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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1999
REGISTRATION NO. 333-00000
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PREMIER PARKS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3995059
(State or jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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11501 NORTHEAST EXPRESSWAY
OKLAHOMA CITY, OKLAHOMA 73131
(405) 475-2500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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COPIES TO:
JAMES M. COUGHLIN, ESQ. DANAL F. ABRAMS, ESQ.
PREMIER PARKS INC. THELEN REID & PRIEST LLP
122 EAST 42ND STREET 40 WEST 57TH STREET
NEW YORK, NEW YORK 10168 NEW YORK, NEW YORK 10019
(212) 599-4690 (212) 603-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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, 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. /_/
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of each Class of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of Registration
Registered Registered(1) Security or Per Unit(2) Price Fee
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<S> <C> <C> <C> <C>
Common Stock, $.025 par value
per share ............................. 1,200,000 $35.75 $42,900,000 $11,926.20
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(1) The number of shares being registered represents the registrant's good faith
estimate of the maximum number of shares that may be issued to the selling
stockholder upon repayment of a promissory note held by the selling
stockholder.
(2) Calculated pursuant to Rule 457(c) of the Securities Act of 1933, as
amended, based upon the closing price of the Common Stock on the New York
Stock Exchange on June 2, 1999.
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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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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Information contained in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion dated June 3, 1999
PROSPECTUS
SHARES
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PREMIER PARKS INC.
COMMON STOCK
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These shares are being sold by the selling stockholder identified under the
caption "Selling Stockholder." The selling stockholder acquired these shares in
connection with our acquisition on May 25, 1999 of the White Water Atlanta water
park (together with an adjacent family entertainment center) near Atlanta,
Georgia. We will not receive any proceeds from the sale of these shares.
Our common stock is listed on the New York Stock Exchange under the trading
symbol "PKS". On June 2, 1999, the closing sale price of the common stock was
$35 3/4.
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CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 8 IN THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 1999
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You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information contained in or incorporated by reference in this prospectus is
accurate as of any date other than the date on the front of this prospectus.
TABLE OF CONTENTS
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Page
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Where You Can Find More Ynformation............................................ 3
Special Note On Forward-Looking Statements..................................... 4
Prospectus Summary............................................................. 5
Risk Factors................................................................... 8
Use Of Proceeds................................................................ 15
Selling Stockholder............................................................ 15
Unaudited Pro Forma Statement Of Operations And Other Data..................... 17
Plan Of Distribution........................................................... 23
Legal Matters.................................................................. 24
Experts........................................................................ 24
</TABLE>
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public at the SEC's web site at
http://www.sec.gov. Our Common Stock is listed on the New York Stock Exchange.
Our reports, proxy statements and other information can also be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
This prospectus is part of a Registration Statement on Form S-3 filed
with the SEC under the Securities Act of 1933. This prospectus omits some of the
information contained in the Registration Statement. You should refer to the
Registration Statement for further information with respect to Premier Parks
Inc. and the securities offered by this prospectus. Any statement contained in
this prospectus concerning the provisions of any document filed as an exhibit to
the Registration Statement or otherwise filed with the SEC is not necessarily
complete, and in each case you should refer to the copy of the document filed
for complete information.
The SEC allows us to "incorporate by reference" the information we file
with it, which means we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be a part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until all of the securities covered by this prospectus are sold by the selling
stockholder.
1. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999.
2. Our Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
3. The audited financial statements of Six Flags Entertainment
Corporation as of December 28, 1997 and December 29, 1996 and for
each of the three years in the period ended December 28, 1997
contained in our registration statement on Form S-3 (Registration
No. 333-46897) declared effective March 26, 1998.
4. The description of our common stock contained in our registration
statement on Form 8-A filed pursuant to Section 12 of the
Securities Exchange Act.
5. The description of the Rights relating to the shares of common
stock contained in our registration statement on Form 8-A filed
pursuant to Section 12 of the Securities Exchange Act.
6. Our Current Report on Form 8-K filed May 7, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Richard Kipf, Corporate Secretary
Telephone: (405) 475-2500
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 AND SUPERMAN are copyrights and
trademarks of DC Comics, a partnership between TWE and a subsidiary of Time
Warner Inc.
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SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by reference in
this prospectus discuss our plans and strategies for our business or state other
forward-looking statements, as this term is defined in the Private Securities
Litigation Reform Act. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of identifying
them. These forward-looking statements reflect the current views of our
management; however, various risks, uncertainties and contingencies could cause
our actual results, performance or achievements to differ materially from those
expressed in, or implied by, these statements, including the following:
o the success or failure of our efforts to implement our business
strategy
o the other factors discussed under the heading "Risk Factors" and
elsewhere in this prospectus
We assume no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
For a discussion of important risks of an investment in our securities,
including factors that could cause actual results to differ materially from
results referred to in the forward-looking statements, see "Risk Factors." You
should carefully consider the information set forth under the caption "Risk
Factors." In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in or incorporated by reference in this
prospectus might not occur.
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PROSPECTUS SUMMARY
THE COMPANY
We are the largest regional theme park operator and the second largest
theme park company in the world, based on 1998 attendance of approximately 38.7
million. We operate 34 regional parks, including 16 of the 50 largest theme
parks in North America, based on 1998 attendance. Our theme parks serve 9 of the
10 largest metropolitan areas in the United States. We estimate that
approximately two-thirds of the population of the continental United States live
within a 150-mile radius of one of our theme parks.
Our 34 parks are located in geographically diverse markets across the
United States with concentrated populations, as well as in Mexico, France,
Belgium and The Netherlands. In April 1998, we acquired all of the outstanding
capital stock of Six Flags Entertainment Corporation. In March 1998, we acquired
a controlling interest in Walibi, S.A. and now we own 98.6% of the outstanding
capital stock of Walibi, S.A. Prior to the these acquisitions, we operated nine
regional theme parks (seven of which include a water park component) and four
water parks at locations across the United States. The parks acquired in the Six
Flags acquisition 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). The Walibi parks include six regional
theme parks, three located in France, two in Belgium and one in The Netherlands.
More recently in May 1999, we acquired all of the outstanding capital stock of
the companies that owned and operated the Reino Aventura theme park in Mexico
City, Mexico and acquired the assets of two waterparks, the White Water Atlanta
water park (together with an adjacent family entertainment center), located near
Atlanta, Georgia, and Splashtown Water Park located near Houston, Texas.
Six Flags has operated regional theme parks under the Six Flags name
for over thirty years and has established a nationally recognized brand name. We
have worldwide ownership of the "Six Flags" brand name. To capitalize on this
name recognition, in the 1998 season we commenced use of the Six Flags name at
one of our other parks (Six Flags Kentucky Kingdom) and we have added the name
to four additional parks for the 1999 season (Six Flags Elitch Gardens, Six
Flags America, Six Flags Darien Lake and Six Flags Marine World).
During the 1998 operating season the domestic parks we then owned drew,
on average, approximately 75% of their patrons from within a 100-mile radius,
with approximately 36% of visitors utilizing group and other pre-sold tickets
and approximately 23% utilizing season passes. Our parks are individually themed
and provide a complete family-oriented entertainment experience. Our 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, our theme parks offer more
than 800 rides, including over 90 roller coasters, making us the leading
operator of thrill rides in the industry.
As part of our Six Flags acquisition, we obtained the exclusive license
for theme park usage throughout the United States (except the Las Vegas
metropolitan area) and Canada of certain Warner Bros. and DC Comics characters.
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. Our
license includes the right to sell merchandise featuring the characters at our
parks, and to use the characters in our advertising, as walk-around characters,
in theming for rides and attractions and in retail outlets. The license applies
to all of our current theme parks, as well as parks we may acquire that meet
certain criteria. Since the Six Flags acquisition, we have continued making
extensive use of these characters at the Six Flags parks and, commencing in
1999, we will add the characters at many of our other U.S. parks. We believe
using these characters promotes increased attendance, supports higher ticket
prices, increases lengths-of-stay and enhances in-park spending.
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5
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Since 1989, under our current management we have assumed control of 33
parks and have achieved significant internal growth. For example, for the 1998
operating season, the 13 parks which we controlled prior to the acquisitions of
Six Flags, Walibi, Reino Aventura, White Water Atlanta and Splashtown 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 14.3%,
21.5% and 36.0%, respectively, as compared to 1997.
We believe that our parks benefit from limited direct competition,
since the combination of a limited supply of real estate appropriate for theme
park development, high initial capital investment, long development lead-time
and zoning restrictions provides each of our parks with a significant degree of
protection from competitive new theme park openings. Based on our knowledge of
the development of other theme parks in the United States, we estimate 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 our largest parks.
Our senior and operating management team has extensive experience in
the theme park industry. Our nine senior executive officers have over 150 years
aggregate experience in the industry and our twenty-five general managers have
an aggregate of in excess of 440 years experience in the industry, including in
excess of 320 years at our parks.
STRATEGY
Our strategy for achieving growth includes pursuing internal growth
opportunities at existing parks, expanding our parks, and making selective
acquisitions.
We believe there are substantial opportunities for continued internal
growth at our parks. We seek to increase revenue by increasing attendance and
per capita spending, while also maintaining strict control of operating
expenses. The primary elements we use to achieve these objectives are:
o adding rides and attractions and improving overall park quality
o enhancing marketing and sponsorship programs
o increasing group sales, season passes and other pre-sold tickets
o using ticket pricing strategies to maximize ticket revenues and
park utilization
o adding and enhancing restaurants and merchandise and other revenue
outlets
o adding special events
Our 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 these expenses is
relatively fixed during any given year.
We have expanded several of our parks by adding complimentary
attractions, such as campgrounds, lodging facilities, new water parks and
concert venues, in order to increase attendance and per capita spending. For
example, for the 1998 season we constructed a hotel at our Darien Lake park to
supplement the existing campgrounds and in 1998 we purchased campgrounds and a
hotel adjacent to Geauga Lake. Further, we are adding a water park to Six Flags
St. Louis for the 1999 season and plan to add a water park to Six Flags Great
Adventure (located between New York City and Philadelphia) for the 2000 season.
We own 400 acres adjacent to Six Flags America (formerly Adventure World) which
are zoned for entertainment, recreational and residential uses and are
available for complementary uses. In addition, we own over 1,500 undeveloped
acres adjacent to Six Flags Great Adventure suitable for additional
complimentary purposes. We also own additional acreage which is suitable for
development at several of our other parks.
The U.S. regional theme park industry is highly fragmented. We believe
that there are numerous acquisition opportunities, both in the U.S. and abroad,
through which we can expand our business. Although we will continue to pursue
acquisitions of regional parks with annual attendance between 300,000 and 1.5
million, we will also consider acquisitions of larger parks or park chains.
