upon any Deposited Securities consists of a
dividend in, or free distribution of, Shares, the Depositary may, and shall if
the Issuer shall so request, distribute to the Owners of outstanding Receipts
entitled thereto, in proportion to the number of Depositary Shares representing
such Deposited Securities held by them respectively, additional Receipts
evidencing an aggregate number of Depositary Shares representing the amount of
Shares received as such dividend or free distribution, subject to the terms and
conditions of the Deposit Agreement with respect to the deposit of Shares and
the issuance of Depositary Shares evidenced by Receipts, including the
withholding of any tax or other governmental charge as provided in Section 4.10
of the Deposit Agreement. In lieu of delivering Receipts for fractional
Depositary Shares in any such case, the Depositary shall sell the amount of
Shares represented by the aggregate of such fractions and distribute the net
proceeds, all in the manner and subject to the conditions described in Section
4.1, or, if the Depositary deems such sale and distribution not feasible, the
Depositary may adopt such method as it shall deem
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equitable and practicable in substitution for delivering Receipts for fractional
Depositary Shares.
In the event that the Depositary determines that any distribution in
property (including Shares and rights to subscribe therefor) is subject to any
tax or other governmental charge which the Depositary is obligated to withhold,
the Depositary may by public or private sale dispose of all or a portion of such
property (including Shares and rights to subscribe therefor) in such amounts and
in such manner as the Depositary deems necessary and practicable to pay any such
taxes or charges and the Depositary shall distribute the net proceeds of any
such sale after deduction of such taxes or charges to the Owners of Receipts
entitled thereto.
14. RIGHTS.
In the event that the Issuer shall offer or cause to be offered to the
holders of any Deposited Securities any rights to subscribe for additional
Shares or any rights of any other nature, the Depositary shall have discretion
as to the procedure to be followed in making such rights available to any Owners
or in disposing of such rights on behalf of any Owners and making the net
proceeds available to such Owners or, if by the terms of such rights offering or
for any other reason, the Depositary may not either make such rights available
to any Owners or dispose of such rights and make the net proceeds available to
such Owners, then the Depositary shall allow the rights to lapse. If at the time
of the offering of any rights the Depositary determines in its discretion that
it is lawful and feasible to make such rights available to all Owners or to
certain Owners but not to other Owners, the Depositary may distribute to any
Owner to whom it determines the distribution to be lawful and feasible, in
proportion to the number of Depositary Shares held by such Owner, warrants or
other instruments therefor in such form as it deems appropriate.
In circumstances in which rights would otherwise not be distributed, if
an Owner of Receipts requests the distribution of warrants or other instruments
in order to exercise the rights allocable to the Depositary Shares of such Owner
hereunder, the Depositary will make such rights available to such Owner upon
written notice from the Issuer to the Depositary that (i) the Issuer has elected
in its sole discretion to permit such rights to be exercised and
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(ii) such Owner has executed such documents as the Issuer has determined in its
sole discretion are reasonably required under applicable law.
If the Depositary has distributed warrants or other instruments for
rights to all or certain Owners, then upon instruction from such an Owner
pursuant to such warrants or other instruments to the Depositary from such Owner
to exercise such rights, upon payment by such Owner to the Depositary for the
account of such Owner of an amount equal to the purchase price of the Shares to
be received upon the exercise of the rights, and upon payment of any other
charges as set forth in such warrants or other instruments, the Depositary
shall, on behalf of such Owner, exercise the rights and purchase the Shares, and
the Issuer shall cause the Shares so purchased to be delivered to the Depositary
on behalf of such Owner. As agent for such Owner, the Depositary shall cause the
Shares so purchased to be deposited pursuant to Section 2.2 of the Deposit
Agreement, and shall, pursuant to Section 2.3 of the Deposit Agreement, execute
and deliver Receipts to such Owner. In the case of a distribution pursuant to
the second paragraph of this section, such Receipts shall be legended in
accordance with applicable U.S. laws, and shall be subject to the appropriate
restrictions on sale, deposit, cancelation, and transfer under such laws.
