Exhibit 2(b)
SUBORDINATED INDEMNITY AGREEMENT
SUBORDINATED INDEMNITY AGREEMENT, dated as of _____________, 1998 (this
"Agreement"), by and among Six Flags Entertainment Corporation ("SFEC"), Six
Flags Theme Parks Inc. ("SFTP"), SFOG II, Inc. ("SFOG") and SFT Holdings,
Inc. ("SFT Holdings" and, together with SFEC, SFTP, SFOG and SFT Holdings,
the "Six Flags Parties"), Time Warner Inc. ("TWX"), Time Warner Entertainment
Company, L.P. ("TWE") and TW-SPV Co. ("TW-SPV Co.") and, together with TWX
and TWE, the "TW Parties"), Premier Parks Inc. ("Holdco") and [GP Holdings],
a wholly-owned subsidiary of Holdco ("GP Holdings" and, together with Holdco,
the "Premier Parties".)
W I T N E S S E T H :
WHEREAS, Holdco, certain subsidiaries of Holdco, SFEC, TWE, and the other
holders of the capital stock of SFEC, are parties to the Agreement and Plan
of Merger, dated as of February 9, 1998 (the "Merger Agreement"), pursuant to
which, among other things, a wholly-owned subsidiary of Holdco will be merged
into and with SFEC, Holdco will become the holder of all of the outstanding
and issued capital stock of SFEC, and SFEC will thereby become a wholly-owned
subsidiary of Holdco (the "Merger");
WHEREAS, SFEC and certain of its subsidiaries are party to (i) the
Overall Agreement, dated as of February 15, 1997 ( the "Georgia Overall
Agreement"); (ii) the Related Agreements (as defined in the Georgia Overall
2
Agreement) and identified on Schedule 0 xxxxxxxx xxxxxx (xxx "Xxxxxxx Related
Agreements" and, together with the Georgia Overall Agreement, the "Georgia
Agreements"); (iii) the Overall Agreement, dated as of November 24, 1997 (the
"Texas Overall Agreement"); and (iv) the Related Agreements (as defined in the
Texas Overall Agreement and identified on Schedule 3 attached hereto) (the
"Texas Related Agreements" and, together with the Texas Overall Agreement, the
"Texas Agreements");
WHEREAS, pursuant to the Georgia Agreements, the Georgia Obligors (as
defined below) (A) are required to make or guarantee pursuant to an Other
Guarantee (as defined below) certain payments, to the extent there is not
"Available Cash" to make such payments, including without limitation (i) the
payments by the Georgia Partnership (as defined below) of "Minimum Amount
Distributions" and "Percentage Distributions" pursuant to Article VI of the
Georgia Partnership Agreement (as defined below), (ii) the payments by the
Georgia Partnership of "Base Rent" under Article IV of the Georgia Park Lease
(as defined below) and (iii) the expenditure of certain amounts on capital
expenditures in the Georgia Park (as defined below) pursuant to Section C of
Article XVII of the Georgia Partnership Agreement, and (B) are required to
perform and comply or guarantee pursuant to an Other Guarantee performance
and compliance with certain covenants, agreements and obligations, including
without limitation the purchase by the Georgia Acquisition Subsidiaries (as
defined below) of Georgia Units (as defined below) on an annual basis
pursuant to Article III of the Georgia Overall Agreement, in each case when
and as the
3
same shall be required to be paid, performed or complied with under the
Georgia Agreements (the payments of all of the amounts required to be paid, and
the performance and compliance with all of the covenants, agreements, and
obligations, by the Georgia Obligors under the Georgia Agreements are referred
to herein as the "Georgia Agreements Obligations");
WHEREAS, to support the performance of the Georgia Agreements Obligations
for the benefit of the Georgia Beneficiaries (as defined below), (i) SFOG
Acquisition A, Inc. ("SFOG Acquisition A") and SFOG Acquisition B, L.L.C.
("SFOG Acquisition B" and, together with SFOG Acquisition A, the "Georgia
Acquisition Subsidiaries") executed and delivered to Six Flags Fund, Ltd.
(L.P.) ("Georgia Fund"), SFG-I, L.L.C. ("SFG-I") and Six Flags Over Georgia,
L.L.C. ("Flags Georgia, L.L.C." and, together with SFG-I and Georgia Fund,
the "Georgia Beneficiaries") that certain Secured General Continuing
Guarantee and Pledge Agreement, dated as of March 18, 1997 (the "Georgia
Acquisition Subsidiaries Guarantee"), (ii) SFTP and SFEC executed and
delivered to the Georgia Beneficiaries the General Continuing Guarantee,
dated as of March 18, 1997 (the "SFEC/SFTP Georgia Guarantee"), and (iii) TWX
and TWE executed and delivered to the Georgia Beneficiaries the General
Continuing Guarantee and Non-Competition Agreement, dated as of February 15,
1997 (the "Georgia Guarantee");
WHEREAS, pursuant to the Texas Agreements, the Texas Obligors (as defined
below) (A) are required to make or guarantee pursuant to an Other Guarantee
certain payments, to the extent there is not "Available Cash" to make such
payments,
4
including without limitation (i) the payments by the Texas Partnership (as
defined below) of "Minimum Amount Distributions" and "Percentage
Distributions" pursuant to Article VI of the Texas Partnership Agreement (as
defined below), (ii) the payments by the Texas Partnership of "Base Rent"
under Article IV of the Texas Park Lease (as defined below), (iii) the
expenditures of certain amounts on capital expenditures in the Texas Park (as
defined below) pursuant to Section C. of Article XVII of the Texas
Partnership Agreement, and (B) are required to perform and comply or
guarantee pursuant to an Other Guarantee performance or compliance with
certain covenants, agreements and obligations, including without limitation
the purchase by the Texas Acquisition Subsidiaries (as defined below) of
Texas Units (as defined below) on an annual basis pursuant to Article III of
the Texas Overall Agreement, in each case when and as the same shall be
required to be paid, performed or complied with in the Texas Agreements (the
payments of all of the amounts required to be paid, and the performance and
compliance with all of the covenants, agreements, and obligations, by the
Texas Obligors under the Texas Agreements are referred to herein as the
"Texas Agreements Obligations");
WHEREAS, to secure and support the performance of the Texas Agreements
Obligations for the benefit of the Texas Beneficiaries (as defined below) in
connection with the Texas Overall Agreement, (i) SFOT Acquisition I, Inc.
("SFOT Acquisition I") and SFOT Acquisition II, Inc. ("SFOT Acquisition II"
and, together with SFOT Acquisition I, the "Texas Acquisition Subsidiaries")
executed and delivered to Six Flags Over Texas Fund, Ltd. ("Texas Fund"),
Flags' Directors,L.L.C. ("Flags'
5
Directors") and Six Flags Fund II, Ltd. ("Texas Fund II" and,
together with Texas Fund and Flags' Directors, the "Texas Beneficiaries") the
General and Continuing Guarantee, dated as of January 6, 1998 (the "Texas
Acquisition Subsidiaries Guarantee"), (ii) SFTP and SFEC executed and delivered
to the Texas Beneficiaries that certain General Continuing Guarantee, dated as
of January 6, 1998 (the "SFTP/SFEC Texas Guarantee"), and (iii) TWX and TWE
executed and delivered the General Continuing Guarantee and Non-Competition
Agreement, dated as of November 24, 1997 (the "Texas Guarantee" and, together
with the Georgia Guarantee, the "TW Guarantees");
WHEREAS, pursuant to the Indenture, dated as of December 16, 1992, by
SFEC and TWE to United States Trust of New York, as trustee thereunder ("ZCN
Trustee"), as amended by the First Supplemental Indenture, dated as of
February 22, 1993 and the Second Supplemental Indenture, dated as of November
8, 1995 (as the same may be amended, the "Zero Coupon Notes Indenture") TWE
has guaranteed the obligations of SFEC under the Zero Coupon Senior Notes due
1999 of SFEC (the "Zero Coupon Notes") issued pursuant to the Zero Coupon
Notes Indenture;
WHEREAS, in order to support the obligations of the Holdco Parties
hereunder, the record ownership of the outstanding capital stock of certain
subsidiaries of SFEC will be transferred to TW-SPV Co., a special purpose
bankruptcy remote subsidiary of TWE, in connection with the transactions
contemplated hereby; and WHEREAS, in order to induce TWE, as holder of all
of the outstanding Class B Common Stock and Class B Preferred Stock of SFEC,
and Holdco to enter into
6
the Merger Agreement, Holdco, GP Holdings and the Six Flags Parties desire to
enter into this Agreement with the TW Parties and the TW Parties and the
Holdco Parties desire to make the agreements provided for herein in
consideration of, inter alia, the undertakings of the Holdco Parties and the TW
Parties set forth herein. The Merger Agreement and all agreements relating
thereto shall be conclusively presumed to have been entered into by TWE and
Holdco in reliance upon this Agreement.
NOW, THEREFORE, for good and valuable consideration, including the
covenants and agreements hereinafter set forth, the adequacy and validity of
which the parties hereby acknowledge, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings ascribed to them in this Section 1.1 (such meanings
to be applicable equally to both singular and plural forms of the terms
defined).
1.1.1 "Accelerated Put" shall have the meaning ascribed to such term
in Section 6.1 of the Georgia Acquisition Subsidiaries Guarantee and Section
6.1 of the Texas Acquisition Subsidiaries Guarantee, respectively.
1.1.2 "Accelerated Put Price" shall mean the "Put Price" as such
term is defined in the Texas Acquisition Subsidiaries Guarantee and the
Georgia Acquisition Subsidiaries Guarantee, respectively.
7
1.1.3 "Acquisition Companies" shall mean the Acquisition
Subsidiaries and the Acquisition Holding Companies.
1.1.4 "Acquisition Holding Companies" shall mean SFOT Acquisition I
Holdings, Inc. ("SFOT I Holdings"), SFOT Acquisition II Holdings, Inc. ("SFOT
II Holdings"), SFOG Acquisition A Holdings, Inc. ("SFOG A Holdings") and SFOG
Acquisition B Holdings, Inc. ("SFOG B Holdings").
1.1.5 "Acquisition Subsidiaries" shall mean the Georgia Acquisition
Subsidiaries and the Texas Acquisition Subsidiaries.
1.1.6 "affiliate" with respect to any Person, shall mean any Person
controlling, controlled by or under common control with such Person.
1.1.7 "Aggregate Georgia End-of-Term Option Payment" shall mean all
sums necessary to consummate the Georgia End-of-Term Option Transactions.
1.1.8 "Aggregate Texas End-of-Term Option Payment" shall mean all
sums necessary to consummate the Texas End-of-Term Option Transactions.
1.1.9 "Beneficiaries" shall mean, collectively, (i) the Georgia
Beneficiaries and any successors thereto, (ii) the Texas Beneficiaries and any
successors thereto and (iii) the holders from time to time of the Zero Coupon
Notes and the ZCN Trustee.
1.1.10 "Business Day" shall mean any day other than a Saturday,
Sunday or Federal holiday on which banking institutions in New York, New York
are permitted to be closed for the purpose of transacting business.
8
1.1.11 "Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with Generally Accepted Accounting Principles,
either would be required to be classified and accounted for as a capital
lease on the balance sheet of such Person or otherwise be disclosed as such
in a note to such balance sheet, other than any such lease under which such
Person is the lessor.
1.1.12 "Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with Generally Accepted Accounting Principles, would appear on the
balance sheet of such lessee in respect of such Capital Lease or otherwise be
disclosed in a note to such balance sheet.
1.1.13 "control" (including the terms "controlling," "controlled by"
and "under common control") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
1.1.14 "Covenant Defeasance" shall mean discharge or defeasance of
the Zero Coupon Notes Indenture (i) pursuant to Section 401 or 403 thereof,
provided TWE is furnished with satisfactory evidence of such discharge
ordefeasance or (ii) pursuant to Section 402(A) thereof without regard to
Sections 402(B), (C), (D) and (E); provided that the Trustee referred to in
paragraph (A) need not be the Trustee under the Zero Coupon Indenture but
must be a trustee or escrow agent not affiliated with Holdco that is
reasonably satisfactory to TWE pursuant to a trust
9
agreement, security agreement or escrow agreement, reasonably satisfactory to
TWE, and with respect to which TWE is a third party beneficiary and that
otherwise meets all of the other requirements of paragraph (A) of Section 402.
1.1.15 "Designated Leverage Amount" shall mean (a) $950,000,000
minus (b) the aggregate amounts of Indebtedness repaid pursuant to clause
(ii) of Section 6.1.1(b).
1.1.16 "Eligible Unitholder" shall mean a Unitholder that delivers a
valid and appropriate Notice of Election to Exercise in connection with an
Accelerated Put.
1.1.17 "End-of-Term Option" shall have the meaning ascribed to such
term in the Texas Guarantee and the Georgia Guarantee, respectively.
1.1.18 "End-of-Term Option Exercise Date" (i) with respect to an
End-of-Term Option under the Texas Overall Agreement, shall mean the earlier
to occur of (x) December 31, 2025 or (y) the date that is 30 days after
notice from Texas Fund to the Texas Acquisition Subsidiaries (which notice
the TW Parties shall promptly deliver to Holdco and SFEC) that the
End-of-Term Option must be exercised or will lapse, and (ii) with respect to
an End-of-Term Option under the Georgia Overall Agreement shall mean the
earlier to occur of (x) December 31, 2024 or (y) the date that is 30 days
after notice from Georgia Fund to the Georgia Acquisition Subsidiaries (which
notice the TW Parties shall promptly deliver to Holdco and SFEC) that the
End-of-Term Option must be exercised or will lapse.
10
1.1.19 "End-of-Term Option Settlement Date" with respect to an
End-of-Term Option under the Georgia Overall Agreement or an End-of-Term
Option (or Accelerated End-of-Term Option) under the Texas Overall Agreement,
shall mean the date on which the End-of-Term Option Price (or other payments)
must be paid to the applicable Unitholders (or the applicable general partner
(or general partners) in case of an Accelerated End-of-Term Option) pursuant
to the provisions of each such agreement, respectively.
