Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this “Agreement”), is dated as of June 12, 2019, and is by and among Millennium Operations LLC, a Delaware limited liability company (“Buyer”); Waterpark Management, Inc., a Texas corporation; Golden Seal Investments, Inc., a Texas corporation; Bad-Schloss, Inc., a Texas corporation; Liberty Partnership, Ltd., a Texas limited partnership; Henry Condo 1, Ltd., a Texas limited partnership; and Henry-Walnut, Ltd., a Texas limited partnership (the “New Braunfels Sellers”); SVV I, LLC, a Kansas limited liability company; and KC Waterpark Management, LLC, a Kansas limited liability company (together, the “Kansas City Sellers”); and Galveston Island Water Park, L.P., a Texas limited partnership; and Galveston Waterpark Management, Inc., a Texas corporation (the “Galveston Sellers,” and collectively with the New Braunfels Sellers and the Kansas City Sellers, each a “Seller” and collectively the “Seller Parties”); Schlitterbahn Seller Rep, LLC, a Texas limited liability company, as Sellers’ Representative (the “Sellers’ Representative”); and Jana Faber and Gary Henry, both individuals, solely with respect to their obligations under Section 6.06.
RECITALS
A.The Seller Parties own, operate and manage waterparks and related resorts in the States of Texas and Kansas.
B.The Seller Parties desire to sell certain assets set forth herein with respect to the following waterparks: (i) the waterpark commonly known as “Schlitterbahn Waterpark Galveston” located at 2026 Lockheed Rd., Galveston, Texas 77554 (the “Galveston Waterpark”), (ii) the waterpark and resort commonly known as “Schlitterbahn Waterpark & Resort New Braunfels” located at 400 N. Liberty Ave., New Braunfels, Texas 77554 (the “New Braunfels Waterpark”), and (iii) the waterpark commonly known as “Schlitterbahn Waterpark Kansas City” located at 9400 State Ave., Kansas City, Kansas 66112 (the “Kansas City Waterpark,” and collectively with the Galveston Waterpark and the New Braunfels Waterpark, the “Parks,” and each a “Park”).
C.It is anticipated that certain Seller Parties will be converted into limited liability companies between the signing and Closing of this Agreement as set forth on Schedule 5.01 or as otherwise consented to by Buyer pursuant to Section 5.01 (the “Reorganization”). In each case the converted entities resulting from such Reorganization shall be deemed to be the same entities as the converting Seller Parties, as applicable, and collectively the same Seller Parties for all purposes under this Agreement. In addition, Jana Faber, Gary Henry and Jeff Henry will deposit the fully executed Family Settlement Documents in escrow upon the signing of this Agreement, all in the forms attached hereto as Exhibit I, which Family Settlement Documents shall be held in escrow pending the Closing, and shall be automatically released from escrow and deemed effective immediately after the Closing. Pursuant to the Family Settlement Documents, Jeff Henry will cease to have an ownership interest in any of the Seller Parties and ownership of the Seller Parties (with respect to the ownership interests held by Jeff Henry) will be directly and indirectly divided between Jana Faber and Gary Henry on the terms set forth in the Family Settlement Documents.
D.The Seller Parties desire to sell and assign to Buyer (or controlled Affiliates designated by Buyer), and Buyer (or controlled Affiliates designated by Buyer) desires to purchase and assume from the Seller Parties, certain assets and liabilities of the Seller Parties relating to the Parks, in each case, all on the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the representations, warranties, covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, all capitalized terms will have the meanings specified in Exhibit A attached hereto.