If the Depositary determines in its discretion that it is not lawful
and feasible to make such rights available to all or certain Owners, it may sell
the rights, warrants or other instruments in proportion to the number of
Depositary Shares held by the Owners to whom it has determined it may not
lawfully or feasibly make such rights available, and allocate the net proceeds
of such sales (net of all taxes and governmental charges payable in connection
with such rights and subject to the terms and conditions of the Deposit
Agreement) for the account of such Owners otherwise entitled to such rights,
warrants or other instruments, upon an averaged or other practical basis without
regard to any distinctions among such Owners because of exchange restrictions or
the date of delivery of any Receipt or otherwise.
The Depositary will not offer rights to Owners unless both the rights
and the securities to which such rights relate are either exempt from
registration under the Securities Act of 1933 with respect to a distribution to
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Owners or are registered under the provisions of such Act. If an Owner of
Receipts requests distribution of warrants or other instruments, notwithstanding
that there has been no such registration under such Act, the Depositary shall
not effect such distribution unless it has received an opinion from recognized
counsel in the United States for the Issuer upon which the Depositary may rely
that such distribution to such Owner is exempt from such registration.
The Depositary shall not be responsible for any failure to determine
that it may be lawful or feasible to make such rights available to Owners in
general or any Owner in particular.
15. RECORD DATES.
Whenever any cash dividend or other cash distribution or any dividend
to be paid by the Issuer in shares of Common Stock shall become payable or any
distribution other than cash shall be made, or whenever rights, preferences or
privileges shall be offered or issued with respect to the Deposited Securities,
or whenever for any reason the Depositary causes a change in the number of
Shares that are represented by each Depositary Share, or whenever the Depositary
shall receive notice of any meeting at which holders of Shares are entitled to
vote or of which holders of Shares are entitled to notice, the Depositary shall
fix a record date (which shall be the same date as the record date fixed by the
Issuer in respect of the Shares) (i) for the determination of the Owners who
shall be (a) entitled to receive such dividend, distribution, rights,
preferences or privileges or the net proceeds of the sale thereof or (b)
entitled to give instructions for the exercise of voting rights at any such
meeting, or (ii) on or after which each Depositary Share will represent the
changed number of Shares.
16. VOTING OF DEPOSITED SECURITIES.
Upon receipt of notice of any meeting at which the holders of Shares
are entitled to vote, the Depositary shall, as soon as practicable thereafter,
mail to the Owners a notice, which shall be provided by the Issuer and which
shall contain (i) such information as is contained in such notice of meeting,
and (ii) a statement that the Owners as of the close of business on a specified
record date fixed by the Depositary pursuant to the Deposit Agreement shall be
entitled, subject to any applicable provision of law, the
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Restated Certificate of Incorporation or the by-laws of the Issuer, to instruct
the Depositary as to the exercise of the voting rights pertaining to the amount
of Shares or other Deposited Securities represented by their respective
Depositary Shares and (iii) a statement as to the manner in which such
instructions may be given. Upon the written request of an Owner on such record
date, the Depositary shall endeavor, in so far as practicable, to vote or cause
to be voted the amount of Shares or other Deposited Securities represented by
the Depositary Shares evidenced by such Receipt in accordance with the
instructions set forth in such request. The Issuer hereby agrees to take all
reasonable action that may be deemed necessary by the Depositary in order to
enable the Depositary to vote such Shares or cause such Shares to be voted. In
the absence of specific instructions from the Owner of a Receipt, the Depositary
will abstain from voting to the extent of the Shares represented by the
Depositary Shares evidenced by such Receipt.
