EXHIBIT 10(a)
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AGREEMENT AND PLAN OF MERGER
by and among
PREMIER PARKS INC.
PREMIER PARKS HOLDING CORPORATION,
PREMIER PARKS MERGER CORPORATION,
PPSTAR I, INC.,
THE HOLDERS OF COMPANY CAPITAL STOCK,
and
SIX FLAGS ENTERTAINMENT CORPORATION
February 9, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE 2
THE MERGERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1 The Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.2 Closing; Effective Time. . . . . . . . . . . . . . . . . . . . . . 26
2.3 Effects of the Mergers.. . . . . . . . . . . . . . . . . . . . . . 27
2.4 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . 27
2.5 By-laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.6 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 3
CONVERSION OF CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . 29
3.1 P Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.1.1 Conversion of Common Stock of Merger Sub P. . . . . . . . . 29
3.1.2 Conversion of Parent Treasury Stock . . . . . . . . . . . . 29
3.1.3 Conversion of Parent Common Stock . . . . . . . . . . . . . 30
3.2 Exchange Ratio for Parent Options and Parent Warrants. . . . . . . 30
3.3 S Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.3.1 Conversion of Common Stock of Merger Sub S. . . . . . . . . 32
3.3.2 Cancellation of Treasury Stock. . . . . . . . . . . . . . . 32
3.3.3 Conversion of Company Capital Stock . . . . . . . . . . . . 32
3.4 Purchase of Certain Holdco Common Stock Held by Parent . . . . . . 35
3.5 Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1 Representations and Warranties of the Sellers with Respect to the
Company and its Subsidiaries.. . . . . . . . . . . . . . . . . . . 35
4.1.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . 36
4.1.2 Stock Ownership . . . . . . . . . . . . . . . . . . . . . . 36
4.1.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . 37
4.1.4 Authorization and Enforceability. . . . . . . . . . . . . . 38
4.1.5 Authority, Approvals and Consents . . . . . . . . . . . . . 39
4.1.6 Financial Statements. . . . . . . . . . . . . . . . . . . . 40
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4.1.7 Absence of Certain Changes or Events. . . . . . . . . . . . 42
4.1.8 Absence of Litigation . . . . . . . . . . . . . . . . . . . 43
4.1.9 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . 44
4.1.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.1.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 48
4.1.12 Environmental Matters. . . . . . . . . . . . . . . . . . . 52
4.1.13 Intangible Property. . . . . . . . . . . . . . . . . . . . 53
4.1.14 Real Property. . . . . . . . . . . . . . . . . . . . . . . 54
4.1.15 Tangible Personal Property . . . . . . . . . . . . . . . . 56
4.1.16 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 57
4.1.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 59
4.1.18 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . 60
4.1.19 Transactions with Affiliates . . . . . . . . . . . . . . . 60
4.1.20 1998 Cap Ex Budget . . . . . . . . . . . . . . . . . . . . 60
4.1.21 Conduct of Business. . . . . . . . . . . . . . . . . . . . 61
4.1.22 No Undisclosed Liabilities . . . . . . . . . . . . . . . . 61
4.1.23 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.1.24 Liabilities of the Company . . . . . . . . . . . . . . . . 61
4.1.25 Corporate Records. . . . . . . . . . . . . . . . . . . . . 62
4.1.26 Accuracy of Information Regarding the Company
and its Subsidiaries. . . . . . . . . . . . . . . . . . . 62
4.1.27 Finders and Investment Bankers . . . . . . . . . . . . . . 63
4.2 Additional Representations and Warranties of each Seller . . . . . 63
4.2.1 Organization and Authority. . . . . . . . . . . . . . . . . 64
4.2.2 Authorization and Enforceability. . . . . . . . . . . . . . 64
4.2.3 Authority, Approvals and Consents . . . . . . . . . . . . . 65
4.2.4 Title to Stock. . . . . . . . . . . . . . . . . . . . . . . 66
4.2.5 Accuracy of Information Provided by Each Seller . . . . . . 66
4.2.6 Accredited Investor; Acquisition for Investment . . . . . . 67
4.2.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
PARENT AND HOLDCO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
5.1 Representations and Warranties of Parent and Holdco. . . . . . . . 69
5.1.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . 69
5.1.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . 70
5.1.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 70
5.1.4 Authorization and Enforceability. . . . . . . . . . . . . . 71
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5.1.5 Authority, Approvals and Consents . . . . . . . . . . . . . 72
5.1.6 SEC Filings; Financial Statements . . . . . . . . . . . . . 74
5.1.7 Absence of Certain Changes or Events. . . . . . . . . . . . 75
5.1.8 Absence of Litigation . . . . . . . . . . . . . . . . . . . 75
5.1.9 Compliance with Laws. . . . . . . . . . . . . . . . . . . . 75
5.1.10 Finders and Investment Bankers . . . . . . . . . . . . . . 76
5.1.11 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE 6
CERTAIN COVENANTS AND
AGREEMENTS OF THE PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 76
6.1 Conduct of Business of the Company and its Subsidiaries. . . . . . 76
6.2 Conduct of Business of Parent and its Subsidiaries . . . . . . . . 82
6.3 Access and Information . . . . . . . . . . . . . . . . . . . . . . 83
6.4 Consummation of Certain Transactions by Closing. . . . . . . . . . 84
6.4.1 Equity Issuance . . . . . . . . . . . . . . . . . . . . . . 84
6.4.2 Other Financings. . . . . . . . . . . . . . . . . . . . . . 85
6.5 Capitalization of Holdco and its Subsidiaries. . . . . . . . . . . 86
6.6 Reasonable Efforts; Additional Actions . . . . . . . . . . . . . . 86
6.7 Notification of Certain Matters. . . . . . . . . . . . . . . . . . 88
6.8 Transfer and Real Property Transfer Gains Taxes; HSR Act Fees. . . 88
6.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 89
6.10 Indemnification of Directors and Officers. . . . . . . . . . . . . 89
6.11 Execution of Registration Rights Agreement . . . . . . . . . . . . 91
6.12 Execution of Indemnity Agreement . . . . . . . . . . . . . . . . . 91
6.13 Execution of Amended and Restated License Agreement. . . . . . . . 91
6.14 Execution of GL Indemnity Agreement. . . . . . . . . . . . . . . . 91
6.15 Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.16 Indemnification of Brokerage . . . . . . . . . . . . . . . . . . . 92
6.17 Restrictions on Hiring . . . . . . . . . . . . . . . . . . . . . . 92
6.18 Certain Employee Matters . . . . . . . . . . . . . . . . . . . . . 92
6.19 Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . 94
6.20 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . 94
6.21 Parent's and Holdco's SEC Filings and Financings . . . . . . . . . 95
6.22 Resignations and Releases. . . . . . . . . . . . . . . . . . . . . 95
6.23 Notice of Litigation, Contract Issues and Labor Matters. . . . . . 96
6.24 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 96
6.25 Certain Parent Entity SEC Filings. . . . . . . . . . . . . . . . . 96
6.26 Non-Competition Agreement. . . . . . . . . . . . . . . . . . . . . 97
6.27 Company Charter Amendment. . . . . . . . . . . . . . . . . . . . . 97
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6.28 The P Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
6.29 Preferred Stock of Holdco. . . . . . . . . . . . . . . . . . . . . 97
6.30 Rights Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 98
6.31 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE 7
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
7.1 Conditions to Each Party's Obligations . . . . . . . . . . . . . . 99
7.2 Conditions to Obligation of Parent, Holdco and Merger Sub S. . . . 99
7.2.1 Performance of Obligations. . . . . . . . . . . . . . . . .100
7.2.2 Representations and Warranties. . . . . . . . . . . . . . .100
7.2.3 Sellers' Closing Certificate. . . . . . . . . . . . . . . .100
7.2.4 Consents and Approvals. . . . . . . . . . . . . . . . . . .100
7.2.5 Equity Issuance . . . . . . . . . . . . . . . . . . . . . .101
7.2.6 Legal Opinions. . . . . . . . . . . . . . . . . . . . . . .101
7.2.7 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . .101
7.3 Conditions to Obligation of Sellers. . . . . . . . . . . . . . . .101
7.3.1 Performance of Obligations. . . . . . . . . . . . . . . . .101
7.3.2 Representations and Warranties. . . . . . . . . . . . . . .102
7.3.3 Parent's Closing Certificate. . . . . . . . . . . . . . . .102
7.3.4 Consents and Approvals. . . . . . . . . . . . . . . . . . .102
7.3.5 Capital Events. . . . . . . . . . . . . . . . . . . . . . .102
7.3.6 Legal Opinions. . . . . . . . . . . . . . . . . . . . . . .103
ARTICLE 8
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . .103
8.2 Procedure for and Effect of Termination. . . . . . . . . . . . . .105
ARTICLE 9
OTHER AGREEMENTS OF THE PARTIES. . . . . . . . . . . . . . . . . . . . . . .106
9.1 Related Party Transactions . . . . . . . . . . . . . . . . . . . .106
9.2 Termination of Registration Rights Agreement . . . . . . . . . . .106
9.3 Cancellation of Contingent Rights to Purchase. . . . . . . . . . .107
9.4 Sale-Leaseback Release.. . . . . . . . . . . . . . . . . . . . . .107
ARTICLE 10
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
10.1 Obligation of the Sellers to Indemnify . . . . . . . . . . . . . .108
10.2 Obligations of Parent, Holdco and Merger Sub S to Indemnify. . . .109
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10.3 Time Limitation on Indemnification . . . . . . . . . . . . . . . . 109
10.4 Other Limitations on Indemnification . . . . . . . . . . . . . . . 110
10.5 Procedures Relating to Indemnification . . . . . . . . . . . . . . 111
10.5.1 Notice of Asserted Liability . . . . . . . . . . . . . . . 111
10.5.2 Opportunity to Defend. . . . . . . . . . . . . . . . . . . 112
10.5.3 Notice of Direct Claim . . . . . . . . . . . . . . . . . . 113
10.5.4 Determination of Losses. . . . . . . . . . . . . . . . . . 114
10.6 Certain Other Indemnity Matters. . . . . . . . . . . . . . . . . . 116
10.7 Effect of Indemnification Payments . . . . . . . . . . . . . . . . 117
ARTICLE 11
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
11.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . 118
11.2 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . 118
11.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
11.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
11.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
11.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 121
11.7 Judicial Proceedings . . . . . . . . . . . . . . . . . . . . . . . 121
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
11.9 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 123
11.10 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 123
11.11 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . 123
11.12 Determination Requests or Consents. . . . . . . . . . . . . . . . 123
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SCHEDULES
1A - Sellers
1B - Sellers Stock Ownership
1.1.2 - 1998 Cap Ex Budget
1.1.9 - Determination of Actual Tangible Net Worth
1.1.21 - Company Charter Amendment
1.1.35 - Fiesta Agreements
1.1.58 - Parent Options, Parent Warrants and Similar Rights
1.1.62(a) - Chase Agreements and Interim Loans Amendments
1.1.62(b) - Capital Improvements
1.1.69 - Parent Theme Parks
1.1.72(a) - Permitted Liens (the Company and its Subsidiaries)
1.1.72(b) - Permitted Liens (Parent and its Subsidiaries)
1.1.81 - Six Flags Theme Parks
4.1.1 - Exceptions to Business Qualifications (the Company and
its Subsidiaries)
4.1.2 - Ownership of Company's Subsidiaries
4.1.3 - Outstanding or Authorized Stock Obligations (Company
and its Subsidiaries)
4.1.5 - Required Consents (Company)
4.1.7 - Certain Changes or Events (Company and its
Subsidiaries)
4.1.8 - Pending or Threatened Litigation or Claims (Company and
its Subsidiaries)
4.1.9 - Exceptions to Compliance with Legal Requirements
(Company and its Subsidiaries)
4.1.10 - Tax Matters
4.1.11 - Employee Benefit Plans (Company and its Subsidiaries)
4.1.12 - Environmental Matters (Company and its Subsidiaries)
4.1.13 - Intangible Property Matters (Company and its
Subsidiaries)
4.1.14(a) - Owned Real Property (Company and its Subsidiaries)
4.1.14(b) - Leased and Improved Real Property (Company and its
Subsidiaries)
4.1.15(b) - Property and Assets Sold or Disposed in Other than in
Ordinary Course of Business
4.1.16 - Contracts (Company and its Subsidiaries)
4.1.17 - Insurance (Company and its Subsidiaries)
vi
4.1.18 - Labor Agreements (Company and its Subsidiaries)
4.1.19 - Transactions with Affiliates (Company and its
Subsidiaries)
4.1.21 - Exceptions to Conduct of Business (Company and
its Subsidiaries)
4.1.24 - Certain Liabilities on the Company
4.2.3 - Required Consents (Sellers)
4.2.4 - Ownership of Company Capital Stock (Sellers)
5.1.1 - Exceptions to Business Qualifications (Parent
Entities)
5.1.2 - Outstanding or Authorized Stock Obligations
(Parent Entities)
5.1.3(a) - Capital Stock Ownership (Parent)
5.1.3(b) - Liens on Parent Subsidiary Shares
5.1.5(a) - Required Consents (Parent and its Subsidiaries)
5.1.5(b) Required Filings (Parent and its Subsidiaries)
5.1.7 - Certain Changes and Events (Parent and its
Subsidiaries)
5.1.8 - Pending or Threatened Litigation or Claims (Parent or
its Subsidiaries)
5.1.9 - Exceptions to Compliance with Legal Requirements
(Parent or its Subsidiaries)
6.1(c) - Existing Agreements Relating Assets and Properties
(Company and its Subsidiaries)
6.1(e) - Obligations Relating to Repurchase, Redemption or
Acquisition of Capital Stock or Equity Interest
(Company and its Subsidiaries)
6.1(f) - Certain Permitted Contracts
6.1(g) - Permitted Additional Indebtedness, Loans, and Liens
(Company and its Subsidiaries)
6.1(h) - Changes to Employee Salaries and Benefits (Company and
its Subsidiaries)
6.1(i) - Certain Changes
6.1(k) - Rides or Attractions to be Acquired or Subject
to Capital Leases
6.2 - Existing Transactions (Parent and its
Subsidiaries)
6.5 - Capitalization (Holdco and its Subsidiaries)
6.18 - Employee Agreements
9.1 - Terminated Related Party Transactions (TWE and the
Company and respective Subsidiaries)
EXHIBITS
Exhibit A - Form of Subordinated Indemnity Agreement
Exhibit B - Form of Amended and Restated License Agreement
Exhibit C - Estimated and Adjusted Balance Sheet
Exhibit D - Form of General Indemnity Escrow Agreement
Exhibit E - Holdco Preferred Stock Terms
Exhibit F - Form of Amendment to the Company's Certificate of Incorporation
Exhibit G - Form of Registration Rights Agreement
Exhibit H - Form of Mutual Releases
Exhibit I - Form of Non-Competition Agreement
vii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 9, 1998 (this
"AGREEMENT"), by and among Premier Parks Inc., a Delaware corporation
("PARENT"), Premier Parks Holding Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("HOLDCO"), Premier Parks Merger Corporation,
a Delaware corporation and a wholly-owned subsidiary of Holdco ("MERGER SUB P"),
PPStar I, Inc., a Delaware corporation and a wholly-owned subsidiary of Holdco
("MERGER SUB S" and, together with Parent, Holdco and Merger Sub P, the "PARENT
ENTITIES"), each of the individuals and entities listed on SCHEDULE 1A hereto
(each, a "SELLER" and, collectively, the "SELLERS") and Six Flags Entertainment
Corporation, a Delaware corporation (the "COMPANY").
WHEREAS, Parent, Holdco and Merger Sub P are concurrently herewith
entering into an Agreement and Plan of Merger (the "P MERGER AGREEMENT"),
pursuant to which, among other things, Merger Sub P will be merged with and into
Parent (the "P MERGER") on the terms and conditions contained therein and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL");
WHEREAS, the respective boards of directors of Holdco, Merger Sub S
and the Company have approved this Agreement pursuant to which, among other
things, Merger Sub S will be merged with and into the Company (the "S MERGER"
and, together with the P Merger, the "MERGERS") on the terms and conditions
contained herein and in accordance with the DGCL;
WHEREAS, each Seller respectively owns the number of issued and
outstanding shares of Class A-1 Common Stock, par value $0.01 per share, of the
Company (the "CLASS A-1 COMMON STOCK"), Class A-2 Common Stock, par value $0.01
per share, of the Company
(the "CLASS A-2 COMMON STOCK"), Class B Common Stock, par value $0.01 per share,
of the Company (the "CLASS B COMMON STOCK" and, together with the Class A-1
Common Stock and the Class A-2 Common Stock, the "COMPANY COMMON STOCK"), Class
A-1 Preferred Stock, par value $0.01 per share, of the Company (the "CLASS A-1
PREFERRED STOCK"), Class A-2 Preferred Stock, par value $0.01 per share, of the
Company (the "CLASS A-2 PREFERRED STOCK") and Class B Preferred Stock, par value
$0.01 per share, of the Company (the "CLASS B PREFERRED STOCK" and, together
with the Class A-1 Preferred Stock and the Class A-2 Preferred Stock, the
"COMPANY PREFERRED STOCK" and the Company Preferred Stock together with the
Company Common Stock, collectively, the "COMPANY CAPITAL STOCK"), in each case,
as set forth opposite such Seller's name on SCHEDULE 1B hereto, which shares of
Company Capital Stock constitute, and as of the Closing will continue to
constitute, all of the issued and outstanding shares of capital stock of the
Company, other than shares of capital stock of the Company issued in respect of
(a) any Company Options exercised or (b) any Company Preferred Stock or Company
Common Stock exchanged or converted, in each case, in accordance with terms
thereof, in effect on the date hereof, following the date hereof and prior to
the Effective Time of the S Merger;
WHEREAS, the Parent Entities, the Company and the Sellers desire to
make certain representations, warranties, covenants and agreements in connection
with the Mergers and to prescribe various conditions to the Mergers;
WHEREAS, for Federal income tax purposes it is intended that the
S Merger qualify as an exchange under Section 351 of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the P Merger as a reorganization within
the meaning of Section 368(a) of the Code or, in the alternative, as an exchange
under Section 351 of the Code; and
2
WHEREAS, in order to induce Time Warner Entertainment Company, L.P.
("TWE"), the holder of all of the outstanding Class B Common Stock and Class B
Preferred Stock, to enter into this Agreement, Holdco, certain of its
Subsidiaries, the Company, certain of its Subsidiaries, and Time Warner Inc.,
and certain of its Subsidiaries including TWE, will, concurrently with the
closing of the transactions contemplated hereby, enter into a Subordinated
Indemnity Agreement in the form of Exhibit A hereto (the "INDEMNITY AGREEMENT");
and
WHEREAS, in order to induce Parent to enter into this Agreement, TWE
will, concurrently with the closing of the transactions contemplated hereby,
cause the Warner Bros. Consumer Products Division of Warner Bros. to enter into,
on behalf of itself and as agent for DC Comics, the Amended and Restated License
Agreement in the form of EXHIBIT B (the "AMENDED AND RESTATED LICENSE
AGREEMENT").
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
1.1 For purposes of this Agreement, the following terms shall have the
meanings ascribed to them in this Section 1.1.
1.1.1 "1998 AUDITED FINANCIALS" shall mean the consolidated audited
balance sheet of Holdco and its Subsidiaries for the fiscal year 1998 and the
related statements of earnings and shareholders equity and cash flows for the
fiscal year then ended, accompanied by the notes thereto and the report thereon
of Holdco's independent auditors.
1.1.2 "1998 CAP EX BUDGET" shall mean the budget set forth as
SCHEDULE 1.1.2.
3
1.1.3 "1997 AUDITED FINANCIALS" shall mean the consolidated audited
balance sheet of the Company and its Subsidiaries at December 28, 1997 and the
related statements of earnings and shareholders equity and cash flows for the
fiscal year then ended, accompanied by the notes thereto and the report thereon
of Ernst & Young LLP.
1.1.4 "1997 CO-VENTURE FINANCIALS" shall mean the audited balance
sheet of each of Texas Flags at December 28, 1997 and SFOG at December 28, 1997,
and the related statements of earnings and partners equity and cash flows for
the fiscal years then ended, accompanied by the notes thereto and the reports
thereon of their respective independent auditors.
1.1.5 "ACQUISITION" shall mean the acquisition of beneficial ownership
of all or material portion of the assets of, or any material interest in, a
Person (including its Subsidiaries) pursuant to a merger, consolidation or other
business combination, sale of shares of capital stock, sale of assets, tender
offer, exchange offer, joint venture or other similar transaction.
1.1.6 "ACQUISITION PROPOSAL" shall mean any bona fide proposal,
whether in writing or otherwise, made by a third party to effect an Acquisition.
1.1.7 "ACTION" shall mean any claim, action, cause of action or suit
(in contract, tort or otherwise), inquiry, proceeding or investigation by or
before any Governmental Authority.
1.1.8 "ACTUAL TANGIBLE NET WORTH" shall mean the actual tangible net
worth of the Company as of the end of its 1997 fiscal year, determined using the
methodology set forth in SCHEDULE 1.1.8 and, to the extent not inconsistent with
such Schedule, the same methodology and in a manner consistent with that used in
determining the Adjusted Tangible Net Worth, but using (subject to such
Schedule) the actual results as included in the 1997 Audited Financials.
4
1.1.9 "ADJUSTED BASE AMOUNT" shall mean (x) $965,000,000(the
"PRELIMINARY BASE AMOUNT") adjusted in accordance with the following sentence,
and as so adjusted (the "BASE AMOUNT"), LESS (y) the Option Cancellation Amount.
If the sum of Actual Tangible Net Worth plus $6,600,000 (which reflects the
excess of Adjusted Tangible Net Worth over Estimated Tangible Net Worth) exceeds
Adjusted Tangible Net Worth, the Preliminary Base Amount shall be increased by
an amount equal to such excess, or if Adjusted Tangible Net Worth exceeds the
sum of Actual Tangible Net Worth plus $6,600,000, the Preliminary Base Amount
shall be reduced by an amount equal to such excess.
1.1.10 "ADJUSTED TANGIBLE NET WORTH" shall mean the tangible net worth
of the Company as of the end of its 1997 fiscal year as shown on EXHIBIT C
hereto under the column "Adjusted."
1.1.11 "AFFILIATE" with respect to any Person, shall mean any Person
controlling, controlled by or under common control with such Person.
1.1.12 "AGGREGATE PREFERRED STOCK AMOUNT" shall mean the aggregate
liquidation value of the Holdco Preferred Stock, if any, to be issued by Holdco
to the Sellers in connection with the S Merger, which amount shall be set forth
in a notice to be delivered by Parent and Holdco to the Sellers' Representative
in accordance with the provisions of Section 11.3 hereof not later than the
third Business Day immediately preceding the Closing; PROVIDED, HOWEVER, that in
no event shall the Aggregate Preferred Stock Amount be (i) less than
$100,000,000, unless no Holdco Preferred Stock is to be issued by Holdco to the
Sellers pursuant to the S Merger (in which case, the Aggregate Preferred Stock
Amount shall be $0) or (ii) more than $200,000,000.
1.1.13 "ANCILLARY AGREEMENTS" shall mean, collectively, the P Merger
Agreement, the Indemnity Agreement, the General Indemnity Escrow Agreement, the
5
Registration Rights Agreement, the Amended and Restated License Agreement, the
Cartoon Network Amendment, the GL Indemnity Agreement and the Mutual Releases.
