SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Under Rule 14a-12
CEDAR FAIR, L.P.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies: limited partnership units
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated
and state how it was determined):
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Check box if any part of the fee is offset as provided by
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Preliminary Copy, Subject to Completion June 22, 2000
CEDAR FAIR, L.P.
AMENDMENT TO PARTNERSHIP AGREEMENT PROPOSED
YOUR VOTE IS VERY IMPORTANT
Cedar Fair Management Company, the general partner of Cedar
Fair, L.P., has called a Special Meeting of Limited Partners of
Cedar Fair to vote on a proposal to revise Cedar Fair's fee
and executive compensation systems. At the meeting, the Board of
Directors of Cedar Fair Management Company will recommend (a) an
amendment to Cedar Fair's limited partnership agreement in order
to eliminate the fees paid by Cedar Fair to the general partner
as well as (b) the approval of a new equity incentive plan in
order to effect the restructuring plan.
The existing executive compensation system was established in
1987 and has served Cedar Fair and its unitholders well. On the
other hand, as described in the attached proxy statement, the
Board of Directors believes that the existing system should be
terminated and a new system implemented that is more appropriate
for today's market conditions. Essentially, the existing system
has resulted in a high level of predictable cash compensation for
senior management. The proposed new system would provide cash
compensation, including cash bonuses, plus equity incentives more
in line with current market levels for superior performing
companies. Our goal in recommending the new system is to provide
incentives to management that will align their compensation more
closely with the interests of our unitholders.
As a publicly traded limited partnership, Cedar Fair does not
normally hold meetings of unitholders. Rather, the limited partner
unitholders are called upon to vote only on certain limited occasions
as specified in the Cedar Fair limited partnership agreement. Our
Board of Directors has detemined that the proposed restructuring is
one of these occasions.
We need the approval of partners holding a majority of the
outstanding units in order to amend the limited partnership
agreement for this purpose. Also, we cannot adopt the new equity
incentive plan unless (a) we obtain the approval of partners
holding a majority of the partnership interests that vote on the
proposal and (b) the total vote cast on the proposal represents a
majority of the interests entitled to vote. Because the new
equity incentive plan is an integral part of the proposed
restructuring, Cedar Fair Management Company reserves the right
not to implement the proposal to amend the limited partnership
agreement, including the fee restructuring plan, if the proposed
new equity incentive plan is not approved. We are inviting you,
as a holder of Cedar Fair units, to attend a special meeting of
the unitholders to vote on these proposals.
The special meeting of Cedar Fair's unitholders will be held at
9:00 a.m. (Pacific time) on [day], [date], 2000, at our Knott's
Radisson Resort Hotel located adjacent to Knott's Berry Farm,
7675 Crescent Avenue, Buena Park, California.
<PAGE>
We encourage you to read the entire proxy statement carefully.
It provides detailed information about the proposals and includes
copies of the relevant documents as exhibits. You can also
obtain information about Cedar Fair from publicly available
documents filed with the Securities and Exchange Commission and
The New York Stock Exchange.
The general partner's Board of Directors unanimously recommends
the proposals. In making this recommendation, the Board
considered the fairness of the proposals to the unitholders and
compensation levels and incentives at comparable companies. The
Board unanimously recommends that you vote FOR approval of each
of the proposals.
Your vote is very important. Whether or not you plan to attend
the special meeting, please take the time to vote by completing
and mailing the enclosed proxy card to us. A prepaid return
envelope is provided for this purpose. You may also vote your
units by telephone or over the Internet by following the
instructions on the proxy card. If you date and mail your proxy
card or grant your proxy by telephone or over the Internet
without indicating how you want to vote, your proxy will be
counted as a vote FOR approval of each of the proposals. If you
do not return your card or instruct your broker how to vote any
units held for you in your broker's name, the effect will be the
same as a vote against each of the proposals. You may revoke
your proxy at any time before it is exercised, and it will not be
used if you attend the meeting and prefer to vote in person. The
Board and I urge all Cedar Fair unitholders to be present in
person or by proxy.
CEDAR FAIR MANAGEMENT COMPANY
Richard L. Kinzel
President and Chief Executive Officer
Proxy Statement dated [ ], 2000
and first mailed to limited partner unitholders on or about [
], 2000.
<PAGE>
CEDAR FAIR, L.P.
One Cedar Point Drive
Sandusky, Ohio 44870-5259
NOTICE OF SPECIAL MEETING OF LIMITED PARTNER UNITHOLDERS
TO BE HELD ON [ ], 2000
A special meeting of the limited partner unitholders of Cedar
Fair, L.P. will be held on [day], [month], [date], 2000 at
9:00 a.m. (Pacific time) at Knott's Radisson Resort Hotel,
located adjacent to Knott's Berry Farm, 7675 Crescent Avenue,
Buena Park, California. All unitholders are invited to attend
the meeting. The meeting is called for the following purposes:
1. To consider and vote upon a proposal to amend the limited
partnership agreement of Cedar Fair for the following purposes:
- To terminate the management and incentive fees that are
currently paid to the general partner.
- To reduce the general partner's interest in the partnership
from 0.5% to 0.1% and to increase the aggregate interests of the
limited partners from 99.5% to 99.9%.
- To allow the general partner to propose and cause the
partnership and its affiliates to adopt employee benefit plans,
including plans involving the issuance of up to 4,830,000 units,
for the benefit of employees of Cedar Fair and its affiliates.
2. To consider and vote upon a proposal to approve the 2000
Equity Incentive Plan for employees of Cedar Fair and its
affiliates.
3. To transact any other business that properly comes before
the special meeting, including any adjournments or postponements
of the meeting.
Only limited partners that held depositary units as of the
close of business on [record date] are entitled to notice of and
to vote at the special meeting and any adjournments or
postponements.
The proposed amendment to the limited partnership agreement
will be approved if holders of a majority of the outstanding
units vote FOR the proposal. The Equity Incentive Plan will be
approved if partners holding a majority of the partnership
interests that vote on the proposal vote FOR the proposal,
provided that the total vote cast on the proposal represents a
majority of the interests entitled to vote. Because the Equity
Incentive Plan is an integral part of the proposed restructuring,
<PAGE>
Cedar Fair Management Company reserves the right not to
implement the proposal to amend the limited partnership agreement
if the proposed new Equity Incentive Plan is not approved by the
unitholders. You are not entitled to dissenters' appraisal
rights under Delaware law or the limited partnership agreement
with respect to the proposals.
The Board of Directors of the general partner unanimously
recommends that you vote FOR the proposed amendment to the
Limited Partnership Agreement and FOR the approval of the Equity
Incentive Plan.
We urge you to read carefully the full text of the proxy
statement and its exhibits before making a decision on these
proposals.
CEDAR FAIR MANAGEMENT COMPANY
Richard L. Kinzel
President and Chief Executive Officer
Sandusky, Ohio
[ ], 2000
Your vote is very important regardless of the number of limited
partner units you own. Whether or not you plan to attend the
special meeting, we request that you sign, date and return your
proxy card by mail in the enclosed envelope or that you grant
your proxy by telephone or over the Internet by following the
instructions on the proxy card as soon as possible. Any proxy
given may be revoked at any time before it is exercised. If you
are present at the special meeting, you may revoke your proxy and
vote personally on each matter brought before the special
meeting.
<PAGE>
TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS 1
SUMMARY 6
The Partnership 6
Background 6
Proposed Fee and Compensation Restructuring Plan 7
Lump Sum Payouts and Unit Option Grants 7
Proposal One - Approval of the Amendment to the
Limited Partnership Agreement 8
Proposal Two - Approval of the 2000 Equity Incentive
Plan 8
Existing Fee and Compensation System 9
Reasons for the Fee Restructuring Plan 9
Interests of Certain Persons in the Proposals 10
Recommendation of the General Partner 10
The Special Meeting 11
Record Date; Vote Required 11
THE SPECIAL MEETING 12
General 12
Time and Place 12
Matters to be Considered 12
Proxies 12
Solicitation of Proxies 13
Record Date; Voting Right; Quorum; Vote Required 13
Dissenters' Appraisal Rights 15
BACKGROUND AND REASONS FOR THE PROPOSALS 16
The Partnership 16
Background and Reasons for the Proposals 17
Proposed Fee and Compensation Restructuring Plan 18
Existing Fee and Compensation System 20
Lump Sum Payouts and Unit Option Grants 23
Proposal One - Approval of the Amendment to the
Partnership Agreement 24
Proposal Two - Approval of the 2000 Equity Incentive
Plan 24
2000 Senior Executive Management Incentive Plan 28
Recommendation of the General Partner 31
INTERESTS OF CERTAIN PERSONS IN THE PROPOSALS 32
Lump Sum Payouts and Unit Option Grants 32
2000 Equity Incentive Plan 35
2000 Senior Executive Management Incentive Plan 35
Current Incentive Compensation Plan 35
<PAGE>
EXECUTIVE COMPENSATION 38
Compensation of Executives; Summary Compensation
Table 38
Compensation of Directors 40
Employment Contracts and Termination of Employment
and Change in Control Arrangements 40
MARKET PRICE OF THE UNITS AND DISTRIBUTIONS TO LIMITED
PARTNERS 44
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT 45
Security Ownership of Certain Beneficial Owners 45
Security Ownership of Management 45
WHERE YOU CAN FIND MORE INFORMATION 47
FORWARD LOOKING STATEMENTS MAY PROVE INACCURATE 47
EXHIBIT A - Amendment No. 4 to Third Amended and Restated
Agreement of Limited Partnership of Cedar Fair, L.P.
EXHIBIT B - 2000 Equity Incentive Plan
EXHIBIT C - 2000 Senior Executive Management Incentive Plan
EXHIBIT D - Opinion of Thompson Hine & Flory LLP, delivered
pursuant to Section 15.3 of the Third Amended and
Restated Agreement of Limited Partnership
<PAGE>
QUESTIONS AND ANSWERS
Q: Why am I receiving these proxy materials?
A:Recipients of this mailing are holders of units of Cedar Fair,
L.P., a publicly traded limited partnership. Generally,
holders of limited partnership units are not stockholders in
the same sense as investors in corporations. As limited
partners, our investors do not generally participate in the
governance of the limited partnership. Our business form
allows Cedar Fair to pay out the majority of its earnings to
unitholders without first paying federal and state income
taxes at the partnership level, avoiding what is known in the
corporate form as double taxation of earnings. Ownership of
Cedar Fair units, therefore, is different from an investment
in corporate stock. Limited partners are called upon to vote
only on significant amendments to the Cedar Fair partnership
agreement as specified in that agreement. This proposal has
been determined by the Board to involve a
significant amendment of this nature.
Q: What is the Board proposing?
A:The Board of Directors is recommending that Cedar Fair's
employee compensation system for senior management be
revised by two related
proposals. First, the Board recommends that the limited
partnership agreement of Cedar Fair be amended in order to
eliminate the system of fees paid by Cedar Fair to the general
partner, effective retroactively to January 1, 2000. Second,
the Board is proposing approval of a plan (the Equity
Incentive Plan) that will permit the grant or award of limited
partner units or options on units as an element of
compensation.
Essentially, cash amounts paid to the general partner will be
reduced significantly as will predictable levels of cash
compensation for senior executive management. At the same
time, senior managers will be afforded the opportunity to
receive unit options, and possibly other equity incentives, in
lieu of cash compensation. This will align a
portion of management's compensation more closely with Cedar
Fair's stock-market performance and thus with the interests of
unitholders.
<PAGE>
Q: Why is the Board making this recommendation?
A:The Board of Directors believes that the existing compensation
and fee system is no longer appropriate for Cedar Fair and
should be changed to more closely resemble the compensation
systems of other superior performing companies. Under the
existing Cedar Fair compensation system, base salaries are set
relatively low in comparison to comparable companies, but a
relatively large and predictable amount of cash is generated
each year in the form of cash fees to Cedar Fair Management
Company. These fees are then allocated at yearend among
senior management in the form of bonuses and deferred limited
partnership units by the Board's Compensation Committee.
The management and incentive fees generated under the limited
partnership agreement (and, thus, management compensation) are
not affected by the market price of Cedar Fair units. The
Board of Directors believes that the existing system is too
heavily weighted toward cash compensation and does not afford
the types of incentives that are appropriate in today's
business environment, including incentives that are more
closely tied to the stock-market performance of Cedar Fair
units.
The proposed new system is designed to tie a portion of
management compensation to the value of Cedar Fair units, and
to more closely align the interests of management with those
of our unitholders. Senior management, acting in its capacity
as the shareholders and share equivalent holders of Cedar Fair
Management Company, approved the new system.
Q:What is the potential impact of the proposed change on cash
distributions?
A:We expect that the aggregate cash expense of base salaries and
bonuses under the new system will be less than that under the
old (existing) system. We base this estimate on the fact that
the current system, which is based primarily on the relatively
high level of predictable distributions on Cedar Fair units,
yields compensation levels considerably higher than would the
new system, which would be based on market-competitive base
salaries plus incentive bonuses generally of up to 50% of such
base salaries.
As a result, except for the year 2000 (when several one-time
lump sum payments will be made to senior management as
described in this proxy statement), the restructuring is
expected to result in an increase in cash available for
distribution to unitholders. We estimate that as a result of
the restructuring plan in 2001, the first year following the
implementation of the plan and payment of the one-time lump
<PAGE>
sum amounts, (1) the Company's aggregate expenses for
salaries, bonuses and deferred units to senior management
would be reduced from $13.5 million to $7.3 million and
(2) the $6.2 million difference ($0.12 per unit) would be
available for distributions to unitholders. In 2002, the
additional amount available to unitholders as a result of the
restructuring is expected to be $7.5 million ($0.14 per unit).
See the table on page ___ under the heading "Background and
Reasons for the Proposals - Existing Fee and Compensation
System."
Also, while we cannot predict the future market price for
Cedar Fair units, we believe the ability to grant equity
incentives to Cedar Fair employees will help to align
compensation incentives more closely with the interests of
unitholders.
Q:How will the Board carry out the restructuring?
A:In order to implement these changes, we want to amend the
Cedar Fair limited partnership agreement and implement a new
equity incentive plan and a new cash bonus program.
Unitholder approval is being sought for the amendment of the
limited partnership agreement and the adoption of the new
Cedar Fair, L.P., 2000 Equity Incentive Plan. Unitholder
approval is not required for the approval of the new cash
bonus program, but it is described in this proxy statement
because it is an integral part of the restructuring.
Q:How will the new compensation system work?
A:Base salaries for those senior managers who are shareholders
or share-equivalent holders of the general partner will be
increased, effective retroactively to January 1, 2000, to be
more in line with current market levels for superior
performing companies. Additionally, these senior managers
will be eligible for yearend bonuses generally equal to 50%
of their base salaries if performance goals are met or
exceeded. In cases of extraordinary performance, it is
possible that bonuses could exceed the 50% level. In the
past, base salaries have been generally below market levels,
but significant year-end bonuses derived from management and
incentive fees paid to Cedar Fair Management Company have been
paid to senior management. If the new Equity Incentive Plan
is approved, beginning in 2000 these senior managers and other
employees will be eligible to participate in the plan.
<PAGE>
Q:What will happen to the existing compensation system?
A:The general partner's interest in Cedar Fair will be reduced
from 0.5% to 0.1%. The existing bonus and incentive
compensation policy for members of Cedar Fair senior
management will be terminated, and the management and
incentive fees currently paid to the general partner by Cedar
Fair will be eliminated effective retroactively to January 1,
2000.
Q:How will we transition from the "old" compensation system to
the "new" system?
A:Several one-time lump sum payments of cash and grants of
options to purchase units will be made to members of senior
management. Cedar Fair will also accelerate the vesting of
deferred units granted under the old system. The lump sum
payments and option grants and the accelerated vesting are
designed to compensate senior management for the termination
of their rights under the existing compensation system.
Q: What will happen if these proposals are not approved by the
unitholders?
A:If the proposals are not approved, the existing compensation
system will remain in place. As Cedar Fair grows and its
revenues and cash distributions increase, the cash
compensation payable to senior management will continue to
increase. Additionally, the compensation system will not
include a strong equity incentive component intended to align
the interests of senior management with those of the
unitholders.
Q:May I change my vote after submitting my proxy?
A:Yes. You may revoke your proxy at any time before it is
exercised, and it will not be used if you attend the meeting
and prefer to vote in person. If you instruct your broker to
vote your units, you must follow directions received from your
broker to change those instructions.