1.1.20 "Equity Interests" means capital stock and all warrants,
options or other rights to acquire capital stock (but excluding any debt
security that is convertible into, or exchangeable for, capital stock.)
1.1.21 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute thereto.
1.1.22 "Excluded Obligations" shall mean the obligations of the TW
Parties set forth herein, in the Merger Agreement, the Georgia Litigation
Indemnity Agreement and the License Agreement.
1.1.23 "Generally Accepted Accounting Principles" shall mean United
States generally accepted accounting principles as in effect from time to
time.
1.1.24 "Georgia End-of-Term Transactions" shall mean the
transactions described in clauses (b), (c) and (d) of Section 8.2 and clauses
(a) and (b) of Section 8.4 of the Georgia Overall Agreement.
1.1.25 "Georgia Fund Interests" shall mean, in the case of
End-of-Term Option, all interests in Georgia Fund, Six Flags Over Xxxxxxx XX,
L.P.
11
and Six Flags Over Georgia, Ltd. described in clauses (b) through (d) of
Section 8.2 of the Georgia Overall Agreement.
1.1.26 "Georgia General Partner" shall mean the Xxxxxx Family Trust
(created by Declaration of Trust dated May 15, 1980, as amended) or any
successor managing general partner of Georgia Fund.
1.1.27 "GL" shall have the meaning ascribed to such term in the Merger
Agreement.
1.1.28 "Georgia Obligors" shall mean SFEC, SFTP, Six Flags Services of
Georgia Inc., SFOG, the Georgia Acquisition Subsidiaries, SFOG II Employee, Inc.
and the Georgia Partnership.
1.1.29 "Georgia Park" shall mean the amusement park commonly known, on
the date hereof, as Six Flags Over Georgia.
1.1.30 "Georgia Park Lease" shall mean the agreement identified as
"Amusement Park Ground Lease" on Schedule 2.
1.1.31 "Georgia Partnership" shall mean Six Flags Over Xxxxxxx XX,
L.P., a Delaware limited partnership and the owner of the improvements
that comprise the Georgia Park, and the lessee of the land upon which is
situated the Georgia Park.
1.1.32 "Georgia Partnership Agreement" shall mean the Limited
Partnership Agreement of Six Flags Over Xxxxxxx XX, L.P., dated as of March 18,
1997.
12
1.1.33 "Georgia Units" shall mean units of limited partnership
interests in Georgia Fund, of which there are 100- 1/31.71 outstanding as of the
date hereof.
1.1.34 "GP Holdings" shall mean "GP Holdings" as defined in the
Preamble hereto, which shall be a wholly-owned, "bankruptcy remote" special
purpose Subsidiary of Holdco (capitalized by Holdco with a contribution of cash
in the amount of $1,000), the Organizational Documents of which shall include,
among other things, the provisions set forth in Exhibit A hereto.
1.1.35 "GP Holdings Preferred Stock" shall mean the preferred stock,
par value $0.01 per share, of GP Holdings having the terms set forth in Exhibit
B hereto.
1.1.36 "guarantee" or "guaranty" means any obligation, contingent or
otherwise, of any Person, direct or indirect, guaranteeing any Indebtedness
or the performance of any other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part). The term "guarantee" or "guaranty" or
"guaranteed" used as a verb has a corresponding meaning.
13
1.1.37 "Holdco Notes" shall mean the notes to be issued in a public or
Rule 144A offering by Holdco (including the Indentures pursuant to which such
notes are issued) to finance, in part, the transactions contemplated by the
Merger Agreement, and any subsequently issued notes or other Indebtedness, to
the extent that the proceeds of which are used directly to refinance or pay
expenses directly relating to, and having a principal amount (which shall
include accrued but unpaid interest, any accretions on such principal in respect
of discounted principal or paid-in-kind interest) not in excess immediately
prior to such refinancing of, such notes or such subsequently issued notes or
other Indebtedness.
1.1.38 "Holdco Parties" shall mean the Premier Parties and, for
purposes of this Agreement, upon and following the Effective Time of the Merger,
the Six Flags Parties.
1.1.39 "Indebtedness" of any Person shall mean (i) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (including without limitation reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers' acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
14
property), (iv) all Capital Lease Obligations of such Person, (v) all
Indebtedness guaranteed by such Person to the extent of such guarantee, (vi)
all Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including without limitation accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, but only to the extent of the value of the
property, and (vii) any obligations requiring payments in excess of the
counter-party obligations under any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement
or derivative agreement of such Person; provided, however, that the Zero
Coupon Notes shall not be deemed Indebtedness to the extent a Covenant
Defeasance has been effected.
1.1.40 "License Agreement" shall have the meaning ascribed to such term
in the Merger Agreement.
1.1.41 "Lien" shall mean any encumbrance, charge, security interest,
mortgage, pledge, hypothecation, title defect, title retention agreement, lease,
sublease, license, occupancy agreement, easement, covenant running with the
land, encroachment, voting trust agreement, restriction, option, right of first
offer or refusal, proxy or lien, including, but not limited to, liens for taxes,
other than a lien for taxes not yet due and payable.
1.1.42 "Losses" shall mean any and all losses, damages (excluding
consequential damages), deficiencies, awards, assessments, amounts paid in
15
good faith settlement, judgments, fines, penalties, interest, costs and expenses
(including, without limitation, reasonable legal and other advisory fees, costs
and expenses).
1.1.43 "Minimum Net Worth" shall mean stockholder's equity, as
determined in accordance with Generally Accepted Accounting Principles, of SFEC
immediately following consummation of the transactions contemplated by the
Merger Agreement. For purposes of Sections 1.1.43 and 1.1.44, in determining
Minimum Net Worth and Net Worth, the Zero Coupon Notes and any securities or
other assets supporting a Covenant Defeasance shall be disregarded.
1.1.44 "Net Worth" shall mean stockholders' equity or its equivalent as
determined in accordance with Generally Accepted Accounting Principles; provided
that in calculating Net Worth, the following principles shall apply: (i) the
amortization of goodwill arising solely out of purchase accounting treatment of
the S Merger (as such term is defined in the Merger Agreement) shall not be
deemed to have been charged, (ii) if any intangible asset is reserved against or
"written down" then such Net Worth shall be calculated using the carrying value
of such asset as so reserved against or written down, (iii) if any intangible
asset is sold or otherwise disposed of then such Net Worth shall be calculated
using the carrying value of the proceeds (whether cash, securities or other
assets) received in such sale or disposition and (iv) the depreciation of the
incremental increase in the basis of an asset arising solely out of purchase
accounting treatment of the Merger shall not be deemed to have been charged. In
determining Net Worth in accordance with the foregoing, there shall
16
be no "double-counting" (e.g., upon the sale of any asset where depreciation
with respect to such asset has been disregarded in accordance with the
foregoing clause (iv), gain resulting from such sale shall be calculated with
reference to the basis of such asset after adding back an amount equal to
such disregarded depreciation).
1.1.45 "Obligors" shall mean, collectively, the Georgia Obligors and
the Texas Obligors.
1.1.46 "Organizational Documents" shall mean (a) with respect to a
corporation, its articles of incorporation and by-laws, (b) with respect to a
partnership, its partnership agreement and its certificate of limited
partnership (if a limited partnership) and (c) with respect to a limited
liability company, its limited liability company operating agreement (or the
equivalent thereof) and its certificate of formation (or the equivalent
thereof), in each case as amended.
1.1.47 "Other Guarantee" shall mean the Texas Acquisition Subsidiaries
Guarantee, the Georgia Acquisition Subsidiaries Guarantee, the SFEC/SFTP Georgia
Guarantee and the SFEC/SFTP Texas Guarantee.
1.1.48 "Permitted Liens" means, with respect to any Person, (a) pledges
or deposits by such Person pursuant to a Covenant Defeasance or under workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases (other than Capital Leases) to which such
Person is a party, or deposits to secure public or statutory obligations of such
Person or deposits or cash or United States government bonds to secure surety or
appeal bonds to which
17
such Person is a party, or deposits as security for contested taxes or import
duties or for the payment of rent, in each case incurred in the ordinary
course of business; (b) Liens imposed by law, such as carriers',
warehousemen's and mechanics' Liens, in each case for sums not yet due or
being contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such Person with respect to which
such Person shall then be proceeding in good faith with an appeal or other
good faith proceeding for review; (c) Liens for property taxes not yet due or
payable or subject to penalties for nonpayment or those which are being
contested in good faith by appropriate proceedings; (d) Liens in favor of
issuers of surety bonds or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of its business;
(e) survey exceptions, encumbrances, easements or reservations of, or rights
of others for, licenses, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions
as to the use of real properties or Liens (i) existing as of the date hereof
or (ii) incidental to the conduct of the business of such Person or to the
ownership of its properties which were not incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect
the value of any SF Theme Park or materially impair the use in the operation
of the business of any such SF Theme Park; (f) Liens on property or shares of
stock of a Person at the time such Person becomes a Subsidiary; provided,
however, that such Liens are not created, incurred or assumed in connection
with, or in contemplation of, such other Person becoming a Subsidiary;
provided further, however, that any such Lien may not extend to any other
property
18
owned by SFEC or any of its Subsidiaries; (g) Liens on property at the time SFEC
or a Subsidiary of SFEC acquired the property, including any acquisition by
means of a merger or consolidation with or into SFEC or any Subsidiary of SFEC;
provided, however, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such acquisition; provided further,
however, that such Liens may not extend to any other property owned by SFEC or
any Subsidiary; (1) Liens to secure the payment of all or a part of the purchase
price of, or Capitalized Lease Obligations with respect to, assets or property
acquired or constructed after the date hereof; provided, however, that (i) the
Indebtedness secured by such Liens is otherwise permitted to be incurred under
this Agreement, (ii) such Liens only extend to or cover such acquired or
constructed property and do not encumber any other assets or property of SFEC or
any Subsidiary thereof, (iii) such Liens are created within 180 days of
construction or acquisition of such assets or property, (iv) the principal
amount of any Indebtedness secured by any such Lien does not exceed the cost of
assets or property so acquired or constructed and (v) the amount of Indebtedness
secured by any such Lien is not subsequently increased; (m) Liens arising by
reason of any judgment, decree or order of any court or arbitrator, so long as
such judgment, decree or order is being contested in good faith and any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment, decree or order shall not have been finally terminated and the
period within which such proceedings may be initiated shall not have expired;
and (n) Liens securing Senior Indebtedness.
19
1.1.49 "Person" shall mean and include an individual, a partnership, a
joint venture, a limited liability company, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
1.1.50 "Relevant Agreements" shall mean, collectively, the Texas
Agreements, the Georgia Agreements and the Zero Coupon Notes Indenture.
1.1.51 "Required Obligations" shall mean, collectively, the Georgia
Agreements Obligations, Texas Agreements Obligations and Zero Coupon Notes
Obligations; provided that the Required Obligations shall not include (i) any
obligations of the Georgia Acquisition Subsidiaries or the Texas Acquisition
Subsidiaries to purchase any Units pursuant to the Accelerated Put provisions
under the Texas Agreements and the Georgia Agreements, except as specifically
provided in Section 4.2 hereunder; or (ii) the Excluded Obligations.
1.1.52 "Restricted Payments" shall mean (i) the payment of any dividend
or the making of any distribution on account of the Equity Interests of SFEC or
of any Non-Qualified Subsidiary (including, without limitation, any payment
in connection with any merger or consolidation involving either SFEC or such
NonQualified Subsidiary) or to the direct or indirect holders of the Equity
Interests of SFEC or such Non-Qualified Subsidiary in their capacity as such
(other than dividends or distributions by SFEC payable in Equity Interests of
the issuer thereof (or accretions thereon); (ii) the purchase, redemption, or
other acquisition or retirement for value (including, without limitation, in
connection with any merger or consolidation involving SFEC or such Non-Qualified
Subsidiary) of any Equity Interests of SFEC or
20
any Non-Qualified Subsidiary, or any other affiliate of SFEC (other than any
such Equity Interests owned by SFEC or any wholly-owned Subsidiary of SFEC or
Units). For purposes of this definition, "Non-Qualified Subsidiaries" shall mean
Subsidiaries in which SFEC owns less than all of the equity interests and in
which Holdco and its Subsidiaries or affiliates (other than SFEC and its
Subsidiaries) owns an equity interest.
1.1.53 "Senior Indebtedness" with respect to any Person, shall mean
Indebtedness of such Person for borrowed money that is not by its terms
subordinated to any other Indebtedness of such Person.
1.1.54 "SFEC Entities" or "SFEC Entity" shall mean, individually or
collectively, SFEC, SFTP, SFT Holdings, SFOT Employee, Inc., Six Flags Over
Texas, Inc. ("SFOT"), SFOT Acquisition I, SFOT Acquisition II, SFOT I
Holdings, SFOT II Holdings, SFOG, SFOG II Employee, Inc., SFOG Acquisition A,
SFOG Acquisition B, SFOG A Holdings, SFOG B Holdings, Six Flags Over Georgia,
Inc., Six Flags Services of Georgia, Inc. and, to the extent applicable, any
SFEC Subsidiaries.
1.1.55 "SF Theme Parks" shall mean, collectively, the theme parks
set forth on Exhibit C hereto and any additional theme parks hereinafter
acquired by SFEC and its Subsidiaries.
1.1.56 "Subsidiary" with respect to any Person, shall mean any
corporation 50% or more of the outstanding voting power of which, or any
partnership, joint venture, limited liability company or other entity 50% or
more of the total equity interest of which, is directly or indirectly owned
or controlled by such
21
Person or which such Person is directly or indirectly a general partner or
managing member (or acts in similar such capacity). For purposes of this
Agreement, all references to "Subsidiaries" of a Person shall be deemed to mean
"Subsidiary" if such Person has only one Subsidiary.
