<PAGE>
FORM 10 - K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________.
Commission file number 1-9444
CEDAR FAIR, L.P.
(Exact name of Registrant as specified in its charter)
DELAWARE 34-1560655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 5006, Sandusky, Ohio 44871-5006
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (419) 626-0830
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Depositary Units New York Stock Exchange
(Representing Limited Partner
Interests)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of Depositary Units held by non-
affiliates of the Registrant based on the closing price of such
units on February 13, 1998 of $26-3/16 per unit was
$1,314,000,000.
Number of Depositary Units representing limited partner interests
outstanding as of February 13, 1998: 52,267,566.
DOCUMENTS INCORPORATED BY REFERENCE
1997 Annual Report to Unitholders incorporated by reference into
Part II (Items 5-8) and Part IV (Item 14).
*********************************
The Exhibit Index is located at Page 21
Page 1 of 90 pages
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CEDAR FAIR, L.P.INDEX
PART I PAGE
Item 1. Business 3
Item 2. Properties 7
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote 7
of Security Holders
PART II
Item 5. Market for Registrant's 8
Depositary Units and Related
Unitholder Matters
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and
Analysis of Financial Condition 8
and Results of Operations
Item 8. Financial Statements and 8
Supplementary Data
Item 9. Changes in and Disagreements with 8
Accountants on Accounting and
Financial Disclosure
PART III
Item 10. Directors and Executive Officers 9
of Registrant
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain 15
Beneficial Owners and Management
Item 13. Certain Relationships and Related 16
Transactions
PART IV
Item 14. Exhibits, Financial Statement 17
Schedules, and Reports on Form 8-K
Signatures 20
<PAGE>
PART I
ITEM 1. BUSINESS.
Cedar Fair, L.P. (the "Partnership") is a publicly traded
Delaware limited partnership managed by Cedar Fair Management
Company (the "General Partner").
The Partnership owns and operates five amusement parks: Cedar
Point, located on Lake Erie between Cleveland and Toledo in
Sandusky, Ohio; Valleyfair, located near Minneapolis-St. Paul in
Shakopee, Minnesota; Dorney Park & Wildwater Kingdom ("Dorney
Park"), located near Allentown in South Whitehall Township,
Pennsylvania; Worlds of Fun/Oceans of Fun ("Worlds of Fun"),
located in Kansas City, Missouri; and Knott's Berry Farm, located
near Los Angeles in Buena Park, California, which was acquired on
December 29, 1997. The parks are family-oriented, with
recreational facilities for people of all ages, and provide clean
and attractive environments with exciting rides and
entertainment. All principal rides and attractions are owned and
operated by the Partnership.
The Partnership's original four parks are generally open daily
from 9:00 a.m. to 10:00-12:00 p.m. from early May until Labor
Day, after which they are open during weekends in September and
October. As a result, virtually all of the operating revenues of
these four parks are derived during an approximately 130-day
operating season. Knott's Berry Farm is open daily from 9:00-
10:00 a.m. to 10:00-12:00 p.m. on a year-round basis. Each park
charges a basic daily admission price, which allows unlimited use
of all rides and attractions with the exception of Challenge Park
and Soak City at Cedar Point, Challenge Park at Valleyfair, go-
kart and bumper boat attractions at Dorney Park, and Oceans of
Fun and RipCord at Worlds of Fun. The demographic groups that
are most important to the parks are young people ages 13 through
24 and families. Families are believed to be attracted by a
combination of the rides and entertainment and the clean,
wholesome atmosphere. Young people are believed to be attracted
by the action-packed rides. During the operating season, the
parks conduct active television, radio, and newspaper advertising
campaigns in their major market areas.
Knott's Berry Farm also operates Knott's Camp Snoopy, a 7-acre
indoor amusement park at the Mall of America in Bloomington,
Minnesota, under a management contract which expires in 2012.
CEDAR POINT
Cedar Point, which was first developed as a recreational area in
1870, is located on a peninsula in Sandusky, Ohio bordered by
Lake Erie and Sandusky Bay, approximately 60 miles west of
Cleveland and 100 miles southeast of Detroit. Cedar Point is
believed to be the largest seasonal amusement park in the United
States, measured by the number of rides and attractions and the
ride capacity per hour. It serves a six-state region in the
midwestern United States, which includes nearly all of Ohio and
Michigan, western Pennsylvania and New York, northern West
Virginia and Indiana and southwestern Ontario, Canada. The
park's total market area includes approximately 22 million
people, and the major areas of dominant influence in this market
area, which are Cleveland, Akron, Toledo, Detroit, Columbus,
Flint, Saginaw and Youngstown, include approximately 12 million
people.
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The main amusement areas of Cedar Point consist of over two miles
of midways, with more than 65 rides and attractions, including
"Power Tower," a 300-foot-tall thrill ride and the tallest ride
of its kind in the world, which is scheduled to open in May,
1998; "Magnum XL-200," "Raptor," "Mantis" and "Mean Streak,"
which are among the world's tallest and fastest steel, inverted,
stand-up and wood roller coasters, respectively; eight additional
roller coasters; "Snake River Falls," one of the world's tallest
water flume rides; "Berenstain Bear Country," a 1.2 acre
children's activity area based on the best-selling Random House
children's books created by Stan and Jan Berenstain; live
entertainment shows featuring talented college students in three
theaters; the Cedar Point Cinema, which features a film using an
IMAX projection system on a 66-foot by 88-foot screen in a 950-
seat theater; an aquarium; a museum; bathing beach facilities;
"Soak City" water park, an extra-charge attraction which includes
"Zoom Flume," a large water slide raft ride, twelve additional
water slides, two river rafting rides, two children's activity
areas, and a giant wave pool; and "Challenge Park," an extra-
charge attraction area which includes "RipCord," a free-fall ride
from a height of more than 15 stories, a 36-hole themed miniature
golf course and a Can-Am-style go-kart track. In addition, there
are more than 50 restaurants, fast food outlets and refreshment
stands, and a number of gift shops, novelty shops and game areas.
Cedar Point also owns and operates three hotel facilities: the
historic Hotel Breakers, which has more than 400 guest rooms in
addition to dining and lounge facilities, a private beach, lake
swimming, a conference/meeting center and two outdoor pools; the
lakefront Sandcastle Suites Hotel, which features 187 suites, a
private beach, lake swimming, a courtyard pool, tennis courts and
the Breakwater Cafe, a contemporary waterfront restaurant; and
the Radisson Harbour Inn, a 237-room full-service hotel, located
at the Causeway entrance to the park, with an adjoining TGI
Friday's restaurant, both of which remain open year-round.
Cedar Point also owns and operates the Cedar Point Marina, one of
the largest full-service marinas on the Great Lakes, which
provides dockage facilities for over 700 boats, and Camper
Village, which provides sites for approximately 225 recreational
vehicles.
The Partnership, through Cedar Point Bridge Company, its wholly-
owned subsidiary, owns and operates the Cedar Point Causeway
across Sandusky Bay. This causeway is a major access route to
Cedar Point. The Partnership also owns dormitory facilities
located near the park which house up to 2,500 of the park's
approximately 3,800 seasonal employees.
VALLEYFAIR
Valleyfair, which opened in 1976, is located near Minneapolis-St.
Paul in Shakopee, Minnesota, and is the largest amusement park in
Minnesota. Valleyfair's market area is centered in Minneapolis-
St. Paul, which has a population of approximately two million,
but the park also draws visitors from other areas in Minnesota
and surrounding states with a combined population of eight
million.
Valleyfair offers more than 35 rides and attractions, including
"Wild Thing," one of the tallest and fastest roller coasters in
the world; four additional roller coasters; a water park named
"Whitewater Country" which includes "Hurricane Falls," a large
water slide raft ride, and "Splash Station," a children's water
park; "Thunder Canyon," a white-water raft ride; "The Wave," a
water flume ride featuring a guest splash basin; a nostalgic
train ride; a giant ferris wheel; a log flume ride; a 500-seat
amphitheater; a kiddie ride area; "Challenge Park," an extra-
charge attraction area which includes "RipCord," a free-fall ride
from a height of more than 15 stories, a Can-Am-style go-kart
track and a 36-hole themed miniature golf course; "Berenstain
Bear Country," an indoor/outdoor children's activity area; "The
Hydroblaster," a 40-foot tall wet/dry slide, or "water coaster;"
and a new 430-seat indoor theater for live show presentations
scheduled to open in 1998. In addition, there are more than 20
restaurants, fast food outlets and refreshment stands, and a
number of gift shops, novelty shops and game areas.
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DORNEY PARK
Dorney Park, which was first developed as a summer resort area in
1884, was acquired by the Partnership in 1992, and is located
near Allentown in South Whitehall Township, Pennsylvania. Dorney
Park is one of the largest amusement parks in the Northeast and
serves a total market area of approximately 35 million people.
The park's major markets include Philadelphia, New Jersey, New
York City, Lancaster, Harrisburg, York, Scranton, Wilkes-Barre,
Hazleton and the Lehigh Valley.
Dorney Park features more than 50 rides and attractions,
including "Hang Time," a 59-foot-tall thrill ride which is
scheduled to open in 1998; "Steel Force," one of the tallest and
fastest roller coasters in the world; "Hercules," a world-class
wooden roller coaster; two additional roller coasters; "White
Water Landing," one of the world's tallest water flume rides
featuring a guest splash basin; "Thunder Canyon," a white-water
rafting ride; a train ride named the "Cedar Creek Cannonball";
"Wildwater Kingdom," one of the largest water parks in the United
States featuring "Island Water Works, " an interactive water play
station, twelve water slides, including the "Pepsi Aquablast,"
one of the longest elevated water slides in the world, a giant
wave pool and two children's activity areas; "Thunder Creek
Mountain," a water flume ride; a giant ferris wheel; a kiddie
area featuring "Chester Cheetah's Playland"; live musical shows
featuring talented college students; the "Red Garter Saloon," an
1890's style restaurant and saloon featuring live shows;
"Berenstain Bear Country," a major children's activity area; and
an antique Dentzel carousel carved in 1921. In addition, there
are more than 30 restaurants, fast food outlets and refreshment
stands, and a number of gift shops, novelty shops and game areas.
WORLDS OF FUN
Worlds of Fun, which opened in 1973, and Oceans of Fun, the
adjacent water park which opened in 1982, were acquired by the
Partnership in 1995. Located in Kansas City, Missouri, Worlds of
Fun serves a total market area of approximately seven million
people centered in Kansas City, but including most of Missouri,
as well as portions of Kansas and Nebraska.
Worlds of Fun is a traditional amusement park themed around Jules
Verne's adventure book Around the World in Eighty Days. The park
offers more than 50 rides and attractions, including "Mamba," one
of the tallest and fastest roller coasters in the world, which is
scheduled to open in 1998; "Timber Wolf," a world-class wooden
roller coaster; "Orient Express," a steel looping roller coaster;
"Detonator," a 185-foot-tall thrill ride, which launches riders
straight up a twin-tower structure; "RipCord," an extra-charge
attraction which lifts riders to a height of more than 15 stories
before dropping them back to earth in a free fall; "Monsoon," a
water flume ride; "Fury of the Nile," a white-water rafting ride;
a 4,000-seat outdoor amphitheater; live musical shows; and
"Berenstain Bear Country," a major indoor/outdoor children's
activity area. Oceans of Fun, which requires a separate
admission fee, features a wide variety of water attractions
including "The Typhoon", one of the world's longest dual water
slides; a giant wave pool; and several children's activity areas,
including "Crocodile Isle." In addition, there are more than 25
restaurants, fast food outlets and refreshment stands, and a
number of gift shops, novelty shops and game areas.
<PAGE>
KNOTT'S BERRY FARM
Knott's Berry Farm, which first opened in 1920, was acquired by
the Partnership on December 29, 1997, and is located near Los
Angeles in Buena Park, California. Knott's Berry Farm is one of
several year-round theme parks in southern California and serves
a total market area of approximately 20 million people centered
in Orange County, and a large national and international tourist
population.
Knott's Berry Farm is comprised of six distinctively themed
areas, including "Ghost Town," "Wild Water Wilderness," "The
Boardwalk," "Indian Trails," "Fiesta Village" and "Camp Snoopy."
The park offers more than 40 rides and attractions, including
"Supreme Scream," a 300-foot-tall thrill ride planned for the
summer of 1998; six roller coasters; "Bigfoot Rapids," a white-
water raft ride; "Timber Mountain Log Ride," one of the first log
flume rides in the United States; a nostalgic train ride; an
antique Dentzel carousel; an old-fashioned ferris wheel; a 2,100-
seat theater; a children's activity area themed with the popular
"Peanuts" comic strip characters; a dolphin and sea lion show in
a stadium seating up to 1,100 persons; live entertainment shows
in 22 indoor and outdoor theater venues; and "Independence Hall,"
an authentic replica of the Philadelphia original, complete with
a 2,075 pound Liberty Bell. In addition, there are more than 30
restaurants, fast food outlets and refreshment stands, and a
number of gift shops, novelty shops and games areas in the park,
as well as Knott's California Marketplace, a dining and shopping
area which is located outside the park's gates and is available
free of charge.
The park is also renowned for its seasonal promotions, including
a special Christmas promotion, "Knott's Merry Farm," and a
spectacular Halloween event called "Knott's Scary Farm," which
celebrated its 25th year in 1997 and is widely acknowledged as
the best in the industry.
WORKING CAPITAL AND CAPITAL EXPENDITURES
The Partnership carries significant receivables and inventories
of food and merchandise during the operating season. Seasonal
working capital needs are met with a revolving credit facility.
The General Partner believes that annual park attendance is to
some extent influenced by the investment in new attractions from
year to year. Capital expenditures are planned on a seasonal
basis with the majority of such expenditures incurred in the
period from October through May, just prior to the beginning of
the peak operating season. Capital expenditures made in a
calendar year differ from amounts identified with a particular
operating season because of timing considerations such as weather
conditions, site preparation requirements and availability of
ride components, which result in accelerated or delayed
expenditures around calendar yearends.
<PAGE>
COMPETITION
In general, the Partnership competes with all phases of the
recreation industry within its primary market areas of Cleveland,
Detroit, Minneapolis-St. Paul, Philadelphia, Kansas City and Los
Angeles, including several other amusement/theme parks in the
Partnership's market areas. The Partnership's business is
subject to factors generally affecting the recreation and leisure
market, such as economic conditions, changes in discretionary
spending patterns and weather conditions.
In Cedar Point's major markets, its primary amusement park
competitors are Paramount Kings Island in southern Ohio, and Sea
World of Ohio and Geauga Lake near Cleveland.
Camp Snoopy, the indoor amusement park at the Mall of America, is
located approximately 15 miles from Valleyfair and is managed by
Knott's Berry Farm. Adventureland, a theme park in Des Moines,
Iowa, is located approximately 250 miles from Valleyfair.
Dorney Park faces significant competition, with Hershey Park in
central Pennsylvania and Six Flags Great Adventure in the New
Jersey / New York area being the major competitors in its market
area.
In Worlds of Fun's major markets, its primary amusement park
competitors are Six Flags Over Mid-America in eastern Missouri
and Silver Dollar City in southern Missouri.
In southern California, Knott's Berry Farm's primary amusement
park competitors are Disneyland, which is approximately 15
minutes away, Six Flags Magic Mountain, which is approximately
75 minutes away, and Universal Studios, which is located
approximately 50 minutes away. The San Diego Zoo and Sea World-
San Diego are located approximately 90 minutes from Knott's.
The principal competitive factors in the amusement park industry
include the uniqueness and perceived quality of the rides and
attractions in a particular park, its proximity to metropolitan
areas, the atmosphere and cleanliness of the park and the quality
and variety of the food and entertainment available. The
Partnership believes that its amusement parks feature a
sufficient quality and variety of rides and attractions,
restaurants, gift shops and family atmosphere to make them highly
competitive with other parks.
GOVERNMENT REGULATION
All rides are run and inspected daily by both the Partnership's
maintenance and ride operations divisions before being put into
operation. The parks are also periodically inspected by the
Partnership's insurance carrier and, at Cedar Point and Dorney
Park, by state ride-safety inspectors.
EMPLOYEES
The Partnership has approximately 1,200 full-time employees.
During the operating season, Cedar Point, Valleyfair, Dorney Park
and Worlds of Fun have approximately 3,800, 1,200, 2,600 and
2,200 seasonal employees, respectively, most of whom are college
students. Knott's Berry Farm hires approximately 1,000 seasonal
employees for peak periods and 1,200 part-time employees who work
year-round. Approximately 2,500 of Cedar Point's seasonal
employees and 210 of Valleyfair's seasonal employees live in
dormitories owned by the Partnership. The Partnership maintains
training programs for all new employees, and believes that its
relations with its employees are good.
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ITEM 2. PROPERTIES.
Cedar Point is located on approximately 365 acres owned by the
Partnership on the Cedar Point peninsula in Sandusky, Ohio. The
Partnership also owns approximately 80 acres of property on the
mainland adjoining the approach to the Cedar Point Causeway. The
Radisson Harbour Inn and adjoining TGI Friday's restaurant, two
seasonal employee housing complexes and a fast-food restaurant
operated by the Partnership, are located on this property.
The Partnership controls, through ownership or an easement, a six-
mile public highway and owns approximately 38 acres of vacant
land adjacent to this highway, which is a secondary access route
to Cedar Point and serves about 250 private residences. The
roadway is maintained by the Partnership pursuant to deed
provisions. The Cedar Point Causeway, a four-lane roadway across
Sandusky Bay, is the principal access road to Cedar Point and is
owned by Cedar Point Bridge Company, a subsidiary of the
Partnership.
At Valleyfair approximately 125 acres have been developed, and
approximately 75 additional acres remain available for future
expansion.
Dorney Park is situated on approximately 200 acres, of which 170
acres have been developed and 30 acres remain available for
future expansion.
Worlds of Fun is located on approximately 350 acres, including
approximately 32 acres of vacant land which the Partnership
acquired from an affiliate of Hunt Midwest Enterprises, Inc.
("HME") during 1997 at a total price of $4.2 million. HME's
president, Lee Derrough, is a director of the General Partner,
and HME owns 1,440,000 limited partnership units from its 1995
sale of Worlds of Fun to the Partnership. At Worlds of Fun,
approximately 235 acres have been developed, and approximately
115 acres remain available for future expansion.
Knott's Berry Farm is situated on approximately 160 acres, of
which 150 acres have been developed and 10 acres remain available
for future expansion.
The Partnership, through its subsidiary Cedar Point of Michigan,
Inc., owns approximately 450 acres of land in Southern Michigan.
All of the Partnership's property is owned in fee simple without
encumbrance. The Partnership considers its properties to be well
maintained, in good condition and adequate for its present uses
and business requirements.
ITEM 3. LEGAL PROCEEDINGS.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S DEPOSITARY UNITS AND RELATED
UNITHOLDER MATTERS.
Cedar Fair, L.P. Depositary Units representing limited
partnership interests are listed for trading on The New York
Stock Exchange udner the symbol "FUN" (CUSIP 150185 10 6). As
of February 14, 1997, there were approximately 10,000 registered
holders of Cedar Fair, L.P. Depositary Units. The cash
distributions declared and the high and low prices of the
Partnerchip's units are shown in the tabel below (all amounts
have been restated to reflect the 2 for 1 split):
1997 Distribution High Low
4th Quarter .3200 26-15/16 23
3rd Quarter .3200 24-1/4 21-1/16
2nd Quarter .3125 22-7/16 18-1/4
1st Quarter .3125 20-1/2 17-11/16
1996 Distribution High Low
4th Quarter .3125 18-1/2 17-3/16
3rd Quarter .3125 19-1/8 16-1/8
2nd Quarter .2875 19-3/8 17
1st Quarter .2875 19-1/2 18-1/8
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ITEM 6. SELECTED FINANCIAL DATA.
1997 1996 1995 1994 1993
(in thousands except amounts per unit and per capita)
OPERATING DATA
Net Revenues $264,137 $250,523 $218,197 $198,358 $178,943
Operating Income 76,303 81,121 73,013 68,016 57,480
Net Income 68,458 74,179 66,136 62,825 61,879
Per limited
partner unit (6) 1.47 1.59 1.45 1.40 1.38
FINANCIAL POSITION
Total Assets $599,616 $304,104 $274,717 $223,982 $218,359
Working Capital
(deficit) (40,427) (27,511) (27,843) (24,404) (22,356)
Long-term debt 189,750 87,600 80,000 71,400 86,800
Partners' equity 285,381 169,994 151,476 115,054 99,967
DISTRIBUTIONS DECLARD
Per limited
partner unit $1.265 $1.20 $1.1375 $1.0625 $0.9625
OTHER DATA
Depreciation and
amortization $21,528 $19,072 $16,742 $14,960 $14,473
Cash flow from
Operating 96,532 94,161 84,565 81,093 69,243
activities
Capital 44,989 30,239 28,520 19,237 23,813
expenditures
Combined 6,844 6,920 6,304 5,918 5,511
attendance
Combined guest
per capita $32.66 $31.75 $30.29 $30.04 $28.86
Spending (7)
<PAGE>
1992 1991 1990 1989 1988
(in thousands except amounts per unit and per capita)
OPERATING DATA
Net Revenues $152,961 $127,950 $121,962 $120,013 $103,157
Operating Income 49,111 42,394 40,324 39,616 30,132
Net Income 42,921 35,975 33,173 31,623 22,593
Per limited
partner unit (6) 0.98 0.84 0.78 0.74 0.53
FINANCIAL POSITION
Total Assets $209,472 $142,532 $141,668 $136,036 $135,395
Working Capital
(deficit) (19,028) (14,616) (13,446) (11,908) (10,915)
Long-term debt 89,700 65,900 69,900 71,100 77,900
Partners' equity 81,333 55,132 51,755 47,439 41,039
DISTRIBUTIONS DECLARED
Per limited $0.8625 $0.7625 $0.675 $0.59 $0.54
partner unit (7)
OTHER DATA
Depreciation and
amortization $12,421 $10,314 $9,706 $9,618 $9,075
Cash flow from
Operating 56,034 46,275 43,703 41,000 32,596
activities
Capital 15,934 10,333 15,168 9,797 8,112
expenditures
Combined 4,857 4,088 4,130 4,310 3,907
attendance
Combined guest
per capit $27.98 $27.84 $26.64 $25.45 $23.80
Spending (8)
NOTE 1 - Knott's Berry Farm is included in 1997 data for three
days subsequent to its acquisition on December 29, 1997.
NOTE 2 - Worlds of Fun/Oceans of Fun is included in 1995 data for
the period subsequent to its acquisition on July 28, 1995.
NOTE 3 - The 1994 operating results include nonrecurring gains of
$2.1 million relating to insurance claim settlements, partially
offset by a $0.7 million charge to interest expense for
refinancing of long-term debt.
NOTE 4 - The 1993 operating results include a nonrecurring credit
for deferred taxes of $11.0 million, or $0.49 per unit.
NOTE 5 - Dorney Park & Wildwater Kingdom is included in 1992 data
for the period subsequent to its acquisition on July 21, 1992.
NOTE 6 - The 1987 operating results include extraordinary and
nonrecurring expenses of $13.9 million. or $0.86 per unit.
NOTE 7 - Net income per limited partner unit is computed based on
the weighted average number of units outstanding.
NOTE 8 - Guest per capita spending includes all amusement park,
causeway tolls and parking revenues for the amusement park
operating season. Revenues from water parks, marina, hotel,
campground and other out-of-park operations are excluded from
these statistics.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
Net revenues for the year ended December 31, 1997 were $264.1
million, a 5% increase over the year ended December 31, 1996.