Q:What are the consequences if I do not vote?
A:A failure to vote has the same effect as voting against the
proposals. If you do not return your proxy card, vote by
telephone or over the Internet or instruct your broker how to
vote any units held for you in your broker's name, the effect
will be a vote against each of the proposals.
<PAGE>
Q: Who can help answer my questions?
A:If you have more questions about the proposals or if you would
like additional copies of this document you should call or
write the general partner:
Cedar Fair Management Company
One Cedar Point Drive
Sandusky, Ohio 44870-5259
Attention: Brian C. Witherow, Corporate Director-Investor
Relations
Phone Number: (419) 627-2233
Fax Number: (419) 627-2260
<PAGE>
SUMMARY
This brief summary highlights information from this proxy
statement and does not contain all of the information that is
important to you. We have included page references
parenthetically to direct you to a more complete description of
each topic presented in this summary. We urge you to carefully
read this entire document, the exhibits and the other information
referred to in "Where You Can Find More Information" (page ___).
The Partnership (page ___)
Cedar Fair, L.P.
One Cedar Point Drive
Sandusky, Ohio 44870-5259
Cedar Fair, L.P., is a publicly traded Delaware limited
partnership managed by its general partner, Cedar Fair Management
Company. Cedar Fair, L.P. and its affiliated companies own and
operate five amusement parks and four separate-gated water
parks: Cedar Point and Soak City, located on Lake Erie between
Cleveland and Toledo in Sandusky, Ohio; Knott's Berry Farm,
located near Los Angeles in Buena Park, California; Dorney Park &
Wildwater Kingdom, located near Allentown in South Whitehall
Township, Pennsylvania; Valleyfair, located near
Minneapolis-St. Paul in Shakopee, Minnesota; Worlds of Fun and
Oceans of Fun, located in Kansas City, Missouri; a newly-acquired
water park located near San Diego in Chula Vista, California,
which is being operated as Knott's Soak City U.S.A; and a fourth
water park being constructed adjacent to Knott's Berry Farm. The
partnership also operates Knott's Camp Snoopy at the Mall of
America in Bloomington, Minnesota, under a management contract.
Background (pages ___)
The Board of Directors of Cedar Fair Management Company
believes that the existing senior management compensation system,
by which cash bonuses, deferred unit awards and other
compensation are provided to Cedar Fair senior management, no
longer serves the best interests of Cedar Fair and its
unitholders and needs to be modified. Accordingly, the Board of
Directors of the general partner has voted to restructure the
compensation system, effective retroactively to January 1, 2000.
Cedar Fair's existing compensation system for senior management
is based on (a) the payment of relatively low base salaries to
senior management and (b) these senior managers' eligibility to
participate in a bonus pool derived from management and incentive
fees paid to the general partner under Cedar Fair's limited
partnership agreement. Senior management generally refers to the
23 shareholders and share-equivalent holders of the general
partner, Cedar Fair Management Company.
<PAGE>
As originally designed, the existing compensation system was
intended to provide senior management a strong incentive to
continually increase cash distributions to unitholders, and the
system achieved this objective. At this point in time, however,
the Board of Directors believes it is desirable to make Cedar
Fair's compensation more consistent with that of other superior
performing companies and in particular that it should have a
stronger equity incentive component.
Proposed Fee and Compensation Restructuring Plan (page ___)
The Board of Directors recommends implementing the steps
described in this proxy statement in order to put the fee and
compensation restructuring into effect, including increasing base
salaries to be more in line with current market conditions and
making the general partner's shareholders and share-equivalent
holders (each of whom is a member of Cedar Fair's senior
management) eligible for a year-end bonus generally equal to 50%
of their base salaries. Under the restructuring plan, the
limited partnership agreement would be amended to decrease the
general partner's interest in Cedar Fair from 0.5% to 0.1%, and
management and incentive fees currently paid to the general
partner would be eliminated. Additionally, Cedar Fair's existing
bonus and incentive compensation policy for senior management
would be terminated and a new equity incentive plan would be
adopted. A new cash bonus plan for senior management would also
be adopted.
Lump Sum Payouts and Unit Option Grants (page ___)
In connection with terminating the existing system, one-time
lump sum cash payments and awards of unit options will be made to
shareholders and share-equivalent holders of the general partner.
The cash payments will aggregate $8,542,000 and options for a
total of 2,330,000 units will be awarded. The options have an
initial exercise price of $20 per unit, which will be reduced
over time by the amount of cash distributions paid on outstanding
units. These payments and grants will be made to compensate
Cedar Fair's senior management for the termination of their
rights under the existing compensation system. Also, all
unvested deferred units previously awarded to these individuals
will become vested.
<PAGE>
Proposal One - Approval of the Amendment to the Limited
Partnership Agreement
(page __)
To implement the new compensation system, the Board of
Directors recommends amending the limited partnership agreement
of Cedar Fair in order to terminate the management and incentive
fees that are currently paid to the general partner, to reduce
the general partner's interest in the partnership from 0.5% to
0.1% and to increase the aggregate interest of the limited
partners from 99.5% to 99.9%. The amendment would also allow the
general partner to propose and adopt employee benefit plans,
including plans involving the issuance of up to 4,830,000 units,
for the benefit of employees of Cedar Fair and its affiliates.
The proposed amendment to the limited partnership agreement is
attached as Exhibit A to this proxy statement. You should read
the proposed amendment in its entirety. The summary provided
above is qualified in its entirety by reference to the actual
amendment.
Proposal Two - Approval of the 2000 Equity Incentive Plan
(page ___)
The 2000 Equity Incentive Plan, a copy of which is attached as
Exhibit B to this proxy statement, represents the equity
component of the new compensation system. For a full
understanding of this plan, you should read it in its entirety.
The purpose of the plan is to enable Cedar Fair and its
affiliates to provide employee compensation in the form of equity
and to align a portion of senior management's compensation more
closely with the interests of unitholders. The Board of
Directors believes that the plan will encourage employees of
Cedar Fair and its affiliates to acquire a proprietary and vested
interest in the growth and performance of Cedar Fair and enhance
the ability of Cedar Fair to attract and retain exceptional
managers.
The maximum number of units for which awards may be granted
under the plan is 4,830,000. Options for 2,330,000 of those
units will be granted in connection with the restructuring and
the remaining 2,500,000 units will be available for future
issuances. The units available for future issuances may be
issuable as options, unit appreciation rights, restricted unit
awards, performance units, distribution equivalents and other
unit awards.
<PAGE>
Existing Fee and Compensation System (pages ___)
The existing compensation and fee system has been in place
since 1987. This system is based on (a) the payment of
relatively low base salaries to senior management and (b) these
senior managers' eligibility to participate in a bonus pool
derived from fees and distributions paid to the general partner
under Cedar Fair's limited partnership agreement. The bonus pool
comes from a formula based on three sources: first, cash
distributions on the general partner's 0.5% interest in Cedar
Fair; second, a management fee of 0.25% of Cedar Fair's net
revenues (as defined); and third, an incentive fee based on
quarterly distributions exceeding certain levels.
As originally designed, the system was intended to provide
senior management with a strong incentive to continually increase
cash distributions to unitholders; the system achieved this
objective. For example, distributions to unitholders were $0.54
per unit in 1988 and increased by an average of 9.2% per year
during the period from 1988 to 1999. As a result of the formula,
there was an annual bonus pool averaging approximately
$1.0 million from 1988 to 1991. More recently, the annual cash
distributions to unitholders increased at an average annual rate
of 5.9% from 1997 to 1999, and the resultant bonus pool increased
to $5.6 million in 1997, $6.7 million in 1998, and $7.8 million
in 1999. Without the restructuring, the bonus pool for 2000 is
estimated to be at least $8.5 million.
Reasons for the Fee Restructuring Plan (page ___)
As reflected in the above figures, Cedar Fair has been
considerably more successful than many people anticipated in
1987, and the increasing size of the cash distributions to the
general partner has resulted in a bonus pool of considerable
size. As a consequence, several years ago, even after the number
of participants in the bonus pool had more than doubled, the cash
compensation paid to senior management began to constitute a
disproportionately larger portion of total compensation than is
the case at comparable companies.
At this point in time, the Board of Directors believes it
desirable to make Cedar Fair's cash compensation more consistent
with that of other superior performing companies and believes the
compensation system should have a stronger equity incentive
component. The two proposals, taken together, are designed to
achieve these objectives.
<PAGE>
Interests of Certain Persons in the Proposals (page ___)
In considering the recommendation of the Board of Directors to
amend the limited partnership agreement and approve the new
equity incentive plan, you should be aware that some of the
directors and officers of Cedar Fair have interests in the fee
and compensation restructuring plan that are different from or in
addition to the interests you have as a unitholder. These
interests arise because of participant rights under the existing
bonus and incentive compensation plan and the lump sum payments
of cash and grants of unit options that will be made to members
of senior management in connection with the restructuring plan.
In connection with terminating the existing bonus and incentive
compensation program and the rights of the participants under
that program, the general partner will (1) increase the base
salaries of members of Cedar Fair senior management retroactive
to January 1, 2000, to be more in line with current market levels
for superior performing companies, (2) cause all unvested
deferred units previously awarded under the current plan to
accelerate and be issued, (3) make one-time lump sum cash
payments in an aggregate amount of $8,542,000 to plan
participants and (4) grant options under the new equity incentive
plan for 2,330,000 units to the participants of the plan.
Additionally, senior managers will be eligible for year-end
bonuses generally equal to 50% of their base salaries if
performance goals are met or exceeded. In cases of extraordinary
performance, it is possible that bonuses could exceed the 50%
level.
The general partner's shareholders and share-equivalent
holders, each of whom is a member of Cedar Fair senior
management, will be eligible to participate in the new equity
incentive plan if it is approved by the unitholders.
Additionally, some of Cedar Fair's key employees, including
certain officers and directors, will be eligible to participate
in the new senior executive management incentive plan.
Recommendation of the General Partner (page ___)
We recommend that you vote FOR the amendment to the limited
partnership agreement and FOR the approval of the 2000 Equity
Incentive Plan.
The Board of Directors believes that each of the proposals is
important for the success of the overall plan.
Accordingly, the general partner reserves the right not to
implement the proposal to amend the limited partnership
agreement, including the fee restructuring plan, if the proposed
new equity incentive plan is not approved by the unitholders.
<PAGE>
The Special Meeting (page ___)
The special meeting of the limited partner unitholders will be
held on [day], [month], [date], 2000 at 9:00 a.m. (Pacific time)
at Knott's Radisson Resort Hotel located adjacent to Knott's
Berry Farm, 7675 Crescent Avenue, Buena Park, California. At the
special meeting, you will be asked to approve the amendment to
the limited partnership agreement, to approve the new Equity
Incentive Plan and to act on any other matters that are properly
brought before the special meeting.
Record Date; Vote Required (page ____)
You may vote at the special meeting if you owned Cedar Fair
units at the close of business on [record date], 2000. The
proposed amendment to the limited partnership agreement will be
adopted if holders of a majority of the outstanding units vote
FOR the proposal. The Equity Incentive Plan will be adopted
(a) if partners holding a majority of the partnership interests
that vote on the proposal vote FOR the proposal and (b) if the
total vote cast on the proposal represents a majority of the
interests entitled to vote. Because the Equity Incentive Plan is
an integral part of the proposed restructuring of the executive
compensation and fee system, Cedar Fair Management Company
reserves the right not to implement the proposal to amend the
limited partnership agreement, including the fee restructuring
plan, if the proposed new equity incentive plan is not approved
by the unitholders.
As contemplated by the limited partnership agreement, Cedar
Fair has received the opinion of Thompson Hine & Flory LLP, a
copy of which is attached to this proxy statement as Exhibit D,
that the proposed amendment to the limited partnership agreement
would not result in the loss of limited liability of any limited
partner or cause Cedar Fair to be treated as an association
taxable as a corporation for federal income tax purposes. The
opinion of Thompson Hine & Flory LLP sets forth the assumptions
and limitations to which the opinion is subject. You should read
the opinion in its entirety.
A failure to vote or an abstention from voting on either
proposal has the same effect as a vote against the proposal. You
may vote your units in person by attending the special meeting,
by mailing us your proxy or by telephone or over the Internet by
following the instructions on the proxy card if you are unable or
do not wish to attend the meeting in person.
<PAGE>
THE SPECIAL MEETING
General
This document is furnished in connection with the solicitation
of proxies from the limited partner unitholders of Cedar Fair,
L.P. by its general partner, Cedar Fair Management Company, for
use at a special meeting. This document and the accompanying
form of proxy is first being mailed to limited partner
unitholders on or about [ ], 2000.
Time and Place
The special meeting will be held at Knott's Radisson Resort
Hotel located adjacent to Knott's Berry Farm, 7675 Crescent
Avenue, Buena Park, California on [day], [date], 2000, at
9:00 a.m., (Pacific time).
Matters to be Considered
At the special meeting, the limited partners will be asked to
approve an amendment to the limited partnership agreement,
approve a new Equity Incentive Plan and vote on any other matters
that may be properly raised at the special meeting. It is not
anticipated that any other matters will be raised at the special
meeting.
Proxies
The accompanying form of proxy is for use at the special
meeting if you will be unable or do not wish to attend the
special meeting in person. You may submit your proxy by mail, by
telephone or over the Internet. The telephone and Internet
voting procedures are designed to authenticate votes cast by use
of a personal identification number. These procedures allow
unitholders to appoint a proxy to vote their units and to confirm
that their instructions have been properly recorded.
Instructions for voting by telephone and over the Internet are
included on the proxy card. All of the Cedar Fair units
represented by proxies properly received prior to or at the
special meeting and not revoked will be voted in accordance with
the instructions indicated in the proxies. If no voting
instructions are indicated on a proxy, the units represented by
that proxy will be voted in favor of each of the proposals. Any
proxy given on the accompanying form may be revoked by the person
giving it at any time before it is voted. Proxies may be
revoked, or the votes reflected in the proxy changed by:
- Submitting to the Corporate Director of Investor Relations,
before the vote is taken at the special meeting, a written notice
of revocation bearing a later date than the date of the proxy.
<PAGE>
- Submitting a properly executed later-dated proxy relating to
the same units.
- Attending the special meeting and voting in person.
If you instruct your broker to vote your units, you must follow
directions received from your broker to change those
instructions. In order to vote in person at the special meeting,
you must attend the special meeting and cast your vote in
accordance with the voting procedures established for the
meeting. Attendance at the meeting will not in and of itself
constitute a revocation of a proxy. Any written notice of
revocation or subsequent proxy must be sent so as to be delivered
at or before the vote is taken at the special meeting as follows:
Cedar Fair Management Company
One Cedar Point Drive
Sandusky, Ohio 44870-5259
Phone: (419) 627-2233
Facsimile: (419) 627-2260
Attention: Brian C. Witherow, Corporate Director-Investor
Relations
Unitholders who require assistance in changing or revoking a
proxy should write the address or call the phone number provided
above.
Solicitation of Proxies
The cost of soliciting the proxies from unitholders will be
borne by Cedar Fair. In addition to solicitation by mail,
arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send the proxy materials
to beneficial owners of the units, and the general partner, upon
request, will reimburse the brokerage houses and custodians for
their reasonable expenses in so doing. The general partner and
its directors, officers and employees may solicit the vote of
unitholders. These persons will receive no additional
compensation for their assistance in soliciting proxies.
Record Date; Voting Right; Quorum; Vote Required
Cedar Fair Management Company has fixed the close of business
on [_____________], 2000 as the record date for unitholders
entitled to notice of and to vote at the special meeting.
<PAGE>
The only outstanding voting securities of Cedar Fair are the
limited partner units and the general partner interest. Only
holders of record of units on the record date are entitled to
notice of the special meeting, and to vote at the special
meeting. Each holder of record, as of the record date, of
limited partner units is entitled to cast one vote per unit on
each of the proposals.
The presence in person or by proxy of holders of a majority of
the units entitled to vote at the special meeting will constitute
a quorum for the transaction of any business. In case a quorum
is not present, the meeting may be adjourned from time to time
without notice other than an announcement at the time of the
adjournment of the date, time and place of the adjourned meeting.