1.1.57 "Tax" or "Taxes" shall mean all taxes, charges, fees, levies or
other assessments, and all estimated payments thereof, including, but not
limited to, income, excise, property, sales, use, value added, franchise,
payroll, transfer, transfer gain, gross receipts, withholding, social security
and unemployment taxes or other taxes of any kind, imposed by any foreign,
Federal, state, county or local government, or any subdivision or agency
thereof, and any interest, penalty and expense relating to such taxes, charges,
fees, levies or other assessments.
1.1.58 "Texas End-of-Term Option Transactions" shall mean the
transactions described in clauses (b), (c) and (d) of Section 7.2 and clauses
(a) and (b) of Section 7.4 of the Texas Overall Agreement.
1.1.59 "Texas Fund Interests" shall mean, in the case of an End-of-Term
Option, all interests in the Texas Fund, Texas Flags, Ltd. ("Flags") and Six
Flags Fund II, Ltd. ("Texas Fund II") described in clauses (b) through (d) of
Section 7.2 of the Texas Overall Agreement, and, in the case of an Accelerated
End-of-Term Option, all interests in Texas Fund, Flags and Texas Fund II
described in clauses (a) and (b) of Section 7.7 of the Texas Overall Agreement.
1.1.60 "Texas General Partner" shall mean Xxxx X. Xxxx, or any
successor managing general partner of Texas Fund.
22
1.1.61 "Texas Obligors" shall mean SFEC, SFTP, SFOT, the Texas
Acquisition Subsidiaries, SFOT Employee, Inc. and the Texas Partnership.
1.1.62 "Texas Park" shall mean the amusement park commonly known, on
the date hereof, as Six Flags Over Texas.
1.1.63 "Texas Park Lease" shall mean the agreement identified as
"Amusement Park Ground Lease" in Schedule 3.
1.1.64 "Texas Partnership" shall mean Texas Flags, Ltd., a Texas
limited partnership and the owner of the improvements that comprise the Texas
Park, and the lessee of the land upon which is situated the Texas Park.
1.1.65 "Texas Partnership Agreement" shall mean the Amended and
Restated Limited Partnership Agreement of Texas Flags, Ltd., dated as of January
6, 1998.
1.1.66 "Texas Units" shall mean units of limited partnership interests
in Texas Fund, of which there are an aggregate of 240.32422 outstanding on the
date hereof.
1.1.67 "Transfer" shall mean sell, lease, assign, transfer or otherwise
dispose of, hypothecate, mortgage, pledge, or otherwise encumber, in each case
directly or indirectly, or by operation of law.
1.1.68 "Triggering Default" shall mean (i) a "Default" as such term is
defined in the Georgia Agreements (other than a Default that results from the
failure of the TW Parties to perform their obligations with respect to an
Accelerated Put as described in Section 4.3 hereof), (ii) a "Default" as such
term is defined in the
23
Texas Agreements (other than a Default that results from the failure of the TW
Parties to perform their obligations with respect to an Accelerated Put as
described in Section 4.3 hereof), (iii) an "Event of Default" as such term is
defined in the Zero Coupon Note Indenture, other than as a result of TWE's
failure to comply with the provisions of Section 6.2.2 hereof, (iv) a default by
any of the Holdco Parties of their covenants, agreements or obligations
hereunder (other than an immaterial default that can be cured upon notice), or
(v) a failure by the Holdco Parties to pay any amounts owed to the TW Parties
hereunder or to otherwise reimburse the TW Parties for any
amounts paid by either of such parties under the Georgia Guarantee or the Texas
Guarantee.
1.1.69 "TWE Notes Guarantee" shall have the meaning set forth in
Section 1201 of the Zero Coupon Notes Indenture.
1.1.70 "Units" shall mean the Texas Units and the Georgia Units.
1.1.71 "Unitholders" shall mean the holders of Units.
1.1.72 "ZCN Trustee" shall mean the Trustee under the Zero Coupon Notes
Indenture, or any successor trustee thereunder. 1.2 Other Defined Terms:
1.2.1 For purposes of this Agreement, the following terms shall have
the meanings ascribed to them in the Section of this Agreement or in the
Relevant Agreement set forth opposite them below:
Term Section/Agreement
------- -------------------
Accelerated End-of-Term Option 4.5.1
24
Term Section/Agreement
-------- -------------------
Accelerated End-of-Term Option Notice 4.5.1
Accelerated Option Notice Date 4.5.1
Accreted Value Amount Zero Coupon Note Indenture
Aggregate Liquidity Put Price 4.2.2
Asserted Third Party Liability 7.3.1
Beneficial Shares 3.3
Beneficial Share Assignment 3.3
Claims Notice 7.3.1
Direct Claim 7.3.3
Direct Claim Notice 7.3.3
Eligible Securities 8.2
End-of-Term Option Texas Overall Agreement and
Georgia Overall Agreement
Escrow Agent 7.3.4
Escrow Amounts 7.3.4
ETO Exercise Notice 4.4.1
Flags' Directors Preamble
Flags Georgia L.L.C. Preamble
Georgia Acquisition Subsidiaries Preamble
Georgia Acquisition Subsidiaries Guarantee Preamble
Georgia Agreements Preamble
Georgia Agreements Obligations Preamble
Georgia AP Units 4.3.1
Georgia AP Units Cash Flow Assignment 4.3.1
Georgia Beneficiaries Preamble
Georgia Fund Preamble
25
Term Section/Agreement
-------- -------------------
Georgia Guarantee Preamble
Georgia Overall Agreement Preamble
Georgia Related Agreements Preamble
Georgia Units Purchaser 4.2.2
Indemnitee 7.3
Indemnitor 7.3
Liquidity Put Certificate 4.2.2
Liquidity Put Notice 4.2.1
Liquidity Put Settlement Date Texas Overall Agreement and
Georgia Overall Agreement
Liquidity Put Texas Overall Agreement and
Georgia Overall Agreement
Merger Preamble
Merger Agreement Preamble
Maturity Zero Coupon Note Indenture
Notice of Election to Exercise Texas Overall Agreement and
Georgia Overall Agreement
Offer to Purchase Zero Coupon Note Indenture
Payment Blockage Notice 8.1
Payment Blockage Period 8.1
Principal Amount Zero Coupon Note Indenture
Repaid Georgia AP Units 4.3.1
Repaid Texas AP Units 4.3.1
Selling Unitholder 4.2.2
SFEC Subsidiary 6.1.5
SFG-I Preamble
SFOG Acquisition A Preamble
26
Term Section/Agreement
-------- -------------------
SFOG Acquisition B Preamble
SFOG BH Capital Stock 3.1
SFOG Capital Stock 3.1
SFOG IIH Capital Stock 3.1
SFOGA AH Capital Stock 3.1
SFOT Acquisition I Preamble
SFOT Acquisition II Preamble
SFOT IH Capital Stock 3.1
SFEC/SFTP Georgia Guarantee Preamble
SFT H Capital Stock 3.1
SFTP/SFEC Texas Guarantee Preamble
Stated Maturity Zero Coupon Note Indenture
Subordinated Indemnity Escrow Agreement 7.3.4
Subordination Obligations 8.1
Termination Date 9.1
Texas Agreements Obligations Preamble
Texas Acquisition Subsidiaries Preamble
Texas Acquisition Subsidiaries Guarantee Preamble
Texas AP Units 4.3.1
Texas AP Units Cash Flow Assignment 4.3.1
Texas Agreements Preamble
Texas Beneficiaries Preamble
Texas Fund Preamble
Texas Fund II Preamble
Texas Overall Agreement Preamble
27
Term Section/Agreement
-------- -------------------
Texas Related Agreements Preamble
Texas Guarantee Preamble
Texas Units Purchaser 4.2.2
Texas Guarantee Preamble
TW Guarantees Preamble
12 1/4Debentures 6.1.5
12 1/4Debentures Indenture 6.1.5
ZCN Trustee Preamble
Zero Coupon Notes Preamble
Zero Coupon Notes Obligations 2.1
Zero Coupon Notes Indenture Preamble
ARTICLE 2
PERFORMANCE OF OBLIGATIONS
2.1 Zero Coupon Notes. In each case for the sole and exclusive benefit of
TWE only, (a) SFEC hereby agrees to, and (b) Holdco agrees to cause SFEC to,
perform all of SFEC's obligations under the Zero Coupon Notes Indenture and
the Zero Coupon Notes, including, without limitation, the due and punctual
payment of the Principal Amount of the Zero Coupon Notes at the Stated
Maturity or the Accreted Value Amount upon an acceleration of Maturity and
all other amounts due and payable under the Zero Coupon Notes and the Zero
Coupon Notes Indenture by SFEC (collectively, the "Zero Coupon Notes
Obligations"), when and as the same shall become due and payable, according
to the terms of the Zero Coupon Notes and the
28
Zero Coupon Notes Indenture, and (c) SFEC and Holdco each guarantees the
payment of all such amounts and the performance of all such obligations
thereunder.
2.2 Georgia Obligations. In each case for the sole and exclusive benefit
of the TW Parties only, each of the Holdco Parties (a) shall cause the
Georgia Obligors to perform the Georgia Agreement Obligations when and as the
same shall be payable or required to be performed under the Georgia
Agreements and (b) guarantees the payment of all amounts required to be paid
and the performance of all covenants, agreements and obligations required to
be performed or complied with by the Georgia Obligors thereunder.
2.3 Texas Obligations. In each case for the sole and exclusive benefit of
the TW Parties only, each of the Holdco Parties (a) shall cause the Texas
Obligors to perform the Texas Agreement Obligations when and as the same
shall be payable or required to be performed under the Texas Agreements and
(b) guarantees the payments of all amounts required to be paid and the
performance of all covenants, agreements and obligations required to be
performed or complied with by the Texas Obligors thereunder.
2.4 Continuing and Irrevocable Obligations. The obligations of the Holdco
Parties under Sections 2.1 through 2.3 including the guarantees thereunder
shall be, except as provided in Article 8, absolute, unconditional and
irrevocable, joint and several and shall not terminate unless and until the
Required Obligations have been indefeasibly paid and performed in full or
otherwise satisfied or waived by the TW Parties or the Texas Beneficiaries
and the Georgia Beneficiaries (in a manner that
29
legally relieves and discharges the parties from any liability with respect to
the TW Guarantees).
2.5 Nature of Obligations.
(a) The liability of each Holdco Party hereunder is independent of
and not in consideration of the liability of the Obligors or any other Holdco
Party and a separate action or actions may be brought and prosecuted by the
TW Parties and their respective permitted successors and assigns, as the case
may be, against any Holdco Party and its permitted successors and assigns,
whether or not any action is brought or prosecuted against any Obligor or any
other Holdco Party or whether or not any Obligor or any other Holdco Party is
joined in any such action or actions. The guarantee of each of the Holdco
Parties under Sections 2.1 through 2.3 hereof shall be construed as a
continuing, absolute, unconditional and irrevocable guarantee of payment and
performance (and not merely of collection) without regard to:
(i) the legality, validity or enforceability of any of the Texas
Agreements, the Georgia Agreements, the Zero Coupon Notes Indenture, the Zero
Coupon Notes, the Merger Agreement or any agreement related thereto (other
than this Agreement), any of the Required Obligations, any collateral or any
Other Guarantee;
(ii) any defense (other than indefeasible payment or an
applicable statute of limitations), set-off or counterclaim (other than a
set-off or counterclaim arising from the failure of the TW Parties to perform
their
30
obligations hereunder) that may at any time be available to any Obligor or
any Holdco Party against, and any right of set-off at any time held by, the
Beneficiaries (or any one of them), the TW Parties or any other Holdco Party;
or
(iii) any other circumstance whatsoever (with or without notice
to or knowledge of any Holdco Party or any Obligor, but excluding
circumstances resulting from the failure of the TW Parties to perform the
Excluded Obligations), whether or not similar to any of the foregoing, that
constitutes, or might be construed to constitute, an equitable or legal
discharge of any Obligor or any Holdco Party, in bankruptcy or in any other
instance.
(b) In the event of default by any Obligor in payment or performance
of the Required Obligations, or any part thereof, when such payment or
performance becomes due, either by its terms or as the result of the exercise
of any power to accelerate, the Holdco Parties, as applicable, shall, pay the
amount due thereon to the applicable Beneficiaries or perform or observe the
Required Obligations, and it shall not be necessary for the Beneficiaries
(and each Holdco Party expressly waives any rights it might otherwise have to
require the Beneficiaries or the TW Parties) to proceed against any Obligor,
any collateral or any other Person.
(c) Suit may be brought or demand may be made against any Obligor or
any other Holdco Party, as applicable, separately or together, without
impairing the rights of the TW Parties against any Holdco Party or any other
Person.
31
2.6 Authorization. Subject to Section 6.2.5, following and during the
continuance of a Triggering Default, each Holdco Party authorizes the TW
Parties, without notice to or further assent by such Holdco Party and without
affecting such Holdco Party's liability hereunder (regardless of whether any
subrogation or similar right that such Holdco Party may have or any other
right or remedy of such Holdco Party is extinguished or impaired), from time
to time, to:
(a) terminate, release, compromise, subordinate, extend, or otherwise
change the amount or time, manner or place of payment or performance of, or
rescind any demand for payment or performance of, the Required Obligations or
any part thereof, provided, that, if any such action taken without the
consent of such Holdco Party has the effect of increasing the amount of any
Required Obligation, then, as to such Holdco Party, the guarantees thereof
under Sections 2.1 through 2.3 hereof shall extend only to the Required
Obligations without giving effect to such increase in amount; provided,
further, that a change in the condition (financial or other) of any Obligor
resulting from a forbearance, extension or equivalent of either will not be
deemed to be an increase of or to cause an increase of the amount of any
Required Obligation within the meaning of the preceding proviso;
(b) to the extent permitted by the Georgia Agreements and the Texas
Agreements, take and hold any stock of the Acquisition Companies and the
preferred stock or assets of GP Holdings, perfect or refrain from perfecting
a lien on such stock and assets, and exchange, enforce, subordinate, release
(whether
32
intentionally or unintentionally), or take or fail to take any other action
in respect of any such stock and assets or lien or any part thereof;
(c) exercise, fail to exercise, waive, suspend, terminate or suffer
expiration of any of the remedies or rights of the TW Parties against any
Obligor or any Holdco Party in respect of any Required Obligations or any
collateral, as the TW Parties may elect in their discretion;
(d) release, partially, release, add or settle with any Obligor or
any Holdco Party, whether expressly, by operation of law or without
limitation otherwise;
(e) accept partial payments on the Required Obligations and apply all
payments or recoveries from any Obligor or any Holdco Party or collateral to
such of the Required Obligations as the TW Parties may elect in their
discretion, whether or not such Required Obligations are secured or
guaranteed; and
(f) otherwise deal with any Obligor or any Holdco Party and any
collateral as the TW Parties may elect in their discretion.