17. CHANGES AFFECTING DEPOSITED SECURITIES.
In circumstances where the provisions of Section 4.3 of the Deposit
Agreement do not apply, upon any change in nominal value, change in par value,
split-up, consolidation or any other reclassification of Deposited Securities,
or upon any recapitalization, reorganization, merger or consolidation or sale of
assets affecting the Issuer or to which it is a party, any securities which
shall be received by the Depositary in exchange for or in conversion of or in
respect of Deposited Securities, shall be treated as new Deposited Securities
under the Deposit Agreement, and Depositary Shares evidenced by Receipts then
outstanding shall thenceforth represent the proportionate interest of Owners
thereof in the new Deposited Securities so received in exchange or conversion,
unless additional Receipts are delivered pursuant to the following sentence. In
any such case the Depositary may, and shall if the Issuer shall so request,
execute and deliver additional Receipts as in the case of a dividend in Shares,
or call for the surrender of outstanding Receipts to be exchanged for new
Receipts specifically describing such new Deposited Securities.
18. FRACTIONAL SHARES.
No fractional shares of Common Stock will be delivered by the Issuer or
the Depositary, as applicable, to the Owners of Receipts upon mandatory or
optional conversion into shares of Common Stock.
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In lieu of any fractional share otherwise deliverable in respect of
the aggregate number of Depositary Shares evidenced by a Receipt or Receipts
of any Owner that are converted upon mandatory conversion, such Owner shall
be entitled to receive an amount in cash equal to the same fraction of the
Closing Price of the Common Stock as of the fifth Trading Day immediately
preceding the Mandatory Conversion Date.
In lieu of any fractional share otherwise deliverable in respect of
the aggregate number of Shares represented by Depositary Shares evidenced by
a Receipt or Receipts of any Owner that are converted upon any optional
conversion, such Owner shall be entitled to receive an amount in cash equal
to the same fraction of the Closing Price of the Common Stock as of the
second Trading Day immediately preceding the effective date of conversion.
If a Receipt or Receipts evidencing more than one Depositary Share
are surrendered for conversion at one time by or for the same Owner, the
number of shares of Common Stock and the amount of cash in lieu of fractional
shares deliverable upon conversion shall be computed on the basis of the
aggregate number of Depositary Shares evidenced by the Receipt or Receipts so
surrendered.
No fractional shares of Common Stock will be delivered by the
Depositary to persons who were Owners on the related record date for a dividend
on the Shares in connection with the Depositary's distribution of a dividend on
the Shares paid by the Issuer to it in shares of Common Stock. In lieu of any
fractional share otherwise so deliverable, such Owners shall be entitled to
receive an amount in cash equal to the same fraction of the Closing Price of the
Common Stock determined as of the fifth Trading Day immediately preceding the
dividend payment date. On the Mandatory Conversion Date, the fractional share of
Common Stock that any Owner would otherwise be entitled to receive shall be
determined by adding all the fractional shares such Owner would be entitled to
receive (i) on the mandatory conversion of all Depositary Shares evidenced by
Receipts held by such Owner and (ii) on the payment of the regular quarterly
dividend on all Depositary Shares evidenced by Receipts held by such Owner at
the related record date. On the Mandatory Conversion Date, the Issuer may, at
its option, deliver any whole number of shares of Common Stock resulting from
the addition of fractional shares resulting from (i) and (ii) above in shares of
Common Stock and any remaining fractional shares in cash.
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In the event that (i) mandatory conversion of the Depositary Shares,
(ii) voluntary conversions of the Shares represented by the Depositary
Shares, (iii) the Depositary's delivery of shares of Common Stock as
dividends on the Depositary Shares to persons who were Owners of the Receipts
evidencing such Depositary Shares on the related record date for such
dividend, (iv) the combination of (i) and (iii) pursuant to the preceding
paragraph or (v) some combination of the foregoing result any Owner of
Receipts evidencing Depositary Shares being entitled to cash in lieu of a
fractional share on the same date, the Issuer will deliver (either directly
or through the Depositary, as applicable) to all such Owners cash in an
amount equal to the total amount of cash to which all such Owners of Receipts
are entitled in lieu of fractional shares on such date.