ARTICLE II
SALE OF ASSETS
2.01 Sale of Assets. On the Closing Date, and subject to the terms and conditions of this Agreement, the Seller Parties shall sell, transfer, assign, convey and deliver to Buyer (or controlled Affiliates designated by Buyer), and Buyer (or controlled Affiliates designated by Buyer) will purchase and acquire from each Seller, free and clear of any Encumbrances other than Permitted Encumbrances, all of such Seller’s right, title and interest in and to the following assets used or usable in the business and operation of the Parks:
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(a)
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all fixed assets, machinery, equipment, tools, furniture, office equipment, computer hardware, supplies, materials, vehicles and other items of tangible personal property of every kind used in connection with the business or operation of the Parks, whether owned or leased (wherever located and whether or not carried on the applicable Seller’s books), including the fixed assets identified on Schedule 2.01(a) (the “Tangible Personal Property”), together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto;
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(b)
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all inventories of the Seller Parties held in connection with the business or operation of the Parks, including finished goods, raw materials, work in progress, packaging, supplies, parts and merchandise inventory;
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(c)
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all real property on which the Parks are located and that is owned by the Seller Parties (together with all buildings, fixtures, structures and improvements situated thereon and all easements, rights-of-way and other rights and privileges appurtenant thereto) (collectively, the “Owned Real Property”);
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(d)
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all real property on which the Parks are located and that is leased by the Seller Parties (together with all rights, title and interest of the Seller Parties in and to leasehold improvements relating thereto, including security deposits, reserves or prepaid rents paid in connection therewith) (collectively, the “Leased Real Property,” and together with the Owned Real Property, the “Real Property”);
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(e)
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All buildings, structures, improvements, facilities, installations, fixtures, machinery and equipment used in connection with the business or operation of the Parks whether owned or leased, including, without limitation, all water park rides, slides, pools, buildings, foundations and footings, pumps, plumbing, air conditioning, heating, ventilating, mechanical, electrical and utility systems, signs, light fixtures, doors, windows, fences, parking lots, walkways and each and every other type of physical improvement located at, on or affixed to the Real Property (the “Improvements”);
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(f)
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All supplies used in connection with the business or operation of the Parks such as spare parts, pool chemicals, cleaning supplies, and similar supplies used in the Ordinary Course of Business of maintenance of the Real Property, Improvements or the Tangible Personal Property (the “Supplies”);
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(g)
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all (i) trade accounts receivable, notes receivable, and other rights to payment from customers of the Parks and the full benefit of all security for such accounts, notes or rights to payment, including all trade accounts receivable representing amounts receivable in respect of goods shipped or products sold or services rendered to customers of the Parks, (ii) other accounts or notes receivable of the Seller Parties relating to the Parks and the full benefit of all security for such accounts or notes, including, but not limited to, accounts receivable from credit card processors, and (iii) claims, remedies, and rights related to the any of the foregoing (collectively, the “Accounts Receivable”), provided, however, that Accounts Receivable will not include any accounts or notes receivables from Affiliates or Related Parties of the Seller Parties that are set forth on Schedule 2.01(g) (the “Intercompany Receivables”);
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(h)
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the Contracts listed on Schedule 2.01(h) hereto used in the business or operation of the Parks (collectively, the “Assigned Contracts”) and the right to receive all payments, rights, and privileges of the Seller Parties arising under the Assigned Contracts;
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(i)
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all (i) intangible rights and property owned by the Seller Parties relating to the operation and business of the Parks, including (A) all going concern value and goodwill related to or associated with the Assets, and (B) all Intellectual Property of the Seller Parties relating to or used in the operation or business of the Parks, including, without limitation, the Intellectual Property set forth on Schedule 2.01(i) (the “Owned Intellectual Property”) and (ii) all rights of any of the Seller Parties under licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions and other Contracts, whether written
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or oral, relating to any Intellectual Property that is used or held for use in the operation and business of the Parks to which a Seller Party is a party, beneficiary or by which it is otherwise bound (“Licensed Intellectual Property” and with the Owned Intellectual Property, the “Purchased Intellectual Property”);
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(j)
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all prepaid expenses, credits, advance payments, claims, security, refunds, rights of recovery, rights of set-off, rights of recoupment, deposits, charges, sums and fees (including any such item relating to the payment of Taxes);
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(k)
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originals, or where not available, copies, of all books and records of each Seller related to the business or operation of the Parks, whether in tangible or electronic form, including, without limitation, service and warranty records, customer and supplier lists, equipment logs, operating guides and manuals, financial and accounting records, creative materials, advertising materials, promotional materials, correspondence, all telephone and facsimile numbers and other directory listings used by Seller, data, referral sources, research and development reports, studies, plans, drawings and other similar documents and records and, subject to all Laws, copies of all personnel records of Hired Employees (collectively, the “Business Records”);
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(l)
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all approvals, consents, licenses, permits, waivers, or other authorizations issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Law to the Seller Parties in connection with the business or operation of the Parks, in each case to the extent transferable to Buyer (collectively, “Governmental Authorizations”), and all pending applications therefor or renewals thereof, in each case to the extent transferable to Buyer, including, without limitation, the Governmental Authorizations and pending applications set forth on Schedule 2.01(l).