1.1.14 "APPLICABLE PERCENTAGE" shall mean a fraction (expressed as a
percentage), the numerator of which is the value of the Merger Consideration
receivable by a Seller or Option Holder party to the General Indemnity Escrow
Agreement pursuant to the first sentence of Section 3.3.3(a) or 3.3.3(b), as
applicable, and the denominator of which is the aggregate value of the Merger
Consideration receivable pursuant to such provisions by all Sellers and Option
Holders party to the General Indemnity Escrow Agreement. For purposes of this
definition, the value of the Merger Consideration receivable by a Seller or
Option Holder shall be determined by adding the amount of cash that is
receivable by such Person together with the aggregate liquidation value of the
shares of Holdco Preferred Stock that are receivable by such Person, if any.
1.1.15 "APPROVED MANAGING UNDERWRITERS" shall mean (x) Lehman
Brothers, or Salomon Smith Barney or both and, in addition to the foregoing,
(y) any other nationally-recognized underwriter designated by Parent and
reasonably acceptable to the Sellers' Representative, it being acknowledged and
agreed that Furman Selz and Montgomery Securities are hereby deemed acceptable
to the Sellers' Representative.
1.1.16 "BENEFICIAL OWNERSHIP" shall have the meaning ascribed to such
term in Rule 13(d)-3 under the Exchange Act.
1.1.17 "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or Federal holiday on which banking institutions in New York, New York are
permitted to be closed for the purpose of transacting business.
6
1.1.18 "CARTOON NETWORK AMENDMENT" shall mean Amendment No. 1 to
License Agreement #8898-Toon, dated as of January 1, 1998, by and between Warner
Bros. Consumer Products Division and SFTP.
1.1.19 "CHASE AGREEMENTS" shall mean the Credit Agreement, dated as of
June 23, 1995, as amended, among Six Flags Theme Parks Inc., the Company, the
lenders named therein and Chase Manhattan Bank, N.A., f/k/a Chemical Bank, and
the related agreements entered into in connection therewith, in each case as
amended from time to time in accordance with this Agreement.
1.1.20 "CLAIMS TERMINATION DATE" shall mean the earlier of (a) the
45th day following the date upon which the 1998 Audited Financials are first
made available to Holdco and (b) April 30, 1999.
1.1.21 "COMPANY CHARTER AMENDMENT" shall mean the amendment to the
Company's certificate of incorporation to effectuate the changes to such
certificate of incorporation described on SCHEDULE 1.1.21.
1.1.22 "COMPANY EXCLUDED CLAIMS" shall mean with respect to the
Sellers, all claims for Losses based upon, arising out of or otherwise in
respect of (a) the Georgia Litigation or (b) the matters subject to the
Indemnity Agreement.
1.1.23 "COMPANY OPTIONS" shall mean options (other than CVRs) to
purchase Company Capital Stock and the rights to shares of Company Capital Stock
pursuant to the Reserved Shares Agreements.
1.1.24 "CONTRACT" shall mean any contract, note, bond, deed, mortgage,
indenture, lease, license, agreement or other instrument or obligation.
1.1.25 "CONTROL" (including the terms "controlling," "controlled by"
and "under common control with") shall mean the possession, directly or
indirectly, of the power to
7
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
1.1.26 "CONVERSION RATIO" shall mean the quotient of (x) the Aggregate
Preferred Stock Amount, DIVIDED BY (y) the Outstanding Company Shares, DIVIDED
BY (z) the per share liquidation value of Holdco Preferred Stock.
1.1.27 "CO-VENTURES" shall mean Texas Flags, Ltd. ("TEXAS FLAGS") and
Six Flags Over Georgia II, L.P. ("SFOG").
1.1.28 "EMPLOYEE" with respect to any Person, shall mean any
individual employed by such Person or any of its Subsidiaries.
1.1.29 "ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS" means (a) any
and all federal, state and local statutes, regulations and ordinances, and any
rules of common law, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substance Control Act (15 U.S.C.
Section 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act
(7 U.S.C. Section 136 et seq.), and the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), and the regulations promulgated pursuant to each
of the foregoing; and (b) with respect to any Person, any and all administrative
or judicial orders, consent decrees, settlement agreements, injunctions,
permits, licenses, codes, covenants and deed restrictions and other provisions
having the force or effect of law, issued by a Governmental Authority in respect
of such Person's or its Subsidiaries' operations or assets, or applicable
thereto; in each case concerning pollution or protection of the environment, or
human health, or safety, including worker safety, to the extent that such safety
may be
8
affected by exposure to Hazardous Materials (including, without limitation, all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of or
exposure to any Hazardous Materials, hazardous materials, or wastes).
1.1.30 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.1.31 "ESCROW AGENT" shall have the meaning set forth in the General
Indemnity Escrow Agreement.
1.1.32 "ESTIMATED TANGIBLE NET WORTH" shall mean the tangible net
worth of the Company as of the end of its 1997 fiscal year as shown on EXHIBIT C
hereto under the column "Estimated."
1.1.33 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
1.1.34 "EXCLUDED CONTRACTS" with respect to any Person, shall mean any
Contracts of such Person (i) entered into in the Ordinary Course of Business of
such Person, (ii) having a duration or remaining term of less than six months
from the date hereof and (iii) the aggregate annual payments in respect of which
do not exceed $50,000.
1.1.35 "FIESTA AGREEMENTS" shall mean those Contracts listed on
SCHEDULE 1.1.35 hereto.
1.1.36 "GENERAL INDEMNITY ESCROW AGREEMENT" shall mean that certain
General Indemnity Escrow Agreement to be executed by the Sellers, certain of the
Option Holders, Holdco and certain of the Parent Entities as of the Closing
substantially in the form of EXHIBIT D hereto.
9
1.1.37 "GENERAL INDEMNITY ESCROW AMOUNT" shall mean $25,000,000 in
cash comprised of (x) a portion of the Capital Stock Consideration payable
pursuant to Section 3.3.3(a) hereof to the Sellers and deposited by Holdco on
behalf of the Sellers (in accordance with the last sentence of Section 3.3.3(a))
with the Escrow Agent under the General Indemnity Escrow Agreement, PLUS (y) a
portion of the Company Option Consideration payable pursuant to Section 3.3.3(b)
hereof to the Option Holders party to the General Indemnity Escrow Agreement and
deposited by the Company on behalf of such Option Holders (in accordance with
the last sentence of Section 3.3.3(b)) with the Escrow Agent under the General
Indemnity Escrow Agreement, such aggregate amount to be held by the Escrow Agent
for the period commencing on the Closing Date and ending on the Claims
Termination Date (and thereafter, with respect to Reserved Claims in accordance
with the terms of the General Indemnity Escrow Agreement), pursuant to the terms
of the General Indemnity Escrow Agreement.
1.1.38 "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean United
States generally accepted accounting principles as in effect on the date on
which the document to which it refers relates.
1.1.39 "GEORGIA AGREEMENTS" shall mean, collectively, (i) the Overall
Agreement, dated as of February 15, 1997 (the "GEORGIA OVERALL AGREEMENT"),
among Six Flags Fund, Ltd. (L.P.), the Salkin Family Trust, SFG, Inc., SFG-I,
LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee,
Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over
Georgia, Inc., Six Flags Services of Georgia, Inc., SFTP and the Company and
(ii) the Related Agreements (as defined in the Georgia Overall Agreement).
10
1.1.40 "GEORGIA LITIGATION" shall mean the lawsuit filed in the
Superior Court of the State of Georgia, Gwinnett County, entitled SIX FLAGS OVER
GEORGIA, LLC, SIX FLAGS FUND, LTD. (L.P.), AND GEORGE DEROY, AS TRUSTEE OF THE
SIX FLAGS CLAIMS TRUST v. TIME WARNER ENTERTAINMENT COMPANY, L.P., SIX FLAGS
ENTERTAINMENT CORPORATION, SIX FLAGS THEME PARKS, INC. AND SIX FLAGS OVER
GEORGIA, INC., Civil Action File No. 97-A-1939-1.
1.1.41 "GOVERNMENTAL AUTHORITY" shall mean any foreign, Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, including, without limitation, any court of competent
jurisdiction.
1.1.42 "HAZARDOUS MATERIAL" shall mean any chemical, waste, pollutant,
contaminant or substance that is regulated by any Environmental, Health or
Safety Requirements, including, without limitation, asbestos in friable
condition, urea formaldehyde foam insulation, petroleum and its derivatives,
by-products and other petroleum hydrocarbons, radioactive materials and
polychlorinated biphenyls (PCBs), and any material or substance which is defined
as a "hazardous waste," "hazardous substance," "hazardous material," "restricted
hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant,"
"toxic waste" or "toxic substance" under any Environmental, Health or Safety
Requirement.
1.1.43 "HOLDCO COMMON STOCK" shall mean the Common Stock, par value
$0.05 per share, of Holdco.
1.1.44 "HOLDCO PREFERRED STOCK" shall mean a series of cash pay
convertible preferred stock of Holdco (or depositary shares evidencing ownership
interests therein) having the terms set forth on EXHIBIT E hereto; PROVIDED that
the conversion ratio and dividend rate (the "VARIABLE TERMS") of any Holdco
Preferred Stock issued to the Sellers pursuant to Section 3.3.3 hereof shall be
established so that the fair market value of each such share (or depositary
share) of Holdco Preferred Stock shall be at least equal to, as of the issue
date, the liquidation
11
value thereof, assuming that such Holdco Preferred Stock is freely tradeable as
of the issue date and without regard to the provisions set forth in EXHIBIT E
hereto under the caption "Lockup." At least ten days prior to the issuance of
the Holdco Preferred Stock, Parent and the Sellers' Representative shall meet in
an attempt to agree on the Variable Terms. If such Persons are unable to agree
on such terms within two days following commencement of negotiations with
respect thereto, such terms shall be specified by a nationally recognized
investment banking firm (which firm will be agreed to by Parent and the Sellers'
Representative by February 28, 1998) after giving effect to all relevant
factors, including Holdco's capitalization and the Equity Issuance pursuant to
Section 6.4.1.
1.1.45 "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.1.46 "INDIVIDUAL ESCROW AMOUNT" shall mean for each Person party to
the General Indemnity Escrow Agreement, an amount equal to the product of
(a) $25,000,000, MULTIPLIED BY (b) such Person's Applicable Percentage.
1.1.47 "INTANGIBLE PROPERTY" shall mean, collectively, patents,
trademarks, service marks, trade names, copyrights, franchises and rights to
receive royalties, and all applications or registrations for any of the
foregoing.
1.1.48 "INTERIM LOANS" shall mean (a) the loan from Chase Manhattan
Bank, N.A. to the Company in the principal amount at December 23, 1997 of
$19,778,127, the proceeds of which were used to purchase limited partnership
interests in Six Flags Fund, Ltd. (L.P.), (b) the loan from TWE to SFOT II, Inc.
in the principal amount at November 24, 1997 of $10,725,000, the proceeds of
which were loaned to Six Flags Over Texas Fund, Ltd., which, in turn, used such
funds to pay certain amounts owed by Six Flags Over Texas Fund,
12
Ltd. to Parent and (c) additional borrowings, from time to time, to finance
amounts payable under the Georgia Agreements and the Texas Agreements.
1.1.49 "IRS" means the United States Internal Revenue Service.
1.1.50 "KNOWLEDGE," with respect to any Person, shall mean the actual
knowledge of any executive officer or director of such Person, PROVIDED that,
with respect to the Sellers, knowledge shall also include actual knowledge of
Larry D. Bouts, Ira M. Belsky and Art Winkleblack; PROVIDED, HOWEVER, that with
respect to changes affecting the representations and warranties set forth in
Articles 4 and 5 hereof occurring after the date hereof and up to the Closing,
"knowledge" shall be deemed to mean actual knowledge after reasonable inquiry.
1.1.51 "LEASES" with respect to any Person, shall mean all leases of
real, personal or intangible property under which either such Person or any of
its Subsidiaries is lessee or lessor (or sublessee or sublessor).
1.1.52 "LEGAL REQUIREMENTS" with respect to any Person, shall mean (a)
all statutes, laws, ordinances, codes, rules, regulations, judgments, decrees,
decisions, writs, rulings, injunctions, orders and other requirements of any
Governmental Authority and (b) any consent, approval, authorization, waiver,
permit, agreement, license, certificate, exemption, order, registration,
declaration or filing of, with or to any Governmental Authority, in each case
other than relating to Taxes, and in each case binding upon such Person or such
Person's assets, business or properties.
1.1.53 "LIEN" shall mean any encumbrance, charge, security interest,
mortgage, pledge, hypothecation, title defect, title retention agreement, lease,
sublease, license, occupancy agreement, easement, covenant running with the
land, encroachment, voting trust agreement,
13
restriction, option, right of first offer or refusal, proxy or lien, including,
but not limited to, liens for taxes.
1.1.54 "LIM COASTERS" shall mean, collectively, the three linear
induction motor propelled coasters manufactured by Phoenix Rides, Inc. for
introduction at Six Flags Great Adventure, Six Flags Over Texas and Six Flags
St. Louis in 1997, but the opening of which was delayed until 1998.
1.1.55 "LOSSES" shall mean any and all losses, damages, deficiencies,
awards, assessments, amounts paid in good faith settlement in accordance with
Article 10 hereof, judgments, fines, penalties, interest, costs and expenses
(including, without limitation, reasonable legal fees and expenses).
1.1.56 "MATERIAL ADVERSE EFFECT," with respect to any Person, shall
mean any change or effect that is or would be reasonably expected to be
materially adverse to the business, assets, properties, financial condition or
results of operations of such Person and its Subsidiaries taken as a whole.
1.1.57 "MERGER CONSIDERATION" shall mean, collectively, the sum of (a)
the Capital Stock Consideration and (b) the Company Option Consideration.
1.1.58 "MINIMUM EQUITY ISSUANCE PRICE" shall mean a per share amount
equal to (x) the weighted average of the trading prices for all sales of shares
of Parent Common Stock on the New York Stock Exchange Composite Transactions
Tape for the 30 trading days ending on the 15th trading day following the date
on which this Agreement is first publicly announced by any of the parties
hereto, minus (y) $5.00, subject in each case to appropriate adjustment for any
recapitalization, reclassification, merger, consolidation, spinoff, split,
dividend, distribution (other than the issuance of Parent Common Stock in
respect of the exercise of Parent Options, Parent Warrants or similar rights, in
each case listed on SCHEDULE
14
1.1.58 and outstanding on the date hereof), subdivision or combination of shares
of Parent Common Stock or the like occurring during or after such 30-day period.
1.1.59 "OPTION CANCELLATION AMOUNT" shall mean the Company Option
Consideration less $5,000,000.
1.1.60 "OPTION CONSIDERATION NOTICE" shall mean a notice, to be
delivered by the Sellers' Representative to Parent in accordance with the
provisions of Section 11.3 hereof not later than two Business Days prior to the
Closing, setting forth the name of each Option Holder and the consideration
designated by the Company to be paid by the Company to each such Option Holder
at the Closing in cancellation of the Company Options held by each such Option
Holder.
1.1.61 "OPTION HOLDERS" shall mean holders of Company Options
outstanding immediately prior to the Effective Time of the S Merger.
1.1.62 "ORDINARY COURSE OF BUSINESS" with respect to any Person, shall
mean the ordinary course of business consistent with past custom and practice in
the business of such Person and its Subsidiaries; PROVIDED THAT, with respect to
the Company and its Subsidiaries, Ordinary Course of Business shall also
include, without limitation, fulfilling their obligations under the Georgia
Agreements, the Texas Agreements, this Agreement and the Indemnity Agreement,
entering into the amendments to the Chase Agreements and the Interim Loans
described in SCHEDULE 1.1.62(A) hereto, undertaking the capital improvements set
forth on SCHEDULE 1.1.62(B) hereto and incurring indebtedness to fund the
expenditures in respect thereof and making payments to TWE or any affiliate
thereof in respect of loans made by TWE or any affiliate thereof to the Company
or any Subsidiary of the Company prior to the Effective Time of the S Merger in
connection with the Company's or its Subsidiaries' obligations under the Georgia
Agreements and the Texas Agreements.
15
1.1.63 "ORGANIZATIONAL DOCUMENTS" shall mean (a) with respect to a
corporation, its articles of incorporation and by-laws, (b) with respect to a
partnership, its partnership agreement and its certificate of limited
partnership (if a limited partnership) and (c) with respect to a limited
liability company, its limited liability company operating agreement (or the
equivalent thereof) and its certificate of formation (or the equivalent
thereof), in each case as amended; PROVIDED, HOWEVER, that the Organizational
Documents of the Co-Ventures and San Antonio Theme Park, L.P. (the "FIESTA
PARTNERSHIP") shall mean only the certificate of limited partnership of each
such Co-Venture and the Fiesta Partnership, respectively, in each case as
amended.
1.1.64 "OUTSTANDING COMPANY SHARES" shall mean the aggregate number of
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time of the S Merger.
1.1.65 "PARENT COMMON STOCK" shall mean the Common Stock, par value
$0.05 per share, of Parent.
1.1.66 "PARENT EXCLUDED CLAIMS" shall mean all claims for Losses based
upon, arising out of, or otherwise in respect of the matters subject to the
Indemnity Agreement.
1.1.67 "PARENT OPTIONS" shall mean the outstanding options issued
pursuant to the Parent Stock Option Plans.
1.1.68 "PARENT STOCK OPTION PLANS" shall mean the 1993, 1995 and 1996
Stock Option and Incentive Plans of Parent, as amended.
1.1.69 "PARENT THEME PARKS" shall mean, collectively, the theme parks
set forth on SCHEDULE 1.1.69 hereto.
16
1.1.70 "PARENT WARRANT" shall mean, collectively, the warrants dated
October 16, 1989, issued to Kieran E. Burke, to purchase in the aggregate
45,038 shares of Parent Common Stock.
1.1.71 "PBGC" shall mean the Pension Benefit Guaranty Corporation.
1.1.72 "PERMITTED LIEN" shall mean (a) any Lien for Taxes not yet due
or delinquent or as to which there is a good faith dispute and for which there
are adequate reserves on the financial statements of the Person affected
thereby, (b) with respect to the Company and its Subsidiaries, Liens that are
set forth on SCHEDULE 1.1.72(A) hereto (identifying therein the particular
property to which such Liens relate), (c) with respect to Parent and its
Subsidiaries, Liens that are set forth on SCHEDULE 1.1.72(B) hereto (identifying
therein the particular property to which such Liens relate), (d) with respect to
real property, any Lien which is not in a material liquidated amount and which
does not, individually or in the aggregate, interfere materially with the
current use or materially detract from the value or marketability of such
property (assuming its continued use in the manner in which it is currently
used), (e) a Lien arising pursuant to any order of attachment, distraint or
similar legal process arising in connection with court proceedings so long as
the execution or other enforcement thereof has been stayed and the claims
secured thereby are being contested in good faith by appropriate proceedings and
for which there are adequate reserves on the financial statements of the Person
affected thereby, (f) Liens for assessments, levies or other governmental
charges not delinquent or being contested in good faith and by appropriate
proceedings and for which there are adequate reserves on the financing
statements of the Person affected thereby, (g) deposits or pledges to secure
bids, tenders, contracts, franchises, leases, statutory obligations, indemnity,
performance, surety and appeal bonds or other obligations of a like nature in
each case arising in the Ordinary Course of Business, (h)
17
deposits or pledges to secure obligations under workers compensation, social
security or similar laws or under employment insurance, (i) mechanics',
workers', materialmen's or other like Liens arising in the Ordinary Course of
Business that do not materially detract from the value, or interfere with the
present use, of the properties or assets affected thereby, (j) Liens arising
under or pursuant to the Georgia Agreements, the Texas Agreements, the Fiesta
Agreements, the Chase Agreements, the Zero Coupon Notes Indenture and the Senior
Subordinated Notes Indenture, as each is in effect on the date hereof and as
permitted to be amended in accordance with the terms hereof and (k) Liens
existing on the date hereof in respect of any capital leases in effect on the
date hereof in respect of rides or attractions at any SF Theme Parks or Liens
arising after the date hereof but prior to the Effective Time of the S Merger in
respect of any new or replacement capital leases permitted by Section 6.1(k).
1.1.73 "PER SHARE CASH PRICE" shall mean the quotient of (x)(i) the
Adjusted Base Amount, LESS (ii) the Aggregate Preferred Stock Amount, DIVIDED BY
(y) the Outstanding Company Shares.
1.1.74 "PERSON" shall mean and include an individual, a partnership, a
joint venture, a limited liability company, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
1.1.75 "RELEASE" shall mean any "release," as defined as such pursuant
to CERCLA, 42 U.S.C. Section 9601(22).
1.1.76 "RESERVED CLAIMS" shall mean all claims under Article 10 hereof
as to which any Indemnitee has in good faith given any Indemnifying Party
written notice (describing with reasonable specificity the amount and basis of
such claims) on or prior to the Claims Termination Date.
18
1.1.77 "RESERVED SHARES AGREEMENTS" shall mean the three Reserved
Shares Agreements, dated as of September 15, 1995, September 15, 1996 and
September 15, 1997 between Larry Bouts and the Company, and any additional
Reserved Shares Agreements which are entered into pursuant to the Tranche 1
Stock Option Agreements between the Company and Larry Bouts as of any subsequent
September 15 which precedes the Closing Date.
1.1.78 "SEC" shall mean the Securities and Exchange Commission.
1.1.79 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
1.1.80 "SENIOR SUBORDINATED NOTES INDENTURE" shall mean the Indenture
dated as of June 23, 1995 among SFTP, Six Flags Over Georgia, Inc., Six Flags
Over Texas, Inc., S.F. Partnership and United States Trust Company of New York,
as Trustee, as amended, pursuant to which SFTP's 12-1/4% Senior Subordinated
Discount Notes due 2005 (the "SENIOR SUBORDINATED NOTES") were issued.
1.1.81 "SF THEME PARKS" shall mean, collectively, the theme parks set
forth on SCHEDULE 1.1.81 hereto.
1.1.82 "SUBSIDIARY," with respect to any Person, shall mean any
corporation 50% or more of the outstanding voting power of which, or any
partnership, joint venture, limited liability company or other entity 50% or
more of the total equity interest of which, is directly or indirectly owned by
such Person or of which such Person is directly or indirectly a general partner
(or acts in a similar such capacity). For purposes of this Agreement, all
references to "Subsidiaries" of a Person shall be deemed to mean "Subsidiary" if
such Person has only one Subsidiary.
1.1.83 "TANGIBLE PERSONAL PROPERTY" shall mean, collectively,
machinery, equipment, furniture, fixtures and other tangible personal property.
19
1.1.84 "TAX" or "TAXES" shall mean all taxes, charges, fees, levies or
other assessments, and all estimated payments thereof, including, but not
limited to, income, excise, property, sales, use, value added, franchise,
payroll, transfer, transfer gain, gross receipts, withholding, social security
and unemployment taxes or other taxes of any kind, imposed by any foreign,
Federal, state, county or local government, or any subdivision or agency
thereof, and any interest, penalty and expense relating to such taxes, charges,
fees, levies or other assessments.
1.1.85 "TEXAS AGREEMENTS" shall mean, collectively, the (i) Overall
Agreement, dated as of November 24, 1997 (the "TEXAS OVERALL AGREEMENT"), among
Six Flags Over Texas Fund, Ltd., Flags' Directors, LLC, FD-II, LLC, Texas Flags,
Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc.,
Six Flags Over Texas, Inc., SFTP and the Company and (ii) the Related Agreements
(as defined in the Texas Overall Agreement).