This followed a 15% increase in 1996, when revenues rose to
$250.5 million from $218.2 in 1995. Net revenues for 1997 reflect
a 1 % decrease in combined attendance (to 6.8 million from 6.9
million in 1996) offset by an increase of 3% in combined guest
per capita spending and an increase of 29% in out-of-park
revenues, principally from the Radisson / TGI Friday's franchises
acquired in December 1996. In 1997, Dorney Park and Worlds of Fun
both had excellent years, which nearly offset attendance declines
at Cedar Point and Valleyfair caused by unusually cool and wet
weather during important parts of the season. Nearly perfect
weather throughout the peak vacation months of July and August,
together with the successful debut of Steel Force, contributed to
Dorney's record performance. Knott's Berry Farm, which was
acquired in late December of 1997, also made a small contribution
for the last three days of the year.
In 1996, Valleyfair achieved a record year and combined
attendance increased 10% to 6.9 million, which included Worlds of
Fun's first full year contribution. In 1995, in spite of an
unusually cold and rainy spring at Valleyfair and Dorney Park,
combined attendance increased 7% to 6.3 million, which included
Worlds of Fun's contribution of approximately 415,000 in
attendance for the period following its acquisition. Combined
guest per capita spending increased 5% in 1996 and 1% in 1995.
<PAGE>
Costs and expenses before depreciation and amortization in 1997
increased to $166.3 million from $150.3 million in 1996 and
$128.4 million in 1995, largely due to the addition of the
Radisson / TGI Friday's operations in 1997. Included in costs and
expenses are approximately $4.7 million of incentive fees earned
by the General Partner in 1997. This compares to $4.3 million and
$3.9 million of incentive fees earned in 1996 and 1995,
respectively.
Operating income in 1997 decreased 6% to $76.3 million,
following an 11% increase in 1996 and a 7% increase in 1995. The
1997 decrease in operating income was the result of attendance
declines at Cedar Point and Valleyfair. In 1996, operating income
increased as the result of greater profits generated from the
Partnership's original three parks, together with Worlds of Fun's
first full year profit contribution. Increased guest per capita
spending at the Partnership's original three parks, in addition
to Worlds of Fun contributing $2.1 million in operating profits
for the period after its acquisition, generated the increase in
operating income in 1995.
<PAGE>
Net income for 1997 decreased 8% to $68.5 million compared to
$74.2 million in 1996 and $66.1 million in 1995.
In 1997, interest expense rose due to the increased debt from the
acquisition of the Radisson /TGI Friday's franchises at the end
of 1996.
For 1998, the Partnership plans to invest $38 million in
capital improvements at its original four parks, including Cedar
Point's new state-of-the-art thrill ride, Power Tower, and Worlds
of Fun's Mamba, one of the world's tallest and fastest roller
coasters. Plans for capital expenditures at Knott's Berry Farm
for 1998 are currently being finalized. We are optimistic that
these major attractions, as well as other improvements at each of
the parks, will generate a high level of public interest and
acceptance. However, stable population trends in our market areas
and uncontrollable factors, such as weather and the economy,
preclude us from anticipating significant long-term increases in
attendance at our parks. Historically, the Partnership has been
able to improve its profitability by continuing to make
substantial investments in its parks. This has enabled us to
maintain a consistently high attendance level as well as steady
increases in guest per capita spending and revenues from guest
accommodations at Cedar Point, while carefully controlling
operating and administrative expenses.
The acquisition of Knott's Berry Farm will have a material
effect on the Partnership's results of operations in 1998, due to
the inclusion of a full year of operations.
<PAGE>
Financial Condition
The Partnership ended 1997 in sound financial condition in terms
of both liquidity and cash flow. The negative working capital
ratio of 2.8 at December 31, 1997 is the result of the
Partnership's highly seasonal business and careful management of
cash flow. Receivables and inventories are at normally low
seasonal levels and credit facilities are in place to fund
current liabilities and pre-opening expenses as required.
In 1997, cash generated from operations totaled $96.5 million
and net borrowings, excluding the Knott's acquisition, totaled
$7.7 million. The Partnership used $45.0 million for capital
expenditures and $58.3 million for distributions to the general
and limited partners. Distributions in 1998, at the current
annual rate of $1.28 per unit, would total approximately $65
million, 12% higher than the distributions paid in 1997.
The Partnership has available through April 2002 a $200 million
revolving credit facility, of which $139.75 million was borrowed
and in use as of December 31, 1997. In January 1998, $50 million
of the yearend bank borrowings were refinanced on a long-term
basis at favorable rates. Credit facilities and cash flow are
expected to be adequate to meet seasonal working capital needs,
planned capital expenditures and distribution requirements.
Because of a recent change in federal tax laws, the Partnership
plans to remain a publicly traded partnership. The exemption of
existing publicly traded limited partnerships from federal income
taxes was continued, and a new 3.5% tax is payable on partnership
gross income beginning in 1998. On a pro forma basis, including
Knott's Berry Farm, the impact of the new tax on 1997 income
would have been $12.1 million (see Note 2). Under prior law, the
Partnership would have been required to pay corporate income
taxes beginning in 1998.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
To The Partners of Cedar Fair, L.P.:
We have audited the accompanying consolidated balance sheets of
Cedar Fair, L.P. (a Delaware limited partnership) and
subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, partners' equity and cash
flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Cedar Fair, L.P. and subsidiaries as of December 31, 1996 and
1995, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1996
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
January 28, 1998.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per unit data)
<CAPTION>
For the years ended December 31, 1997 1996 1995
<S> <C> <C> <C>
Net revenues
Admissions $135,625 $135,838 $112,582
Food, merchandise and games 105,944 99,166 91,529
Accommodations and other 22,568 15,519 14,086
264,137 250,523 218,197
Cost and expenses:
Cost of products sold 26,006 25,022 22,880
Operating expenses 108,800 96,328 80,801
Selling, general and
administrative 31,500 28,980 24,761
Depreciation and amortization 21,528 19,072 16,742
187,834 169,402 145,184
Operating income 76,303 81,121 73,013
Interest expense, net 7,845 6,942 6,877
Net income $68,458 $74,179 $66,136
Net income allocated to general
partners 330 742 661
Net income allocated to limited
partners $68,128 $73,437 $65,475
Weighted average limited
partner units and equivalents
outstanding-Basic 45,965 45,920 45,096
Net income per limited partner
unit-Basic $1.48 $1.60 $1.45
Weighted average limited
partner units and equivalents
outstanding-Diluted 46,265 46,116 45,214
Net income per limited partner
unit-Diluted $1.47 $1.59 $1.45
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
<PAGE>
CONSOLIDATED BALANCE SHEET
(In thousands)
<CAPTION>
December 31, 1997 1996
<S> <C> <C>
Assets
Current Assets:
Cash $2,520 $ 1,279
Receivables 6,530 2,984
Inventories 9,055 4,446
Prepaids 3,849 3,021
Total current assets 21,954 11,730
Land, Buildings and Equipment:
Land 123,550 29,056
Land improvements 84,134 39,711
Buildings 158,550 105,545
Rides and equipment 331,342 231,457
Construction in progress 17,333 6,454
714,909 412,223
Less accumulated depreciation (147,772) (130,585)
567,137 281,638
Intangibles, net of amortization 10,528 10,736
$599,619 $304,104
Liabilities and Partners' Equity
Current Liabilities:
Accounts payable $15,644 $ 5,251
Distribution payable to partners 14,768 14,495
Accrued interest 1,576 1,555
Accrued taxes 4,602 3,604
Accrued salaries, wages and benefits 11,305 5,539
Self-insurance reserves 8,946 6,635
Other accrued liabilities 5,585 2,162
Total current liabilities 62,426 39,241
Other Liabilities 10,312 7,269
Long-Term Debt:
Revolving credit loans 139,750 33,100
Term debt 50,000 54,500
189,750 87,600
Redeemable Limited Partnership Units 51,750 -
Partners' Equity:
Special L.P. interests 5,290 5,290
General partners 413 717
Limited partners, 22,960,208 units
outstanding 279,678 163,987
285,381 169,994
$599,619 $304,104
The accompanying Notes to Consolidated Financial Statements are
an integral part of these balance sheets.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
For the years ended December 31, 1997 1996 1995
<S> <C> <C> <C>
Cash Flows From (For) Operating Activities
Net income $68,458 $74,179 $66,136
Adjustments to reconcile net income to net
cash from operating activities
Depreciation and amortization 21,528 19,072 16,742
Change in assets and liabilities, net of
effects from acquisitions:
Decrease in inventories (214) 22 670
Decrease (increase) in current and other
assets 576 (422) 267
Increase (decrease) in accounts payable 2,455 (1,541) (2,188)
Increase in self-insurance reserves 581 233 315
Increase in other current liabilities 105 942 956
Increase in other liabilities 3,043 1,676 1,667
Net cash from operating activities 96,532 94,161 84,565
Cash Flows From (For) Investing Activities
Capital expenditures (44,989) (30,239) (28,520)
Acquisition ofKnott's Berry Farm:
Land, buildings and equipment acquired (261,685) -- --
Negative working capital assumed, net of cash
acquired 10,281 -- --
Acquisition ofJHW Limited Partnership:
Land, buildings, rides and equipment acquired -- (16,295) --
Negative working capital assumed, net of cash
acquired -- 442 --
Acquisition ofWorlds of Fun/Oceans of Fun:
Land, buildings, rides and equipment acquired
-- -- (37,350)
Negative working capital assumed, net of cash
acquired -- -- 1,481
Net cash (for) investing activities (296,393) (46,092) (64,389)
Cash Flows From (For) Financing Activities
Net borrowing (payment) on revolving credit
loans 12,150 (8,375) (5,303)
Repayment of term debt (4,500) -- --
Distributions paid to partners (58,254) (54,501) (51,245)
Withdrawal of Special General Partner (196) -- --
Acquisition ofKnott's Berry Farm:
Borrowings on revolving credit loans 94,500 -- --
Issuance of limited partnership units 157,402 -- --
Acquisition of JHW Limited Partnership:
Borrowings on revolving credit loans -- 11,475 --
Long-term debt of JHW Limited Partnership -- 4,500 --
Acquisition of Worlds of Fun/Oceans of Fun:
Borrowings on revolving credit loans for
refinancing of assumed long-term debt -- -- 13,903
Issuance of limited partnership units -- -- 22,230
Net cash (for) financing activities 201,102 (46,901) (20,415)
Cash:
Net increase (decrease) for the period 1,241 1,168 (239)
Balance, beginning of period 1,279 111 350
Balance, end of period $2,520 $1,279 $111
Supplemental Information:
Cash payments for interest expense $7,874 $7,072 $6,787
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(In thousands)
<CAPTION>
Special General Limited Total
L.P. Partners' Partners' Partners'
Interests Equity Equity Equity
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $5,290 $389 $109,375 $115,054
Issuance of 1,440,000 limited
partnership units, for
acquisition of Worlds of
Fun/Oceans of Fun -- -- 22,230 22,230
Allocation of net income -- 661 65,475 66,136
Partnership distributions
declared ($1.1375 per limited
partner unit) -- (519) (51,425) (51,944)
Balance at December 31, 1995 5,290 531 145,655 151,476
Allocation of net income -- 742 73,437 74,179
Partnership distributions
declared ($1.20 per limited
partner unit) -- (556) (55,105) (55,661)
Balance at December 31, 1996 5,290 717 163,987 169,994
Issuance of 6,482,433 limited
partnership units for acquisition
on Knott's Berry Farm -- -- 157,402 157,402
Reclassification of redeemable
limited partnership units -- -- (51,750) (51,750)
Withdrawl of Special General
Partner -- (196) -- (196)
Allocation of net income -- 330 68,128 68,458
Partnership distributions
declared ($1.265 per limited
partner unit) -- (438) (58,089) (58,527)
Balance at December 31, 1997 $5,290 $413 $279,678 $285,381
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
<PAGE>
Notes To Consolidated Financial Statements
(1) Partnership Organization
Cedar Fair, L.P (the "Partnership") is a Delaware limited
partnership which commenced operations in 1983 when it
acquired Cedar Point, Inc., and became a publicly traded
partnership in 1987. At December 31, 1997, 44,480,416 limited
partnership units were registered on The New York Stock
Exchange, after giving effect to a 2-for-1 split issued in
the fourth quarter of 1997. All unit and per unit amounts in
these financial statements have been restated to reflect
this split. An additional 1,440,000 limited partnership
units were issued in 1995 in connection with the acquisition
of Worlds of Fun/Oceans of Fun, and 6,482,433 limited
partnership units were issued on December 29, 1997 in
connection with the acquisition of Knott's Berry Farm, as
discussed in Note 7. The units issued in these acquisitions
have not been registered with the Securities and Exchange
Commission, and are subject to certain trading restrictions.
The Partnership's General Partner is Cedar Fair Management
Company, an Ohio corporation owned by the Partnership's
executive management (the "General Partner"). Effective
July 1, 1997 CF Partners, the Special General Partner,
voluntarily withdrew from the Partnership and, in accordance
with the Partnership Agreement, received $400,000 as final
payment of the balance of its 1997 fees. After this
transaction, the Partnership's limited partner units
represent, in the aggregate, a 99.5% interest in income,
losses and cash distributions of the Partnership, compared
with a 99.0% interest in prior periods. The General Partner
owns a 0.5% interest in the Partnership's income, losses,
and distributions except in defined circumstances, and has
full control over all activities of the Partnership.
For the services it provides, the General Partner earns a
fee equal to .25% of the Partnership's net revenues, as
defined, and also earns incentive compensation when
quarterly distributions exceed certain levels as defined in
the Partnership Agreement. The General Partner earned
$5,335,000, $4,926,000 and $4,430,000 of total fees in 1997,
1996 and 1995, respectively.
The General Partner may, with the approval of a specified
percentage of the limited partners, make additional capital
contributions to the Partnership, but is only obligated to
do so if the liabilities of the Partnership cannot otherwise
be paid or there exists a negative balance in its capital
account at the time of its withdrawal from the Partnership.
The General Partner, in accordance with the terms of the
Partnership Agreement, is required to make regular cash
distributions on a quarterly basis of all the Partnership's
available cash, as defined.
<PAGE>
(2) Summary Of Significant Accounting Policies:
The following policies are used by the Partnership in its
preparation of the accompanying consolidated financial
statements.
Principles Of Consolidation: The consolidated financial
statements include the accounts of the Partnership and its
wholly-owned corporate subsidiaries. All significant
intercompany transactions and balances are eliminated in
consolidation.
Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of
revenues and expenses during each period. Actual results
could differ from those estimates.
Inventories: The Partnership's inventories primarily
represent purchased products, such as merchandise and food,
for sale to its customers. All inventories, except those at
Knott's Berry Farm, are valued at the lower of first-in,
first-out cost or market. Inventories at Knott's are valued
principally under the last-in, first-out method.
Depreciation and Amortization: The Partnership's policy is
to provide depreciation on a straight-line basis over the
estimated useful lives of its assets. The composite method
is used for the group of assets acquired as a whole in 1983,
as well as for the Dorney Park & Wildwater Kingdom assets
acquired in 1992, the Worlds of Fun/Oceans of Fun assets
acquired in 1995, the JHW Limited Partnership assets
acquired at the end of 1996, and the Knott's Berry Farm
assets acquired in 1997. The unit method is used for all
individual assets subsequently purchased.
Under the composite depreciation method, assets with similar
estimated lives are grouped together and the several pools
of assets are depreciated on an aggregate basis. Gains and
losses on the retirement of assets, except those related to
abnormal retirements, are credited or charged to accumulated
depreciation. Accumulated gains and losses on asset
retirements under the composite depreciation method have not
been significant.
Under the unit method of depreciation, individual assets are
depreciated over their estimated useful lives with gains and
losses on all asset retirements recognized currently in
income.
The weighted average useful lives combining both methods are
approximately:
Land improvements 23 Years
Buildings 29 Years
Rides 17 Years
Equipment 10 Years
Goodwill is amortized over a 40-year period.
<PAGE>
Segment Reporting: The Partnership is in the single business
of operating amusement parks with accompanying resort
facilities.
Income Taxes: The accompanying statements of operations do
not include a provision for corporate income taxes, as the
income of the Partnership is not taxed directly; rather, the
Partnership's tax attributes are included in the individual
tax returns of its partners. Neither the Partnership's
financial reporting income, nor the cash distributions to
unitholders, can be used as a substitute for the detailed
tax calculations which the Partnership must perform annually
for its partners. Net income from the Partnership is not
treated as "passive income" for federal income tax purposes.
As a result, partners subject to the passive activity loss
rules are not permitted to offset income from the
Partnership with passive losses from other sources.
The tax returns of the Partnership are subject to
examination by state and federal tax authorities. If such
examinations result in changes to taxable income, the tax
liability of the partners could be changed accordingly.
Federal tax legislation in 1997 provided a continuing income
tax exemption to existing "publicly traded partnerships,"
such as Cedar Fair; L.P, with a 3.5% tax to be levied on
partnership gross income (net revenues less cost of products
sold) beginning in 1998 in place of corporate income taxes.
The Partnership plans to remain a publicly traded
partnership under the terms of this new tax law. If it had
applied to 1997 results, the Partnership would have recorded
a tax provision of approximately $8.3 million.
Earnings Per Unit: The Partnership has presented, and where
appropriate, restated earnings per unit amounts for all
periods to conform with Statement of Financial Accounting
Standards No.128 (Earnings per Share). For purposes of
calculating the basic and diluted earnings per limited
partner unit, no adjustments have been made to the reported
amounts of net income. The unit amounts used are as follows:
<PAGE>
1997 1996 1995
(in thousands except per unit data)
Basic weighted average
units outstanding 45,965 45,920 45,096
Effect of dilutive units:
Deferred units
(see note 5) 291 169 118
Contingent units -
Knott's acquisition
(see note 7) 9 -- --
Diluted weighted average
units outstanding 46,265 46,116 45,214
Net income per unit - $1.48 $1.60 $1.45
basic
Net income per unit - $1.47 $1.59 $1.45
diluted
3) Long-Term Debt:
At December 31,1997 and 1996, long-term debt consisted of
the following:
1997 1996
(In thousands)
Revolving credit loans $139,750 $ 33,100
Term debt 50,000 54,500
$189,750 $ 87,600
Revolving Credit Loans: In December 1997, the Partnership
entered into a new credit agreement with five banks under
which it will have available a $200 million revolving credit
facility through April 2002. Borrowings under this credit
facility were $139.75 million as of December 31, 1997 which
was the maximum outstanding balance during 1997, at an
average interest rate of 6.2%.
Borrowings under this agreement bear interest at the
banks' prime lending rate, with more favorable LIBOR and
other rate options. The agreement requires the Partnership
to pay a commitment fee of 1/5% per annum on the daily
unused portion of the credit. The Partnership, at its
option, may make prepayments without penalty and reduce this
loan commitment.
<PAGE>
Term Debt: In 1994, the Partnership refinanced $50 million
in senior notes at an interest rate of 8.43%. The
Partnership is required to make annual repayments of $10
million in August 2002 through August 2006 and may make
prepayments with defined premiums. The fair value of the
aggregate future repayments on these senior notes at
December 31, 1997, as required by Statement of Financial
Accounting Standards No.107, would be approximately $56.3
million, applying a discount rate of 6.7%.
In January 1998, the Partnership entered into a new note
agreement for the issuance of an additional $50 million in
6.68% senior notes to refinance a portion of the Knott's
Berry Farm acquisition. The Partnership is required to make
annual repayments of $10 million in August 2007 through
August 2011 and may make prepayments with defined premiums.
The Partnership's consolidated balance sheet at December 31,
1996, reflects a $4.5 million term note, as a result of the
acquisition of JHW Limited Partnership, which was
subsequently repaid in 1997 (see Note 7).
Covenants: Under the terms of the credit agreements, the
Partnership, among other restrictions, is required to
maintain a specified level of net tangible assets, as
defined, and comply with certain cash flow, interest
coverage, and debt to net worth levels.
(4) Special L.P. Interests:
In accordance with the Partnership Agreement, certain
partners were allocated $5.3 million of 1987 and 1988
taxable income (without any related cash distributions) for
which they received Special L.P. Interests. The Special L.P.
Interests do not participate in cash distributions and have
no voting rights. However, the holders of Special L.P.
Interests will receive in the aggregate $5.3 million upon
liquidation of the Partnership.
(5) Retirement Plans:
The Partnership has trusteed, noncontributory retirement
plans for the majority of its employees. Contributions are
discretionary and were $1,352,000 in 1997, $1,361,000 in
1996 and $1,140,000 in 1995.
The Partnership also has an Employees' Savings and
Investment Plan under which nonunion employees can
contribute specified percentages of their salary matched up
to a limit by the Partnership. Contributions by the
Partnership to this plan appnoximated $450,000 in 1997,
$430,000 in 1996 and $352,000 in 1995.
<PAGE>
In addition, approximately 125 employees are covered by
union-sponsored, multi-employer pension plans for which
approximately $359,000, $338,000 and $298,000 were
contributed for the years ended December 31, 1997, 1996 and
1995, respectively. The Partnership believes that, as of
December 31, 1997 it would have no withdrawal liability as
defined by the Multiemployer Pension Plan Amendments Act of
1980.
In 1992, the Partnership amended its policy for payment of
fees earned by the General Partner to permit a portion of
such fees to be deferred for payment after retirement or
over certain vesting periods as established by the Board of
Directors. Payment will be made in a combination of limited
partnership units and cash. The amounts deferred were
$2,409,000 in 1997, $2,196,000 in 1996 and $1,783,000 in
1995, including the value of 90,470, 104,232 and 73,662
limited partnership units issuable in future years, which
are included in the calculation of diluted weighted average
units outstanding. Amounts not payable within 12 months of
the balance sheet date are included in Other Liabilities.
(6) Contingencies:
The Partnership is a party to a number of lawsuits arising
in the normal course of business. In the opinion of
management, these matters will not have a material effect in
the aggregate on the Partnership's financial statements.
(7) Acquisitions:
On December 29, 1997, the Partnership acquired Knott's Berry
Farm, a privately held partnership which owns and operates
Knott's Berry Farm theme park in Buena Park, California and
manages Knott's Camp Snoopy at the Mall of America in
Bloomington, Minnesota. Knott's Berry Farm is a traditional,
family-oriented theme park and Knott's Camp Snoopy is the
nation's largest indoor theme park. The initial transaction
price, which is subject to adjustment under certain
circumstances, consisted of 6,482,433 unregistered limited
partnership units (valued at an average price of $24.2813,
or $157.4 million in the aggregate) and the payment of $94.5
million in cash borrowed under the expanded revolving credit
agreement. The Partnership agreed to repurchase during 1998
up to an aggregate of 500,000 of these units per quarter at
market prices upon demand. As of December 31, 1997 the
market value of the 2 million redeemable units has been
recorded separately in the accompanying balance sheet, and
will be paid upon demand to repurchase these limited
partnership units during 1998 or be reclassified into
partners' equity as the redemption period expires.
Knott's Berry Farm's assets, liabilities and results of
operations for the last three days of 1997 are included in
the accompanying consolidated financial statements. The
acquisition has been accounted for as a purchase, and
accordingly the purchase price has been allocated to assets
and liabilities acquired based upon their fair values at the
date of acquisition.
<PAGE>
The table below summarizes the unaudited consolidated pro
forma results of operations assuming the acquisition of
Knott's Berry Farm had occurred at the beginning of each of
the periods presented, with adjustments primarily
attributable to interest expense relating to the refinancing
of long-term debt and depreciation expense relating to the
fair value of assets acquired.
Years Ended December 31, 1997 1996
(In thousands except amounts per unit)
Net revenues $392,085 $375,583
Net income $ 73,066 $ 80,618
Net income per limited
partner unit-diluted $ 1.38 $ 1.52
These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of what
would have occurred had the acquisition been made at the
beginning of the periods presented, or of results which may
occur in the future.