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We believe we have 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, we believe we have
numerous competitive advantages over single-park operators in pursuing
acquisitions and improving the operating results at acquired parks. These
advantages include our ability to:
o exercise group purchasing power (for both operating expenses and
capital assets)
o use the Six Flags brand name and the characters licensed from
Warner Bros. and DC Comics
o achieve administrative economies of scale
o attract greater sponsorship revenue and support from sponsors with
nationally- recognized brands and marketing partners
o recruit and retain superior management
o use our access to capital markets as well as our common stock as
all or a portion of future acquisition consideration
ADDRESS
Our 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 OFFERING
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Common stock offered by selling stockholder....................................... _______ shares
Common stock outstanding as of March 31, 1999..................................... 76,513,796 shares
New York Stock Exchange symbol.................................................... PKS
Use of proceeds................................................................... We will not receive any proceeds from the sale
of the common stock sold by the selling
stockholder.
</TABLE>
The purpose of this offering is to register the resale of the shares of
common stock owned by the selling stockholder. The selling stockholder acquired
these shares in connection with our acquisition on May 25, 1999 of the White
Water Atlanta water park (together with an adjacent family entertainment center)
near Atlanta, Georgia. The selling stockholder is required to deliver a copy of
this prospectus in connection with any sale of these shares.
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7
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER EACH OF THE FOLLOWING RISKS AND ALL OF
THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN
OUR COMMON STOCK. SOME OF THE FOLLOWING RISKS RELATE PRINCIPALLY TO OUR BUSINESS
IN GENERAL AND THE INDUSTRY IN WHICH WE OPERATE. OTHER RISKS RELATE PRINCIPALLY
TO THE SECURITIES MARKETS AND OWNERSHIP OF OUR SECURITIES. THE RISKS AND
UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING OUR COMPANY.
ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE
CURRENTLY BELIEVE TO BE IMMATERIAL MAY ALSO ADVERSELY AFFECT OUR BUSINESS. IF
ANY OF THE FOLLOWING RISKS AND UNCERTAINTIES DEVELOP INTO ACTUAL EVENTS, OUR
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY
ADVERSELY AFFECTED.
SUBSTANTIAL LEVERAGE -- OUR HIGH LEVEL OF INDEBTEDNESS AND OTHER MONETARY
OBLIGATIONS REQUIRE THAT A SIGNIFICANT PART OF OUR CASH FLOW BE USED TO PAY
INTEREST AND FUND THESE OTHER OBLIGATIONS.
We have a high level of debt. As of March 31, 1999, Premier and its
subsidiaries owed a combined total of approximately $2,086.9 million (including
$185.4 million carrying value of notes which we will repay on or prior to
December 15, 1999 with funds already deposited in escrow). We have to pay total
interest on our debt in 1999 of approximately $145.9 million ($25.9 million of
which we will pay with funds already deposited in escrow). We also have to pay
annual dividends of $23.3 million on our mandatorily convertible preferred
stock, although we can pay these dividends either in cash or shares of common
stock. At March 31, 1999, we had approximately $261.4 million of cash and cash
equivalents to help meet our obligations.
In addition to making interest payments on debt and dividend payments
on our preferred stock, we must satisfy the following obligations with respect
to Six Flags Over Georgia and Six Flags Over Texas:
o We must make annual distributions to our partners in such parks,
which will amount to approximately $47.3 million in 1999 (of which
we will be entitled to receive $14.4 million due to our current
ownership interest in such parks) with similar amounts (adjusted
for changes in cost of living) payable in future years.
o We must spend a minimum of approximately 6% of each park's annual
revenues over specified periods for capital expenditures, which in
1999 is expected to be approximately $14.6 million.
o Each year we must offer to purchase partnership units from our
partners in such parks, which amount in 1999 aggregated
approximately $3.3 million.
We will use cash flow from the operations at these parks to satisfy the
first two obligations before we use any of our other funds. In addition, we have
deposited in escrow approximately $75.0 million which can be used to satisfy
these obligations. The obligations relating to Six Flags Over Georgia continue
until 2027 and those relating to Six Flags Over Texas continue until 2028.
Further, as a result of our purchase of Walibi, S.A., we have agreed to
invest approximately $38.0 million from 1999 through 2002 to expand the six
Walibi parks of which approximately $21.0 million is being invested for the 1999
season.
Our high level of debt and other obligations could have important
negative consequences to us and investors in our securities. These include:
o We may not be able to satisfy all of our obligations.
8
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o We could have problems obtaining necessary financing in the future
for working capital, capital expenditures, debt service
requirements, refinancing or other purposes.
o We will have to use a significant part of our cash flow to make
payments on our debt, to pay the dividends on preferred stock (if
we choose to pay them in cash), and to satisfy the other
obligations set forth above, which may reduce the capital
available for operations and expansion.
o Adverse economic or industry conditions may have more of a
negative impact on us.
We expect to be able to meet all of our obligations with existing cash,
cash generated from the parks, and our current lines of credit. We believe that
funds from these sources will be sufficient to meet our obligations and
operating needs for the next several years and beyond. However, our business is
subject to factors beyond our control, such as economic conditions, weather and
competition. We cannot be sure that income from our parks will be as high as we
expect. We may have to refinance all or some of our debt or secure new
financing. We can not be sure that we will be able to obtain such refinancing or
new loans on reasonable terms or at all. We have agreed in our loan agreements
and the indentures covering certain of our outstanding notes to limit the amount
of additional debt we will incur.
If we can not meet all of our obligations, the market value and
marketability of our common stock will likely be adversely affected. In
addition, if we become the subject of bankruptcy proceedings, our creditors and
preferred stockholders will be entitled to our assets before any distributions
are made to common stockholders.
RESTRICTIVE COVENANTS -- OUR FINANCIAL AND OPERATING ACTIVITIES ARE LIMITED BY
RESTRICTIONS CONTAINED IN THE TERMS OF OUR PRIOR FINANCINGS.
The terms governing our and our subsidiaries' indebtedness impose
significant operating and financial restrictions on us. These restrictions may
significantly limit or prohibit us from engaging in certain transactions,
including the following:
o incurring additional indebtedness
o creating liens on our assets
o paying dividends
o selling assets
o engaging in mergers or acquisitions
o making investments
Our failure to comply with the terms and covenants in our and our
subsidiaries' indebtedness could lead to a default under the terms of those
documents, which would entitle the lenders to accelerate the indebtedness and
declare all amounts owed due and payable. Moreover, the instruments governing
our indebtedness contain cross-default provisions so that a default under any of
our indebtedness will be considered a default under all other indebtedness. If a
cross-default occurs, the maturity of almost all of our indebtedness could be
accelerated and become immediately due and payable. If that happens, we would
not be able to satisfy all of our debt obligations, which would have a
substantial material adverse effect on the value of our common stock and our
ability to continue as a going concern. We cannot assure you that we will be
able to comply with these restrictions in the future or that our compliance
would not cause us to forego opportunities that might otherwise be beneficial to
us.
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Further, certain of our subsidiaries are required to comply with
specified financial ratios and tests, including:
o interest expense
o fixed charges
o debt service
o total debt
We are currently in compliance with all of these financial covenants
and restrictions. However, events beyond our control, such as weather and
economic, financial and industry conditions, may affect our ability to continue
meeting these financial tests and ratios. The need to comply with these
financial covenants and restrictions could limit our ability to expand our
business or prevent us from borrowing more money when necessary.
MANAGEMENT OF GROWTH STRATEGY -- WE MAY NOT BE ABLE TO MANAGE OUR RAPID GROWTH
OR INTEGRATe ACQUISITIONS.
We have experienced significant growth through acquisitions and will
continue to consider acquisition opportunities that arise. Such acquisitions
could place a future strain on our operations. Our ability to manage future
acquisitions will depend on our ability to evaluate new markets and investments,
monitor operations, control costs, maintain effective quality controls and
expand our internal management and technical and accounting systems.
To fund future acquisitions, we may need to borrow more money or assume
the debts of acquired companies. In taking on any debt, we must comply with the
restrictions described above with respect to our existing indebtedness. If we do
not receive necessary consents or waivers of such restrictions, we may be unable
to make additional acquisitions.
In the past, in certain circumstances we have used shares of our common
stock to fund a portion of the price of acquisitions. In the future, we may
again fund all or part of acquisitions by issuing new shares of our common stock
or other securities which can be converted into common stock. Issuing such
additional shares or convertible securities may cause a decrease in the per
share market price of our common stock.
If we do purchase additional businesses, it may negatively affect our
earnings, at least in the short term. Further, we cannot guarantee that any
future acquisition will generate the earnings or cash flow we expect. As with
any expansion, unexpected liabilities might arise and the planned benefits may
not be realized.
RISK OF ACCIDENTS -- THERE IS THE RISK OF ACCIDENTS OCCURRING AT OUR PARKS WHICH
MAY REDUCE ATTENDANCE AND EARNINGS.
Almost all of our parks feature "thrill rides." While we carefully
maintain the safety of our rides, there are inherent risks involved with these
attractions. An accident or an injury at any of our parks may reduce attendance
at that and other parks, causing a drop in revenues.
On March 21, 1999, a raft capsized in the river rapids ride at Six
Flags Over Texas, resulting in one fatality and injuries to ten others. While
the park is covered by our existing insurance, the impact of this incident on
our financial position, operations or attendance at the park has not yet been
determined.
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We maintain insurance of the type and in amounts that we believe is
commercially reasonable and that are available to businesses in our industry. We
maintain multi-layered general liability policies that provide for excess
liability coverage of up to $100.0 million per occurrence. We have no
self-insured retention, except that the self-insurance portion of claims arising
out of occurrences prior to July 1, 1998 at our U.S. parks owned prior to the
Six Flags acquisition is $50,000 per occurrence.
FACTORS IMPACTING ATTENDANCE -- LOCAL CONDITIONS, DISTURBANCES, EVENTS AND
NATURAL DISASTERS CAN ADVERSELY IMPACT PARK ATTENDANCE.
Lower attendance may also be caused by other local conditions or
events. For example:
o In 1994, fewer people attended our Six Flags Magic Mountain park
because of the Los Angeles County earthquake, and the earthquake
also significantly interrupted operation of the park.
o Six Flags Over Georgia suffered a drop in attendance in 1996 as a
result of the 1996 Summer Olympics.
In addition, since some of our parks are near major urban areas and
appeal to teenagers and young adults, there may be disturbances at one or more
parks which negatively affect our image. This may result in lower attendance at
the affected parks. We work with local police authorities on security-related
precautions to prevent such occurrences. We can make no assurance, however, that
these precautions will be able to prevent any such disturbances. We believe that
our ownership of many parks in different geographic locations reduces the
effects of such occurrences on our consolidated results.
ADVERSE WEATHER CONDITIONS -- BAD WEATHER CAN ADVERSELY IMPACT ATTENDANCE AT OUR
PARKS; OUR OPERATIONS ARE SEASONAL.
Because most of the attractions at our theme parks are outdoors,
attendance at our parks is adversely affected by bad weather. The effects of bad
weather on attendance are more pronounced at our water parks. Bad weather and
forecasts of bad or mixed weather conditions can reduce the number of people who
come to our parks, which negatively affects our revenues. However, we believe
that our ownership of many parks in different geographic locations reduces the
effect that adverse weather can have on our consolidated results.