The proposed amendment to the limited partnership agreement
will be approved if holders of a majority of the outstanding
units vote FOR the proposal. The Equity Incentive Plan will be
approved if partners holding a majority of the partnership
interests that vote on the proposal vote FOR the proposal,
provided that the total vote cast on the proposal represents a
majority of the interests entitled to vote. Accordingly, a proxy
marked "abstain" will have the effect of a vote against the
proposals. Similarly, the failure of a unitholder to return a
proxy or attend the special meeting to vote in person will have
the effect of a vote against each of the proposals. The Board
urges you to complete, date and sign the accompanying proxy and
return it promptly in the enclosed, postage-paid envelope or to
submit your proxy by telephone or over the Internet.
As contemplated by the limited partnership agreement, Cedar
Fair has received the opinion of Thompson Hine & Flory LLP, a
copy of which is attached to this proxy statement as Exhibit D,
that the proposed amendment to the limited partnership agreement
would not result in the loss of limited liability of any limited
partner or cause Cedar Fair to be treated as an association
taxable as a corporation for federal income tax purposes. The
opinion of Thompson Hine & Flory LLP sets forth the assumptions
and limitations to which the opinion is subject. You should read
the opinion in its entirety.
On the record date, there were approximately [51,980,000] units
outstanding and entitled to vote at the special meeting, held by
approximately [11,000] holders of record. As of May 31, 2000,
the directors and executive officers of the general partner and
their affiliates beneficially owned and were entitled to vote
2,708,000 units, or approximately 5.2% of the units outstanding
on that date. See "Security Ownership of Certain Beneficial
Owners and Management."
<PAGE>
Dissenters' Appraisal Rights
Unitholders are not entitled to dissenters' appraisal rights in
connection with the proposed transactions under either the Cedar
Fair limited partnership agreement or Delaware law.
<PAGE>
BACKGROUND AND REASONS FOR THE PROPOSALS
The Partnership
Cedar Fair, L.P., is a publicly traded Delaware limited
partnership managed by its general partner, Cedar Fair Management
Company. Cedar Fair, L.P. and its affiliated companies own and
operate five amusement parks and four separate-gated water parks:
Cedar Point and Soak City, located on Lake Erie between Cleveland
and Toledo in Sandusky, Ohio; Knott's Berry Farm, located near
Los Angeles in Buena Park, California; Dorney Park & Wildwater
Kingdom, located near Allentown in South Whitehall Township,
Pennsylvania; Valleyfair, located near Minneapolis-St. Paul in
Shakopee, Minnesota; Worlds of Fun and Oceans of Fun, located in
Kansas City, Missouri; a newly-acquired water park located near
San Diego in Chula Vista, California, which is being operated as
Knott's Soak City U.S.A; and a fourth water park being
constructed adjacent to Knott's Berry Farm. The partnership also
operates Knott's Camp Snoopy, a 7-acre indoor amusement park at
the Mall of America in Bloomington, Minnesota, under a management
contract that expires in 2012.
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 and its affiliated companies. The Partnership's four
seasonal parks are generally open daily from 9:00 a.m. to
10:00-12:00 at night 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 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
6:00-12:00 at night 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; Oceans of Fun and
RipCord at Worlds of Fun; and the two Knott's Soak City U.S.A.
water parks.
The demographic groups that are most important to the parks
are young people ages 12 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 principally by the action-packed
rides. During their operating seasons, the parks conduct active
television, radio and newspaper advertising campaigns in their
major market areas.
<PAGE>
Background and Reasons for the Proposals
Currently, pursuant to the Cedar Fair limited partnership
agreement, cash bonuses, deferred unit awards and other employee
compensation and benefits provided to Cedar Fair's senior
management are paid or reimbursed by the general partner out of
the management and incentive fees and cash distributions Cedar
Fair Management Company receives from Cedar Fair as its general
partner, pursuant to the limited partnership agreement as
currently in effect.
Cedar Fair's compensation system for senior management (each
of whom is a shareholder or share-equivalent holder of Cedar Fair
Management Company) has been in place since 1987, when Cedar Fair
first became a publicly traded limited partnership. This system
is based on (a) the payment of relatively low base salaries to
senior management and (b) these senior managers' eligibility to
participate in a bonus pool derived from fees paid to the general
partner under Cedar Fair's limited partnership agreement. The
bonus pool comes from a formula based on three sources: first,
cash distributions on the general partner's 0.5% interest in
Cedar Fair; second, a management fee of 0.25% of Cedar Fair's net
revenues (as defined); and third, an incentive fee based on
quarterly distributions exceeding certain levels.
As originally designed, the system was intended to provide
senior management with a strong incentive to continually increase
cash distributions to unitholders; the system achieved this
objective. For example, distributions to unitholders were $0.54
per unit in 1988 and increased by an average of 9.2% per year
during the period from 1988 to 1999. As a result of the formula,
there was an annual bonus pool averaging approximately
$1.0 million from 1988 to 1991, which represented approximately
4% of total partnership cash available for distribution during
the period. More recently, the annual cash distributions to
unitholders have increased at an average annual rate of 5.9% from
1997 to 1999. The resultant bonus pool increased to $5.6 million
in 1997, $6.7 million in 1998, and $7.8 million in 1999 which
represented 8.8%, 9.4% and 9.8%, respectively, of total
partnership cash available for distribution in these years.
Without the restructuring, the bonus pool for 2000 is estimated
to be at least $8.5 million, approximately 10% of total cash
available for distribution in the current year.
From these figures, it is clear that Cedar Fair has been
considerably more successful than many people anticipated in
1987, and the increasing size of the cash distributions to the
general partner has resulted in a bonus pool of considerable
size. As a consequence, several years ago, even after the number
of participants in the pool had more than doubled, the cash
compensation paid to senior management began to constitute a
disproportionately larger portion of total compensation than is
<PAGE>
the case at comparable companies. These levels of cash
compensation are relatively predictable. As a result, the Board
began issuing an increasing amount of deferred compensation
beginning in 1992.
Beginning in mid-1999, a committee of the Board of Directors
comprised exclusively of non-employee members of the Board began
active consideration of whether or not to recommend a new
management and incentive fee/executive compensation system.
After several meetings without management participation, a new
fee and compensation system was first proposed to representatives
of senior management in late January 2000 and, after minor
modifications, was subsequently approved by those
representatives. The management and incentive fee/executive
compensation proposal was then unanimously approved by the Board
of Directors on March 2, 2000, with those Directors who were
either employees of Cedar Fair or its affiliates or newly elected
in 2000 abstaining from the vote. Later, the proposal was
presented to the shareholders and share-equivalent holders of
Cedar Fair Management Company, who approved the proposal at a
special meeting of shareholders held on April 28, 2000.
Proposed Fee and Compensation Restructuring Plan
The Board of Directors believes it desirable to make Cedar
Fair's cash compensation more consistent with that of other
superior performing companies and believes that the compensation
system should have a stronger equity incentive component. Since
the existing system affords the present shareholders and share-
equivalent holders of Cedar Fair Management Company with
relatively predictable, high levels of cash compensation for the
foreseeable future, the Board of Directors has also determined to
make one-time lump sum payments of cash bonuses and grants of
unit options to Cedar Fair senior management. These payments and
grants will be made to compensate senior management for the
termination of their rights under the existing compensation
system. As part of the elimination of the old compensation
system, the Board has also determined to accelerate the vesting
of deferred unit awards earned under the old system.
In reaching these conclusions, the Board of Directors
determined that the existing compensation system is too heavily
weighted toward cash compensation. The Board also believes that
compensation should be more closely linked to the stock market
performance of the Cedar Fair units. Accordingly, the Board of
Directors has voted to restructure the compensation system and
the system of management and incentive fees paid by Cedar Fair to
the general partner, effective retroactively to January 1, 2000.
In order to implement the fee and compensation restructuring
program, the Board of Directors recommends taking the following
steps:
<PAGE>
- If approved by unitholders holding the requisite number of
units, the limited partnership agreement will be amended to
reduce the general partner's interest in Cedar Fair from 0.5% to
0.1% and to eliminate the management and incentive fees currently
paid to the general partner.
- Cedar Fair's existing bonus and incentive compensation
policy for senior management will be terminated.
- Management base salaries will be increased to be more in
line with current market levels for comparable industry
competitors and high-performing companies of similar size.
Salary increases will be retroactive to January 1, 2000.
- The general partner's shareholders and share-equivalent
holders, each of whom is a member of Cedar Fair's senior
management, will be eligible for year-end bonuses beginning in
2000, generally equal to 50% of their base salaries if
performance goals are met or exceeded. In cases of extraordinary
performance, it is possible that bonuses could exceed the 50%
level, but would be subject to any limitations imposed by the
limited partnership agreement as it may be amended or restated.
- If the new equity incentive plan is approved by unitholders
holding the requisite number of units, the general partner's
shareholders and share-equivalent holders and other employees of
Cedar Fair will be eligible to participate in the plan beginning
in 2000.
- One-time lump sum payments of cash and grants of unit
options will be made to shareholders and share-equivalent holders
of the general partner.
- Cedar Fair will adopt a new cash bonus plan, the senior
executive management incentive plan. See "Interests of Certain
Persons in the Proposals - 2000 Senior Executive Management
Incentive Plan."
The proposed amendment to the limited partnership agreement
will be approved if partners holding a majority of the
outstanding units vote FOR the proposal. The proposed new equity
incentive plan will be adopted if we obtain the approval of
partners holding a majority of the partnership interests that
vote on the proposal and if the total vote cast on the proposal
represents a majority of the interests entitled to vote. The
adoption of the new cash bonus plan does not require the approval
of the unitholders but is being described in this proxy statement
because it is an integral part of the fee and compensation
restructuring plan.
<PAGE>
Cedar Fair Management Company believes that each of the steps
of the fee and compensation restructuring plan referred to above
is important for the success of the plan. Accordingly, Cedar
Fair Management Company reserves the right not to implement the
proposal to amend the limited partnership agreement, including
the fee restructuring plan, if the proposed new equity incentive
plan is not approved by the unitholders.
Existing Fee and Compensation System
Fees and Distributions to the General Partner
As the general partner, Cedar Fair Management Company is
entitled to receive certain management and incentive fees and
other cash distributions from Cedar Fair. Currently, pursuant to
the terms of the limited partnership agreement in exchange for
services provided, the general partner receives the following
fees:
- An "annual management fee" equal to 0.25% of Cedar Fair's
"net revenue" (as defined in the limited partnership agreement)
for each year.
- An "available cash incentive fee" equal to 18.18% of the
"excess distribution amount" (as defined in the limited
partnership agreement) paid to unitholders in each year.
In addition to this fee income received from the partnership,
the general partner receives quarterly cash distributions.
Pursuant to the limited partnership agreement, each quarter Cedar
Fair must distribute all of its "available cash" (as defined in
the limited partnership agreement) to the general partner and the
limited partners in accordance with their respective percentage
interests. Currently, the general partner's percentage interest
is 0.5% and the aggregate percentage interest of the limited
partners is 99.5%.
The general partner earned $7.8 million, $6.7 million and
$5.6 million of total fees and distributions from Cedar Fair in
1999, 1998 and 1997, respectively. Cash bonuses, deferred unit
awards, incentive and deferred compensation and other employee
benefits provided to Cedar Fair's senior management are paid or
reimbursed by the general partner out of these management and
incentive fees and cash distributions that it receives from Cedar
Fair.
One objective of the fee and compensation restructuring plan
is to eliminate the management and incentive fees and
significantly reduce the cash distributions paid to the general
partner which are used to pay compensation to senior management.
If the restructuring plan is approved, our compensation system
will more closely resemble the compensation systems of other
<PAGE>
superior performing companies, a portion of management
compensation will be linked more closely to the stock-market
performance of the units, and cash bonuses will make up a smaller
portion of total compensation for senior management.
Bonus and Incentive Compensation Policy
The general partner is owned by four members of Cedar Fair's
senior management. The 19 members of Cedar Fair's senior
management who are not shareholders of the general partner are
share-equivalent holders. Each share-equivalent holder is a
party to an agreement with the general partner pursuant to which
the holder is generally treated as if he or she were a
shareholder for economic, but not voting, purposes. The share-
equivalent holders have a right to receive incentive compensation
from the general partner or Cedar Fair as if the share-equivalent
holder were a shareholder of the general partner.
As discussed above, the general partner distributes the fees
it receives from Cedar Fair to its shareholders and share-
equivalent holders in the form of cash bonuses and deferred
compensation. The guidelines for these distributions were
established by the general partner's bonus and incentive
compensation policy. Under that policy, funds available to the
general partner are allocated as compensation to shareholders and
share-equivalent holders in the following manner:
- First to cash bonuses in an amount not to exceed 150% of
aggregate base salaries of shareholders and share-equivalent
holders.
- If the sum of total funds available exceeds 150% but is
equal to or less than 200% of the aggregate base salaries, the
additional amount is allocated to deferred compensation and may
be divided between (1) deferred limited partnership units and
(2) supplemental retirement benefits. In recent years, the
additional amounts available generally have been allocated to
deferred limited partnership units.
- If the sum of the total funds available exceeds 200% of the
aggregate base salaries, the additional amounts available are
allocated as recommended by the general partner's compensation
committee and approved by its board.
Deferred limited partnership units issued under the policy are
subject to vesting requirements and other restrictions.
Supplemental retirement benefits awarded under the policy
represent the right of the participant to receive benefits from
Cedar Fair upon retirement at age 62 or older, if the participant
has a minimum of twenty years' service with Cedar Fair and/or its
predecessors. The award of cash bonuses and deferred units to
<PAGE>
particular shareholders and share-equivalent holders under the
policy are based upon the success of Cedar Fair's operations
during the previous year, the individual's position with the
general partner, the responsibilities of the position, the
individual's contribution to Cedar Fair's operations and other
relevant factors. During 1992 to 1996, supplemental retirement
benefits were allocated until fully funded based on a target
annual retirement benefit (including amounts projected to be
available from Cedar Fair's profit sharing retirement plan) of
57.5% of average base salary projected for the three years prior
to retirement at age 65. The general partner's compensation
committee has discretion to revise the assumptions and
methodology used in allocating amounts to participants under the
policy. Any deferred units issued under the policy are subject
to forfeiture or acceleration in certain events. See "Executive
Compensation - Employment Contracts and Termination of Employment
and Change in Control Arrangements."
If the proposed fee and compensation restructuring plan is
implemented, the bonus and incentive compensation policy and all
of the rights of the shareholders and share-equivalent holders
under the policy will be terminated, and the vesting of deferred
units awarded in the past will be accelerated. See " - Lump Sum
Payouts and Unit Option Grants."
The following table illustrates our estimate of the effect of
the proposed new system compared to the old (existing) system:
<TABLE>
<CAPTION>
Aggregate Expense of Increase in Cash
Salaries, Available for
Bonuses and Deferred One-Time Distribution to
Units to Payouts Unitholders
Senior Management Under New System
Year
Per
Old System New System Amount Unit
<S> <C> <C> <C> <C> <C>
2000 $11,900,000 $7,000,000 $ 8,500,000 $ (3,600,000) $(0.07)
(est.) (est.)
2001 13,500,000 7,300,000 -0- 6,200,000 0.12
(est.) (est.)
2002 15,100,000 7,600,000 -0- 7,500,000 0.14
(est.) (est.)
</TABLE>
<PAGE>
Lump Sum Payouts and Unit Option Grants
In connection with terminating the existing bonus and
incentive compensation program and the rights of senior
management under that program, one-time lump sum cash payments in
an aggregate amount of $8,542,000 and a total of 2,330,000 unit
option awards under the new equity incentive plan will be made to
participants in the old compensation system. The lump sum
payments of cash and unit option grants are designed to
compensate Cedar Fair's senior management for the termination of
their rights under the existing compensation system. The
one-time lump sum payments will consist of:
- Cash payments to each of the general partner's shareholders
and share-equivalent holders totaling an aggregate of $3 million.
- "Tax gross-up" cash payments to holders of deferred units to
pay estimated income taxes expected to be incurred as a result of
the accelerated issuance of the deferred units.
Effective March 2, 2000, the general partner's Board granted
2,330,000 unit option awards under the new equity incentive plan,
subject to unitholder approval of the new plan at the special
meeting, to the general partner's shareholders and share-
equivalent holders. The unit options awarded will vest at the
rate of 20% per year for five years and will be exercisable over
10 years from the date of grant. The options will have an
initial exercise price of $20 per unit which will be reduced over
time by the amount of cash distributions paid on outstanding
units. The closing price of the units on the New York Stock
Exchange on the date of grant was $18.3125 per unit. If one
assumes that the current rate of distributions per unit ($.375
per quarter) continues, the exercise price as of December 31,
2001 and as of December 31, 2002 would be $17.375 and $15.875,
respectively. If there should be a change in control prior to
March 2, 2005, the exercise price of these options would be the
lower of the exercise price as calculated above or $12.50. See
"Interests of Certain Persons in the Proposals - Lump Sum Payouts
and Unit Option Grants."