At the close of business on December 31, 1996, the
Partnership acquired substantially all of the equity of JHW
Limited Partnership, which owned a 237-room Radisson hotel
and a large TGI Friday's restaurant near Cedar Point in
Sandusky, Ohio. The Partnership acquired the remaining small
equity interest in JHW at no additional cost in 1997. The
purchase price of approximately $16 million, including $4.5
million of long-term debt, was allocated to the assets of
JHW based on their relative fair values at the acquisition
date. The results of JHW's operations are included in the
Partnership's consolidated financial statements beginning in
1997.
At the close of business on July 28, 1995, the Partnership
acquired substantially all of the assets of Worlds of Fun
and Oceans of Fun, located in Kansas City, Missouri, in a
transaction valued at $40 million. The purchase price
consisted of the assumption of approximately $17 million of
liabilities and the issuance of 1,440,000 unregistered
limited partnership units (recorded at the July 28 NYSE
closing price of $15.4375, or $22.2 million in the
aggregate). The acquisition was accounted for as a purchase,
and accordingly the purchase price was allocated to assets
and liabilities acquired based upon their fair values at the
date of acquisition. The results of Worlds of Fun's
operations are included in the Partnership's consolidated
financial statements from the date of acquisition.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.
Cedar Fair Management Company, an Ohio corporation owned by
the Partnership's executive management consisting of 19
individuals, is the General Partner of the Partnership and
has full responsibility for the management of the
Partnership. On July 1, 1997, CF Partners, the Special
General Partner, voluntarily withdrew from the Partnership.
For additional information, including the fees paid to the
General Partner for services rendered during 1997, attention
is directed to Note 1 to the consolidated financial
statements on page 10 in the Registrant's 1997 Annual Report
to Unitholders, which note is incorporated herein by this
reference.
Directors:
Name Age Position with General Partner
Richard L. Kinzel 57 President, Chief Executive
Officer, Director since 1986
Lee A. Derrough* 53 Director since 1995
Richard S. Ferreira* 57 Director since 1997
Terry C. Hackett* 49 Director since 1997
Mary Ann Jorgenson* 57 Director since 1988
Donald H. Messinger* 54 Director since 1993
James L. Miears 62 Executive Vice President and
General Manager-Cedar Point,
Director since 1993
Thomas A. Tracy* 66 Director since 1993
* Member of Audit and Compensation Committees as of March 1, 1998.
The Board of Directors of the General Partner has a
Compensation Committee and an Audit Committee. The
Compensation Committee reviews the Partnership's
compensation and employee benefit policies and programs and
recommends related actions, as well as executive
compensation decisions, to the Board of Directors. The
Audit Committee meets periodically with the Partnership's
independent auditors, reviews the activities of the
Partnership's internal audit staff, considers the
recommendations of the independent and internal auditors,
and reviews the annual financial statements upon completion
of the audit.
Each director of the General Partner is elected for a one-
year term.
<PAGE>
Executive Officers:
Name Age Position with General Partner
Richard L. Kinzel 57 President and Chief Executive Officer
since 1986
John R. Albino 51 Vice President-General Manager-Dorney
Park since 1995
Richard J. Collingwood 58 Corporate Vice President-General
Services since 1992
Jacob T. Falfas 46 Vice President-General Manager-Knott's
Berry Farm since 1997
Mark W. Freyberg 44 Vice President-Park Operations-
Valleyfair since 1996
Joseph E. Greene 55 Vice President-Maintenance-Dorney Park
since 1996
H. John Hildebrandt 48 Vice President-Marketing-Cedar Point
since 1993
Bruce A. Jackson 46 Corporate Vice President-Finance and
Chief Financial Officer since 1992
Lee C. Jewett 63 Corporate Vice President-Planning &
Design since 1990
Daniel R. Keller 48 Vice President-General Manager-Worlds of
Fun since 1995
Larry L. MacKenzie 42 Vice President-Revenue Operations-Dorney
Park since 1997
James L. Miears 62 Executive Vice President-General Manager-
Cedar Point since 1993
<PAGE>
Executive Officers (continued):
Name Age Position with Managing General Partner
Charles M. Paul 44 Corporate Controller since 1996
Thomas W. Salamone 53 Treasurer since 1982
Alan L. Schwartz 48 Vice President-Finance-Valleyfair since
1978
Daryl R. Smith 43 Vice President-Park Operations-Cedar
Point since 1998
Linnea Stromberg-Wise 52 Vice President-Marketing-Valleyfair
since 1995
Joseph L. von der Weis 65 Corporate Vice President-Accommodations
since 1996
Walter R. Wittmer 57 Vice President-General Manager-
Valleyfair since 1988
BUSINESS EXPERIENCE.
Directors:
Richard L. Kinzel has served as president and chief
executive officer since 1986. Mr. Kinzel has been employed
by the Partnership or its predecessor since 1972, and from
1978 to 1986 he served as vice president and general manager
of Valleyfair.
Lee A. Derrough is President and Chief Executive Officer of
Hunt Midwest Enterprises, Inc., and has been associated with
the Hunt companies since 1967. Mr. Derrough was elected as
a director in 1995 pursuant to the Contribution Agreement
dated July 28, 1995, which entitles Hunt Midwest
Enterprises, Inc. to appoint a representative on the Board
of Directors so long as it owns more than 1,380,000 units of
Cedar Fair, L.P. Mr. Derrough is also a past president of
the International Association of Amusement Parks and
Attractions.
Richard S. Ferreira is a retired executive vice president of
Golf Hosts, Inc. (developer and owner of nationally
recognized resorts in Colorado and Florida) and a past
member of its Board of Directors. Mr. Ferreira was
associated with Golf Hosts for more than 26 years.
Terry C. Hackett is a business attorney and President of Hackett
Management Corporation (real estate management) and previously
served on the Board of Directors of Knott's Berry Farm since 1981.
Mr. Hackett was elected a director in 1997 as a
representative of the Knott family following the acquisition
of Knott's Berry Farm on December 29, 1997.
Mary Ann Jorgenson is a partner in the law firm of Squire,
Sanders & Dempsey L.L.P., the Partnership's General Counsel,
and has been associated with the firm since 1975. She is
also a director of S 2 Golf Inc. (manufacturer and
distributor of golf clubs and bags) and is a director and
Secretary of Essef Corporation (manufacturer of plastic
pressure vessels for the water treatment and systems
industry; spa and pool equipment; and containers for
hazardous waste transportation).
Donald H. Messinger is a partner in the law firm of Thompson
Hine & Flory LLP and has been associated with the firm since
1968.
James L. Miears has served as Executive Vice President and
General Manager of Cedar Point since 1993. In 1992, he was
Senior Vice President-Merchandise at Cedar Point and prior
to 1992 he served as Vice President-Merchandise of Cedar
Point.
Thomas A. Tracy is a business consultant and was a partner
in the public accounting firm of Arthur Andersen LLP from
1966 until his retirement in 1989.
<PAGE>
Executive Officers:
Richard L. Kinzel. See "Directors" above.
John R. Albino has served as Vice President-General Manager
of Dorney Park & Wildwater Kingdom since 1995. From 1993 to
1995, he served as Vice President-Food Operations of Cedar
Point, and prior to that was Director-Food Operations for
more than five years.
Richard J. Collingwood has served as Corporate Vice
President-General Services since 1992 and has primary
responsibility for human resources, purchasing and security.
Jacob T. Falfas has served as Vice President-General Manager
of Knott's Berry Farm since December 1997. From 1993 to
1997, he served as Vice President-Park Operations of Cedar
Point, and prior to that he served as Director-Park
Operations of Cedar Point for more than five years.
Mark W. Freyberg has served as Vice President-Park
Operations of Valleyfair since 1996. Prior to 1996, he
served as Director-Park Operations of Valleyfair for more
than five years.
Joseph E. Greene has served as Vice President-Maintenance of
Dorney Park since 1996. From 1993 to 1996, he served as
Director-Construction & Maintenance of Dorney Park, and
prior to that was Manager-Construction & Maintenance of
Cedar Point.
H. John Hildebrandt has served as Vice President-Marketing
of Cedar Point since 1993. Prior to 1993, he served as
Director-Marketing of Cedar Point for more than five years.
Bruce A. Jackson has served as Corporate Vice President-
Finance and Chief Financial Officer since 1992. Mr. Jackson
is a certified public accountant.
Lee C. Jewett has served as Corporate Vice President-
Planning & Design since 1990.
Daniel R. Keller has served as Vice President-General
Manager of Worlds of Fun / Oceans of Fun since 1995. From
1993 to 1995, he served as Senior Vice President-Operations
of Cedar Point, and prior to that was Vice President-
Operations of Cedar Point for more than five years.
Larry L. MacKenzie has served as Vice President-Revenue
Operations of Dorney Park since 1997. Prior to 1997, he
served as Director-Revenue Operations of Dorney Park for
more than five years.
James L. Miears. See "Directors" above.
Charles M. Paul has served as Corporate Controller since
1996, and prior to that was Controller of Cedar Point for
more than five years. Mr. Paul is a certified public
accountant.
Thomas W. Salamone has served as Treasurer since 1982.
Alan L. Schwartz has served as Vice President-Finance of
Valleyfair since 1978. Mr. Schwartz is a certified public
accountant.
Daryl R. Smith was appointed Vice President-Park Operations
of Cedar Point in February 1998. Prior to that, he was Vice
President and Director-Park Operations of Dorney Park for
more than five years.
<PAGE>
Linnea Stromberg-Wise has served as Vice President-Marketing
of Valleyfair since 1995. Prior to 1995, she served as
Director-Marketing of Valleyfair for more than five years.
Joseph L. von der Weis has served as Corporate Vice
President-Accommodations since 1996. From 1978 to 1996, he
served as Vice President-Accommodations of Cedar Point.
Walter R. Wittmer has served as Vice President-General
Manager of Valleyfair since 1988.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Section 16(a) of the Securities Exchange Act of 1934
requires the Registrant's directors, executive officers and
persons who own more than ten percent of its Depositary
Units ("Insiders") to file reports of ownership and changes
in ownership, within 10 days following the last day of the
month in which any change in such ownership has occurred,
with the Securities and Exchange Commission and the New York
Stock Exchange, and to furnish the Partnership with copies
of all such forms they file. The Partnership understands
from the information provided to it by these individuals
that all filing requirements applicable to the Insiders were
met for 1997.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
Long-
Annual Term
Compensation Compens
ation
(a) (b) (c) (d) (f) (i)
Restric All
ted Other
Salary Bonus Unit Compens
Awards ation
Name and Year ($) ($) ($) ($)
Principal
Position
Richard L. Kinzel, 1997 219,538 550,907 448,688 15,950
President and 1996 207,692 516,532 349,627 81,960
Chief Executive 1995 199,615 497,842 206,281 201,630
Officer
James L. Miears, 1997 162,730 296,853 125,706 15,950
Executive Vice 1996 155,770 281,745 202,615 42,460
President and 1995 149,422 271,551 129,425 105,030
General Manager-
Cedar Point
Bruce A. Jackson, 1997 137,731 301,323 144,616 15,950
Corporat Vice 1996 130,770 236,593 108,355 25,660
President- 1995 124,808 226,293 97,854 28,830
Finance and Chief
Financial Officer
Daniel R. Keller, 1997 146,731 267,713 144,809 15,950
Vice President 1996 139,809 252,848 98,936 15,260
and General 1995 128,654 244,396 55,483 15,130
Manager-Worlds of
Fun
Walter R. Wittmer 1997 147,731 269,535 117,052 15,950
Vice President 1996 140,769 254,653 172,379 94,060
and General 1995 134,423 244,396 100,483 99,810
Manager-Valleyfair
<PAGE>
Notes To Summary Compensation Table:
Column (f) Restricted Unit Awards. The aggregate number of
restricted Cedar Fair, L.P. depositary units,
representing limited partner interests, awarded to
Messrs. Kinzel, Miears, Jackson, Keller and Wittmer as
of December 31, 1997, together with their market value
at yearend, were 62,350 ($1,613,299), 31,133
($805,563), 22,761 ($588,939), 17,303 ($447,720) and
25,568 ($661,562), respectively. These units will
accrue additional units on the date of each quarterly
distribution paid by the Registrant, calculated at the
NYSE closing price on that date.
Column (i) All Other Compensation. Comprises amounts accrued
under the following plans:
1. Profit Sharing Retirement Plan - With respect to
1997, $11,200 was credited to the accounts of each of
the named executive officers.
2. Employees' Savings and Investment Plan - With
respect to 1997, $4,750 was credited to the accounts
of each of the named executive officers.
3. Supplemental Retirement Benefits - No amounts were
awarded in 1997.
Cash bonuses, restricted unit awards and supplemental
retirement benefits provided to the Partnership's executive
management are reimbursed by the General Partner out of
funds provided by management and incentive fees and cash
distributions from the Partnership.
<PAGE>
COMPENSATION OF DIRECTORS.
The Board of Directors establishes the fees paid to
Directors and Board Committee members for services in those
capacities. The current schedule of such fees is as
follows:
1. For service as a member of the Board, $15,000
per annum, payable quarterly, plus $1,000 for
attendance at each meeting of the Board;
2. For service as a Board Committee member, $250
for attendance at each Committee meeting held on the
same date on which the Board of Directors meets and
$1,000 for attendance at any additional Committee
meeting held on a date other than a date on which the
Board of Directors meets; and
3. For service as Chairman of a Committee of the
Board, a fee of $2,500 per annum.
These fees are payable only to non-management Directors.
Management Directors receive no additional compensation for
service as a Director. All Directors receive reimbursement
from the Partnership for expenses incurred in connection
with service in that capacity.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS.
Severance Compensation.
All regular, full-time, non-union affiliated employees,
including the named executive officers, who have been
employed by the Partnership for at least one year are
eligible for severance compensation under the Cedar Fair,
L.P. Severance Pay Plan. Under the Plan, employees are
generally eligible for severance pay if their employment is
terminated due to the elimination of the job or position, a
mutually agreed-upon separation of the employee due to
performance, or a change in ownership which results in
replacement of the employee by the new owner. Upon
termination of employment where severance compensation is
payable under the Plan, the employee is entitled to receive
a payment based on the following schedule:
Length of Service Severance Pay
1 year through 10 years One week of pay for each
full year of service
11 years through 30 years Ten weeks' pay plus two
weeks of pay for each
full year of service in
excess of 10
31 years or more Fifty-two weeks of pay
In addition, eight executive officers of the Partnership,
including each of the executive officers named in the
Summary Compensation Table, are entitled to severance
payments and continuation of existing insurance benefits if
their employment is terminated within 24 months after any
change in control occurs, as defined in a plan approved by
the Board of Directors in 1995. Such severance payments and
benefits range from 1.6 times the last five years' average
cash compensation and 24 months of continued insurance
benefits for park General Managers to three times the last
five years' average cash compensation, less $1, and 36
months of continued insurance benefits, for the President
and Chief Executive Officer.
<PAGE>
Restricted Unit Awards.
Restricted unit awards represent the named executive
officer's right to receive newly issued Cedar Fair, L.P.
units at specified future dates if the individual is still
employed by the Partnership at that time. The dollars
allocated annually to each officer are converted to a number
of deferred Partnership units based on the NYSE closing
price on the first Monday in December of the year granted.
These units, together with quarterly distributions thereon,
vest in years three through five after the date of grant.
In the event of death, total disability, retirement at age
62 or over, removal of the General Partner, or a "change-in-
control" of the Partnership (as defined), all accrued units
for a participant will become fully vested and will be
issued at the time of such event. Failure to remain an
employee of the Partnership on any vesting date for any
other reason will result in the forfeiture of all unissued
deferred units of a participant.
Supplemental Retirement Benefits.
Supplemental retirement benefits represent the named
executive officer's right to receive cash payments from the
Partnership upon retirement at age 62 or over, with a
minimum of 20 years' service to the Partnership, its
predecessors and/or successors. Amounts are allocated among
the executive officers as approved by the Compensation
Committee of the Board, based on a target annual retirement
benefit (including amounts projected to be available from
the Partnership's profit sharing retirement plan) of 57.5%
of average base salary projected for the three years prior
to retirement at age 65. Each officer's account accrues
interest at the prime rate as established from time to time
by the Partnership's lead bank, beginning on December 1 of
the year of grant. Executive officers leaving the employ of
the Partnership prior to reaching age 62 or with less than
20 years of service will forfeit their entire balance. In
the event of death, total disability, retirement at age 62
or over with at least 20 years' service, or removal of the
General Partner (unless resulting from reorganization of the
Partnership into corporate form), all amounts accrued will
become immediately and fully vested and payable to the
executive officers. In the event of a "change-in-control"
(as defined), all amounts accrued will become fully vested
and will be funded in a trust, for the benefit of the
executive officers when they reach age 62, die, or become
totally disabled, whichever occurs first. At each executive
officer's option, the accrued balance may be distributed in
a lump sum or in a number of future payments over a period
not to exceed 10 years.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
A. Security Ownership of Certain Beneficial Owners.
According to information obtained by the Partnership from
Schedule 13G filings with the Securities and Exchange
Commission concerning the beneficial ownership of its units
(determined in accordance with the rules of the Securities
and Exchange Commission), there were no parties known to the
Partnership to own more than 5 percent of its Depositary
Units representing limited partner interests as of February
13, 1998.
B. Security Ownership of Management.
The following table sets forth the number of Depositary
Units representing limited partner interests beneficially
owned by each Director and named executive officer and by
all officers and Directors as a group as of February 13,
1998.
Amount and Nature of Beneficial Ownership
Name of Beneficial Investment Power Voting Power Percent
Beneficial Owner Ownership Sole Shared Sole Shared of Units
Richard L. Kinzel (1) 646,878 259,872 387,006 259,872 387,006 1.2
Lee A. Derrough 2,000 2,000 -0- 2,000 -0- *
Richard S. Ferreira 1,000 1,000 -0- 1,000 -0- *
Terry C. Hackett (2) 405,848 -0- 405,848 -0- 405,848 1.0
Mary Ann Jorgenson (3) 764,776 400 764,376 400 764,376 1.5
Donald H. Messinger 695 695 -0- 695 -0- *
James L. Miears (1) 452,132 56,477 395,655 56,477 395,655 1.0
Thomas A. Tracy 5,817 4,182 1,635 4,182 1,635 *
Bruce A. Jackson 63,399 61,399 2,000 61,399 2,000 *
Daniel R. Keller (1) 440,573 57,553 383,020 57,553 383,020 1.0
Walter R. Wittmer (4) 37,372 37,072 300 37,072 300 *
All Directors an 2,425,485 813,656 1,611,829 813,656 1,611,829 4.6
officersas a group
(25 individuals)
* Less than one percent of outstanding units.
<PAGE>
(1) Includes 383,020 units held by a corporation of which
Messrs. Kinzel, Miears and Keller, together with certain
other current and former executive officers of the
General Partner, are shareholders and, under Rule 13d-3
of the Securities and Exchange Commission, are deemed to
be the beneficial owners of these units by having shared
investment and voting power. Messrs. Kinzel, Miears and
Keller disclaim beneficial ownership of 331,400, 341,724
and 346,886, respectively, of these units. The units
owned by the corporation have been counted only once in
the total of the directors and executive officers as a
group.
(2) Excludes 1,071,122 units held in an escrow account and
4,870,180 units held by other members of the Knott
family.
(3) Includes 763,976 units held by certain trusts of which
Mrs. Jorgenson and another partner of Squire, Sanders &
Dempsey L.L.P. are trust advisors, as to which Mrs.
Jorgenson disclaims beneficial ownership.
(4) Includes 300 units held by Mr. Wittmer's son, as to
which Mr. Wittmer disclaims beneficial ownership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Attention is directed to Note 1 to the consolidated
financial statements on page 10 in the Registrant's 1997
Annual Report to Unitholders, which is incorporated herein
by this reference. Also, see Item 2 for discussion of a
land acquisition from an affiliate of Hunt Midwest
Enterprises, Inc.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K.
A. 1. Financial Statements
With respect to the consolidated financial statements of the
Registrant set forth below, attention is directed to pages 7-
14 in the Registrant's 1997 Annual Report to Unitholders,
which are incorporated herein by this reference.
(i) Consolidated Balance Sheets - December 31, 1997 and
1996.
(ii) Consolidated Statements of Operations - Years ended
December 31, 1997, 1996 and 1995.
(iii) Consolidated Statements of Partners' Equity - Years
ended December 31, 1997, 1996 and 1995.
(iv) Consolidated Statements of Cash Flows - Years ended
December 31, 1997, 1996 and 1995.
(v) Notes to Consolidated Financial Statements - December
31, 1997, 1996 and 1995.
(vi) Report of Independent Public Accountants.
A. 2. Financial Statement Schedules
All Schedules are omitted, as the information is not
required or is otherwise furnished.
A. 3. Exhibits
The exhibits listed below are incorporated herein by reference to
prior SEC filings by the Registrant or included as exhibits in this
Form 10-K.
Exhibit
Number Description
3.1* Form of Third Amended and Restated Certificate and
Agreement of Limited Partnership of Cedar Fair, L.P.
(included as Exhibit A to the Prospectus).
3.2 Form of Admission and Substitution Agreement.
Incorporated herein by reference to Exhibit 3.2 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1988.
3.3 Amendment No. 2 to Third Amended and Restated Agreement
of Limited Partnership of Cedar Fair, L.P., dated as of
December 31, 1992. Incorporated herein by reference to
Exhibit 3.3 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992.
4* Form of Deposit Agreement.
10.1* Registration Agreement between Cedar Fair, L.P. and
certain limited partners thereof.
10.3* Letter amending Registration Agreement between Cedar
Fair, L.P. and certain limited partners thereof.
10.4 Private Shelf Agreement with The Prudential Insurance
Company of America dated August 24, 1994 and
$50,000,000, 8.43% Senior Note Due August 24, 2006.
Incorporated herein by reference to Exhibit 10.1 to
Registrant's Form 10-Q for the quarter ended October 2,
1994.
10.5 Contribution Agreement by and among Dorney Park Coaster
Company, Wildwater Kingdom, Inc. and the Registrant,
dated July 21, 1992. Incorporated herein by reference
to Registrant's Form 8-K filed August 4, 1992.
10.9 Credit Agreement dated as of December 19, 1997 between
Cedar Fair, L.P. Cedar Fair, Magnum Management
Corporation and Knott's Berry Farm as co-borrowers, and
KeyBank National Association, NBD Bank, National City
Bank, First Union Bank and Mellon Bank, N.A. as lenders.
Incorporated herein by reference to Exhibit 10.1 to
Registrant's Form 8-K filed January 13, 1998.
10.10 Amendment No. 1 dated as of January 28, 1998, to Credit
Agreement dated as of December 19, 1997.
10.15 Bonus and Incentive Compensation Policy for Officers of
Cedar Fair Management Company dated as of November 2,
1992. Incorporated herein by reference to Exhibit
10.15 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992.
10.16 Contribution Agreement by and among Hunt Midwest
Entertainment, Inc. and the Registrant, dated July 28,
1995. Incorporated herein by reference to Registrant's
Form 8-K filed August 11, 1995.
10.17 Cedar Fair, L.P. Executive Severance Plan dated as of
July 26, 1995. Incorporated herein by reference to
Exhibit 10.17 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995.
10.18 Contribution Agreement by and among Cedar Fair, L.P.,
Knott's Berry Farm and the Partners of Knott's Berry
Farm dated December 19, 1997. Incorporated herein by
reference to Exhibit 10 to Registrant's Form 8-K filed
January 13, 1998.
10.19 Private Shelf Agreement with The Prudential Insurance
Company of America dated January 28, 1998 and
$50,000,000, 6.68% Series B Notes due August 24, 2011.
13 1997 Annual Report to Unitholders.
21* Subsidiaries of Cedar Fair, L.P.
* Incorporated herein by reference to the Registration
Statement on Form S-1 of Cedar Fair, L.P., Registration
No. 1-9444, filed April 23, 1987.