2.7 Certain Agreements and Waivers by Each Holdco Party. Each Holdco
Party hereby agrees that neither any TW Party's rights or remedies nor any
Holdco Party's obligations under this Article 2 shall be released,
diminished, impaired, reduced or affected by any one or more of the following
events, actions, facts or circumstances, and the liability of each Holdco
Party under this Article 2 shall be absolute, unconditional and irrevocable
irrespective of:
33
(a) the death, insolvency, bankruptcy, disability, dissolution,
liquidation, termination, receivership, reorganization, merger,
consolidation, change of form, structure or ownership, sale of all assets, or
lack of corporate, partnership, limited partnership, limited liability
company or other power of any Obligor or any Holdco Party or any other Person
at any time liable for the payment or performance of any or all of the
Required Obligations;
(b) all rights and benefits under applicable law purporting to reduce
a guarantor's obligations in proportion to the obligation of the principal or
providing that the obligation of a surety or guarantor must neither be larger
nor in other respects more burdensome than that of the principal;
(c) any requirement of marshaling or any other principle of election
of remedies and all rights and defenses arising out of an election of
remedies by any TW Party by, even though that election of remedies has
destroyed any Holdco Party's rights of subrogation and reimbursement against
any Obligor;
(d) any right to assert against any TW Party any defense (legal or
equitable), set-off, counterclaim and other right that any Holdco Party may
now or any time hereafter have against any Obligor;
(e) presentment, diligence in making demands hereunder, demand on any
other Holdco Party, notice of dishonor or nonperformance, protest, acceptance
and notice of acceptance of the guarantees under Sections 2.1 through 2.3
hereof;
34
(f) any order, ruling or plan of reorganization emanating from any
proceeding under the Bankruptcy Code with respect to any Obligor or any other
Person, including any extension, reduction, composition, or other alteration
of the Required Obligations, whether or not consented to by the Holdco
Parties; or
(g) except to the extent otherwise provided in Section 2.5(a), any
rights, defenses and other benefits any Holdco Party may have under the
provisions of Section 34.02 of the Texas Business and Commerce Code or
Section 10-7-24 of the Official Code of Georgia Annotated, as applicable.
2.8 Duty of Inquiry. Each Holdco Party assumes the responsibility for
being and keeping itself informed of the financial condition of each Obligor
and of all other circumstances bearing upon the risk of nonpayment or
nonperformance of the Required Obligations that diligent inquiry would
reveal, and agrees that the TW Parties shall have no duty to advise any
Holdco Party of information regarding such condition or any such
circumstances.
2.9 Bankruptcy No Discharge.
(a) The guarantees of any Holdco Party under Section 2.1 hereof shall
not be discharged or otherwise affected, with respect to any other Holdco
Party, by any bankruptcy, reorganization or similar proceeding commenced by
or against any Obligor, including (i) any discharge of, or bar to stay
against collecting, all or any part of the Required Obligations in or as a
result of any such proceeding, whether or not assented to by the TW Parties,
or (ii) any disallowance of all or any portion of the TW Parties' claim for
repayment or performance of the Required
35
Obligations. If acceleration of the time for payment or performance of any
Required Obligations is stayed or delayed as a result of any such proceeding,
all such amounts shall nonetheless be payable by each Holdco Party, on demand
by the TW Parties.
(b) If a payment of any Required Obligation by any Obligor is made
and is later determined not to have been indefeasibly made in whole or in
part, such payment by any such Obligor to the Beneficiaries or the TW
Parties, as the case may be, shall not constitute a release of any Holdco
Party from any liability hereunder, and (i) the guarantees of the Holdco
Parties under Sections 2.1 through 2.3 hereof (and any lien on any collateral
securing such guarantees or the Required Obligations) shall continue to be
effective or shall be reinstated notwithstanding any prior release, surrender
or discharge by any TW Party of the guarantees of the Holdco Parties under
Sections 2.1 through 2.3 and /or of any Holdco Party, and (ii) the guarantees
of the Holdco Parties under Sections 2.1 through 2.3 (and any lien on any
collateral securing such guarantees or the Required Obligations) shall apply
to any and all amounts so refunded by any Beneficiaries or the TW Parties or
paid by any Beneficiaries or the TW Parties to another Person (including any
interest included in such amount), all as though such payment had not been
made or such proceeds had not been received.
2.10 Limitation on Obligations. The obligations of each Holdco Party
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Sections 544 or 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable law.
36
ARTICLE 3
TRANSFERS OF CAPITAL STOCK
3.1 Capital Stock of SFOG A Holdings, SFOG B Holdings, SFOT I Holdings,
SFOT II Holdings, SFOG and SFT Holdings. Immediately following the Effective
Time of the Merger:
(a) SFEC shall sell, assign, transfer, and convey to TW-SPV Co. all
right, title and interest of SFEC in and to the capital stock of SFOG B
Holdings (the "SFOG BH Capital Stock") in consideration of $1.00 in cash.
Immediately prior to such transfer, SFEC shall cause SFOG B Holdings to incur
$_____ of indebtedness, the proceeds of which will immediately be distributed
to SFEC.1/
(b) SFEC shall sell, assign, transfer and convey to TW-SPV Co. all
right, title and interest of SFEC in and to the capital stock of SFOT II
Holdings (the "SFOT IIH Capital Stock") in consideration of $1.00 in cash.
Immediately prior to such transfer, SFEC shall cause SFOT II Holdings to
incur $_____ of indebtedness, the proceeds of which will immediately be
distributed to SFEC.2/
(c) SFTP shall sell, assign, transfer and convey to TW-SPV Co. all
right, title and interest of SFTP in and to the capital stock of SFOG A
Holdings (the "SFOG AH Capital Stock") in consideration of $1.00 in cash.
Immediately prior
--------
1/ The amount of debt shall equal fair market value of SFOG B Holdings
less $1.00.
2/ The amount of debt shall equal the fair market value of SFOT II
Holdings less $1.00.
37
to such transfer, Holdco will cause SFOG A Holdings to incur $________3/ of
indebtedness, the proceeds of which will immediately be distributed to SFTP.
(d) SFTP shall sell, assign, transfer and convey to TW-SPV Co. all
right, title and interest of SFTP in and to the capital stock of SFOT I
Holdings (the "SFOT IH Capital Stock") in consideration of $1.00 in cash. 3/
The amount of debt shall equal (a) the number of Georgia Units then held by
SFOG Acquisition A, multiplied by (b) the acquisition price paid for each
such unit (e.g., $2,383,589), less (c) $1.00. Immediately prior to such
transfer, Holdco will cause SFOT I Holdings to incur $________4/ of
indebtedness, the proceeds of which will immediately be distributed to SFTP.
(e) SFEC shall sell, assign, transfer and convey to GP Holdings all
right, title and interest of SFEC in and to the capital stock of SFOG (the
"SFOG Capital Stock") in consideration of $1.00 in cash. Immediately prior to
such transfer, Holdco shall cause SFOG to incur $_____5/ of indebtedness, the
proceeds of which will immediately be distributed to SFEC.
(f) SFTP shall sell, assign, transfer and convey to GP Holdings all
right, title and interest of SFTP in and to the capital stock of SFT Holdings
(the "SFT H Capital Stock") in consideration of $1.00 in cash. Immediately
--------
3/ The amount of debt shalle equal (a) the number of Georgia Units then held
by SFOG Acquisition A, multiplied by (b) the acquisition price paid for
each such unit (e.g., $2,383,589), less (c) $1.00.
4/ The amount of debt shall equal (a) the number of Texas Units then held
by SFOT Acquisition I, multiplied by (b) the acquisition price of each
such unit (e.g., $1,457,323), less $1.00.
5/ The amount of debt shall equal the fair market value of the Georgia
General Partner, less $1.00
38
prior to such transfer, SFTP will cause SFT Holdings to incur $___6/ of
indebtedness, the proceeds of which will immediately be distributed to SFTP.
(g) In furtherance of the provisions of this Section 3.1, concurrently
with the consummation of each of the transactions described in the foregoing
clauses (a) through (f), SFTP and SFEC shall deliver to TW-SPV Co. or GP
Holdings, as applicable, such certificate or certificates representing the
SFOG BH Capital Stock, the SFOT IIH Capital Stock, SFOG AH Capital Stock,
SFOT IH Capital Stock, the SFOG Capital Stock and the SFT H Capital Stock, as
applicable, in each case, duly endorsed in blank or accompanied by stock
powers duly executed in blank, in form for transfer to TW-SPV Co. or GP
Holdings, as applicable, with all appropriate stock transfer tax stamps
affixed, in each case, against payment to SFEC or SFTP, as applicable, of the
cash consideration due in respect thereof.
3.2 Preferred Stock of GP Holdings. Immediately following the Effective
Time of the Mergers, GP Holdings shall, and Holdco shall cause GP Holdings
to, issue to TWE 100 fully paid and non-assessable shares of GP Holdings
Preferred Stock in consideration of $1.00 in cash.
3.3 Beneficial Assignment of Interests. Immediately following
consummation of the transactions contemplated by Section 3.1 hereof, TW-SPV
Co. and Holdco shall execute and deliver the Beneficial Share Assignment
Agreement substantially in the form Exhibit D (the "Beneficial Share
Assignment"), pursuant to
--------
6/ The amount of debt shall equal the fair market value of the Texas
General Partner less $1.00.
39
which, among other things, (A) Holdco shall pay to TW-SPV Co. $4.00 in cash
(which payment shall be made immediately following consummation of the
transactions contemplated by Section 3.1), and (B) in consideration of such
payment, TW-SPV Co. shall take all reasonable actions necessary so that
Holdco shall be afforded the economic benefits to be conferred by the
ownership of the SFOG AH Capital Stock, SFOG BH Capital Stock, SFOT IH
Capital Stock and the SFOT IIH Capital Stock (collectively, the "Beneficial
Shares"), by assigning to Holdco, until the occurrence and continuance of a
Triggering Default, (x) the right to receive, all cash flow derived from such
Beneficial Shares, including all cash flow derived from the Units owned by
the Acquisition Subsidiaries on and after the date hereof; such cash flow to
be paid to Holdco as soon as practicable, but in no event later than two
Business Days, following the receipt thereof by TW-SPV Co. and (y) the right
to vote such Beneficial Shares including with respect to the election and
removal of directors. In furtherance of the foregoing, the Persons entitled
to vote the Beneficial Shares shall cause the Acquisition Subsidiaries and
the Acquisition Holding Companies to pay to the holders of its capital stock
all cash received in respect of Units, as soon as practicable, but in no
event later than two Business Days, following receipt thereof.
3.4 Preferred Stock of Acquisition Companies. TW-SPV Co. shall cause each
of the Acquisition Holding Companies to issue to Holdco in consideration of
$1.00 a class of preferred stock of each such Acquisition Holding Company,
the terms of which will provide the holder of such stock, without
duplication, the economic
40
benefits and voting rights (upon the same terms and subject to the same
limitations) intended to be conferred upon Holdco under the Beneficial Share
Assignment.
3.5 Tax Matters. Solely for all federal, state and local income tax and
accounting purposes, (i) the sales, transfers, conveyances and assignments
pursuant to Sections 3.1 and 3.3 shall be deemed to be distributions of the
Beneficial Shares to Holdco and (ii) Holdco will be deemed the owner of all
Beneficial Shares throughout the term of this Agreement and will include all
Acquisition Companies in its consolidated federal income tax returns and
appropriate combined or unitary returns filed by Holdco or its affiliates.
The parties hereto agree to report and otherwise take actions solely for all
income tax and accounting purposes with respect to the foregoing transactions
consistent with the description contained in the preceding sentence. Holdco
will pay (i) all Taxes of all of the Acquisition Companies and of TW-SPV Co.,
except as is attributable to a breach by the TW Parties of their obligations
hereunder and except for any Taxes of TW-SPV Co. arising by reason of being
part of any affiliated, combined or unitary group including TWX or any of its
affiliates and their respective successors and (ii) all Taxes for which any
of them may be liable by reason of being part of any affiliated, combined or
unitary group including Holdco, SFEC or any of their respective affiliates or
successors and all Taxes of GP Holdings and its successors. Holdco and its
affiliates hereby waive any rights of contribution from or subrogation to the
Acquisition Companies or TW-SPV Co. with respect to payments of any Taxes or
other amounts required to be paid by Holdco pursuant to this Section 3.5.
41
ARTICLE 4
LIQUIDITY PUTS; ACCELERATED PUTS; END-OF-TERM OPTIONS
4.1 General. Without limiting any of the rights or obligations of the
parties under Article 2 hereof, the provisions of this Article 4 shall govern
the respective rights and obligations of the parties with respect to any
Liquidity Put, Accelerated Put, or End-of-Term Option (including any
accelerated End-of-Term Option). Notwithstanding the provisions of the Texas
Agreements and the Georgia Agreements to the contrary and except as
specifically provided for under this Agreement, none of the TW Parties, the
Holdco Parties or their respective affiliates shall purchase, offer or agree
to purchase or otherwise acquire any Units or take any action that would
increase the purchase price of any Units under the Georgia Agreements or the
Texas Agreements.