Our operations are seasonal. More than 90% of our annual park
attendance occurs during the spring, summer and early autumn months. By
comparison, most of our expenses for maintenance and costs of adding new
attractions are incurred when the parks are closed in the mid to late autumn and
winter months. For this reason, a quarter to quarter comparison is not a good
indication of our performance or of how we will perform in the future. However,
the market price of our common stock may still fluctuate significantly in
response to changes in our quarterly results of operations.
COMPETITION -- THE THEME PARK INDUSTRY COMPETES WITH NUMEROUS ENTERTAINMENT
ALTERNATIVES.
Our parks compete with other theme, water and amusement parks and with
other types of recreational facilities and forms of entertainment, including
movies, sports attractions and vacation travel. Our business is also subject to
factors that affect the recreation and leisure industries generally, such as
general economic conditions and changes in consumer spending habits. The
principal competitive factors of a park include location, price, the uniqueness
and perceived quality of the rides and attractions, the atmosphere and
cleanliness of the park and the quality of its food and entertainment.
11
<PAGE>
KEY PERSONNEL -- THE LOSS OF KEY PERSONNEL COULD HURT OUR OPERATIONS.
Our success depends upon the continuing contributions of our executive
officers and other key operating personnel, including Kieran E. Burke, our
Chairman and Chief Executive Officer, and Gary Story, our President and Chief
Operating Officer. The complete or partial loss of their services or the
services of other key personnel could adversely affect our business. Although we
have entered into employment agreements with Mr. Burke and Mr. Story (which end
on December 31, 1999), we cannot be certain that we will be able to retain their
services during that or any extension period. If we were to lose the services of
both Messrs. Burke and Story and are unable to replace them within a specified
period of time we would be in default under our credit facilities.
INTERNATIONAL OPERATIONS -- OUR INTERNATIONAL OPERATIONS HAVE ADDITIONAL RISKS.
Through our Walibi parks and our recently acquired Mexico park, we
conduct some of our operations in Europe and Mexico. We also may make further
acquisitions of parks in other international locations. There are risks to which
we are subject that are inherent in operating abroad. Some examples of these
risks can include:
o problems in staffing and managing foreign operations
o fluctuations in currency exchange rates
o political risks
o unexpected changes in regulatory requirements
o potentially detrimental tax consequences in many locations with
different tax laws
SHARES ELIGIBLE FOR FUTURE SALE -- THE PRICE OF OUR COMMON STOCK MAY DECLINE DUE
TO POSSIBLE SALES OF SHARES.
As of May 7, 1999, there were 76,866,063 shares of our common stock
outstanding, all of which are transferable without restriction or further
registration under the Securities Act of 1933, except for any shares held by our
affiliates. In addition, we have reserved and registered under the Securities
Act approximately 4,800,000 shares for currently outstanding management-held
options, 5,550,000 shares for future option issuances, 9,550,000 shares issuable
pursuant to our mandatorily convertible preferred stock, and approximately
70,000 shares for currently outstanding consultant-held options.
Our officers, directors and their affiliates together hold
approximately 16.5 million shares of common stock (including shares issuable
upon exercise of outstanding options and warrants and shares of outstanding
restricted stock, in each case subject to vesting). They can sell these
securities in the public market (subject, in certain cases, to the resale
conditions imposed by Rule 144). In addition, other stockholders who own
approximately 7.5 million shares of common stock have the right to require us to
register their shares for sale under the Securities Act. If future revenues at
Kentucky Kingdom and Walibi reach certain levels, we are required to issue
additional shares of common stock. In that connection in 1999, as a result of
1998 revenue levels at that park, we issued approximately 337,467 shares of
common stock to the former owners of Kentucky Kingdom (which amount includes
126,402 escrowed shares). We may also issue additional shares of common stock to
pay quarterly dividend payments on our mandatorily convertible preferred stock
(which dividends total $46.6 million over two years). The sale or expectation of
sales of a large number of shares of common stock or securities convertible into
common stock in the public market at any time after the date of this prospectus
might negatively affect the market price of the common stock.
ANTI-TAKEOVER PROVISIONS -- ANTI-TAKEOVER PROVISIONS LIMIT THE ABILITY OF
STOCKHOLDERS TO EFFECT A CHANGE IN CONTROL OF PREMIER.
Certain provisions in our Certificate of Incorporation and in our debt
instruments and those of our subsidiaries may have the effect of deterring
transactions involving a change in control of Premier, including transactions in
which stockholders might receive a premium for their shares.
12
<PAGE>
Our Certificate of Incorporation provides for the issuance of up to
5,000,000 shares of preferred stock with such designations, rights and
preferences as may be determined from time to time by our board of directors.
The authorization of preferred shares empowers our board of directors, without
further stockholder approval, to issue preferred shares with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of our common stock. If issued, the
preferred stock could be used to discourage, delay or prevent a change of
control of Premier. We have no current plans to issue any preferred stock.
In addition, we have a rights plan which gives each holder of our
common stock the right to purchase a share of junior preferred stock in certain
events which would constitute a change of control. The rights plan is designed
to deter third parties from attempting to take control of Premier.
In addition, we are subject to the anti-takeover provisions of the
Delaware General Corporation Law, which could have the effect of delaying or
preventing a change of control of Premier. Furthermore, upon a change of
control, the holders of substantially all of our outstanding indebtedness are
entitled at their option to be repaid in cash. These provisions may have the
effect of delaying or preventing changes in control or management of Premier.
All of these factors could materially adversely affect the price of our common
stock.
As part of the Six Flags acquisition, we obtained the exclusive right
to use certain Warner Bros. and DC Comics characters in our theme parks in the
United States (except in the Las Vegas metropolitan area) and Canada. Warner
Bros. can terminate this license under certain circumstances, including the
acquisition of Premier by persons engaged in the movie or television industries.
This could deter certain parties from seeking to acquire Premier.
DIVIDENDS -- WE ARE NOT LIKELY TO PAY CASH DIVIDENDS ON OUR COMMON STOCK.
We have not paid dividends on our common stock during the last three
years, and we do not anticipate paying any cash dividends on such stock in the
foreseeable future. Our ability to pay cash dividends is restricted under the
indentures relating to our notes.
YEAR 2000 ISSUE -- OUR OPERATIONS COULD BE ADVERSELY AFFECTED BY DATA PROCESSING
FAILURES AFTER DECEMBER 31, 1999.
Many computer systems, software applications and other electronics
currently in use worldwide are programmed to accept only two digits in the
portion of the date field which designates the year. The "Year 2000 problem"
arises because these systems and products cannot properly distinguish between a
year that begins with "20" and the familiar "19." If these systems and products
are not modified or replaced, many will fail or create erroneous results and/or
may cause other related systems to fail. Our failure to correct a material Year
2000 problem could result in an interruption in or failure of certain of our
normal business operations or activities. This could result in a system failure
or miscalculations causing disruptions of operations, including, but not limited
to, a temporary inability to process transactions.
Our Year 2000 Project (the "Project") is in process. We have undertaken
various initiatives intended to ensure that our computer equipment and software
will function properly with respect to dates in the Year 2000 and thereafter. In
planning and developing the Project, we have considered both our information
technology ("IT") and our non-IT systems. The term "computer equipment and
software" includes systems that are commonly thought of as IT systems, including
accounting, data processing, telephone systems, scanning equipment and other
miscellaneous systems. Those items not to be considered as IT systems include
alarm systems, fax machines, monitors for park operations or other miscellaneous
systems. Both IT and non-IT systems may contain embedded technology, which
complicates our Year 2000 identification, assessment, remediation and testing
efforts. Based upon our identification and assessment efforts to date, we are in
the process of replacing
13
<PAGE>
the computer equipment and upgrading the software it currently uses to become
Year 2000 complaint. In addition, in the ordinary course of replacing computer
equipment and software, we plan to obtain replacements that are in compliance
with Year 2000.
We have initiated correspondence with our significant vendors and
service providers to determine the extent such entries are vulnerable to Year
2000 issues and whether the products and services purchased from such entities
are Year 2000 compliant. We expect to receive a favorable response from such
third parties and it is anticipated that their significant Year 2000 issues will
be addressed on a timely basis.
We anticipate that the Project will be completed in November 1999.
As noted above, we are in the process of replacing certain computer
equipment and software because of the Year 2000 issue. We estimate that the
total cost of such replacements will be no more than $1.5 million. Substantially
all of the personnel being used on the Project are our employees. Therefore, the
labor costs of our Year 2000 identification, assessment, remediation and testing
efforts, as well as currently anticipated labor costs to be incurred by with
respect to Year 2000 issues of third parties, are expected to be less than $0.8
million.
We have not yet developed a most reasonably likely worst case scenario
with respect to Year 2000 issues, but instead have focused our efforts on
reducing uncertainties through the review described above. We have not developed
Year 2000 contingency plans other than as described above, and do not expect to
do so unless merited by the results of our continuing review.
We presently do not expect to incur significant operational problems
due to the Year 2000 issue. However, if all Year 2000 issues are not properly
and timely identified, assessed, fixed and tested, there can be no assurance
that the Year 2000 issue will not materially impact our results of operations or
adversely affect our relationships with vendors or others. Additionally, there
can be no assurance that the Year 2000 issues of other entities will not have a
material impact on our systems or results of operations.
14
<PAGE>
USE OF PROCEEDS
The selling stockholder will receive all of the net proceeds from the
sale of the shares of common stock offered under this prospectus. We will not
receive any proceeds from the sale of the selling stockholder's shares of common
stock.
SELLING STOCKHOLDER
Lehman Brothers Inc., who is the selling stockholder, may from time to
time offer and sell pursuant to this prospectus any or all of the shares of
common stock offered under this prospectus. The selling stockholder received the
shares of common stock covered by this prospectus upon the repayment by Premier
of its $40,700,000 principal amount promissory note. Premier had initially
issued a convertible promissory note to Silver Dollar City, Inc. in connection
with our acquisition of the White Water Atlanta water park (together with an
adjacent family entertainment center) in May 1999. The selling stockholder
purchased the promissory note from Silver Dollar City, Inc. for $40,700,000.
The promissory note, which was payable on demand, bore interest at the
Eurodollar Rate (as defined) plus 2.75%. The promissory note provided that it
was prepayable by us in that number of shares of our common stock determined by
dividing the aggregate amount owed under the note by an amount equal to the
difference between the closing price of our common stock on the New York Stock
Exchange on the trading day immediately preceding the date of such prepayment
less $0.05 per share. The shares of common stock being sold under this
prospectus by the selling stockholder are the shares we issued to the selling
stockholder when we repaid the promissory note in full. The outstanding
indebtedness under the promissory note is reduced on a dollar-for-dollar basis
by the amount of proceeds received from time to time by the selling stockholder
from the sale of shares of common stock offered by this prospectus.