1.1.86 "ZERO COUPON NOTES" shall mean the Zero Coupon Notes of the
Company due 1999 issued pursuant to the Indenture, dated as of December 16,
1992, as amended, by the Company and TWE to United States Trust of New York (the
"ZERO COUPON NOTES INDENTURE").
1.2 For purposes of this Agreement, the following terms shall have the
meanings ascribed to them in the Sections set forth opposite them below:
TERM SECTION
1996 Co-Venture Financials . . . . . . . . . . . . . . . . . . . . .4.1.6
1996 Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . .5.1.6
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Amended and Restated License Agreement . . . . . . . . . . . . . Preamble
Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5.4
Asserted Liability . . . . . . . . . . . . . . . . . . . . . . . . 10.5.1
Audited Financials . . . . . . . . . . . . . . . . . . . . . . . . .4.1.6
Base Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1.9
Bouts Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.18
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1.7
Capital Events . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.4
20
Capital Stock Consideration. . . . . . . . . . . . . . . . . . . . .3.3.3
Certificate of S Merger. . . . . . . . . . . . . . . . . . . . . . . .2.2
Claims Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5.1
Class A-1 Common Stock . . . . . . . . . . . . . . . . . . . . . Preamble
Class A-1 Preferred Stock. . . . . . . . . . . . . . . . . . . . Preamble
Class A-2 Common Stock . . . . . . . . . . . . . . . . . . . . . Preamble
Class A-2 Preferred Stock. . . . . . . . . . . . . . . . . . . . Preamble
Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . Preamble
Class B Preferred Stock. . . . . . . . . . . . . . . . . . . . . Preamble
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Capital Stock . . . . . . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Financial Statements . . . . . . . . . . . . . . . . . . . .4.1.6
Company Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.14
Company Option Consideration . . . . . . . . . . . . . . . . . . . .3.3.3
Company Pension Plan . . . . . . . . . . . . . . . . . . . . . . . 4.1.11
Company Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.11
Company Preferred Stock. . . . . . . . . . . . . . . . . . . . . Preamble
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . .6.3
Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.2.4
Consultation Period. . . . . . . . . . . . . . . . . . . . . . . . 10.5.4
Co-Venture Financial Statements. . . . . . . . . . . . . . . . . . .4.1.6
CVRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.3
Determination Notice . . . . . . . . . . . . . . . . . . . . . . . 10.5.4
Determination Period . . . . . . . . . . . . . . . . . . . . . . . 10.5.4
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Direct Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5.3
Direct Claim Notice. . . . . . . . . . . . . . . . . . . . . . . . 10.5.3
D&O Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
Effective Time of the P Merger . . . . . . . . . . . . . . . . . . . .2.2
Effective Time of the S Merger . . . . . . . . . . . . . . . . . . . .2.2
Employee Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 6.18
Equity Issuance. . . . . . . . . . . . . . . . . . . . . . . . . . .6.4.1
Excepted Conditions. . . . . . . . . . . . . . . . . . . . . . . . . 6.28
Existing Transaction . . . . . . . . . . . . . . . . . . . . . . . . .6.2
Extension Notice . . . . . . . . . . . . . . . . . . . . . . . . . .8.1.2
Fiesta Partnership . . . . . . . . . . . . . . . . . . . . . . . . 1.1.63
Financial Delivery Date. . . . . . . . . . . . . . . . . . . . . . . 6.24
GL Indemnity Agreement . . . . . . . . . . . . . . . . . . . . . . . 6.14
Georgia Overall Agreement. . . . . . . . . . . . . . . . . . . . . 1.1.39
Holdco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Holder Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . 6.30
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . 10.5
21
Indemnity Agreement. . . . . . . . . . . . . . . . . . . . . . Preamble
Initial Termination Date . . . . . . . . . . . . . . . . . . . . .8.1.2
Interim Co-Venture Financials. . . . . . . . . . . . . . . . . . .4.1.6
Interim Financials . . . . . . . . . . . . . . . . . . . . . . . .4.1.6
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.16
Leased Real Property . . . . . . . . . . . . . . . . . . . . . . 4.1.14
Maximum Premium. . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
Merger Sub P . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Merger Sub S . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Minimum Amount . . . . . . . . . . . . . . . . . . . . . . . . . 10.6.3
Notice of Disagreement . . . . . . . . . . . . . . . . . . . . . 10.5.4
P Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
P Merger Agreement . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Subsidiary Shares . . . . . . . . . . . . . . . . . . . . .5.1.3
P Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . .2.1
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Basket Amount . . . . . . . . . . . . . . . . . . . . . . . 10.4
Parent Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4
Parent Entities. . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Rights Agreement. . . . . . . . . . . . . . . . . . . . . . 6.30
Preliminary Base Amount. . . . . . . . . . . . . . . . . . . . . .1.1.9
Registration Rights Agreement. . . . . . . . . . . . . . . . . . . 6.11
SFOG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.26
SFTP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1.6
S Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
S Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . .2.1
SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . .5.1.6
Section 9.1 Agreements . . . . . . . . . . . . . . . . . . . . . . .9.1
Seller or Sellers. . . . . . . . . . . . . . . . . . . . . . . Preamble
Sellers' Basket Amount . . . . . . . . . . . . . . . . . . . . . . 10.4
Sellers' Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4
Sellers' Representative. . . . . . . . . . . . . . . . . . . . . .11.12
Senior Subordinated Notes. . . . . . . . . . . . . . . . . . . . 1.1.80
Significant Park Acquisition . . . . . . . . . . . . . . . . . . . .6.2
Tax Items. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5.4
Termination Fee. . . . . . . . . . . . . . . . . . . . . . . . . .8.2.2
Texas Flags. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.27
Texas Overall Agreement. . . . . . . . . . . . . . . . . . . . . 1.1.85
Theme Park Operator. . . . . . . . . . . . . . . . . . . . . . . . .6.2
TWE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Variable Terms . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.44
Zero Coupon Notes Indenture. . . . . . . . . . . . . . . . . . . 1.1.86
22
ARTICLE 2
THE MERGERS
2.1 THE MERGERS. (a) Upon the terms and subject to the conditions of
the P Merger Agreement, at the Effective Time of the P Merger and in accordance
with the DGCL, Merger Sub P shall be merged with and into Parent. Pursuant to
the P Merger Agreement, following the P Merger, the separate existence of Merger
Sub P shall cease and Parent shall continue as the surviving corporation (the "P
SURVIVING CORPORATION") and shall succeed to and assume all rights, properties,
liabilities and obligations of Merger Sub P in accordance with the DGCL.
(b) Upon the terms and subject to the conditions of this
Agreement, at the Effective Time of the S Merger and in accordance with the
DGCL, Merger Sub S shall be merged with and into the Company. Following the S
Merger, the separate existence of Merger Sub S shall cease and the Company shall
continue as the surviving corporation (the "S SURVIVING CORPORATION") and shall
succeed to and assume all rights, properties, liabilities and obligations of
Merger Sub S in accordance with the DGCL.
2.2 CLOSING; EFFECTIVE TIME. The closing of the S Merger (the
"CLOSING") shall take place in New York City at the offices of Weil, Gotshal &
Manges LLP, as soon as practicable, but in no event later than 10:00 a.m. New
York City time on the later of (a) the fifth Business Day after the Effective
Time of the P Merger and (b) the fifth Business Day after the date on which the
conditions set forth in Article 7 (other than the conditions set forth in
Section 7.2.3, 7.2.6, 7.2.7, 7.3.3 and 7.3.6, which are to be satisfied at the
Closing) have been satisfied or waived by the party or parties entitled to the
benefit of such conditions, or at such other place, at such other time or on
such other date Parent and the Sellers' Representative may mutually agree. The
date on which the Closing actually occurs is
23
hereinafter referred to as the "CLOSING DATE." At the Closing, the parties
shall cause to be filed with the Secretary of State of the State of Delaware
such certificate of merger or other appropriate documents (such certificate and
other documents being hereinafter referred to as the "CERTIFICATE OF S MERGER")
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings, recordings or publications required by the DGCL in connection
with the S Merger. The S Merger shall become effective at the time specified in
the Certificate of S Merger (the "EFFECTIVE TIME OF THE S MERGER") which shall
be subsequent to the effective time of the P Merger specified in the P Merger
Agreement (the "EFFECTIVE TIME OF THE P MERGER").
2.3 EFFECTS OF THE MERGERS. The S Merger shall have the effects set
forth in Section 259 of the DGCL. Pursuant to the terms of the P Merger
Agreement, the P Merger shall have the effects set forth in Section 259 of the
DGCL.
2.4 CERTIFICATE OF INCORPORATION. (a) Pursuant to the terms of the
P Merger Agreement, at the Effective Time of the P Merger, the certificate of
incorporation of Parent, as in effect immediately prior to the Effective Time of
the P Merger, shall be amended so as to read in its entirety in the form annexed
as Exhibit A to the P Merger Agreement.
(b) At the Effective Time of the S Merger, the certificate of
incorporation of the Company, as in effect immediately prior to the Effective
Time of the S Merger, shall be amended so as to read in its entirety in the form
annexed as EXHIBIT F hereto.
2.5 BY-LAWS. (a) Pursuant to the terms of the P Merger Agreement,
the by-laws of Parent, as in effect immediately prior to the Effective Time of
the P Merger, shall become, from and after the Effective Time of the P Merger,
the by-laws of the P Surviving
24
Corporation, until thereafter altered, amended or repealed as provided therein
and in accordance with applicable law.
(b) The by-laws of Merger Sub S, as in effect immediately prior
to the Effective Time of the S Merger, shall become, from and after Effective
Time of the S Merger, the by-laws of the S Surviving Corporation, until
thereafter altered, amended or repealed as provided therein and in accordance
with applicable law.
2.6 DIRECTORS. (a) Pursuant to the terms of the P Merger Agreement,
the directors of Parent in office immediately prior to the Effective Time of the
P Merger shall be the directors of the P Surviving Corporation until the earlier
of their death, resignation or removal or until their respective successors are
duly elected or appointed or qualified, as the case may be.
(b) The directors of Merger Sub S in office immediately prior to
the Effective Time of the S Merger shall be the directors of the S Surviving
Corporation until the earlier of their death, resignation or removal or until
their respective successors are duly elected or appointed or qualified, as the
case may be.
2.7 OFFICERS. (a) Pursuant to the terms of the P Merger Agreement,
the officers of Parent in office immediately prior to the Effective Time of the
P Merger shall be the officers of the P Surviving Corporation until the earlier
of their death, resignation or removal or until their respective successors are
duly elected or appointed or qualified, as the case may be.
(b) The officers of Merger Sub S in office immediately prior to
the Effective Time of the S Merger shall be the officers of the S Surviving
Corporation until the earlier of their death, resignation or removal or until
their respective successors are duly elected or appointed or qualified, as the
case may be.
25
ARTICLE 3
CONVERSION OF CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS
3.1 P MERGER. Pursuant to the terms of the P Merger Agreement, as of
the Effective Time of the P Merger, by virtue of the P Merger and without any
action on the part of the holder of any shares of Parent Common Stock or any
shares of capital stock of Merger Sub P:
3.1.1 CONVERSION OF COMMON STOCK OF MERGER SUB P. Pursuant to
the terms of the P Merger Agreement, each share of Common Stock, par value $.01
per share, of Merger Sub P issued and outstanding immediately prior to the
Effective Time of the P Merger shall be converted into one (1) fully paid and
non-assessable share of Common Stock, par value $.05 per share, of the P
Surviving Corporation.
3.1.2 CONVERSION OF PARENT TREASURY STOCK. Pursuant to the terms
of the P Merger Agreement, each share of Parent Common Stock that is owned by
Parent or any of its Subsidiaries immediately prior to the Effective Time of the
P Merger shall be converted into one (1) share of Holdco Common Stock. As of
the Effective Time of the P Merger, all such shares of Parent Common Stock shall
no longer be outstanding and shall automatically be cancelled and shall cease to
exist. As of the Effective Time of the P Merger, each certificate theretofore
representing such shares of Parent Common Stock, without any action on the part
of Holdco, Parent or the holder thereof, shall be deemed to represent a number
of shares of Holdco Common Stock equivalent to that number of shares of Parent
Common Stock formerly represented by such certificate and shall cease to
represent any rights in any shares of Parent Common Stock.
26
3.1.3 CONVERSION OF PARENT COMMON STOCK. Pursuant to the terms
of the P Merger Agreement, each share of Parent Common Stock issued and
outstanding immediately prior to the Effective Time of the P Merger (other than
shares referred to Section 3.1.2 hereof) shall be converted into one (1) fully
paid and nonassessable share of Holdco Common Stock. As of the Effective Time
of the P Merger, all such shares of Parent Common Stock shall no longer be
outstanding and shall automatically be canceled and shall cease to exist. As of
the Effective Time of the P Merger, each certificate theretofore representing
such shares of Parent Common Stock, without any action on the part of Holdco,
Parent or the holder thereof, shall be deemed to represent a number of shares of
Holdco Common Stock equivalent to that number of shares of Parent Common Stock
formerly represented by such certificate and shall cease to represent any rights
in any shares of Parent Common Stock.
3.2 EXCHANGE RATIO FOR PARENT OPTIONS AND PARENT WARRANTS.
(a) Pursuant to the terms of the P Merger Agreement, prior to the Effective
Time of the P Merger, Parent and Holdco shall take all requisite action so that,
as of the Effective Time of the P Merger, each Parent Option and each Parent
Warrant (and each other right to receive shares of Parent Common Stock), in each
case outstanding immediately prior to the Effective Time of the P Merger, shall
be assumed by Holdco and represent an option or warrant (or other right), as the
case may be, to purchase shares of Holdco Common Stock, as provided below.
Following the Effective Time of the P Merger, each such Parent Option shall
continue to have, and shall be subject to, the same terms and conditions set
forth in the applicable Parent Stock Option Plan pursuant to which such Parent
Option was granted, and each such Parent Warrant (or other such right) shall
continue to have, and shall be subject to, the same terms and conditions, in
each case as in effect immediately prior to the Effective Time of the P Merger,
27
except that each such Parent Option or Parent Warrant (or other right) shall be
exercisable for a number of shares of Holdco Common Stock equal to the number of
shares of Parent Common Stock for which such Parent Option or Parent Warrant (or
other right) was exercisable immediately prior to the Effective Time of the
P Merger.
(b) Pursuant to the P Merger Agreement, as of the Effective Time
of the P Merger, Holdco shall enter into an assumption agreement with respect to
each such Parent Option and each such Parent Warrant (or other such right)
which, in the case of any Parent Option, Parent Warrant or other right, shall
provide for Holdco's assumption of the obligations of Parent under the relevant
Parent Stock Option Plan (and any related agreement pursuant to which options,
warrants or other rights may have been granted). Prior to the Effective Time of
the P Merger, Parent shall make such amendments, if any, to the Parent Stock
Option Plans as shall be necessary to permit such assumption in accordance with
this Section 3.2(b).
(c) Pursuant to the P Merger Agreement, it is the intention of
the parties that, to the extent that any Parent Option constitutes an "incentive
stock option" (within the meaning of Section 422 of the Code) immediately prior
to the Effective Time of the P Merger, such Parent Option shall continue to
qualify as an incentive stock option to the maximum extent permitted by Section
422 of the Code, and that the assumption of the Parent Option shall satisfy the
conditions of Section 424(a) of the Code.
3.3 S MERGER. As of the Effective Time of the S Merger, by virtue of
the S Merger and without any action on the part of the holder of any shares of
Company Capital Stock or any shares of the capital stock of Merger Sub S:
3.3.1 CONVERSION OF COMMON STOCK OF MERGER SUB S. Each share of
common stock of Merger Sub S issued and outstanding immediately prior to the
Effective
28
Time of the S Merger shall be converted into one (1) fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the S
Surviving Corporation.
3.3.2 CANCELLATION OF TREASURY STOCK. Each share of Company
Common Stock that is owned by the Company or any of its wholly-owned
Subsidiaries immediately prior to the Effective Time of the S Merger shall
automatically be canceled or retired and shall cease to exist, without any
consideration delivered in exchange therefor.
3.3.3 CONVERSION OF COMPANY CAPITAL STOCK. (a) Each share of
Company Capital Stock issued and outstanding immediately prior to the Effective
Time of the S Merger shall be converted into the right to receive (i) an amount
in cash equal to the Per Share Cash Price and (ii) the number of fully paid and
nonassessable shares of Holdco Preferred Stock equal to the Conversion Ratio,
payable to the holder thereof, without, in the case of the cash consideration,
interest thereon, upon surrender of the certificate representing such share of
Company Capital Stock to the S Surviving Corporation; PROVIDED that, each holder
of Company Capital Stock shall receive, in lieu of any fractional shares of
Holdco Preferred Stock that such holder would otherwise receive pursuant to this
Section 3.3.3(a), cash equal to the proportionate liquidation value of any such
fractional shares. The aggregate consideration provided to holders of Company
Capital Stock pursuant to this Section 3.3.3(a) shall be referred to as the
"CAPITAL STOCK CONSIDERATION". Subject to the following sentence, payment of
the Capital Stock Consideration shall be by official bank check, or cash by wire
transfer of immediately available funds, on the Closing Date following the
Effective Time of the S Merger, together with delivery of validly issued and
executed certificates for all Holdco Preferred Stock (or, in lieu thereof,
validly issued and executed depositary shares or receipts evidencing ownership
of the underlying Holdco Preferred Stock). Notwithstanding anything to the
contrary contained herein, Holdco shall (i) deposit with the Escrow Agent, at
the
29
Closing and on behalf of and out of the Capital Stock Consideration payable to
each Seller under this Section 3.3.3(a), an amount in cash equal to such
Seller's Individual Escrow Amount, such amount to be held and disbursed in
accordance with the terms of the General Indemnity Escrow Agreement and (ii) pay
to or as directed by the Sellers' Representative, at the Closing and on behalf
of each Seller and out of the Capital Stock Consideration payable to each Seller
under this Section 3.3.3(a), an amount equal to such Seller's Applicable
Percentage of the aggregate estimated expenses of the Sellers and the Company
incurred in connection with this Agreement and the transactions contemplated
hereby, such amount to be set forth in a notice from the Sellers' Representative
to Holdco given not later than one Business Day prior to the Closing.
(b) CONVERSION OF OPTIONS. Immediately prior to the Effective
Time of the S Merger, the Company shall pay to the Option Holders, in settlement
and cancellation of each of such Option Holder's Company Options, the amount in
cash set forth opposite each such Option Holder's name in the Option
Consideration Notice. The aggregate consideration provided to all Option
Holders pursuant to this Section 3.3.3(b) shall be referred to as the "COMPANY
OPTION CONSIDERATION". Holdco shall loan or contribute to the Company all
amounts necessary to fund such payments. Notwithstanding anything to the
contrary contained herein, the Company shall (i) deposit with the Escrow Agent,
at the Closing and on behalf of any Option Holder party to the General Indemnity
Escrow Agreement and out of the Company Option Consideration payable pursuant to
this Section 3.3.3(b) to each such Option Holder, an amount in cash equal to
each such Option Holder's Individual Escrow Amount, such amount to be held and
disbursed in accordance with the terms of the General Indemnity Escrow Agreement
and (ii) pay to or as directed by the Sellers' Representative, at the Closing
and on behalf of each Option Holder designated by
30
the Sellers' Representative and out of the Company Option Consideration payable
pursuant to this Section 3.3.3(b) to each Option Holder, an amount equal to such
Option Holder's Applicable Percentage of the aggregate estimated expenses of the
Sellers and the Company incurred in connection with this Agreement and the
transactions contemplated hereby, such amount to be set forth in a notice from
the Sellers' Representative to the Company given not later than one Business Day
prior to the Closing.
3.4 PURCHASE OF CERTAIN HOLDCO COMMON STOCK HELD BY PARENT. After
the Effective Time of the P Merger, Holdco shall repurchase each share of Holdco
Common Stock owned by Parent immediately prior to the Effective Time of the
P Merger for $1.00 per share, payable to Parent upon surrender by Parent to
Holdco of the certificate representing each such share of Holdco Common Stock.
3.5 WITHHOLDING. Holdco and the Company shall deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock or Company Options such amounts as
Holdco and the Company are required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of the Company Common Stock or Company Options in
respect of which such deduction and withholding was made.
31
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS WITH RESPECT TO THE
COMPANY AND ITS SUBSIDIARIES. Each Seller, jointly and severally, represents
and warrants to Parent, Holdco and Merger Sub S as follows:
4.1.1 ORGANIZATION. Each of the Company and the Company's
Subsidiaries is duly organized and existing in good standing under the laws of
the jurisdiction of its incorporation or organization and has all requisite
power and authority to own, lease and operate its respective properties and to
carry on its respective business as now being conducted. Except as set forth in
SCHEDULE 4.1.1, each of the Company and the Company's Subsidiaries is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
for such failures to be so duly qualified or licensed and in good standing that
would not have a Material Adverse Effect with respect to the Company. Complete
and correct copies of the Organizational Documents of the Company and each of
its Subsidiaries, with all amendments thereto to the date hereof, have been
delivered or made available to Parent.
4.1.2 STOCK OWNERSHIP. SCHEDULE 4.1.2 lists (i) each Subsidiary
of the Company and its jurisdiction of incorporation or organization; (ii) the
authorized number of shares of each class or series of capital stock or other
equity interests of such Subsidiary; (iii) the number of issued and outstanding
shares of each such class or series or other equity interest; and (iv) the names
of the record owners of the capital stock of, or equity interest in, each
Subsidiary (other than, with respect to owners that are not Subsidiaries of the
Company,
32
the Co-Ventures) and the number of shares of such capital stock or the
percentage of such equity interest owned by them. Except as set forth in
SCHEDULE 4.1.2, the Company is the beneficial and record owner of all of the
issued and outstanding capital stock of, or equity interests in, the Company's
Subsidiaries, free and clear of all Liens and preemptive rights, other than
Permitted Liens and Liens imposed by Federal and state securities laws. Except
as set forth on SCHEDULE 4.1.2, the Company does not own, directly or
indirectly, any shares of capital stock or other equity interest in any Person,
foreign or domestic.
4.1.3 CAPITALIZATION. The authorized Company Capital Stock
consists solely of 26,100,161 shares of Company Common Stock and 11,000,000
shares of Company Preferred Stock, of which 41 shares of Class A-1 Common Stock,
10 shares of Class A-2 Common Stock, 49 shares of Class B Common Stock,
4,100,000 shares of Class A-1 Preferred Stock, 1,000,000 shares of Class A-2
Preferred Stock and 4,900,000 shares of Class B Preferred Stock are as of the
date hereof, and will be on the Closing Date, issued and outstanding, except for
shares of capital stock of the Company issued in accordance with the proviso in
Section 6.1(e). Except as set forth in SCHEDULE 4.1.3, there are no outstanding
or authorized Company Options, warrants, calls, subscriptions, rights,
agreements or other commitments of any character (contingent or otherwise)
obligating the Company or the Company's Subsidiaries to issue, sell, purchase,
return or redeem any shares of capital stock of (or equity interest in), or
securities convertible into or exchangeable for, any shares of capital stock of
(or equity interest in) the Company or its Subsidiaries. Upon the consummation
of the S Merger, any such outstanding or authorized options, warrants, calls,
subscriptions, rights, agreements or other commitments set forth on SCHEDULE
4.1.3 will be cancelled (without any consideration therefor, except as set forth
in Section 3.3.3(b)) and none will be authorized or outstanding. Except as
disclosed on SCHEDULE 4.1.3 hereto, there are no stockholder
33
agreements, voting trusts or other agreements or understandings to which the
Company or any Subsidiary thereof is a party or to which any of them is bound
relating to the voting or registration of any shares of Company Capital Stock or
capital stock of or equity interests in the Company's Subsidiaries. All issued
and outstanding shares of Company Capital Stock and capital stock of or other
equity interests in the Company's Subsidiaries are duly authorized, validly
issued, fully paid and non-assessable.