Because the unit options have a variable exercise price,
generally accepted accounting principles will require Cedar Fair
to recognize compensation expense over the period during which
the options are outstanding, based on the difference between the
current market value of Cedar Fair units and the option exercise
price at each reporting date. Increases in the market price of
the units as well as decreases in the option exercise price
resulting from quarterly cash distributions will result in the
recognition of non-cash compensation expense each fiscal period.
<PAGE>
Any subsequent decrease in the market price of the units will be
recognized as income, but limited to the amount of previously
recorded compensation expense on these options. These accounting
adjustments will affect Cedar Fair's financial reporting income
and could be material in some fiscal periods, but will not affect
the amount of cash available for distributions to unitholders.
Proposal One - Approval of the Amendment to the Partnership
Agreement
To implement the new compensation system, the Board of
Directors recommends amending the Cedar Fair limited partnership
agreement as follows:
- Terminate the management and incentive fees that are
currently paid to the general partner.
- Reduce the general partner's interest in the partnership
from 0.5% to 0.1% and increase the aggregate interest of the
limited partners from 99.5% to 99.9%.
- Allow the general partner to propose and adopt employee
benefit plans, including plans involving the issuance of up to
4,830,000 units, for the benefit of employees of Cedar Fair and
its affiliates.
The proposed amendment to the limited partnership agreement is
attached as Exhibit A to this proxy statement. You should read
the proposed amendment in its entirety. The summary provided
above is qualified in its entirety by reference to the actual
amendment.
Proposal Two - Approval of the 2000 Equity Incentive Plan
The 2000 Equity Incentive Plan represents the equity component
of the new compensation system. In connection with the fee and
compensation restructuring plan, the Board of Directors
recommends that Cedar Fair adopt a new equity incentive plan, in
the form presented in this document, to replace the existing
bonus and incentive compensation program that will be terminated.
The purpose of the new plan is to align a portion of senior
management's compensation more closely with the interests of
unitholders and to encourage employees of Cedar Fair and its
affiliates to acquire a proprietary and vested interest in the
growth and performance of Cedar Fair and to enhance the ability
of Cedar Fair to attract and retain exceptional managers. The
Board of Directors anticipates that, subject to determinations by
its Compensation Committee or that committee's designee, the
initial participants in the new equity incentive plan will
<PAGE>
include (a) the 15 senior executives who are expected to
participate in the new senior executive management incentive plan
and (b) approximately 50 additional senior managers who are
expected to participate in other incentive compensation programs.
A copy of the new equity incentive plan is attached to this
proxy statement as Exhibit B. You should read the plan in its
entirety. The summary provided here is qualified in its entirety
by reference to the actual plan.
- Term. The term of the plan is 10 years from the effective
date. No awards may be granted after the termination date.
Awards granted under the plan will have a term set by the
committee on the date of grant and the award term may extend
beyond the termination of the plan.
- Number of Units. The maximum number of units with respect
to which awards may be granted is 4,830,000. No participant may
be granted awards in any one calendar year with respect to more
than 100,000 units, other than one-time lump sum awards made in
connection with the proposed fee and compensation restructuring
plan. In connection with the restructuring plan effective
March 2, 2000, Cedar Fair granted options for 2,330,000 units
under the plan, subject to unitholder approval of the plan at the
special meeting.
- Types of Awards. The plan covers awards of options, unit
appreciation rights, restricted unit awards, performance units,
distribution equivalents and other unit awards.
- Committee. The Compensation Committee of the Board of
Directors or its designee will administer the plan. The
administrator of the plan, whether the committee or its designee,
is referred to in this document as the "committee." The
committee has the authority to determine: (1) which participants
will be granted awards, (2) the type of awards granted, (3) the
number of units covered by each award, (4) the terms and
conditions of the grant, (5) whether and to what extent an award
may be settled in cash, units or other property and (6) whether
and to what extent awards may be deferred either automatically or
at the election of the participant. The committee also
interprets and administers the plan and any agreement or
instrument entered into under the plan.
- Participants. The committee may grant awards under the plan
to any employee, officer or director (including non-employee
directors) of Cedar Fair or any of its affiliates.
<PAGE>
- Options. The purchase price of options granted under the
plan will be determined by the committee in its sole discretion;
provided that the purchase price may not be less than the fair
market value of the units at the time of grant, except that the
price may be reduced (but not below zero) prior to the exercise
of the option by the amount of cash distributions per unit made
by Cedar Fair prior to exercise.
- Unit Appreciation Rights. A unit appreciation right is the
right to receive upon exercise the excess of (1) the fair market
value of one unit over (2) the grant price of the appreciation
right on the date of grant. Unit appreciation rights may be
granted either alone or in addition to other awards granted under
the plan.
- Restricted Units. A restricted unit is any unit issued with
a restriction that the holder may not sell, transfer, pledge or
assign the unit (and with other restrictions imposed by the
committee). Restricted units may be issued to participants for
no cash consideration or minimum cash consideration either alone
or in addition to other awards granted under the plan. Unless
otherwise determined by the committee, upon the termination of a
participant's employment for any reason during the restriction
period, all restricted units that remain subject to restriction
will be forfeited. If a participant's employment termination is
the result of retirement, permanent disability or death or other
special circumstances, however, the committee may waive any
remaining restrictions if it believes that a waiver would be in
the best interest of Cedar Fair.
- Performance Awards. Performance awards may be issued for no
cash consideration or minimum cash consideration, either alone or
in addition to other awards granted under the plan. The
performance criteria and levels to be achieved during a
performance period and the length of a performance period will be
determined by the committee upon the grant of a performance
award. Generally, performance awards will be distributed only
after the end of the relevant performance period and may be paid
in cash, units, other property or any combination of the three.
Additionally, performance award payments may be paid in lump sum
or in installments.
<PAGE>
- Other Unit Awards. In addition to the awards listed above,
the committee may grant "other" awards of units or awards valued
in whole or in part by reference to or based on units or other
property. Other awards may be issued for no cash consideration
or minimum cash consideration, either alone or in addition to
other awards granted under the plan. Such other awards may be
paid in units, other securities of Cedar Fair, cash or any other
property.
- Change in Control. Unless the committee determines
otherwise at the time of grant, upon a "change in control" (as
defined in the plan) (1) any options and unit appreciation rights
outstanding which are not exercisable and vested will become
fully exercisable and vested, (2) the restrictions and deferral
limitations on any restricted units will lapse and the restricted
units will be free of all restrictions and limitations and become
fully vested and transferable, (3) all performance awards will be
considered earned and payable in full and any deferral or other
restriction on any performance award will lapse and the
performance award will be immediately settled or distributed and
(4) the restrictions and deferral limitations and other
conditions applicable to any other unit awards will lapse and the
other unit awards will be free of all restrictions, limitations
or conditions and become fully vested and transferable.
- Change in Control Cash-Out. If the committee so determines
at or any time after the time of grant, during the 60-day period
after a change in control, a participant holding an option will
have the right, whether or not the option is fully exercisable
and in lieu of payment of the purchase price for the units being
purchased under the option, to surrender all or part of the
option to Cedar Fair for cash in an amount equal to the amount by
which the change in control price per unit on the date of
election exceeds the purchase price per unit under the option,
multiplied by the number of units granted under the option as to
which the right is exercised.
- Definition of Change in Control. A "change in control"
occurs when (1) certain persons acquire or obtain the right to
acquire the beneficial ownership of 25% or more of the units then
outstanding (excluding an offer for all of the outstanding units
at a price and on terms determined by a majority of the directors
to be in the best interest of Cedar Fair and the unitholders),
(2) Cedar Fair files a report or proxy statement with the
Securities and Exchange Commission disclosing in response to
Item 1 of Form 8-K or Item 6(e) of Schedule 14A that a change in
control of Cedar Fair has, may have or will occur in the future
pursuant to
<PAGE>
a then existing contract, (3) the unitholders approve a
transaction allowing Cedar Fair to merge with or into, to be
consolidated with or become the subsidiary of another entity
and after giving effect to the transaction less than 45% of
the outstanding voting securities of the surviving or
resulting entity or of the ultimate parent entity have been
issued in exchange for Cedar Fair's voting securities,
(4) the unitholders approve a transaction to sell, lease,
transfer or otherwise dispose of all or substantially all of
Cedar Fair's assets or (5) Cedar Fair Management Company
ceases to be the sole managing partner of Cedar Fair without
the prior approval of a majority of the shareholders of
Cedar Fair Management Company.
- Amendments. The Board may amend, alter or discontinue the
plan but no amendment, alteration or discontinuance may be made
that would impair the rights of an optionee or plan participant
without the optionee's or participant's consent. The committee
may amend the terms of any award but no amendment may impair the
rights of any participant without his consent.
- Termination of Awards. The committee has full authority to
determine whether, to what extent and under what circumstances an
award may be canceled or suspended. In particular, all of a
participant's awards will be canceled if the participant, without
the consent of the committee, becomes associated with, employed
by or renders services to any business that is in competition
with Cedar Fair or any business in which Cedar Fair has a
substantial interest.
In connection with the fee and compensation restructuring
plan, the Board granted options for 2,330,000 units under the new
equity incentive plan, effective March 2, 2000, subject to
unitholder approval of the new plan. Currently, it is not
possible to determine other specific amounts that may be awarded
in the future under the plan. See "Interests of Certain Persons
in the Proposals - Lump Sum Payouts and Unit Option Grants."
2000 Senior Executive Management Incentive Plan
In connection with the restructuring plan, Cedar Fair plans to
adopt a new cash bonus plan to replace the cash bonus portion of
the existing bonus and incentive compensation policy that will be
terminated. The purpose of the senior executive management
incentive plan is to provide select key employees of Cedar Fair
and its affiliates with incentive cash bonuses based on the
achievement of financial, business and other performance
criteria. The senior executive management incentive plan is not
subject to unitholder approval but is being described in this
proxy statement because it is an integral part of the fee and
compensation restructuring plan. It is anticipated that
<PAGE>
approximately 15 of the most senior executives of Cedar Fair and
its affiliates will participate in this plan. This group
includes all of the current shareholders and many, but not all,
of the current share-equivalent holders of the general partner.
The remaining share-equivalent holders will participate in the
Cedar Fair current incentive compensation plan under which they
also will be eligible to receive incentive cash bonuses based on
comparable criteria. A copy of the senior executive management
incentive plan is attached to this proxy statement as Exhibit C
and should be read in its entirety. The summary provided here is
for the convenience of the unitholders and is qualified in its
entirety by reference to the actual plan.
- Committee. The plan will be administered by the
Compensation Committee of the Board of Directors or its designee.
The administrator of the plan, whether the committee or its
designee, is referred to in this document as the "committee."
The committee has the authority to: (1) determine which key
employees will be granted awards, (2) determine the type of cash
incentive awards granted, (3) determine the terms, conditions,
performance periods and restrictions applicable to the cash
incentive awards, (4) prescribe the forms of notices, agreements
or other instruments relating to cash incentive awards, (5) grant
cash incentive awards, (6) adopt, alter and repeal rules
governing the plan, (7) interpret the terms and provisions of the
plan and any cash incentive awards granted and (8) supervise the
administration of the plan.
- Participants. Select key employees of Cedar Fair and its
affiliates are eligible to receive cash incentive awards under
the plan. Initially, the Board of Directors anticipates that
approximately 15 senior executives will participate in this plan.
- Cash Incentive Awards. Awards are payable in cash and are
contingent upon the achievement of the performance goals
established by the committee.
- Performance Measures. Each participant receives a
competitive base salary determined by the committee. The target
amount of a cash incentive award for each participant will be 50%
of the participant's base salary for the performance period,
subject to adjustment (the "award target"). Prior to the
commencement of the performance period, the committee will
determine reasonable performance measures (with such multiple
levels of performance and relative weights as the committee may
determine and which may or may not be readily quantifiable) for
the performance period for each participant. The committee may
establish different performance measures for
<PAGE>
different participants and the performance measures chosen
may include individual performance measures that are
specific to a particular participant. Additionally, the
committee may select performance measures determined on a
company, business unit, management function or other basis,
as the committee deems reasonable. A performance period may
be equal to or less than a full year, but not less than one
fiscal quarter.
- Award Payouts and Adjustments. A participant's actual
incentive award payout will be determined by the extent to which
the participant's individual performance measures are achieved
for the applicable period, adjusted to reflect the relative
weights determined by the committee for the respective
performance measures. In its discretion based on factors it
deems relevant, the committee may adjust a participant's actual
cash incentive award payout up or down, but not above the award
target except in limited instances described in the next
sentence. If a participant's performance measures for a
particular period are achieved at a level greater than that which
would entitle the participant to receive a cash incentive award
at the award target, the committee, in its discretion based on
factors it deems relevant, may increase the participant's cash
incentive award for the applicable performance period to an
amount not in excess of 150% of the target award.
- Limitations on Cash Incentive Award Payouts. No amounts may
be paid under the plan to a participant if none of the
participant's performance measures are met. Additionally, the
aggregate amount of all cash incentive awards paid for an
applicable performance period may not exceed the limits, if any,
imposed on the payment of cash bonuses under the partnership
agreement, as it may be amended or restated.
- Deferral of Payments. The committee may permit participants
to defer the payment of some or all of their cash incentive
awards.
- Change in Control. Unless otherwise determined by the
committee, upon a change in control, all cash incentive awards
will be deemed to have been earned to the extent determined by
the committee. The definition of "change in control" under the
plan is substantially the same as the definition used in the new
equity incentive plan. See " - Proposal Two - Approval of the
2000 Equity Incentive Plan."
<PAGE>
- Termination of Employment. If the employment of a
participant terminates for any reason, all deferred and unpaid
cash incentive awards may be exercisable and paid only under the
rules established by the committee.
- Termination of Awards. The committee may cancel any unpaid
or deferred cash incentive award at any time if the participant
is not in compliance with the plan or the terms and conditions of
the award, or if the participant, without prior written consent
of Cedar Fair, (1) renders services to an organization or engages
in a business that competes with Cedar Fair or (2) discloses or
misuses Cedar Fair's material confidential business information.
- Amendments. The Board may amend or suspend the plan at any
time. The committee may amend the terms of any award but no
amendment may impair the rights of any participant without his or
her consent.
Recommendation of the General Partner
We recommend that you vote FOR the amendment to the limited
partnership agreement and FOR approval of the Equity Incentive
Plan.
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE PROPOSALS
Some of the directors and officers of Cedar Fair have
interests in the restructuring plan that are different from or in
addition to the interest you have as a unitholder. These
interests arise because of participant rights under the existing
bonus and incentive compensation plan and the one-time lump sum
payments of cash and unit option grants that will be made to
members of senior management in connection with the fee and
compensation restructuring plan. As described below, some of the
officers and directors will receive benefits from the
restructuring that are in addition to the benefits they will
receive as unitholders. The Board of Directors was aware of
these interests and fully considered them, among other things, in
adopting the fee and compensation restructuring plan and
recommending the approval of the related proposals. Those
directors who were also employees of Cedar Fair and its
affiliates, including those directors who are shareholders or
share-equivalent holders of the general partner, did not vote on
either proposal and did not participate to any significant extent
in the development of these proposals.
Lump Sum Payouts and Unit Option Grants
Under the existing bonus and incentive compensation policy,
the general partner's shareholders and share-equivalent holders,
comprising twenty-three members of senior management, are
eligible to receive cash bonuses and deferred compensation and
supplemental retirement benefits. Amounts due under the policy
are payable out of the fee income and other cash distributions
received by the general partner from Cedar Fair. See "Background
and Reasons for Proposals - Existing Fee and Compensation
System."
The Board of Directors plans to eliminate the management and
incentive fees payable to the general partner under the limited
partnership agreement in connection with the restructuring plan.
Additionally, Cedar Fair will terminate the existing bonus and
incentive compensation policy, and adopt (1) a new cash bonus
plan for certain key members of management and (2) a new equity
incentive plan, provided that it is approved by the unitholders
at the special meeting.
In connection with terminating the existing bonus and
incentive compensation policy and the rights of the participants
under that program, the general partner will (1) cause all
unvested deferred units previously awarded under the plan to
accelerate and be issued, (2) make one-time lump sum cash
payments in an aggregate amount of $8,542,000 to participants in
the current program, and (3) grant unit options under the new
equity incentive plan for 2,330,000 units to these participants.