<PAGE>
B. Reports on Form 8-K.
The Registrant filed the following reports on Form 8-K for
the year ended December 31, 1997:
1) January 13, 1998: Form 8-K, Registrant acquires all of
the partnership interests in Knott's Berry Farm,
located in Buena Park, California.
2) March 13, 1998: Form 8-K/A, Amendment No. 1 to Form
8-K filed January 13, 1998.
Item 7(a)(1) Financial Statements of Knott's Berry
Farm for the three years ended December 29, 1996,
together with Independent Auditors' Report
(a)(2) Financial Statements (unaudited)
of Knott's Berry Farm for the nine months ended
September 28, 1997 and September 29, 1996
(b) Pro Forma Financial Information
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CEDAR FAIR, L.P.
(Registrant)
DATED: March 27, 1998
/s/ Richard L. Kinzel
Richard L. Kinzel
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been executed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C> <C>
/s/ Richard L. Kinzel President and Chief March 27, 1998
Richard L. Kinzel Executive Officer, Director
/s/ Bruce A. Jackson Corporate Vice President- March 27, 1998
Bruce A. Jackson Finance (Chief Financial Officer)
/s/ Charles M. Paul Corporate Controller March 27, 1998
Charles M. Paul (Chief Accounting Officer)
/s/ Lee A. Derrough Director March 27, 1998
Lee A. Derrough
/s/ Richard S. Ferreira Director March 27, 1998
Richard S. Ferreura
/s/ Terry C. Hackett Director March 27, 1998
Terry C. Hackett
/s/ Mary Ann Jorgenson Director March 27, 1998
Mary Ann Jorgenson
/s/ Donald H. Messinger Director March 27, 1998
Donald h. Messinger
/s/ James L. Miears Executive Vice President, March 27, 1998
James L. Miears Director
/s/ Thomas A. Tracy Director March 27, 1998
Thomas A. Tracy
</TABLE>
<PAGE>
ANNUAL REPORT ON FORM 10-K
CEDAR FAIR, L.P.
For the Year Ended December 31, 1997
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
<S> <C> <C>
3.1 Form of Third Amended and Restated Certificate and
Agreement of Limited Partnership of Cedar Fair, L.P. *
3.2 Form of Admission and Substitution Agreement. *
3.3 Amendment No. 2 to Third Amended and Restated Agreement of
Limited Partnership of Cedar Fair, L.P., dated as of *
December 31, 1992.
4 Form of Deposit Agreement. *
10.1 Registration Agreement between Cedar Fair, L.P. and *
certain limited partners thereof.
10.3 Letter amending Registration Agreement between Cedar Fair,
L.P. and certain limited partners thereof. *
10.4 Private Shelf Agreement with Prudential Insurance Company
of America dated August 24, 1994 and $50,000,000, 8.43% *
Senior Note Due August 24, 2006. Incorporated herein by
reference to Exhibit 10.1 to Registrant's Form 10-Q for
the quarter ended October 2, 1994.
10.5 Contribution Agreement by and among Dorney Park Coaster
Company, Wildwater Kingdom, Inc. and the Registrant, dated *
July 21, 1992.
10.9 Credit Agreement dated as of December 19, 1997 between
Cedar Fair, L.P., Cedar Fair, Magnum Management
Corporation and Knott's Berry Farm as co-borrowers, and *
KeyBank National Association, NBD Bank, National City
Bank, First Union Bank and Mellon Bank, N.A. as lenders.
10.10 Amendment No. 1 dated as of January 28, 1998, to Credit 22
Agreement dated as of December 19, 1997.
10.15 Bonus and Incentive Compensation Policy for Officers of
Cedar Fair Management Company dated as of November 2, *
1992.
10.16 Contribution Agreement by and among Hunt Midwest
Entertainment, Inc. and the Registrant, dated July 28, *
1995.
10.17 Cedar Fair, L.P. Executive Severance Plan dated as of July *
26, 1995.
10.18 Contribution Agreement by and among Cedar Fair, L.P., *
Knott's Berry Farm and the Partners of Knott's Berry Farm
dated December 19, 1997. Incorporated herein by reference
to Exhibit 10 to Registrant's Form 8-K filed January 13,
1998.
10.19 Private Shelf Agreement with The Prudential Insurance 26
Company of America dated January 28, 1998 and $50,000,000,
6.68% Series B Notes due August 24, 2011.
21 Subsidiaries of Cedar Fair, L.P. *
27 Financial Data Schedule 71
* Incorporated herein by reference; see Item 14(A) (3).
<PAGE>
</TABLE>
AMENDMENT NO.1 TO CREDIT AGREEMENT
THIS AMENDMENT NO.1 TO CREDIT AGREEMENT, dated as of January
28, 1998 ("this Amendment"), among the following:
(i) CEDAR FAIR, L. P., a Delaware limlted
partnership (herein, together with its successors
and assigns, the "Company "or a "Co-Borrower");
(ii) CEDAR FAIR, an Ohio general partnership
(herein, together with its successors and assigns,
"Cedar Fair" or a "Co-Borrower"), which is a
Wholly-Owned Subsidiary of the Company;
(iii) MAGNUM MANAGEMENT CORPORATION, an Ohio corporation
(herein, together with its successors and assigns. "Magnum
Management" or a "Co-Borrower"), which is a Wholly-Owned
Subsidiary of the Company, in (x) its individual capacity,
and (y) as treasury manager for the Co-Borrowers (in such
capacity, together with its successors and assigns in such
capacity, the "Treasury Manager");
(iv) KNOTT'S BERRY FARM, a California general partnership
(herein, together with its successors and assigns, "Knott's
Berry Farm" or a "Co-Borrower"), which is a Wholly-Owned
Subsidiary of the Company;
(v) the lending institutions party hereto
(each a "Lender" and collectively, the
"Lenders"); and
(vi) KEYBANK NATIONAL ASSOCIATION, a national
banking association, as administrative agent (the
"Administrative Agent"):
PRELIMINARY STATEMENTS:
(1) The Co-Borrowers, the Lenders named therein, and
the Administrative Agent entered into the Credit Agreement,
dated as of December 19, 1997 (the "Credit Agreement"; with
the terms defined therein, or the definitions of which are
incorporated therein, being used herein as so defined).
(2) The Company and Knott's Berry Farms propose to
enter into the Note Purchase and Private Shelf Agreement,
dated as of January 28,1998 (the "1998 Note Purchase and
Private Shelf Agreement"), with The Prudential Insurance
Company of America ("Prudential") pursuant to which, among
other things, the Company and Knott's Berry Farms, as Co-
Issuers, would issue and sell to Prudential and/or certain
of its Affiliates $50,000,000 aggregate principal amount of
their 6.68% Series B Notes due August 24, 2011. Such Notes
are referred to in the Credit Agreement as the Additional
Notes.
(3) The right of the Co-Borrowers to issue and sell the
Additional Notes in compliance with the requirements of the
Credit Agreement is conditioned upon satisfaction of the
conditions specified in section 9.4(c) of the Credit
Agreement.
<PAGE>
(4) The Lenders are entitled under section 8.12 of the
Credit Agreement to require that the Credit Agreement be
amended to include certain covenants contained in the 1998
Note Purchase and Private Shelf Agreement.
(5) The Co-Borrowers, the Lenders, and the
Administrative Agent desire to amend certain of the terms
and provisions of the Credit Agreement in order to make
certain modifications to the terms and provisions thereof,
all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. CONSENT AND AMENDMENTS.
1.1. Consent to Issuance of Additional Notes. Effective
on the Effective Date (as hereinafter defined), the Lenders
(i) confirm their satisfaction with the matters specified in
section 9.4(c)(i) of the Credit Agreement insofar as they
pertain to the issuance of the Additional Notes, and (ii)
consent to the issuance of the Additional Notes as
contemplated by section 9.4(c) of the Credit Agreement.
1.2. Amendment to Add an Affirmative Covenant.
Effective on the Effective Date, a new section 8.16 is added
to the Credit Agreement, reading in its entirety as follows:
8.16. Minimum Assets. The Company covenants
and agrees that (i) the consolidated total assets
of the Company and Knott's Berry Farms shall at
all times constitute at least 70% of the
consolidated total assets of the Company and its
Subsidiaries and (ii) the unconsolidated total
assets of the Company shall at all times
constitute at least 40% of the consolidated total
assets of the Company and its Subsidiaries.
1.3. Amendment to Indebtedness Covenant. Effective on
the Effective Date, clause (h) of section 9.4 of the Credit
Agreement is amended to read in its entirety as follows:
(h) Additional Unsecured Debt: additional unsecured
Indebtedness of the Company, to the extent not otherwise
permitted pursuant to the foregoing clauses, provided that
(i) at the time of incurrence thereof, and after giving
effect thereto, no Event of Default shall have occurred and
be continuing or would result therefrom, (ii) Consolidated
Debt shall at no time exceed 70% of Consolidated Total
Capital, and (iii) at all times during a period of at least
45 consecutive days in each rolling twelve month period
Consolidated Debt shall not exceed 60% of Consolidated Total
Capital.
<PAGE>
1.4. Additional Definition. Effective on the Effective
Date, the following additional definition shall be added to
section 1.1 of the Credit Agreement in the appropriate
alphabetic order:
"Consolidated Total Capital" shall mean at any time of
determination the sum of (i) Consolidated Debt at such time
and (ii) Consolidated Net Worth as of the most recent fiscal
period ended on or prior to the time of determination for
which financial statements have been delivered to the
Lenders hereunder.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Co-Borrowers jointly and severally represent and warrant
that: (a) this Amendment has been duly authorized by all
necessary corporate or other organizational action on the
part of each Co-Borrower, has been duly executed and
delivered on behalf of each Co-Borrower, and constitutes the
valid and binding agreement of each Co-Borrower, enforceable
against such Co-Borrower in accordance with its terms; (b)
the representations and warranties of the Co-Borrowers
contained in the Credit Agreement, as amended hereby, are
true and correct on and as of the date hereof as though made
on and as of the date hereof; except that any representation
and warranty made only as of a specified date is hereby
represented to have been true and correct when made, (c) no
condition or event has occurred or exists which constitutes
or which, after notice or lapse of time or both, would
constitute an Event of Default; and (d) the Co-Borrowers are
in full compliance with all covenants and agreements
contained in the Credit Agreement, as amended hereby.
SECTION 3. RATIFICATIONS.
The terms and provisions set forth in this Amendment shall
modify and supersede all inconsistent terms and provisions
set forth in the Credit Agreement, and except as expressly
modified and superseded by this Amendment, the terms and
provisions of the Credit Agreement are ratified and
confirmed and shall continue in full force and effect.
<PAGE>
SECTION 4. BINDING EFFECT.
This Amendment shall become effective on a date (the
"Effective Date"), on or before January 31, 1998, if and
when the following conditions shall be satisfied:
(a) Amendment, etc.: this Amendment shall
have been executed by the Co-Borrowers and the
Administrative Agent, and counterparts hereof as
so executed shall have been delivered to the
Administrative Agent; the Acknowledgment and
Consent appended hereto shall have been executed
by the Subsidiaries of the Company named therein,
and counterparts thereof as so executed shall have
been delivered to the Administrative Agent; and
the Administrative Agent shall have been notified
by all of the Lenders that such Lenders have
executed this Amendment (which notification may be
by facsimile or other written confirmation of such
execution);
(b) Issuance of Additional Notes: the Additional Notes
shall have been issued in accordance with the terms of the
1998 Note Purchase and Private Shelf Agreement, and there
shall have been no material changes to the terms of such
Agreement since the draft thereof furnished to the Lenders
which have not been approved by the Administrative Agent;
(c) Intercreditor Agreement: the Lenders, the
Administrative Agent and the other
parties thereto shall have entered into the
Intercreditor Agreement contemporaneously therewith,
and the Intercreditor Agreement shall be in full force
and effect; and
(d) Notice from the Administrative Agent: the
Administrative Agent shall have notified the Treasury
Manager and each Lender in writing that the conditions
specified in the foregoing clauses have been satisfied;
and thereafter this Amendment shall be binding upon and
inure to the benefit of the Co-Borrowers, the
Administrative Agent and each Lender and their
respective permitted successors and assigns, except
that no Co-Borrower shall have the right to assign its
rights hereunder or any interest herein without the
prior written consent of the Lenders.
SECTION 5. MISCELLANEOUS.
5.1. Survival of Representations and Warranties. All
representations and warranties made in this Amendment shall
survive the execution and delivery of this Amendment, and no
investigation by any Administrative Agent or any Lender or
any subsequent Loan shall affect the representations and
warranties or the right of the Administrative Agent or any
Lender to rely upon them.
<PAGE>
5.2. Reference to Credit Agreement. The Credit
Agreement and any and all other agreements, instruments or
documentation now or hereafter executed and delivered
pursuant to the terms of the Credit Agreement as amended
hereby, are hereby amended so that any reference therein to
the Credit Agreement shall mean a reference to the Credit
Agreement as amended hereby.
5.3. Expenses. As provided in the Credit Agreement, but
without limiting any terms or provisions thereof, the Co-
Borrowers agrees to pay on demand all costs and expenses
incurred by the Administrative Agent in connection with the
preparation, negotiation, and execution of this Amendment,
including without limitation the costs and fees of the
Administrative Agent's special legal counsel, regardless of
whether this Amendment becomes effective in accordance with
the terms hereof, and all costs and expenses incurred by the
Administrative Agent or any Lender in connection with the
enforcement or preservation of any rights under the Credit
Agreement, as amended hereby.
5.4. Severability. Any term or provision of this
Amendment held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the
remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or
unenforceable.
5.5. Applicable Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of
Ohio.
5.6. Headings. The headings, captions and arrangements
used in this Amendment are for convenience only and shall
not affect the interpretation of this Amendment.
5.7. Entire Agreement. This Amendment is specifically
limited to the matters expressly set forth herein. This
Amendment and all other instruments, agreements and
documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the
parties hereto with respect to the subject matter hereof and
supersede any and all prior commitments, agreements,
representations and understandings, whether written or oral,
relating to the matters covered by this Amendment, and may
not be contradicted or varied by evidence of prior,
contemporaneous or subsequent oral agreements or discussions
of the parties hereto. There are no oral agreements among
the parties hereto relating to the subject matter hereof or
any other subject matter relating to the Credit Agreement.
5.8. Recourse. The provisions of section 14.21 of the
Credit Agreement shall apply to this Amendment as well as to
the Credit Agreement as amended hereby.
<PAGE>
CEDAR FAIR, L.P.
and
KNOTT'S BERRY FARM
as Co-Issuers
NOTE PURCHASE AND
PRIVATE SHELF AGREEMENT
$50,000,000 6.68% Series B Notes due August 24, 2011
$25,000,000 Private Shelf Facility
Dated as of January 28, 1998
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES 1
1A. Authorization of Issue of Series B Notes 1
1B. Authorization of Issue of Shelf Notes 1
2. PURCHASE AND SALE OF NOTES 2
2A. Purchase and Sale of Series B Notes 2
2B(1). Facility 2
2B(2). Issuance Period 3
2B(3). Request for Purchase 3
2B(4). Rate Quotes 3
2B(5). Acceptance 3
2B(6). Market Disruption 4
2B(7). Closing 4
2B(8). Fees 5
2B(8)(i). Facility Fee 5
2B(8)(ii).
Delayed Delivery Fee 5
2B(8)(iii).
Cancellation Fee 5
2B(8)(iv).
Structuring Fee 6
3. CONDITIONS OF CLOSING 6
3A. Opinion of Company's Counsel 6
3B. Opinion of Purchaser's Special Counsel 6
3C. Representations and Warranties;
No Default 6
3D. Fees 7
3E. Purchase Permitted By Applicable Laws 7
3F. Proceedings 7
3G. Intercreditor Agreement 7
4. PREPAYMENTS 7
4A(1). Required Prepayments of Series B Notes 7
4A(2). Required Prepayments of Shelf Notes 7
4B(1). Optional Prepayment with Yield-
Maintenance Amount 7
4B(2). Prepayment with Yield-Maintenance Amount
Pursuant to Intercreditor Agreement 8
4C. Notice of Optional Prepayment 8
4D. Application of Prepayments 8
4E. Retirement of Notes 8
5. AFFIRMATIVE COVENANTS 9
5A. Financial Statements 9
5B. Inspection of Property 10
5C. Covenant to Secure Note Equally 10
5D. Information Required by Rule 144A 11
5E. Compliance With Environmental Laws 11
5F. Maintenance of Insurance 11
5G. Minimum Assets 11
5H. Most Favored Covenant Status, etc. 11
5I. Senior Debt 12
<PAGE>
6. NEGATIVE COVENANTS 12
6A. Lien, Debt and Other Restrictions 12
6A(1). Liens 12
6A(2). Debt 13
6A(3). Loans, Advances, Investments and
Contingent Liabilities 13
6A(4). Sale of Stock and Debt of Subsidiaries 14
6A(5). Merger and Sale of Assets 15
6A(6). Transactions with Related Persons 15
6B. Issuance of Stock by Subsidiaries 16
6C. Bank Defined Indebtedness/Consolidated
EBITDA Ratio 16
6D. Interest Coverage Ratio 16
7. EVENTS OF DEFAULT 16
7A. Acceleration 16
7B. Notice of Acceleration 19
7C. Other Remedies 19
8. REPRESENTATIONS, COVENANTS AND WARRANTIES 19
8A(1). Company Organization and Qualification 19
8A(2). Knott's Berry Farm Organization and
Qualification 19
8B. Financial Statements 20
8C. Actions Pending 20
8D. Outstanding Debt 21
8E. Title to Properties 21
8F. Taxes 21
8G. Conflicting Agreements and Other
Matters 21
8H. Offering of Notes 22
8I. Regulation G, etc. 22
8J. ERISA 22
8K. Governmental Consent 22
8L. Environmental Compliance 23
8M. Investment Company Status 23
8N. Disclosure 23
8O. Hostile Tender Offers 23
9. REPRESENTATIONS OF THE PURCHASERS 23
9A. Nature of Purchase 23
9B. Source of Funds 24
10. DEFINITIONS 24
10A. Yield-Maintenance Terms 24
10B. Other Terms 25
10C. Accounting Principles, Terms and
Determinations 33
<PAGE>
11. MISCELLANEOUS 33
11A. Note Payments 33
11B. Expenses 33
11C. Consent to Amendments 34
11D. Form, Registration, Transfer and
Exchange of Notes; Lost Notes 34
11E. Persons Deemed Owners; Participations 35
11F. Survival of Representations and
Warranties Entire Agreement 35
11G. Successors and Assigns 35
11H. Notices 36
11I. Descriptive Headings 36
11J. Satisfaction Requirement 36
11K. Payments Due on Non-Business Days 36
11L. Limited Liability of Partners 36
11M. Independence of Covenants 37
11N. Severability 37
11O. Governing Law, Jurisdiction; Consent to
Service of Process 37
11P. Counterparts 37
11Q. Binding Agreement 38
12. JOINT AND SEVERAL OBLIGATIONS 38
12.1 Nature of Obligations 38
12.2 Failure of any Co-Issuer to Perform 38
12.3 Additional Undertaking 38
12.4 Joint and Several Obligations
Unconditional, etc. 38
12.5 Co-Issuer's Obligations to Remain in
Effect; Restoration 39
12.6 Waiver of Acceptance, etc. 39
12.7 Subrogation 40
12.8 Effect of Stay 41
<PAGE>
CEDAR FAIR, L.P.
One Causeway Drive
P.O. Box 5006
Sandusky, Ohio 44871
As of January 28, 1998
The Prudential Insurance Company
of America ("Prudential")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential, the
"Purchasers")
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Ladies and Gentlemen:
The undersigned, Cedar Fair, L.P., a Delaware
limited partnership (herein called the "Company") and
Knott's Berry Farm, a California general partnership
("Knott's Berry Farm"; the Company and Knott's Berry Farm
are sometimes hereinafter collectively referred to as the
"Co-Issuers" and individually referred to as a "Co-Issuer"),
hereby jointly and severally agree with you as set forth
below. Reference is made to paragraph 10 hereof for
definitions of capitalized terms used herein and not
otherwise defined herein.
<PAGE>
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. Authorization of Issue of Series B Notes.
The Co-Issuers shall authorize the issue of the senior
promissory notes of the Co-Issuers (the "Series B Notes") in
the aggregate principal amount of $50,000,000, to be dated
the date of issue thereof, to mature August 24, 2011, to
bear interest on the unpaid balance thereof from the date
thereof until the principal thereof shall have become due
and payable at the rate of 6.68% per annum and on overdue
principal, Yield-Maintenance Amount and interest at the rate
specified therein, to be a joint and several obligation of
the Co-Issuers, and to be substantially in the form of
Exhibit A-1 attached hereto. The terms "Series B Note" and
"Series B Notes" as used herein shall include each Series B
Note delivered pursuant to any provision of this Agreement
and each Series B Note delivered in substitution or exchange
for any such Series B Note pursuant to any such provision.
1B. Authorization of Issue of Shelf Notes. The
Co-Issuers shall authorize the issue of additional senior
promissory notes of the Co-Issuers (the "Shelf Notes") in
the aggregate principal amount of $25,000,000, to be a joint
and several obligation of the Co-Issuers, to be dated the
date of issue thereof, to mature, in the case of each Shelf
Note so issued, no more than 15 years after the date of
original issuance thereof, to have an average life, in the
case of each Shelf Note so issued, of no more than 12 years
after the date of original issuance thereof, to bear
interest on the unpaid balance thereof from the date thereof
at the rate per annum, and to have such other particular
terms, as shall be set forth, in the case of each Shelf Note
so issued, in the Confirmation of Acceptance with respect to
such Shelf Note delivered pursuant to paragraph 2B(5), and
to be substantially in the form of Exhibit A-2 attached
hereto. The terms "Shelf Note" and "Shelf Notes" as used
herein shall include each Shelf Note delivered pursuant to
any provision of this Agreement and each Shelf Note
delivered in substitution or exchange for any such Shelf
Note pursuant to any such provision. The terms "Note" and
"Notes" as used herein shall include each Series B Note and
each Shelf Note delivered pursuant to any provision of this
Agreement and each Note delivered in substitution or
exchange for any such Note pursuant to any such provision.
Notes which have (i) the same final maturity, (ii) the same
principal prepayment dates, (iii) the same principal
prepayment amounts (as a percentage of the original
principal amount of each Note), (iv) the same interest rate,
(v) the same interest payment periods and (vi) the same date
of issuance (which, in the case of a Note issued in exchange
for another Note, shall be deemed for these purposes the
date on which such Note's ultimate predecessor Note was
issued), are herein called a "Series" of Notes.
2. PURCHASE AND SALE OF NOTES.
<PAGE>
2A. Purchase and Sale of Series B Notes. The Co-
Issuers hereby jointly and severally agree to sell to
Prudential and, subject to the terms and conditions herein
set forth, Prudential agrees to purchase from the Co-Issuers
$50,000,000 aggregate principal amount of Series B Notes at
100% of such aggregate principal amount. On January 28,
1998 (herein called the "Series B Closing Day"), the Co-
Issuers will deliver to Prudential at the offices of
Prudential Capital Group, Two Prudential Plaza, Suite 5600,
Chicago, Illinois 60601, one or more Series B Notes
registered in its name, evidencing the aggregate principal
amount of Series B Notes to be purchased by Prudential and
in the denomination or denominations specified with respect
to Prudential in the Purchaser Schedule attached hereto,
against payment of the purchase price thereof by transfer of
immediately available funds for credit to the Company's
account #10015-15467 at Keybank N.A., 127 Public Square,
Cleveland, Ohio 44114, ABA Routing Number 041 001 039.