If payment in cash in lieu of fractional shares of Common Stock in
accordance with the preceding six paragraphs would result in the Issuer's
failure to be in compliance with any debt instrument to which it is a party, the
Issuer shall be entitled to deliver (either directly or through the Depositary,
as applicable) a whole share of Common Stock in lieu of cash to Owners entitled
to fractional shares of Common Stock (beginning with the Owners entitled to the
largest fractional shares) until delivery of cash in lieu of fractional shares
of Common Stock to the remaining Owners would no longer result in the Issuer's
failure to be in compliance with such debt instrument.
19. LIABILITY OF ISSUER AND DEPOSITARY.
Neither the Depositary nor Issuer shall incur any liability to any
Owner or holder of any Receipt, if by reason of any provision of any present or
future law or regulation of the United States or of any governmental or
regulatory authority or stock exchange, or by reason of any provision, present
or future, of the Restated Certificate of Incorporation or by-laws of the
Issuer, or by reason of any act of God or war or other circumstances beyond its
control, the Depositary or Issuer shall be prevented or forbidden from, or be
subject to any civil or criminal penalty on account of, doing or performing any
act or thing which by the terms of the Deposit Agreement it is provided shall be
done or performed; nor shall the Depositary or Issuer incur any liability to any
Owner or holder of a Receipt by reason of any non-performance or delay, caused
as aforesaid, in the
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performance of any act or thing which by the terms of the Deposit Agreement it
is provided shall or may be done or performed, or by reason of any exercise of,
or failure to exercise, any discretion provided for in the Deposit Agreement.
Where, by the terms of a distribution pursuant to Sections 4.1, 4.3 or 4.4 of
the Deposit Agreement, or an offering or distribution pursuant to Section 4.5 of
the Deposit Agreement, or for any other reason, such distribution or offering
may not be made available to Owners of Receipts, and the Depositary may not
dispose of such distribution or offering on behalf of such Owners and make the
net proceeds available to such Owners, then the Depositary shall not make such
distribution or offering, and shall allow any rights, if applicable, to lapse.
Neither Issuer nor the Depositary assumes any obligation or shall be subject to
any liability under the Deposit Agreement to Owners or holders of Receipts,
except that they agree to perform their obligations specifically set forth in
the Deposit Agreement without negligence or bad faith. The Depositary shall not
be subject to any liability with respect to the validity or worth of the
Deposited Securities. Neither the Depositary nor Issuer shall be under any
obligation to appear in, prosecute or defend any action, suit or other
proceeding in respect of any Deposited Securities or in respect to the Receipts,
which in its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability shall be furnished as often
as may be required. Neither the Depositary nor Issuer shall be liable for any
action or nonaction by it in reliance upon the advice of or information from
legal counsel, accountants, any person presenting Shares for deposit, any Owner
or any other person believed by it in good faith to be competent to give such
advice or information. The Depositary shall not be liable for any acts or
omissions made by a successor depositary whether in connection with a previous
act or omission of the Depositary or in connection with any matter arising
wholly after the removal or resignation of the Depositary, provided that in
connection with the issue out of which such potential liability arises the
Depositary performed its obligations without negligence or bad faith while it
acted as Depositary. The Depositary shall not be responsible for any failure to
carry out any instructions to vote any of the Deposited Securities, or for the
manner in which any such vote is cast or the effect of any such vote, provided
that any such action or nonaction is in good faith. The Issuer agrees to
indemnify the Depositary, its directors,
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employees, agents and affiliates, and hold each of them harmless from, any
liability or expense (including, but not limited to, the fees and expenses of
counsel) which may arise out of acts performed or omitted, in accordance with
the provisions of the Deposit Agreement and of the Receipts, as the same may be
amended, modified or supplemented from time to time, (i) by either the
Depositary or its directors, employees, agents and affiliates, except for any
liability or expense arising out of the negligence or bad faith of either of
them, or (ii) by the Issuer or any of its directors, employees, agents and
affiliates. No disclaimer of liability under the Securities Act of 1933 is
intended by any provision of the Deposit Agreement.