<PAGE>
Additionally, base salaries of Cedar Fair's senior management
will be increased to be more in line with current market levels
for superior performing companies, retroactive to January 1,
2000, and they will be eligible for year-end bonuses generally
equal to 50% of their base salaries if performance goals are met
or exceeded. In cases of extraordinary performance, it is
possible that bonuses could exceed the 50% level.
The lump sum cash payments and unit option grants are designed
to compensate Cedar Fair senior management for the termination of
their rights under the existing compensation system. The lump
sum payments will consist of:
- Cash payments to each of the general partner's shareholders
and share-equivalent holders totaling an aggregate of $3 million.
- "Tax gross-up" cash payments to holders of deferred units to
pay the estimated income taxes expected to be incurred as a
result of the accelerated issuance of the deferred units.
The unit options awarded will vest at the rate of 20% per year
for five years and will be exercisable over 10 years. The
options were awarded March 2, 2000, subject to unitholder
approval of the new plan at the special meeting, and will have an
initial exercise price of $20 per unit which will be reduced over
time by the amount of cash distributions paid on outstanding
units. The closing price of the units on the New York Stock
Exchange on March 2, 2000, the date of grant, was $18.3125 per
unit. If one assumes that the current rate of distributions per
unit ($.375 per quarter) continues, the exercise price as of
December 31, 2001 would be $17.375, and as of December 31, 2002,
it would be $15.875. If there should be a change in control
prior to March 2, 2005, the exercise price of these options would
be the lower of the exercise price as calculated above or $12.50.
<PAGE>
The following table provides a summary of the number of
deferred units accelerated, the lump sum cash payments and unit
options to be received by and the increase in base salary for
each named executive officer in connection with the
restructuring:
<TABLE>
<CAPTION>
Name and Units Lump Sum Increase
Principal Accelerat Payment Other Lump Options in Base
Position ed (1) for Taxes Sum Payment Granted Salary
<S> <C> <C> <C> <C> <C>
Richard L. 103,580 $1,173,300 $770,000 720,000 $450,000
Kinzel,
President
and Chief
Executive
Officer
Jacob T. 20,868 236,400 150,000 205,000 125,000
Falfas,
Vice
President
and General
Manager-
Knott's
Berry Farm
Bruce A. 39,052 442,400 150,000 255,000 205,000
Jackson,
Corporate
Vice
President-
Finance and
Chief
Financial
Officer
James L. 32,644 369,800 390,000 30,000 173,200
Miears,
Executive
Vice
President
and General
Manager-
Cedar Point
John R. 29,473 333,800 150,000 205,000 128,400
Albino,
Vice
President
and General
Manager-
Dorney Park
Daniel R. 28,891 327,300 390,000 205,000 128,400
Keller,
Vice
President
and General
Manager-
Worlds of
Fun
Walter R. 32,165 364,300 150,000 205,000 128,400
Wittmer,
Vice
President
and General
Manager-
Valleyfair
</TABLE>
() Assumes that units will be issued in the third quarter of
2000.
2000 Equity Incentive Plan
The general partner's shareholders and share-equivalent
holders will be eligible to participate in the new equity
incentive plan if it is approved by the unitholders at the
special meeting. See "Background and Reasons for the Proposals -
Proposal Two - Approval of the 2000 Equity Incentive Plan."
2000 Senior Executive Management Incentive Plan
Some of Cedar Fair's key employees, including some officers
and directors, will be eligible to participate in the new senior
executive management incentive plan. See "Background and Reasons
for the Proposals - 2000 Senior Executive Management Incentive
Plan."
Current Incentive Compensation Plan
At the present time, some of Cedar Fair's senior managers
participate in the Cedar Fair Current Incentive Compensation
Plan. None of the shareholders or share-equivalent holders of
the general partner participate in this plan, although many of
the share-equivalent holders participated in this plan before
becoming share-equivalent holders and as a result are eligible to
participate in the existing fee and compensation system described
in this document.
If the proposals described in this proxy statement are
approved, Cedar Fair expects that 10 of the current share-
equivalent holders will again participate in this plan, which
will make them eligible for year-end bonuses equal to 50% of base
<PAGE>
salaries if performance goals are met or exceeded. Participants
in the Current Incentive Compensation Plan will also be eligible
to receive equity compensation under the proposed equity
incentive plan.
The Current Incentive Compensation Plan provides generally
for annual cash bonuses from 5% to 50% of base salaries,
depending on managerial responsibilities, if performance goals
are met or exceeded. In 1999, approximately 240 people
participated in this plan and, if the proposals being submitted
to unitholders are approved, approximately 10 additional people
are expected participate in 2000. See "Background and Reasons
for the Proposals - Proposal Two - Approval of the 2000 Equity
Incentive Plan."
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
Compensation of Executives; Summary Compensation Table
<CAPTION>
Long-
Annual Term
Compensation Compensa
(a) (b) tion (f) (i)
(c) (d)
Deferred All
Unit Other
Name and Principal Salary Bonus Awards Compensa
Position Year ($) ($) ($) tion ($)
<S> <C> <C> <C> <C> <C>
Richard L. Kinzel, 1999 341,539 882,148 698,523 16,281
President and 1998 296,924 786,067 519,500 16,200
Chief Executive 1997 219,538 550,907 448,688 15,950
Officer
Jacob T. Falfas, 1999 209,615 408,321 142,574 13,676
Vice President and 1998 188,462 333,530 84,100 16,200
General Manager- 1997 94,827 129,759 224,586 15,950
Knott's Berry Farm
Bruce A. Jackson, 1999 185,961 349,929 277,062 16,281
Corporate Vice 1998 154,346 295,386 215,800 16,200
President-Finance 1997 137,731 301,323 144,616 15,950
and Chief
Financial Officer
James L. Miears, 1999 176,346 330,465 148,827 16,281
Executive Vice 1998 164,923 314,509 137,400 16,200
President and 1997 162,730 296,853 125,706 15,950
General Manager-
Cedar Point
John R. Albino, 1999 170,961 320,838 162,007 16,281
Vice President and 1998 153,654 258,489 201,300 16,200
General Manager- 1997 119,615 218,541 219,232 15,950
Dorney Park
Daniel R. Keller, 1999 170,961 320,838 162,007 16,281
Vice President and 1998 154,692 295,386 165,800 16,200
General Manager- 1997 146,731 267,713 144,809 15,950
Worlds of Fun
Walter R. Wittmer, 1999 170,961 320,838 162,007 16,281
Vice President and 1998 154,731 295,386 165,800 16,200
General Manager- 1997 147,731 269,535 117,052 15,950
Valleyfair
</TABLE>
Column (f) Deferred Unit Awards. The aggregate number of
deferred Cedar Fair, L.P. units, representing restricted
limited partner interests, awarded to Messrs. Kinzel,
Falfas, Jackson, Miears, Albino, Keller and Wittmer as
of December 31, 1999, together with their market value at
year end, were 97,774 ($1,894,370), 19,698 ($381,651),
36,863 ($714,226), 30,815 ($597,030), 27,821 ($539,024),
27,272 ($528,389), and 30,362 ($588,271), respectively.
These units will accrue additional deferred units on the
date of each quarterly distribution paid by Cedar Fair,
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 1999,
$11,481 was credited to the account of each of the
named executive officers, with the exception of
Mr. Falfas who was credited with $8,876 in 1999.
2.Employees' Savings and Investment Plan - With respect
to 1999, $4,800 was credited to the account of each of
the named executive officers.
3.Supplemental Retirement Benefits - No amounts were
awarded in 1999.
Cash bonuses, deferred unit awards, and supplemental retirement
benefits provided to the partnership's executive management are
reimbursed by the general partner out of funds provided by its
management and incentive fees and cash distributions from the
partnership. This system is proposed to be changed if the
proposals presented in this proxy statement are adopted.
<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 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.
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
Cedar Fair 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
Cedar Fair for at least one year are eligible for severance
compensation under the 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
<PAGE>
In addition, seven executive officers of Cedar Fair,
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. These 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.
Deferred Unit Awards
Deferred unit awards represent a named executive officer's
right to receive units at specified future dates if the
individual is still employed by Cedar Fair at that time. The
dollars allocated to each officer are converted to a number of
deferred units based on the NYSE closing price on the first
Monday in December of the year granted. These units, together
with quarterly distributions on the units, vest in years three
through five after the date of grant, at which time unrestricted
units are issued.
In the event of death, total disability, retirement at
age 62 or over, removal of the general partner, or a "change in
control" of Cedar Fair, 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 Cedar Fair on any
vesting date for any other reason will result in the forfeiture
of all unissued deferred units of a participant.
As part of the restructuring program, all unissued deferred
units will be accelerated and issued to participants in the
current program. If the proposals are approved, an aggregate of
approximately 489,000 units will be accelerated and issued out of
treasury units acquired by Cedar Fair or its affiliates in open
market transactions.
Supplemental Retirement Benefits
Supplemental retirement benefits represent a named executive
officer's right to receive cash benefits from Cedar Fair upon
retirement at age 62 or over, with a minimum of 20 years' service
to Cedar Fair, its predecessors and/or successors. Amounts are
allocated among the executive officers as approved by the
compensation committee of the Board. Each officer's account
accrues interest at the prime rate as established from time to
time by Cedar Fair's lead bank, beginning on December 1 of the
year of grant. Executive officers leaving the employ of Cedar
<PAGE>
Fair 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>
MARKET PRICE OF THE UNITS AND
DISTRIBUTIONS TO LIMITED PARTNERS
The limited partner units trade on the New York Stock
Exchange under the symbol "FUN". As of [record date], there were
approximately [11,000] registered holders of the units, including
[3,200] participants in Cedar Fair's distribution reinvestment
plan. The following table sets forth the high and low
transaction prices of the units in trades on the NYSE.
<TABLE>
<CAPTION>
1998 1999 2000
High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C>
First Quarter $28 5/8 $25 $26 $23 1/4 $20 7/8 $17 1/2
Second 30 1/8 25 1/2 26 23 1/4 20 11/16* 18 9/16*
Quarter
Third Quarter 28 13/16 21 3/4 24 15/16 20 5/8
Fourth 26 15/16 22 21 1/4 18 7/16
Quarter
</TABLE>
* Through June 21, 2000.
The closing price of the units on June 21, 2000 was $18.875.
The closing price on March 2, 2000, the date on which the
restructuring plan was approved by the Board of Directors, was
$18.3125. Limited partners are urged to obtain current
information with respect to the market price of the units.
Cedar Fair made quarterly cash distributions to the limited
partners in 1998 and 1999 pursuant to the terms of its limited
partnership agreement and will continue to do so pursuant to the
terms of the limited partnership agreement to the extent of
available funds.
Our registrar and transfer agent is American Stock
Transfer & Trust Company, 40 Wall Street, New York, New
York 10005, (800) 937-5449, (212) 936-5100.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of May 31, 2000, according to information obtained by
Cedar Fair from Schedule 13G and Schedule 13D filings with the
Securities and Exchange Commission concerning the beneficial
ownership of the units (determined in accordance with the rules
of the Securities and Exchange Commission), there were no parties
known to Cedar Fair to own more than 5% of the units.
Security Ownership of Management
The following table sets forth the number of 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 May 31, 2000.
<TABLE>
<CAPTION>
Amount
and
Nature
of
Benefici
al
Ownershi
p
Beneficial
Name of Ownership Investme Voting Power
Beneficial (4) nt Power % of Units
Owner
Sole Shared Sole Shared
<S> <C> <C> <C> <C> <C> <C>
Richard L. 788,770 373,893 414,877 373,893 414,877 1.5
Kinzel (1)
Lee A. 2,000 2,000 -0- 2,000 -0- *
Derrough
Richard S. 2,946 400 2,546 400 2,546 *
Ferreira
Terry C. 478,367 -0- 478,367 -0- 478,367 *
Hackett (2)
Bruce A. 99,939 97,939 2,000 97,939 2,000 *
Jackson
Mary Ann 764,796 420 764,376 420 764,376 1.5
Jorgenson (3)
Michael D. -0- -0- -0- -0- -0- *
Kwiatkowski
Donald H. 2,162 2,162 -0- 2,162 -0- *
Messinger
James L. 458,442 62,050 396,392 62,050 396,392 *
Miears (1)
Thomas A. 9,216 6,386 2,830 6,386 2,830 *
Tracy
Jacob T. 40,229 34,752 5,477 34,752 5,477 *
Falfas
John R. 51,672 51,672 -0- 51,672 -0- *
Albino
Daniel R. 459,058 76,038 383,020 76,038 383,020 *
Keller (1)
Walter R. 57,285 57,285 -0- 57,285 -0- *
Wittmer
All Directors
and officers 2,780,494 1,092,52 1,687,972 1,092,52 1,687,9 5.3
as a group 2 2 72
(30
individuals)
</TABLE>
* Less than one percent of outstanding units.
(1) Includes 383,020 units held by a corporation of which
Messrs. Kinzel, Miears and Keller, together with certain
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 5,447,065 units held by other members of the
Knott family.
(3) Includes 763,976 units held by certain trusts of which
Mrs. Jorgenson and two other partners of Squire, Sanders &
Dempsey L.L.P. are trust advisors, as to which Mrs. Jorgenson
disclaims beneficial ownership.
(4) Includes deferred units that will vest upon the
implementation of the restructuring plan as follows:
Richard L. Kinzel - 101,673; Lee A, Derrough - 0; Richard S.
Ferreira - 0; Terry C. Hackett - 0; Bruce A. Jackson - 38,333;
Mary Ann Jorgenson - 0; Michael D. Kwiatkowski - 0; Donald H.
Messinger - 0; James L. Miears - 32,044; Thomas A. Tracy - 0;
Jacob T. Falfas - 20,484; John R. Albino - 28,930; Daniel R.
Keller - 28,359; and Walter R. Wittmer - 31,573.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Cedar Fair files annual, quarterly and occasional special
reports with the SEC. You may read and copy any reports,
statements or other information we file at the SEC's public
reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
http://www.sec.gov.
No person is authorized to give any information or make any
representation not contained in this proxy statement, and if
given or made, that information or representation should not be
relied upon as having been authorized by Cedar Fair, the Board or
the general partner. The delivery of this proxy statement does
not imply that there has been no change in the information set
forth in this document or in the affairs of the partnership or
the general partner since the date of this document.
FORWARD LOOKING STATEMENTS MAY PROVE INACCURATE
This document, and documents to which we refer you in this
document, contain forward-looking statements about, among other
things, Cedar Fair and our expectations or beliefs concerning
future events or future results of operations. These statements
are typically identified by terms indicating future expectation
such as "anticipates," believes," "expects," "estimates,"
"intends" and similar expressions. These forward-looking
statements are subject to numerous risks and uncertainties, and
many factors could cause actual results and events to differ
significantly from those discussed in forward-looking statements.
All forward-looking statements are subject to the risks and
uncertainties inherent with predictions and forecasts. These are
necessarily speculative statements, and unforeseen factors, such
as competitive pressures, changes in customer preferences,
inclement weather affecting attendance at seasonal parks and
attractions, and delay in developing, or inability to develop,
successful new rides and attractions, could cause results to
differ materially from any that may be expected. Forward-looking
statements are made in the context of information available as of
the date stated. We do not undertake any obligation to update or
revise the statements to reflect new circumstances or
unanticipated events as they occur.
<PAGE>
CEDAR FAIR, L.P.
PROXY
SPECIAL MEETING OF LIMITED PARTNERS, [________,] 2000
This Proxy is Solicited on Behalf of Cedar Fair's General
Partner,
Cedar Fair Management Company
The undersigned hereby appoints [ ____________ and ___________
], and each of them jointly and severally, Proxies, with full
power of substitution, to vote as designated on the reverse side,
all Limited Partnership Units of Cedar Fair, L.P. held of record
by the undersigned on [ _________ ], 2000, at the Special Meeting
of Limited Partners to be held on [ _________ ], 2000, or any
adjournment thereof.
THE GENERAL PARTNER RECOMMENDS A VOTE FOR THE APPROVAL OF THE
PROPOSAL TO AMEND THE LIMITED PARTNERSHIP AGREEMENT OF CEDAR FAIR
AND FOR THE APPROVAL OF THE CEDAR FAIR, L.P., 2000 EQUITY
INCENTIVE PLAN. The Limited Partnership Units represented by
this Proxy will be voted as specified on the reverse side. IF NO
DIRECTION IS GIVEN IN THE SPACE PROVIDED ON THE REVERSE SIDE,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
(Continued and to be dated and signed on the reverse side.)