2B(1). Facility. Prudential is willing to
consider, in its sole discretion and within limits which may
be authorized for purchase by Prudential and Prudential
Affiliates from time to
time, the purchase of additional Notes pursuant to this
Agreement. In the event Prudential and the Company agree
such additional Notes may be issued by the Company as the
sole obligor thereunder. The willingness of Prudential to
consider such purchase of additional Notes is herein called
the "Facility". At any time, the aggregate principal
amount of Notes stated in paragraph 1, minus the aggregate
principal amount of Notes purchased and sold pursuant to
this Agreement prior to such time, minus the aggregate
principal amount of Accepted Notes (as hereinafter defined)
which have not yet been purchased and sold hereunder prior
to such time is herein called the "Available Facility
Amount" at such time. NOTWITHSTANDING THE WILLINGNESS OF
PRUDENTIAL TO CONSIDER PURCHASES OF NOTES, THIS AGREEMENT IS
ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER
PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED
TO MAKE OR ACCEPT OFFERS TO PURCHASE NOTES, OR TO QUOTE
RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF NOTES, AND THE FACILITY SHALL IN NO WAY BE
CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL
AFFILIATE.
2B(2). Issuance Period. Notes may be issued
and sold pursuant to this Agreement until the earlier of (i)
the third anniversary of the date of this Agreement and (ii)
the thirtieth day after Prudential shall have given to the
Co-Issuers, or the Co-Issuers shall have given to
Prudential, a notice stating that it elects to terminate the
Facility (or if such thirtieth day is not a Business Day,
the Business Day next preceding such thirtieth day). The
period during which Notes may be issued and sold pursuant
to this Agreement is herein called the "Issuance Period".
<PAGE>
2B(3). Request for Purchase. The Co-Issuers
(or, if Prudential so agrees, the Company) may from time to
time during the Issuance Period make requests for purchases
of additional Notes (each such request being herein called a
"Request for Purchase"). Each Request for Purchase shall
be made to Prudential by telecopier and confirmed by
nationwide overnight delivery service, and shall (i) specify
the aggregate principal amount of Notes covered thereby,
which shall not be less than $10,000,000 and not be greater
than the Available Facility Amount at the time such Request
for Purchase is made, (ii) specify the principal amounts,
final maturities and principal payment dates and amounts,
(iii) specify the use of proceeds of such Notes, (iv)
specify the proposed day for the closing of the purchase and
sale of such Notes, which shall be a Business Day during the
Issuance Period not less than 5 Business Days and not more
than 25 Business Days after the Acceptance Day (if any)
with respect to such Request for Purchase, (v) specify the
number of the account and the name and address of the
depository institution to which the purchase prices of such
Notes are to be transferred on the Closing Day for such
purchase and sale, (vi) certify that the representations and
warranties contained in paragraph 8 are true on and as of
the date of such Request for Purchase except to the extent
of changes caused by the transactions herein contemplated
and that there exists on the date of such Request for
Purchase no Event of Default or Default and (vii) be
substantially in the form of Exhibit B attached hereto.
Each Request for Purchase shall be in writing and shall be
deemed made when received by Prudential.
2B(4). Rate Quotes. Not later than three
Business Days after the Co-Issuers (or, if Prudential so
agrees, the Company) shall have given Prudential a Request
for Purchase pursuant to paragraph 2B(3), Prudential may
provide (by telephone promptly thereafter confirmed by
telecopier, in each case no earlier than 9:30 A.M. and no
later than 1:30 P.M. New York City local time) interest rate
quotes for the several principal amounts, maturities,
prepayment schedules and interest payment periods of Notes
specified in such Request for Purchase. Each quote pursuant
to this paragraph 2B(4) shall represent the fixed interest
rate per annum payable on the outstanding principal balance
of such Notes until such balance shall have become due and
payable, at which Prudential or a Prudential Affiliate would
be willing to purchase such Notes at 100% of the principal
amount thereof.
<PAGE>
2B(5). Acceptance. Within 30 minutes after
Prudential shall have provided any interest rate quotes
pursuant to paragraph 2B(4) or such shorter period as
Prudential may specify to the Issuer (such period herein
called the "Acceptance Window"), the Issuer may, subject to
paragraph 2B(6), elect to accept such interest rate quotes.
Such election shall be made by an Authorized Officer of the
Issuer notifying Prudential by telephone or telecopier
within the Acceptance Window (but not earlier than 9:30 A.M.
or later than 2:00 P.M., New York City local time) that the
Issuer elects to accept such interest rate quotes,
specifying the Note (each such Note being herein called an
"Accepted Note") as to which such acceptance (herein called
an "Acceptance") relates. The day the Issuer notifies
Prudential of an Acceptance with respect to any Accepted
Notes is herein called the "Acceptance Day" for such
Accepted Notes. Any interest rate quotes as to which
Prudential does not receive an Acceptance within the
Acceptance Window shall expire, and no purchase or sale of
Notes hereunder shall be made based on such expired interest
rate quotes. Subject to paragraph 2B(6) and the other terms
and conditions hereof, the Issuer agrees to sell to
Prudential or a Prudential Affiliate, and Prudential agrees
to purchase, or to cause the purchase by a Prudential
Affiliate of, the Accepted Notes. As soon as practicable
following the Acceptance Day, the Issuer, Prudential and
each Prudential Affiliate which is to purchase any such
Accepted Notes will execute a confirmation of such
Acceptance substantially in the form of Exhibit C attached
hereto (herein called a "Confirmation of Acceptance").
2B(6). Market Disruption. Notwithstanding the
provisions of paragraph 2B(5), if Prudential shall have
provided interest rate quotes pursuant to paragraph 2B(5)
and thereafter, prior to the time an Acceptance with respect
to such quotes shall have been notified to Prudential in
accordance with paragraph 2B(5), there shall occur a general
suspension, material limitation, or significant disruption
of trading in securities generally on the New York Stock
Exchange or in the market for U.S. Treasury securities or
derivatives, then such interest rate quotes shall expire,
and no purchase or sale of Notes hereunder shall be made
based on such expired interest rate quotes. If the Issuer
thereafter notifies Prudential of the Acceptance of any such
interest rate quotes, such Acceptance shall be ineffective
for all purposes of this Agreement, and Prudential shall
promptly notify the Issuer that the provisions of this
paragraph 2B(6) are applicable with respect to such
Acceptance.
<PAGE>
2B(7). Closing. Not later than 11:30 A.M. (New
York City local time) on the Closing Day for any Accepted
Notes, the Issuer will deliver to Prudential or the
Prudential Affiliate listed in the Confirmation of
Acceptance relating thereto at the offices of Prudential
Capital Group, Two Prudential Plaza, Suite 5600, Chicago,
Illinois 60601, the Notes to be purchased by such Purchaser
in the form of a single Accepted Note for the Accepted Notes
which have exactly the same terms (or such greater number of
Notes in authorized denominations as such Purchaser may
request) dated the Closing Day and registered in such
Purchaser's name, against payment of the purchase price
thereof by transfer of immediately available funds for
credit to the account specified by the Issuer in the Request
for Purchase of such Notes. If the Issuer fails to tender
to any Purchaser the Accepted Notes to be purchased by such
Purchaser on the scheduled Closing Day for such Accepted
Notes as provided above in this paragraph 2B(7), or any of
the conditions specified in paragraph 3 shall not have been
fulfilled by the time required on such scheduled Closing
Day, the Issuer shall, prior to 1:00 P.M., New York City
local time, on such scheduled Closing Day notify such
Purchaser in writing whether (x) such closing is to be
rescheduled (such rescheduled date to be a Business Day
during the Issuance Period not less than one Business Day
and not more than 10 Business Days after such scheduled
Closing Day (the "Rescheduled Closing Day") and certify to
such Purchaser that the Issuer reasonably believes that it
will be able to comply with the conditions set forth in
paragraph 3 on such Rescheduled Closing Day and that the
Issuer will pay the Delayed Delivery Fee in accordance with
paragraph 2B(8)(ii) or (y) such closing is to be canceled as
provided in paragraph 2B(8)(iii). In the event that the
Issuer shall fail to give such notice referred to in the
preceding sentence, Prudential (on behalf of each Purchaser)
may at its election, at any time after 1:00 P.M., New York
City local time, on such scheduled Closing Day, notify the
Company in writing that such closing is to be canceled as
provided in paragraph 2B(8)(iii).
2B(8). Fees.
2B(8)(i). Facility Fee. The Issuer will pay to
Prudential in immediately available funds a fee (herein
called the "Facility Fee") on each Closing Day (other than
the closing of the purchase and sale of the Series B Notes)
in an aggregate amount equal to 0.15% of the aggregate
principal amount of Notes sold on such Closing Day.
<PAGE>
2B(8)(ii). Delayed Delivery Fee. If the closing of
the purchase and sale of any Accepted Note is delayed for
any reason beyond the original Closing Day for such Accepted
Note (other than the failure of a Purchaser to fund the
purchase of an Accepted Note after all conditions to closing
specified in paragraph 3 have been timely satisfied), the
Issuer will pay to Prudential (for the benefit of the
Purchasers) on the last Business Day of each calendar month,
commencing with the first such day to occur more than 30
days after the Acceptance Day for such Accepted Note and
ending with the last such day to occur prior to the
Cancellation Date or the actual closing date of such
purchase and sale, and on the Cancellation Date or actual
closing date of such purchase and sale, a fee (herein called
the "Delayed Delivery Fee") calculated as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond
equivalent yield per annum of such Accepted Note; "MMY"
means Money Market Yield, i.e., the yield per annum on a
commercial paper investment of the highest quality selected
by Prudential on the date Prudential receives notice of the
delay in the closing for such Accepted Notes having a
maturity date or dates the same as, or closest to, the
Rescheduled Closing Day or Rescheduled Closing Days (a new
alternative investment being selected by Prudential each
time such closing is delayed); "DTS" means Days to
Settlement, i.e., the number of actual days elapsed from and
including the originally scheduled Closing Day with respect
to such Accepted Note (in the case of the first such payment
with respect to such Accepted Note) or from and including
the date of the next preceding payment (in the case of any
subsequent delayed delivery fee payment with respect to such
Accepted Note) to but excluding the date of such payment;
and "PA" means Principal Amount, i.e., the principal amount
of the Accepted Note for which such calculation is being
made. In no case shall the Delayed Delivery Fee be less
than zero. Nothing contained herein shall obligate any
Purchaser to purchase any Accepted Note on any day other
than the Closing Day for such Accepted Note, as the same may
be rescheduled from time to time in compliance with
paragraph 2B(7).
<PAGE>
2B(8)(iii). Cancellation Fee. If the Issuer at any
time notifies Prudential in writing that the Issuer is
canceling the closing of the purchase and sale of any
Accepted Note, or if Prudential notifies the Issuer in
writing under the circumstances set forth in the last
sentence of paragraph 2B(7) that the closing of the purchase
and sale of any Accepted Note is to be canceled, or if the
closing of the purchase and sale of any Accepted Note is not
consummated on or prior to the last day of the Issuance
Period (the date of any such notification, or the last day
of the Issuance Period, as the case may be, being herein
called the "Cancellation Date"), the Issuer will pay to
Prudential (for the benefit of the Purchasers) in
immediately available funds an amount (the "Cancellation
Fee") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient
(expressed in decimals) obtained by dividing (a) the excess
of the ask price (as determined by Prudential) of the Hedge
Treasury Note(s) on the Cancellation Date over the bid price
(as determined by Prudential) of the Hedge Treasury Note(s)
on the Acceptance Day for such Accepted Note by (b) such bid
price; and "PA" has the meaning ascribed to it in paragraph
2B(8)(ii). The foregoing bid and ask prices shall be as
reported by Dow Jones Markets, Inc. services (Telerate) (or,
if such data for any reason ceases to be available through
Dow Jones Markets, Inc. services (Telerate), any publicly
available source of similar market data). Each price shall
be based on a U.S. Treasury security having a par value of
$100.00 and shall be rounded to the second decimal place.
In no case shall the Cancellation Fee be less than zero.
2B(8)(iv). Structuring Fee. On the date of the
execution and delivery of this Agreement by the Co-Issuers
and Prudential, the Co-Issuers will pay to Prudential in
immediately available funds a non-refundable fee (herein
called the "Structuring Fee") in the amount of $40,000.
3. CONDITIONS OF CLOSING. The obligation of any
Purchaser to purchase any Accepted Notes is subject to the
satisfaction, on or before the applicable Closing Day for
such Accepted Notes, of the following conditions:
3A. Opinion of Company's Counsel. On each
Closing Day, such Purchaser shall have received from
Squire, Sanders & Dempsey, special counsel to the Issuer, or
other counsel designated by the Company and acceptable to
such Purchaser, a favorable opinion satisfactory to the
Purchaser and substantially in the form of Exhibit D
attached hereto and as to such other matters as such
Purchaser may reasonably request. The Issuer hereby directs
such counsel to deliver such opinion, and agrees that the
issuance and sale of any Notes will constitute a
reconfirmation of such direction.
<PAGE>
3B. Opinion of Purchaser's Special Counsel. Such
Purchaser shall have received from Wiley S. Adams, Assistant
General Counsel of Prudential, or such other counsel who is
acting as counsel for it in connection with this transac
tion, a favorable opinion satisfactory to such Purchaser as
to such matters incident to the matters herein contemplated
as it may reasonably request.
3C. Representations and Warranties; No Default.
The representations and warranties contained in paragraph 8
shall be true on and as of the applicable Closing Day,
except to the extent of changes caused by the transactions
herein contemplated; there shall exist on the applicable
Closing Day no Default or Event of Default (assuming, if no
Note is outstanding on such Closing Day, that paragraph 6
hereof is then in effect); and the Issuer shall have
delivered to each Purchaser an Officer's Certificate, dated
the applicable Closing Day, to both such effects.
3D. Fees. On or before each Closing Day, the
Issuer shall have paid to Prudential the fee, if any,
required by paragraphs 2B(8)(i), 2B(8)(ii) and 2B(8)(iv).
3E. Purchase Permitted By Applicable Laws. The
purchase of and payment for the Notes to be purchased on the
applicable Closing Day on the terms and conditions herein
provided (including the use of the proceeds of such Notes by
the Issuer) shall not violate any applicable law or
governmental regulation (including, without limitation,
section 5 of the Securities Act or Regulation G, T or X of
the Board of Governors of the Federal Reserve System) and
shall not subject any Purchaser to any tax, penalty,
liability or other onerous condition under or pursuant to
any applicable law or governmental regulation, and such
Purchaser shall have received such certificates or other
evidence as such Purchaser may reasonably request to
establish compliance with this condition.
3F. Proceedings. All corporate and other
proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incident
thereto shall be satisfactory in substance and form to each
Purchaser, and each Purchaser shall have received all such
counterpart originals or certified or other copies of such
documents as it may reasonably request.
3G. Intercreditor Agreement. On or before the
Series B Notes Closing Day, Prudential and the lenders
parties to the Credit Agreement shall have entered into an
Intercreditor Agreement in the form of Exhibit E hereto (the
"Intercreditor Agreement") and such agreement shall be in
full force and effect.
<PAGE>
4. PREPAYMENTS. The Series B Notes and any
Shelf Notes shall be subject to required prepayment as and
to the extent provided in paragraphs 4A and 4B,
respectively. The Series B Notes and any Shelf Notes shall
also be subject to prepayment under the circumstances set
forth in paragraph 4C. Any prepayment made by the Issuer
pursuant to any other provision of this paragraph 4 shall
not reduce or otherwise affect its obligation to make any
required prepayment as specified in paragraph 4A or 4B.
4A(1). Required Prepayments of Series B Notes.
Until the Series B Notes shall be paid in full, the Co-
Issuers jointly and severally agree to apply to the
prepayment of the Series B Notes, without Yield-Maintenance
Amount, the sum of $10,000,000 on August 24 of each year
commencing on August 24, 2007 and continuing through and
including August 24, 2010 and such principal amounts of the
Series B Notes, together with interest thereon to the
payment dates, shall become due on such payment dates. The
remaining unpaid principal amount of the Series B Notes
together with any accrued and unpaid interest, shall become
due on the maturity date of the Series B Notes on August 24,
2011.
4A(2). Required Prepayments of Shelf Notes.
Each Series of Shelf Notes shall be subject to required
prepayments, if any, set forth in the Notes of such Series.
4B(1).
Optional Prepayment with Yield-Maintenance Amount. The
Notes of each Series shall be subject to optional
prepayment, in whole or in part, in increments of $100,000,
and in a minimum amount of $1,000,000, at the option of the
Company, at 100% of the principal amount so prepaid plus
interest thereon to the prepayment date and the Yield-
Maintenance Amount, if any, with respect to each such Note.
Any partial prepayment of a Series of Notes pursuant to this
paragraph 4B shall be applied in satisfaction of required
payments of principal in inverse order of their scheduled
due dates.
4B(2). Prepayment with Yield-Maintenance Amount
Pursuant to Intercreditor Agreement. If amounts are to be
applied to the principal of the Notes pursuant to the terms
of the Intercreditor Agreement, interest owing thereon to
the prepayment date and the Yield-Maintenance Amount, if
any, with respect to each Note shall be due and payable on
such date. Any partial prepayment on the Notes pursuant to
this paragraph 4B(2) shall be applied in satisfaction of
required payments of principal in inverse order of their
scheduled due dates.
<PAGE>
4C. Notice of Optional Prepayment. The Issuer
shall give notice to the holder of each Note of a Series
irrevocable written notice of any optional prepayment to be
made pursuant to paragraph 4B(1) with respect to such Series
not less than 10 Business Days prior to the prepayment date,
specifying (i) such prepayment date, (ii) the aggregate
principal amount of the Notes of such Series to be prepaid
on such date, (iii) the principal amount of the Notes of
such holder to be prepaid on that date, and (iv) stating
that such optional prepayment is to be made pursuant to
paragraph 4B(1). Notice of optional prepayment having been
given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to
the prepayment date and together with the Yield-Maintenance
Amount, if any, herein provided, shall become due and
payable on such prepayment date. The Issuer shall, on or
before the day on which it gives written notice of any
prepayment pursuant to paragraph 4B(1), give telephonic
notice of the principal amount of the Notes to be prepaid
and the prepayment date to each Significant Holder which
shall have designated a recipient for such notices in the
purchaser schedule attached to the applicable Confirmation
of Acceptance or by notice in writing to the Issuer.
4D. Application of Prepayments. In the case of
each prepayment pursuant to paragraphs 4A or 4B of less than
the entire unpaid principal amount of all outstanding Notes
of any Series, the amount to be prepaid shall be applied pro
rata to all outstanding Notes of such Series (including, for
the purpose of this paragraph 4D only, all Notes of such
Series prepaid or otherwise retired or purchased or
otherwise acquired by the Issuer or any of its Subsidiaries
or Affiliates other than by prepayment pursuant to
paragraphs 4A or 4B) according to the respective unpaid
principal amounts thereof.
4E. Retirement of Notes. The Issuer shall not,
and shall not permit any of its Subsidiaries or Affiliates
to, prepay or otherwise retire in whole or in part prior to
their stated final maturity (other than by prepayment
pursuant to paragraphs 4A or 4B or upon acceleration of such
final maturity pursuant to paragraph 7A), or purchase or
otherwise acquire, directly or indirectly, any Notes of any
Series unless the Issuer or such Subsidiary or Affiliate
shall have offered to prepay or otherwise retire or purchase
or otherwise acquire, as the case may be, the same
proportion of the aggregate principal amount of the Notes of
such Series held by each holder of Notes of such Series at
the time outstanding upon the same terms and conditions.
Any Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Issuer or any of its Subsidiaries
or Affiliates shall not be deemed to be outstanding for any
purpose under this Agreement, except as provided in
paragraph 4D.
5. AFFIRMATIVE COVENANTS.
<PAGE>
5A. Financial Statements. The Company covenants
that it will deliver to each Significant Holder in
triplicate:
(i) as soon as practicable and in any
event within 60 days after the end of each
quarterly period (other than the last
quarterly period) in each fiscal year,
consolidated statements of income, partners'
equity or shareholders' equity (as the case
may be) and cash flows of the Company and its
Subsidiaries for (a) such quarterly period
and (b) the period of four consecutive fiscal
quarters ended on the last day of such
quarterly period, and a consolidated balance
sheet of the Company and its Subsidiaries as
at the end of such quarterly period, setting
forth in each case in comparative form
figures for the corresponding period in the
preceding fiscal year or years, all in
reasonable detail and certified by an
authorized financial officer of the Company,
subject to changes resulting from year-end
adjustments; provided, however, that delivery
pursuant to clause (iii) below of copies of
the Quarterly Report on Form 10-Q of the
Company for such quarterly period filed with
the Securities and Exchange Commission shall
be deemed to satisfy the requirements of this
clause (i);
(ii) as soon as practicable and in any
event within 120 days after the end of each
fiscal year, consolidated statements of
income, partners' equity and cash flows of
the Company and its Subsidiaries for such
year, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of
such year, setting forth in each case in
comparative form corresponding consolidated
figures from the preceding annual audit, all
in reasonable detail and satisfactory in form
to the Required Holder(s), and reported on by
independent public accountants of recognized
national standing selected by the Company
whose report shall be without limitation as
to scope of the audit and satisfactory in
substance to the Required Holder(s);
provided, however, that delivery pursuant to
clause (iii) below of copies of the Annual
Report on Form 10-K of the Company for such
fiscal year filed with the Securities and
Exchange Commission shall be deemed to
satisfy the requirements of this clause (ii);
(iii) promptly upon transmission
thereof, copies of all such financial
statements, proxy statements, notices and
reports as the Company shall send to its
Limited Partners generally and copies of all
registration statements (without exhibits),
other than registration statements on Form S-
8 or any successor form, and all reports
which it files with the Securities and
Exchange Commission (or any governmental body
or agency succeeding to the functions of the
Securities and Exchange Commission); and
<PAGE>
(iv) with reasonable promptness, such
other financial data (including, without
limitation, consolidating financial
statements and a copy of each other report
submitted to the Company or any Subsidiary by
independent accountants in connection with
any annual, interim or special audit made by
them of the books of the Company or any
Subsidiary) as such Significant Holder may
reasonably request.
Together with each delivery of financial statements required
by clauses (i) and (ii) above, the Company will deliver to
each Significant Holder an Officer's Certificate (a) setting
forth (except to the extent specifically set forth in such
financial statements) the aggregate amounts of interest
accrued on Funded Debt and Current Debt of the Company and
Subsidiaries during the fiscal period covered by such
financial statements, and the aggregate amounts of
depreciation on physical property charged on the books of
the Company and Subsidiaries (if any) during such fiscal
period, (b) demonstrating (with computations in reasonable
detail) compliance by the Company and its Subsidiaries with
paragraph 6A(2), 6C and 6D (including, without limitation,
identification of the most recent forty-five consecutive day
period at all times during which Consolidated Debt did not
exceed 60% of Gross Worth) and, to the extent Debt secured
by Liens described in clauses (v) and (vi) of paragraph
6A(1) exceeds $5,000,000, demonstrating compliance with
clauses (v) and (vi) of paragraph 6A(1), in each case
during and at the end of such fiscal period and (c) stating
that there exists no Event of Default or Default or, if any
Event of Default or Default exists, specifying the nature
thereof, the period of existence thereof and what action the
Company proposes to take with respect thereto. Together
with each delivery of financial statements required by
clause (ii) above, the Company will deliver to each
Significant Holder a certificate of such accountants stating
that, in making the audit necessary to the certification of
such financial statements, they have obtained no knowledge
of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default,
specifying the nature and period of existence thereof
(provided that such accountants shall not be liable to
anyone by reason of their failure to obtain knowledge of any
such Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance
with generally accepted auditing standards).
The Company also covenants that forthwith
upon any Responsible Officer obtaining knowledge of an Event
of Default or Default, it will deliver to each Significant
Holder an Officer's Certificate specifying the nature and
period of existence thereof and what action the Company
proposes to take with respect thereto.