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(m)
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all claims of the Seller Parties against third parties relating to the Assets or the Assumed Liabilities, whether choate or inchoate, known or unknown, contingent or noncontingent; and
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(n)
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all of the Seller Parties’ rights under warranties, indemnities and all similar rights against third parties to the extent related to the Assets or the Assumed Liabilities.
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All of the property and assets described in Section 2.01 are collectively referred to as the “Assets”.
Notwithstanding the foregoing, each Seller shall retain and shall not transfer to Buyer, and the term “Assets” shall not include any of the following assets and properties (collectively, the “Excluded Assets”): (i) such Seller’s corporate minute books, Organizational Documents, stock ledgers, corporate seal, and all other books and records relating solely to the Excluded Assets or the Excluded Liabilities; (ii) all personnel records that such Seller is required by Law to maintain, (iii) all rights of such Seller under the Acquisition Documents; (iv) all Employee Benefit Plans and assets and Contracts of, attributed to, or related to, any Employee Benefit Plan; (v) all insurance policies of the Seller Parties; (vi) the Intercompany Receivables; (vii) all Contracts to which a Seller is a party that are not included among the Assigned Contracts (the “Excluded Contracts”); (viii) all cash, cash equivalents and short term investments that are received, held or maintained by the Seller Parties in connection with the business or operation of the Parks (including, the Pre-Sale Tickets); and (ix) all property and assets of such Seller listed on Schedule 2.01(1) attached hereto.
2.02 Purchase Price; Payment.
(a) The aggregate purchase price for the Assets shall be Two Hundred Sixty-Seven Million Dollars ($267,000,000) (the “Base Amount”), which amount is subject to increase or decrease, as the case may be, as provided in the following sentence, and Buyer (or controlled Affiliates designated by Buyer) will assume the Assumed Liabilities. The “Purchase Price”, as finally determined pursuant to the terms of this Agreement, is an amount equal to the Base Amount, minus the amount, if any, by which the Net Asset Value Target exceeds the Estimated Net Asset Value, plus the amount, if any, by which the Estimated Net Asset Value exceeds the Net Asset Value Target, minus any Negative Adjustment Amount, and plus any Positive Adjustment Amount.
(b) As soon as reasonably practical, but in no event later than five (5) Business Days prior to the Closing Date, the Seller Parties shall in good faith cause to be prepared and delivered to Buyer an estimated balance sheet of each Seller (collectively, as finally agreed upon by Buyer and the Seller Parties, the “Closing Statement”), which shall set forth (i) an estimate of the book value of the Current Assets as of the Closing Date (the “Estimated Asset Value”), (ii) the estimated amount of Current Liabilities as of the Closing Date (the “Estimated Liabilities”), (iii) an estimate of Transaction Expenses as of the Closing Date and a list of the Persons that are owed such amounts (the “Closing Date Transaction Expenses”), (iv) an estimate of Indebtedness as of the Closing Date and a list of the Persons that are owed such amounts (the “Closing Date Indebtedness”); (v) the resulting Closing Payment Amount due to the Seller Parties under Section 2.02(e)(iv) and (v); and (vi) an estimate of the resulting Purchase Price.
The Closing Statement shall be prepared and calculated in accordance with GAAP and will include a breakdown and reasonable detail in support of the calculation of items (i), (ii), (iii), and (iv) in the preceding sentence as between the Galveston Sellers, the Kansas City Sellers and the New Braunfels Sellers. Buyer shall have the opportunity to review and comment on the Closing Statement and, if Buyer disagrees with any item set forth in such statement, the Seller Parties and Buyer will resolve in good faith any such disagreement by mutual agreement prior to Closing.
(c) The “Closing Payment Amount” is an amount equal to (i) the Base Amount, minus (ii) the amount, if any, by which the Estimated Net Asset Value is less than the Net Asset Value Target or plus the amount, if any, by which the Estimated Net Asset Value is more than the Net Asset Value Target, minus (iii) the amount of Closing Date Transaction Expenses as set forth on the Closing Statement, minus (iv) the amount of Closing Date Indebtedness as set forth on the Closing Statement, and minus (v) the Escrow Amount. The term “Estimated Net Asset Value” means an amount (expressed as a positive or negative number, as necessary) equal to the Estimated Asset Value, minus the Estimated Liabilities.