4.1.4 AUTHORIZATION AND ENFORCEABILITY. This Agreement has been
duly authorized by the Board of Directors of the Company and approved by all
holders of the outstanding Company Capital Stock and this Agreement has been
duly executed and delivered by the Company, and (assuming this Agreement
constitutes a valid and binding obligation of each of the Parent Entities),
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance
or transfer or similar laws affecting the enforcement of creditors' rights
generally and general principles of equity (whether considered in a proceeding
at law or in equity). Except for the aforesaid authorizations and approvals, no
other authorizations or approvals are required of any boards of directors or
holders of the capital stock of the Company or its Subsidiaries with respect to
this Agreement or the transactions contemplated hereby.
4.1.5 AUTHORITY, APPROVALS AND CONSENTS. Neither the Company nor
any of its Subsidiaries is in violation of its Organizational Documents, except
as would not have a Material Adverse Effect with respect to the Company. Except
as set forth on SCHEDULE 4.1.5, neither the execution, delivery or performance
(I) by the Sellers of this Agreement or any Ancillary Agreement to which the
Sellers will be a party as of the Closing or (II) by the Company of this
Agreement, the Amended and Restated License Agreement or
34
the Cartoon Network Amendment, nor the consummation by the Sellers or the
Company (as the case may be) of the transactions contemplated hereby and
thereby, does or will constitute, result in or give rise to (i) once the Company
Charter Amendment has been filed and is in effect, a breach or default under any
provision of the Organizational Documents of the Company or its Subsidiaries,
(ii) a breach, violation or default under (a) any statute, law, judgment,
decree, decision, ruling, injunction or order of any Governmental Authority
applicable to the Company or its Subsidiaries or (b) any other Legal Requirement
not referred to in the foregoing clause (a) applicable to the Company or its
Subsidiaries, (iii) the imposition of any Lien upon any assets of the Company or
its Subsidiaries or (iv) a breach or default under or the occurrence of any
event which, with the notice or lapse of time or both, would constitute a
default under (or the acceleration of the time for performance of any obligation
under or the termination, cancellation or non-renewal of) any Contracts of the
Company or its Subsidiaries (or binding on their assets, businesses or
properties), except with respect to clauses (ii)(b), (iii) and (iv) as would not
have a Material Adverse Effect with respect to the Company. Except as set forth
in SCHEDULE 4.1.5 and except for the filing of the Certificate of S Merger and
the Company Charter Amendment, in each case with the Delaware Secretary of State
and filings in respect of the HSR Act, no approval, consent, waiver,
authorization or other order of, and no declaration, filing, registration,
qualification or recording with, any Governmental Authority or any Person party
to any Contracts of the Company or its Subsidiaries (or binding on their assets,
business or properties) is required to be obtained or made by or on behalf of
any of the Company or its Subsidiaries in connection with the execution,
delivery or performance of this Agreement and the consummation of the Closing
hereunder in accordance with the terms and conditions thereof, except those
where failure to obtain such approval, consent, waiver, authorization or other
order, or to make such
35
declaration, filing, registration, qualification or recording would not have a
Material Adverse Effect with respect to the Company.
4.1.6 FINANCIAL STATEMENTS.
(a) FINANCIAL INFORMATION. Parent has been furnished with
each of the following:
(i) The consolidated audited balance sheet of Six Flags
Theme Parks Inc. ("SFTP") and its Subsidiaries at December 29, 1996 and the
related statements of earnings and shareholders equity and cash flows for the
fiscal year then ended, accompanied by the notes thereto and the report thereon
of Ernst & Young LLP (collectively, the "AUDITED FINANCIALS").
(ii) The unaudited consolidated balance sheet of SFTP
and its Subsidiaries at September 28, 1997 and related unaudited consolidated
statements of earnings and cash flows for the 39 week period then ended (the
"INTERIM FINANCIALS" and, together with the Audited Financials, the "COMPANY
FINANCIAL STATEMENTS").
(iii) The audited balance sheet of each of Texas Flags
at December 29, 1996 and SFOG at December 29, 1996, and the related statements
of earnings and partners equity and cash flows for the fiscal year then ended,
accompanied by the notes thereto and reports thereon of their respective
independent auditors (the "1996 CO-VENTURE FINANCIALS").
(iv) The unaudited balance sheet of each of Texas Flags
at September 28, 1997 and SFOG at September 28, 1997, and the related statements
of earnings and partners equity and cash flows for the 39 week period then ended
(the "INTERIM CO-VENTURE FINANCIALS" and, together with the 1996 Co-Venture
Financials, the "CO-VENTURE FINANCIAL STATEMENTS").
36
(b) CHARACTER OF FINANCIAL INFORMATION. The Company
Financial Statements were prepared, and the 1997 Audited Financials, when
delivered to Parent, will be prepared, in each case, in accordance with
Generally Accepted Accounting Principles consistently applied throughout the
periods specified therein, except as disclosed in the Company Financial
Statements or the 1997 Audited Financials, as applicable, and present and will
present fairly, in all material respects, the consolidated financial position
and consolidated results of operations of SFTP and its Subsidiaries and the
Company and its Subsidiaries, respectively, as of the dates and for the periods
specified therein in conformity with Generally Accepted Accounting Principles,
subject in the case of the Interim Financials to an absence of footnotes
required by Generally Accepted Accounting Principles and to normal year-end
adjustments. The Co-Venture Financial Statements were prepared, and the 1997
Co-Venture Financials, when delivered to Parent, will be prepared, in each case,
on the accounting basis used for Federal income tax purposes, except as
disclosed in the Co-Venture Financial Statements or the 1997 Co-Venture
Financials, as applicable, and present and will present fairly, in all material
respects, the assets, liabilities, partners' capital and results of operations
of each of Texas Flags and SFOG, respectively, as applicable, as of the dates
and for the periods specified therein, on the basis of accounting described in
the footnotes to the 1996 Co-Venture Financials, subject in the case of the
Interim Co-Venture Financials to an absence of certain footnotes and normal
year-end adjustments.
4.1.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as
disclosed in SCHEDULE 4.1.7 or as contemplated by this Agreement, since
September 28, 1997, the Company and its Subsidiaries have conducted their
respective businesses in the Ordinary Course of Business of the Company and
there has not been any condition, event or occurrence that, individually or in
the aggregate, has had or would have a Material Adverse Effect with respect
37
to the Company (without regard, however, to changes in (i) conditions generally
applicable to the industries in which the Company and its Subsidiaries are
involved or general economic conditions or (ii) changes in management or
employees of the Company after the public announcement of the transactions
contemplated by this Agreement).
(b) Without limiting the generality of paragraph (a) of
this Section 4.1.7, except as disclosed in SCHEDULE 4.1.7 or as contemplated by
this Agreement, since September 28, 1997 through the date hereof, neither the
Company nor any of its Subsidiaries has:
(i) acquired or agreed to acquire, develop, lease,
operate or manage, by merging or consolidating with, or by purchasing a material
portion of the assets of any business or any corporation, partnership, joint
venture, association or other business organization or division thereof (each a
"BUSINESS"), or by any other manner (x) any Business, (y) any assets that are
material to the Company and its Subsidiaries taken as a whole or (z) any new
amusement park of any kind;
(ii) declared, set aside, or paid any dividends or
made any distributions on Company Capital Stock;
(iii) except as disclosed in the Company Financial
Statements or the Co-Venture Financial Statements, changed any of its tax or
accounting policies (including, without limitation, procedures with respect to
the payment of accounts payable and collection of accounts receivable);
(iv) resolved, agreed or otherwise committed to do any
of the foregoing.
4.1.8 ABSENCE OF LITIGATION. Except as set forth on
SCHEDULE 4.1.8 or as would not have, individually or in the aggregate, a
Material Adverse Effect with respect to the
38
Company, as of the date hereof, there is no Action pending or, to the knowledge
of the Sellers, threatened against the Company or any of its Subsidiaries or any
portion of their properties or assets, and there is no Action pending or, to the
knowledge of the Sellers, threatened against the Company or any of its
Subsidiaries which could reasonably be expected to interfere with the
consummation of this Agreement or any of the transactions contemplated hereby.
4.1.9 COMPLIANCE. Except as set forth on SCHEDULE 4.1.9, each of
the Company, its Subsidiaries, the SF Theme Parks and the properties identified
in SCHEDULES 4.1.14(A) and 4.1.14(B) hereto is in compliance with all Legal
Requirements, including, without limitation, those relating to zoning (excluding
those relating to Environmental, Health, or Safety Requirements which are
covered by Section 4.1.12 hereof), except for such failures to comply or to be
in compliance as have not had, and would not have, individually or in the
aggregate, a Material Adverse Effect with respect to the Company. Except as set
forth on SCHEDULE 4.1.9, none of the Company or any of its Subsidiaries has
received any written notice asserting any non-compliance with any such Legal
Requirements, except for such failures to comply as have not had, and would not
have, a Material Adverse Effect with respect to the Company.
4.1.10 TAXES. (a) Except as set forth on SCHEDULE 4.1.10,
(i) all federal income tax returns and reports and all other material tax
returns and reports (collectively, "COMPANY TAX RETURNS") required to be filed
by or on behalf of the Company and its Subsidiaries have been duly and timely
filed with the appropriate taxing authorities in all jurisdictions in which such
Company Tax Returns are required to be filed (after giving effect to any valid
extensions of time in which to make such filings); and (ii) all amounts shown as
due thereon from the Company or its Subsidiaries have been timely paid. Except
as set forth
39
on Schedule 4.1.10 or as agreed between Sellers' Representative and Parent, the
Company and its Subsidiaries shall prepare and, after consultation with Parent,
timely file, in a manner consistent with prior years except as required by a
change in applicable laws and regulations, all Company Tax Returns required to
be filed on or before the Effective Time of the S Merger (after giving effect to
any valid extensions of time in which to make such filings).
(b) Each of the Company and its Subsidiaries has complied in all
material respects with all applicable laws, rules and regulations relating to
the withholding of Taxes, except for Taxes, the non-withholding of which has not
had, and would not have, a Material Adverse Effect with respect to the Company.
(c) Parent has received copies of (i) all federal, state, local
and foreign income or franchise Company Tax Returns relating to the tax periods
ended the last Sunday in May for 1994, 1995 and 1996 as well as a draft of the
federal tax return for the period ended May 31, 1997 and (ii) any audit report
issued within the last three years (or otherwise with respect to any audit or
investigation in progress) relating to Taxes due from or with respect to the
Company and its Subsidiaries, their respective income, assets or operations.
The income and franchise Company Tax Returns filed by or on behalf of the
Company and its Subsidiaries for the taxable years ended in 1993, 1994, 1995 and
1996 set forth on SCHEDULE 4.1.10 have been examined by the relevant taxing
authority or the statute of limitations with respect to such Company Tax Returns
has expired.
(d) Except as set forth on SCHEDULE 4.1.10, no written claim has
been made by a taxing authority in a jurisdiction where the Company or its
Subsidiaries does not file Company Tax Returns such that it is or may be subject
to taxation by that jurisdiction.
(e) Except as set forth on SCHEDULE 4.1.10, all deficiencies
asserted or assessments made as a result of any examinations by the IRS or other
taxing authority of
40
Company Tax Returns of or covering or including the Company and its Subsidiaries
have been fully paid, and there are no other audits or investigations by any
taxing authority in progress, nor has any Seller, the Company or any of its
Subsidiaries received any written notice from any taxing authority that it
intends to conduct such an audit or investigation.
(f) Except as set forth on SCHEDULE 4.1.10, neither the Company
nor its Subsidiaries has received any private letter ruling of the IRS or
comparable rulings of other taxing authorities.
(g) Except as set forth on SCHEDULE 4.1.10, none of the Company,
any of its Subsidiaries or any other Person on behalf of the Company or its
Subsidiaries has (i) agreed to or is required to make any adjustments pursuant
to Section 481(a) of the Code or any similar provision of state, local or
foreign law by reason of a change in accounting method initiated by the Company
or its Subsidiaries or has any application pending with any taxing authority
requesting permission for any change in accounting methods that relate to the
business or operations of the Company or its Subsidiaries, and the Sellers have
no knowledge that the IRS has proposed any such adjustment or change in
accounting method, (ii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of state, local, or foreign law with respect to the Company or its
Subsidiaries, (iii) extended the time within which to file any Company Tax
Return, which Company Tax Return has since not been filed or the assessment or
collection of Taxes, which Taxes have not since been paid or (iv) authorized any
power of attorney with respect to any tax matter currently in force.
(h) No property owned by the Company or its Subsidiaries (i) is
property required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect
41
immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) constitutes "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code or (iii) is "tax-exempt bond financed property"
within the meaning of Section 168(g) of the Code.
(i) Neither the Company nor any of its Subsidiaries is a party
to any tax sharing or similar contract or arrangement (whether or not written)
with any Person other than the Company and its Subsidiaries.
(j) Except as set forth on SCHEDULE 4.1.10, since June 1, 1990
neither the Company nor any of its Subsidiaries has been a member of any
consolidated, combined, unitary or affiliated group of corporations for any tax
purposes other than the group of which the Company or a present or former
Subsidiary of the Company is or was the common parent corporation.
(k) Neither the Company nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or agreed for Section 341(f)(2)
to apply to the disposition of any assets.
4.1.11 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 4.1.11(A) contains a true and complete list of each
"employee benefit plan" (within the meaning of section 3(3) of ERISA) other than
multiemployer plans (within the meaning of ERISA section 3(37)), and each stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, welfare benefit, collective bargaining, bonus, incentive, deferred
compensation and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA (including any
funding mechanism therefor now in effect or required in the future as a result
of the transaction contemplated by this Agreement or otherwise), whether formal
or informal, oral or written, legally binding or not, under which any employee
or former employee of the
42
Company has any present or future right to benefits or under which the Company
has any present or future liability. All such plans, agreements, programs,
policies and arrangements (other than multiemployer plans) shall be collectively
referred to as the "COMPANY PLANS".
(b) The documents relating to Company Plans provided to Parent
on or before January 31, 1998 are accurate copies thereof and to the extent not
delivered or made available prior to the date hereof, with respect to each
Company Plan, the Company will deliver or make available to Parent promptly
following the date hereof a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument;
(ii) the most recent determination letter; (iii) any summary plan description
and other written communications (or a description of any oral communications)
by the Company to its employees concerning the extent of the benefits provided
under a Company Plan; and (iv) for the most recent year (A) the Form 5500 and
attached schedules, (B) audited financial statements, (C) actuarial valuation
reports and (D) attorney's response to an auditor's request for information.
(c)(i) Except as disclosed on SCHEDULE 4.1.11(C), each Company
Plan has been established and administered in all material respects in
accordance with its terms, and with the applicable provisions of ERISA, the Code
and other applicable laws, rules and regulations; (ii) each Company Plan which
is intended to be qualified within the meaning of Code section 401(a) is so
qualified and has received a favorable determination letter as to its
qualification, and, to the knowledge of the Company, nothing has occurred,
whether by action or failure to act, that could reasonably be expected to cause
the loss of such qualification; (iii) for each Company Plan that is a "welfare
plan" within the meaning of ERISA section 3(1), the Company does not have nor
will have any liability or obligation
43
under any plan which provides medical or death benefits with respect to current
or former employees of the Company beyond their termination of employment (other
than coverage mandated by law); (iv) to the knowledge of the Company, no event
has occurred and no condition exists that would subject the Company, either
directly or by reason of its affiliation with any Commonly Controlled Entity
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c), (m) or (o)), to
any material tax, fine, lien, penalty or other material liability imposed by
ERISA, the Code or other applicable laws, rules and regulations; (v) for each
Company Plan with respect to which a Form 5500 has been filed, no material
change has occurred with respect to the matters covered by the most recent
Form 5500 since the date thereof; and (vi) no "accumulated funding deficiency"
(as such term is defined in ERISA section 302 and Code section 412 (whether or
not waived)), or "prohibited transaction" (as such term is defined in ERISA
section 406 and Code section 4975) or to which the Company has any liability has
occurred with respect to any Company Plan.
(d) With respect to the Company Plan that is subject to Title IV
of ERISA (the "COMPANY PENSION PLAN"), as of the reference date of the most
recent valuation report, the assets of such Company Pension Plan exceeded the
present value of the accrued benefits of the participants in such Company
Pension Plan based on the actuarial methods and assumptions indicated in the
most recent actuarial valuation report with respect to the Company Pension Plan,
and no material increase in benefits under the Company Pension Plan has
occurred, other than as required by law or in the Ordinary Course of Business,
since the reference date of such valuation report.
(e) SCHEDULE 4.1.11(A) sets forth a complete and accurate list
of each multiemployer plan (within the meaning of ERISA section 4001(a)(3)) to
which the Company
44
has any liability or contributes (or has contributed or had an obligation to
contribute in the preceding five years) (each a "MULTIEMPLOYER PLAN"). Except
as disclosed on SCHEDULE 4.1.11(E), with respect to each Multiemployer Plan:
(i) the Company has not incurred any withdrawal liability under Title IV of
ERISA which has not been satisfied nor, to the knowledge of the Company, would
the Company be subject to any material withdrawal liability if, as of the date
of the Closing, the Company were to engage in a complete withdrawal (as defined
in ERISA section 4203) or partial withdrawal (as defined in ERISA section 4205)
from any such multiemployer plan; and (ii) no such multiemployer plan is in
reorganization or insolvent (as those terms are defined in ERISA sections 4241
and 4245, respectively).
(f) With respect to any Company Plan, (i) no material actions,
suits or claims (other than routine claims for benefits in the ordinary course)
are pending or threatened, (ii) to the knowledge of the Company, no facts or
circumstances exist that could give rise to any such actions, suits or claims,
and (iii) no written or oral communication has been received in respect of any
Company Benefit Plan subject to Title IV of ERISA concerning the termination or
imposition of a lien with respect to any such plan.
(g) Except as disclosed on SCHEDULE 4.1.11(G), the consummation
of the transactions contemplated by this Agreement will not (i) entitle any
current or former employee or director of the Company to severance pay,
unemployment compensation or any similar payment or (ii) accelerate the time of
payment or vesting, or increase the amount of any compensation due to, any
current or former employee of the Company.
(h) No lump sum distribution option is available under the terms
of the Company Pension Plan (other than with respect to amounts of $5,000 or
less). The Company Pension Plan will by its terms be terminable immediately
following the Closing with respect to non-collectively bargained employees and
the amount of accrued benefits expressed as an
45
annuity commencing at normal retirement age shall not increase solely as a
result of such termination; PROVIDED that the foregoing is not a representation
with respect to the cost of annuitization or other costs ordinarily associated
with the termination of such a plan including without limitation any
acceleration of vesting with respect to otherwise unvested benefits under the
Company Pension Plan.
(i) It is contemplated that, as soon as practicable following
the Closing, the assets of the Company Pension Plan will, to the extent
necessary, be transferred in cash or kind, as may be mutually agreed between
Time Warner Inc. and Parent; PROVIDED that if no agreement shall be reached on
the assets to be transferred, such assets shall be transferred in cash and
reduced for the reasonable liquidation costs, if any, associated with the
conversion of such assets to cash in accordance with the terms of the applicable
trust agreement and consistent with past practice. Any such transfer shall be
made in compliance with and subject to applicable laws and regulations.
(j) The Company has not taken any action, other than in the
Ordinary Course of Business, that has or would result in a material increase in
benefits under any Company Plan after December 28, 1997.
4.1.12 ENVIRONMENTAL MATTERS. Except as set forth in
SCHEDULE 4.1.12 or except with respect to events, conditions or circumstances
that, individually or in the aggregate, would not have a Material Adverse Effect
with respect to the Company: (a) the Company and its Subsidiaries have obtained
and are in compliance with all permits issuable and issued pursuant to any
Environmental, Health or Safety Requirements; (b) as of the date hereof, there
are no administrative, civil or criminal actions, suits, demands, notices,
investigations, writs, injunctions, decrees, orders or judgments outstanding or,
to the knowledge of the Sellers, threatened against the Company or its
Subsidiaries based upon or
46
arising out of any Environmental Health and Safety Requirements; (c) none of the
Company or its Subsidiaries has caused or has received notice and the Sellers
have no knowledge of any Release or threatened Release in a quantity requiring
reporting or remediation under any Environmental, Health or Safety Requirements
of any Hazardous Materials on or from the assets owned or operated by the
Company or its Subsidiaries; (d) the Company and its Subsidiaries do not have
any current liability in connection with any Release of Hazardous Materials into
the indoor or outdoor environment, whether on-site or off-site; (e) none of the
operations of the Company or its Subsidiaries involves the treatment, storage
for longer than 90 days, or disposal of hazardous waste on any property owned,
leased or operated by the Company or any subsidiary, as defined under 40 C.F.R.
Parts 260-270 or any state equivalent; and (f) the Company and its Subsidiaries
have provided all Phase I environmental assessments, and all reports of
investigations conducted as a result of any recommendation in any such
assessments that have been performed within the past three years with respect to
the currently or previously owned, leased or operated properties of the Company
and its Subsidiaries.
4.1.13 INTANGIBLE PROPERTY. The Company or its Subsidiaries own
(free and clear of any Liens, except Permitted Liens), possess or have the right
to use all necessary or appropriate licenses or other valid rights to use all
Intangible Property material to and currently used to conduct the business of
the Company and its Subsidiaries. Except as disclosed on SCHEDULE 4.1.13:
(a) no Action is pending or, to the knowledge of the Sellers, threatened against
the Company or any of its Subsidiaries claiming that the Company or any of its
Subsidiaries is, and, to the knowledge of the Sellers, the Company and its
Subsidiaries are not, infringing or otherwise adversely affecting the rights of
any Person with regard to any Intangible Property and (b) to the knowledge of
the Sellers, no person is infringing the rights of the Company or any of its
Subsidiaries with respect to any Intangible Property; PROVIDED
47
that no representation or warranty is made in the foregoing clauses (a) and (b)
with respect to matters that would not have a Material Adverse Effect with
respect to the Company. All of the permits, grants or licenses or other rights
relating to the Intangible Property are valid and binding upon the Company and
its Subsidiaries and, to the knowledge of the Sellers, the other parties
thereto, in accordance with their respective terms, except as would not,
individually or in the aggregate, have a Material Adverse Effect with respect to
the Company.
4.1.14 REAL PROPERTY. (a) SCHEDULE 4.1.14(A) hereto identifies
all the real property owned, or which will be owned, by the Company or its
Subsidiaries as of the Closing, as well as all contracts, agreements or options
to acquire other real property, or to sell or lease owned property (other than
space leases, license agreements, concession agreements or equivalents thereof
entered into in the Ordinary Course of Business of the Company or its
Subsidiaries), in each case, binding on the Company or any of its Subsidiaries.
Except as disclosed in SCHEDULE 4.1.14(A), the Company and its Subsidiaries have
good, valid and insurable title to all such real property and all improvements
located thereon free and clear of all Liens, except Permitted Liens within the
meaning of clauses (a), (b), (c), (d), (e), (f), (g), (i), (j) and (k) of the
definition thereof.