<PAGE>
5B. Inspection of Property. The Company
covenants that it will permit any Person designated by any
Significant Holder in writing, at such Significant Holder's
expense, to visit and inspect any of the properties of the
Company and its Subsidiaries, to examine the corporate books
and financial records of the Company and its Subsidiaries
and make copies thereof or extracts therefrom and to discuss
the affairs, finances and accounts of any of such entities
with the officers and directors of the Managing General
Partner and the directors, officers and independent
accountants of the Co-Issuers, all at such reasonable times
and as often as such Significant Holder may reasonably
request.
5C. Covenant to Secure Note Equally. The Company
covenants that, if it or any Subsidiary shall create or
assume any Lien upon any of its property or assets, whether
now owned or hereafter acquired, other than Liens permitted
by the provisions of paragraph 6A(1) (unless prior written
consent to the creation or assumption thereof shall have
been obtained pursuant to paragraph 11C), it will make or
cause to be made effective provision whereby the Notes will
be secured by such Lien equally and ratably with any and all
other Debt thereby secured so long as any such other Debt
shall be so secured.
5D. Information Required by Rule 144A. The
Company covenants that it will, upon the request of the
holder of any Note, provide such holder, and any qualified
institutional buyer designated by such holder, such
financial and other information as such holder may
reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A
under the Securities Act in connection with the resale of
Notes, except at such times as the Company is subject to the
reporting requirements of section 13 or 15(d) of the
Exchange Act. For the purpose of this paragraph 5D, the
term "qualified institutional buyer" shall have the meaning
specified in Rule 144A under the Securities Act.
5E. Compliance With Environmental Laws. The
Company will, and will cause each of its Subsidiaries to,
comply in a timely fashion with, or operate pursuant to
valid waivers of the provisions of, all Environmental Laws,
except where noncompliance would not materially adversely
affect the business, condition (financial or other) or
operations of the Company and its Subsidiaries taken as a
whole.
5F. Maintenance of Insurance. The Company
covenants that it and each of its Subsidiaries will maintain
insurance in such amounts and against such casualties,
liabilities, risks, contingencies and hazards as is
customarily maintained by other similarly situated companies
operating similar businesses and, upon request of a
Significant Holder, it will deliver an Officers' Certificate
specifying the details of such insurance then in effect.
<PAGE>
5G. Minimum Assets. The Co-Issuers covenant and
agree that (i) the unconsolidated total assets of the Co-
Issuers shall at all times constitute at least 70% of the
consolidated total assets of the Company and its
Subsidiaries and (ii) the unconsolidated assets of the
Company shall at all times constitute at least 40% of the
consolidated total assets of the Company and its
Subsidiaries.
5H. Most Favored Covenant Status, etc. Should
the Company or its Subsidiaries at any time after the date
hereof, issue or guarantee any unsecured indebtedness
denominated in U.S. dollars for money borrowed or
represented by bonds, notes, debentures or similar
securities in an aggregate amount exceeding $5,000,000 to
any lender or group of lenders acting in concert with one
another or one or more institutional investors, pursuant to
a loan agreement, credit agreement, note purchase agreement,
indenture, guaranty or other similar instrument, which
agreement, indenture, guaranty or instrument, includes
affirmative or negative business or financial covenants (or
any events of default or other type of restriction which
would have the practical effect of any affirmative or
negative business or financial covenant, including, without
limitation, any "put" or mandatory prepayment or redemption
of any such indebtedness upon the occurrence of a designated
event) which are applicable to the Company or any
Significant Subsidiary, other than those set forth herein,
the Company shall promptly so notify the holders of the
Notes and, if the Required Holder(s) shall so request by
written notice to the Company (after a determination has
been made by the Required Holder(s) that any of the above-
referenced documents or instruments contain any such
provisions, which either individually or in the aggregate,
are more favorable to the holders of such unsecured
Indebtedness than any of the provisions set forth herein),
the Co-Issuers and the Required Holder(s) shall promptly
amend this Agreement to incorporate some or all of such
provisions, in the discretion of the Required Holder(s),
into this Agreement and, to the extent necessary and
reasonably desirable to the Required Holder(s), all at the
election of the Required Holder(s).
5I. Senior Debt. The Co-Issuers will at all
times ensure that (a) the claims of the holders of the Notes
under this Agreement and the Notes will not be subordinate
to, and will in all respects at least rank pari passu with,
the claims of every other senior unsecured creditor of such
Co-Issuer and (b) any Indebtedness subordinated in any
manner to the claims of any other senior unsecured creditor
of either Co-Issuer will be subordinated in like manner to
such claims of the holders of the Notes.
6. NEGATIVE COVENANTS. The provisions of this
paragraph 6 shall remain in effect so long as any Note shall
remain outstanding or any other amount shall be owing
hereunder.
6A. Lien, Debt and Other Restrictions. The
Company covenants that it will not and will not permit any
Subsidiary to (and Knott's Berry Farm covenants that it will
not take any action that will cause non-compliance with any
of the following):
<PAGE>
6A(1). Liens. Create, assume or suffer to
exist any Lien upon any of its property or assets, whether
now owned or hereafter acquired (whether or not provision is
made for the equal and ratable securing of the Notes in
accordance with the provisions of paragraph 5C), except
(i) Liens for taxes not yet due or
which are being actively contested in good
faith by appropriate proceedings,
(ii) other Liens incidental to the
conduct of its business or the ownership of
its property and assets which were not
incurred in connection with the borrowing of
money or the obtaining of advances or credit,
and which do not in the aggregate materially
detract from the value of its property or
assets or materially impair the use thereof
in the operation of its business,
(iii) subject to the limitation set
forth in clause (iii) of paragraph 6A(2),
Liens on property or assets of a Subsidiary
to secure obligations of such Subsidiary to
the Company or another Subsidiary,
(iv) Liens consisting of Capitalized
Leases if the Funded Debt represented by the
related Capitalized Lease Obligations is
permitted by paragraph 6A(2),
(v) any Lien existing on any property
of any corporation at the time it becomes a
Subsidiary, or existing prior to the time of
acquisition upon any property acquired by the
Company or any Subsidiary through purchase,
merger or consolidation or otherwise, whether
or not assumed by the Company or such
Subsidiary, or placed upon property at the
time of acquisition by the Company or any
Subsidiary to secure all or a portion of (or
to secure Debt incurred to pay all or a
portion of) the purchase price thereof,
provided that (a) such property is not and
shall not thereby become encumbered in an
amount in excess of 80% of the lesser of the
cost thereof or the fair value (as determined
in good faith by the board of directors of
the Managing General Partner or the Company,
as the case may be) thereof at the time such
corporation becomes a Subsidiary or at the
time of acquisition of such property by the
Company or a Subsidiary, as the case may be,
(b) any such Lien shall not encumber any
other property (except related replacement
parts) of the Company or such Subsidiary, and
(c) the aggregate amount of Debt secured by
all such Liens and any Liens permitted by
clause (iv) above and clause (vi) below at
any one time outstanding shall be permitted
by paragraph 6A(2), and
<PAGE>
(vi) any Lien renewing, extending or
refunding any Lien permitted by clause (v)
above if the aggregate amount of Debt secured
by all such Liens and any Lien permitted by
clauses (iv) and (v) above at any one time
outstanding shall be permitted by paragraph
6A(2), provided that the principal amount
secured is not increased, and the Lien is not
extended to other property;
6A(2). Debt. Create, incur, assume, guarantee,
suffer to exist, or otherwise be or become directly or
indirectly liable for, any Funded or Current Debt, except
(i) Funded Debt of the Company
represented by the Notes,
(ii) Funded or Current Debt of any
Subsidiary to the Company,
(iii) Funded or Current Debt of any
Subsidiary to any other Subsidiary, provided
that no Subsidiary shall become liable for or
suffer to exist any Debt permitted by this
clause (iii) unless the Subsidiary to which
such Debt is owed shall be free from any Debt
to any Person other than the Company, and
(iv) other Debt of the Company or any
Subsidiary; provided that (a) Consolidated
Debt shall at no time exceed 70% of Gross
Worth, (b) at all times during a period of at
least forty-five consecutive days in each
rolling twelve month period, Consolidated
Debt shall not exceed 60% of Gross Worth and
(c) Priority Debt shall at no time exceed
20% of Owners' Equity;
6A(3). Loans, Advances, Investments and
Contingent Liabilities. Make or permit to remain
outstanding any loan or advance to, or guarantee, endorse or
otherwise be or become contingently liable, directly or
indirectly, in connection with the obligations, stock, or
dividends of, or own, purchase or acquire any stock,
obligations or securities of, or any other interest in, or
make or maintain any capital contribution to, any Person,
except that the Company and its Subsidiaries may
(i) subject to paragraph 6A(2), make or
permit to remain outstanding loans or
advances to the Company or any Subsidiary,
(ii) subject to paragraph 6A(2), own,
purchase or acquire stock, obligations or
securities of a Subsidiary or of a
corporation which immediately after such
purchase or acquisition will be a Subsidiary,
(iii) acquire and own stock,
obligations or securities received in
settlement of debts (created in the ordinary
course of business) owing to the Company or
any Subsidiary,
<PAGE>
(iv) own, purchase or acquire commercial
paper rated Prime-1 by Moody's Investors
Service, Inc. or A-1 or better by Standard &
Poor's Corporation on the date of acquisition
and certificates of deposit of, bankers'
acceptances issued by, and eurodollar
deposits with United States commercial banks
(having capital resources in excess of
$100,000,000, and, in the case of eurodollar
deposits, issued by such bank through its
head office or a branch office in London or
Tokyo), in each case due within one year from
the date of acquisition and payable in the
United States in United States dollars,
obligations of the United States Government
or any agency thereof backed by the full
faith and credit of the United States
Government, obligations guaranteed by the
United States Government, and repurchase
agreements of such banks for terms of less
than one year in respect of the foregoing
certificates and obligations,
(v) endorse negotiable instruments for
collection in the ordinary course of
business,
(vi) guarantee or otherwise become
directly or indirectly liable for Debt to the
extent the Debt is permitted by paragraph
6A(2) (including, without limitation, the
limitation on Priority Debt set forth
therein),
(vii) make or permit to remain
outstanding travel, relocation and other like
advances to officers and employees in the
ordinary course of business, and
(viii) make or permit to remain
outstanding any loans or advances to, any
guarantees for the benefit of, or any
investments in, any Person not otherwise
permitted by this paragraph 6A(3) up to an
aggregate amount outstanding which shall not
exceed an amount equal to 15% of Owners'
Equity at any time;
6A(4). Sale of Stock and Debt of Subsidiaries.
Except to the Company or a 75%-owned Subsidiary, sell or
otherwise dispose of, or part with control of, any shares of
stock or Debt of any (i) Significant Subsidiary, or (ii)
other Subsidiary, if at the time of such sale or other
disposition, such other Subsidiary owns, directly or
indirectly, any shares of stock or Debt of any Significant
Subsidiary or any Debt of the Company;
<PAGE>
6A(5). Merger and Sale of Assets. Merge or
consolidate with any corporation or sell, lease, transfer or
otherwise dispose, in any single transaction or series of
related transactions, of assets which shall have contributed
10% or more to Consolidated Pre-Tax Income for any of the
three fiscal years then most recently ended, or assets whose
aggregate fair value (as determined in good faith by the
board of directors of the Managing General Partner or the
Company, as the case may be) shall exceed 10% of
Consolidated Net Assets, to any Person, except that
(i) any 75%-owned Subsidiary which is
free from any Debt to any Person other than
the Company may merge with any one or more
other 75%-owned Subsidiaries which are free
from any Debt to any Person other than the
Company,
(ii) any Subsidiary may sell, lease,
transfer or otherwise dispose of any of its
assets to the Company or a 75%-owned
Subsidiary,
(iii) any Subsidiary may sell or
otherwise dispose of all or substantially all
of its assets subject to the conditions
specified in paragraph 6A(4) with respect to
a sale of the stock of such Subsidiary,
(iv) the Company may enter into any
merger in which it is the surviving entity,
provided that no Default or Event of Default
would exist immediately after giving effect
thereto,
(v) the Company may, in the ordinary
course of business, sell or otherwise dispose
of (a) buildings and parcels of land not used
in connection with the business of the
Company or any Subsidiary and (b) vehicles,
(vi) any Subsidiary (other than Knott's
Berry Farm) may merge or consolidate with any
other corporation, provided that, immediately
after giving effect to such merger or
consolidation, the continuing or surviving
corporation of such merger or consolidation
shall constitute a Subsidiary and no Default
or Event of Default would exist, and
(vii) Knott's Berry Farm may merge
or consolidate with any other corporation,
provided that, (a) it is the continuing and
surviving entity in the case of any merger or
consolidation with any Person other than the
Company and (b) immediately after giving
effect to such merger or consolidation no
Default or Event of Default would exist;
<PAGE>
6A(6). Transactions with Related Persons.
Directly or indirectly, purchase, acquire or lease any
property from, or sell, transfer or lease any property to,
or otherwise deal with, in the ordinary course of business
or otherwise, any Related Person, except (i) pursuant to the
terms of the Partnership Agreement or (ii) on an arm's-
length basis and on terms no less favorable to the Company
and its Subsidiaries (as determined in good faith by the
board of directors of the Managing General Partner or the
Company, as the case may be) than terms which would have
been obtainable from a Person other than a Related Person.
6B. Issuance of Stock by Subsidiaries. The
Company covenants that it will not permit any Subsidiary
(either directly, or indirectly by the issuance of rights or
options for, or securities convertible into, such shares or
other equity interest) to issue, sell or otherwise dispose
of any shares of any class of its stock or other equity
interest (other than directors' qualifying shares) except to
the Company or a 75%-owned Subsidiary.
6C. Bank Defined Indebtedness/Consolidated EBITDA
Ratio. The Company will not at any time permit the ratio of
(i) the amount of its Consolidated Debt at such time to (ii)
its Consolidated EBITDA for the Testing Period most recently
ended, to exceed 3.00 to 1.00 at any time.
6D. Interest Coverage Ratio. The Company will
not permit its Interest Coverage Ratio for any Testing
Period ending on or prior to December 31, 1998 to be less
than 3.00 to 1.00, or for any Testing Period thereafter to
be less than 3.50 to 1.00.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise):
(i) the Issuer defaults in the payment
of any principal of or Yield-Maintenance
Amount on any Note when the same shall become
due, either by the terms thereof or otherwise
as herein provided; or
(ii) the Issuer defaults in the payment
of any interest on any Note for more than 10
days after the date due; or
<PAGE>
(iii) either Co-Issuer or any
Subsidiary defaults in any payment of
principal of or interest on any other
obligation for money borrowed (or any
Capitalized Lease Obligation, any obligation
under a conditional sale or other title
retention agreement, any obligation issued or
assumed as full or partial payment for
property whether or not secured by a purchase
money mortgage or any obligation under notes
payable or drafts accepted representing
extensions of credit) beyond any period of
grace provided with respect thereto, or
either Co-Issuer or any Subsidiary fails to
perform or observe any other agreement, term
or condition contained in any agreement under
which any such obligation is created (or if
any other event thereunder or under any such
agreement shall occur and be continuing) and
the effect of such failure or other event is
to cause, or to permit the holder or holders
of such obligation (or a trustee on behalf of
such holder or holders) to cause, such
obligation to become due (or to be
repurchased by either Co-Issuer or any
Subsidiary) prior to any stated maturity,
provided that the aggregate amount of all
obligations as to which such a payment
default shall occur and be continuing or such
a failure or other event permitting
acceleration (or sale to either Co-Issuer or
any Subsidiary) shall occur and be continuing
exceeds $15,000,000; or
(iv) any representation or warranty made
by either Co-Issuer herein or in any writing
furnished in connection with or pursuant to
this Agreement shall be false in any material
respect on the date as of which made; or
(v) either Co-Issuer fails to perform
or observe any agreement contained in
paragraph 6 hereof; or
(vi) either Co-Issuer fails to perform
or observe any other agreement, term or
condition contained herein and such failure
shall not be remedied within 30 days after
any Responsible Officer has actual knowledge
thereof; or
(vii) either Co-Issuer or any
Significant Subsidiary makes an assignment
for the benefit of creditors or is generally
not paying its debts as such debts become
due; or
(viii) any decree or order for relief
in respect of either Co-Issuer or any
Significant Subsidiary is entered under any
bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar
law, whether now or hereafter in effect
(herein called the "Bankruptcy Law"), of any
jurisdiction; or
<PAGE>
(ix) either Co-Issuer or any Significant
Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment
of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar
official of either Co-Issuer or any
Significant Subsidiary, or of any substantial
part of the assets of either Co-Issuer or any
Significant Subsidiary, or commences a
voluntary case under the Bankruptcy Law of
the United States or any proceedings (other
than proceedings for the voluntary
liquidation and dissolution of a Subsidiary)
relating to either Co-Issuer or any
Significant Subsidiary under the Bankruptcy
Law of any other jurisdiction; or
(x) any such petition or application is
filed, or any such proceedings are commenced,
against either Co-Issuer or any Significant
Subsidiary and either Co-Issuer or such
Significant Subsidiary by any act indicates
its approval thereof, consent thereto or
acquiescence therein, or an order, judgment
or decree is entered appointing any such
trustee, receiver, custodian, liquidator or
similar official, or approving the petition
in any such proceedings, and such order,
judgment or decree remains unstayed and in
effect for more than 60 days; or
(xi) any order, judgment or decree is
entered in any proceedings against either Co-
Issuer decreeing the dissolution of either Co-
Issuer and such order, judgment or decree
remains unstayed and in effect for more than
60 days; or
(xii) any order, judgment or decree
is entered in any proceedings against either
Co-Issuer or any Significant Subsidiary
decreeing a split-up of either Co-Issuer or
such Significant Subsidiary which requires
the divestiture of assets representing a
substantial part, or the divestiture of the
stock of a Significant Subsidiary whose
assets represent a substantial part, of the
consolidated assets of the Company and its
Significant Subsidiaries (determined in
accordance with generally accepted accounting
principles) or which requires the divestiture
of assets, or stock of a Significant
Subsidiary, which shall have contributed a
substantial part of the consolidated net
income of the Company and its Significant
Subsidiaries (determined in accordance with
generally accepted accounting principles) for
any of the three fiscal years then most
recently ended, and such order, judgment or
decree remains unstayed and in effect for
more than 60 days; or
<PAGE>
(xiii) one or more final judgments
for the payment of money, the uninsured
portion of which in aggregate amount exceeds
$5,000,000, is rendered against either Co-
Issuer or any Subsidiary and, within 60 days
after entry thereof, any such judgment is not
discharged or execution thereof stayed
pending appeal, or within 60 days after the
expiration of any such stay, such judgment is
not discharged; or
(xiv) either Co-Issuer or any ERISA
Affiliate, in its capacity as an employer
under a Multiemployer Plan, makes a complete
or partial withdrawal from such Multiemployer
Plan resulting in the incurrence by such
withdrawing employer of a withdrawal
liability in an amount exceeding $5,000,000;
then (a) if such event is an Event of Default specified in
clause (i) or (ii) of this paragraph 7A, the holder of any
Note (other than Knott's Berry Farm, the Company or any of
its Subsidiaries or Affiliates) may at its option, by notice
in writing to the Issuer, declare such Note to be, and such
Note shall thereupon be and become, immediately due and
payable at par together with interest accrued thereon,
without presentment, demand, protest or additional notice of
any kind, all of which are hereby waived by the Issuer, (b)
if such event is an Event of Default specified in clause
(viii), (ix) or (x) of this paragraph 7A with respect to the
Issuer, all of the Notes at the time outstanding shall
automatically become immediately due and payable together
with interest accrued thereon and together with the Yield-
Maintenance Amount, if any, with respect to each Note,
without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Co-Issuers, and (c)
with respect to any event constituting an Event of Default
hereunder, the Required Holder(s) of the Notes of any Series
may at its or their option, by notice in writing to the
Issuer, declare all of the Notes of such Series to be, and
all of such Notes shall thereupon be and become, immediately
due and payable together with interest accrued thereon and
together with the Yield-Maintenance Amount, if any, with
respect to each such Note, without presentment, demand,
protest or additional notice of any kind, all of which are
hereby waived by the Co-Issuers.
7B. Notice of Acceleration. Whenever any Note
shall be declared immediately due and payable pursuant to
paragraph 7A the Issuer shall forthwith give written notice
thereof to the holder of each Note of each Series at the
time outstanding.
<PAGE>
7C. Other Remedies. If any Event of Default or
Default shall occur and be continuing, the holder of any
Note may proceed to protect and enforce its rights under
this Agreement and such Note by exercising such remedies as
are available to such holder in respect thereof under
applicable law, either by suit in equity or by action at
law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or
in aid of the exercise of any power granted in this
Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative
and shall be in addition to every other remedy conferred
herein or now or hereafter existing at law or in equity or
by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
The Co-Issuers represent, covenant and warrant as follows:
8A(1). Company Organization and Qualification.
The Company is a limited partnership duly organized and
existing in good standing under the laws of the State of
Delaware, has the power to own its properties and to carry
on its business as now being conducted and is duly qualified
to do business as a foreign limited partnership and is in
good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the
business transacted by it requires it to be so qualified
under applicable law, except where the failure to be so
qualified would not have a material adverse effect upon the
Company and its Subsidiaries taken as a whole. Each
Subsidiary is a corporation duly organized and existing in
good standing under the laws of its state of incorporation,
has the corporate power to own its properties and to carry
on its business as now being conducted and is duly qualified
to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the
business transacted by it requires it to be so qualified
under applicable law, except where the failure to be so
qualified would not have a material adverse effect upon such
Subsidiary. The Co-Issuers have the power and authority to
enter into, execute, deliver and perform this Agreement and
the Notes; this Agreement constitutes the Company's valid
and binding obligation; and each Note will upon its issuance
constitute the Company's valid and binding obligation. The
Partnership Agreement has been duly authorized, executed and
delivered by the Partners, is a valid, legal and binding
agreement of the Partners, and has been duly filed in all
places where such filing is required.
<PAGE>
8A(2). Knott's Berry Farm Organization and
Qualification. Knott's Berry Farm is a general partnership
duly organized and existing in good standing under the laws
of California, has the power to own its properties and to
carry on its business as now being conducted and is duly
qualified to do business as a foreign partnership and is in
good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the
business transacted by it requires it to be so qualified
under applicable law, except where the failure to be so
qualified would not have a material adverse effect upon the
Company and its Subsidiaries taken as a whole. Knott's
Berry Farm has the power and authority to enter into,
execute, deliver and perform this Agreement and the Notes
executed by it; this Agreement constitutes Knott's Berry
Farm's valid and binding obligation; and each Note executed
by Knott's Berry Farm will upon its issuance constitute
Knott's Berry Farm's valid and binding obligation The KBF
Partnership Agreement has been duly authorized; executed and
delivered by the parties thereto, is a valid legal and
binding agreement of such parties, and has been duly filed
in all places where such filing is required.
8B. Financial Statements. The Company has
furnished each Purchaser of any Accepted Notes with the
following financial statements, identified by a principal
financial officer of the Company: (i) consolidated balance
sheets of the Company and its Subsidiaries as at the last
day in each of the five fiscal years of the Company most
recently completed prior to the date as of which this
representation is made or repeated to such Purchaser (other
than fiscal years completed within 120 days prior to such
date for which audited financial statements have not been
released) and consolidated statements of income, partners'
equity and cash flows of the Company and its Subsidiaries
for each such year, reported on by Arthur Andersen LLP (or,
with respect to years subsequent to 1993, by Arthur
Andersen LLP or other independent public accountants of
recognized national standing); and (ii) consolidated balance
sheets of the Company and its Subsidiaries as at the end of
the quarterly period (if any) most recently completed prior
to such date and after the end of such fiscal year (other
than quarterly periods completed within 60 days prior to
such date for which financial statements have not been
released) and the comparable quarterly period in the
preceding fiscal year and consolidated statements of income,
partners' equity and cash flows for (a) such quarterly
periods and (b) the period of four consecutive fiscal
quarters ended on the last day of such quarterly periods,
prepared by the Company. Such financial statements
(including any related schedules and/or notes) are true and
correct in all material respects (subject, as to interim
statements, to changes resulting from audits and normal year-
end adjustments), have been prepared in accordance with
generally accepted accounting principles consistently
followed throughout the periods involved and show all
liabilities, direct and contingent, of the Company and its
Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition
of the Company and its Subsidiaries as at the dates thereof,
and the statements of income, partners' equity and cash
flows fairly present the results of the operations of the
Company and its Subsidiaries for the periods indicated.