4.2 Procedures Relating to Liquidity Puts.
4.2.1 Liquidity Put Notices.
(a) Subject to the further provisions of Section 4.2, the Holdco
Parties shall on behalf of the Texas Acquisition Subsidiaries and the Georgia
Acquisition Subsidiaries, as the case may be (and for the sole and exclusive
benefit of the TW Parties only), administer, observe, comply with and
perform, at the sole cost and expense of the Holdco Parties, any and all of
the obligations of the Texas Acquisition Subsidiaries and the Georgia
Acquisition Subsidiaries with respect to any Liquidity Put, including,
without limitation, the preparation and dissemination of notices (each such
notice a "Liquidity Put Notice") in respect of such Liquidity Put in
42
accordance with the respective terms and provisions of the Texas Overall
Agreement and the Georgia Overall Agreement, the calculation of the Put Price
in respect of such Liquidity Put, the determination of the Liquidity Put
Number and the payments of amounts necessary to acquire Units in respect of
such Liquidity Put.
(b) Without limiting SFEC's obligations under Section 4.2.1(a), or
any party's obligations under Section 10.2 hereof, (i) each of the
Acquisition Subsidiaries shall, and the Persons entitled to vote the
Beneficial Shares shall cause each of them to, deliver all information within
its possession relating to and in connection with any Liquidity Put to SFEC;
and (ii) SFEC shall, not later than five Business Days prior to the date upon
which any Liquidity Put Notice is, pursuant to the Texas Overall Agreement or
the Georgia Overall Agreement, as applicable, required to be given to the
applicable Unitholders, furnish to the TW Parties (a) the form of any such
Liquidity Put Notice for its approval (which approval shall not be
unreasonably withheld or delayed, provided that, if such Liquidity Put Notice
is in the form of Exhibits 3.4(b) and 3.5(b) of the Texas Overall Agreement
or the Georgia Overall Agreement, respectively, or if the TW Parties shall
fail to approve or disapprove any Liquidity Put Notice within three Business
Days following receipt thereof, then, in either case, such Liquidity Put
Notice shall be deemed to have been approved by the TW Parties) and (b)
copies of all other documents relating to such Liquidity Put Notice,
including, without limitation, any information provided to SFEC by the Texas
General Partner or the Georgia General Partner in respect thereof. All
Liquidity Put Notices shall designate SFEC, acting on behalf of the Texas
Acquisition Subsidiaries
43
and the Georgia Acquisition Subsidiaries, as applicable, as the recipient of
all Notices of Election to Exercise delivered in respect of any such
Liquidity Put Notice.
4.2.2 Payment of Put Price. With respect to each Liquidity Put:
(a) Not later than 10 Business Days after April 15 of any year in
which Unitholders may, pursuant to the Texas Overall Agreement or the Georgia
Overall Agreement, as applicable, exercise Liquidity Put rights, SFEC shall,
to the extent any Unitholders exercise such rights, furnish to the TW Parties
a certificate (each a "Liquidity Put Certificate") of the Chief Financial
Officer of SFEC and Holdco, respectively, setting forth the aggregate number
of Texas Units or Georgia Units, as the case may be, to be purchased pursuant
to such Liquidity Put, the identity of each Unitholder that delivers a Notice
of Election to Exercise in connection with such Liquidity Put (each such
Unitholder, a "Selling Unitholder"), the Put Price to be paid to each such
Selling Unitholder and the aggregate Put Price to be paid to all such Selling
Unitholders (the "Aggregate Liquidity Put Price").
(b) All Texas Units and all Georgia Units for which a valid and
appropriate Notice of Election to Exercise is delivered in respect of such
Liquidity Put shall, subject to the pro-ration cut-back provisions of Section
3.3(b) of the Texas Overall Agreement and the Georgia Overall Agreement,
respectively be purchased by SFOT Acquisition II (the "Texas Units
Purchaser") or SFOG Acquisition B (the "Georgia Units Purchaser"), as
applicable, unless the parties otherwise agree.
(c) Not later than two Business Days prior to the Liquidity Put
Settlement Date applicable to such Liquidity Put, (i) the Holdco Parties
shall (for
44
the sole and exclusive benefit of the TW Parties only) pay to the Texas Units
Purchaser or the Georgia Units Purchaser, as applicable, the Aggregate
Liquidity Put Price for such Liquidity Put in immediately available funds in
United States Dollars in an account of such Texas Units Purchaser or Georgia
Units Purchaser, as the case may be. The Texas Units Purchaser or the Georgia
Units Purchaser, as applicable, shall use such funds to purchase from and pay
the applicable Put Price (or portion thereof) to each Selling Unitholder in
respect of such Selling Unitholder's Texas Units or Georgia Units set forth
in the Notice of Election to Exercise delivered by such Selling Unitholder in
connection with such Liquidity Put. By virtue of the Beneficial Share
Assignment, unless a Triggering Default occurs and is continuing, all cash
flow derived from the Units acquired pursuant to this Section 4.2 shall be
paid over to Holdco upon receipt by TW-SPV Co. thereof.
4.3 Procedures Relating to Accelerated Puts.
4.3.1 Notice of an Accelerated Put. If at any time there shall occur
an event which requires the Texas Acquisition Subsidiaries or the Georgia
Acquisition Subsidiaries, as the case may be, to purchase Units pursuant to
an Accelerated Put (as defined in Section 6.1 of the Texas Acquisition
Subsidiaries Guarantee and the Georgia Acquisition Subsidiaries Guarantee,
respectively), then the following shall apply:
(a) The TW Parties shall make available to the Georgia Units
Purchaser sufficient funds to purchase from and pay to each Eligible
Unitholder the Accelerated Put Price applicable to such Accelerated Put. The
parties
45
hereby agree to take all actions, and execute all amendments to this
Agreement and the Beneficial Share Assignment, reasonably necessary to cause
the Georgia Units Purchaser to assign to TWE all cash flow derived from the
Georgia Units (the "Georgia AP Units Cash Flow Assignment") purchased
pursuant to an Accelerated Put (collectively, "Georgia AP Units"). All
Georgia AP Units held by the Georgia Units Purchaser and TWE's rights to the
cash flow derived from such Georgia AP Units shall be subject to the
provisions of clause (b) of this Section 4.3.1.
(b) On the Liquidity Put Settlement Date for each Liquidity Put
following the purchase of Georgia AP Units pursuant to clause (a) above,
Holdco shall pay to the TW Parties an amount equal to the product of (i)
Liquidity Put Number for such Liquidity Put, less any Georgia Units that are
actually tendered pursuant to such Liquidity Put (but in no event greater
than the number of Georgia AP Units in respect of which payments have not
been made by Holdco hereunder (the "Repaid Georgia AP Units")), multiplied by
(ii) the lesser of (x) the Put Price for such Liquidity Put (as such Put
Price is determined in accordance with Section 3.2 of the Georgia Overall
Agreement) and (y) the applicable Accelerated Put Price. Upon any such
payment, the Repaid Georgia AP Units shall no longer be subject to the
Georgia AP Units Cash Flow Assignment.
(c) The TW Parties shall make available to the Texas Units Purchaser
sufficient funds to purchase from and pay to each Eligible Unitholder the
Accelerated Put Price applicable to such Accelerated Put. The parties hereby
agree to take all actions, including executing all amendments to this
Agreement and the
46
Beneficial Share Assignment, reasonably necessary to cause the Texas Units
Purchaser to assign to TWE all cash flow derived from the Texas Units (the
"Texas AP Units Cash Flow Assignment") purchased pursuant to an Accelerated
Put (collectively, "Texas AP Units"). All Texas AP Units held by the Texas
Units Purchaser and TWE's rights to the cash flow derived from such Texas AP
Units shall be subject to the further provisions of clause (d) of this
Section 4.3.1.
(d) On the Liquidity Put Settlement Date for each Liquidity Put
following the purchase of Texas AP Units pursuant to clause (c) above, Holdco
shall pay to the TW Parties an amount equal to the product of (i) Liquidity
Put Number for such Liquidity Put, less any Texas Units that are actually
tendered pursuant to such Liquidity Put (but in no event greater than the
number of Texas AP Units in respect of which payments have not been made by
Holdco hereunder (the "Repaid Texas AP Units")), multiplied by the lesser of
(x) the Put Price for such Liquidity Put (as such Put Price is determined in
accordance with Section 3.2 of the Texas Overall Agreement) and (y) the
applicable Accelerated Put Price. Upon any such payment, the Repaid Texas AP
Units shall no longer be subject to the Texas AP Units Cash Flow Assignment.
(e) Solely for all income tax and accounting purposes during the
period the cash flow from the Georgia AP Units is assigned to TWE pursuant to
the Georgia AP Units Cash Flow Assignment, TWE shall be deemed to be the
owner of such Georgia AP Units and as such owner shall be deemed to transfer
such Georgia AP Units to the Georgia Units Purchaser pursuant to Section
4.3.1(b)
47
above at such time as the Georgia AP Units are no longer subject to the
Georgia AP Units Cash Flow Assignment. Solely for accounting and all income
tax purposes during the period the cash flow from the Texas AP Units is
assigned to TWE pursuant to the Texas AP Units Cash Flow Assignment, TWE
shall be deemed to be the owner of such Texas AP Units and as such owner
shall be deemed to transfer of such Texas AP Units to the Texas Units
Purchaser pursuant to Section 4.3.1(d) above at such time as the Texas AP
Units are no longer subject to the Texas AP Units Cash Flow Assignment. The
parties agree to report and otherwise take actions consistent with the
foregoing.
4.4 Procedures Relating to End-of-Term Options. The following provisions
shall apply to any End-of-Term Option, other than an Accelerated End-of-Term
Option under Section 7.7 of the Texas Overall Agreement, which shall be
subject to Section 4.5 hereof.
4.4.1 End-of-Term Option Notices. If the Holdco Parties desire to
have the Georgia Units Purchaser or the Texas Units Purchaser exercise the
End-of-Term Option under the Georgia Overall Agreement and the Texas Overall
Agreement, respectively, then, not later than 30 days prior to the applicable
End-of-Term Option Exercise Date, the Holdco Parties shall give written
notice (an "ETO Exercise Notice") to the Georgia Units Purchaser or Texas
Units Purchaser, as applicable (with a copy of such notice to the TW
Parties), instructing the Georgia Units Purchaser or the Texas Units
Purchaser, as the case may be, to exercise such End-of-Term Option, such
notice to set forth the date upon which such End-of-Term Option shall be
exercised and
48
include forms of all notices or such other information necessary to effect
the exercise of the relevant End-of-Term Option. If any such End-of-Term
Option shall lapse without the exercise thereof, the rights and
responsibilities with respect to the Units so affected shall be as otherwise
provided in this Agreement and the disposition of the Georgia Park and the
Texas Park shall be as provided in the Georgia Overall Agreement and the
Texas Overall Agreement, respectively. Upon exercise of an End-of-Term
Option, the following shall apply:
4.4.2 Actions in respect an End-of-Term Option.
(a) With respect to an End-of-Term Option under the Georgia Overall
Agreement, provided the Holdco Parties have given a valid and effective ETO
Exercise Notice, the Holdco Parties shall have the right and obligation to
administer, observe, comply with and perform all obligations of the Georgia
Units Purchaser under such End-of-Term Option and shall, not later than three
Business Days prior to the End-of-Term Option Settlement Date, pay to the
Georgia Units Purchaser (in immediately available funds in United States
Dollars in the account of the Georgia Units Purchaser designated by the TW
Parties) the Aggregate Georgia-End-of-Term Option Payment.
(b) With respect to an End-of-Term Option under the Texas Overall
Agreement, provided the Holdco Parties have given a valid and effective ETO
Exercise Notice, the Holdco Parties shall have the right and obligation to
administer, observe, comply with and perform all obligations of the Texas
Units Purchaser under such End-of-Term Option and shall, not later than three
Business Days prior to the
49
End-of-Term Option Settlement Date, pay to the Texas Units Purchaser (in
immediately available funds in United States Dollars in the account of such
Texas Units Purchaser designated by the TW Parties) the Aggregate Texas
End-of-Term Option Payment.
4.4.3 Casualty or Loss Accelerated End-of-Term Option. If an
End-of-Term Option is deemed accelerated and exercised pursuant to Section
7.6 or 8.6 of the Texas Overall Agreement and Georgia Overall Agreement,
respectively, then the Holdco Parties shall be deemed to have given an ETO
Exercise Notice in respect of such End-of-Term Option, shall observe, comply
with and perform all of the obligations of the applicable Acquisition
Subsidiary in respect of such End-of-Term Option and shall undertake the
actions described in Sections 4.4.2(a) and 4.4.2(b), as applicable.
4.5 Procedures Relating to An Accelerated End-of-Term Option.
4.5.1 End-of-Term Option Notices. If at any time prior to the 90th
day immediately preceding the End-of-Term Option Exercise Date (the
"Accelerated Option Notice Date"), the Texas Units Purchaser or affiliates
thereof, or the Holdco Parties, or affiliates thereof, shall have acquired
all of the Texas Units and the Holdco Parties desire to have the Texas Units
Purchaser accelerate the End-of-Term Option as provided under Section 7.7 of
the Texas Overall Agreement (an "Accelerated End-of-Term Option"), the Holdco
Parties shall by written notice (the "Accelerated End-of-Term Option Notice")
to the Texas Units Purchaser, given not later than the Accelerated Option
Notice Date (with a copy to the TW Parties), instruct
50
Texas Units Purchaser to effect such Accelerated End-of-Term Option. The
Accelerated End-of-Term Option Notice shall set forth the date upon which the
Accelerated End-of-Term Option is to be effected and shall include forms of
all notices and such other information necessary to effect the Accelerated
End-of-Term Option in compliance with the Texas Overall Agreement. If the
Holdco Parties shall request the Texas Units Purchaser to effect the
Accelerated End-of-Term Option, the following shall apply:
4.5.2 Actions in respect an Accelerated End-of-Term Option. Provided
the Holdco Parties shall have delivered a valid and effective Accelerated
End-of-Term Option Notice on or prior to the Accelerated Option Notice Date,
the Holdco Parties shall have the right and obligation to administer,
observe, comply with and perform all obligations of the Texas Units Purchaser
with respect to the Accelerated End-of-Term Option. In furtherance of the
foregoing, not later than three Business Days prior to the End-of-Term Option
Settlement Date, the Holdco Parties shall pay to the Texas Units Purchaser
(in immediately available funds in United States Dollars in the account of
such Texas Units Purchaser designated by the TW Parties) all sums necessary
to acquire the interests of each applicable general partner pursuant to the
Accelerated End-of-Term Option provisions of the Texas Overall Agreement.