1. VOTE OVER THE INTERNET:
- Read the accompanying Proxy Statement.
- Have your 12-digit control number
located on your voting ballot available.
- Point your browser to:
http://www. [ _________ ] .com/
- Follow the instructions and cast your
OR
2. VOTE BY TELEPHONE:
- Read the accompanying Proxy Statement.
- Have your 12-digit control number
located on your voting
ballot available.
- Using a touch-tone phone, call the toll-free number shown on
your voting ballot.
- Follow the recorded instructions to cast your vote.
OR
3. VOTE BY MAIL:
- Read the accompanying Proxy Statement.
- Mark your choices on the proxy card.
- Return it in the envelope provided.
<PAGE>
[ _________ ], 2000
To Our Limited Partners:
You are cordially invited to attend a special meeting of Limited
Partners to be held at the Knott's Radisson Resort Hotel located
adjacent to Knott's Berry Farm, 7675 Crescent Avenue, Buena Park,
California, at 9:00 a.m. (Pacific time) on ___________, [ ______ ],
2000.
The Notice of Special Meeting of Limited Partners and the Special
Proxy Statement describe the matters to be acted upon at the
meeting.
Regardless of the number of units you own, your vote on these
matters is important. Whether or not you plan to attend the
meeting, we urge you to vote over the Internet, by telephone, or by
marking your choices on the attached proxy card and signing, dating,
and returning it by mail in the envelope provided. If you decide to
vote in person at the meeting, you will have an opportunity to
revoke your proxy and vote personally by ballot.
IF YOU PLAN TO ATTEND THE MEETING, PLEASE MARK THE BOX PROVIDED ON
THE PROXY CARD.
We look forward to seeing you at the meeting.
RICHARD L. KINZEL
President and Chief Executive Officer
FOLD AND DETACH HERE IF YOU RETURN YOUR PROXY CARD BY MAIL
[X] Please mark your vote as in this example.
This proxy when properly executed will be voted in the manner
directed. If no direction is made, this proxy will be voted FOR
proposals 1 and 2.
1. Approval of the Proposal to Amend the Limited Partnership Agreement
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the Proxies are authorized to
vote upon such other business as may properly come before
the meeting or any adjournment and matters incident to
the conduct of the meeting.
2. Approval of the Cedar Fair, L.P., 2000 Equity Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
[ ] I will attend the meeting
[ ] Change of Address
The signer hereby revokes all proxies previously given by the
signer to vote at the meeting or any adjournments.
NOTE: Please sign exactly
as your name appears on
this card. Joint owners
should each sign. When
signing as attorney,
executor, administrator,
trustee or guardian,
please sign in full
corporate name by
president or other
authorized officer. If a
partnership, please sign
in partnership name by
general partner.
DATE: ____________, 2000
__________________________
SIGNATURE(S)
EXHIBIT A
CEDAR FAIR, L.P.
AMENDMENT NO. 4 TO THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
This Amendment No. 4 (this "Amendment") to Third Amended and
Restated Agreement of Limited Partnership of Cedar Fair, L.P,
(the "Partnership") is dated __________, 2000.
WHEREAS, Cedar Fair Management Company, an Ohio corporation and
managing general partner of the Partnership ("CFMC"), proposes
that the Third Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of April 21, 1987 (the
"Third Restated Agreement"), as amended by Amendment No. 1 to the
Third Restated Agreement dated as of December 31, 1988, Amendment
No. 2 to the Third Restated Agreement dated as of December 31,
1992, and Amendment No. 3 to the Third Restated Agreement
effective July 1,1997, should be further amended to reflect
certain changes in the general partnership interest of and fees
and distributions payable to CFMC under the Third Restated
Agreement and to reflect certain other related changes, all as
set forth in this Amendment; and
WHEREAS, CFMC approves this Amendment and has determined that it
is advisable to call a meeting of the Limited Partners to
consider and vote on this Amendment; and
WHEREAS, certain capitalized terms used but not defined in this
Amendment shall have the meanings assigned to them in the Third
Restated Agreement;
NOW, THEREFORE, subject to approval as contemplated by Article XV
of the Third Restated Agreement, the Third Restated Agreement, as
heretofore amended, is further amended as follows:
1. The definition of "Annual Fee" in Article II shall be
deleted.
2. The definition of "Available Cash Incentive Fee" in
Article II shall be deleted.
3. The definition of "Excess Distribution Amount" in Article II
shall be deleted.
4. The definition of "Incentive Fee" in Article II shall be
deleted.
5. The definition of "Percentage Interest" in Article II shall
be amended so as to read:
<PAGE>
"`Percentage Interest' means (a) as to the Managing General
Partner, 0.1%, and (b) as to any Limited Partner or
Assignee, the product of (i) 99.9% multiplied by (ii) a
fraction, the numerator of which is the number of such
Limited Partner's or Assignee's Units and the denominator of
which is the total number of Units Outstanding as of the
date of determination."
6. Section 4.1 shall be amended to read as follows:
"4.1 General Partner. The General Partner shall not be
required to contribute to the capital of the Partnership
except (a) as may be necessary to pay liabilities of the
Partnership for which provision cannot otherwise be made or
(b) as otherwise required pursuant to Sections 13.1(c),
14.2(b) or 14.8. The General Partner shall at all times
while serving in such capacities retain a Percentage
Interest entitling it, except as otherwise provided in
Article V, to at least a 0.1% participation in the
Partnership's income, gains, losses, deductions and credits,
but only for so long as the General Partner continues in
such capacity."
7. The first sentence of Section 4.3(a) shall be amended to
read as follows:
"(a) Subject to Section 4.3(b), in order to raise additional
capital or to acquire assets, to redeem or retire
Partnership debt, to provide compensation or incentives to
employees of the Partnership or of its Affiliates,
including, without limitation, the Managing General Partner,
or for any other Partnership purposes, the Managing General
Partner is authorized to cause the Partnership to issue up
to 100 million Units and options or other rights to acquire
Units in addition to those issued pursuant to Section 4.2 at
any time or from time to time to the General Partner, the
Limited Partners, or other Persons and to admit them to the
Partnership as Additional Limited Partners."
8. The last sentence of Section 4.3(b) is amended to read as
follows:
"Any issuance of Units to a General Partner or any Affiliate
thereof (other than to employees of the Partnership or of
its Affiliates, including, without limitation, the Managing
General Partner, pursuant to a plan contemplated by
Section 6.5(k) hereof) shall be made only if such issuance
is approved by the affirmative vote or approval of more than
85% of the Percentage Interests of the Limited Partners
exclusive of any such Percentage Interests held by a General
Partner or any Affiliate thereof."
<PAGE>
9. The third sentence of Section 6.1(c) shall be amended so as
to read: "Each Operating Partnership shall be composed of the
Managing General Partner as managing general partner thereof,
having a 0.1% interest in the Operating Partnership, and the
Partnership as the sole limited partner thereof having a 99.9%
interest in the Operating Partnership."
10. Sections 6.5(b), (d), (e), (g) and (h) shall be deleted.
11. Section 6.5(k) is amended to read as follows:
"(k) The Managing General Partner may propose and adopt
customary and reasonable fringe benefit plans, including plans
involving the issuance of Units of the Partnership not to exceed
4,830,000 Units in the aggregate (subject to adjustment to take
into account any distribution, subdivision or combination of
Units as described in Section 4.9 hereof) for the benefit of
employees, officers and directors of the Partnership or of its
Affiliates, including, without limitation, the Managing General
Partner, in respect of services performed or to be performed,
directly or indirectly, for the benefit of the Partnership."
12. A new section, Section 6.15, shall be added immediately
following Section 6.14 and that section shall read as follows:
"6.15. Limit on Bonus Compensation. The aggregate amount
payable to executive officers of the Partnership as cash
bonuses in excess of base salary with respect to any year
shall not exceed 5% of Available Cash with respect to such
year."
This Amendment shall become effective upon approval thereof
pursuant to Article XV of the Third Restated Agreement, but with
effect from January 1, 2000. Nothing in this Amendment shall in
any way affect the rights of the Managing General Partner with
respect to any fees, distributions or other amounts payable to
the Managing General Partner under the Third Restated Agreement
(without giving effect to this Amendment) with respect to any
year ended prior to January 1, 2000.
EXHIBIT B
CEDAR FAIR, L.P.,
2000 EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE. The purposes of the Cedar Fair, L.P., 2000
Equity Incentive Plan (the "Plan") are to encourage employees of
Cedar Fair, L.P. (the "Company") and its subsidiaries (the
Company and its subsidiaries are herein collectively referred to
as "Cedar Fair"), and its general partner, Cedar Fair Management
Company ("CFMC"), and their respective officers and directors, to
acquire a proprietary and vested interest in the growth and
performance of Cedar Fair, to generate an increased incentive to
contribute to Cedar Fair's future success and prosperity, thus
enhancing the value of Cedar Fair for the benefit of its limited
partners (or unitholders), and to enhance the ability of Cedar
Fair to attract and retain individuals of exceptional managerial
talent upon whom, in large measure, the sustained progress,
growth and profitability of Cedar Fair depends.
SECTION 2. DEFINITIONS. As used in the Plan, the following
terms shall have the meanings set forth below:
(a) "Award" shall mean any Option, Unit Appreciation Right,
Restricted Unit Award, Performance Unit, Distribution Equivalent,
Other Unit Award, or any other right, interest, or option
relating to Units or other securities of the Company granted
pursuant to the provisions of the Plan.
(b) "Award Agreement" shall mean any written agreement,
contract, or other instrument or document evidencing any Award
granted by the Committee hereunder and signed by both the Company
and the Participant.
(c) "Board" shall mean the Board of Directors of CFMC.
(d) A "Change in Control" of the Company shall have
occurred at any time after the Effective Date when:
(i) any Acquiring Person (other than (A) the Company or any
related entity, (B) any employee benefit plan of the Company
or any related entity or any trustee of or fiduciary with
respect to any such plan when acting in such capacity, or
(C) any person who, on the Effective Date of the Plan, is an
Affiliate of the Company and owning in excess of ten
percent (10%) of the outstanding Units of the Company and
the <PAGE>
<PAGE>
respective successors, executors, legal representatives,
heirs, and legal assigns of such person), alone or together
with its Affiliates and Associates, has acquired or obtained
the right to acquire the beneficial ownership of twenty-five
percent (25%) or more of the Units then outstanding (except
pursuant to an offer for all outstanding Units of the
Company at a price and upon such terms and conditions as a
majority of the Continuing Directors determine to be in the
best interests of the Company and its unitholders (other
than the Acquiring Person or any Affiliate or Associate
thereof on whose behalf the offer is being made));
(ii) the Company files a report or proxy statement with the
SEC pursuant to the Exchange Act disclosing in response to
Item 1 of Form 8-K thereunder or Item 6(e) of Schedule 14A
thereunder that a Change in Control of the Company has or
may have occurred or will or may occur in the future
pursuant to any then-existing contract or transaction;
(iii) the unitholders of the Company approve a transaction
pursuant to which the Company is to be merged with or into,
consolidated with, or become the subsidiary of another
entity and immediately after giving effect to that
transaction, less than 45% of the then outstanding voting
securities of the surviving or resulting entity or (if the
Company is to become a subsidiary in the transaction) of the
ultimate parent of the Company will represent or will have
been issued in exchange for voting securities of the Company
outstanding immediately prior to the transaction;
(iv) the unitholders of the Company approve a transaction
pursuant to which all or substantially all of the assets of
the Company are to be leased, sold, transferred or otherwise
disposed of in a single transaction or a series of related
transactions to a single purchaser or a group of affiliated
purchasers; or
(v) CFMC ceases to be the sole managing general partner of
the Company, except with the prior affirmative vote or
approval of holders of shares of CFMC entitling them to
exercise a majority of the voting power of CFMC in the
election of directors.
<PAGE>
(1) "Acquiring Person" means any person (any
individual, firm, corporation or other entity) who or
which, together with all Affiliates and Associates, has
acquired or obtained the right to acquire the
beneficial ownership of twenty-five percent (25%) or
more of the Units then outstanding.
(2) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(3) "Continuing Director" means any person who was a
member of the Board on the Effective Date of the Plan
or thereafter elected to the Board or appointed by the
Board prior to the date as of which the Acquiring
Person (other than an Acquiring Person described in
clauses (A), (B), or (C) of paragraph (i) of the
definition of "Change in Control") became the owner of
more than ten percent (10%) of the outstanding Units of
the Company, or a person designated (before his initial
election or employment as a director) as a Continuing
Director by three-fourths of the Whole Board, but only
if a majority of the Whole Board shall then consist of
Continuing Directors.
(4) "Whole Board" means the total number of directors
which the Board would have if there were no vacancies.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(f) "Committee" shall mean the Compensation Committee of
the Board, composed of no fewer than three directors, each of
whom is a Non-Employee Director, or any other committee or
designee of the Board that the Board authorizes to administer
this Plan; provided, however, that Awards to, and other
determinations hereunder with respect to, Participants who are
subject to Section 16 of the Exchange Act and the rules and
regulations thereunder shall, to the extent practicable, be made
by the Board or by a committee of the Board meeting the
requirements of Rule 16b-3(d)(1) under the Exchange Act, as from
time to time amended or superseded.
(g) "Company" shall mean Cedar Fair, L.P., a Delaware
limited partnership.
<PAGE>
(h) "Distribution Equivalent" shall mean any right granted
pursuant to Section 13(h) hereof.
(i) "Eligible Person" shall mean any employee of the
Company or of any related entity, and any officer or director
thereof (including directors who are not employees of the Company
or any related entity). Unless otherwise determined by the
Committee in its sole discretion, for purposes of the Plan, an
Eligible Person shall be considered to have terminated employment
and to have ceased to be an Eligible Person if his or her
employer ceases to be a related entity of the Company, even if he
or she continues to be employed by such employer.
(j) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time, and any successor thereto.
(k) "Fair Market Value" shall mean, with respect to any
property, the fair market value of such property determined by
such methods or procedures as shall be established from time to
time by the Committee.
(l) "Non-Employee Director" shall have the meaning set
forth in Rule 16b-3(b)(3) promulgated by the Securities and
Exchange Commission under the Exchange Act or any successor
definition adopted by the Securities and Exchange Commission.
(m) "Option" shall mean any right granted to a Participant
under Section 6 hereof allowing such Participant to purchase
Units at such price or prices and during such period or periods
as the Committee shall determine.
(n) "Other Unit Award" shall mean any right granted to a
Participant by the Committee pursuant to Section 10 hereof.
(o) "Participant" shall mean an Eligible Person who is
selected by the Committee to receive an Award under the Plan.
(p) "Performance Award" shall mean any Award of Performance
Units pursuant to Section 9 hereof.
(q) "Performance Period" shall mean that period established
by the Committee at the time any Performance Award is granted or
at any time thereafter during which any performance goals
specified by the Committee with respect to such Award are to be
measured.
<PAGE>
(r) "Performance Unit" shall mean any grant pursuant to
Section 9 hereof of a unit valued by reference to a designated
number of Units or other property, which value may be paid to the
Participant by delivery of such property as the Committee shall
determine, including, without limitation, cash, Units, or any
combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at
the time of such grant or thereafter.
(s) "Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, limited liability company, other
entity or government or political subdivision thereof.
(t) "Restricted Unit" shall mean any Unit issued with the
restriction that the holder may not sell, transfer, pledge, or
assign such Unit and with such other restrictions as the
Committee, in its sole discretion, may impose (including, without
limitation, any restriction on the right to vote such Unit, and
the right to receive any cash distributions) which restrictions
may lapse separately or in combination at such time or times, in
installments or otherwise, as the Committee may deem appropriate.
(u) "Restricted Unit Award" shall mean an award of
Restricted Unit under Section 8 hereof.
(v) "Unit" shall mean a unit of limited partnership interest
of the Company.
(w) "Unit Appreciation Right" shall mean any right granted
to a Participant pursuant to Section 7 hereof to receive, upon
exercise by the Participant, the excess of (i) the Fair Market
Value of one Unit on the date of exercise or, if the Committee
shall so determine, at any time during a specified period before
the date of exercise over (ii) the grant price of the right on
the date of grant, or if granted in connection with an
outstanding Option on the date of grant of the related Option, as
specified by the Committee in its sole discretion, which (other
than in the case of substitute awards which shall have the same
prices as the original awards) shall not be less than the Fair
Market Value of one Unit on such date of grant of the right or
the related Option, as the case may be. Any payment by the
Company in respect of such right may be made in cash, Units,
other property or any combination thereof, as the Committee, in
its sole discretion, shall determine.