(d) The Closing Payment Amount that is due to the Seller Parties at the Closing pursuant to Sections 2.02(e)(iv) and 2.02(e)(v) will be allocated among the Seller Parties according to the percentages set forth on Exhibit G. The amount of the Closing Payment Amount that is allocated (i) to the Galveston Sellers is the “Galveston Closing Payment Amount”; (ii) to the New Braunfels Sellers is the “New Braunfels Closing Payment Amount”); and (iii) to the Kansas City Sellers is the “Kansas City Closing Payment Amount”).
(e) At the Closing, Buyer shall:
(i) deposit the Escrow Amount with the Escrow Agent, by wire transfer of immediately available funds, to be held and distributed in accordance with the terms of the Escrow Agreement;
(ii) pay by wire transfer of immediately available funds the Closing Date Transaction Expenses to each respective Person owed such amounts, on behalf of and for the benefit of the Seller Parties, pursuant to written instructions provided to Buyer by the Sellers’ Representative;
(iii) pay by wire transfer of immediately available funds all of the Closing Date Indebtedness to each respective debt holder owed such amounts, on behalf of and for the benefit of the Seller Parties pursuant to written instructions provided to Buyer by the Sellers’ Representative;
(iv) pay by three (3) wire transfers of immediately available funds the Galveston Closing Payment Amount, in the designated amounts and to the three (3) accounts designated by the Galveston Sellers to Buyer prior to the Closing Date, to the following Persons: (i) ANICO Eagle, LLC, (ii) ANH20, Inc., and (iii) Galveston Waterpark Holdings, Ltd. For the avoidance of doubt, other than sending the Galveston Closing Payment Amount to the three (3) recipients designated in this Section 2.02(e)(iv), Buyer shall have no liability whatsoever regarding the payment and distribution of the Galveston Closing Payment Amount; and
(v) pay by wire transfer of immediately available funds to an account designated by the Sellers’ Representative, an aggregate amount equal to the sum of the New Braunfels Closing Payment Amount and the Kansas City Closing Payment Amount to the Sellers’ Representative for distribution to each of the New Braunfels Sellers and Kansas City Sellers.
(f) Notwithstanding anything else in this Agreement to the contrary, in the event of a Delayed KC Closing Scenario, the parties shall proceed to Closing with respect to the portion of the Subject Transaction involving the Galveston Waterpark and the New Braunfels Waterpark (the “Texas Transaction”) subject to the terms of this Agreement, and the following modifications shall be made to Sections 2.02(a)-(e):
(i) the Base Amount shall be reduced by Six Million Dollars ($6,000,000) (the “Kansas City Purchase Price”), such that the Base Amount for the Assets relating to the Galveston Waterpark and the New Braunfels Waterpark is Two Hundred Sixty-One Million Dollars ($261,000,000);
(ii) the Closing Date Indebtedness for the Texas Transaction shall be reduced by the amount of any Indebtedness that is applicable to the Kansas City Waterpark and that is set forth on Schedule 2.02(f)(ii) (the “Kansas City Indebtedness”);
(iii) for the avoidance of doubt, for the Texas Transaction, no Closing Payment Amount shall be allocated to the Kansas City Sellers, and the Closing Payment Amount that is due to the Galveston Sellers and the New Braunfels Sellers, as applicable, will be allocated among such Seller Parties according to the percentages set forth on Exhibit G; and
(iv) for the avoidance of doubt, for the Texas Transaction, the Estimated Net Asset Value only involves the Galveston Sellers and the New Braunfels Sellers.
(g) Notwithstanding anything else in this Agreement to the contrary, in the event of a Delayed KC Closing Scenario, at the KC Delayed Closing:
(i) Buyer shall pay by wire transfer of immediately available funds the Transaction Expenses incurred and not paid prior to the KC Delayed Closing (the “Kansas City Transaction Expenses”) to each respective Person owed such amounts, on behalf of and for the benefit of the Seller Parties, pursuant to written instructions provided to Buyer by the Sellers’ Representative;
(ii) Buyer shall pay by wire transfer of immediately available funds all of the Kansas City Indebtedness to each respective debt holder owed such amounts, on behalf of and for the benefit of the Seller Parties pursuant to written instructions provided to Buyer by the Sellers’ Representative;
(iii) Buyer shall pay by wire transfer of immediately available funds to an account designated by the Sellers’ Representative for distribution to the Kansas City Sellers, an amount equal to the Kansas City Purchase Price, less the Kansas City Indebtedness, and less the Kansas City Transaction Expenses; and
(iv) for the avoidance of doubt, there are no Current Assets or Current Liabilities applicable to the Kansas City Waterpark since this waterpark is not in operation.