The selling stockholder has agreed that the maximum proceeds which the
selling stockholder may realize from the sale of the common stock under this
prospectus will not exceed the principal amount of the promissory note (i.e.,
$40,700,000) plus accrued and unpaid interest thereon. To the extent that the
selling stockholder receives such maximum amount of proceeds, the seller
stockholder has agreed to not sell any further shares of common stock offered by
this prospectus and to return to us any such unsold shares. If, however, the
selling stockholder sells all of the shares of common stock offered by this
prospectus and the proceeds received by the selling stockholder is less than
$40,700,000 plus accrued and unpaid interest on the promissory note (including
if the selling stockholder has been unable to sell all or any portion of the
shares of common stock within 60 days of the date of this prospectus for any
reason), we have agreed to pay cash to the selling stockholder in the amount of
such deficiency.
In connection with the selling stockholder's acquisition of the
promissory note, we agreed to file the registration statement of which this
prospectus forms a part.
Lehman Brothers has from time to time provided, and in the future may
provide, certain investment banking services to us and our affiliates, for which
it has received, and in the future would receive, customary fees. In addition,
Lehman Brothers acted as an underwriter of our 1996, 1997 and 1998 public
offerings and received customary fees in connection therewith. Furthermore, an
affiliate of Lehman Brothers is a lender under each of our two credit
facilities.
The following table sets forth information with respect to the
ownership by the selling stockholder of our shares of common stock.
15
<PAGE>
<TABLE>
<CAPTION>
Common Stock Common Stock
Owned Prior to Owned After
Name Offering Shares Offered Offering
- ---- -------------- -------------- ------------
<S> <C> <C> <C>
Lehman Brothers Inc. --
</TABLE>
16
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
The following unaudited pro forma statement of operations and other
data of Premier is based upon and should be read in conjunction with the
historical financial statements of Premier and Six Flags, which are incorporated
herein by reference.
The unaudited pro forma statement of operations and other data for the
year ended December 31, 1998 (i) gives effect to the acquisitions of Six Flags
and Walibi and the financings associated with the transactions (including the
issuance of mandatorily convertible preferred stock and common stock) as if they
had occurred on January 1, 1998 (except in the case of Six Flags, which was
treated as if it occurred December 29, 1997, the first day of the 1998 fiscal
year of Six Flags), and (ii) does not include the effect of Premier's May 1999
acquisitions.
The pro forma statement of operations and other data is for
informational purposes only, has been prepared based upon estimates and
assumptions deemed by Premier to be appropriate and does not purport to be
indicative of the results of operations which would actually have been attained
if the acquisitions had occurred as presented in the statement or which could be
achieved in the future.
17
<PAGE>
PREMIER PARKS INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
YEAR ENDED DECEMBER 31, 1998
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical Historical
Six Flags for Walibi for
Historical Period Prior to Period Prior to Combined Pro Forma Company
Premier April 1, 1998(1) April 1, 1998(2) Company Adjustments Pro Forma
------- ---------------- ---------------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Theme park admissions ................ $ 423,461 $ 15,047 $ 883 $ 439,391 $ -- $ 43,391
Theme park food, merchandise
and other ....................... 399,166 8,356 339,146 399,146 -- 399,146
--------- --------- -------- --------- -------- ---------
Total revenue ................... 813,627 23,403 1,507 838,537 -- 838,537
--------- --------- -------- --------- -------- ---------
OPERATING COSTS AND EXPENSES:
Operating expenses .............. 297,266 56,307 4,626 358,199 (10,628)(3) 347,571
Selling, general and
administrative ........... 126,985 54,711 3,407 185,103 (35,433)(3) 149,670
Noncash compensation ............ 6,362 -- -- 6,362 -- 6,362
Costs of products sold .......... 103,051 2,757 248 106,056 -- 106,056
Depreciation and amortization ... 109,841 17,629 3,214 130,684 6,440(4) 137,124
--------- --------- -------- --------- -------- ---------
Total operating costs
and expenses ............. 643,505 131,404 11,419 786,404 (39,621) 746,783
--------- --------- -------- --------- -------- ---------
Income (loss) from operations ... 170,122 (108,001) (9,988) 52,133 39,621 91,754
--------- --------- -------- --------- -------- ---------
OTHER INCOME (EXPENSE):
Interest expense, net ........... (115,849) (22,508) (889) (139,246) (16,655)(5) (155,901)
Equity in operations of theme
park partnerships ........ 24,054 (13,152) -- 10,902 -- 10,902
Minority interest ............... (960) -- -- (960) -- (960)
Other expense ................... (1,023) -- (1) (1,024) -- (1,024)
--------- --------- -------- --------- -------- ---------
Total other income
(expense) ................ (93,778) (35,660) (890) (130,328) (16,655) (146,983)
--------- --------- -------- --------- -------- ---------
Income (loss) before income taxes 76,344 (143,661) (10,878) (78,195) 22,966 (55,229)
Income tax expense (benefit) .... 40,716 -- (4,786) 35,930 (38,038)(6) (2,108)
--------- --------- -------- --------- -------- ---------
Income (loss) before
extraordinary loss ....... $ 35,628 $(143,661) $ (6,092) $(114,125) $ 61,004 $ (53,121)
--------- --------- -------- --------- -------- ---------
--------- --------- -------- --------- -------- ---------
Income (loss) applicable to common
stock ........................... $ 18,162 (7) (7) $ (76,409)(7)
--------- ---------
--------- ---------
Income (loss) per common share .. $ 0.27 (7) (7) $ (1.01)(7)
--------- ---------
--------- ---------
Weighted average shares ......... 66,430 $ 75,617(7)
--------- ---------
--------- ---------
OTHER DATA:
EBITDA(8) ................................... $286,325 $ (90,372) $ (6,774) $ 189,179 $ 46,061 $(235,240)
--------- --------- -------- --------- -------- ---------
--------- --------- -------- --------- -------- ---------
Adjusted EBITDA(9) .......................... $321,733 $(102,077) $ (6,774) $ 212,882 $ 46,061 $(258,943)
--------- --------- -------- --------- -------- ---------
--------- --------- -------- --------- -------- ---------
Net cash provided by (used in) operating
activities ................................ $119,010 $ (54,779) $ (7,663) $ 56,568 $ 38,478 $ 95,046
--------- --------- -------- --------- -------- ---------
--------- --------- -------- --------- -------- ---------
</TABLE>
18
<PAGE>
PREMIER PARKS INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
YEAR ENDED DECEMBER 31, 1998
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
BASIS OF PRESENTATION
The accompanying unaudited pro forma statement of operations and other
data for the year ended December 31, 1998 has been prepared based upon certain
pro forma adjustments to historical financial information of Premier and the
pre-acquisition historical financial information of Six Flags and Walibi.
Premier acquired Six Flags on April 1, 1998 and Walibi on March 26, 1998.
The unaudited pro forma statement of operations and other data for the
year ended December 31, 1998 has been prepared assuming the acquisitions and the
related financings (including the issuance of mandatorily convertible preferred
stock and common stock) occurred on January 1, 1998 (except in the case of Six
Flags, which was treated as if it was acquired on December 29, 1997, the first
day of the 1998 fiscal year of Six Flags). The unaudited pro forma statement of
operations should be read in conjunction with the financial statements of
Premier, which are incorporated herein by reference.
PRO FORMA ADJUSTMENTS
1. The results of Six Flags included herein represent the operations of
Six Flags for the period from December 29, 1997 to March 31, 1998,
prior to Premier's acquisition of Six Flags.
2. The results of Walibi included herein represent the operations of
Walibi for the period from January 1, 1998 to March 26, 1998, prior to
Premier's acquisition of a controlling interest in Walibi. The results
of Walibi are in Belgium 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 for
the period January 1, 1998 to March 26, 1998 to conform to U.S.
generally accepted accounting principles and U.S. dollars (using an
average exchange rate for the period of 37.500 BEF to US$1):
19
<PAGE>
Premier Parks Inc.
Notes to Unaudited Pro Forma Statement of Operations and Other Data
Year Ended December 31, 1998
(All amounts in thousands, except share data)
<TABLE>
<CAPTION>
Amount Accounting Adjusted Amount
(in BEF) Adjustments Amount (in US $)
-------- ------------ -------- ---------
<S> <C> <C> <C> <C>
Revenue:
Theme park admissions 33,122 -- 33,122 $ 883
Theme park food, merchandise and other 23,296 112 23,408 624
Total revenue 56,418 112 56,530 1,507
Operating costs and expenses:
Operating expenses 184,288 (10,800) 173,488 4,626
Selling, general and administrative 127,774 -- 127,774 3,407
Costs of products sold 9,310 -- 9,310 248
Depreciation and amortization 120,678 (149) 120,529 3,214
Total operating costs and expenses 442,050 (10,949) 431,101 11,495
-------- -------- -------- --------
Income (loss) from operations (385,632) 11,061 (374,571) (9,988)
-------- -------- -------- --------
Other income (expense):
Interest expense, net (33,324) -- (33,324) (889)
Other expense (14) -- (14) (1)
-------- -------- -------- --------
Total other expense (33,338) -- (33,338) (890)
-------- -------- -------- --------
Income (loss) before taxes (418,970) 11,061 (407,909) (10,878)
Income tax expense (benefit) (175,066) (4,398) (179,464) (4,786)
-------- -------- -------- --------
Net income (loss) (243,904) 15,459 (228,445) $(6,092)
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
3. Adjustments reflect the elimination of compensation expense associated
with stock option payments resulting from the acquisition of Six Flags
that were recognized during the pre-acquisition period from December
28, 1997 to March 31, 1998.
4. Adjustment reflects the elimination of historical depreciation and
amortization of $20,819 for Six Flags and Walibi and the inclusion of
estimated pro forma depreciation of $14,647 and amortization of
$12,612.
5. Adjustment reflects additional interest expense associated with debt
incurred by Premier in connection with the acquisitions, net of (a) the
elimination of the historical interest expense associated with Premier
and Six Flags credit facilities previously outstanding and the
long-term debt of Walibi, and (b) the amortization of the fair value
adjustments for Six Flags long-term debt assumed as a result of the Six
Flags acquisition. Issuance costs associated with the borrowings are
being amortized over their respective terms. The components of the
adjustments are as follows:
20
<PAGE>
Premier Parks Inc.