4.6 Certain Actions Following a Triggering Default. Without limiting the
obligations of the Holdco Parties hereunder, following and during the
continuation of a Triggering Default, the TW Parties and TW-SPV Co. may take
all
51
action necessary to permit the Acquisition Companies to purchase Units
pursuant to the terms of the Georgia Agreements and the Texas Agreements.
4.7 Certain Third Party Claims.
(a) The Holdco Parties shall indemnify and hold harmless the
Acquisition Companies and the TW Parties from and against any Losses arising
out of or relating to actions or claims brought by or on behalf of
Unitholders in connection with the Acquisition Companies' purchase of Units
and their performance of obligations, from and after the Effective Time of
the Mergers, under Articles III and VIII of the Georgia Overall Agreement and
Articles III and VII of the Texas Overall Agreement.
(b) The TW Parties shall indemnify and hold harmless the Holdco
Parties from and against any Losses arising out of or relating to actions or
claims brought by or on behalf of Unitholders in connection with the
Acquisition Companies' purchase of Units and their performance of
obligations, prior to the Effective Time of the Mergers, under Articles III
and VIII of the Georgia Overall Agreement and Articles III and VII of the
Texas Overall Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of Holdco and GP Holdings. Holdco and
GP Holdings, jointly and severally, represent and warrant to the TW Parties
that:
52
5.1.1 Corporate Existence and Power. Each of Holdco and GP Holdings
is duly organized and existing in good standing under the laws of its
jurisdiction of incorporation, and has all corporate power and authority and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
5.1.2 Corporate and Governmental Authorization; Contravention. The
execution, delivery and performance by each of Holdco and GP Holdings of this
Agreement are within its corporate power, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official and do not contravene, or
constitute a default under any provision of, applicable law or regulations or
the Organizational Documents of Holdco or GP Holdings or any agreement,
judgment, injunction, order, decree or other instrument binding upon Holdco
or GP Holdings or its assets.
5.1.3 Binding Effect. This Agreement constitutes a valid and binding
agreement of each of Holdco and GP Holdings, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer or
similar laws affecting enforcement of creditors' rights generally and general
principles of equity (whether considered in a proceeding at law or in equity).
5.2 Representations and Warranties of the TW Parties. TWX and TWE,
jointly and severally, represent and warrant to Holdco and GP Holdings that:
53
5.2.1 Corporate Existence and Power. Each of TWX and TWE is duly
organized and existing in good standing under the laws of its jurisdiction of
incorporation or organization, and has all requisite power and authority and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
5.2.2 Corporate and Governmental Authorization; Contravention. The
execution, delivery and performance by each of TWX and TWE of this Agreement
are within its corporate or partnership power, as applicable, have been duly
authorized by all necessary corporate or partnership action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under any provision
of, applicable law or regulations or the Organizational Documents of TWX or
TWE, or any agreement, judgment, injunction, order, decree or other
instrument binding upon TWX or TWE or its assets.
5.2.3 Binding Effect. This Agreement constitutes a valid and binding
agreement of each of TWX and TWE, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer or similar laws
affecting enforcement of creditors' rights generally and general principles
of equity (whether considered in a proceeding at law or in equity).
5.3 Representations and Warranties of the Six Flags Parties. Each of
the Six Flags Parties, jointly and severally, represents and warrants, that:
54
5.3.1 Corporate Existence and Power. Each such Six Flags Party is
duly organized and existing in good standing under the laws of its
jurisdiction of incorporation or organization, and has all requisite power
and authority and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
5.3.2 Corporate and Governmental Authorization; Contravention. The
execution, delivery and performance by each such Six Flags Party of this
Agreement are within its corporate or partnership power, as applicable, have
been duly authorized by all necessary partnership or corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default under any
provision of, applicable law or regulations or the Organizational Documents
of such Six Flags Party or any agreement, judgment, injunction, order, decree
or other instrument binding upon such Six Flags Party or its assets.
5.3.3 Binding Effect. This Agreement constitutes a valid and binding
agreement of each such Six Flags Party, enforceable against it in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer or similar laws
affecting enforcement of creditors' rights generally and general principles
of equity (whether considered in a proceeding at law or in equity).
5.3.4 Stock Ownership of Certain Subsidiaries. Schedule 5.3.4 lists
at the Effective Time of the Mergers (i) the authorized number of shares of
each
55
class or series of capital stock or other equity interest of each of the
Acquisition Companies; (ii) the number of issued and outstanding shares of
each such class or series or other equity interest; and (iii) the names of
the record owners of the capital stock of, or equity interest in, each such
entity and the number of shares of such capital stock or the percentage of
such equity interest owned by them.
5.3.5 Effective Time of Representations and Warranties. The
representations and warranties of each Six Flags Party shall be deemed to be
made to (i) the Holdco Parties prior to the Effective Time of the Mergers and
(ii) the TW Parties immediately following the Effective Time of the Mergers.
ARTICLE 6
COVENANTS
6.1 Covenants of the Holdco Parties. In order to induce the TW Parties to
enter into this Agreement and the Merger Agreement, the Holdco Parties, as
applicable, further covenant and agree as follows:
6.1.1 Maintenance of Ownership.
(a) From and after the date hereof and until such time as all issued
and outstanding Zero Coupon Notes have been paid in full or SFEC shall have
effected a Covenant Defeasance with respect to the Zero Coupon Notes
Indenture, (i) SFEC shall not (and the Holdco Parties shall cause SFEC not
to) Transfer any interest in the capital stock of SFTP; and (ii) SFTP shall
not (and the Holdco Parties shall cause SFTP not to) Transfer any SF Theme
Park or any material portion thereof
56
(it being understood that the sale or disposition of a ride or attraction in
good faith in the ordinary course of business shall for purposes of this
Section 6.1 not be deemed a material portion of an SF Theme Park) in any
transaction or series of related transactions; provided, however, that (A)
Liens may be granted by SFEC and its Subsidiaries in (i) the capital stock of
SFTP or any Subsidiary of SFTP or (ii) any SF Theme Park or material portion
thereof, in each case solely in connection with bona fide (x) borrowings from
an investment bank, a commercial bank, insurance company or similar
institutional lender or (y) debt issuances to Persons unaffiliated with
Holdco, in each case under any Senior Indebtedness of SFEC or its
Subsidiaries permitted under Section 6.1.2 and (B) Liens securing Senior
Indebtedness may be foreclosed.
(b) Following the repayment in full of all issued and outstanding
Zero Coupon Notes or upon the happening of a Covenant Defeasance with respect
to the Zero Coupon Notes Indenture, SFEC may not Transfer any SF Theme Park
or material portion thereof, unless, (A) such Transfer is a Lien securing
Senior Indebtedness or (B) (i) such Transfer is a sale on arm's-length terms
to an unaffiliated third party or, with the consent of the TW Parties (such
consent not to be unreasonably withheld) to affiliates of SFEC, in each case
for fair value in cash, (ii) the net proceeds of such Transfer are used to
repay Indebtedness of SFEC, or its Subsidiaries and (iii) after giving effect
to such Transfer, the Net Worth of SFEC shall not be less than the Minimum
Net Worth; provided, further, that SFEC may make Transfers pursuant to this
clause (b) without complying with the foregoing clause (iii), only if (A)(x)
such
57
Transfer is required to cure a default or an event which, with the giving of
notice or the passage of time, would become a default under, or otherwise
maintain compliance with, the financial covenants contained in the agreements
governing any of SFEC's or its Subsidiaries' Senior Indebtedness that could
not reasonably be cured or complied with without such Transfer and (y) such
Transfer otherwise complies with clauses (i) and (ii) above, or (B) such
Transfer is a foreclosure of Lien. Following the repayment of any
Indebtedness required by the foregoing clause (ii), SFEC may not make any
Restricted Payment if after giving effect to such Restricted Payment, (i)
SFEC's consolidated indebtedness is then greater than the Designated Leverage
Amount and (ii) SFEC's Net Worth would be less than the Minimum Net Worth.
(c) At least five Business Days prior to any Transfer of a SF Theme
Park or any material portion thereof or the making of any Restricted Payment
following any such Transfer, the Holdco Parties shall provide the TW Parties
with written notice thereof including a certificate of the chief financial
officer of Holdco certifying as to the compliance of such transfer with the
provisions of Sections 6.1.1, including a calculation, if applicable, of the
Net Worth of SFEC or the Designated Leverage Amount showing with reasonable
specificity the changes from Net Worth shown on SFEC's most recent audited
balance sheet.
(d) For purposes of this Section 6.1.1, Transfers shall not include
the granting of Permitted Liens.
6.1.2 Indebtedness. SFEC and its Subsidiaries shall not (i)
guarantee any Indebtedness of any Person other than Indebtedness of SFEC or
any
58
of its Subsidiaries or (ii) secure any Indebtedness of any Person (other than
SFEC or any of its Subsidiaries) by a Lien upon or in property owned by SFEC
or any of its Subsidiaries. SFEC and its Subsidiaries shall not incur or
suffer to exist any Indebtedness if such Indebtedness is guaranteed by any
Person (other than SFEC and its Subsidiaries) or secured by a Lien upon or in
assets owned by such Person other than Indebtedness of SFEC, the proceeds of
which are used solely to effect the Covenant Defeasance.
6.1.3 Amendment of Documents Relating to the Required Obligations.
SFEC shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of or waive any rights under any of the Relevant
Agreements without the prior written consent of the TW Parties, which consent
shall not be unreasonably withheld or delayed; provided that the TW Parties
may not withhold their consent if the effect of any such amendment, change or
waiver would not increase the obligations of the TW Parties under any
Relevant Agreement or otherwise would adversely affect the obligations of the
TW Parties under or in respect of the TW Guarantee, the Texas Guarantee or
the Georgia Guarantee.
6.1.4 Repayment of Zero Coupon Notes. Upon the acceleration or at
Stated Maturity of the Zero Coupon Notes, SFEC shall, and Holdco shall cause
SFEC to (in each case for the sole and exclusive benefit of the TW Parties
only) pay all amounts due in respect of the Zero Coupon Notes and any other
amounts due and payable under the Zero Coupon Notes Indenture, including
without limitation, the Principal Amount, Accreted Value Amount and Default
Interest, if any, in respect of
59
each such Zero Coupon Note; and, in furtherance of SFEC's obligation under
this Section 6.1.4, SFEC shall cause SFTP to provide all funds necessary for
SFEC to fulfill such obligations, including, without limitation, the
declaration of a one-time dividend, or the making of a one-time loan, by SFTP
to SFEC in accordance with Section 4.04(3)(b)(vi) of the Indenture, dated
June 23, 1995, among SFTP, SFOG, SFOT, Inc. and S.F. Partnership and UST, as
amended. The Holdco Parties hereby acknowledge and agree that any refinancing
of the Zero Coupon Notes shall be effected without any guarantee (or similar
undertaking) of such refinancing by TWE or any affiliate thereof.
6.1.5 Other Agreements. Unless a Covenant Defeasance has been
effected or the Zero Coupon Notes have otherwise been repaid in full, none of
the Holdco Parties shall enter into or become obligated under any agreement
the terms and provisions of which would contractually restrict or prohibit
the ability of SFTP to make the restrictive payments contemplated by Section
4.04(b)(vii) under the Indenture, dated as of June 23, 1995, as amended (the
"12-1/4% Debentures Indenture") , of SFTP relating to its 12-1/4% Senior
Subordinated Discount Notes due 2005 (the "12-1/4% Debentures").
6.1.6 SFEC Subsidiaries. The Holdco Parties, as applicable, shall,
subject to the Holdco Parties' being reasonably satisfied as to compliance
with the 12-1/4% Debenture Indenture, cause each direct or indirect
Subsidiary of SFEC not currently a party hereto (each, a "SFEC Subsidiary")
to execute and deliver to the TW Parties an instrument in form and substance
reasonably satisfactory to the TW Parties
60
pursuant to which it will become a party to this Agreement and agree that all
such SFEC Subsidiaries shall be bound by the terms of this Agreement;
provided that, the foregoing requirement shall not apply to any SFEC
Subsidiary that (a) holds immaterial assets and (b) is not liable with
respect to any material liabilities. For purposes of this agreement the terms
"SF Subsidiaries," "Six Flags Parties" and "Holdco Parties" shall
automatically be amended to include such SFEC Subsidiary. If any SFEC
Subsidiary is unable to become a party to this Agreement pursuant to the
foregoing provisions of this Section 6.1.6, then such Subsidiary shall not
(and the Holdco Parties shall cause such Subsidiary not to) incur any
Indebtedness other than guarantees of Senior Indebtedness incurred by SFTP or
SFEC.
6.1.7 Amendment of Certain Organizational Documents; No Liens; No
Transfers. The Holdco Parties shall not, and shall not permit GP Holdings to,
amend the Organizational Documents of GP Holdings. The Holdco Parties will
not take any action that will result in a Lien being imposed upon the
Beneficial Shares, the capital stock of the Acquisition Subsidiaries or the
Units, other than pursuant to the Georgia Acquisition Subsidiaries Guarantee
and the Texas Acquisition Subsidiaries Guarantee. None of the Holdco Parties
shall Transfer any interest in the Beneficial Shares or any shares of capital
stock of the Acquisition Companies or GP Holdings or any interests in any of
the foregoing.