2.03 Assumption of Liabilities. Subject to the terms and conditions of this Agreement, on the Closing Date, Buyer (or controlled Affiliates designated by Buyer) will assume and agree to pay, perform, and discharge only the following Liabilities of the Seller Parties in accordance with their respective terms and subject to the respective conditions thereof (collectively, the “Assumed Liabilities”):
(a) all Liabilities arising after the Closing under the Assigned Contracts, but excluding any Liability of any Seller arising from or related to such Assigned Contracts as a result of (i) any breach of any such Assigned Contract occurring on or prior to the Closing Date; (ii) any violation of Law, breach of warranty, tort or infringement in connection with any such Assigned Contracts occurring on or prior to the Closing Date; or (iii) any charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand related to the foregoing clauses (i) or (ii);
(b) any trade account payable incurred by a Seller in the Ordinary Course of Business of operating the Parks (i) that is reflected on the Balance Sheet, or (ii) that is incurred between the Balance Sheet Date and the Closing Date and that is not reflected on the Balance Sheet, and in each instance which remains unpaid at, and is not past due or delinquent, as of the Closing Date, provided, however, that such trade account payables will not include any amounts or payables owed to Affiliates or Related Parties of the Seller Parties (the “Intercompany Payables”); and
(c) all Liabilities in connection with the Pre-Sale Tickets (other than Liabilities that are directly or indirectly related to an Excluded Liability or the Seller Parties’ breach of a representation and warranty or covenant under this Agreement).
2.04 Excluded Liabilities. Notwithstanding the provisions of Section 2.03 or any other provision in this Agreement to the contrary, Buyer (or controlled Affiliates designated by Buyer) will not assume and will not be responsible to pay, perform or discharge any Liabilities of any Seller or any of their Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (collectively, the “Excluded Liabilities”). The Excluded Liabilities will remain the sole responsibility of the applicable Seller and will be retained, paid, performed and discharged by such Seller. For the avoidance of doubt, “Excluded Liabilities” shall include, but not be limited to, the following Liabilities of the Seller Parties:
(a) any Liability arising from or related to any Contract of a Seller, including any Assigned Contract, as a result of (i) any breach of such Contract occurring on or prior to the Closing Date; (ii) any violation of Law, breach of warranty, tort or infringement in connection with such Contract occurring on or prior to the Closing Date; or (iii) any charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand related to the foregoing clauses (i) or (ii);
(b) any trade account payable of a Seller that was not incurred in connection with the operation of the Parks or that is not reflected on the Balance Sheet and that was not incurred by such Seller in the Ordinary Course of Business in connection with the operation of the Parks between the Balance Sheet Date and the Closing Date;
(c) any Liability for Taxes, including (i) any Taxes arising as a result of the Seller Parties’ operation of the Parks, their business or ownership of the Assets prior to the Closing Date; (ii) any Taxes that will arise as a result of the sale of the Assets pursuant to this Agreement; and (iii) any deferred Taxes of any nature;
(d) any Liability of any Seller under this Agreement, any of the other Acquisition Documents or any other document or certificate executed in connection with the Subject Transactions;
(e) any Liability for Transaction Expenses (including, without limitation, the Kansas City Transaction Expenses);
(f) any Liability for Indebtedness (including, without limitation, the Kansas City Indebtedness);
(g) any Liability in respect of any prior, settled, pending or threatened Proceeding arising out of, relating to or otherwise in respect of the operation of the Parks or the Assets to the extent such Proceeding relates to the operation of the Parks on or prior to the Closing Date, including, without limitation, any personal injury, product liability or similar claim for injury to a Person or property;
(h) any Liability arising out of, in respect of or in connection with the failure by the Seller Parties or any of their Affiliates to comply with any Law or Order;
(a)any Liability under the Excluded Contracts or any other Contracts, which are not validly and effectively assigned to Buyer (or any controlled Affiliate designated by Buyer) pursuant to this Agreement;
(b)any Liability to indemnify, reimburse or advance amounts to any present or former officer, director, employee or agent of any Seller (including with respect to any breach of fiduciary obligations by same);
(c)any Liability with respect to any of the Parks relating or arising from unfulfilled commitments, quotations, purchase orders, customer orders or work orders that (i) do not constitute part of the Assets on or before the Closing; (ii) did not arise in the Ordinary Course of Business; or (iii) are not validly and effectively assigned to Buyer pursuant to this Agreement;
(d)any Liability relating to or arising out of or from: (i) the employment, or termination of employment, of any employee of a Seller prior to or on the Closing; (ii) any employee of any Seller that is not hired by the Buyer; (iii) any employee of Seller relating to periods ending on or prior to the Closing (including any Liability relating to unpaid salaries or wages, accrued but unpaid bonuses, accrued but unpaid vacation pay, employee inventions, withholding of Taxes and social insurance contributions, employee loans, accidents, workers compensation claims, injuries or discrimination); or (iv) any compensation or benefit granted or promised by Seller to any employee of Seller in connection with the Subject Transactions;
(e)any Liability relating to or arising out of any Employee Benefit Plan;
(f)any Environmental and Safety Liabilities with respect to the operations, properties or business of the Parks prior to Closing;
(g)any Liabilities relating to intercompany Contracts or arrangements of any kind or nature amongst the Seller Parties, their Affiliates and/or their Related Parties, including, without limitation, the Intercompany Payables; and
(h)any Liability in respect of any Excluded Assets.