Notes to Unaudited Pro Forma Statement of Operations and Other Data
Year Ended December 31, 1998
(All amounts in thousands, except share data)
<TABLE>
<S> <C>
Interest expense on Premier credit facility for the period prior to April 1, 1998
(at an 8.0% interest rate) $ (4,400)
Interest expense on Six Flags credit facility for the period prior to April 1,
1998 (at an 8.0% interest rate) (8,200)
Interest expense on the Six Flags zero coupon notes for the period prior to
April 1, 1998 (at a 6.5% interest rate) (2,600)
Interest expense on the Six Flags Theme Parks Inc. 12 1/4% senior subordinated
notes (at a 10.3% interest rate) (7,337)
Interest expense on the Six Flags 87/8% senior notes for the period prior to
April 1, 1998 (at an 87/8% interest rate) (3,772)
Interest expense on Premier 10% senior discount notes prior to April 1, 1998
(at a 10% interest rate) (6,293)
Interest expense on Premier 9 1/4% senior notes prior to April 1, 1998 (at a
9 1/4% interest rate) (6,475)
Interest expense from the amortization of issuance costs
(1,570)
Interest expense from commitment fees on Premier and Six Flags credit
facilities (773)
Interest expense on Walibi indebtedness (1,570)
Elimination of historical interest expense - Premier 2,785
Elimination of historical interest expense - Six Flags 22,661
Elimination of historical interest expense - Walibi 889
---------
$(16,655)
---------
---------
</TABLE>
6. Adjustment reflects the application of income taxes to the pro forma
adjustments and to the pre-acquisition operations of Six Flags and
Walibi, after consideration of permanent differences, at a rate of 38%.
7. Net Income (loss) applicable to common stockholders is adjusted to
reflect $5,822 of additional dividends payable to the holders of
Premier's 7 1/2% mandatorily convertible preferred stock for the period
prior to issuance on April 1, 1998.
Net Income (loss) per common share and weighted average common share
data are not presented for Six Flags and Walibi as the information is
not meaningful.
The calculation of pro forma weighted average shares outstanding for
the year ended December 31, 1998 is as follows:
21
<PAGE>
Premier Parks Inc.
Notes to Unaudited Pro Forma Statement of Operations and Other Data
Year Ended December 31, 1998
(All amounts in thousands, except share data)
<TABLE>
<S> <C>
Pro forma weighted average number of common shares outstanding
excluding Premier's April 1, 1998 common stock offering
and the Walibi acquisition 38,020,000
Common shares issued in Premier's April 1, 1998 common stock offering,
as if issued on January 1, 1998 36,800,000
Common shares issued as partial consideration for
the Walibi acquisition, as if issued on
January 1, 1998 797,000
-----------
Pro forma weighted average number of common shares outstanding 75,617,000
-----------
-----------
</TABLE>
8. EBITDA is defined as earnings before interest expense, net, income tax
expense (benefit), depreciation and amortization, equity in operations
of theme park partnerships, minority interest, and noncash
compensation. Premier has included information concerning EBITDA
because it is used by certain investors as a measure of Premier'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 Premier's operating performance. This information
should be read in conjunction with the Statement of Cash Flows
contained in the financial statements incorporated by reference.
9. Adjusted EBITDA includes Premier's share of the EBITDA from the three
partnership parks which are not consolidated - Six Flags Over Texas,
Six Flags Over Georgia and Six Flags Marine World.
22
<PAGE>
PLAN OF DISTRIBUTION
The shares offered hereby are being offered on behalf of Lehman
Brothers Inc., which is the selling stockholder. We will not receive any
proceeds from the selling stockholder's sale of the shares of common stock.
Any distribution of the shares covered by this prospectus by the
selling stockholder may be effected from time to time in one or more of the
following transactions:
o through brokers, acting as agent in transactions (which may
involve block transactions), in special offerings, in the
over-the-counter market, or otherwise, at market prices obtainable
at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices;
o to dealers or underwriters who acquire shares for their own
account and resell them in one or more transactions, including
negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale (any public offering
price and any discount or concessions allowed or reallowed or paid
to other dealers may be changed from time to time);
o directly or through brokers or agents in private sales at
negotiated prices;
o to lenders pledged as collateral to secure loans, credit or other
financing arrangements and any subsequent foreclosure, if any,
under those arrangements; or
o by any other legally available means.
Also, offers to purchase shares covered by this prospectus may be
solicited by agents designated by the selling stockholder from time to time.
Dealers, underwriters or agents participating in an offering made pursuant to
this prospectus and the related registration statement may receive underwriting
discounts or commissions under the Securities Act of 1933, discounts or
concessions may be allowed or reallowed or paid to dealers, and brokers and
agents participating in such transactions may receive brokerage or agent's
commissions fees.
Premier has been advised by the selling stockholder that it has not, as
of the date of this prospectus, entered into any arrangement with an
underwriter, agent or broker-dealer for the sale of its shares covered by this
prospectus.
The selling stockholder may also sell all or a portion of the shares
covered by this prospectus pursuant to Rule 144 under the Securities Act of
1933, to the extent that such sales may be made in compliance with that Rule.
The selling stockholder and any agents or broker-dealers that
participate with the selling stockholder in the distribution of any of the
shares covered by this prospectus may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, and any discount or commission received
by them and any profit on the resale of shares covered by this prospectus
purchased by them may be deemed to be underwriting discounts or commissions
under the Securities Act of 1933.
In connection with a sale of shares covered by this prospectus, the
following information will, to the extent then required, be provided in a
prospectus supplement relating to such sale:
o the number of shares to be sold,
o the purchase price,
23
<PAGE>
o the public offering price,
o the name of any underwriter, agent or broker-dealer, and
o any commissions, discounts or other items constituting
compensation to underwriters, agents or broker-dealers with
respect to the particular sale.
Premier has agreed to pay all of the expenses incident to the
registration, offering and sale of the shares to the public other than selling
commissions or discounts of underwriters, broker-dealers or agents.
The selling stockholder received the shares of common stock covered by
this prospectus upon the repayment by Premier of its $40,700,000 principal
amount promissory note. The promissory note provided that it was prepayable by
us in that number of shares of our common stock determined by dividing the
aggregate amount owed under the note by an amount equal to the difference
between the closing price of our common stock on the New York Stock Exchange on
the trading day immediately preceding the date of such prepayment less $0.05 per
share.
An investor may only purchase the shares being offered hereby if such
shares are qualified for sale or are exempt from registration under the
applicable state securities laws of the state in which such prospective
purchaser resides.
Lehman Brothers has from time to time provided, and in the future may
provide, certain investment banking services to us and our affiliates for which
it has received, and in the future would receive, customary fees. In addition,
Lehman Brothers acted as an underwriter of our 1996, 1997 and 1998 public
offerings and received customary fees in connection therewith. Furthermore, an
affiliate of Lehman Brothers is a lender under each of our two credit
facilities.
LEGAL MATTERS
Our counsel, Thelen Reid & Priest LLP of New York, New York, will issue
an opinion to us on certain legal matters relating to the shares of common
stock.
EXPERTS
The consolidated financial statements of Premier Parks Inc. and
subsidiaries as of December 31, 1998 and 1997 and for each of the years in the
three-year period ended December 31, 1998, have been incorporated by reference
herein in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Six Flags Entertainment Corporation as of December 28, 1997 and
December 29, 1996 and for each of the three years in the period ended December
28, 1997 included in our Registration Statement on Form S-3 (File No.
333-46897), as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. Six Flags
Entertainment Corporation's financial statements are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Premier Parks Inc. will pay all expenses related to the offering and
sale to the public of the securities being registered. Such expenses are set
forth in the following table. All the amounts shown are estimates, except the
SEC registration fee.
<TABLE>
<S> <C>
SEC Registration Fee..................................... $11,926.20
Legal Fees and Expenses.................................. 10,000.00
Miscellaneous............................................ 3,073.80
----------
Total.................................................... $25,000.00
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of Premier Parks Inc. ("Premier")
provides that it will to the fullest extent permitted by the General Corporation
Law of the State of Delaware (the "GCL"), as amended from time to time,
indemnify all persons whom it may indemnify pursuant to the GCL. Premier's
By-laws contain similar provisions requiring indemnification of Premier's
directors and officers to the fullest extent authorized by the GCL. The GCL
permits a corporation to indemnify its directors and officers (among others)
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by them in connection with any
action, suit or proceeding brought (or threatened to be brought) by third
parties, if such directors or officers acted in good faith and in a manner they
reasonably believe to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. In a derivative action,
i.e., one by or in the right of Premier, indemnification may be made for
expenses (including attorneys' fees) actually and reasonably incurred by
directors and officers in connection with the defense or settlement of such
action if they had acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of Premier, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged liable to Premier unless and only to
the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses. The GCL further
provides that, to the extent any director or officer has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
this paragraph, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. In addition, Premier's
Certificate of Incorporation contains a provision limiting the personal
liability of Premier's directors for monetary damages for certain breaches of
their fiduciary duty. Premier has indemnification insurance under which
directors and officers are insured against certain liability that may incur in
their capacity as such. Section 145 of the GCL which covers the indemnification
of directors, officers, employees and agents of a corporation is hereby
incorporated herein by reference.
ITEM 16. EXHIBITS.
See Exhibit Index
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
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;
and
(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 (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrants 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) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment 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.
(3) 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.
(4) That, for the purpose of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act (and, where applicable, each filing
of any employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act) that is incorporated by reference in the Registration
Statement 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15 (other than the
provisions relating to insurance), or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy expressed in the Securities 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 Securities 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 June 2, 1999.
Premier Parks Inc.
By: /s/ Kieran E. Burke
-------------------------------------
Kieran E. Burke
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
under the heading "Signatures" constitutes and appoints Kieran E. Burke, Gary
Story and James F. Dannhauser, each as his true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) and supplements to this Registration
Statement and any related Registration Statement filed pursuant to Rule 462(b)
of the Securities Act of 1933, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and to perform each and every act and thing
requisite and necessary to be done in connection with the above premises, as
fully for all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ Kieran E. Burke Chairman of the Board and Chief
- ----------------------- Executive Officer (Principal
Kieran E. Burke Executive Officer) June 2, 1999
/s/ Gary Story President, Chief Operating Officer
- ----------------------- and Director June 2, 1999
Gary Story
/s/ James F. Dannhauser Chief Financial Officer and Director
- ----------------------- (Principal Financial and Accounting
James F. Dannhauser Officer) June 2, 1999
/s/ Paul A. Biddelman Director June 2, 1999
- -----------------------
Paul A. Biddelman
/s/ Michael E. Gellert Director June 2, 1999
- -----------------------
Michael E. Gellert
/s/ Sandy Gurtler Director June 2, 1999
- -----------------------
Sandy Gurtler
/s/ Charles R. Wood Director June 2, 1999
- -----------------------
Charles R. Wood
II-3
<PAGE>
EXHIBITS INDEX
The following exhibits are filed as a part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit No.: Description
- ------------ -----------
<S> <C>
3.1: Certificate of Incorporation of Premier Parks Inc.
(a) Certificate of Incorporation of Registrant dated March 24, 1981--incorporated by reference
from Exhibit 3 to Form 10-Q of Registrant for the quarter ended June 30, 1987.
(b) Plan and Agreement of Merger of Registrant and Tierco, a Massachusetts business trust, dated
March 31, 1981--incorporated by reference from Exhibit 3 to Form 10-Q of Registrant for the
quarter ended June 30, 1987.