<PAGE>
SECTION 3. ADMINISTRATION. The Plan shall be administered by
the Committee. The Committee shall have full power and
authority, subject to such orders or resolutions not inconsistent
with the provisions of the Plan as may from time to time be
adopted by the Board, to: (a) select the Eligible Persons to
whom Awards may from time to time be granted hereunder;
(b) determine the type or types of Award to be granted to each
Participant hereunder; (c) determine the number of Units to be
covered by each Award granted hereunder; (d) determine the terms
and conditions, not inconsistent with the provisions of the Plan,
of any Award granted hereunder; (e) determine whether, to what
extent and under what circumstances Awards may be settled in
cash, Units or other property or canceled or suspended;
(f) determine whether, to what extent and under what
circumstances cash, Units and other property and other amounts
payable with respect to an Award under this Plan shall be
deferred either automatically or at the election of the
Participant; (g) interpret and administer the Plan and any
instrument or agreement entered into under the Plan,
(h) establish such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the
Plan; and (i) make any other determination and take any other
action that the Committee deems necessary or desirable for
administration of the Plan. Decisions of the Committee shall be
final, conclusive and binding upon all persons including the
Company, any Participant, any unitholder, and any Eligible Person
of the Company or of any Affiliate. A majority of the members of
the Committee may determine its actions and fix the time and
place of its meetings.
SECTION 4. DURATION OF, AND UNITS SUBJECT TO PLAN.
(a) TERM. Subject to the provisions of Section 15 below,
the Plan shall remain in effect for 10 years after the Effective
Date.
(b) UNITS SUBJECT TO THE PLAN. The maximum number of Units
with respect to which Awards may be granted under the Plan,
subject to adjustment as provided in Section 4(c) of the Plan, is
4,830,000 Units. Notwithstanding the foregoing, no Participant
may be granted Awards in any one calendar year with respect to
more than one-hundred thousand (100,000) Units, except that the
foregoing limitation shall not apply to Awards contemplated by
the restructuring of CFMC's executive compensation as described
in the Company's proxy statement dated ________, 2000 for the
Special Meeting of Unitholders called to be held ________, 2000.
<PAGE>
For the purpose of computing the total number of Units available
for Awards under the Plan, there shall be counted against the
foregoing limitations the number of Units subject to issuance
upon exercise or settlement of Awards as of the dates on which
such Awards are granted. The Units which were previously subject
to Awards shall again be available for Awards under the Plan if
any such Awards are forfeited, terminated, unexercised at the
time of expiration, settled in cash or exchanged for other Awards
(to the extent of such forfeiture or expiration of such Awards),
or if the Units subject thereto can otherwise no longer be
issued. Further, any Units which are used as full or partial
payment to the Company by a Participant of the purchase price
upon exercise of a Unit Option shall again be available for
Awards under the Plan.
Units which may be issued under the Plan may be either authorized
and unissued Units or issued Units which have been reacquired by
Cedar Fair. No fractional Units shall be issued under the Plan.
(c) CHANGES IN UNITS. In the event of any merger,
reorganization, consolidation, recapitalization, unit dividend,
unit split, reverse unit split, spin off or similar transaction
or other change in legal structure affecting the Units, such
adjustments and other substitutions shall be made to the Plan and
to Awards as the Committee in its sole discretion deems equitable
or appropriate, including without limitation such adjustments in
the aggregate number, class, and kind of Units which may be
delivered under the Plan, in the aggregate or to any one
Participant, in the number, class, kind, and option or exercise
price of Units subject to outstanding Options, Unit Appreciation
Rights or other Awards granted under the Plan, and in the number,
class and kind of Units subject to Awards granted under the Plan
(including, if the Committee deems appropriate, the substitution
of similar options to purchase the shares of, or other awards
denominated in the shares of, another company) as the Committee
may determine to be appropriate in its sole discretion, provided
that the number of Units or other securities subject to any Award
shall always be a whole number.
SECTION 5. ELIGIBILITY. Any Eligible Person shall be eligible
to be selected as a Participant, except that any member of the
Committee shall not participate in his own selection as a
Participant, or in the grant of any Award to such member of the
Committee.
<PAGE>
SECTION 6. UNIT OPTIONS. Options may be granted hereunder to
Participants either alone or in addition to other Awards granted
under the Plan. Any Option granted under the Plan shall be
evidenced by an Award Agreement in such form as the Committee may
from time to time approve. Any such Option shall be subject to
the following terms and conditions and to such additional terms
and conditions, not inconsistent with the provisions of the Plan,
as the Committee shall deem desirable:
(a) OPTION PRICE. The purchase price per Unit purchasable
under an Option shall be determined by the Committee in its sole
discretion; provided that, subject to the next succeeding
proviso, such purchase price shall not be less than the Fair
Market Value of the Unit on the date of the grant of the Option;
and provided, further, that the Committee in its sole discretion,
may determine at the time of grant of an Option that the purchase
price shall be reduced prior to the exercise of the Option (but
in no event to less than zero) by an amount equal to the cash
distributions per Unit made by the Company on its issued and
outstanding Units when and as such cash distributions are made by
the Company.
(b) OPTION PERIOD. The term of each Option shall be fixed
by the Committee in its sole discretion.
(c) EXERCISABILITY. Options shall be exercisable at such
time or times as determined by the Committee at or subsequent to
grant.
(d) METHOD OF EXERCISE. Subject to the other provisions of
the Plan and any applicable Award Agreement, any Option may be
exercised by the Participant in whole or in part at such time or
times, and the Participant may make payment of the option price
in such form or forms, including, without limitation, payment by
delivery of cash, Units or other consideration (including, where
permitted by law and the Committee, Awards, including Awards
other than the Option then being exercised) having a Fair Market
Value on the exercise date equal to the total option price, or by
any combination of cash, Units, and other consideration as the
Committee may specify in the applicable Award Agreement.
SECTION 7. UNIT APPRECIATION RIGHTS. Unit Appreciation Rights
may be granted hereunder to Participants either alone or in
addition to other Awards granted under the Plan and may, but need
not, relate to a specific Option granted under Section 6. The
provisions of Unit Appreciation Rights need not be the same with
respect to each recipient. <PAGE>
Any Unit Appreciation Right related to an Option may be granted
at the same time such Option is granted or at any time thereafter
before exercise or expiration of such Option. In the case of any
Unit Appreciation Right related to any Option, the Unit
Appreciation Right or applicable portion thereof shall terminate
and no longer be exercisable upon the termination or exercise of
the related Option, except that a Unit Appreciation Right granted
with respect to less than the full number of Units covered by a
related Option shall not be reduced until the exercise or
termination of the related Option exceeds the number of Units not
covered by the Unit Appreciation Right. Any Option related to
any Unit Appreciation Right shall no longer be exercisable to the
extent the related Unit Appreciation Right has been exercised.
The Committee may impose such conditions or restrictions on the
exercise of any Unit Appreciation Right as it shall deem
appropriate.
SECTION 8. RESTRICTED UNITS.
(a) ISSUANCE. Restricted Unit Awards may be issued
hereunder to Participants, for no cash consideration or for such
minimum consideration as may be required by applicable law,
either alone or in addition to other Awards granted under the
Plan. The provisions of Restricted Unit Awards need not be the
same with respect to each recipient.
(b) REGISTRATION. Any Restricted Units issued hereunder
may be evidenced in such manner as the Committee in its sole
discretion shall deem appropriate, including, without limitation,
book-entry registration or issuance of a unit certificate or
certificates. In the event any unit certificate is issued in
respect of Restricted Units awarded under the Plan, such
certificate shall be registered in the name of the Participant,
and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award.
(c) FORFEITURE. Except as otherwise determined by the
Committee at the time of grant, upon termination of employment
for any reason during the restriction period, all Restricted
Units still subject to restriction shall be forfeited by the
Participant and reacquired by the Company; provided that, in the
event of a Participant's retirement, permanent disability, other
termination of employment or death, or in cases of special
circumstances, the Committee may, in its sole discretion, when it
finds that a waiver would be in the best interests of the
Company, waive in whole or in part any or all remaining
restrictions with respect to such Participant's Restricted Units.
Unrestricted Units, evidenced in such manner as the Committee
shall deem appropriate, shall be issued to the grantee promptly
after the expiration of the period of forfeiture, as determined
or modified by the Committee.
<PAGE>
SECTION 9. PERFORMANCE AWARDS. Performance Awards may be issued
hereunder to Participants, for no cash consideration or for such
minimum consideration as may be required by applicable law,
either alone or in addition to other Awards granted under the
Plan. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall
be determined by the Committee upon the grant of each Performance
Award. Except as provided in Section 11, Performance Awards will
be distributed only after the end of the relevant Performance
Period. Performance Awards may be paid in cash, Units, other
property or any combination thereof, in the sole discretion of
the Committee at the time of payment. The performance levels to
be achieved for each Performance Period and the amount of the
Award to be distributed shall be conclusively determined by the
Committee. Performance Awards may be paid in a lump sum or in
installments following the close of the Performance Period.
SECTION 10. OTHER UNIT AWARDS.
(a) UNITS AND ADMINISTRATION. Other Awards of Units and
other Awards that are valued in whole or in part by reference to,
or are otherwise based on, Units or other property ("Other Unit
Awards") may be granted hereunder to Participants, either alone
or in addition to other Awards granted under the Plan. Other Unit
Awards may be paid in Units, other securities of the Company,
cash or any other form of property as the Committee shall
determine. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Eligible
Persons to whom and the time or times at which such Awards shall
be made, the number of Units to be granted pursuant to such
Awards, and all other conditions of the Awards. The provisions
of Other Unit Awards need not be the same with respect to each
recipient.
(b) TERMS AND CONDITIONS. Units (including securities
convertible into Units) granted under this Section 10 may be
issued for no cash consideration or for such minimum
consideration as may be required by applicable law; Units
(including securities convertible into Units) purchased pursuant
to a purchase right awarded under this Section 10 shall be
purchased for such consideration as the Committee shall in its
sole discretion determine, which shall not be less than the Fair
Market Value of such Units or other securities as of the date
such purchase right is awarded.
<PAGE>
SECTION 11. CHANGE IN CONTROL PROVISIONS.
(a) IMPACT OF EVENT. Notwithstanding any other provision
of the Plan to the contrary unless the Committee shall determine
otherwise at the time of grant with respect to a particular
Award, in the event of a Change in Control:
(i) Any Options and Unit Appreciation Rights outstanding as
of the date such Change in Control is determined to have
occurred, and which are not then exercisable and vested,
shall become fully exercisable and vested to the full extent
of the original grant.
(ii) The restrictions and deferral limitations applicable
to any Restricted Unit shall lapse, and such Restricted Unit
shall become free of all restrictions and limitations and
become fully vested and transferable to the full extent of
the original grant.
(iii) All Performance Awards shall be considered to be
earned and payable in full, and any deferral or other
restriction shall lapse and such Performance Awards shall be
immediately settled or distributed.
(iv) The restrictions and deferral limitations and other
conditions applicable to any Other Unit Awards or any other
Awards shall lapse, and such Other Unit Awards or such other
Awards shall become free of all restrictions, limitations or
conditions and become fully vested and transferable to the
full extent of the original grant.
(b) CHANGE IN CONTROL CASH-OUT. Notwithstanding any other
provision of the Plan, during the 60-day period from and after a
Change in Control (the "Exercise Period"), if the Committee shall
determine at or at any time after, the time of grant, a
Participant holding an Option shall have the right, whether or
not the Option is fully exercisable and in lieu of the payment of
the purchase price for the Units being purchased under the Option
and by giving notice to the Company, to elect (within the
Exercise Period) to surrender all or part of the Option to the
Company and to receive cash, within 30 days of such notice, in an
amount equal to the amount by which the Change in Control Price
per Unit on the date of such election shall exceed the purchase
price per Unit under the Option (the "Spread") multiplied by the
number of Units granted under the Option as to which the right
granted under this Section 11(b) shall have been exercised.
<PAGE>
(c) Notwithstanding any other provision of this Plan, if
any right granted pursuant to this Plan would make a Change in
Control transaction ineligible for pooling-of-interests
accounting under APB No. 16 that (after giving effect to any
other actions taken to cause such transaction to be eligible for
such pooling-of-interests accounting treatment) but for the
nature of such grant would otherwise be eligible for such
accounting treatment, the Committee shall have the ability to
substitute for the cash payable pursuant to such right Units with
a Fair Market Value equal to the cash that would otherwise be
payable pursuant thereto.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that
would impair the rights of an optionee or Participant under an
Award theretofore granted, without the optionee's or
Participant's consent. The Committee may amend the terms of any
Award theretofore granted, prospectively or retroactively, but no
such amendment shall impair the rights of any Participant without
his consent.
SECTION 13. GENERAL PROVISIONS.
(a) Unless the Committee determines otherwise at the time
the Award is granted, no Award, and no Units subject to Awards
described in Section 10 which have not been issued or as to which
any applicable restriction, performance or deferral period has
not lapsed, may be sold, assigned, transferred, pledged or
otherwise encumbered, except by will or by the laws of descent
and distribution; provided that, if so determined by the
Committee, a Participant may, in the manner established by the
Committee, designate a beneficiary to exercise the rights of the
Participant with respect to any Award upon the death of the
Participant. Each Award shall be exercisable, during the
Participant's lifetime, only by the Participant or, if
permissible under applicable law, by the Participant's guardian
or legal representative.
(b) The term of each Award shall be for such period of
months or years from the date of its grant as may be determined
by the Committee.
(c) No Eligible Person shall have any claim to be granted
any Award under the Plan and there is no obligation for
uniformity of treatment of Eligible Persons under the Plan.
<PAGE>
(d) The prospective recipient of any Award under the Plan
shall not, with respect to such Award, be deemed to have become a
Participant, or to have any rights with respect to such Award,
until and unless such recipient shall have executed an agreement
or other instrument evidencing the Award and delivered a fully
executed copy thereof to the Company, and otherwise complied with
the then applicable terms and conditions.
(e) The Committee shall be authorized to make adjustments in
Performance Award criteria or in the terms and conditions of
other Awards in recognition of unusual or nonrecurring events
affecting the Company or its financial statements or changes in
applicable laws, regulations or accounting principles. The
Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem desirable to carry it into
effect. In the event the Company shall assume outstanding
employee benefit awards or the right or obligation to make future
such awards in connection with the acquisition of another
corporation or business entity, the Committee may, in its
discretion, make such adjustments in the terms of Awards under
the Plan as it shall deem appropriate.
(f) The Committee shall have full power and authority to
determine whether, to what extent and under what circumstances
any Award shall be canceled or suspended. In particular, but
without limitation, all outstanding Awards to any Participant
shall be canceled if the Participant, without the consent of the
Committee while employed by the Company or after termination of
such employment, becomes associated with, employed by, renders
services to or owns any interest in (other than any
nonsubstantial interest, as determined by the Committee), any
business that is in competition with the Company or with any
business in which the Company has a substantial interest as
determined by the Committee.
(g) All certificates for Units delivered under the Plan
pursuant to any Award shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
the Units are then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference
to such restrictions.
<PAGE>
(h) The Committee shall be authorized to establish
procedures pursuant to which the payment of any Award may be
deferred. Subject to the provisions of this Plan and any Award
Agreement, the recipient of an Award (including, without
limitation, any deferred Award) may, if so determined by the
Committee, be entitled to receive, currently or on a deferred
basis, interest or distributions, or interest or distribution
equivalents, with respect to the number of Units covered by the
Award, as determined by the Committee, in its sole discretion,
and the Committee may provide that such amounts (if any) shall be
deemed to have been reinvested in additional Units or otherwise
reinvested.
(i) Except as otherwise required in any applicable Award
Agreement or by the terms of the Plan, recipients of Awards under
the Plan shall not be required to make any payment or provide
consideration more than the rendering of services.
(j) The Company shall be authorized to withhold from any
Award granted or payment due under the Plan the amount of
withholding taxes due in respect of an Award or payment hereunder
and to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for the payment of such
taxes. The Committee shall be authorized to establish procedures
for election by Participants to satisfy such withholding taxes by
delivery of, or directing the Company to retain, Units.