(b) SCHEDULE 4.1.14(B) hereto identifies the real property
("LEASED REAL PROPERTY") leased, subleased, occupied or used by the Company or
any of its Subsidiaries pursuant to a Lease or other agreement (each such Lease
or other similar agreement being hereinafter referred to as a "COMPANY LEASE")
and the Company or its Subsidiaries owns or leases the improvements located on
such Leased Real Property (including rides at SF Theme Parks). Neither the
Company nor any of its Subsidiaries has received any written notification that
it is in default with respect to any Company Leases pursuant to which it
occupies or uses any Leased Real Property and/or such improvements nor, to the
knowledge of the Sellers, are
48
there any disputes between any Person and the Company or any of its Subsidiaries
with respect to Company Leases, which default or dispute would materially
adversely affect the right of the Company or its Subsidiaries to remain in
possession of the property in question or otherwise adversely affect in any
material respect the ability to use such property for its current use. Except
as set forth in SCHEDULE 4.1.14(B), the Company and its Subsidiaries have
performed all obligations required to be performed by them to date under, and
are not in default in respect of any Company Lease, and no event has occurred
which, with due notice or lapse or both, would constitute such a default, except
for such obligations, the non-performance of which, and such defaults, the
existence of which, in each case, would not result in a termination or
cancellation of any Lease (or other such agreement) or which would not
otherwise, individually or in the aggregate, have a Material Adverse Effect with
respect to the Company. To the Sellers' knowledge, no other party to any
Company Lease or such other agreement is in default in respect thereof, and, to
the Sellers' knowledge, no event has occurred which, with due notice or lapse of
time or both, would constitute such a default, except for defaults which,
individually or in the aggregate, would not have a Material Adverse Effect with
respect to the Company. Except as disclosed in SCHEDULE 4.1.14(B), either the
Company or a Subsidiary of the Company has a valid leasehold interest in each
Leased Property subject to a Company Lease, which leasehold interest is free and
clear of all Liens, except Permitted Liens within the meaning of clauses (a),
(b), (c), (d), (e), (f), (g), (i), (j) and (k) of the definition thereof. No
representation is made with respect to the state of the title of the fee estate
in the properties subject to a Company Lease.
(c) Except for the LIM Coasters and the rides, attractions and
improvements either being constructed or installed for the 1998 operating
seasons, in storage or otherwise not in service, all improvements (including
rides at SF Theme Parks) which are
49
substantially completed are, in the aggregate, in good operating repair and
condition, normal wear and tear excepted.
(d) None of the SF Theme Parks or other real property owned by
the Company or its Subsidiaries is assessed for real estate taxes together with
real estate owned by third parties.
4.1.15 TANGIBLE PERSONAL PROPERTY. (a) The Tangible Personal
Property owned, leased or used by the Company or any of its Subsidiaries is in
the aggregate sufficient and adequate to carry on their respective businesses as
presently conducted and is, in the aggregate, in good operating condition and
repair, normal "wear and tear" excepted.
(b) Except as set forth on SCHEDULE 4.1.15(B) or property and
assets sold or disposed of in the Ordinary Course of Business of the Company,
each of the Company and its Subsidiaries (other than the Co-Ventures and the
Fiesta Partnership), the Co-Ventures and the Fiesta Partnership have good and
valid title to all Tangible Personal Property shown on the Interim Financials
and Interim Co-Venture Financials, respectively, as being owned by any of them
(and, as of the Closing, will have good and valid title with respect to such
property as shown on the 1997 Audited Financials and the 1997 Co-Venture
Financials, respectively), in each case free and clear of all Liens, except for
(i) Permitted Liens and (ii) Liens arising in the Ordinary Course of Business of
the Company after the date hereof, which would otherwise fall within the
definition of Permitted Liens if such definition did not require adequate
reserves on the financial statements of the Company or any of its Subsidiaries
with respect to such Liens.
4.1.16 CONTRACTS. (a) SCHEDULES 4.1.16 and 6.18 together contain
a list of the following Contracts to which the Company or any of its
Subsidiaries is a party or by which any of their assets, business or properties
are bound: (i) employment, consulting,
50
severance or golden parachute agreements (other than employment or consulting
agreements that constitute Excluded Contracts pursuant to clause (iii) of such
definition); (ii) Contracts granting a right of first refusal or first offer or
negotiation with respect to any properties or rights (in each case with a value
in excess of $50,000) of the Company or any of its Subsidiaries;
(iii) partnership or joint venture agreements; (iv) Contracts for the
acquisition, sale or lease of material properties or assets of any Subsidiaries
(by merger, purchase or sale of assets, stock or otherwise and other than
Contracts entered into in the Ordinary Course of Business of the Company)
entered into after January 1, 1995 or under which the Company or any of its
Subsidiaries has continuing obligations; (v) Contracts with any Governmental
Authority (other than Excluded Contracts and any ticket consignment Contracts
and Contracts relating to group outings); (vi) Contracts which limit or restrain
the Company or any of its Subsidiaries from engaging or competing in any
business (other than concession agreements or the equivalents thereof entered
into in the Ordinary Course of Business of the Company); (vii) Contracts
relating to indebtedness for borrowed money and guarantees thereof and capital
leases; (viii) agreements for the advertising of SF Theme Parks on a national
basis; and (ix) national sponsorship agreements. True and complete copies of
all Contracts listed on SCHEDULE 4.16 and 6.18 have been delivered or made
available to Parent, each as amended to date, and each of them is in full force
and effect. Except as set forth on SCHEDULES 4.16 or 6.18, there is no material
default under any Contract listed therein either by the Company or any of its
affiliates party thereto, and no event has occurred that with notice or lapse of
time or both would constitute such a default or, to Sellers' knowledge, by any
other party thereto. As of the date hereof, no party to any such Contract has
given notice to the Company, any Subsidiary of the Company or any Seller of, or
made a claim against any of them with respect to, any breach or default
thereunder.
51
(b) Complete and correct copies of the Georgia Agreements, the
Texas Agreements, the Chase Agreements, the Zero Coupon Notes Indenture, the
Senior Subordinated Notes Indenture and the agreements relating to the Interim
Loans, in each case with all amendments thereto to the date hereof, have been
delivered or made available to Parent.
(c) Since the date of the issuance of the initial Senior
Subordinated Notes (the "ISSUE DATE"), the Company and its Subsidiaries have
made an aggregate of $128,000,000 of scheduled principal amortization payments
and mandatory prepayments (other than mandatory prepayments in respect of
consolidated excess cash flow) required pursuant to the terms of the Chase
Agreements (as in effect on the Issue Date) and no other mandatory prepayments
were required to be made thereunder.
4.1.17 INSURANCE. SCHEDULE 4.1.17 hereto sets forth a list of
all policies or binders of fire, liability, workmen's compensation or other
insurance held by or on behalf of the Company or any of its Subsidiaries
(specifying the insurer, the policy number or covering note number with respect
to binders). Correct and complete copies of such policies or binders have been
delivered or made available to Parent. None of the Company or any of its
Subsidiaries (i) is in default with respect to any material provision contained
in any such policy or binder; or (ii) has received a notice of cancellation or
non-renewal of any such policy or binder. All of such insurance is in full
force and effect and all premiums due and payable thereon have been paid. The
last annual premium paid by the Company for directors' and officers' liability
insurance prior to the date hereof was approximately $221,000.
4.1.18 LABOR MATTERS. Except as set forth on SCHEDULE 4.1.18,
none of the Company or any of its Subsidiaries is party to any collective
bargaining agreement or other labor agreement with any union or labor
organization and no union or labor
52
organization has been recognized by the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries has made any commitment not in
the collective bargaining agreements listed on SCHEDULE 4.1.18 hereto that would
require the application of the terms of any collective bargaining agreements
entered into by the Company or any of its Subsidiaries to any of the Parent
Entities. Except as disclosed on SCHEDULE 4.1.18 hereto, as of the date hereof,
(i) there is no active arbitration under any collective bargaining agreement
involving the Company or any of its Subsidiaries and (ii) there is no strike,
picketing or work stoppage by, or any lockout of, Employees of the Company or
any of its Subsidiaries pending or, to the Sellers' knowledge, threatened,
against or involving the Company or any of its Subsidiaries.
4.1.19 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 4.1.19, none of the Company or any of its Subsidiaries is a party to
any material Contract with any of their affiliates, with any Seller or any
Seller's affiliates or any director or officer for the purchase, sale, lease or
other disposition of property or services.
4.1.20 1998 CAP EX BUDGET. As of December 31, 1997, the Company
and its Subsidiaries have expended approximately $20,070,000 in respect of the
capital expenditures shown on the 1998 Cap Ex Budget.
4.1.21 CONDUCT OF BUSINESS. Except as set forth on
SCHEDULE 4.1.21 hereto, all of the business and operations of the SF Theme Parks
are conducted through the Company and its Subsidiaries. Any and all direct or
indirect ownership interests of the Sellers or any of their respective
affiliates in the Company or any of its Subsidiaries shall be directly or
indirectly transferred to the Company and its Subsidiaries (or to designees of
Parent) upon consummation of the S Merger for no additional consideration.
53
4.1.22 NO UNDISCLOSED LIABILITIES. Except as set forth in the
Company Financial Statements or the Co-Venture Financial Statements or with
respect to claims disclosed on SCHEDULE 4.1.8, as of September 28, 1997, none of
the Company or any of its Subsidiaries had any material liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, and
whether due or to become due or asserted or unasserted, which would be required
by Generally Accepted Accounting Principles to be reflected in, reserved against
or otherwise described in the balance sheets (including the notes thereto, as
applicable) included therein.
4.1.23 LOANS. The loans incurred under the Chase Agreements and
the Interim Loans are prepayable without penalty or premium, other than
customary breakage fees and similar expenses.
4.1.24 LIABILITIES OF THE COMPANY. Except for the Zero Coupon
Notes, the Interim Loans and as set forth on SCHEDULE 4.1.24, there are no
material liabilities of the Company that are not also liabilities of Six Flags
Theme Parks Inc. or its Subsidiaries.
4.1.25 CORPORATE RECORDS. The minute books (or comparable
records) of the Company and each of its Subsidiaries (other than the Co-Ventures
and the Fiesta Partnership) heretofore have been made available to Parent for
its inspection and contain true and complete records of all meetings and
consents in lieu of meeting of the Board of Directors (or the equivalent
thereof) and shareholders (or the equivalent thereof) of the Company and each of
its Subsidiaries (other than the Co-Ventures and the Fiesta Partnership) since
January 1, 1995.
4.1.26 ACCURACY OF INFORMATION REGARDING THE COMPANY AND ITS
SUBSIDIARIES. None of the information supplied or to be supplied by the Sellers
or the Company (in each case, in writing and designated as such) with respect to
the Company or
54
any of the Company's Subsidiaries for inclusion or incorporation by reference in
any filing with the SEC by any Parent Entity in connection with the transactions
contemplated by this Agreement will, at the time any such filing becomes
effective under applicable securities laws, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If at any time prior to the Effective
Time of the S Merger any event with respect to the Company, any of the Company's
Subsidiaries or their respective officers and directors should occur which is
required to be described in an amendment of, or a supplement to, any such filing
with the SEC by any Parent Entity in connection with the transactions
contemplated by this Agreement, or if any information previously supplied by the
Sellers or the Company (in each case, in writing and designated as such) with
respect to the Company or any of the Company's Subsidiaries for inclusion or
incorporation by reference in any such filing is found by the Sellers or the
Company to contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in either case, the Sellers represent and warrant that they shall
upon becoming aware of any such untrue statement or omission promptly so advise
such filing Parent Entity and such event shall be so described in a written
notice to such filing Parent Entity for inclusion in such amendment or
supplement (in the case of any untrue statement or material omission as so
described, to correct the same).
4.1.27 FINDERS AND INVESTMENT BANKERS. None of the Sellers, the
Company or any of their respective officers or directors has employed any
investment banker, business consultant, financial advisor, broker or finder in
connection with the transactions contemplated by this Agreement, except for Bear
Stearns & Co. Inc. and Lazard Freres & Co.
55
L.L.C., and except for fees payable to such Persons, which fees will be payable
by the Sellers, neither the Sellers nor the Company has incurred any liability
for any investment banking, business consultancy, financial advisory, brokerage
or finders' fees or commissions in connection with the transactions contemplated
hereby.
4.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF EACH SELLER. Each
Seller represents and warrants, for itself, to each of Parent, Holdco and Merger
Sub S, but only with respect to such Seller and the Company Capital Stock owned
by such Seller, that, as of the date hereof and as of the Closing Date (except
that representations and warranties that are made as of a specific date need be
true only as of such date):
4.2.1 ORGANIZATION AND AUTHORITY. Such Seller is a corporation
or limited partnership, duly formed, legally existing and in good standing under
the laws of its state of incorporation or formation, and such Seller has full
corporate or partnership (or similar) power and authority to enter into this
Agreement, to carry out and perform its obligations hereunder and to consummate
the transactions contemplated hereby.
4.2.2 AUTHORIZATION AND ENFORCEABILITY. This Agreement, and each
Ancillary Agreement to which such Seller will be a party as of the Closing Date,
has been duly authorized by all necessary corporate, partnership or similar
action. This Agreement has been, and each Ancillary Agreement to which such
Seller will be a party as of the Closing Date, will be, duly executed and
delivered by such Seller, and (assuming this Agreement constitutes and each
Ancillary Agreement to which such Seller will be a party, as of the Closing
Date, will constitute the valid and binding obligation of the other parties
hereto and thereto) this Agreement constitutes, and each Ancillary Agreement to
which such Seller will be a party, as of the Closing Date, will constitute, the
legal, valid and binding obligation of such Seller, enforceable against such
Seller in accordance with its terms, except as such
56
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer or similar laws affecting the enforcement of
creditors' rights generally and general principles of equity (whether considered
in a proceeding at law or in equity).
4.2.3 AUTHORITY, APPROVALS AND CONSENTS. Such Seller is not in
violation of its Organizational Documents, except as would not have a Material
Adverse Effect with respect to the Company. Neither the execution and delivery
by such Seller of this Agreement or any Ancillary Agreement to which such Seller
will be a party as of the Closing, nor the consummation by such Seller of the
transactions contemplated hereby or thereby, does or will (i) conflict with or
result in any breach of any provision of the Organizational Documents of such
Seller, (ii) except as set forth on SCHEDULE 4.2.3, require any consent,
approval or notice of or with any Governmental Authority or conflict with or
result in any violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, non-renewal or acceleration) under, any terms, conditions or
provisions of any Contracts of such Seller or by which it or any portion of its
business, properties or assets may be bound or (iii) violate (a) any statute,
law, judgment, decree, decision, ruling, injunction or order of any Governmental
Authority applicable to such Seller or (b) any other Legal Requirement not
referred to in the foregoing clause (a) applicable to such Seller; PROVIDED that
no representation or warranty is made in the foregoing clauses (ii) and (iii)(b)
with respect to matters that would not, individually or in the aggregate, have a
Material Adverse Effect with respect to the Company or that would not reasonably
be expected to materially adversely affect the transactions contemplated hereby.
Except for the aforesaid authorizations and approvals, no authorizations or
approvals are required of such Seller's board of directors (or similar body)
with respect to this Agreement or the transactions contemplated hereby.
57
4.2.4 TITLE TO STOCK. Such Seller is the record and beneficial
owner of, and has good and valid title to, the Company Capital Stock set forth
opposite such Seller's name on SCHEDULE 4.2.4 hereto, free and clear of any
Liens and preemptive rights, other than Liens imposed by Federal or state
securities laws or set forth on SCHEDULE 4.2.4.
4.2.5 ACCURACY OF INFORMATION PROVIDED BY EACH SELLER. None of
the information supplied or to be supplied by such Seller (in each case, in
writing) for itself for inclusion or incorporation by reference in any filing
with the SEC by any Parent Entity in connection with the transactions
contemplated by this Agreement will, at the time any such filing becomes
effective under applicable securities laws, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If at any time prior to the Effective
Time of the S Merger any event with respect to such Seller or its respective
officers and directors should occur which is required to be described in an
amendment of, or a supplement to, any such filing with the SEC by any Parent
Entity in connection with the transactions contemplated by this Agreement, or if
any information previously supplied by such Seller (in writing) for itself for
inclusion or incorporation by reference in any such filing is found by such
Seller to contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in either case, such Seller represents and warrants that it shall
upon becoming aware of any such untrue statement or omission promptly so advise
such filing Parent Entity and such event shall be so described in a written
notice to such filing Parent Entity for inclusion in such amendment or
supplement (in the case of any untrue statement or material omission as so
described, to correct the same).
58
4.2.6 ACCREDITED INVESTOR; ACQUISITION FOR INVESTMENT. (a) Such
Seller is an "accredited investor" as defined in Regulation D promulgated under
the Securities Act. Any shares of Holdco Preferred Stock acquired by such
Seller pursuant to the transactions contemplated hereby are being acquired by
such Seller for its own account for investment and not with a view to any
distribution or resale thereof in any transaction which would be in violation of
the Securities Act, and the rules promulgated thereunder, or any state
securities statute, without prejudice, however, to the rights of such Seller at
all times to sell or otherwise dispose of all or any part of its Holdco
Preferred Stock under an effective registration statement under the Securities
Act, or under an exemption from such registration available under the Securities
Act, and subject, nevertheless, to the disposition of such Seller's property
being at all times within its control.
(b) Such Seller acknowledges that the shares of Holdco Preferred
Stock, at the time of issuance, are not being registered under the Securities
Act or any state securities or "blue sky" law and such shares will not be sold
or otherwise disposed of except in compliance with the Securities Act or in
reliance upon an exemption therefrom, and that the certificate representing such
shares will contain a legend to such effect.
(c) Such Seller has such knowledge and experience in financial and
business matters that such Seller is capable of evaluating the merits and risks
of the prospective investment in the shares of Holdco Preferred Stock and able
to bear the economic consequences thereof.
(d) None of Holdco, Parent or the Company has made any
representation, warranty, acknowledgment or covenant, in writing or otherwise,
to such Seller regarding the tax consequences, if any, of the transactions
contemplated hereby or of the resale of the shares of Holdco Preferred Common
Stock by such Seller.
59
(e) Such Seller and such Seller's representatives have been given a
full opportunity to examine all documents relating to the transactions
contemplated hereby, including this Agreement and the Ancillary Agreements, and
to ask questions of, and to receive answers from, the Company, Parent and their
respective representatives concerning, the terms of the S Merger, such Seller's
investment in the shares of Holdco Preferred Stock and the business of Holdco
and Parent and such other information as such Seller desires in order to
evaluate an investment in the shares of Holdco Preferred Stock, and all such
questions have been answered to the full satisfaction of such Seller.
(f) Such Seller has been furnished with all publicly available
information about Parent's assets, operations and business activities which such
Seller has requested and which such Seller considers necessary or relevant to
enable such Seller to make a decision about such Seller's acquisition of the
shares of Holdco Preferred Stock.
4.2.7 TAXES. Except as set forth on SCHEDULE 4.2.7, such Seller
is not a foreign person within the meaning of Section 1445 of the Code.
4.3 SURVIVAL. The respective representations and warranties of the
Sellers contained in this Article 4 shall survive until the Claims Termination
Date.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
PARENT AND HOLDCO
5.1 REPRESENTATIONS AND WARRANTIES OF PARENT AND HOLDCO. Parent and
Holdco, jointly and severally, represent and warrant to the Company and the
Sellers follows:
5.1.1 ORGANIZATION. Each of the Parent Entities and each of its
Subsidiaries is duly organized and existing in good standing under the laws of
the jurisdiction of its incorporation or organization and has all requisite
power and authority to own, lease
60
and operate its respective properties and to carry on its respective business as
now being conducted. Except as set forth in SCHEDULE 5.1.1, each of the Parent
Entities and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that would not have Material
Adverse Effect with respect to Parent. Complete and correct copies of the
Organizational Documents of each of the Parent Entities, with all amendments
thereto to the date hereof, have been delivered or made available to the Sellers
and the Company.
5.1.2 CAPITALIZATION. (a) The authorized capital stock of Parent
is as disclosed in the SEC Filings. Except as set forth on SCHEDULE 5.1.2, as
of the date hereof, no shares of capital stock of Parent are reserved for
issuance or issued and outstanding and there are no outstanding authorized
options, warrants, calls, subscriptions, rights, agreements or other commitments
of any character obligating Parent to issue, sell, purchase, return or redeem
any shares of capital stock of Parent, a security convertible into or
exchangeable for, any shares of capital stock, other than the Parent Warrants
and the Parent Options. All issued and outstanding shares of capital stock of
Parent have been duly authorized and are validly issued, fully paid,
nonassessable and free of preemptive rights.
(b) The authorized Capital Stock of Holdco consists of 3,000
shares of Common Stock, par value $0.01 per share, 10 of which have been validly
issued, are fully paid and non-assessable and owned by Parent, free and clear of
any Liens. The authorized capital stock of Merger Sub P consists of 3,000
shares of Common Stock, par value $.01 per share, 10 of which have been validly
issued, are fully paid and nonassessable and owned by Holdco free and clear of
any Liens, other than Liens imposed by Federal or state securities
61
laws. The authorized capital stock of Merger Sub S consists of 1,000 shares of
Common Stock, par value $.01 per share, all of which have been validly issued
and are fully paid and non-assessable and owned by Holdco free and clear of any
Liens, other than Liens imposed by Federal and state securities laws.
5.1.3 SUBSIDIARIES. Except as disclosed in the SEC Filings or as
set forth on SCHEDULE 5.1.3(A), as of the date hereof, Parent does not own,
directly or indirectly, any shares of capital stock or any other equity interest
in any Person, domestic or foreign. All of the outstanding shares of capital
stock of each of Parent's Subsidiaries that are owned by Parent or any other
Subsidiary of Parent (collectively, the "PARENT SUBSIDIARY SHARES") have been
duly authorized and are validly issued, fully paid and nonassessable and free of
preemptive rights. There are no irrevocable proxies or similar obligations with
respect to any of the Parent Subsidiary Shares and, except as set forth on
SCHEDULE 5.1.3(B), all of the Parent Subsidiary Shares are owned by Parent free
and clear of all Liens, other than Permitted Liens, and Liens imposed by Federal
or state securities laws.
5.1.4 AUTHORIZATION AND ENFORCEABILITY. (a) This Agreement and
each Ancillary Agreement to which any Parent Entity will be a party as of the
Closing, has been duly authorized and approved by the requisite Boards of
Directors of each of the Parent Entities party thereto, and this Agreement has
been (and the Ancillary Agreements to which any Parent Entity will be a party as
of the Closing, will be) duly executed and delivered by each of the Parent
Entities, and (assuming this Agreement constitutes, and the Ancillary Agreements
to which any Parent Entity will be a party as of the Closing, will constitute,
the valid and binding
62
obligation of the parties hereto and thereto other than the Parent Entities
party hereto and thereto) this Agreement constitutes (and each of the Ancillary
Agreements to which any Parent Entity will be a party as of the Closing, will
constitute) a valid and binding obligation of each of the Parent Entities party
thereto, enforceable against each such Parent Entity party thereto in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer or other similar
laws affecting the enforceability of creditors' rights generally or general
principles of equity (whether considered in a proceeding at law or equity).
Except for the aforesaid authorizations and approvals, no other authorizations
or approvals are required of any boards of directors of any Parent Entity with
respect to this Agreement or any Ancillary Agreement to which any Parent
Entities will be a party as of the Closing or the transactions contemplated
hereby or thereby.
(b) This Agreement has been (and, to the extent necessary, the
Ancillary Agreements have been) duly authorized and approved by the requisite
stockholders of each of the Parent Entities (other than Parent) party thereto,
and, except for such authorizations and approvals, no other authorizations or
approvals are required of any holders of the capital stock of any Parent
Entities with respect to this Agreement, the Ancillary Agreements to which they
will be a party as of the Closing or the transactions contemplated hereby or
thereby.