6.1.8 Repayment of SFOG B Holdings, SFOT II Holdings, SFOG A
Holdings, SFOT I Holdings, SFOG, and SFT Holdings Debt. Immediately following
the closing of the transactions contemplated by the Merger Agreement and
61
the execution and delivery of the Beneficial Share Assignment, Holdco shall
repay, or cause to be repaid, the indebtedness (and satisfy, or cause to be
satisfied, any related liabilities and obligations) incurred by SFOG B
Holdings, SFOT II Holdings, SFOG A Holdings, SFOT I Holdings, SFOG and SFT
Holdings pursuant to Sections 3.1(a) through (f), respectively.
6.1.9 Mergers. No Holdco Party shall merge or consolidate with or into,
or transfer all or substantially all of its assets to, any Person, unless the
surviving entity or transferee, as the case may be, executes an instrument, in
form and substance reasonably satisfactory to the TW Parties, pursuant to which
it assumes all of the obligations of such Holdco Party hereunder.
6.2 Covenants of the TW Parties. In order to induce the Holdco Parties to
enter into this Agreement and the Merger Agreement, the TW Parties further
agree as follows:
6.2.1 Non-Compete Provisions. The TW Parties shall, and shall cause
the Warner Bros. division of TWE (or any successor to Warner Bros.) to
observe and comply with the non-competition provisions set forth in Article V
of the Georgia Guarantee and the Texas Guarantee, respectively.
6.2.2 TWE Zero Coupon Notes Covenants. Subject to the provisions of
Section 6.1.4 hereof, until the earlier to occur of (i) payment in full of
all issued and outstanding Zero Coupon Notes or (ii) a Covenant Defeasance
with respect to the Zero Coupon Notes Indenture, TWE shall, and TWX shall
cause TWE to, observe, perform and comply with in all material respects the
provisions set forth in
62
Sections 803, 1004, 1008, 1009, 1010 and 1011 (to the extent arising out of a
default by TWE and not a default by SFEC) of the Zero Coupon Notes Indenture.
6.2.3 Amendment of Certain Organizational Documents. Prior to the
Effective Time of the Mergers, SFEC shall cause the Acquisition Companies,
and TWE shall cause TW-SPV Co. and the Acquisition Companies to amend their
respective Organizational Documents to include the provisions set forth in
Exhibit A hereto, and the TW Parties and the Holdco Parties shall not permit
further amendments of such Organizational Documents.
6.2.4 Ownership of the Acquisition Subsidiaries. None of the TW
Parties shall Transfer the GP Holdings Preferred Stock, or any interest
therein, any interest in TW-SPV Co., or the Acquisition Companies or the
Georgia AP Units Cash Flow Assignment or the Texas AP Units Cash Flow
Assignment or otherwise take any action that would violate the Georgia
Agreements or the Texas Agreements; provided, that TWE may Transfer interests
in TW-SPV Co. to TWX or one or more wholly-owned Subsidiaries thereof. The TW
Parties will not take any action that would result in a Lien being imposed on
the Beneficial Shares, the Georgia AP Units Cash Flow Assignment, the Texas
AP Units Cash Flow Assignment, the capital stock of the Acquisition
Subsidiaries or the Units, other than pursuant to the Georgia Acquisition
Subsidiaries Guarantee and the Texas Acquisition Subsidiaries Guarantee. The
TW Parties hereby covenant and agree to cause TW-SPV Co. not to engage in any
business or other activity other than the record ownership of the Beneficial
Shares and the activities related thereto and to otherwise comply with its
obligations hereunder.
63
6.2.5 Ownership of Texas Units and Georgia Units. None of the TW
Parties, TW-SPV Co., the Acquisition Companies or the Person entitled to vote
the Beneficial Shares, to the extent it is within their respective control,
and the Holdco Parties shall permit the Transfer of any interest in any Texas
Units or Georgia Units held by the Acquisition Companies.
ARTICLE 7
INDEMNIFICATION
7.1 Obligation of the Holdco Parties to Indemnify. Subject to the further
terms of this Article 7, each of the Holdco Parties, jointly and severally,
agrees to indemnify, defend and hold harmless each of TWE and TWX from and
against all Losses based upon, arising out of, relating to or otherwise in
respect of (i) the failure of any Holdco Party or Obligor, as applicable, to
perform on a full and timely basis any of the Required Obligations, (ii) the
failure of any Holdco Party to perform on a full or timely basis its
obligations under this Agreement, or under the Subordinated Indemnity Escrow
Agreement, (iii) payments made by the TW Parties in respect of the Georgia
Guarantee or the Texas Guarantee (other than payments made in respect of any
Excluded Obligations), (iv) payments made by the TW Parties or their
affiliates in respect of any Required Obligations; and (v) any breach or
violation of any covenants, representations or agreements of the Holdco
Parties under this Agreement.
7.2 Obligation of the TW Parties to Indemnify. Subject to the further
terms of this Article 7, each of TWE and TWX, jointly and severally, agrees to
64
indemnify, defend and hold harmless each of the Holdco Parties from and
against all Losses based upon, arising out of, relating to or otherwise in
respect of any breach or violation of any covenants, representations or
agreements of the TW Parties under this Agreement.
7.3 Procedures Relating to Indemnification. The party making a claim
under this Article 7 is referred to as the "Indemnitee," and the party
against whom such claims are asserted under this Article 7 is referred to as
the "Indemnitor":
7.3.1 Notice of Asserted Third Party Liability. With respect to
third party claims, all claims for indemnification by any Indemnitee under
this Article 7 shall be asserted and resolved as follows:
(a) Promptly after receipt by an Indemnitee of notice of any demand,
claim or circumstances which, with the lapse of time, would give rise to a
claim or the commencement (or the threatened commencement) of any action,
proceeding or investigation (an "Asserted Third Party Liability") that may
result in Losses which are subject to indemnification under Section 7.1 or
7.2, as applicable, the Indemnitee shall give notice thereof (the "Claims
Notice") to the Indemnitor. The Claims Notice shall describe the Asserted
Third Party Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary, and to the extent feasible) of the Losses that have
been or may be suffered by the Indemnitee. The failure of an Indemnitee to
provide a Claims Notice with reasonable promptness shall not adversely affect
any indemnification obligations hereunder except to the extent that the
Indemnitor is actually prejudiced thereby.
65
7.3.2 Procedures with Respect to Asserted Third Party Liabilities.
The Indemnitor may elect to compromise or defend, at its own expense and by
its own counsel, any Asserted Third Party Liability. If the Indemnitor elects
to compromise or defend such Asserted Third Party Liability, it shall, within
30 days (or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnitor, in the compromise of, or defense
against, such Asserted Third Party Liability. If the Indemnitor elects not to
compromise or defend the Asserted Third Party Liability, fails to notify the
Indemnitee of its election as herein provided or contests its obligations to
defend under this Agreement, the Indemnitee may pay, compromise or defend
such Asserted Third Party Liability (at the Indemnifying Party's sole cost
and expense). Notwithstanding the foregoing, neither the Indemnitor nor the
Indemnitee may settle or compromise any claim over the objection of the
other; provided, however, that if the settlement or compromise does not
result in any liability to the Indemnitor, consent to settlement or
compromise shall not be unreasonably withheld. In any event, the Indemnitee
and the Indemnitor may participate at their own expense, in defense of such
Asserted Third Party Liability. If the Indemnitor chooses to defend any
claim, the Indemnitee shall make available to the Indemnitor any books,
records or other documents within its control that are necessary or
appropriate for such defense (in the judgment of counsel engaged by the
Indemnitor).
The Indemnitee has the right to employ its own counsel in any
compromise of, or defense against, any Asserted Third Party Liability, or in
66
connection with the Indemnitee's provision of reasonable cooperation and
assistance to the Indemnitor or the Indemnitor's counsel as provided above,
but the fees, expenses and other charges of such counsel employed by the
Indemnitee will be at the expense of the Indemnitee unless (i) the employment
of counsel by the Indemnitee has been authorized in writing by the Indemnitor
or (ii) the Indemnitor has not in fact employed counsel to compromise or
defend against the Asserted Third Party Liability within a reasonable time,
in each of which cases the reasonable fees, disbursements and other charges
of counsel retained by the Indemnitee will be at the expense of the
Indemnitor. It is understood that the Indemnitor shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time
retained by the Indemnitee unless the employment of more than one counsel has
been authorized in writing by the Indemnitor.
7.3.3 Direct Claim. In the event that an Indemnitee has a claim for
indemnification that does not involve a claim by a third party (a "Direct
Claim"), the Indemnitee shall notify the Indemnitor of such Direct Claim at
the time such Indemnitee desires to proceed with such claim, specifying, to
the extent known, the nature, circumstances and amount of such Direct Claim
(a "Direct Claim Notice"), provided, however, the failure of an Indemnitee to
provide such Direct Claim Notice with reasonable promptness shall not
adversely affect any indemnification obligations hereunder, which shall
survive until such claim is resolved hereunder.
67
7.3.4 Escrow Agreement. Holdco, TWE and TWX covenant and agree to
enter into concurrently with the execution of this Agreement an escrow
agreement (the "Subordinated Indemnity Escrow Agreement") pursuant to which
an escrow agent (the "Escrow Agent") reasonably satisfactory to the TW
Parties shall maintain an escrow fund, the funding for which shall be
determined on an annual basis and shall equal the sum of the "Escrow Amounts"
in respect of each of Texas Fund and Georgia Fund. For purposes of the
Subordinated Indemnity Escrow Agreement, "Escrow Amounts" shall mean, for
each year, with respect to each of Six Flags Over Texas Fund, Ltd. and Six
Flags Fund, Ltd. (L.P.) (with reference to the Texas Overall Agreement and
the Georgia Overall Agreement, respectively), (x) the excess of (i) the sum
of (A) the "Minimum Amount" for such year, plus (B) the "Base Rent" for such
year, over (ii) twice the earnings before depreciation and amortization and
after minimum mandatory capital expenditures and cash interest expense for
Texas Fund and Georgia Fund, as applicable, for the prior year, multiplied by
(y) the percentage of the Texas Units or Georgia Units, as the case may be,
owned by Persons other than the Acquisition Companies. The Escrow Amounts
shall be determined not later than March 31 of each such year7/ and, without
limiting any of Holdco's other obligations, Holdco shall deposit such amounts
as shall be necessary to equal the Escrow Amounts with the Escrow Agent
within five Business Days thereafter, and all amounts held in the Escrow
Account in excess of the Escrow Amount shall be returned promptly to
--------
7/ With respect to determining payments for the first year, 1998 numbers
for Texas park will be doubled. Actual 1997 and 1998 results for
Georgia will be used.
68
Holdco. All amounts held in escrow shall be used, at the election of the TW
Parties, to satisfy amounts owing to the TW Parties under the this Agreement,
but only after all cash flow derived from the Texas Units and the Georgia
Units then subject to the Beneficial Share Assignments have been applied to
such amounts so owing.
ARTICLE 8
SUBORDINATION
8.1 Subordination Agreement. (a) Notwithstanding any provision to the
contrary set forth herein, the parties agree that all monetary obligations of
Holdco pursuant to this Agreement (the "Subordinated Obligations") including,
without limitation, all obligations of Holdco with respect to the Required
Obligations as set forth in Sections 2.1 through 2.3 hereof, its obligations
in respect of the Zero Coupon Notes pursuant to Section 6.1.4 hereof, and its
indemnification obligations set forth in Section 7.1 hereof, shall be
subordinated to the prior payment in full in cash of all obligations with
respect to the Holdco Notes (including interest accruing on such Holdco Notes
after the commencement of a bankruptcy case or proceeding at the contract
rate whether or not a claim for such interest is an allowed claim in such
case or proceeding), and agree that no payment of, on, or on account of, the
Subordinated Obligations shall be made by Holdco, if (i) a default has
occurred and is continuing with respect to any payment obligation on or with
respect to the Holdco Notes; or (ii) a default, other than a payment default,
on the Holdco Notes occurs and is continuing that then permits, or with the
passage of time or the giving of notice would permit,
69
holders of the Holdco Notes to accelerate their maturity and the TW Parties
receive a notice of default (a "Payment Blockage Notice") from a Person
authorized to give it under the Holdco Notes or the Holdco Notes Indenture.
No new Payment Blockage Period (defined below) may be commenced unless and
until 365 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice, and in no event may the total number of days during
which any Payment Blockage Period is in effect exceed 179 days in the
aggregate during any 365 day consecutive period. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been cured or waived for a period of
not less than 180 days. Without limiting the foregoing, a Payment Blockage
Notice shall remain in effect until the earlier of (x) the date on which such
nonpayment default is cured or waived, (y) 179 days after the date on which
the applicable Payment Blockage Notice is received or (z) such Payment
Blockage Notice shall be rescinded by written notice to the TW Parties from
the holders of a majority of the outstanding principal amount of the Holdco
Notes or their trustee or authorized representative who delivered such notice
("Payment Blockage Period").
(b) In the event that either (i) a default shall have occurred and be
continuing with respect to any payment obligation on or with respect to the
Holdco Notes or (ii) a Payment Blockage Period is in effect, then,
notwithstanding the foregoing provisions, any payment received by the TW
Parties in respect of the Subordinated Obligations in contravention of the
provisions of the foregoing clause (a)
70
shall, until such default has been cured or waived or such Payment Blockage
Period has expired, as applicable, be held in trust for the benefit of and
shall, to the extent that at such time all Holdco Notes have not been paid or
provided for in full, be paid over to the trustee, or equivalent thereof, in
respect of the Holdco Notes, for application to the payment of the Holdco
Notes until such default has been cured or waived, such Payment Blockage
Period shall have expired or until all such Holdco Notes shall have been paid
in full, whichever shall occur first.