2.05 Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will be consummated at the offices of Squire Patton Boggs (US) LLP in Cleveland, Ohio at 10:00 a.m. (San Antonio, Texas time) (or pursuant to the electronic or other remote exchange of all executed documents and other Closing deliverables required by this Article II) on the date that is two Business Days after the date on which all of the conditions to Closing set forth in Article VII and Article VIII are satisfied or waived (other than those conditions that by their nature are to be satisfied at Closing, but subject to the satisfaction or waiver of such conditions). The Closing shall be deemed to have become effective as of 12:01 a.m., San Antonio, Texas time on the date of the Closing (such time and date referred to herein as the “Closing Date”).
2.06 Closing Deliverables.
(a) Subject to fulfillment or waiver of the conditions set forth in Article VIII, at the Closing, the Seller Parties will deliver to Buyer the following:
(i) (A) a Bill of Sale (the “Bill of Sale”) executed by each Seller, transferring the Tangible Personal Property included in the Assets to Buyer (or controlled Affiliates designated by Buyer), and (B) an Assignment and Assumption Agreement (“Assignment and Assumption Agreement”) duly executed by each Seller, effecting the assignment and assumption to Buyer (or controlled Affiliates designated by Buyer) of the intangible property rights included in the Assets and the Assumed Liabilities, each substantially in the form of Exhibit B attached hereto;
(ii) an Intellectual Property Assignment, substantially in the form of Exhibit C attached hereto, duly executed by each Seller, transferring all of such Seller’s right, title and interest in and to the Purchased Intellectual Property to Buyer (or controlled Affiliates designated by Buyer);
(iii) with respect to each parcel of Owned Real Property, a special warranty deed substantially in the form of Exhibit D-1, duly executed and notarized by the applicable Seller;
(iv) an Assignment and Assumption of Lease, with respect to each of the Leases that are Assigned Contracts, substantially in the form of Exhibit D-2 (collectively, the “Lease Assignments”), duly executed by the applicable Seller;
(v) the Escrow Agreement, duly executed by the Sellers’ Representative;
(vi) a certificate of the Secretary or another officer of each Seller, dated as of the Closing Date, (A) certifying as complete and accurate as of the Closing Date attached copies of the Organizational Documents of such Seller (including a copy of such Seller’s Organizational Documents and all amendments thereto); (B) certifying and attaching all requisite resolutions or actions of such Seller’s Governing Authority approving the execution, delivery and performance of this Agreement and the other Acquisition Documents and the Subject Transactions; and (C) certifying as to the incumbency and signatures of the officers of such Seller executing this Agreement and the other Acquisition Documents;
(vii) a certificate pursuant to Treasury Regulations Section 1.445-2(b), duly executed by each Seller transferring Real Property, certifying that such Seller is not a foreign person within the meaning of Section 1445 of the Code;
(viii) all certificates required by Article VII;
(ix) the Payoff and Release Letters, as contemplated by Section 5.05;
(x) the Required Consent, as contemplated by Section 7.01(f);
(xi) a Consulting Agreement, substantially in the form of Exhibit E attached hereto, duly executed by Magnum Management Corporation and Waterpark Management, LLC, a Texas limited liability company formed as a result of the conversion of Waterpark Management, Inc., a Texas corporation (the “Consulting Agreement”);
(xii) the Shared Services Agreement with respect to the Schlitterbahn South Padre Island Waterpark, substantially in the form of Exhibit F-1 attached hereto (the “South Padre Shared Services Agreement”); duly executed by Buyer, Enterprize Management, Inc., and Schlitterbahn Beach Resort Management, LLC;