(c) Certificate of Amendment of Certificate of Incorporation of Registrant dated April 14, 1985--
incorporated by reference from Exhibit 3 to Form 10-Q of Registrant for the quarter ended June
30, 1987.
(d) Certificate of Amendment of Certificate of Incorporation of Registrant dated May 8,
1987-incorporated by reference from Exhibit 3 to Form 10-Q of Registrant for the quarter ended
June 30, 1987.
(e) Certificate of Amendment of Certificate of Incorporation of Registrant dated June 11, 1987--
incorporated by reference from Exhibit 3 to Form 10-Q of Registrant for the quarter ended June
30, 1987.
(f) Certificate of Amendment of Certificate of Incorporation of Registrant dated April 30, 1991
--incorporated by reference from Exhibit 3(f) to Form 10-K of Registrant for the year ended
December 31, 1991.
(g) Certificate of Amendment of Certificate of Incorporation of Registrant dated June 30, 1992
--incorporated by reference from Exhibit 3(g) to Form 10-K of Registrant for the year ended
December 31, 1992.
(h) Certificate of Amendment of Certificate of Incorporation of Registrant dated June 23, 1993
--incorporated by reference from Exhibit 3(a) to Form 10-Q of Registrant for the quarter ended
June 30, 1993.
(i) Certificate of Amendment to Certificate of Incorporation dated October 7, 1994 -- incorporated
by reference from Exhibit 3(i) to Form 10-K of Registrant for the year ended December 31, 1994.
(j) Certificate of Designation of Series A Junior Preferred Stock of Registrant -- incorporated by
reference from Exhibit 2(1.C) to Registrant's Registration Statement on Form 8-A dated January
21, 1998.
(k) Certificate of Amendment to Certificate of Incorporation dated June 16, 1997 -- incorporated by
reference from Exhibit 3(n) to Form 10-k of Registrant for year ended December 31, 1997.
(l) Certificate of Designation, Rights and Preferences for 7 1/2% Mandatorily Convertible Preferred
Stock of Registrant-incorporated by reference from Exhibit 4(s) to Registrant's Registration
Statement on Form S-3 (No. 333-45859) declared effective on March 26, 1998.
(m) Certificate of Amendment of Certificate of Incorporation of Registrant dated July 24, 1998
--incorporated by reference from Exhibit 3(p) to Form 10-K of Registrant for the year ended
December 31, 1998.
4.1: Demand Promissory Note dated May 25, 1999 issued by the Registrant in favor of Lehman Brothers Commercial
Paper Inc. and the related Letter Agreement.
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
4.3 Amended and Restated Rights Agreement between Premier Parks Inc. and Bank One Trust Company, as Rights
Agent -- incorporated by reference from Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated
December 15, 1997, as amended.
5.1: Opinion of Thelen Reid & Priest LLP.
23.1: Consent of KPMG LLP.
23.2: Consent of Ernst & Young LLP
23.3: Consent of Thelen Reid & Priest LLP (included in Exhibit 5.1).
24.1: Power of Attorney (included on the signature page hereto).
</TABLE>
II-5
<PAGE>
Exhibit 4.1
DEMAND PROMISSORY NOTE
$40,700,000.00 May 25, 1999
FOR VALUE RECEIVED, the undersigned, PREMIER PARKS INC. (the
"BORROWER"), a Delaware corporation, unconditionally promises to pay ON DEMAND
to the order of LEHMAN COMMERCIAL PAPER INC. (the "LENDER"), at such address or
account as the Lender shall notify in writing to the Borrower, the principal
amount of FORTY MILLION SEVEN HUNDRED THOUSAND U.S. DOLLARS AND ZERO CENTS
($40,700,000.00) and interest on the unpaid principal amount of this Note from
and including the date hereof until the principal amount hereof is paid in full,
at the rate of interest provided in Section 1 hereof. Unless otherwise defined
in this Note, terms defined in Annex I attached hereto are used herein as
defined therein.
1. INTEREST. This Note shall accrue interest at a rate per annum
equal to the Eurodollar Rate (computed on the basis of a 360 day year and the
actual number of days elapsed including the first day but excluding the last
day) PLUS 2.75%. Accrued interest shall be payable on the last day of each
Interest Period and on the due date hereof (whether by demand or upon
acceleration hereof or otherwise). If the Borrower shall fail to pay when due
(whether by reason of demand, acceleration or otherwise) any principal hereof or
interest hereon or any other amount whatsoever payable hereunder, the Borrower
agrees to pay interest, on demand by the Lender, on such overdue amount, for the
period from and including the due date of such amount to but excluding the date
such amount is paid in full, at a rate per annum equal to 2% per annum above the
interest rate otherwise applicable hereunder.
2. PAYMENT WITH CAPITAL STOCK. Anything herein to the contrary
notwithstanding, the Borrower may, upon at least three Business Days'
irrevocable prior notice to the Lender (which notice shall specify the date of
delivery of the common stock referred to below (such date, the "STOCK DELIVERY
DATE", which shall not be more than three Business Days from the date of such
notice)), elect to prepay the entire outstanding principal amount of this Note
and the accrued interest thereon by delivering registered common stock of the
Borrower in the manner and on the terms and conditions set forth in the Letter
Agreement dated May 25, 1999 (the "LETTER AGREEMENT") between the Borrower,
Lehman Brothers Inc. and the Lender. If the Borrower so elects to prepay this
Note, the outstanding principal amount due hereunder and the accrued interest
hereon shall become due and payable on the earlier of (i) the dates specified in
paragraph (iv) of the Letter Agreement or (ii) the date on which this Note shall
be accelerated pursuant to Section 7 hereof. The parties hereto agree that the
foregoing provisions (as well as the provisions in Section 7 hereof) do not
prejudice the Lender's right to demand payment in full of the principal
hereunder (with accrued interest thereon) and all other amounts owing under this
Note at any time prior to the Borrower's election to prepay this Note as
provided in this Section 2.
3. PAYMENTS; PREPAYMENTS.
3.1 PAYMENTS. All payments (including prepayments) to be made by
the Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Lender, for
its account, at the office specified from time to time by the Lender as its
payment office by written notice to the Borrower, in U.S. Dollars and in
immediately available funds (except as provided in Section 2 hereof). If any
payment hereunder becomes due and payable on a day other than
<PAGE>
2
a Business Day, such payment shall be extended to the next succeeding Business
Day, and interest thereon shall be payable at the then applicable rate during
such extension.
3.2 OPTIONAL CASH PREPAYMENTS. The principal of this Note may be
prepaid in U.S. Dollars and in immediately available funds at the Borrower's
option, in whole or in part, without premium or penalty, upon irrevocable notice
delivered to the Lender at least three Business Days prior thereto, which notice
shall specify the date and amount of prepayment; PROVIDED that if such
prepayment is made on any day other than the last day of the Interest Period,
the Borrower shall also pay any amounts owing pursuant to Section 4 hereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to such
date on the amount prepaid. Partial cash prepayments shall be in a minimum
principal amount of $1,000,000.
3.3 TAXES. All payments made by the Borrower under this Note shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any governmental authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Lender as a result of a present or former connection between the
Lender and the jurisdiction of any governmental authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this Note).
If any such taxes, levies, imposts, duties, charges, fees, deductions or
withholdings are required to be withheld from any amounts payable to the Lender
hereunder, the amounts so payable to the Lender shall be increased to the extent
necessary to yield to the Lender (after payment of all such taxes and other
similar amounts) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Note.
4. INDEMNITY. The Borrower agrees to indemnify the Lender and to
hold the Lender harmless from any loss or expense which the Lender may sustain
or incur as a consequence of (a) a default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Note or (b) the making of a payment or prepayment (including,
without limitation, as a result of a demand hereunder or upon acceleration of
this Note) of the principal on a day which is not the last day of an Interest
Period with respect thereto. Such indemnification in respect of clause (b) above
shall not exceed an amount equal to the excess, if any, of (i) the amount of
interest (calculated at the Eurodollar Rate only) which would have accrued on
the amount so prepaid for the period from the date of such prepayment to the
last day of such Interest Period at the applicable rate of interest provided for
herein OVER (ii) the amount of interest (as reasonably determined by the Lender)
which would have accrued to the Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section 4
submitted to the Borrower by the Lender shall be conclusive in the absence of
manifest error.
5. REPRESENTATIONS AND WARRANTIES. On the date of the issuance of
this Note, the Borrower hereby represents and warrants to the Lender that: (a)
the Borrower is duly organized, validly existing and in good standing under the
laws of Delaware, (b) the Borrower has the corporate power and authority, and
the legal right, to make, deliver and perform this Note and the Letter Agreement
(collectively, the "LOAN DOCUMENTS"), (c) the Borrower has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents, (d) except as expressly contemplated by the Letter Agreement, no
consent or authorization of, filing with, notice to
<PAGE>
3
or other act by or in respect of, any governmental authority or any other person
is required in connection with the execution, delivery, performance, validity or
enforceability of the Loan Documents, (e) each Loan Document has been duly
executed and delivered on behalf of the Borrower and constitutes a legal, valid
and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law) and (f) the
execution, delivery and performance of the Loan Documents by the Borrower will
not violate, and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to, any
applicable law, rule or regulation or determination of an arbitrator or a court
or other governmental authority or the certificate of incorporation and by-laws
or other organizational or governing documents of the Borrower or any of its
subsidiaries or any provision of any security issued by the Borrower or any of
its subsidiaries or of any agreement, instrument or other undertaking to which
Borrower or any of its subsidiaries is a party or by which it or any of them or
any of its or their property is bound.
6. COVENANTS. The Borrower hereby agrees that, so long as any
principal or other amount is owing to the Lender hereunder, the Borrower shall:
(a) promptly give notice to the Lender of the occurrence of any Event of Default
under Section 7 hereof; (b) not create, incur, assume or suffer to exist any
Lien upon any of its property, whether now owned or hereafter acquired, except
for Permitted Liens (as defined in the Indenture as in effect on the date hereof
between the Borrower and The Bank of New York, as Trustee, with respect to the
9-1/4% Senior Notes due 2006 issued by the Borrower); and (c) own, free and
clear of any Lien, at all times an aggregate amount of cash and Cash Equivalents
of not less than the sum of (a) the then outstanding principal amount of this
Note PLUS (b) any and all accrued and unpaid interest under this Note.
7. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing and the Borrower has elected to exercise
its right to prepay this Note with its common stock under Section 2 hereof:
(a) the Borrower shall fail to observe or perform any covenant,
condition or agreement in this Note or the Letter Agreement, or any
representation or warranty made by the Borrower in this Note shall
prove to have been incorrect in any material respect when made; or
(b) the Borrower or any of its subsidiaries shall (i) default in
making any payment of any principal of any indebtedness of the Borrower
or such subsidiary on the scheduled or original due date with respect
thereto; or (ii) default in making any payment of any interest on any
such indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such indebtedness was created; or
(iii) default in the observance or performance of any other agreement
or condition relating to any such indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or beneficiary of such indebtedness (or a trustee or agent on
behalf of such holder or beneficiary) to cause, with the giving of
notice if required, such indebtedness to become due prior to its stated
maturity; PROVIDED that a default, event or condition described in
clause (i), (ii) or (iii) of this paragraph (b) shall not at any time
constitute an Event of Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i),
(ii) and (iii) of this paragraph (b) shall have occurred and be
continuing
<PAGE>
4
with respect to indebtedness the outstanding principal amount of which
exceeds in the aggregate $5,000,000; or
(c) (i) the Borrower or any of its subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or the Borrower or
any of its subsidiaries shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against the Borrower
or any of its subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Borrower or any of its
subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Borrower or any of its subsidiaries shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) the Borrower or any of its
subsidiaries shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (c) above with respect to the Borrower, the
principal hereunder (with accrued interest thereon) and all other amounts owing
under this Note shall immediately become due and payable, and (B) if such event
is any other Event of Default, the Lender may, by written notice to the
Borrower, demand payment in full of the principal hereunder (with accrued
interest thereon) and all other amounts owing under this Note, whereupon the
same shall immediately become due and payable; PROVIDED that, in either
circumstance described in clause (A) or (B) above, the Lender shall, immediately
upon the payment in full of the outstanding principal of this Note (with accrued
interest thereon) and all other amounts owing under this Note, deliver to the
Borrower all shares of the common stock of the Borrower previously delivered to
the Lender under Section 2 hereof and not theretofore disposed of by the Lender
or any of its affiliates.
8. MISCELLANEOUS.
8.1 AMENDMENTS AND WAIVERS. No amendment, modification, supplement
or waiver of any provision of this Note nor consent to departure by the Borrower
therefrom shall be effective unless the same shall be in writing and signed by
the Borrower and the Lender, and such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
8.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed (a) in the case of the Borrower, at the address on the
signature page hereof, and (b) in the
<PAGE>
5
case of the Lender, to such address as the Lender may hereafter notify to the
Borrower; PROVIDED that any notice, request or demand to or upon the Lender
shall not be effective until received.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Lender, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
8.4 SURVIVAL. All representations and warranties made hereunder
and in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Note. The
agreements in Sections 4 and 8.5 hereof shall survive repayment of the principal
and all other amounts hereunder.
8.5 PAYMENT OF EXPENSES. The Borrower agrees (a) to pay or
reimburse the Lender for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Note and any other documents
prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements and other charges of counsel
to the Lender and (b) to pay or reimburse the Lender for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Note and any such other documents, including, without
limitation, the fees and disbursements of counsel (including the allocated fees
and disbursements and other charges of in-house counsel) to the Lender.
8.6 SUCCESSORS AND ASSIGNS, ETC. This Note shall be binding on the
Borrower and its successors and permitted assigns and shall inure to the benefit
of the Lender and its successors and permitted assigns. Neither the Borrower nor
the Lender may assign any of its respective rights and/or obligations hereunder
without the prior written consent of the other party.
8.7 GOVERNING LAW, ETC. THIS NOTE AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. THE BORROWER
AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE AND FOR ANY COUNTERCLAIM
THEREIN.
9. SELLER NOTES. Subject to the terms and conditions of the Letter
Agreement, upon the purchase by the Lender of the convertible promissory notes,
each dated May 25, 1999, made by the Borrower to each of Silver Dollar City,
Inc. ("SDC") and Ozark Mountain Bank, as Trustee, in the principal amounts as
set forth in Section 1.3 of the Asset Purchase and Exchange Agreement dated as
of April 30, 1999 between SFOG Acquisition Company LLC and SDC, such convertible
notes shall be superseded by this Note and delivered to the Borrower marked
"cancelled".
10. DEMAND NOTE. THIS NOTE IS A DEMAND PROMISSORY NOTE AND,
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN OR IN THE LETTER AGREEMENT OR
OTHERWISE, IS PAYABLE BY THE BORROWER UPON DEMAND BY THE LENDER, EXCEPT TO THE
EXTENT THE BORROWER HAS ELECTED TO
<PAGE>
6
EXERCISE ITS RIGHT TO PREPAY THE OUTSTANDING PRINCIPAL AMOUNT DUE HEREUNDER WITH
ITS COMMON STOCK UNDER SECTION 2 HEREOF, IN WHICH CASE THIS NOTE WILL BECOME DUE
AND PAYABLE ON THE EARLIER OF (I) THE DATES SPECIFIED IN PARAGRAPH (IV) OF THE
LETTER AGREEMENT OR (II) THE DATE ON WHICH THIS NOTE SHALL BE ACCELERATED
PURSUANT TO SECTION 7 HEREOF.
<PAGE>
PREMIER PARKS INC.
By: /s/Patrick J. Walker
--------------------------------------
Name: Patrick J. Walker
Title: Vice President - Finance
Address for Notices:
122 E. 42nd St.
New York, New York 10168
Attention: James F. Dannhauser and
James M. Coughlin, Esq.
Telephone: 212-599-4693/4690
Facsimile: 212-949-6203
<PAGE>
ANNEX I
DEFINITIONS
"BUSINESS DAY": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close and which is also a day for trading by and between banks in U.S. Dollar
deposits in the interbank eurodollar market.
"CASH EQUIVALENTS": (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of one year or less from the date of
acquisition, banker's acceptances with maturities not exceeding six months and
overnight bank deposits, in each case issued by or with the Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof having combined capital and surplus of not less than $500,000,000;
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Services ("S&P") or P-2 by Moody's Investors Service, Inc. ("MOODY'S"),
or carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within one year from the date of
acquisition; (d) repurchase obligations of the Lender or of any commercial bank
satisfying the requirements of clause (b) of this definition, having a term of
not more than 30 days with respect to securities described in clause (a) or (b)
of this definition; (e) securities with maturities of one year 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 or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by the
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
at least 95% of their assets in securities satisfying the requirements of
clauses (a) through (f) of this definition.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day, the aggregate
(without duplication) of the maximum rates (expressed as a decimal fraction) of
reserve requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System of the United States (or
any successor) or other governmental authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of said
Board of Governors) maintained by a member bank of the Federal Reserve System.
"EURODOLLAR BASE RATE": with respect to each day during any
Interest Period, the rate per annum determined on the basis of the rate for
deposits in U.S. Dollars for a period equal
<PAGE>
2
to such Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event that
such rate does not appear on Page 3750 of the Telerate screen (or otherwise on
such screen), the "EURODOLLAR BASE RATE" for purposes of this definition shall
be determined by reference to such other comparable publicly available service
for displaying eurodollar rates as may be selected by the Lender or, in the
absence of such availability, such rate as shall be reasonably determined by the
Lender.
"EURODOLLAR RATE": with respect to each day during any Interest
Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
EURODOLLAR BASE RATE
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"INTEREST PERIOD": initially, the period commencing on the date
hereof and ending seven days thereafter; and thereafter, each period commencing
on the last day of the next preceding Interest Period and ending seven days or
one, two or three months thereafter, as selected by the Borrower by irrevocable
notice to the Lender not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; PROVIDED that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day; (ii) any Interest Period that would
otherwise extend beyond the date payment is due hereunder shall end on such date
payment is due hereunder; (iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month; and (iv) if the Borrower
shall fail to select such Interest Period, the relevant Interest Period shall be
one month's duration.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).
<PAGE>
LEHMAN BROTHERS INC. LEHMAN COMMERCIAL PAPER INC.
3 World Financial Center 3 World Financial Center
New York, New York 10285 New York, New York 10285
May 25, 1999
Premier Parks Inc.
Letter Agreement
Premier Parks Inc.
122 E. 42nd St.
New York, New York 10168
Attention: James F. Dannhauser
Ladies and Gentlemen:
Reference is made to the Asset Purchase and Exchange Agreement
dated April 30, 1999 between SFOG Acquisition Company LLC (the "Buyer") and
Silver Dollar City, Inc. (the "Acquisition Agreement"). We understand that
pursuant to Section 1.3(b) of the Acquisition Agreement the purchase price in
respect of the acquisition covered thereby will be paid by the issuance by
Premier Parks Inc. ("PPI") of two convertible promissory notes in an aggregate
principal amount of $40,700,000 (collectively, the "Seller Notes"). We further
understand that pursuant to said Section the Buyer is obligated to arrange for
the Seller Notes to be purchased for cash at a purchase price of 100% of the
principal amount thereof as of the Closing Date (as defined in the Acquisition
Agreement). You have requested, on behalf of the Buyer, that Lehman Commercial
Paper Inc. ("LCPI") purchase the Seller Notes. This will confirm the agreement
that, subject to the terms of this Letter Agreement, LCPI will acquire the
Seller Notes for such cash purchase price on the Closing Date (as so defined).
As an inducement to LCPI to purchase the Seller Notes and in
consideration for the services of Lehman Brothers Inc. ("LBI") and LCPI in
connection with the transactions contemplated hereby, PPI agrees for the benefit
of LBI, LCPI and their affiliates that:
(i) The purchase of the Seller Notes by LCPI will be subject to
the satisfaction of all of the following conditions:
(a) issuance by PPI to LCPI of the Demand Promissory Note
dated as of May 25, 1999 (the "Note"; capitalized terms used but
not defined herein are used with the meanings assigned to them in
the Note) in a principal amount of $40,700,000, whereupon the Note
shall become effective and the obligations of the Seller Notes
shall be replaced with and superseded by the obligations of PPI
set forth in the Note;
(b) the acquisition contemplated in the Acquisition Agreement
shall have been consummated on the terms and conditions specified
therein;
(c) PPI, LBI and LCPI shall have executed and delivered this
Letter Agreement;
(d) LCPI shall have received certified copies of all
corporate action taken by PPI (including, without limitation,
board of director (or executive committee) resolutions and
evidence of the incumbency, including specimen signatures, of
officers) with respect to the execution, delivery and performance
of the Note and this Letter Agreement (and LCPI may conclusively
rely on such certificate until it receives notice in writing from
PPI to the contrary) and such other documentation as LCPI may
reasonably request;
(e) LCPI shall have received the legal opinion of the general
counsel of PPI in substantially the form heretofore agreed upon by
the parties hereto;
<PAGE>
Lehman Brothers Inc.
Lehman Commercial Paper Inc. May 25, 1999
2
(f) LBI and LCPI shall have received from PPI an up-front fee
in the amount equal to $250,000 and all expenses for which
invoices have been presented (including reasonable fees,
disbursements and other charges of counsel to LBI and LCPI), on or
before the date hereof; and
(g) LCPI shall have received such other documentation as it
may reasonably require in connection with this Letter Agreement
and the Note.