5.1.5 AUTHORITY, APPROVALS AND CONSENTS. None of Parent or any
of its Subsidiaries is in violation of its Organizational Documents, except as
would not have a Material Adverse Effect with respect to Parent. Except as set
forth on SCHEDULE 5.1.5(A), neither the execution, delivery or performance of
this Agreement or the Ancillary Agreements to which any Parent Entity will be a
party as of the Closing, nor the consummation by the Parent Entities of the
transactions contemplated hereby and thereby, does or will constitute, result in
or give rise to (i) a breach or default under any provision of the
Organizational Documents of Parent or its Subsidiaries, (ii) a breach, violation
or default under (a) any
63
statute, law, judgment, decree, decision, ruling, injunction or order of any
Governmental Authority applicable to Parent or its Subsidiaries or (b) any other
Legal Requirement not referred to in the foregoing clause (a) applicable to such
Parent or its Subsidiaries, (iii) the imposition of any Lien upon any assets of
Parent or its Subsidiaries or (iv) a breach or default under or the occurrence
of any event which, with notice or lapse of time or both, would constitute a
default under (or the acceleration of the time for performance of any obligation
under or the termination, cancellation or non-renewal of) any Contracts of
Parent or its Subsidiaries (or binding on their assets, businesses or
properties), except with respect to clauses (ii)(b), (iii) and (iv) as would not
have a Material Adverse Effect with respect to Parent. Except as set forth in
SCHEDULE 5.1.5(B) and except for the filing of the P Merger Agreement and the
Certificate of S Merger, in each case with the Delaware Secretary of State and
filings required in connection with the HSR Act, no approval, consent, waiver,
authorization or other order of and no declaration, filing, registration,
qualification or recording with, any Governmental Authority or any Person party
to any Contracts of Parent or its Subsidiaries (or binding on their assets,
business or properties) is required to be obtained or made by or on behalf of
any of Parent or its Subsidiaries in connection with the execution, delivery or
performance of this Agreement by them and the consummation by them of the
Closing hereunder in accordance with the terms and conditions thereof, except
those where failure to obtain such approval, consent, waiver, authorization or
other order, or to make such declaration, filing, registration, qualification or
recording would not have a Material Adverse Effect with respect to Parent.
5.1.6 SEC FILINGS; FINANCIAL STATEMENTS. Parent has made all
filings required to be made with the SEC since December 31, 1995 and has
delivered or made available to the Sellers and the Company correct and complete
copies of Parent's (a) Annual
64
Reports on Form 10-K for the year ended December 31, 1996 (the "1996 FORM
10-K"), as filed with the SEC, (b) proxy statements relating to all of Parent's
meetings of stockholders (whether annual or special) since December 31, 1996 and
(c) all other reports, statements and registration statements (including
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed by Parent
with the SEC since December 31, 1996 (collectively, and in each case, including
all exhibits and schedules thereto and documents incorporated by reference
therein, the "SEC FILINGS"). As of the respective dates of the SEC Filings, the
SEC Filings did not contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Parent and its Subsidiaries
included or incorporated by reference in the 1996 Form 10-K and Parent's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997, June 30,
1997 and September 30, 1997 have been prepared in accordance with Generally
Accepted Accounting Principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes to such financial statements)
and fairly present in all material respects the consolidated financial position
of Parent and its Subsidiaries at the respective dates thereof and the
consolidated results of operations and cash flows for the respective periods
then ended (subject, in the case of unaudited interim financial statements, to
the absence of footnotes required by Generally Accepted Accounting Principles
and to normal year-end adjustment).
5.1.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the SEC Filings or as set forth in SCHEDULE 5.1.7 or as contemplated by this
Agreement, since September 30, 1997, each of the Parent Entities and each of
Parent's Subsidiaries has conducted its respective business in the Ordinary
Course of Business of Parent and there has not been any condition, event or
occurrence that, individually or in the aggregate, has had, or
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would have, a Material Adverse Effect with respect to Parent (without regard,
however, to changes in conditions generally applicable to the industries in
which Parent and its Subsidiaries are involved or general economic conditions).
5.1.8 ABSENCE OF LITIGATION. Except as disclosed in the SEC
Filings or as set forth on SCHEDULE 5.1.8 or as would not, individually or in
the aggregate, have a Material Adverse Effect with respect to Parent, as of the
date hereof, there is no Action pending or, to the knowledge of Parent,
threatened against Parent or any of its Subsidiaries or any portion of their
properties or assets, and there is no Action pending or, to the knowledge of
Parent, threatened against Parent or any of its Subsidiaries which could
reasonably be expected to interfere with the consummation of this Agreement or
any of the transactions contemplated hereby by the Parent Entities.
5.1.9 COMPLIANCE WITH LAWS. Except as described in the SEC
Filings or as set forth on SCHEDULE 5.1.9, each of Parent, its Subsidiaries and
the Parent Theme Parks has complied and is in compliance with all Legal
Requirements, including, without limitation, those relating to zoning, except
for such failures to comply or to be in compliance as have not had, and would
not have, individually or in the aggregate, a Material Adverse Effect with
respect to Parent. Except as set forth on SCHEDULE 5.1.9, none of Parent or any
of its Subsidiaries has received any written notice asserting any non-compliance
with any such Legal Requirements, except for such failures to comply as have not
had, and would not have, a Material Adverse Effect with respect to Parent.
5.1.10 FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of
its officers or directors has employed any investment banker, business
consultant, financial advisor, broker or finder in connection with the
transactions contemplated by this Agreement, except for Lehman Brothers and
Allen & Co. Incorporated and except for fees payable to such
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Persons, which fees will be payable by Parent, Parent has not incurred any
liability for any investment banking, business consultancy, financial advisory,
brokerage or finders' fees or commissions in connection with the transactions
contemplated hereby.
5.1.11 SURVIVAL. The representations and warranties of Parent
and Holdco contained in this Article 5 shall survive until the Claims
Termination Date.
ARTICLE 6
CERTAIN COVENANTS AND
AGREEMENTS OF THE PARTIES
6.1 CONDUCT OF BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES. From
the date hereof until the Effective Time of the S Merger, the Company and its
Subsidiaries shall conduct their business in the Ordinary Course of Business of
the Company and shall use their best efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and key employees. Except as otherwise
approved in writing by Parent or as expressly contemplated by this Agreement,
the Ancillary Agreements, the Georgia Agreements or the Texas Agreements, and
without limiting the generality of the foregoing, from the date hereof until the
Effective Time of the S Merger:
(a) the Company shall not, and shall not permit any of its
Subsidiaries to, adopt or propose any change in its Organizational Documents
(other than the Company Charter Amendment);
(b) the Company shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire, develop, lease, operate or manage,
by merging or consolidating with, or by purchasing a material portion of the
assets of any Business, or by any other manner of acquiring: (i) any Business;
(ii) any assets, other than assets that are not
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material to the Company and its Subsidiaries taken as a whole, except in the
Ordinary Course of Business of the Company or as permitted under Section 6.1(k)
hereof; or (iii) any new amusement park of any kind;
(c) the Company shall not, and shall not permit its Subsidiaries
to, sell, lease, license, mortgage or otherwise encumber or subject to any Liens
or otherwise transfer or dispose of any of its material properties or assets, or
other ownership interest in any of its properties, assets or subsidiaries, other
than: (i) in the Ordinary Course of Business of the Company; (ii) pursuant to
any agreements existing as of the date hereof, which agreements are set forth on
SCHEDULE 6.1(C) hereto; and (iii) Permitted Liens;
(d) the Company shall not declare, set aside, or pay any
dividends or make any distributions on Company Capital Stock;
(e) the Company shall not, and shall not permit any of its
Subsidiaries to: (i) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any capital stock of (or equity interest in) the
Company or any of its Subsidiaries, or any security convertible into or
exercisable for either of the foregoing; PROVIDED that, following the date
hereof and prior to the Effective Time of the S Merger, the Company may issue
capital stock of the Company (x) pursuant to the exercise of any Company Options
or (y) in respect of any Company Preferred Stock or Company Common Stock
exchanged for or converted to such capital stock, and the Company may issue up
to 3,671.5 additional Company Options pursuant to any plan or agreement with
respect to such Company Options, in each case, in accordance with the terms
thereof in effect on the date hereof; (ii) split, combine or reclassify any
capital stock of the Company or any of its Subsidiaries or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of (or equity interest in) the Company
or any of its
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Subsidiaries; or (iii) except as disclosed in SCHEDULE 6.1(E) hereto,
repurchase, redeem or otherwise acquire any shares of capital stock of (or
equity interest in) the Company or any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares, equity interest or other securities;
(f) except as set forth in SCHEDULE 6.1(F), the Company shall
not, and shall not permit any of its Subsidiaries to, make any commitment or
enter into, or amend, modify, or terminate, any Contract of a nature which would
be required to be disclosed on SCHEDULE 4.1.16 hereto, except (subject to
compliance with the other provisions of this Section 6.1) in the Ordinary Course
of Business of the Company following reasonable advance notice to Parent (except
that advance notice will not be required for amendments or modifications to
Contracts of the nature identified in clauses (viii) and (ix) of Section 4.1.16
which are not material);
(g) except in the Ordinary Course of Business of the Company or
as described in SCHEDULE 6.1(G) hereto, the Company shall not, and shall not
permit any of its Subsidiaries to: (i) incur any indebtedness for borrowed
money or guarantee or otherwise become liable or responsible for (whether
directly, contingently or otherwise) any such indebtedness or other obligations
of another person; (ii) make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any Subsidiary of
the Company; (iii) discharge or satisfy any Lien (other than Permitted Liens) or
pay any obligation or liability prior to when it is due; or (iv) cancel or
compromise any debt of, or claim against, the Company or any of its
Subsidiaries;
(h) except as set forth on SCHEDULE 6.1(H) or pursuant to any
Contract, Employee Agreement or Company Plan in effect on the date hereof and
set forth on one of the Schedules hereto, the Company shall not, and shall not
permit any of its
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Subsidiaries to: (i) increase the compensation payable or to become payable to
its officers, directors or key Employees (other than normal and customary
increases consistent with past practices for Employees who are not senior
executives); (ii) grant or increase any severance or termination pay to
officers, directors or key Employees; (iii) enter into, extend or renew any
employment, severance or consulting agreement with any current or former
director, officer or other Employee of the Company, except that the Company and
its Subsidiaries may (x) following consultation with Parent, enter into
agreements with any new Employee who is hired to replace a current Employee who
has an employment agreement, PROVIDED that the term of any such replacement
Employee's agreement may not be more than one year, such replacement Employee's
agreement may not contain any severance obligation beyond such term and the
other terms of such replacement Employee's agreement are in all material
respects no less favorable to the Company or such Subsidiary than the terms of
the current Employee's agreement and (y) extend or renew employment agreements
to the extent otherwise agreed between the Sellers' Representative and Parent;
or (iv) establish, adopt, enter into or amend, any collective bargaining, bonus,
profit sharing, thrift, compensation stock option, restricted stock, pension,
retirement, deferred compensation, employment termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former director, officer or Employee.
(i) except as disclosed in the Company Financial Statements, the
Co-Venture Financial Statements or SCHEDULE 6.1(I) or as may be required as a
result of a change in law or in Generally Accepted Accounting Principles, the
Company shall not, and shall not permit any of its Subsidiaries (other than the
Co-Ventures) to, change any of its tax or accounting policies (including,
without limitation, procedures with respect to the payment of accounts payable
and collection of accounts receivable);
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(j) the Company shall not, and shall not permit or cause its
Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries (other than the S Merger);
(k) the Company shall not, and shall not permit any of its
Subsidiaries to, purchase or enter into any agreement to purchase or enter into
or replace any capital lease in respect of, in each case, any rides or
attractions for any SF Theme Parks, except as set forth on SCHEDULE 6.1(K) or in
accordance with the 1998 Cap Ex Budget (provided that any such new or
replacement capital lease will have a term of more than five years and an
interest rate of less than 10%);
(l) the Company shall not, and shall not permit any of its
Subsidiaries to, settle any audit relating to Taxes or any material Action which
is not covered by insurance without the prior written consent of Parent (which
consent will not be unreasonably withheld or delayed) unless such settlement has
been adequately reserved for on the Company Financial Statements or the
Co-Venture Financial Statements;
(m) the Company shall, and shall cause its Subsidiaries to, use
best efforts to keep or cause to be kept its insurance policies (or substantial
equivalents) in such amounts duly in force until the Effective Time of the
S Merger and will give Parent notice of any material change in its insurance
policies; and
(n) the Company shall not, and shall not permit or cause any of
its Subsidiaries to, agree or commit to do anything described in the foregoing
clauses (a) through (l).
6.2 CONDUCT OF BUSINESS OF PARENT AND ITS SUBSIDIARIES. Except as
contemplated by this Agreement, from the date hereof to the Effective Time of
the S Merger,
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Parent shall, and shall cause each of its Subsidiaries to, conduct its business,
in the Ordinary Course of Business of Parent. Except as otherwise approved in
writing by the Sellers' Representative or as contemplated by this Agreement, and
without limiting the generality of the foregoing, from the date hereof until the
Effective Time of the S Merger, Parent shall not, and shall not permit its
Subsidiaries to, (a) contract for or consummate any transaction involving the
Acquisition of any company or other entity that owns or operates theme parks (a
"THEME PARK OPERATOR"), except to the extent Parent or any of its Subsidiaries
has previously entered into an agreement respecting such a transaction prior to
December 23, 1997 (which agreement is described on SCHEDULE 6.2 (an "EXISTING
TRANSACTION")), and (b) except with respect to any Existing Transaction,
directly or indirectly, (i) initiate, solicit or encourage any inquiries or the
submission of any proposal that constitutes or is reasonably likely to lead to
an Acquisition of a Theme Park Operator having annual revenues in excess of
$75,000,000 (a "SIGNIFICANT PARK ACQUISITION"), or (ii) engage in negotiations
or discussions with, or furnish any information or data to, any third party
relating to a Significant Park Acquisition, or (c) issue, agree to issue, take
any material action, including filing of a registration statement or
dissemination of a private placement memorandum, relating to issuance of, any
capital stock of Parent or its Subsidiaries, except as contemplated by this
Agreement, or pursuant to (x) any Parent Stock Option Plan, (y) any other
contractual commitments of Parent or its Subsidiaries in effect as of the date
hereof and set forth on SCHEDULE 6.2 hereto or (z) any other equity based
arrangement or plan for the benefit of employees of Parent and its Subsidiaries.
6.3 ACCESS AND INFORMATION. Between the date of this Agreement and
the Effective Time of the S Merger, each of Parent and the Company shall, and
shall cause its respective Subsidiaries to, afford the Sellers' Representative
or Parent, as the case may be, and their respective authorized representatives
(including its accountants, financial advisors and
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legal counsel) reasonable access during normal business hours to all of the
properties, personnel, contracts and other agreements, books and records of
Parent and its Subsidiaries or the Company and its Subsidiaries, as the case may
be, and shall promptly deliver or make available to the Sellers' Representative
or Parent, as the case may be, all information (including financial information)
concerning the business, properties, assets and personnel of Parent and its
Subsidiaries or the Company and its Subsidiaries as the Sellers' Representative
or Parent, respectively, may from time to time reasonably request. Each of
Parent and the Sellers shall, and shall cause its respective Representatives (as
defined in the letter agreement dated as of December 18, 1997 (the
"CONFIDENTIALITY AGREEMENT") between certain of the Sellers and Parent) to, hold
all Evaluation Material (as defined in the Confidentiality Agreement) in
confidence in accordance with the terms of the Confidentiality Agreement and, in
the event of the termination of this Agreement for any reason, Parent or the
Sellers, as applicable, promptly shall return or destroy, or cause to be
returned or destroyed, all Evaluation Material in accordance with the terms of
the Confidentiality Agreement.
6.4 CONSUMMATION OF CERTAIN TRANSACTIONS BY CLOSING. Parent and
Holdco shall, or shall cause the applicable Subsidiaries thereof, to effect the
following transactions (collectively, the "CAPITAL EVENTS"):
6.4.1 EQUITY ISSUANCE. Following the Effective Time of the
P Merger and prior to or concurrently with the Effective Time of the S Merger,
Holdco shall issue equity in the form of common stock or preferred stock (that
is not senior to the Holdco Preferred Stock), that will yield Holdco net
proceeds at least equal to $900,000,000, such proceeds to be used either to
finance the transactions contemplated by this Agreement, for general corporate
purposes and/or to repay any outstanding indebtedness of Parent or any of its
Subsidiaries (the "EQUITY ISSUANCE"); PROVIDED, that if Holdco issues such
equity that yields
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Holdco net proceeds at least equal to $750,000,000 and Holdco otherwise closes
the transactions contemplated by this Agreement, this covenant shall be deemed
satisfied; and PROVIDED, FURTHER that the obligations of Parent and Holdco with
respect to the amount of equity issued pursuant to the Equity Issuance shall be
reduced by the aggregate liquidation value of all Holdco Preferred Stock issued
in connection with the S Merger in accordance with Section 3.3 hereof. If the
Equity Issuance is consummated through an underwritten offering, or private
placement, the managing underwriters or placement agents of such offering or
private placement shall be the Approved Managing Underwriters. Notwithstanding
the foregoing, Parent and Holdco shall not be obligated to issue equity if
Holdco is unable to issue common stock at a per share price (before deductions
for underwriting discounts and commissions) of at least the Minimum Equity
Issuance Price (unless such failure results from, or can reasonably be
attributed to, the failure of Holdco or Parent to effect the financing
transactions (other than the Equity Issuance) contemplated by SCHEDULE 6.5);
PROVIDED that Parent and Holdco comply with the remaining provisions of this
Section 6.4.1. If by the 20th day prior to the Initial Termination Date, the
Closing shall not have occurred, Parent shall deliver a certificate to the
Sellers describing the status of the Equity Issuance. In addition, at any time
Parent believes that it will not be able to complete the Equity Issuance at a
price per share of at least the Minimum Equity Issuance Price, it will provide
to the Sellers (i) a certificate to that effect and (ii) a letter from the
Approved Managing Underwriters addressed to each of the Sellers setting forth in
reasonable detail the reasons the Approved Managing Underwriters believe the
Equity Issuance cannot be consummated at a price per share of at least the
Minimum Equity Issuance Price. Any certificate required to be delivered
pursuant to this SECTION 6.4.1 shall be executed by the chief executive officer
and chief financial officer of Parent.
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6.4.2 OTHER FINANCINGS. Parent and Holdco shall, or shall cause
the S Surviving Corporation to, at the Effective Time of the S Merger, refinance
the loans incurred under the Chase Agreements and the Interim Loans such that
such loans shall be repaid in full at the Closing. Parent and Holdco shall take
all action necessary to comply with the terms and provisions of the Zero Coupon
Notes Indenture and the Senior Subordinated Notes Indenture, including in
connection with the transactions contemplated hereby.
6.5 CAPITALIZATION OF HOLDCO AND ITS SUBSIDIARIES. Subject to the
ability of Holdco to issue common stock at the Minimum Equity Issuance Price,
after giving effect to the Capital Events and other transactions contemplated by
this Agreement, Holdco and its Subsidiaries shall have a capitalization no less
favorable from the point of view of a creditor of Holdco than as set forth in
SCHEDULE 6.5 hereto.
6.6 REASONABLE EFFORTS; ADDITIONAL ACTIONS.
6.6.1 (a) Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action, and to do or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including using all reasonable
efforts to: (i) obtain all consents, amendments to or waivers under the terms
of any of the Company's or its Subsidiaries' borrowing or other contractual
arrangements required by the transactions contemplated by this Agreement;
(ii) effect promptly all necessary or appropriate registrations and filings with
Governmental Authorities, including, without limitation, filings and submissions
pursuant to the HSR Act, the Securities Act, the Exchange Act and the DGCL;
(iii) defend any lawsuits or other legal proceedings, whether judicial or
75
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby; and (iv) fulfill or cause the fulfillment of
the conditions to the Closing set forth in Article 7.
(b) Each party, upon reasonable request from time to time of any
other party hereto after the Closing, and at the expense of a requesting party
but without further consideration, shall (i) do each and every act and thing and
execute such documents and other papers as may be necessary or reasonably
requested to consummate the transactions contemplated hereby and (ii) provide
the other party with access to appropriate records in its possession relating to
Tax matters of the Company and its Subsidiaries and make available to the other
party its Employees or external advisors with a view to assisting that other
party in the determination of its Tax liability.
6.6.2 If, at any time after the Effective Time of the S Merger,
the S Surviving Corporation shall determine or be advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the S Surviving
Corporation the right, title or interest in, to or under any of the rights,
properties or assets of either of Merger Sub S and the Company, as applicable,
acquired or to be acquired by the S Surviving Corporation as a result of, or in
connection with, the S Merger or otherwise to carry out this Agreement, the
officers and directors of the S Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of each of Merger Sub S or the
Company, as applicable, or otherwise, all such deeds, bills of sale, assignments
and assurances and to take and do, in the name and on behalf of each of Merger
Sub S and the Company, as applicable, or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any
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and all right, title and interest in, to and under such rights, properties or
assets in the S Surviving Corporation or otherwise to carry out this Agreement.
6.7 NOTIFICATION OF CERTAIN MATTERS. The Sellers and the Company
shall give prompt notice to Parent and Parent shall give prompt notice to the
Sellers' Representative of (i) any representation or warranty made by it
contained in this Agreement that is qualified or limited as to materiality or
Material Adverse Effect becoming untrue or inaccurate in any respect or any
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect (in each case, to the extent any Seller, on
the one hand, or Parent, on the other hand, has knowledge of the same) or
(ii) the failure by it or the Company to comply with in any material respect any
covenant or agreement to be complied with by it or the Company under this
Agreement; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
6.8 TRANSFER AND REAL PROPERTY TRANSFER GAINS TAXES; HSR ACT FEES.
The Sellers collectively, on the one hand, and Parent and Holdco collectively,
on the other hand, shall each be responsible for one-half of (i) any
liabilities, without deduction or withholding from any amount payable hereunder
to the holders of Company Capital Stock or Company Options, arising under any
real property transfer taxes, stock transfer taxes and any similar taxes imposed
by any city or state of the United States (and any penalties and interest with
respect to such Taxes), to the extent any such taxes become payable in
connection with the transactions contemplated by this Agreement, on behalf of
the holders of Company Capital Stock or Company Options and (ii) the fees
payable in connection with filings pursuant to the HSR Act. The Company and
Holdco shall cooperate in complying with the requirements of such Taxes and
fees.
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6.9 PUBLIC ANNOUNCEMENTS. None of Parent, Holdco, Merger Sub P and
Merger Sub S, on the one hand, or the Company and the Sellers, on the other
hand, shall issue any press release or make any public statements with respect
to this Agreement or the transactions contemplated hereby, without the prior
written consent of Parent or the Company and the Sellers' Representative, as the
case may be (which consent will not be unreasonably withheld), except as may be
required by law or the rules and regulations of any national securities exchange
or which is requested or required by any regulatory body which asserts
jurisdiction over such party, in which case such party (or parties) shall be
allowed to make such disclosure; PROVIDED that the party (or parties) making
such disclosure or whose affiliates or agents or representatives are making such
disclosure shall notify the other party (or parties) as promptly as practicable
(and, if possible, prior to making such disclosure) and it shall use its
reasonable best efforts to limit the scope of such disclosure and seek
confidential treatment of the information to be disclosed.