20. RESIGNATION AND REMOVAL OF THE DEPOSITARY.
The Depositary may at any time resign as Depositary under the Deposit
Agreement by written notice of its election so to do delivered to the Issuer,
such resignation to take effect upon the appointment of a successor depositary
and its acceptance of such appointment as provided in the Deposit Agreement. The
Depositary may at any time be removed by Issuer by written notice of such
removal, effective upon the appointment of a successor depositary and its
acceptance of such appointment as provided in the Deposit Agreement.
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21. AMENDMENT.
The form of the Receipts and any provision of the Deposit Agreement may
at any time and from time to time be amended by agreement between the Issuer and
the Depositary in any respect that they may deem necessary or desirable. Any
amendment that shall impose any fees, taxes or charges (other than taxes and
other governmental charges, fees and expenses provided for in the Deposit
Agreement or in the Receipts), or that shall otherwise prejudice any substantial
existing right of Owners of Receipts, shall not become effective as to
outstanding Receipts until the expiration of 90 days after notice of such
amendment shall have been given to the Owners of outstanding Receipts. Every
Owner of an outstanding Receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such Receipt, to consent and agree to
such amendment and to be bound by the Deposit Agreement as amended thereby. In
no event shall any amendment impair the right, subject to the provisions of the
Deposit Agreement, of any Owner to surrender any Receipt or Receipts evidencing
Depositary Shares representing Shares with instructions to the Depositary or an
applicable agent of the Depositary to deliver to the Owner such Shares or to
cause the conversion of such Shares into Common Stock and cash for fractional
shares of Common Stock and, in each case, all securities and other property, if
any, represented thereby, except in order to comply with mandatory provisions of
applicable law.
22. TERMINATION OF DEPOSIT AGREEMENT.
The Deposit Agreement shall terminate at the close of business on
the Madatory Conversion Date upon distribution by the Depositary to each
Owner entitled thereto of (i) shares of Common Stock and cash (whether in
lieu of fractional shares or otherwise) received by the Depositary from the
Issuer for madatory conversion of, and/or dividend payments on, the
Deposiatary Shares evidenced by the Receipt or Receipts held by such Owner,
and (ii) all other securities, property and cash then held by the Depositary
hereunder. On and after the date of termination, the Owner of a Receipt will,
upon surrender of such Receipt at the Corporate Trust Office of the
Depositary and payment of any applicable taxes or governmental charges, be
entitled to delivery, to him or upon his order, of the amount of Deposited
Securities represented by the Depositary Shares evidenced by such Receipt. If
any Receipts shall remain outstanding after the date of termination, the
Depositary thereafter shall discontinue the registration of transfers of
Receipts, shall suspend the distribution of dividends to the Owners thereof,
and shall not give any further notices or perform any further acts under the
Deposit Agreement, except that the Depositary shall continue
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to collect dividends and other distributions pertaining to Deposited
Securities, shall sell rights as provided in the Deposit Agreement, and shall
continue to deliver Deposited Securities, together with any dividends or
other distributions received with respect thereto and the net proceeds of the
sale of any rights or other property, in exchange for Receipts surrendered to
the Depositary (after deducting, in each case, any applicable taxes or
governmental charges). At any time after the expiration of one year from the
date of termination, the Depositary may sell the Deposited Securities then
held under the Deposit Agreement and may thereafter hold uninvested the net
proceeds of any such sale, together with any other cash then held by it under
the Deposit Agreement, unsegregated and without liability for interest, for
the pro rata benefit of the Owners of Receipts which have not theretofore
been surrendered, such Owners thereupon becoming general creditors of the
Depositary with respect to such net proceeds. After making such sale, the
Depositary shall be discharged from all obligations under the Deposit
Agreement, except to account for such net proceeds and other cash (after
deducting, in each case, any applicable taxes or governmental charges). Upon
the termination of the Deposit Agreement, the Issuer shall be discharged from
all obligations under the Deposit Agreement except for its obligations to the
Depositary under Sections 5.6 and 5.7 of the Deposit Agreement.