(ii) You agree (a) to indemnify and hold harmless LBI, LCPI, their
respective affiliates and their respective officers, directors,
employees, advisors, and agents (each, an "indemnified person") from
and against any and all losses, claims, damages and liabilities to
which any such indemnified person may become subject arising out of or
in connection with this Letter Agreement, the Note, the transactions
contemplated hereby and thereby or any claim, litigation, investigation
or proceeding relating to any of the foregoing, regardless of whether
any indemnified person is a party thereto, and to reimburse each
indemnified person upon demand for any legal or other expenses incurred
in connection with investigating or defending any of the foregoing,
provided that the foregoing indemnity will not apply to any losses,
claims, damages, liabilities or related expenses to the extent they are
found by a final, non-appealable judgment of a court to arise from the
willful misconduct or gross negligence of any indemnified person, and
(b) to reimburse LBI and LCPI and their affiliates on demand for all
out-of-pocket expenses (including due diligence expenses and reasonable
fees, charges and disbursements of counsel) incurred in connection with
the transactions contemplated by the Note and any related documentation
(including this Letter Agreement) or the administration, amendment,
modification or waiver hereof or thereof, whether or not such
transactions are consummated. No indemnified person shall be liable for
any indirect or consequential damages in connection with its activities
related thereto.
(iii) You acknowledge that LBI and its affiliates (the term "LBI"
being understood to refer hereinafter in this paragraph to include such
affiliates, including LCPI) may be providing debt financing, equity
capital or other services (including financial advisory services) to
other companies in respect of which you may have conflicting interests
regarding the transactions described herein and otherwise. LBI will not
use material non-public information obtained from you by virtue of the
transactions contemplated by this Letter Agreement or their other
relationships with you in connection with the performance by LBI of
services for other companies, and LBI will not furnish any such
information to other companies. You also acknowledge that LBI has no
obligation to use in connection with the transactions contemplated by
this Letter Agreement, or to furnish to you, material non-public
information obtained from other companies.
(iv) In the event that, pursuant to Section 2 of the Note, PPI
elects to prepay the principal amount of the Note (and accrued
interests thereon) in full by delivering shares of common stock of PPI
(the "Shares") to LCPI, the following provisions shall apply:
(A) Prior to the date hereof, the parties have agreed upon
the form of registration statement on Form S-3 (the "Registration
Statement") covering the resale of the Shares by LCPI, LBI or any
of their affiliates (collectively, "Lehman") to be filed with the
Securities and Exchange Commission (the "SEC"). Promptly following
the issuance of the Note, PPI will so file the Registration
Statement and use reasonable good faith efforts to cause the
Registration Statement to be declared effective by the SEC as soon
thereafter as practicable. PPI will not file any amendment or
supplement to the Registration Statement to which Lehman
reasonably objects in writing. The Registration Statement shall be
declared effective on or prior to the Stock Delivery Date (as
defined in Section 2 of the Note).
(B) On the Stock Delivery Date, PPI shall deliver to Lehman:
(i) a certificate or certificates representing the
number of Shares, which number shall equal the ratio (rounded
to the nearest whole number of Shares) of (a) the outstanding
principal amount of the Note (together with accrued and
unpaid interest thereon) as of the Stock Delivery Date to (b)
the difference of (x) the closing price per share of common
stock of PPI on the New York Stock Exchange on the trading
day immediately preceding the Stock Delivery Date minus (y)
$.05;
<PAGE>
Lehman Brothers Inc.
Lehman Commercial Paper Inc. May 25, 1999
3
(ii) a legal opinion of the general counsel of PPI of a
type customarily issued in underwritten public offerings; and
(iii) an indemnification agreement in favor of Lehman
containing indemnification and contribution provisions of a
type customary in underwritten public offerings.
(C) Following the Stock Delivery Date, Lehman will sell the
Shares from time to time pursuant to and in accordance with the
Registration Statement, provided that Lehman will provide prior
notice to PPI of any proposed sale and will not effect any such
sale to which PPI objects.
(D) The net proceeds of such sales (after deducting an amount
equal to $.05 per Share) will be applied by Lehman to prepay the
principal of and accrued interest on the Note, it being understood
that such application shall be made in a manner that minimizes the
indemnity costs of PPI under Section 4 of the Note. If (i) upon
the sale of all of the Shares, the aggregate net proceeds thereof
are less than the then outstanding principal amount of and accrued
interest on the Note (including accrued interest after the Stock
Delivery Date) or (ii) within 60 days Lehman has been unable to
sell all or any portion of the Shares for any reason whatsoever,
PPI shall forthwith pay Lehman an amount equal to such shortfall
in U.S. Dollars and in immediately available funds in full
satisfaction of the Note. If the aggregate net proceeds received
from sales of Shares shall at any time be equal to or exceed the
then outstanding principal amount of and accrued interest on the
Note, Lehman shall thereupon cease all further sales activity and
the Note shall thereupon be delivered to PPI (marked "cancelled"),
together with the certificates representing all unsold Shares and
an amount equal to any such excess net proceeds. Lehman shall
deliver written reports to PPI of its sales of Shares at least
weekly and, in any event, upon request of PPI.
(v) Nothing herein shall be a commitment by or legally binding
obligation of LBI, LCPI or any of their respective affiliates to act as
underwriter, initial purchaser and/or placement agent in connection
with any offering of securities, other than participating in "road
shows". Such a commitment on the part of LBI, LCPI or any of their
respective affiliates will exist only upon the execution of a final,
written underwriting, purchase or placement agent agreement and then
only in accordance with the terms and conditions thereof.
(vi) All out-of-pocket costs, expenses, taxes and other charges
incidental to the issuance and sale of the Shares (including
out-of-pocket costs and expenses incurred by LBI and LCPI and the fees
and expenses of their counsel in connection therewith and the other
matters contemplated by this Letter Agreement) shall be borne by PPI.
You agree that, except as otherwise expressly provided herein,
once paid or delivered, the fees or other property or any part thereof payable
or deliverable hereunder shall not be refundable under any circumstances,
regardless of whether the transactions contemplated by this Letter Agreement are
consummated. All fees payable hereunder shall be paid in immediately available
funds and shall be in addition to reimbursement of LCPI's out-of-pocket
expenses.
This Letter Agreement shall not be assignable by any party without
the prior written consent of each of the parties hereto (and any purported
assignment without such consent shall be null and void), is intended to be
solely for the benefit of the parties hereto and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto. This Letter Agreement may not be amended or waived except by an
instrument in writing signed by LBI, LCPI and you. The provisions of this Letter
Agreement relating to the payment of fees and expenses and indemnification and
contribution and the agreements relating to confidentiality will survive the
expiration or termination of this Letter Agreement.
<PAGE>
Lehman Brothers Inc.
Lehman Commercial Paper Inc. May 25, 1999
4
This Letter Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York. Each of PPI, LCPI and LBI
hereby waives, to the fullest extent permitted by applicable law, any right to
trial by jury with respect to any action or proceeding arising out of or
relating to this Letter Agreement. This Letter Agreement may be executed in any
number of counterparts, each of which shall be an original, and all of which,
when taken together, shall constitute one agreement. Delivery of an executed
signature page of this Letter Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
You agree that this Letter Agreement is delivered to you on the
understanding that neither this Letter Agreement nor any of its terms or
substance shall be disclosed, directly or indirectly, to any other person except
(a) to your officers, agents and advisors who are directly involved in this
matter or (b) as may be compelled in a judicial or administrative proceeding or
as otherwise required by law (in which case you agree to inform us promptly
thereof).
As you know, LBI and its affiliates are a full service financial
firm and as such from time to time may effect transactions for their own account
or the account of customers, and hold long or short positions in debt or equity
securities or loans of companies that may be the subject of the transactions
contemplated by this Letter Agreement.
This Letter Agreement (together with the Note and any other
documentation delivered pursuant to paragraph (i)(g) above) sets forth the
entire understanding of the parties hereto as to the subject matter hereof and
the obligations of LCPI and LBI hereunder. This Letter Agreement shall supersede
all prior understandings and proposals, whether written or oral, between Lehman
and you relating to any of the transactions contemplated hereby.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof by returning to LCPI executed
counterparts hereof not later than 5:00 p.m., New York City time, on May 25,
1999. The commitments and agreements of LBI and LCPI with respect to the
transactions contemplated hereby will expire at such time in the event LCPI has
not received such executed counterpart in accordance with the immediately
preceding sentence.
LBI and LCPI are pleased to have been given the opportunity to
assist you in connection with this financing, and we look forward to working
with you.
Very truly yours,
LEHMAN COMMERCIAL PAPER INC.
By: /s/ William Gallagher
------------------------------
Title: Authorized Signatory
LEHMAN BROTHERS INC.
By: /s/ William Gallagher
------------------------------
Title: Authorized Signatory
Accepted and agreed to
as of the date first written:
PREMIER PARKS INC.
By: /s/Patrick J. Walker
-------------------------------
Title: Vice President - Finance
<PAGE>
Exhibit 5.1
June 2, 1999
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Re: PREMIER PARKS INC.; REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to Premier Parks Inc., a Delaware corporation
(the "REGISTRANT"), in connection with the preparation and filing with the
Securities and Exchange Commission (the "COMMISSION") of the above-captioned
Registration Statement on Form S-3 (the "REGISTRATION STATEMENT") under the
Securities Act of 1933, as amended (the "ACT"), relating to the resale by the
holder named therein (the "SELLING STOCKHOLDERS") of up to an aggregate of
1,200,000 shares of common stock, $.025 par value per share, of the Registrant
(the "SHARES").
In connection therewith, we have examined the Certificate of
Incorporation and the By-Laws of the Registrant, resolutions of the Board of
Directors of the Registrant and the Registration Statement. We also have made
such inquiries and have examined originals or copies of other instruments as we
have deemed necessary or appropriate for the purpose of this opinion. For
purposes of such examination, we have assumed the genuineness of all signatures
on and the authenticity of all documents submitted to us as originals, and the
conformity to the originals of all documents submitted to us as certified or
photostatic copies.
Based upon the foregoing, we are of the opinion that the Shares are
duly authorized, validly issued, fully paid and non-assessable shares of common
stock of the Registrant.
<PAGE>
Premier Parks Inc.
June 2, 1999
Page 2
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference therein to our firm under the
caption "Legal Matters." In giving the foregoing consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
THELEN REID & PRIEST LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Premier Parks Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-3 of Premier Parks Inc. of our report dated March 22, 1999, relating to
the consolidated balance sheets of Premier Parks Inc. and subsidiaries as of
December 31, 1998 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, 1998, which report appears in the December
21, 1998 annual report on Form 10-K of Premier Parks Inc. and to the reference
to our firm under the heading "Experts" in the Prospectus.
KPMG LLP
Oklahoma City, Oklahoma
May 25, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Premier Parks Inc.
for the registration of Premier Parks Inc. Common Stock and to the incorporation
by reference therein of our report dated February 14, 1998, with respect to the
financial statements of Six Flags Entertainment Corporation as of December 28,
1997 and December 29, 1996 and for each of the three years in the period ended
December 28, 1997 included in Premier Parks Inc.'s Registration Statement (Form
S-3 File No. 333-46897).
ERNST & YOUNG LLP
New York, New York
May 25, 1999