6.10 INDEMNIFICATION OF DIRECTORS AND OFFICERS. From and after the
Effective Time of the S Merger, (a) Holdco shall and shall cause its successors
to indemnify, defend and hold harmless, to the full extent permitted by law and
consistent with the indemnification obligations under the Company's or its
Subsidiaries' Organizational Documents in effect on the date hereof, the present
and former officers and directors of the Company and its Subsidiaries from and
against all losses, claims, damages and liability in respect of acts or
omissions occurring at or prior to the Effective Time of the S Merger and
(b) the S Surviving Corporation shall indemnify, defend and hold harmless, to
the full extent permitted by law and consistent with the indemnification
obligations under the Company's or its Subsidiaries' Organizational Documents in
effect on the date hereof, the present and former officers and directors of the
Company and its Subsidiaries from and against all losses, claims, damages and
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liability in respect of acts or omissions occurring at or prior to the Effective
Time of the S Merger. Holdco shall cause the S Surviving Corporation (and its
successors) to establish and maintain, to the fullest extent permitted by any
Legal Requirements, provisions in its Organizational Documents concerning the
indemnification and exoneration of the Company's former and present officers,
directors, employees and agents that are no less favorable to those persons than
the provisions of the Company's Organizational Documents in effect on the date
hereof. Holdco shall cause to be maintained in effect for a period of not less
than six years from the Effective Time of the S Merger the current policies of
the directors' and officers' liability insurance or other policies comparable to
those policies maintained by Parent for its officers and directors (or a "tail"
policy, in each case, in Holdco's discretion) with respect to matters occurring
prior to the Effective Time of the S Merger (the "D&O INSURANCE") for all
present and former directors and officers of the Company and its Subsidiaries,
so long as the annual premium therefor would not be in excess of 200% of the
last annual premium paid by the Company prior to the Effective Time of the
S Merger (the "MAXIMUM PREMIUM"). If the existing D&O Insurance expires, is
terminated or canceled during such six-year period, Holdco shall use all
reasonable efforts to cause to obtain as much D&O Insurance as can be obtained
for the remainder of such period for an annual premium not in excess of the
Maximum Premium, on terms and conditions no less advantageous to the covered
persons than the existing D&O Insurance. The present and former directors and
officers covered by this Section 6.10 shall be third party beneficiaries of this
Section.
6.11 EXECUTION OF REGISTRATION RIGHTS AGREEMENT. Holdco and Parent
shall execute and deliver to the other parties thereto the Registration Rights
Agreement in the form of EXHIBIT G (the "REGISTRATION RIGHTS AGREEMENT") at or
prior to the Closing.
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6.12 EXECUTION OF INDEMNITY AGREEMENT. Holdco shall execute and
deliver to the other parties thereto the Indemnity Agreement at or prior to the
Closing.
6.13 EXECUTION OF AMENDED AND RESTATED LICENSE AGREEMENT. TWE shall
cause the Warner Bros. Consumer Products Division of Warner Bros. to execute and
deliver, on behalf of itself and as agent for DC Comics, to the other parties
thereto the Amended and Restated License Agreement at or prior to the Closing.
6.14 EXECUTION OF GL INDEMNITY AGREEMENT. At or prior to the Closing
the Sellers shall execute and deliver to the other parties thereto the
GL Indemnity Agreement in the form agreed to by the parties concurrently
herewith (the "GL INDEMNITY AGREEMENT").
6.15 TAX TREATMENT. Except as contemplated by this Agreement, each of
Parent and Holdco has no present intention to merge or liquidate Holdco, Parent
or the Company with or into any other Person or transfer any of the assets
thereof other than in the Ordinary Course of Business, and, in the case of
Parent, other than pursuant to a transaction described in Section 368(a)(2)(C)
of the Code or Treasury Regulation Section 1.368-(1)(d)(4) or 1.368-2(k).
6.16 INDEMNIFICATION OF BROKERAGE. Parent and Holdco, on the one
hand, and the Company and the Sellers, on the other hand, each agree to
indemnify and save the other harmless from any claim or demand for commission or
other compensation by any broker, finder, agent or similar intermediary claiming
to have been employed by or on behalf of Parent or Holdco or any of their
affiliates, on the one hand, or by the Company or the Sellers or any of their
affiliates, on the other hand, and to bear the cost of legal expenses incurred
in defending any such claim or demand.
6.17 RESTRICTIONS ON HIRING. From and after the date hereof through
the second anniversary of the Initial Termination Date, the Parent Entities, on
the one hand, and
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TWE and the Company, on the other hand, shall not, and shall not permit their
respective Subsidiaries to, solicit or cause, directly or indirectly, to be
solicited, nor attempt to induce, any employee or consultant of the Company and
its Subsidiaries or Parent and its Subsidiaries, as applicable, at, or any time
since December 23, 1997 (unless such employee or consultant was terminated by
the employing party) to (a) terminate his or her employment or engagement with
the employing party, or (b) be employed by or otherwise render services to
another party to this Agreement or its Subsidiaries.
6.18 CERTAIN EMPLOYEE MATTERS.
From and after the Effective Time of the S Merger, Holdco
will, and will cause the S Surviving Corporation to, honor in accordance with
their terms, the employment, severance, indemnification or similar agreements
disclosed in SCHEDULE 6.18 hereto between the Company and certain Employees of
the Company (the "EMPLOYEE AGREEMENTS") and all Company Plans; PROVIDED,
HOWEVER, that nothing herein shall preclude Holdco or any of its affiliates from
having the right to terminate the employment of any Company Employee, with or
without cause, or amend or terminate any Company Plan after the Effective Time
of the S Merger. From and after the Effective Time of the S Merger, Holdco
will, and will cause the Surviving Corporation to, (i) pay all salary
obligations (including any severance benefits measured by reference to salary)
under the Employment Agreement dated September 15, 1995 between the Company,
SFTP and Larry Bouts (the "BOUTS AGREEMENT") a true, correct and complete copy
of which has been delivered to Parent and (ii) provide medical and health
benefits to Larry Bouts no less favorable than those generally provided by
Holdco and its affiliates to their senior executives. From and after the
Effective Time of the S Merger, the Sellers will be responsible for and pay all
other obligations (including, with limitation, any "Equity Termination Payment")
under the Bouts
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Agreement, whether arising by reason of the S Merger or otherwise. Subject to
compliance by Larry Bouts with the terms of the Bouts Agreement up to the
Effective Time of the S Merger, Holdco agrees that if Bouts resigns effective
upon the Effective Time of the S Merger, Holdco will treat such resignation as a
"Termination for Good Reason" under the Bouts Agreement.
Following the Effective Time of the S Merger, Holdco and its
Subsidiaries will provide benefits to those of its Employees who were employed
by the Company and its Subsidiaries immediately prior to the Effective Time of
the S Merger substantially comparable in the aggregate to those generally
provided by Holdco and its affiliates to similarly situated Employees employed
by Holdco and its affiliates; PROVIDED that such Employees shall be credited for
service with the Company and its Subsidiaries (and their respective predecessors
to the extent such service was recognized by the Company or any of its
Subsidiaries) for all purposes, including eligibility, vesting and benefit
levels (other than with respect to benefit accruals under any plans subject to
Title IV of ERISA) with respect to all benefits provided by Holdco and its
Subsidiaries to such Employees.
6.19 NON-SOLICITATION. From and after the date hereof through and
until this Agreement is terminated pursuant to Article 8 hereof or the Closing,
whichever shall apply, neither the Sellers nor their respective officers,
directors, employees, representatives or advisors will, formally or informally,
directly or indirectly (i) initiate, solicit or encourage any inquiry or the
submission of any proposals by any third party that constitutes or is reasonably
likely to lead to an Acquisition Proposal with respect to the Company or (ii)
engage in negotiations or discussions with, or furnish any information or data
to, any third party relating to an Acquisition Proposal with respect to the
Company.
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6.20 CAPITAL EXPENDITURES. From and after the date hereof through and
until this Agreement is terminated pursuant to Article 8 hereof or the Closing,
the Company will, and will cause its Subsidiaries to, take all commercially
reasonable actions to undertake the capital projects contemplated by the 1998
Cap Ex Budget in the Ordinary Course of Business of the Company.
6.21 PARENT'S AND HOLDCO'S SEC FILINGS AND FINANCINGS. The Company
and its Subsidiaries shall, and the Sellers shall cause the Company and its
Subsidiaries to, use commercially reasonable efforts to cooperate with and
assist Parent and Holdco in the preparation of any filings with the SEC or other
Governmental Authorities or any private offering memoranda and with Holdco's and
Parent's financing and loan syndication activities, in each case in connection
with this Agreement and the transactions contemplated hereby, including the
preparation of audited financial information and management's discussion and
analysis and delivery of consents and comfort letters of auditors of the Company
or its Subsidiaries in connection therewith.
6.22 RESIGNATIONS AND RELEASES. The Sellers will use all commercially
reasonable efforts to cause each director of the Company and its Subsidiaries to
execute and deliver at the time of the Closing a letter of resignation as a
director of the Company and any of its Subsidiaries, as applicable, and from
such other positions with the Company or its Subsidiaries such individual may
then hold and a release of any and all claims such director had, has or may ever
have against the Company and its Subsidiaries (other than under Section 6.10
hereof); PROVIDED that, any such director that delivers such release shall
receive from the Company and any of its Subsidiaries of which such person is
director and from Parent and Holdco a release of any and all claims such
entities had, have or may ever have against such director in such capacity or
any other capacity in which such director serves
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(other than to the extent indemnification would not be permitted under
applicable law or the Company's or its Subsidiary's Organizational Documents as
in effect on the date hereof), such mutual releases to be substantially in the
form of EXHIBIT H hereto.
6.23 NOTICE OF LITIGATION, CONTRACT ISSUES AND LABOR MATTERS. The
Company shall, and the Sellers shall cause the Company to, provide Parent prompt
notice of (a) any material Action (and any material change with respect thereto)
arising from and after the date hereof up to the Closing, (b) any material
change in any material Action existing as of the date hereof, (c) any notice
from or claim made by any Person after the date hereof and up to the Closing
that the Company or any of its Subsidiaries has breached or is in default under
any Contract required to be listed on SCHEDULE 4.1.16 hereto which such Person
giving such notice or making such claim is a party and (d) any arbitration,
strike, picket, work stoppage or lockout arising after the date hereof and up to
the Closing which would have been required to be described in SCHEDULE 4.1.18 if
it had existed as of the date hereof; PROVIDED, HOWEVER, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
6.24 FINANCIAL STATEMENTS. The Company shall, and shall cause the
general partner of each of the Co-Ventures to, use best efforts to make
available to Parent the 1997 Audited Financials and the 1997 Co-Venture
Financials, in each case not later than February 20, 1998 (the "FINANCIAL
DELIVERY DATE").
6.25 CERTAIN PARENT ENTITY SEC FILINGS. Parent and Holdco shall
provide the Sellers' Representative copies of all filings with the SEC by any
Parent Entity in connection with the financing of the transactions contemplated
by this Agreement sufficiently in advance
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of the making of any such filing so as to provide the Sellers and their advisors
a reasonable period of time to review the same.
6.26 NON-COMPETITION AGREEMENT. TWE shall execute and deliver to
Holdco and Parent the Non-Competition Agreement in the form of EXHIBIT I at or
prior to the Closing.
6.27 COMPANY CHARTER AMENDMENT. Prior to the Effective Time of the
S Merger, the Company shall file the Company Charter Amendment with the
Secretary of State of the State of Delaware in accordance with the DGCL.
6.28 THE P MERGER. If the conditions to the obligations of Parent,
Holdco and Merger Sub S to effect the S Merger hereunder (other than the
conditions specified in Sections 7.1.3 (with respect to the P Merger), 7.2.3
(with respect to the Sellers' closing certificate), 7.2.5 (with respect to the
Equity Issuance), 7.2.6 (with respect to legal opinions) and 7.2.7 (with respect
to the tax opinion) hereof and the performance of the covenant set forth in
Section 6.29 (collectively, the "EXCEPTED CONDITIONS")) have been either
satisfied or waived, such that, subsequent to the Effective Time of the
P Merger, the parties hereto would be obligated to effect the S Merger upon
satisfaction or waiver of the Excepted Conditions, then Parent shall, and shall
cause Holdco and Merger Sub P to, consummate the P Merger pursuant to the terms
of the P Merger Agreement.
6.29 PREFERRED STOCK OF HOLDCO. After the Effective Time of the P
Merger and prior to the Effective Time of the S Merger, Holdco shall file a
certificate of designations with respect to any Holdco Preferred Stock to be
issued pursuant to Section 3.3 and with respect to any other series or class of
preferred stock of Holdco to be issued in connection with the Equity Issuance.
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6.30 RIGHTS AGREEMENTS. Prior to the Effective Time of the P Merger,
Parent shall take all requisite action to cause the rights issued pursuant to
the Rights Agreement, dated as of January 12, 1998, between Parent and Banc One
Trust Company, N.A. (the "PARENT RIGHTS AGREEMENT"), to expire immediately prior
to the Effective Time of the P Merger. Prior to the Effective Time of the P
Merger, Holdco shall take all requisite action to adopt, effective not later
than the Effective Time of the P Merger, a rights agreement (the "HOLDCO RIGHTS
AGREEMENT") identical in all material respects to the Rights Agreement and to
cause there to be issued with and attached to each share of Holdco Common Stock
issued in the P Merger a number of rights issued under the Holdco Rights
Agreement identical to the number of rights issued under the Parent Rights
Agreement and attached to each share of Parent Common Stock immediately prior to
the expiration thereof pursuant to the preceding sentence.
6.31 SURVIVAL. The respective covenants of the parties contained in
this Article 6 shall survive until the Claims Termination Date, except that the
covenants contained in Sections 6.6.1(b), 6.10 and 6.16 hereof shall survive the
Closing indefinitely.
ARTICLE 7
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the S Merger shall be subject to the
fulfillment at or prior to the Effective Time of the S Merger of the following
conditions:
7.1.1 No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or any
legal restraint or prohibition preventing the consummation of the Mergers shall
be in effect; PROVIDED,
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HOWEVER, that each of the parties shall have used its best efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any such injunction or other order that may be entered; PROVIDED that
best efforts as used herein shall not include divestitures, or otherwise holding
separate, or taking any similar action with respect to the Company or Parent or
any of their respective Subsidiaries or material assets.
7.1.2 The waiting periods (and any extension thereof) applicable
to the transactions contemplated by this Agreement under the HSR Act shall have
expired or been terminated.
7.1.3 The P Merger shall have been effected pursuant to the
terms of the P Merger Agreement.
7.2 CONDITIONS TO OBLIGATION OF PARENT, HOLDCO AND MERGER SUB S. The
obligations of Parent, Holdco and Merger Sub S to effect the S Merger are
further subject to the satisfaction or waiver by Parent at or prior to the
Effective Time of the S Merger of the following conditions:
7.2.1 PERFORMANCE OF OBLIGATIONS. The Company and the Sellers
shall have performed in all material respects the covenants and obligations
required to be performed by the Company or the Sellers under this Agreement on
or prior to the Effective Time of the S Merger.
7.2.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Sellers contained in this Agreement that are
qualified or limited in any respect as to materiality or Material Adverse Effect
shall be true and correct in all respects and those that are not so qualified
shall be true and correct in all material respects, in each case on and as of
the Closing Date as if made on and as of the Closing Date, except to
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the extent any such representation or warranty expressly relates to an earlier
date (in which case as of such date).
7.2.3 SELLERS' CLOSING CERTIFICATE. At the Closing, the Sellers
shall furnish a certificate, signed by the Sellers' Representative, dated the
Closing Date, to the effect that the conditions specified in Sections 7.2.1 and
7.2.2 hereof, to the extent relating to the representations, warranties,
covenants and agreements of such Seller, have been satisfied in accordance with
the terms and provisions hereof.
7.2.4 CONSENTS AND APPROVALS. All consents, authorizations,
approvals, registrations, filings, waivers, or other similar requirements
("CONSENTS") on the part of the Company or its Subsidiaries or the Sellers
necessary to execute, deliver and perform this Agreement and the documents
contemplated hereby, including, without limitation, the Ancillary Agreements,
shall have been obtained and be in full force and effect, except (i) those
Consents which the failure to obtain would not have a Material Adverse Effect
with respect to the Company and (ii) any Consents which may be required with
respect to the loans which, under Section 6.4.2, Parent and Holdco have agreed
will be refinanced at the time of Closing.
7.2.5 EQUITY ISSUANCE. Holdco shall have consummated the Equity
Issuance with net proceeds at least equal to the excess of (i) $900,000,000 over
(ii) the aggregate liquidation value of all Holdco Preferred Stock issued in
connection with the Merger in accordance with Section 3.3 hereof.
7.2.6 LEGAL OPINIONS. Parent and Holdco shall have received the
opinions dated the Closing Date of each of Paul, Weiss, Rifkind, Wharton &
Garrison, counsel to TWE, and Willkie Farr & Gallagher, counsel to Boston
Ventures Limited Partnership IV and Boston Ventures Limited
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Partnership IVA, in each case, in form reasonably satisfactory to Parent.
7.2.7 TAX OPINION. Parent shall have received the opinion dated
the Closing Date of Weil, Gotshal & Manges LLP to the effect that the P Merger
will qualify as a reorganization under Section 368(a) of the Code and that no
gain or loss will be recognized by Parent's stockholders in connection with the
P Merger.
7.3 CONDITIONS TO OBLIGATION OF SELLERS. The obligation of the
Sellers and the Company to effect the S Merger are further subject to the
satisfaction or waiver by the Sellers' Representative at or prior to the
Effective Time of the S Merger of the following conditions:
7.3.1 PERFORMANCE OF OBLIGATIONS. Parent, Holdco, Merger Sub P
and Merger Sub S shall have performed in all material respects the covenants and
obligations required to be performed by them under this Agreement on or prior to
the Effective Time of the S Merger.
7.3.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Holdco contained in this Agreement that are qualified
or limited in any respect as to materiality or Material Adverse Effect shall be
true and correct in all respects and those that are not so qualified shall be
true and correct in all material respects, in each case on and as of the Closing
Date as if made on and as of the Closing Date, except to the extent any such
representation or warranty expressly relates to an earlier date (in which case
as of such date).
7.3.3 PARENT'S CLOSING CERTIFICATE. At the Closing, Parent shall
furnish a certificate, signed by Parent and Holdco, dated the Closing Date, to
the effect that the conditions specified in Sections 7.3.1 and 7.3.2 hereof, to
the extent relating to the
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representations, warranties, covenants and agreements of Parent and Holdco, have
been satisfied in accordance with the terms and provisions hereof.
7.3.4 CONSENTS AND APPROVALS. All Consents on the part of
Parent, Holdco or their Subsidiaries necessary to execute, deliver and perform
this Agreement and the documents contemplated hereby, including, without
limitation, the Ancillary Agreements, shall have been obtained and be in full
force and effect, except those Consents which the failure to obtain would not
have a Material Adverse Effect with respect to Parent.
7.3.5 CAPITAL EVENTS. The Capital Events shall have been
consummated.
7.3.6 LEGAL OPINIONS. Each of the Sellers shall have received
the opinions dated the Closing Date of each of Weil, Gotshal & Manges LLP and
Baer, Marks & Upham, LLP, in each case, in form reasonably satisfactory to the
Sellers' Representative.
ARTICLE 8
TERMINATION
8.1 TERMINATION. This Agreement may be terminated and the Mergers
contemplated hereby may be abandoned at any time prior to the Effective Time of
the S Merger:
8.1.1 by the mutual written consent of Parent and the Sellers'
Representative; or
8.1.2 (a) by Parent or the Sellers, if a court of competent
jurisdiction or other Governmental Authority of the United States shall have
issued an order, decree, ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Mergers and such order,
decree, ruling or other action shall have become final and nonappealable; or
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(b) by Parent or the Sellers, if the Effective Time of the P
Merger and the Effective Time of the S Merger shall not have each occurred on or
before the Initial Termination Date. For purposes of this Agreement, "INITIAL
TERMINATION DATE" shall mean the 150th day following the date hereof (unless
such day is not a Business Day in which case, the Initial Termination Date shall
be the first Business Day immediately preceding the 150th day from the date
hereof); PROVIDED, HOWEVER, that (i) Parent shall have the right to extend the
Initial Termination Date for a period of up to 30 days by written notice (the
"EXTENSION NOTICE") from Parent to the Sellers and the Company given prior to
the Initial Termination Date, setting forth the date (which shall be a Business
Day) to which the Initial Termination Date has been extended (but in no event
beyond 30 days from the date on which the Initial Termination Date would have
occurred (after giving effect to any extension pursuant to the following clause
(ii)) and (ii) in the event that either one or both of the 1997 Audited
Financials and the 1997 Co-Venture Financials has not been made available to
Parent on or prior to the Financial Delivery Date, the Initial Termination Date
shall be automatically extended by the number of days that elapse from the
Financial Delivery Date to the date all such financial results have been made
available to Parent; or
(c) by Parent, in the event of a breach by the Sellers or the
Company of any representation, warranty, covenant or other agreement contained
in this Agreement which would give rise to a failure of a condition set forth in
Section 7.2.1, 7.2.2 or 7.2.4, after written notice of such breach from Parent
to Sellers' Representative and the failure to cure same within 30 days thereof;
or
(d) by the Sellers, in the event of a breach by Parent or Holdco
of any representation, warranty, covenant or other agreement contained in this
Agreement which would give rise to a failure of a condition set forth in Section
7.3.1, 7.3.2 or 7.3.4, after
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written notice of such breach from Sellers' Representative to Parent and a
failure to cure same within 30 days thereof;
PROVIDED, that, in the case of the foregoing clauses (b), (c) and (d), the
terminating party shall have the right to exercise such right of termination
only if such terminating party is not then in breach of any representation,
warranty, covenant or other agreement that would give rise to a failure of a
condition described in such clauses (c) and (d).
8.2 PROCEDURE FOR AND EFFECT OF TERMINATION.
8.2.1 In the event that this Agreement is terminated and the
Mergers are abandoned by Parent, on the one hand, or by the Sellers and the
Company, on the other hand, pursuant to Section 8.1, written notice of such
termination and abandonment shall forthwith be given to the other parties and
this Agreement shall terminate and the Mergers shall be abandoned without any
further action. If this Agreement is terminated as provided herein, no party
hereto shall have any liability (including, any liability for any breaches of
representations and warranties of any party hereto) or further obligation to any
other party under the terms of this Agreement, except with respect to any breach
of any covenant or agreement by any party hereto and except that the provisions
of Sections 4.1.27, 4.2.6 and 5.1.10, the last sentence of Section 6.3,
Sections 6.16 and 6.17, this Section 8.2, Article 10 and Sections 11.5, 11.6 and
11.7 shall survive the termination of this Agreement.
8.2.2 If this Agreement is terminated pursuant to Section 8.1,
other than (i) by Parent pursuant to clause (c) of Section 8.1.2 hereof or by
Parent as a result of a failure of the conditions set forth in Section 7.2.2, or
(ii) as a result of the issuance of an order or injunction referred to in
Section 7.1.1 hereof for any reason directly attributable to an act or omission
to act of the Company, any Seller or any of their respective affiliates in
breach of
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this Agreement or any other agreement to which such Person is party, Parent
shall pay the Company a termination fee (the "TERMINATION FEE") in the amount of
$25,000,000; PROVIDED that the Termination Fee shall be $30,000,000 in the event
the Initial Termination Date is extended as provided in clause (i) of the
proviso in Section 8.1.2(b).