(k) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements,
subject to unitholder approval if such approval is otherwise
required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(l) The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Delaware
and applicable Federal law.
(m) If any provision of this Plan is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, or
would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without in the determination of the
Committee, materially altering the intent of the Plan, it shall
be stricken and the remainder of the Plan shall remain in full
force and effect.
<PAGE>
(n) Awards may be granted to Eligible Persons who are
foreign nationals or employed outside the United States, or both,
on such terms and conditions different from those specified in
the Plan as may, in the judgment of the Committee, be necessary
or desirable in order to recognize differences in local law or
tax policy. The Committee also may impose conditions on the
exercise or vesting of Awards in order to minimize the Company's
obligation with respect to tax equalization for Eligible Persons
on assignments outside their home country.
SECTION 14. EFFECTIVE DATE OF PLAN. The Plan shall be effective
on January 1, 2000, subject to approval of the Plan by the
Company's Unitholders (the "Effective Date"). Awards made under
the Plan prior to approval of the Plan by the Company's
Unitholders shall be contingent on such approval and, in the
event that the Company's Unitholders fail to approve the Plan,
shall be null and void.
SECTION 15. TERM OF PLAN. No Award shall be granted pursuant to
the Plan after 10 years from the Effective Date, but any Award
theretofore granted may extend beyond that date.
EXHIBIT C
CEDAR FAIR, L.P.,
2000 SENIOR EXECUTIVE MANAGEMENT INCENTIVE PLAN
1. Purpose
The purpose of the Cedar Fair, L.P., 2000 Senior Executive
Management Incentive Plan is to provide certain employees of
Cedar Fair, L.P., including without limitation its subsidiaries
(collectively, the "Company") with incentive compensation based
on the achievement of financial, business, and other performance
criteria. To achieve this purpose, the Plan provides for the
authority to grant Cash Incentive Awards.
2. Definitions
As used in the Plan, the following terms shall have the
meanings set forth below:
(a) "Award Target" - This term has the meaning given to it
in Section 6.
(b) "Board " - The Board of Directors of Cedar Fair
Management Company ("CFMC").
(c) "Cash Incentive Award" - This term has the meaning
given to it in Section 6.
(d) "Change in Control" - A "Change in Control" will be
deemed to occur if at any time after the date of the adoption of
this Plan:
(i) any Acquiring Person (other than (A) the Company or
any related entity, (B) any employee benefit plan of the
Company or any related entity or any trustee of or
fiduciary with respect to any such plan when acting in
such capacity, or (C) any person who, on the date of the
adoption of this Plan, is an Affiliate of the Company
and owning in excess of ten percent (10%) of the
outstanding Units of the Company and the respective
successors, executors, legal representatives, heirs, and
legal assigns of such person), alone or together with
its Affiliates and Associates, has acquired or obtained
the right to acquire the beneficial ownership of twenty-
five percent (25%) or more of the Units then outstanding
(except pursuant to an offer for all outstanding Units
<PAGE>
of the Company at a price and upon such terms and
conditions as a majority of the Continuing Directors
determine to be in the best interests of the Company and
its unitholders (other than the Acquiring Person or any
Affiliate or Associate thereof on whose behalf the offer
is being made));
(ii) the Company files a report or proxy statement with
the SEC pursuant to the Exchange Act disclosing in
response to Item 1 of Form 8-K thereunder or Item 6(e)
of Schedule 14A thereunder that a Change in Control of
the Company has or may have occurred or will or may
occur in the future pursuant to any then-existing
contract or transaction;
(iii) the Company is merged with or into, is
consolidated with, or becomes the subsidiary of another
entity and immediately after giving effect to that
transaction, less than 45% of the then outstanding
voting securities of the surviving or resulting entity
or (if the Company becomes a subsidiary in the
transaction) of the ultimate parent of the Company
represent or were issued in exchange for voting
securities of the Company outstanding immediately prior
to the transaction;
(iv) all or substantially all of the assets of the
Company are leased, sold, transferred or otherwise
disposed of in a single transaction or a series of
related transactions to a single purchaser or a group of
affiliated purchasers; or
(v) CFMC ceases to be the sole managing general partner
of the Company, except with the prior affirmative vote
or approval of holders of shares of CFMC entitling them
to exercise a majority of the voting power of CFMC in
the election of directors.
(1) "Acquiring Person" means any person (any
individual, firm, corporation or other entity) who
or which, together with all Affiliates and
Associates, has acquired or obtained the right to
acquire the beneficial ownership of twenty-five
percent (25%) or more of the Units then
outstanding.
<PAGE>
(2) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under
the Exchange Act.
(3) "Continuing Director" means any person who was
a member of the Board on the Effective Date of the
Plan or thereafter elected to the Board or
appointed by the Board prior to the date as of
which the Acquiring Person (other than an Acquiring
Person described in clauses (A), (B), or (C) of
paragraph (i) of the definition of "Change in
Control") became the owner of more than ten percent
(10%) of the outstanding Units of the Company, or a
person designated (before his initial election or
employment as a director) as a Continuing Director
by three-fourths of the Whole Board, but only if a
majority of the Whole Board shall then consist of
Continuing Directors.
(4) "Whole Board" means the total number of
directors which the Board would have if there were
no vacancies.
(d) "Code" - The Internal Revenue Code of 1986, or any law
that supersedes or replaces it, as amended from time to time.
(e) "Committee" - The Compensation Committee of the Board,
or any other committee or designee of the Board that the Board
authorizes to administer this Plan.
(f) "Company" - Cedar Fair, L.P., a Delaware limited
partnership.
(g) "Company Performance Measures" - This term has the
meaning given to it in Section 6.
(h) "Exchange Act" - Securities Exchange Act of 1934, and
any law that supersedes or replaces it, as amended from time to
time.
(i) "Participant" - Any person to whom a Cash Incentive
Award has been granted under this Plan.
3. Eligibility
All key employees of the Company and its related entities
shall be eligible to receive Cash Incentive Awards.
<PAGE>
4. Administration
(a) Committee. Subject to Section 4(b), this Plan will be
administered by the Committee. The Committee will, subject to
the terms of this Plan, have the authority to: (i) select the
eligible employees who will receive Cash Incentive Awards, (ii)
determine the types of Cash Incentive Awards to be granted, (iii)
determine the terms, conditions, performance periods (which may
be a full fiscal year or a longer or shorter period of time), and
restrictions applicable to the Cash Incentive Awards, (iv)
prescribe the forms of any notices, agreements, or other
instruments relating to the Cash Incentive Awards, (vi) grant the
Cash Incentive Awards, (vi) adopt, alter, and repeal rules
governing this Plan, (viii) interpret the terms and provisions of
the Plan and any Cash Incentive Awards granted under this Plan,
and (ix) otherwise supervise the administration of this Plan.
All decisions by the Committee will be made with the approval of
not less than a majority of its members.
(b) Delegation. The Committee may delegate any of its
authority to any other person or persons that it deems
appropriate.
(c) Decisions Final. All decisions by the Committee, and
by any other person or persons to whom the Committee has
delegated authority, will be final and binding on all persons.
(d) Expenses. The expenses of the administration of the
Plan shall be borne by the Company and its related entities.
5. Adjustment of Cash Incentive Awards. In its sole
discretion, the Committee may, but is not required to, make an
adjustment in a Participant's Cash Incentive Award to take into
account: (i) acquisitions and investments closed or completed
during the applicable performance period that were not already
taken into account in the Participant's Cash Incentive Award for
such period; (ii) the effect of any major change in accounting
principles during the applicable performance period; and/or (iii)
the effect of any major reorganization within the Company during
the applicable performance period.
6. Cash Incentive Award. A Cash Incentive Award is payable in
cash and is contingent upon the achievement of performance
measures established by the Committee for the Participant. Each
Participant to whom a Cash Incentive Award is granted is paid a
base salary designed to be competitive in the marketplace, with
the salary level determined by the Committee. The target amount
<PAGE>
of the Cash Incentive Award for each Participant shall be fifty
percent (50%) of the Participant's base salary for the
performance period, subject to adjustment as provided in this
Section 6 (the "Award Target"). Prior to the commencement of
the performance period, the Committee shall determine reasonable
performance measures (with such multiple levels of performance
and such relative weights as the Committee may determine and
which may or may not be readily quantifiable) for the performance
period for each Participant in the Plan, which may be the same as
or different from the performance measures established by the
Committee for other Participants and may include individual
performance measures that are specific to that Participant and/or
performance measures determined on a Company, business unit,
management function or other basis, in such combination as the
Committee determines to be reasonable under the circumstances.
A performance period may be equal to, more than, or less
than a full fiscal year, but in no event less than one fiscal
quarter. The individual Participant's actual Cash Incentive Award
payout for the applicable performance period will be determined
by the extent to which the Participant's individual performance
measures are achieved for the applicable performance period, as
adjusted to reflect the relative weights determined by the
Committee for the respective performance measures. In its
discretion based on factors it deems relevant, the Committee may
adjust a Participant's actual Cash Incentive Award payout for a
performance period up or down from the payout the Participant
would receive based on achievement of performance measures, but,
except as provided in the next paragraph of this Section 6, in no
event may any upward adjustment result in a Cash Incentive Award
in excess of the Award Target.
Notwithstanding the foregoing, if the performance measures
applicable to a Participant for the applicable performance period
are achieved at a level greater than that which, subject to the
Committee's discretion in adjusting Cash Incentive Awards as
provided in the immediately preceding sentence, would entitle the
Participant to receive a Cash Incentive Award at the Award
Target, the Committee, in its discretion based on factors it
deems relevant, may increase the Participant's Cash Incentive
Award for the applicable performance period to an amount not in
excess of 150% of the Award Target. In addition, and
notwithstanding any other provisions of this Section 6, (a) no
amounts shall be payable under this Plan to a Participant if none
of the Participant's performance measures for the applicable
performance period are met and (b) the aggregate amount of all
<PAGE>
Cash Incentive Awards paid for the applicable performance period
shall not exceed the limits, if any, imposed on the payment of
cash bonuses under the Company's Third Amended and Restated
Agreement of Limited Partnership, as heretofore or hereafter
amended or restated.
7. Deferral of Payment
The Committee may, in its discretion, permit Participants to
defer the payment of some or all of their Cash Incentive Awards,
as well as other compensation or fees, in accordance with
procedures established by the Committee to assure that the
recognition of taxable income is deferred under the Code.
8. Taxes Associated with Cash Incentive Award
Prior to the payment of a Cash Incentive Award, the Company
may withhold, or require a Participant to remit to the Company,
an amount sufficient to pay any federal, state, and local taxes
associated with the Cash Incentive Award.
9. Termination of Employment
If the employment of a Participant terminates for any
reason, all deferred and unpaid Cash Incentive Awards may be
exercisable or paid only in accordance with rules established by
the Committee.
10. Termination of Cash Incentive Awards under Certain
Conditions
The Committee may cancel any unpaid or deferred Cash
Incentive Award at any time if the Participant is not in
compliance with all applicable provisions of this Plan or with
the terms or conditions of the Cash Incentive Award or if the
Participant, without the prior written consent of the Company,
engages in any of the following activities:
(i) Renders services to an organization, or engages in
a business, that is, in the sole judgment of the Committee,
in competition with the Company.
(ii) Discloses to anyone outside of the Company, or
uses for any purpose other than the Company's business, any
material confidential information or material relating to
the Company, whether acquired by the Participant during or
after employment with the Company.
<PAGE>
The Committee may, in its discretion and as a condition to
the payment of a Cash Incentive Award, require a Participant to
acknowledge in writing that he or she is in compliance with all
applicable provisions of this Plan and with the terms and
conditions of the Cash Incentive Award and has not engaged in any
activities referred to in clauses (i) and (ii) above.
11. Change in Control; Acquisition of the Company
In the event of a Change in Control of the Company, unless
otherwise determined by the Committee, all Cash Incentive Awards
will be deemed to have been earned to the extent determined by
the Committee.
12. Amendment or Suspension of this Plan; Amendment of
Outstanding Cash Incentive Awards
(a) Amendment or Suspension of this Plan. The Board may
amend or suspend this Plan at any time.
(b) Amendment of Outstanding Cash Incentive Awards. The
Committee may, in its discretion, amend the terms of any Cash
Incentive Award, prospectively or retroactively, but no such
amendment, except as provided in Section 10, may impair the
rights of any Participant without his or her consent. The
Committee may waive, in whole or in part, any restriction or
conditions applicable to, or accelerate the vesting of, any Cash
Incentive Award.
13. No Trust
Neither the Plan nor any Cash Incentive Award shall create
or be construed to create a trust or separate fund of any kind or
a fiduciary relationship between the Company and any Participant.
To the extent that the Participant acquires a right to receive
payments from the Company in respect of any Cash Incentive Award,
such rights shall be no greater than the right of any unsecured
general creditor of the Company.
14. Nonassignability
Unless otherwise determined by the Committee, (i) no Cash
Incentive Award granted under this Plan may be transferred or
assigned by the Participant to whom it is granted other than by
will, pursuant to the laws of descent and distribution, or
pursuant to a qualified domestic relations order and (ii) a Cash
<PAGE>
Incentive Award granted under this Plan may be paid, during the
Participant's lifetime, only to the Participant or the
Participant's guardian or legal representative.
15. Governing Law
The interpretation, validity, and enforcement of this Plan
will be governed by the law of the State of Delaware.
16. Rights of Employees
Nothing in this Plan will confer upon any Participant the
right to continued employment by the Company or any of its
related entities or limit in any way the Company's or a related
entity's right to terminate any Participant's employment at will.
17. Effective and Termination Dates
(a) Effective Date. This Plan will become effective on the
date it is approved by the Board, but with effect from January 1,
2000.
(b) Termination Date. This Plan will continue in effect
until terminated by the Board.
EXHIBIT D
[LETTERHEAD OF THOMPSON HINE & FLORY LLP]
July ____, 2000
Cedar Fair, L.P.
One Cedar Point Drive
Sandusky, Ohio 44870-5259
Re: Proposed Amendment to Limited Partnership Agreement
Ladies and Gentlemen:
We are acting as counsel to Cedar Fair, L.P. ("Cedar Fair") in
connection with the proposed Amendment No. 4 (the "Amendment") to
the Third Amended and Restated Agreement of Limited Partnership
of Cedar Fair, as heretofore amended (the "Partnership
Agreement").
We are rendering this opinion pursuant to Section 15.3(a) of the
Partnership Agreement. In rending this opinion, we have examined
(a) the Partnership Agreement as amended to date, (b) the
Amendment, and (c) the definitive Proxy Statement for the Special
Meeting of Limited Partner unitholders (the "Special Meeting")
called to consider and vote on the Amendment (the "Proxy
Statement") to be mailed to unitholders on or about the date
hereof. We also have reviewed the originals or copies certified
or otherwise identified to our satisfaction of all such records
of Cedar Fair and such other instruments and other certificates,
and we have made such investigations of law, as we have deemed
appropriate as a basis for the opinion expressed below.
Additionally, we have assumed that the Amendment will be approved
by the Limited Partners in the form proposed.
As a result of the foregoing, we are of the opinion that the
Amendment would not result in the loss of limited liability of
any Limited Partner or of the limited partners in any Operating
Partnership (as defined in the Partnership Agreement) or cause
Cedar Fair or any such Operating Partnership to be treated as an
association taxable as a corporation for federal income tax
purposes.
<PAGE>
The information set forth in this opinion is as of the date
hereof. We assume no obligation to advise you of changes that
may later be brought to our attention. Our opinion is based on
statutory laws and judicial decisions that are in effect on the
date hereof, and we do not opine with respect to any law,
regulation, rule, or governmental policy that may be enacted or
adopted after the date hereof, nor do we assume any
responsibility to advise you of future changes in our opinion.
This opinion is solely for your information in connection with
the restructuring plan described in the Proxy Statement. Except
as set forth below, this opinion is not to be quoted in whole or
in part or otherwise referred to in any of Cedar Fair's public
documents or releases, nor is it to be filed with or distributed
to any governmental agency or other person without the consent of
this firm. This opinion may not be relied upon by any other
person for any other reason whatsoever.
We hereby consent to the use of this opinion as an exhibit to the
Proxy Statement as filed with the Securities and Exchange
Commission, to the summary of this opinion in the Proxy
Statement, and to the distribution of a copy of this opinion to
the Limited Partners, in each case, in connection with the
Special Meeting, and any adjournments thereof.
Very truly yours,
[THOMPSON HINE & FLORY LLP]