There has been no material adverse change in the business,
condition or operations (financial or otherwise) of the
Company and its Subsidiaries taken as a whole since the end
of the most recent fiscal year for which such audited
financial statements have been furnished.
<PAGE>
8C. Actions Pending. There are no actions,
suits, investigations or proceedings pending or, to the
knowledge of the elected officers of the Co-Issuers or the
Managing General Partner, threatened against the Co-Issuers
or any of the Company's Subsidiaries, or any properties or
rights of the Co-Issuers or any of the Company's
Subsidiaries, by or before any court, arbitrator or
administrative or governmental body which individually or in
aggregate might result in any material adverse change in the
business, condition or operations of the Company and its
Subsidiaries taken as a whole.
8D. Outstanding Debt. Neither the Co-Issuer nor
any of the Company's Subsidiaries has outstanding any Debt
except as permitted by paragraph 6A(2). There exists no
default under the provisions of any instrument evidencing
such Debt or of any agreement relating thereto.
8E. Title to Properties. Each Co-Issuer has and
each of the Company's Subsidiaries has good and marketable
title to its respective real properties (other than
properties which it leases) and good title to all of its
other respective properties and assets, including the
properties and assets reflected in the most recent audited
balance sheet referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of
business), subject to no Lien of any kind except Liens
permitted by paragraph 6A(1). All leases necessary in any
material respect for the conduct of the business of the Co-
Issuers and the Company's Subsidiaries taken as a whole are
valid and subsisting and are in full force and effect.
8F. Taxes. Each Co-Issuer has and each of the
Company's Subsidiaries has filed all Federal, State and
other income tax returns which, to the best knowledge of the
elected officers of the Co-Issuers or the Managing General
Partner, are required to be filed, and each has paid all
taxes as shown on such returns and on all assessments
received by it to the extent that such taxes have become
due, except such taxes as are being contested in good faith
by appropriate proceedings for which adequate reserves have
been established in accordance with generally accepted
accounting principles.
<PAGE>
8G. Conflicting Agreements and Other Matters.
Neither Co-Issuer nor any of the Company's Subsidiaries is a
party to any contract or agreement or subject to any
partnership agreement, charter or other partnership or
corporate restriction which materially and adversely affects
the business (as presently conducted), property, assets or
financial condition of the Company and its Subsidiaries
taken as a whole. Neither the execution nor delivery of
this Agreement or the Notes, nor the offering, issuance and
sale of the Notes, nor fulfillment of nor compliance with
the terms and provisions hereof and of the Notes will
conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under,
or result in any violation of, or result in the creation of
any Lien upon any of the properties or assets of the Co-
Issuers or any of the Company's Subsidiaries pursuant to,
the Partnership Agreement, the KBF Partnership Agreement or
the charter, by-laws or code of regulations of any
Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with partners or stockholders),
instrument, order, judgment, decree, statute, law, rule or
regulation to which either Co-Issuer or any of the Company's
Subsidiaries is a party or otherwise subject. Neither Co-
Issuer nor any of the Company's Subsidiaries is a party to,
or otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of either Co-Issuer or
any Subsidiary, any agreement relating thereto or any other
contract or agreement (including the Partnership Agreement,
the KBF Partnership Agreement and, in the case of any
Subsidiary, its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of
either Co-Issuer of the type to be evidenced by the Notes
except (i) as of the date of this Agreement, as set forth in
the agreements listed in Schedule 8G attached hereto and
(ii) as of any date subsequent to the date of this Agreement
when this representation is repeated, as set forth in the
agreements listed in Schedule 8G or as theretofore disclosed
to Prudential in a writing which by its terms modifies
Schedule 8G.
8H. Offering of Notes. Neither Co-Issuer nor any
agent acting on their behalf has, directly or indirectly,
offered the Notes or any similar security of the Issuer for
sale to, or solicited any offers to buy the Notes or any
similar security of the Issuer from, or otherwise approached
or negotiated with respect thereto with, any Person other
than institutional investors, and neither the Co-Issuer nor
any agent acting on their behalf has taken or will take any
action which would subject the issuance or sale of the Notes
to the provisions of section 5 of the Securities Act or to
the provisions of any securities of Blue Sky law of any
applicable jurisdiction.
<PAGE>
8I. Regulation G, etc. Neither Co-Issuer nor any
Subsidiary will, directly or indirectly, use any of the
proceeds of the sale of the Notes for the purpose, whether
immediate, incidental or ultimate, of buying a "margin
stock" or of maintaining, reducing or retiring any
indebtedness originally incurred to purchase a stock that is
currently a "margin stock", or for any other purpose which
might constitute any purchase and sale of Notes hereunder a
"purpose credit", in each case within the meaning of
Regulation G of the Board of Governors of the Federal
Reserve System (12 C.F.R. 207, as amended). Neither Co-
Issuer nor any agent acting on their behalf has taken or
will take any action which might cause this Agreement or the
Notes to violate Regulation G, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Exchange Act of 1934, as
amended, in each case as in effect now or as the same may
hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, exists with respect to any
Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected
by either Co-Issuer or any ERISA Affiliate to be incurred
with respect to any Plan (other than a Multiemployer Plan)
by either Co-Issuer or any Subsidiary or any ERISA Affiliate
which is or would be materially adverse to the Company and
its Subsidiaries taken as a whole. Neither Co-Issuer, any
Subsidiary nor any ERISA Affiliate has incurred or presently
expects to incur any withdrawal liability under Title IV of
ERISA with respect to any Multiemployer Plan which is or
would be materially adverse to the Company and its
Subsidiaries taken as a whole. The execution and delivery
of this Agreement and the issuance and sale of the Notes
will not involve any transaction which is subject to the
prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975 of the
Code. The representation by the Co-Issuers in the next
preceding sentence is made in reliance upon and subject to
the accuracy of the representation in paragraph 9B as to the
source of the funds to be used to pay the purchase price of
the Notes to be purchased.
8K. Governmental Consent. Neither the nature of
either Co-Issuer or of any Subsidiary, nor any of their
respective businesses or properties, nor any relationship
between either Co-Issuer or any Subsidiary and any other
Person, nor any circumstance in connection with the
offering, issuance, sale or delivery of the Notes is such as
to require any authorization, consent, approval, exemption
or other action by or notice to or filing with any court or
administrative or governmental body (other than routine
filings after the date of closing with the Securities and
Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this
Agreement, the offering, issuance, sale or delivery of the
Notes or fulfillment of or compliance with the terms and
provisions hereof or of the Notes.
<PAGE>
8L. Environmental Compliance. The Co-Issuers and
the Company's Subsidiaries are in substantial compliance
with any and all Environmental Laws including, without
limitation, all Environmental Laws in all jurisdictions in
which any of them owns or operates, or has owned or
operated, a facility or site, arranges or has arranged for
disposal or treatment of hazardous substances, solid waste
or other wastes, accepts or has accepted for transport any
hazardous substances, solid waste or other wastes or holds
or has held any interest in real property or otherwise. No
material litigation or proceeding arising under, relating to
or in connection with any Environmental Law is pending or,
to the best knowledge of the Co-Issuers, threatened against
either Co-Issuer or any Subsidiary, any real property in
which any thereof holds or has held an interest or any past
or present operation of any thereof. No release, threatened
release or disposal of hazardous waste, solid waste or other
wastes is occurring, or has occurred, on, under or to any
real property in which either Co-Issuer or any Subsidiary
holds any interest or performs any of its operations, in
violation of any Environmental Law the violation of which
could reasonably be expected to have a material adverse
effect on the Company or its Subsidiaries. As used in this
paragraph, "litigation or proceeding" means any demand,
claim, notice, suit, suit in equity, action, administrative
action, investigation or inquiry whether brought by any
governmental authority, private person or entity or
otherwise, and "material" means the measure of a matter or
matters the exposure with respect to which individually or
together with all other matters described exceeds or can
reasonably be expected to exceed $2,500,000.
8M. Investment Company Status. Neither Co-Issuer
nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended or an
"investment adviser" within the meaning of the Investment
Advisers Act of 1940, as amended.
8N. Disclosure. Neither this Agreement nor any
other document, certificate or statement furnished to any
Purchaser by or on behalf of the Co-Issuers in connection
herewith contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading.
There is no fact peculiar to the Co-Issuers or any of the
Company's Subsidiaries which materially adversely affects or
in the future may (so far as the Co-Issuers can now foresee)
materially adversely affect the business, property, assets
or financial condition of the Company and its Subsidiaries
taken as a whole and which has not been set forth in this
Agreement or in the other documents, certificates and
statements furnished to any Purchaser by or on behalf of the
Company prior to the date hereof in connection with the
transactions contemplated hereby.
8O. Hostile Tender Offers. None of the proceeds
of the sale of any Notes will be used to finance a Hostile
Tender Offer.
<PAGE>
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. Nature of Purchase. Such Purchaser is not
acquiring the Notes purchased by it hereunder with a view to
or for sale in connection with any distribution thereof
within the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times
be and remain within its control.
9B. Source of Funds. The source of the funds
being used by such Purchaser to pay the purchase price of
the Notes being purchased by such Purchaser hereunder
constitutes assets allocated to: (i) the "insurance company
general account" of such Purchaser (as such term is defined
under Section V of the United States Department of Labor's
Prohibited Transaction Class Exemption ("PTCE") 95-60), and
as of the date of the purchase of the Notes such Purchaser
satisfies all of the applicable requirements for relief
under Sections I and IV of PTCE 95-60, (ii) a separate
account maintained by such Purchaser in which no employee
benefit plan, other than employee benefit plans identified
on a list which has been furnished by such Purchaser to the
Issuer, participates to the extent of 10% or more or (iii)
an investment fund, the assets of which do not include any
assets of any employee benefit plan. For the purpose of
this paragraph 9B, the terms "separate account" and
"employee benefit plan" shall have the respective meanings
specified in section 3 of ERISA.
10. DEFINITIONS. For the purpose of this
Agreement, the terms defined in the text of any paragraph
shall have the respective meanings specified therein, and
the following terms shall have the meanings specified with
respect thereto below:
10A. Yield-Maintenance Terms.
"Business Day" shall mean any day other than
a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed.
"Called Principal" shall mean, with respect
to any Note, the principal of such Note that is to be
prepaid pursuant to paragraph 4B (any partial prepayment
being applied in satisfaction of required payments of
principal in inverse order of their scheduled due dates) or
is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Discounted Value" shall mean, with respect
to the Called Principal of any Note, the amount obtained
by discounting all Remaining Scheduled Payments with respect
to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice
and at a discount factor (as converted to reflect the
periodic basis on which interest on such Note is payable, if
interest is payable other than on a semi-annual basis) equal
to the Reinvestment Yield with respect to such Called
Principal.
<PAGE>
"Reinvestment Yield" shall mean, with respect
to the Called Principal of any Note, .50% plus the yield to
maturity implied by (i) the yields reported, as of 10:00
A.M. (New York City local time) on the Business Day next
preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page 678" on the
Dow Jones Markets, Inc. services (Telerate) (or such other
display as may replace Page 678 on the Dow Jones Markets,
Inc. services (Telerate)) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or
if such yields shall not be reported as of such time or the
yields reported as of such time shall not be ascertainable,
(ii) the Treasury Constant Maturity Series yields reported,
for the latest day for which such yields shall have been so
reported as of the Business Day next preceding the
Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations
to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between
reported yields.
"Remaining Average Life" shall mean, with
respect to the Called Principal of any Note, the number of
years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of
the products obtained by multiplying (a) each Remaining
Scheduled Payment of such Called Principal (but not of
interest thereon) by (b) the number of years (calculated to
the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and
the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean,
with respect to the Called Principal of any Note, all
payments of such Called Principal and interest thereon that
would be due on or after the Settlement Date with respect to
such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date.
"Settlement Date" shall mean, with respect to
the Called Principal of any Note, the date on which such
Called Principal is to be prepaid pursuant to paragraph 4B
or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with
respect to any Note, an amount equal to the excess, if any,
of the Discounted Value of the Called Principal of such Note
over the sum of (i) such Called Principal plus (ii) interest
accrued thereon as of (including interest due on) the
Settlement Date with respect to such Called Principal. The
Yield-Maintenance Amount shall in no event be less than
zero.
<PAGE>
10B. Other Terms.
"Acceptance" shall have the meaning specified
in paragraph 2B(5).
"Acceptance Day" shall have the meaning
specified in paragraph 2B(5).
"Acceptance Window" shall have the meaning
specified in paragraph 2B(5).
"Accepted Note" shall have the meaning
specified in paragraph 2B(5).
"Affiliate" shall mean, with respect to any
Person, any other Person directly or indirectly controlling,
controlled by, or under direct or indirect common control
with such first Person. A Person shall be deemed to control
another Person if such first Person possesses, directly or
indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether
through the ownership of voting securities, by contract or
otherwise.
"Authorized Officer" shall mean (i) in the
case of the Co-Issuers, the chief executive officer, the
chief financial officer and the treasurer of the Co-Issuers
or the Managing General Partner, as well as any vice
president thereof designated as an "Authorized Officer" in
the Information Schedule attached hereto or any vice
president thereof designated as an "Authorized Officer" for
the purpose of this Agreement in an Officer's Certificate
executed by the Co-Issuers' or Managing General Partner's
chief executive officer or chief financial officer and
delivered to Prudential, and (ii) in the case of Prudential,
any officer of Prudential designated as its "Authorized
Officer" in the Information Schedule or any officer of
Prudential designated as its "Authorized Officer" for the
purpose of this Agreement in a certificate executed by one
of its Authorized Officers. Any action taken under this
Agreement on behalf of either Co-Issuer by any individual
who on or after the date of this Agreement shall have been
an Authorized Officer of such Co-Issuer or the Managing
General Partner and whom Prudential in good faith believes
to be an Authorized Officer of such Co-Issuer or the
Managing General Partner at the time of such action shall be
binding on the Company even though such individual shall
have ceased to be an Authorized Officer of such Co-Issuer or
the Managing General Partner, and any action taken under
this Agreement on behalf of Prudential by any individual who
on or after the date of this Agreement shall have been an
Authorized Officer of Prudential, and whom the Co-Issuers in
good faith believe to be an Authorized Officer of Prudential
at the time of such action shall be binding on Prudential
even though such individual shall have ceased to be an
Authorized Officer of Prudential.
<PAGE>
"Available Facility Amount" shall have the
meaning specified in paragraph 2B(1).
"Bank Defined Indebtedness" shall mean
"Consolidated Debt" as defined in the Credit Agreement as in
effect on the date hereof and with such modifications to
such definition as the Required Holder(s) may consent to in
writing. No modification or termination of the Credit
Agreement shall affect the continued applicability of the
foregoing reference thereto.
"Bankruptcy Law" shall have the meaning
specified in clause (viii) of paragraph 7A.
"Cancellation Date" shall have the meaning
specified in paragraph 2B(8)(iii).
"Cancellation Fee" shall have the meaning
specified in paragraph 2B(8)(iii).
"Capitalized Lease" shall mean any lease if
the obligation to make rental payments thereunder
constitutes a Capitalized Lease Obligation.
"Capitalized Lease Obligation" shall mean any
rental obligation which, under generally accepted accounting
principles, is or will be required to be capitalized on the
books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest
expense) in accordance with such principles.
"Closing Day" for any Accepted Note shall
mean the Business Day specified for the closing of the
purchase and sale of such Note in the Request for Purchase
of such Note, provided that (i) if the Company and the
Purchaser which is obligated to purchase such Note agree on
an earlier Business Day for such closing, the "Closing Day"
for such Accepted Note shall be such earlier Business Day,
and (ii) if the closing of the purchase and sale of such
Accepted Note is rescheduled pursuant to paragraph 2B(7),
the Closing Day for such Accepted Note, for all purposes of
this Agreement except paragraph 2B(8)(ii), shall mean the
Rescheduled Closing Day with respect to such Closing.
"Code" shall mean the Internal Revenue Code
of 1986, as amended.
"Confirmation of Acceptance" shall have the
meaning specified in paragraph 2B(5).
"Consolidated Debt" shall mean, as of any
time of determination thereof, the sum of (i) Debt of the
Company and Subsidiaries determined on a consolidated basis
and (ii) to the extent in excess of $5,000,000, Debt of the
Company owed to Subsidiaries.
<PAGE>
"Consolidated EBITDA" shall mean
"Consolidated EBITDA" as defined in the Credit Agreement as
in effect on the date hereof and with such modifications to
such definition as the Required Holder(s) may consent to in
writing. No modification or termination of the Credit
Agreement shall affect the continued applicability of the
foregoing reference thereto.
"Consolidated Net Assets" shall mean, as of
any time of determination thereof, with respect to the
Company and Subsidiaries on a consolidated basis, their
assets less, without duplication, all of their (i) current
liabilities, (ii) asset, liability, contingency and other
appropriate reserves, including reserves for depreciation
and amortization expense and for deferred income taxes and
(iii) other liabilities.
"Consolidated Pre-Tax Income" shall mean, for
any period, the consolidated gross revenues of the Company
and its Subsidiaries less all operating and non-operating
expenses of the Company and its Subsidiaries including
current additions to reserves and all other charges of a
proper character except current and deferred taxes on
income, but not including in gross revenues any gains (nor
in expenses any expenses or taxes applicable thereto) in
excess of losses resulting from the sale, conversion or
other disposition of capital assets (i.e., assets other than
current assets), any gains resulting from the write-up of
assets, any equity of the Company or any Subsidiary in the
unremitted earnings of any corporation which is not a
Subsidiary, any earnings of any Person acquired by the
Company or any Subsidiary through purchase, merger or
consolidation or otherwise for any year prior to the year of
acquisition, or any deferred credit representing the excess
of equity in any Subsidiary at the date of acquisition over
the cost of the investment in such Subsidiary.
"Credit Agreement" shall mean the Credit
Agreement dated as of December 19, 1997 among the Company,
Knott's Berry Farm, Cedar Fair and Magnum Management
Corporation, as co-borrowers, Magnum Management Corporation,
as treasury manager for the co-borrowers, the lending
institutions named therein and Keybank National Association
as administrative agent, as amended, restated, supplemented
and otherwise modified from time to time.
"Current Debt" shall mean, with respect to
any Person, all Indebtedness of such Person for borrowed
money which by its terms or by the terms of any instrument
or agreement relating thereto matures on demand or within
one year from the date of the creation thereof and is not
directly or indirectly renewable or extendible at the option
of the debtor to a date more than one year from the date of
the creation thereof, provided that Indebtedness for
borrowed money outstanding under a revolving credit or
similar agreement which obligates the lender or lenders to
extend credit over a period of more than one year shall
constitute Funded Debt and not Current Debt, even though
such Indebtedness by its terms matures on demand or within
one year from the date of the creation thereof.
<PAGE>
"Debt" shall mean Funded Debt and Current
Debt.
"Delayed Delivery Fee" shall have the meaning
specified in paragraph 2B(8)(ii).
"Environmental Laws" shall mean all federal,
state, local and foreign laws relating to pollution or
protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment
(including without limitation ambient air, surface water,
ground water, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes, and any and all rules, regulations,
codes, plans, orders, decrees, judgments, injunctions,
notices or demand letters issued, entered, promulgated or
approved thereunder.
"ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any corporation
which is a member of the same controlled group of
corporations as either Co-Issuer within the meaning of
section 414(b) of the Code, or any trade or business which
is under common control with either Co-issuer within the
meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the
events specified in paragraph 7A, provided that there has
been satisfied any requirement in connection with such event
for the giving of notice, or the lapse of time, or the
happening of any further condition, event or act, and
"Default" shall mean any of such events, whether or not any
such requirement has been satisfied.
"Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
"Facility" shall have the meanings specified
in paragraph 2B(1).
"Facility Fee" shall have the meaning
specified in paragraph 2B(8)(i).
"Funded Debt" shall mean with respect to any
Person, all Indebtedness of such Person which by its terms
or by the terms of any instrument or agreement relating
thereto matures, or which is otherwise payable or unpaid,
more than one year from, or is directly or indirectly
renewable or extendible at the option of the debtor to a
date more than one year (including an option of the debtor
under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more
than one year) from, the date of the creation thereof.
<PAGE>
"General Partner" and "General Partners"
shall mean the Managing General Partner which is the general
partner of the Company, and any Person substituted for or
who succeeds either of them as a general partner pursuant to
the terms of the Partnership Agreement, in each case in such
capacity.
"Gross Worth" shall mean, as of any time of
determination thereof, the sum of Owners' Equity and
Consolidated Debt.
"Guarantee" shall mean, with respect to any
Person, any direct or indirect liability, contingent or
otherwise, of such Person with respect to any indebtedness,
lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or
indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or
indirectly liable, including, without limitation, any such
obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge
of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other
financial condition of the obligor of such obligation, or to
make payment for any products, materials or supplies or for
any transportation or service, regardless of the non-
delivery or non-furnishing thereof, in any such case if the
purpose or intent of such agreement is to provide assurance
that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that
the holders of such obligation will be protected against
loss in respect thereof. The amount of any Guarantee shall
be equal to the outstanding principal amount of the
obligation guaranteed or such lesser amount to which the
maximum exposure of the guarantor shall have been
specifically limited.
"Hedge Treasury Note(s)" shall mean, with
respect to any Accepted Note, the United States Treasury
Note or Notes whose duration (as determined by Prudential)
most closely matches the duration of such Accepted Note.
<PAGE>
"Hostile Tender Offer" shall mean, with
respect to the use of proceeds of any Note, any offer to
purchase, or any purchase of, shares of capital stock of any
corporation or equity interests in any other entity, or
securities convertible into or representing the beneficial
ownership of, or rights to acquire, any such shares or
equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded
on any securities exchange or in any over-the-counter
market, other than purchases of such shares, equity
interests, securities or rights representing less than 5% of
the equity interests or beneficial ownership of such
corporation or other entity for portfolio investment
purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or
the equivalent governing body of such other entity prior to
the date on which the Issuer makes the Request for Purchase
of such Note.
"Indebtedness" shall mean, with respect to
any Person, without duplication, (i) all items (excluding
deferred compensation, items of contingency reserves and
reserves for deferred income taxes) which in accordance with
generally accepted accounting principles would be included
in determining total liabilities as shown on the liability
side of a balance sheet of such Person as of the date on
which Indebtedness is to be determined, (ii) all
indebtedness secured by any Lien on any property or asset
owned or held by such Person subject thereto, whether or not
the indebtedness secured thereby shall have been assumed,
and (iii) all indebtedness of others with respect to which
such Person has become liable by way of Guarantee.
"Intercreditor Agreement" shall have the
meaning specified in paragraph 3G.
"Interest Coverage Ratio" shall mean
"Interest Coverage Ratio" as defined in the Credit Agreement
as in effect on the date hereof and with such modifications
to such definition as the Required Holder(s) may consent to
in writing. No modification or termination of the Credit
Agreement shall affect the continued applicability of the
foregoing reference thereto.
"Issuance Period" shall have the meaning
specified in paragraph 2B(2).
"Issuer" shall mean the Co-Issuers or the
Company, as the case may be or the context requires.
"KBF Partnership Agreement" shall mean the
partnership agreement of Knott's Berry Farm.