8.2 Dissolution, Etc. In the event of any dissolution, winding-up,
liquidation or reorganization of Holdco (whether voluntary or involuntary and
whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshaling of the assets
and liabilities of Holdco or otherwise):
(a) all obligations with respect to the Holdco Notes shall be
indefeasibly paid in full in cash (including interest accruing on such Holdco
Notes after the commencement of a bankruptcy case or proceeding at the
contract rate whether or not a claim for such interest is an allowed claim in
such case or proceeding) before the TW Parties are entitled to receive any
payment on or in respect of the Subordinated Obligations (provided that the
TW Parties may receive securities ("Eligible Securities") that are
subordinated to at least the same extent as the Subordinated Obligations to
(a) the Holdco Notes and (b) any securities issued in exchange for Holdco
Notes); and
(b) in the event that any payment or distribution of assets of Holdco
of any kind or character (other than Eligible Securities) shall be received
by the
71
TW Parties in respect of the Subordinated Obligations before all Holdco Notes
(including, as applicable, interest accruing on, or original issue discount
accreting with respect to, such Holdco Notes after the commencement of a
bankruptcy case or proceeding at the contract rate whether or not such
interest is an allowed claim in such case or proceeding) are indefeasibly
paid in full in cash, such payment or distribution shall be received in trust
and shall, to the extent that at such time all Holdco Notes have not been
indefeasibly paid in full in cash, be paid over to the holders of the Holdco
Notes, for application to the payment of obligations with respect to Holdco
Notes until all such obligations shall have been indefeasibly paid in full in
cash.
The consolidation of Holdco with, or the merger of Holdco into, another
entity shall not be deemed a dissolution, winding-up, liquidation or
reorganization for purpose of these subordination provisions.
8.3 Subrogation. Subject to the Holdco Notes being paid in full in cash
or Cash Equivalents, the TW Parties shall be subrogated to the rights of the
holders of the Holdco Notes, or their respective representatives, to receive
payments or distributions of assets of Holdco applicable to the Holdco Notes
until all amounts owing, if any, in respect of the Subordinated Obligations,
shall be paid in full, and for the purpose of such subrogation, no payments
or distributions to the holders of the Holdco Notes, or their respective
representatives, as the case may be, by or on behalf of Holdco or by or on
behalf of the TW Parties, which otherwise would have been made to the TW
Parties shall, as between Holdco and its creditors, be deemed to be payment
by Holdco to or on account of the holders of the Holdco Notes, or their
72
respective representatives, as the case may be, it being understood that
these subordination provisions are intended solely for the purpose of
defining the relative rights of the TW Parties, on the one hand, and the
holders of the Holdco Notes and their respective representatives, on the
other hand.
8.4 Obligation to Pay Unconditional. Except as expressly provided herein,
nothing in this Article 8 is intended to or shall (i) impair, as between the
Holdco Parties and the TW Parties, the obligation of the Holdco Parties,
which is absolute and unconditional, to pay and perform the Required
Obligations as and when the same shall become due and payable in accordance
with the terms of this Agreement or (ii) affect any rights the TW Parties may
have to set-off and apply any and all payments received by the Texas
Acquisition Subsidiaries or the Georgia Acquisition Subsidiaries in respect
of any Texas Units or Georgia Units, respectively, against any and all of the
Required Obligations now or hereafter existing.
ARTICLE 9
TERMINATION
9.1 Termination. Unless terminated earlier by the written consent of
Holdco, SFEC and the TW Parties, on the date (the "Termination Date") upon
which no obligations (including the Required Obligations), whether absolute,
accrued, contingent, inchoate or otherwise are owing or outstanding under the
Relevant Documents (including the Georgia Guarantee and the Texas Guarantee),
or this Agreement, the Holdco Parties may request that this Agreement be
terminated, in
73
which event, provided the foregoing condition shall have been satisfied, the TW
Parties shall agree to such termination and this Agreement shall be terminated
effective on the Termination Date.
9.2 Termination of Obligation. The provisions of this Section 9.2 shall
survive any termination of this Agreement until the transactions contemplated
under this Section 9.2 are completed. At such time as all Texas Units and all
Georgia Units are held by one or more of the TW Parties, the Texas
Acquisition Subsidiaries, the Georgia Acquisition Subsidiaries and/or Holdco,
the parties shall take all reasonable actions to terminate all obligations
(including the Required Obligations), whether absolute, accrued, contingent,
inchoate or otherwise under the Relevant Agreements (other than the Zero
Coupon Note Indenture, but including the Georgia Guarantee and the Texas
Guarantee).
9.3 Actions Upon Termination. Upon the termination of this Agreement,
TW-SPV Co. shall, and the TW Parties shall cause TW-SPV Co. to, sell, assign,
transfer and convey to Holdco or its designee, all right, title and interest
of TWE in and to the SFOG BH Capital Stock, the SFOT IIH Capital Stock, the
SFOG AH Capital Stock, the SFOT IH Capital Stock and the GP Holdings
Preferred Stock in return for payment of $1.00. In furtherance of the
foregoing, TWE shall, upon receipt of such payment, deliver to Holdco, or its
designee, such certificates (or other indicia of ownership) representing such
capital stock, duly endorsed in blank or accompanied by stock powers (or
similar documents of conveyance) duly executed in
74
blank, in form for transfer to Holdco, or its designee and with all
appropriate stock transfer tax stamps affixed.
ARTICLE 10
MISCELLANEOUS
10.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person,
by telecopier (with a confirmed receipt thereof) or registered or certified mail
(postage prepaid, return receipt requested), and on the next business day when
sent by overnight courier service, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Holdco Parties, to:
Premier Parks Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxx 00000
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxx, Esq.
75
Telecopier: (000) 000-0000
(b) if to TWE Parties, to:
Time Warner Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx,
Executive Vice President,
General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
10.2 Notice Under Georgia and Texas Agreements. The parties hereto will
take all action necessary to ensure that each of Holdco and the TW Parties
receive all notices received or delivered by any party pursuant to the
Georgia Agreements and the Texas Agreements.
10.3 Waiver of Compliance; Consents. Any failure of the Holdco Parties,
on the one hand, or the TW Parties, on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Holdco
or TWE, respectively, only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires
76
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 10.
10.4 Amendments. Subject to applicable law, this Agreement may be
amended, modified or supplemented only by a written agreement signed by each
of the parties hereto with respect to any of the terms contained herein.
10.5 Successors and Assigns; No Third Party Beneficiaries. The provisions
of this Agreement (including any provision that is expressly by its terms for
the sole benefit of or exclusive to a party) shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted
successors and assigns; provided that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the written consent of the other parties; provided
further that any Person that through a sale or merger succeeds to all or
substantially all of the assets of a party to this Agreement shall be deemed
a "permitted" successor and assignee of such party. Nothing contained in this
Agreement shall be deemed to confer upon anyone other than the parties hereto
(and their permitted successors and assigns) any right to insist upon or to
enforce the performance or observance of any of the obligations contained
herein.
10.6 Waiver of Subrogation; No Contribution. Except with respect to
Excluded Obligations, the Holdco Parties shall not exercise and hereby waive
any rights that they may now or hereafter acquire against any TW Party, the
Texas Acquisition Subsidiaries or the Georgia Acquisition Subsidiaries that
arise from the
77
existence, payment, performance or enforcement of the Required Obligations
under this Agreement or any Relevant Agreement, including, without
limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of the Person against any TW Party, the Texas Acquisition Subsidiaries
or the Georgia Acquisition Subsidiaries, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right.
10.7 Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements
made and to be performed entirely within such State, without regard to the
choice of law principles thereof.
10.8 Judicial Proceedings. (a) EACH OF THE PARTIES HERETO AGREES THAT ANY
ACTION, SUIT OR PROCEEDING AGAINST ANY OF THE PARTIES HERETO ARISING UNDER OR
RELATING IN ANY WAY TO THIS AGREEMENT OR A TRANSACTION CONTEMPLATED HEREBY
MAY ONLY BE BROUGHT OR ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF EACH
SUCH COURT IN RESPECT OF ANY SUCH ACTION, SUIT OR PROCEEDING. EACH OF THE
PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY
SUCH ACTION, SUIT OR PROCEEDING BY THE MAILING
78
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PRE-PAID, RETURN
RECEIPT REQUESTED, TO SUCH PARTY AT ITS ADDRESSES PROVIDED FOR NOTICES
HEREUNDER.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE THE LAYING OF VENUE OF ANY ACTION, SUIT OR
PROCEEDING ARISING UNDER OR RELATING IN ANY WAY TO DISAGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY IN ANY COURT LOCATED IN THE STATE OF NEW
YORK AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT A COURT LOCATED IN
THE STATE OF NEW YORK IS NOT A CONVENIENT FORUM FOR ANY SUCH ACTION, SUIT OR
PROCEEDING.
10.9 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
10.10 Offsetting Payments. The parties hereby agree and acknowledge that
all dividends and distributions made in respect of the GP Holdings Preferred
Stock and all amounts received by the TW Parties in respect of the GP
Holdings Preferred Stock upon any voluntary or involuntary liquidation,
dissolution or winding up of GP Holdings shall be applied against any amounts
due hereunder.
10.11 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement
79
of the parties and shall not in any way affect the meaning or interpretation
of this Agreement. All references to the term "as of the date hereof" shall
mean the date of this Agreement.
10.12 Entire Agreement. This Agreement (including the schedules,
exhibits, documents or instruments referred to herein) constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, among the parties, or between any of them, with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year
first above written.
[Holdco]
By:
-----------------------------------------
Name:
Title:
[INSERT OTHER SIGNATORIES]
Exhibit A
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SUBORDINATED INDEMNITY AGREEMENT
dated
______________, 1998
among
PREMIER PARKS INC. and [GP HOLDINGS],
TIME WARNER INC., TIME WARNER
ENTERTAINMENT COMPANY, L.P. and TW-SPV CO.,
and
SIX FLAGS ENTERTAINMENT CORPORATION,
SIX FLAGS THEME PARKS INC.,
SFOG II, INC., and
SFT HOLDINGS, INC.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
-------
ARTICLE 1 DEFINED TERMS................................................................... 6
1.1 Definitions..................................................................... 6
1.2 Other Defined Terms............................................................ 24
ARTICLE 2 PERFORMANCE OF OBLIGATIONS..................................................... 28
2.1 Zero Coupon Notes.............................................................. 28
2.2 Georgia Obligations............................................................ 28
2.3 Texas Obligations.............................................................. 29
2.4 Continuing and Irrevocable Obligations......................................... 29
2.5 Nature of Obligations.......................................................... 29
2.6 Authorization.................................................................. 31
2.7 Certain Agreements and Waivers by Each Holdco Party............................ 33
2.8 Duty of Inquiry................................................................ 34
2.9 Bankruptcy No Discharge........................................................ 35
2.10 Limitation on Obligations...................................................... 36
ARTICLE 3 TRANSFERS OF CAPITAL STOCK..................................................... 36
3.1 Capital Stock of SFOG A Holdings, SFOG B Holdings,
SFOT I Holdings, SFOT II Holdings, SFOG and SFT
Holdings....................................................................... 36
3.2 Preferred Stock of GP Holdings................................................. 39
3.3 Beneficial Assignment of Interests............................................. 39
3.4 Preferred Stock of Acquisition Companies....................................... 40
3.5 Tax Matters.................................................................... 40
ARTICLE 4 LIQUIDITY PUTS; ACCELERATED PUTS;
END-OF-TERM OPTIONS............................................................ 41
4.1 General........................................................................ 41
4.2 Procedures Relating to Liquidity Puts.......................................... 42
4.3 Procedures Relating to Accelerated Puts........................................ 45
4.4 Procedures Relating to End-of-Term Options..................................... 48
4.5 Procedures Relating to An Accelerated End-of-Term Option....................... 50
4.6 Certain Actions Following a Triggering Default................................. 51
4.7 Certain Third Party Claims..................................................... 51
ARTICLE 5 REPRESENTATIONS AND WARRANTIES................................................ 52
5.1 Representations and Warranties of Holdco and GP Holdings....................... 52
5.2 Representations and Warranties of the TW Parties............................... 53
5.3 Representations and Warranties of the Six Flags Parties........................ 54
ARTICLE 6 COVENANTS...................................................................... 56
6.1 Covenants of the Holdco Parties................................................ 56
6.2 Covenants of the TW Parties.................................................... 62
i
Page
-------
ARTICLE 7 INDEMNIFICATION................................................................ 64
7.1 Obligation of the Holdco Parties to Indemnify.................................. 64
7.2 Obligation of the TW Parties to Indemnify...................................... 64
7.3 Procedures Relating to Indemnification......................................... 65
ARTICLE 8 SUBORDINATION.................................................................. 69
8.1 Subordination Agreement........................................................ 69
8.2 Dissolution, Etc............................................................... 71
8.3 Subrogation.................................................................... 72
8.4 Obligation to Pay Unconditional................................................ 73
ARTICLE 9 TERMINATION.................................................................... 73
9.1 Termination.................................................................... 73
9.2 Termination of Obligation...................................................... 74
9.3 Actions Upon Termination....................................................... 74
ARTICLE 10 MISCELLANEOUS.................................................................. 75
10.1 Notices........................................................................ 75
10.2 Notice Under Georgia and Texas Agreements...................................... 76
10.3 Waiver of Compliance; Consents................................................. 76
10.4 Amendments..................................................................... 77
10.5 Successors and Assigns; No Third Party Beneficiaries........................... 77
10.6 Waiver of Subrogation; No Contribution......................................... 77
10.7 Governing Law.................................................................. 78
10.8 Judicial Proceedings........................................................... 78
10.9 Counterparts; Effectiveness.................................................... 79
10.11 Interpretation................................................................. 80
10.12 Entire Agreement............................................................... 80
Exhibits
Exhibit A - Organizational Documents Provisions
Exhibit B - GP Holdings Preferred Stock
Exhibit C - SF Theme Parks
Exhibit D - Beneficial Share Assignment Agreement
Schedules
Schedule 1 - [Intentionally omitted] Schedule 2 - Georgia Agreements
Schedule 3 - Texas Agreements
Schedule 5.3.4 - Ownership of Acquisition Companies.
ii