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EXHIBIT 5
March 24, 1998
Premier Parks Inc.
122 East 42nd Street
New York, New York 10168
Re: Registration Statement on Form S-3
-------------------------------------------------------------
(File No. 333-45859)
Gentlemen:
We have acted as your counsel in connection with the filing of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission, relating to the registration under the
Securities Act of 1933, as amended (the "Securities Act") of (i) 13,000,000
shares of common stock, par value $.05 per share (the "Common Stock"), of
Premier Parks Inc. (the "Company"); (ii) up to 1,950,000 additional shares of
Common Stock which may be sold to the Underwriters pursuant to thirty (30) day
over-allotment options; (iii) 5,000,000 Premium Income Equity Securities
("PInESp") consisting of depositary shares, each representing one five-hundredth
of a share of Mandatorily Convertible Preferred Stock and (iv) up to 750,000
additional PInES which may be sold to the Underwriters pursuant to a thirty (30)
day over-allotment option. Capitalized terms used herein but not otherwise
defined shall have the respective meanings set forth in the Registration
Statement.
In connection with the foregoing, we have examined copies of the Company's
Certificate of Incorporation and By-laws, each as amended through the date
hereof, the minutes of unanimous written consents of the Board of Directors and
shareholders of the Company and originals or copies, satisfactory to us, of all
such corporate records, agreements, certificates and other documents of the
Company as we have deemed relevant and necessary as a basis for the opinion
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures, the authenticity and accuracy of all documents submitted to us
as copies. As to questions of fact material to such opinion, we have relied upon
certificates of public officials and certificates of officers or other
representatives of the Company.
Based upon the foregoing and subject to the qualifications and limitations
stated herein, we are of the opinion that (a) the Company is a validly existing
corporation under the laws of the State of Delaware and (b) the Common Stock,
the PInES and the Mandatorily Convertible Preferred Stock represented by such
PInES, when sold to the Underwriters in accordance with the terms and conditions
of the Underwriting Agreement, will be validly issued, fully paid and
non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving such consent, we do not thereby concede that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations promulgated thereunder, or that we are "experts" within
the meanings of the Securities Act or the rules and regulations promulgated
thereunder.
Very truly yours,
<PAGE>
EXHIBIT 23(B)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Premier Parks Inc.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the Prospectus.
KPMG Peat Marwick LLP
Oklahoma City, Oklahoma
March 23, 1998
<PAGE>
EXHIBIT 23(C)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 14, 1998, with respect to the financial
statements of Six Flags Entertainment Corporation included in the Registration
Statement (Amendment No. 2 to Form S-3, No. 333-45859) and related Prospectus of
Premier Parks Inc.
Ernst & Young LLP
New York, New York
March 23, 1998
<PAGE>
EXHIBIT 23(E)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Kentucky Kingdom, Inc.
We consent to the incorporation by reference in the registration statement on
Form S-3 of Premier Parks, Inc. of our report dated December 12, 1997, except as
to Note K which is as of March 4, 1998, relating to the balance sheet of
Kentucky Kingdom as of November 2, 1997, and the related statements of income,
changes in stockholders equity and cash flows for the year then ended, which
report appears in the amended report on Form 8-K/A of Premier Parks, Inc. and to
the reference to our firm under the heading "Experts" in the Prospectus.
Carpenter, Mountjoy & Bressler, PSC
Louisville, Kentucky
March 24, 1998