"Lien" shall mean any mortgage, pledge,
security interest, encumbrance, lien or charge of any kind
(including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement
to give any financing statement under the Uniform Commercial
Code of any jurisdiction) or any other type of preferential
arrangement for the purpose, or having the effect, of
protecting a creditor against loss or securing the payment
or performance of an obligation.
<PAGE>
"Limited Partner" shall mean any Person who
is or shall become a limited partner of the Company, in such
capacity.
"Managing General Partner" shall mean Cedar
Fair Management Company, an Ohio corporation, and its
successors and assigns.
"Multiemployer Plan" shall mean any Plan
which is a "multiemployer plan" (as such term is defined in
section 4001(a)(3) of ERISA).
"Note" and "Notes" shall have the meaning
specified in paragraph 1.
"Officer's Certificate" shall mean a
certificate signed in the name of the Company by an
Authorized Officer of the Company.
"Owners' Equity" shall mean, as of any time
of determination thereof, the partners' equity or
shareholders' equity (as the case may be) of the Company.
"Partner" shall mean any General Partner or
any Limited Partner.
"Partnership Agreement" shall mean the Third
Amended and Restated Agreement of Limited Partnership of the
Company, dated as of April 21, 1987, among Cedar Fair
Management Company, as General Partner, and the limited
partners named therein, as the same has been and may be
amended or supplemented from time to time.
"Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or
any department or agency thereof.
"Plan" shall mean any "employee pension
benefit plan" (as such term is defined in section 3 of
ERISA) which is or has been established or maintained, or to
which contributions are or have been made, by the Company or
by any trade or business, whether or not incorporated which,
together with the Company, is under common control, as
described in section 414(b) or (c) of the Code.
"Priority Debt" shall mean, as of any time of
determination thereof, (i) Debt of any Subsidiary, excluding
however (a) Debt owed to the Company or another Subsidiary
and (b) Indebtedness which is subject to the terms of the
Intercreditor Agreement and (ii) Debt of the Company secured
by any Lien.
<PAGE>
"Prudential" shall mean The Prudential
Insurance Company of America.
"Prudential Affiliate" shall mean any
corporation or other entity all of the Voting Stock (or
equivalent voting securities or interests) of which is owned
by Prudential either directly or through Prudential
Affiliates.
"Purchaser(s)" shall mean Prudential and each
Prudential Affiliate as purchaser of any Note.
"Related Person" shall mean (i) any General
Partner, (ii) any Person owning 10% or more of the
depository units representing limited partnership interests
in the Company or (iii) any Affiliate of any Person
described in clause (i) or (ii).
"Request for Purchase" shall have the meaning
specified in paragraph 2B(3).
"Required Holder(s)" shall mean the holder or
holders of at least 51% of the aggregate principal amount of
the Notes or of a Series of Notes, as the context may
require, from time to time outstanding.
"Rescheduled Closing Day" shall have the
meaning specified in paragraph 2B(7).
"Responsible Officer" shall mean the chief
executive officer, chief operating officer, treasurer, chief
financial officer or chief accounting officer of the
Company, general counsel of the Company or any other officer
of the Company involved principally in its financial
administration or its controllership function.
"Securities Act" shall mean the Securities
Act of 1933, as amended.
"Series" shall have the meaning specified in
paragraph 1.
"Series A Notes" shall mean the 8.43%
$50,000,000 Series A Notes executed by the Company dated
August 24, 1994 and due August 24, 2006, and any Note
delivered in exchange or substitution therefor pursuant to
this Agreement.
"Significant Holder" shall mean (i)
Prudential and any other Purchaser, so long as Prudential or
such Purchaser shall hold (or be committed under this
Agreement to purchase) any Note, or (ii) any other holder of
at least 5% of the aggregate principal amount of any Series
of Notes from time to time outstanding.
<PAGE>
"Significant Subsidiary" shall mean any
Subsidiary of the Company or any of its Subsidiaries, (i)
having assets which shall have contributed 10% or more of
Consolidated Pre-Tax Income for any of the three fiscal
years then most recently ended, (ii) having assets whose
aggregate fair value (as determined in good faith by the
board of directors of the Managing General Partner or the
Company, as the case may be) shall exceed 10% of the
Consolidated Net Assets or (iii) the sale of which shall
have a material adverse effect on the Company.
"Structuring Fee" shall have the meaning
specified in paragraph 2B(8)(iv).
"Subsidiary" shall mean any corporation or
partnership the majority of the stock of every class of
which, except directors' qualifying shares, or the majority
of equity interest in which shall, at the time as of which
any determination is being made, be owned by the Company
either directly or through Subsidiaries and "75%-owned
Subsidiary" shall mean any corporation or partnership 75% of
the stock of every class of which, except directors'
qualifying shares, or 75% of the equity interest in which
shall, at the time as of which any determination is being
made, be owned by the Company either directly or through a
75%-owned Subsidiary.
"Testing Period" shall mean for any
determination a single period consisting of the four
consecutive fiscal quarters of the Company then last ended
(whether or not such quarters are all within the same fiscal
year).
"Transferee" shall mean any direct or
indirect transferee of all or any part of any Note purchased
under this Agreement.
"Treasury Manager" shall mean Magnum
Management Corporation, a Ohio corporation.
"Voting Stock" shall mean, with respect to
any corporation, any shares of stock of such corporation
whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other
class or classes shall have or might have voting power by
reason of the happening of any contingency).
<PAGE>
10C. Accounting Principles, Terms and
Determinations. All references in this Agreement to
"generally accepted accounting principles" shall be deemed
to refer to generally accepted accounting principles in
effect in the United States at the time of application
thereof. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all determinations
with respect to accounting matters hereunder shall be made,
and all financial statements and certificates and reports as
to financial matters required to be furnished hereunder
shall be prepared, in accordance with generally accepted
accounting principles applied, in the case of any such
unaudited financial statements, certificates and reports, on
a basis consistent with the most recent audited consolidated
financial statements of the Company and its Subsidiaries
delivered pursuant to clause (ii) of paragraph 5A or, if no
such statements have been so delivered, the most recent
audited financial statements referred to in clause (i) of
paragraph 8B.
11. MISCELLANEOUS.
11A. Note Payments. The Issuer of each Note
agrees that, so long as any Purchaser shall hold any Note,
it will make payments of principal thereof and Yield-
Maintenance Amount, if any, and interest thereon, which
comply with the terms of this Agreement, by wire transfer of
immediately available funds for credit to (i) the account or
accounts of Prudential specified in the Purchaser Schedule
attached hereto in the case of any Series B Note, (ii) the
account or accounts as specified in the purchaser schedule
attached to the applicable Confirmation of Acceptance or
(iii) such other account or accounts in the United States as
any Purchaser may designate in writing, notwithstanding any
contrary provision herein or in any Note with respect to the
place of payment. Each Purchaser agrees that, before
disposing of any Note, it will make a notation thereon (or
on a schedule attached thereto) of all principal payments
previously made thereon and of the date to which interest
thereon has been paid. The Co-Issuers agree to afford the
benefits of this paragraph 11A to any Transferee which shall
have made the same agreement as you have made in this
paragraph 11A.
<PAGE>
11B. Expenses. The Co-Issuers jointly and
severally agree, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save
each Purchaser and any Transferee harmless against liability
for the payment of, all out-of-pocket expenses arising in
connection with such transactions, including (i) all
document production and duplication charges and the fees and
expenses of any special counsel engaged by the Purchasers or
any Transferee in connection with this Agreement, the
transactions contemplated hereby and any subsequent proposed
modification of, or proposed consent under, this Agreement,
whether or not such proposed modification shall be effected
or proposed consent granted, and (ii) the costs and
expenses, including attorneys' fees, incurred by each
Purchaser or any Transferee in enforcing (or in determining
whether or in what manner to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or
other legal process issued in connection with this Agreement
or the transactions contemplated hereby or by reason of any
Purchaser's or any Transferee's having acquired any Note,
including without limitation costs and expenses incurred in
any bankruptcy case. The obligations of the Co-Issuers
under this paragraph 11B shall survive the transfer of any
Note or portion thereof or interest therein by any Purchaser
or any Transferee and the payment of any Note.
11C. Consent to Amendments. This Agreement may be
amended, and the Co-Issuers and the Company's Subsidiaries
may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, if the Co-
Issuers shall obtain the written consent to such amendment,
action or omission to act, of the Required Holder(s) of the
Notes of each Series except that, (i) with the written
consent of the holders of all Notes of a particular Series,
and if an Event of Default shall have occurred and be
continuing, of the holders of all Notes of all Series, at
the time outstanding (and not without such written
consents), the Notes of such Series may be amended or the
provisions thereof waived to change the maturity thereof, to
change or affect the principal thereof, or to change or
affect the rate or time of payment of interest or Yield-
Maintenance Amount payable with respect to the Notes of such
Series, (ii) without the written consent of the holder or
holders of all Notes at the time outstanding, no amendment
to or waiver of the provisions of this Agreement shall
change or affect the provisions of paragraph 7A or this
paragraph 11C insofar as such provisions relate to
proportions of the principal amount of the Notes of any
Series, or the rights of any individual holder of Notes,
required with respect to any declaration of Notes to be due
and payable or with respect to any consent, (iii) with the
written consent of Prudential (and not without the written
consent of Prudential) the provisions of paragraph 2 may be
amended or waived (except insofar as any such amendment or
waiver would affect any rights or obligations with respect
to the purchase and sale of Notes which shall have become
Accepted Notes prior to such amendment or waiver) and (iv)
with the written consent of all of the Purchasers which
shall have become obligated to purchase Accepted Notes of
any Series (and not without the written consent of all such
Purchasers), any of the provisions of paragraphs 2 and 3 may
be amended or waived insofar as such amendment or waiver
would affect only rights or obligations with respect to the
purchase and sale of the Accepted Notes of such Series or
the terms and provisions of such Accepted Notes.
<PAGE>
Each holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been
marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such
consent. No course of dealing between the Co-Issuers and
the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver
of any rights of any holder of such Note. As used herein
and in the Notes, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to
time be amended or supplemented.
11D.
Form, Registration, Transfer and Exchange of Notes;
Lost Notes. The Notes are issuable as registered notes
without coupons in denominations of at least $1,000,000,
except as may be necessary to reflect any principal amount
not evenly divisible by $1,000,000. The Treasury Manager
shall keep at its principal office a register in which the
Treasury Manager shall provide for the registration of Notes
and of transfers of Notes. Upon surrender for registration
of transfer of any Note at the principal office of the
Treasury Manager, the Issuer shall, at its expense, execute
and deliver one or more new Notes of like tenor and of a
like aggregate principal amount, registered in the name of
such transferee or transferees. At the option of the holder
of any Note, such Note may be exchanged for other Notes of
like tenor and of any authorized denominations, of a like
aggregate principal amount, upon surrender of the Note to be
exchanged at the principal office of the Treasury Manager.
Whenever any Notes are so surrendered for exchange, the
Issuer shall, at its expense, execute and deliver the Notes
which the holder making the exchange is entitled to receive.
Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer duly executed, by the holder
of such Note or such holder's attorney duly authorized in
writing. Any Note or Notes issued in exchange for any Note
or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the
Note so exchanged or transferred, so that neither gain nor
loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of
any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or
destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation
upon surrender and cancellation of such Note, the Issuer
will make and deliver a new Note, of like tenor, in lieu of
the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior
to due presentment for registration of transfer, the Issuer
may treat the Person in whose name any Note is registered as
the owner and holder of such Note for the purpose of
receiving payment of principal of and Yield-Maintenance
Amount, if any, and interest on such Note and for all other
purposes whatsoever, whether or not such Note shall be
overdue, and the Issuer shall not be affected by notice to
the contrary. Subject to the preceding sentence, the holder
of any Note may from time to time grant participations in
all or any part of such Note to any Person on such terms and
conditions as may be determined by such holder in its sole
and absolute discretion.
<PAGE>
11F. Survival of Representations and Warranties;
Entire Agreement. All representations and warranties
contained herein or made in writing by or on behalf of the
Co-Issuers in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, the
transfer by any Purchaser of any Note or portion thereof or
interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any investi
gation made at any time by or on behalf of any Purchaser or
any Transferee. Subject to the preceding sentence, this
Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and
understandings relating to the subject matter hereof.
11G. Successors and Assigns. All covenants and
other agreements in this Agreement contained by or on behalf
of any of the parties hereto shall bind and inure to the
benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any
Transferee) whether so expressed or not.
11H. Notices. All written communications provided
for hereunder (other than communications provided for under
paragraph 2) shall be sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if
to any Purchaser, addressed as specified for such
communications in the purchaser schedule attached to the
applicable Confirmation of Acceptance, or at such other
address as any Purchaser shall have specified to the Co-
Issuers in writing, (ii) if to any other holder of any Note,
addressed to such other holder at such address as such other
holder shall have specified to the Co-Issuers in writing or,
if any such other holder shall not have so specified an
address to the Co-Issuers, then addressed to such other
holder in care of the last holder of such Note which shall
have so specified an address to the Company, and (iii) if to
either Co-Issuer, addressed to it c/o Treasury Manager at
One Causeway Drive, P.O. Box 5006, Sandusky, Ohio 44871-
5006, Attention: Treasurer, or at such other address as
such Co-Issuer shall have specified to the holder of each
Note in writing. Any communication pursuant to paragraph 2
shall be made by the method specified for such communication
in paragraph 2, and shall be effective to create any rights
or obligations under this Agreement only if, in the case of
a telephone communication, an Authorized Officer of the
party conveying the information and of the party receiving
the information are parties to the telephone call, and in
the case of a telecopier communication, the communication is
signed by an Authorized Officer of the party conveying the
information, addressed to the attention of an Authorized
Officer of the party receiving the information, and in fact
received at the telecopier terminal the number of which is
set forth on the Information Schedule attached hereto or at
such other telecopier terminal as the party receiving the
information shall have specified in writing to the party
sending such information.
11I. Descriptive Headings. The descriptive
headings of the several paragraphs of this Agreement are
inserted for convenience only and do not constitute a part
of this Agreement.
<PAGE>
11J. Satisfaction Requirement. If any agreement,
certificate or other writing, or any action taken or to be
taken, is by the terms of this Agreement required to be
satisfactory to any Purchaser, to any holder of Notes or to
the Required Holder(s), the determination of such
satisfaction shall be made by such Purchaser, such holder or
the Required Holder(s), as the case may be, in the sole and
exclusive judgment (exercised in good faith) of the Person
or Persons making such determination.
11K. Payments Due on Non-Business Days. Anything
in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or interest on
any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day. If the
date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period
of such extension shall be included in the computation of
the interest payable on such Business Day.
11L. Limited Liability of Partners. Anything in
this Agreement or the Notes to the contrary notwithstanding,
no recourse under or in respect of this Agreement or the
Notes shall be had against any Partner, shareholder of a
Partner or partner of a Partner by the enforcement of any
assessment or by any legal or equitable proceeding, by
virtue of statute or otherwise, whether based on agency,
deputization or otherwise, it being expressly agreed that no
personal liability whatsoever shall attach to or be incurred
by the Partners, shareholders of Partners or partners of
Partners or any of them under or by reason of this
Agreement or the Notes; provided that the foregoing
limitation of liability shall in no way constitute a
limitation on the right of the holders of the Notes to
enforce their remedies against the Company's assets for the
collection of amounts due and owing under the Notes or any
other obligation of the Company contemplated by this
Agreement. Each of the Notes shall contain a statement to
the effect that the obligations of the Partners are limited
as provided in this paragraph 11L.
11M. Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a
particular action or condition is prohibited by any one of
such covenants, the fact that it would be permitted by an
exception to, or otherwise be in compliance within the
limitations of, another covenant shall not avoid the
occurrence of a Default or Event of Default if such action
is taken or such condition exists.
11N. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision
in any other jurisdiction.
<PAGE>
11O. Governing Law, Jurisdiction; Consent to
Service of Process. (1) This Agreement shall be construed
and enforced in accordance with, and the rights of the
parties shall be governed by, the internal law of the State
of Illinois; (2) Each of the parties hereto hereby
irrevocably and unconditionally submits to the nonexclusive
jurisdiction of any Illinois State court or Federal court of
the United States of America sitting in the Northern
District of Illinois, and any appellate court of any of the
foregoing, in any action or proceeding arising out of or
relating to this Agreement or the Notes or for recognition
or enforcement of any judgment entered in any such action or
proceeding, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and
determined in such Illinois State court or, to the extent
permitted by law, in such Federal court. Each of the
parties hereto agree that any summons, complaint or other
process with respect to any proceeding initiated in any such
court may be made by any means permitted by Illinois law or
federal law. Each of the parties hereto agrees that a final
judgment in any such action or proceeding may be enforced in
other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall
affect any right that any party hereto otherwise may have to
bring any action or proceeding relating to this Agreement or
the Notes against any other party hereto in the courts of
any jurisdiction; (3) Each of the parties hereto hereby
irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to
this Agreement or the Notes in any Illinois State or Federal
court of the United States of America sitting in the
Northern District of Illinois. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court;
(4) Nothing in this Agreement will affect the right of any
party to this Agreement to serve process in any manner
permitted by law.
11P. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary
in making proof of this Agreement to produce or account for
more than one such counterpart.
11Q. Binding Agreement. When this Agreement
is executed and delivered by the Co-Issuers and Prudential,
it shall become a binding agreement between the Co-Issuers
and Prudential. This Agreement shall also inure to the
benefit of each other Purchaser which shall have executed
and delivered a Confirmation of Acceptance, and each such
other Purchaser shall be bound by this Agreement to the
extent provided in such Confirmation of Acceptance.
12. JOINT AND SEVERAL OBLIGATIONS.
12.1 Nature of Obligations. The obligations of
the Co-Issuers under this Agreement, the Series B Notes, any
other Notes executed by the Co-Issuers hereunder are joint
and several primary obligations of each Co-Issuer regardless
of which Co-Issuer actually receives the proceeds of any
Notes or the manner in which Prudential, any Purchaser or
Transferee accounts for such Notes on its books and records.
<PAGE>
12.2 Failure of any Co-Issuer to Perform. In the
event either Co-Issuer fails to make full and punctual
payment of any obligation due hereunder, the other Co-Issuer
shall forthwith on demand by the Required Holder(s) pay the
entire amount not so paid at the place and in the currency
and otherwise in the manner specified in this Agreement or
any other applicable agreement or instrument delivered in
connection herewith.
12.3. Additional Undertaking. As a separate,
additional and continuing obligation, each Co-Issuer
unconditionally and irrevocably undertakes and agrees for
the benefit of the holders from time to time of the Notes
that, should any amounts not be recoverable from the other
Co-Issuer under paragraph 12.2 for any reason whatsoever
(including, without limitation, by reason of any provision
of this Agreement, any Note or other agreement delivered in
connection herewith being or becoming void, unenforceable,
or otherwise invalid under any applicable law) then,
notwithstanding any notice or knowledge thereof by any
holder of any Note or any other Person, at any time, such Co-
Issuer as sole, original and independent obligor, upon
demand by the Required Holder(s), will make payment to the
applicable holders of the Notes, of all such obligations not
so recoverable by way of full indemnity, in such currency
and otherwise in such manner as is provided in this
Agreement or any other applicable agreement or instrument
delivered in connection herewith.
12.4 Joint and Several Obligations Unconditional,
etc. The obligations of each Co-Issuer under this Agreement
shall be unconditional and absolute and, without limiting
the generality of the foregoing shall not be released,
discharged or otherwise affected by the occurrence, one or
more times, of any of the following:
(i) any extension, renewal, settlement,
compromise, waiver or release in respect of
any obligation of the Co-Issuers under any
agreement or instrument, by operation of law
or otherwise;
(ii) any modification, restatement or
amendment of or supplement to this Agreement,
any Note, or any other agreement or
instrument evidencing or relating to any
obligation of the Co-Issuers;
(iii) any release, non-perfection or
invalidity of any direct or indirect security
for any obligation of the Co-Issuers under
any agreement or instrument evidencing or
relating to any such obligation;
(iv) any change in the corporate
existence, structure or ownership of any Co-
Issuer or Subsidiary of the Company or any
insolvency, bankruptcy, reorganization or
other similar proceeding affecting either Co-
Issuer or Subsidiary of the Company or its
assets or any resulting release or discharge
of any obligation contained in any agreement
or instrument evidencing or relating to any
obligation of the Co-Issuers;
<PAGE>
(v) the existence of any claim, set-off
or other rights which either Co-Issuer may
have at any time against the other Co-Issuer,
any holder of any Note, or any other Person,
whether in connection herewith or any
unrelated transactions;
(vi) any invalidity or unenforceability
relating to or against either Co-Issuer for
any reason of any agreement or instrument
evidencing or relating to any obligation of
the Co-Issuers, or any provision of
applicable law or regulation purporting to
prohibit the payment by either Co-Issuer of
any obligation of the Co-Issuers; or
(vii) any other act or omission to
act, or delay of any kind by either Co-
Issuer, any holder of any Note or any other
Person or any other circumstance whatsoever
which might, but for the provisions of this
paragraph, constitute a legal or equitable
discharge of such Co-Issuer's obligations
under this paragraph or the other provisions
of this Agreement and the documents delivered
in connection herewith.
12.5 Co-Issuer's Obligations to Remain in Effect;
Restoration. Each Co-Issuer's obligations under this
paragraph and the other provisions of this Agreement and the
documents delivered in connection herewith shall remain in
full force and effect until the principal of and interest on
the Notes and other obligations hereunder (including,
without limitation, the Yield-Maintenance Amount, if any),
and all other amounts payable by the Co-Issuers, under this
Agreement or any other agreement or instrument evidencing or
relating to any of the obligations of the Co-Issuers, shall
have been paid in full. If at any time any payment of any
of the obligations of Co-Issuer in respect of any
obligations hereunder is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or
reorganization of a Co-Issuer, the Co-Issuers' obligations
under this paragraph and the other provisions of this
Agreement and the documents delivered in connection herewith
with respect to such payment shall be reinstated at such
time as though such payment had been due but not made at
such time.
12.6 Waiver of Acceptance, etc. Each Co-Issuer
irrevocably waives acceptance hereof, presentment, demand,
protest and any notice not provided for herein, as well as
any requirement that any time any action be taken by any
Person against the other Co-Issuer or any other Person, or
against any collateral or guaranty of any other Person.
12.7 Subrogation. Until the indefeasible payment
in full of all of the Co-Issuer's obligations to the holders
of the Notes, no Co-Issuer shall have any rights, by
operation of law or otherwise, upon making any payment under
this paragraph 12 or the other provisions of this Agreement
or the documents delivered in connection herewith to be
subrogated to the rights of the payee against the other Co-
Issuer with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the other Co-Issuer
in respect thereof.
<PAGE>
12.8 Effect of Stay. In the event that
acceleration of the time for payment of any amount payable
by either Co-Issuer with respect to any of the Co-Issuers'
obligations is stayed upon insolvency, bankruptcy or
reorganization of the other Co-Issuer, all such amounts
otherwise subject to acceleration under the terms of any
applicable agreement or instrument evidencing or relating to
any such obligation shall nonetheless be payable by the
other Co-Issuer under this paragraph 12 and the other
provisions of this Agreement and the documents delivered in
connection herewith forthwith on demand by the Required
Holder(s).
Very truly yours,
CEDAR FAIR, L.P.,
as a Co-Issuer
By: CEDAR FAIR MANAGEMENT COMPANY,
Managing General Partner
By: /s/ Bruce A. Jackson
Bruce A. Jackson
Vice President & Chief
Financial Officer
KNOTT'S BERRY FARM,
as a Co-Issuer
By: Magnum Management Corporation
one of its general partners
By: /s/ Bruce A. Jackson
Bruce A. Jackson
Vice President & Chief
Financial Officer
The foregoing Agreement is hereby accepted
as of the date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ P. Scott von Fischer
Title: Vice President
<PAGE>
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