ARTICLE 9
OTHER AGREEMENTS OF THE PARTIES
9.1 RELATED PARTY TRANSACTIONS. SCHEDULE 9.1 hereto sets forth a
list of certain agreements (the "SECTION 9.1 AGREEMENTS") that are between or
among certain of the parties to this Agreement. The parties to the Section 9.1
Agreements agree, and Parent and Holdco acknowledge, that effective as of the
Closing, the Section 9.1 Agreements shall be terminated and upon such
termination no party to any such agreements or any of its affiliates or any of
their respective officers or directors shall have any liability to any other
party to such agreements or its respective affiliates, assignees or successors.
9.2 TERMINATION OF REGISTRATION RIGHTS AGREEMENT. The Company and
the Sellers acknowledge and agree that at or prior to the Effective Time of the
S Merger, the Sellers and the Company shall cause to be terminated that certain
Stockholders and Registration Rights Agreement, dated as of June 23, 1995, as
amended, among the Company and the Sellers.
9.3 CANCELLATION OF CONTINGENT RIGHTS TO PURCHASE. By execution of
this Agreement, the Sellers acknowledge that as of the Effective Time of the S
Merger, any and all Contingent Rights to purchase Class B Convertible Preferred
Stock and Common Stock of the Company issued to any such Seller as of June 23,
1995 (the "CVRS"), or thereafter acquired by any such Seller shall be deemed
terminated, such termination to be without
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payment hereunder or thereunder, other than payments, if any, to be made among
the Sellers prior to the Closing.
9.4 SALE-LEASEBACK RELEASE. Effective at the Effective Time of the
S Merger, TWE on behalf of its affiliates hereby releases the Company and its
Subsidiaries from each and every liability to TWE and its affiliates, including
but not limited to liabilities under each of the tax indemnity and other
indemnity agreements between TWE and SFTP, in connection with, related to or
arising out of the arrangements (the "SALE-LEASEBACK TRANSACTIONS") pursuant to
which (i) TWE, in or around September 1993 and May 1994, acquired and leased
from, and leased back to, SFTP certain assets used in connection with theme
parks located in California, Missouri, Texas, New Jersey and Illinois and
(ii) TWE, in or around June 1995, assigned, sold or transferred its interest
under such arrangements and in such assets to the Company and its Subsidiaries,
but only the extent the Company and its Subsidiaries would not have any such
liability if it had not entered into the Sale-Leaseback Transactions.
9.5 PRE-CLOSING PURCHASE OF TEXAS UNITS. The Company agrees that all
Texas Units (as defined in the Indemnity Agreement) to be purchased pursuant to
the Texas Agreements prior to the Closing shall be purchased by SFOT Acquisition
II, Inc., which is an indirect wholly-owned subsidiary of the Company.
ARTICLE 10
INDEMNIFICATION
10.1 OBLIGATION OF THE SELLERS TO INDEMNIFY. Subject to the terms of
this Article 10, each Seller, for itself only and not jointly in the case of the
indemnification provided in clauses (a) and (c) of this Section 10.1, and
jointly and severally in the case of the indemnification provided in clause (b)
of this Section 10.1, agrees to indemnify, defend and
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hold harmless each of Parent, Holdco and Merger Sub S, their affiliates, and the
respective directors, officers, shareholders, partners, employees, agents and
representatives of each of them from and against all Losses (other than Company
Excluded Claims) they may suffer based upon, arising out of or otherwise in
respect of the following: (a) any breach of or inaccuracy in any representation
or warranty made by any Seller, individually in Section 4.2 hereof; (b) any
breach of or inaccuracy in any representation or warranty made by the Sellers in
Section 4.1 hereof or in the certificate delivered pursuant to Section 7.2.3; or
(c) any breach or violation of any covenant or agreement made by any Seller for
itself or on behalf of the Company or its Subsidiaries in this Agreement or any
documents delivered to the Parent Entities at the Closing hereunder. For all
purposes of any claim for indemnification pursuant to this Section 10.1, all
materiality and Material Adverse Effect qualifications or limitations (other
than as contained in Sections 4.1.6, 4.1.7 and 4.1.16(a)(iv)) shall be
disregarded for purposes of determining whether there has been any breach or
inaccuracy in any representation or warranty the subject of any such claim. The
Sellers shall not be entitled to make any claim for indemnity or contribution
against the Company or any of its Subsidiaries in respect of their
indemnification obligations under this Section 10.1 in the event of any breach
of this Agreement by the Company or its Subsidiaries.
10.2 OBLIGATIONS OF PARENT, HOLDCO AND MERGER SUB S TO INDEMNIFY.
Subject to the terms of this Article 10, each of Parent, Holdco and Merger Sub
S, jointly and severally, agrees to indemnify, defend and hold harmless the
Sellers, their affiliates, and the respective directors, officers, shareholders,
partners, employees, agents and each of them from and against all Losses (other
than Parent Excluded Claims) they may suffer based upon, arising out of or
otherwise in respect of (a) any breach of any representation or warranty made by
or on behalf of the Parent, Holdco or Merger Sub S in Article 5 hereof or in the
certificate
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delivered pursuant to Section 7.3.3; or (b) any breach or violation of any
covenant or agreement made by or on behalf of Parent, Holdco or Merger Sub S in
this Agreement or any documents delivered to the Sellers at the Closing
hereunder. For all purposes of any claim for indemnification pursuant to this
Section 10.2, all materiality and Material Adverse Effect qualifications or
limitations shall be disregarded for purposes of determining whether there has
been any breach or inaccuracy in any representation or warranty the subject of
any such claim. Any indemnification by Parent, Holdco or Merger Sub S for any
such breach or violation shall be in addition to and shall not be limited by any
other amounts required to be paid to the Sellers under this Agreement.
10.3 TIME LIMITATION ON INDEMNIFICATION. No claim may be made or suit
instituted after the Claims Termination Date by any of Parent, Holdco or Merger
Sub S or their related indemnitees, or any successor thereto, against the
Sellers under any provision of this Article 10, except for Reserved Claims. No
claim may be made or suit instituted after the Claims Termination Date by any of
the Sellers or their related indemnitees, or any successor thereto, against
Parent, Holdco or Merger Sub S under any provision of this Article 10, except
for Reserved Claims. The limitations set forth in this Section 10.3 shall not
apply to any covenant that survives the Claims Termination Date pursuant to
Section 6.31.
10.4 OTHER LIMITATIONS ON INDEMNIFICATION. (a) The Sellers shall not
be obligated to pay any amounts for breaches of or inaccuracies in
representations and warranties under clauses (a) and (b) of Section 10.1 hereof
in respect of any Losses until the aggregate of such amounts exceeds $5,000,000
(the "SELLERS' BASKET AMOUNT"), whereupon the Sellers shall be obligated to pay
in full all such amounts for such indemnification including the Sellers' Basket
Amount. Notwithstanding any other provision of this Agreement, the total
maximum aggregate indemnification payments for all claims for Losses suffered
for breaches or
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inaccuracies in any representations and warranties pursuant to clauses (a) and
(b) of Section 10.1 hereof shall not exceed $25,000,000 (the "SELLERS' CAP") for
all of the Sellers as a group. Any and all payments to be made by the Sellers
in respect of any claims indemnifiable under clauses (a) and (b) of Section 10.1
shall be paid only from the General Indemnity Escrow Amount in accordance with
the terms of the General Indemnity Escrow Agreement.
(b) Parent, Holdco and Merger Sub S shall not be obligated to
pay any amounts for Losses suffered for breaches or inaccuracies in any
representations and warranties under clause (a) of Section 10.2 hereof in
respect of any Losses until the aggregate of such amounts exceeds $5,000,000
(the "PARENT BASKET AMOUNT"), whereupon Parent, Holdco and Merger Sub S shall be
obligated to pay in full all such amounts for such indemnification including the
Parent Basket Amount. Notwithstanding any other provisions of this Agreement,
the total maximum aggregate indemnification payments for all such claims for
Losses suffered for breaches or inaccuracies in any representations and
warranties pursuant to clause (a) of Section 10.2 shall not exceed $25,000,000
(the "PARENT CAP") for Parent, Holdco and Merger Sub S as a group.
10.5 PROCEDURES RELATING TO INDEMNIFICATION. The party making a claim
under this Article 10 is referred to as the "INDEMNITEE," and the party against
whom such claims are asserted under this Article 10 is referred to as the
"INDEMNIFYING PARTY."
10.5.1 NOTICE OF ASSERTED LIABILITY. With respect to third party
claims, all claims for indemnification by any Indemnitee under this Article 10
shall be asserted and resolved as follows: Promptly after receipt by an
Indemnitee of notice of any demand, claim or circumstances, which, with the
lapse of time, would give rise to a claim or the commencement (or the threatened
commencement of) any action, proceeding or investigation (an "ASSERTED
LIABILITY") that may result in Losses which are subject to indemnification under
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Sections 10.1 or 10.2, as applicable, the Indemnitee shall give notice thereof
(the "CLAIMS NOTICE") to the Indemnifying Party; PROVIDED that, for purposes of
this Section 10.5.1 delivery of the Claims Notice to the Sellers' Representative
shall be deemed delivery of such notice to each Seller in its, and all of the
Sellers in their capacity as an Indemnifying Party. The Claims Notice shall
describe the Asserted Liability in reasonable detail, and shall indicate the
amount (estimated, if necessary, and to the extent feasible) of the Losses that
have been or may be suffered by the Indemnitee. The failure of an Indemnitee to
provide a Claims Notice with reasonable promptness shall not adversely affect
any indemnification obligations hereunder except to the extent that the
Indemnifying Party is actually and materially prejudiced thereby.
10.5.2 OPPORTUNITY TO DEFEND. The Indemnifying Party may elect
to compromise or defend, at its own expense and by its own counsel, any Asserted
Liability. If the Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall, within 30 days (or sooner, if the nature of the
Asserted Liability so requires) notify the Indemnitee of its intent do so, and
the Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, such Asserted Liability. If the Indemnifying
Party elects not to compromise or defend the Asserted Liability, fails to notify
the Indemnitee of its election as herein provided or contests its obligations to
defend under this Agreement, the Indemnitee may pay, compromise or defend such
Asserted Liability (at the Indemnifying Party's sole cost and expense).
Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any claim over the objection of the other; PROVIDED,
HOWEVER, that if the settlement or compromise does not result in any liability
to the Indemnifying Party, consent to such settlement or compromise shall not be
unreasonably withheld. In any event, the Indemnitee and the Indemnifying Party
may participate, at their own expense, in defense of such Asserted Liability.
If the
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Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense (in the judgment
of counsel engaged by the Indemnifying Party).
The Indemnitee has the right to employ its own counsel in any
compromise of, or defense against, any Asserted Liability, or in connection with
the Indemnitee's provision of reasonable cooperation and assistance to the
Indemnifying Party or the Indemnifying Party's counsel as provided above, but
the fees, expenses and other charges of such counsel employed by the Indemnitee
will be at the expense of the Indemnitee unless (i) the employment of counsel by
the Indemnitee has been authorized in writing by the Indemnifying Party or
(ii) the Indemnifying Party has not in fact employed counsel to compromise or
defend against the Asserted Liability within a reasonable time, in each of which
cases the reasonable fees, disbursements and other charges of counsel retained
by the Indemnitee will be at the expense of the Indemnifying Party. It is
understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time retained by the
Indemnitee unless the employment of more than one counsel has been authorized in
writing by the Indemnifying Party.
10.5.3 NOTICE OF DIRECT CLAIM. In the event that an Indemnitee
has a claim for indemnification that does not involve a third party (a "DIRECT
CLAIM"), the Indemnitee shall notify the Indemnifying Party of such Direct Claim
with reasonable promptness, specifying, to the extent known, the nature,
circumstances and amount of such Direct Claim (a "DIRECT CLAIM NOTICE"),
HOWEVER, the failure of an Indemnitee to provide
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such Direct Claim Notice with reasonable promptness shall not adversely affect
any indemnification obligations hereunder except to the extent that the
Indemnifying Party is actually and materially prejudiced thereby. If the
Indemnifying Party notifies the Indemnitee that it disputes the Indemnitee's
right of indemnification with respect to a Direct Claim, the Indemnitee and the
Indemnifying Party shall use reasonable efforts to resolve such dispute. In the
absence of such an agreement, the Indemnitee shall be entitled to proceed to
enforce its rights hereunder including its rights to indemnification from escrow
funds, if any.
10.5.4 DETERMINATION OF LOSSES. The Losses of any Indemnitee
pursuant to this Article 10 shall be determined net of the value of a net Tax
benefit or Tax saving or increased by the cost of a net Tax cost (to the extent
not included in such Losses) (the "TAX ITEMS"). The Tax Item with respect to
each such Loss shall be determined by the Indemnitee in good faith in a written
notice delivered to the Indemnifying Party, describing in reasonable detail the
method of making such determination (the "DETERMINATION NOTICE"), using
reasonable assumptions and methods of valuation, including the marginal United
States, state, local and foreign income tax rate applicable (or reasonably
expected to be applicable) to the Indemnitee and applying to each Tax Item a
discount rate equal to 9% in order to compute such amount to the present value.
Tax cost shall include any income that may be recognized by the Indemnitee upon
receipt of any indemnification payment under this Article 10. In the event that
the Indemnifying Party shall disagree with the determination of the amount,
value or cost of a Tax Item, the Indemnifying Party shall notify the Indemnitee
in writing of such disagreement within 30 days of the Indemnifying Party's
receipt of the Determination Notice, such notice (the "NOTICE OF DISAGREEMENT")
shall set forth in reasonable detail the basis for such disagreement, including
the Indemnifying Party's estimate of the amount, value or cost of the subject
Tax Item and the method used in arriving at such estimate. The Indemnitee
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shall provide to the Indemnifying Party the assumptions and methods of
valuation, the Tax rates utilized, and other information relating to the
determination of such Losses in the Determination Notice, and other information
reasonably requested by the Indemnifying Party in preparing, or considering
whether to prepare, a Notice of Disagreement. If the Indemnifying Party does
not deliver a Notice of Disagreement to the Indemnitee within such 30-day
period, the Indemnifying Party shall be deemed to have agreed to the
determination set forth in the Determination Notice, which shall be final and
binding on each of the Indemnitee and the Indemnifying Party. If, within 30
days after the receipt of the Notice of Disagreement by the Indemnitee (the
"CONSULTATION PERIOD"), the Indemnifying Party and the Indemnitee are unable to
resolve their disagreement, the Indemnitee, on the one hand, and the
Indemnifying Party, on the other hand, shall promptly instruct their respective
firms of accountants to select, within 10 days of the earlier of the last day of
the Consultation Period and the date on which the parties mutually acknowledge
their inability to resolve their disagreement, a third such firm, which shall be
one of the five major independent certified public accounting firms (the
"ARBITRATOR"), to finally determine the amount, value or cost of the disputed
Tax Item, which determination shall be made within 30 days of submission of the
matter to the Arbitrator (the "DETERMINATION PERIOD"), and shall be final and
binding on the Indemnitee and the Indemnifying Party. The Indemnifying Party
and the Indemnitee shall each be entitled to submit during the first 15 days of
the Determination Period such memoranda and analysis to the Arbitrator as each
deems appropriate, and the Indemnifying Party and the Indemnitee shall make
available to each other and the Arbitrator all working papers, tax returns, and
other documents as either shall reasonably request and that relate to the
disputed Tax Item. If the Arbitrator determines that the value of the disputed
net Tax benefit or Tax saving is greater than 15% of the value set forth in the
Determination Notice
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or the value of the disputed net Tax cost is more than 15% less than the value
or amounts set forth in the Determination Notice, then the fees, costs and
expenses of the Arbitrator shall be borne by the Indemnitee; otherwise, the
fees, costs and expenses of the Arbitrator shall be borne by the Indemnifying
Party.
10.6 CERTAIN OTHER INDEMNITY MATTERS.
10.6.1 Subject to the obligations of the Sellers under the GL
Indemnification Agreement, from and after the Closing, the sole and exclusive
remedy with respect to any and all claims relating to a breach of any
representations, warranties, covenants or agreements under this Agreement shall
be pursuant to the indemnification provisions set forth in this Article 10.
10.6.2 From and after the Closing, the Seller shall not be
entitled to make any claim for indemnification relating to a breach by Parent or
Holdco of any representation, warranty, covenant or agreement set forth in
Section 6.15 if Holdco does not issue any Holdco Preferred Stock as part of the
Merger Consideration.
10.6.3 No party shall be entitled to make any claim pursuant to
the indemnification provisions hereof, or otherwise, for Losses (i) attributable
to loss of profits or consequential damages arising out of the transactions
contemplated by this Agreement and (ii) attributable to any individual claim (or
series of claims arising from substantially the same set of facts) that is less
than $50,000 ("MINIMUM AMOUNT"); PROVIDED, HOWEVER, for all such claims (or
series of claims) equal to or greater than the Minimum Amount, the parties
hereto shall be obligated to pay in full all such amounts including the Minimum
Amount, subject to the limitations set forth in Sections 10.4(a) and 10.4(b)
hereof, as applicable and (b) no claim for Losses less than the Minimum Amount
with respect to an individual claim (or series of
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claims arising from substantially the same set of facts) shall be applied toward
the Sellers' Basket Amount or the Parent's Basket Amount, as applicable.
10.6.4 The parties agree that to the extent claims for
indemnification under Section 10.1 hereof are based upon, arise out of or are in
respect of Losses suffered in connection with the ownership of the Co-Ventures
or the assets thereof, all payments for indemnification of any such Losses shall
be appropriately prorated to reflect the Company's or any of the Company's
affiliates' direct or indirect percentage ownership of such Co-Ventures.
10.7 EFFECT OF INDEMNIFICATION PAYMENTS. The parties hereto agree
that any payments by either party to the other in respect of their
indemnification obligations pursuant to this Article 10 shall be treated as an
adjustment to the Merger Consideration.
ARTICLE 11
MISCELLANEOUS
11.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by a written agreement
signed by Parent, Holdco, the Sellers' Representative and the Company at any
time prior to the Effective Time of the S Merger with respect to any of the
terms contained herein.
11.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of Parent, Holdco,
Merger Sub S or Merger Sub P, on the one hand, or the Company or the Sellers, on
the other hand, to comply with any obligation, covenant, agreement or condition
herein may be waived by Parent or the Sellers and the Company, respectively,
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or
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estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.
11.3 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person,
by telecopier (with a confirmed receipt thereof) or registered or certified mail
(postage prepaid, return receipt requested), and on the next business day when
sent by overnight courier service, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent, Holdco or the Merger Sub S, to:
Premier Parks Inc
122 East 42nd Street
Suite 4906
New York, New York 10168
Attention: Kieran E. Burke
Telecopier: 212-599-4694
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10022
Attention: Howard Chatzinoff, Esq.
Telecopier: (212) 310-8007
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attention: Glenn D. West, Esq.
Telecopier: (214) 746-7700
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(b) if to the Company, to:
Six Flags Entertainment Corporation
400 Interpace Parkway
Building C, Third Floor
Parsippany, New Jersey 07054-1191
Attention: Ira M. Belsky, Vice President,
General Counsel
Telecopier: (973) 402-8100
with a copy to:
Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Robert B. Schumer, Esq.
Telecopier: (212) 757-3990
(c) If to the Sellers
Boston Ventures
1 Federal Street, 23rd Floor
Boston, Massachusetts 02110
Attention: Neil Wallack
Telecopier: (617) 350-1509
with a copy to:
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Laurence D. Weltman, Esq.
Telecopier: (212) 821-8111
and
Time Warner Entertainment Company, L.P.
75 Rockefeller Plaza
New York, New York 10019
Attention: Peter R. Haje, Executive Vice
President,
General Counsel
Telecopier: (212) 956-7281
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With a copy to:
Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Robert B. Schumer, Esq.
Telecopier: (212) 757-3990
11.4 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties;
PROVIDED, HOWEVER, that the rights of the Merger Sub S and Merger Sub P may be
transferred in accordance with the provisions of clauses (a) and (b),
respectively, of Section 2.1 hereof.
11.5 EXPENSES. Except as provided in Sections 6.8 and 8.2.2, whether
or not the Mergers are consummated, all fees, charges and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, charges or expenses; PROVIDED that, in no
event shall the Company pay from its own funds, without reimbursement therefor
in full from the Sellers prior to or at the Closing, any fees, charges or
expenses incurred by the Sellers or the Company in connection with this
Agreement or the other agreements to be executed and delivered in connection
with the Closing.
11.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State, without regard to the
choice of law principles thereof, except to the extent that the DGCL applies to
the Mergers.
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11.7 JUDICIAL PROCEEDINGS. (a) EACH OF THE PARTIES HERETO AGREES THAT
ANY ACTION, SUIT OR PROCEEDING AGAINST ANY OF THE PARTIES HERETO ARISING UNDER
OR RELATING IN ANY WAY TO THIS AGREEMENT OR A TRANSACTION CONTEMPLATED HEREBY
MAY ONLY BE BROUGHT OR ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND EACH OF THE PARTIES
HERETO IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF EACH SUCH COURT IN
RESPECT OF ANY SUCH ACTION, SUIT OR PROCEEDING. EACH OF THE PARTIES HERETO
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION, SUIT
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PRE-PAID, RETURN RECEIPT REQUESTED, TO SUCH PARTY AT ITS ADDRESSES
PROVIDED FOR NOTICES HEREUNDER.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE THE LAYING OF VENUE OF ANY ACTION,
SUIT OR PROCEEDING ARISING UNDER OR RELATING IN ANY WAY TO DISAGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY IN ANY COURT LOCATED IN THE STATE OF NEW YORK
AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT A COURT LOCATED IN THE
STATE OF NEW YORK IS NOT A CONVENIENT FORUM FOR ANY SUCH ACTION, SUIT OR
PROCEEDING.
107
11.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9 INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. All references to the term "as of the date
hereof" shall mean the date of this Agreement.
11.10 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits, documents or instruments referred to herein) constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, among the parties, or between any of them, with respect to the
subject matter hereof.
11.11 NO THIRD PARTY BENEFICIARIES. Except as expressly provided
in Sections 6.10, this Agreement is not intended to, and does not, create any
rights or benefits of any party other than the parties hereto.
11.12 DETERMINATION REQUESTS OR CONSENTS. All determinations,
requests, consents, waivers, or amendments to be made by the Sellers in their
opinion or judgment or with their approval pursuant to this Agreement shall be
made jointly by TWE and Boston Ventures Limited Partnership IV (collectively,
the "SELLERS' REPRESENTATIVE"). The Parent and Holdco shall be entitled to
rely, as being binding upon the Sellers, upon (i) any document or other
instrument believed by Parent and Holdco to be genuine and correct and to have
been signed by the Sellers' Representative and (ii) any action taken by the
Sellers' Representative on behalf of the Sellers, and Parent and Holdco shall
not be liable to the Sellers for any action taken or omitted to be taken by the
Parent or Holdco in such reliance.
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11.13 IN WITNESS WHEREOF, Parent, Holdco, Merger Sub P, Merger
Sub S, the Company and the Sellers have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.
PREMIER PARKS INC.
By: /s/
-------------------------------------
Name:
Title:
PREMIER PARKS HOLDING CORPORATION
By: /s/
-------------------------------------
Name:
Title:
PREMIER PARKS MERGER CORPORATION
By: /s/
-------------------------------------
Name:
Title:
PPSTAR I, INC.
By: /s/
-------------------------------------
Name:
Title:
109
SIX FLAGS ENTERTAINMENT CORPORATION
By: /s/
-------------------------------------
Name:
Title:
[SELLERS]
110