(xiii) the Shared Services Agreement with respect to the Schlitterbahn Corpus Christi Waterpark, substantially in the form of Exhibit F-2 attached hereto (and with such changes as may be agreed to by Diamond Beach Holdings, LLC and Buyer between the date of this Agreement and Closing) (the “Corpus Christi Shared Services Agreement”), duly executed by Buyer and Diamond Beach Holdings, LLC (and Buyer shall consider in good faith all changes to the form set forth on Exhibit F-2 as may be reasonably requested by Diamond Beach Holdings, LLC prior to the Closing, but Buyer shall not be obligated to accept such changes);
(xiv) the Shared Services Agreement with respect to Waterpark Management, Inc., substantially in the form of Exhibit F-3 attached hereto (the “Family Tail Shared Services Agreement”); duly executed by Buyer and Waterpark Management, Inc.;
(xv) confirmation that any notice required to be given to any Person prior to Closing, or consent required to be obtained from any Person prior to Closing, in either case as set forth on Schedule 2.06(a)(xv), under any Assigned Contract or otherwise, shall have been given or obtained, as applicable;
(xvi) all affidavits, gap indemnity agreements and other documents, to the extent reasonably approved by the Seller, to induce the Title Company to issue its owner’s and leasehold, as applicable, policy of title insurance, with extended coverage, to the Buyer (or any controlled Affiliate designated by Buyer);
(xvii) the landlord estoppel certificates set forth in Section 3.09(b) with respect to the Leased Real Property being assumed by Buyer;
(xviii) evidence of the termination of that certain Trademark License Agreement, in form and substance reasonably satisfactory to Buyer;
(xix) the South Padre License Agreements, each in form and substance reasonably satisfactory to Buyer;
(xx) the License Agreement referred to in Section 5.04 with respect to the Corpus Christi waterpark, substantially in the form of Exhibit J attached hereto (and with such changes as may be agreed to by Diamond Beach Holdings, LLC and Buyer between the date of this Agreement and Closing) (the “Corpus Christi License Agreement”), duly executed by Buyer and Diamond Beach Holdings, LLC (and Buyer shall consider in good faith all changes to the form set forth on Exhibit J as may be reasonably requested by Diamond Beach Holdings, LLC prior to the Closing, but Buyer shall not be obligated to accept such changes);
(xxi) the Family Settlement Documents held in escrow pending the Closing in the forms attached hereto as Exhibit I, fully executed by Jana Faber, Gary Henry and Jeff Henry; and
(xxii) the consent of the UG and the STAR Bonds Acknowledgement and Assumption Agreement, as contemplated by Section 7.01(i).
In addition to the above deliveries, the Seller Parties shall take all other actions and execute any additional instruments as Buyer may reasonably request as may be necessary or advisable to put Buyer (or any controlled Affiliate designated by Buyer) in actual possession or control of the Assets or otherwise complete the Subject Transactions.
(b) Subject to fulfillment or waiver of the conditions set forth in Article VII, at the Closing, Buyer shall make the payments and take the other actions as provided in Section 2.02(e); and deliver to the Seller Parties all of the following:
(i) the Assignment and Assumption Agreement, duly executed by Buyer (or any controlled Affiliate designated by Buyer);
(ii) the Lease Assignments, duly executed by Buyer (or any controlled Affiliate designated by Buyer);
(iii) the Escrow Agreement, duly executed by Buyer;
(iv) a certificate of the Secretary of Buyer, dated as of the Closing Date, (A) certifying as complete and accurate as of the Closing Date attached copies of Organizational Documents of Buyer (including a copy of Buyer’s Organizational Documents and all amendments thereto); (B) certifying and attaching all requisite resolutions or actions of Buyer’s Governing Authority approving the execution, delivery and performance of this Agreement and the other Acquisition Documents and the Subject Transactions; and (C) certifying as to the incumbency and signatures of the officers of Buyer executing this Agreement and the other Acquisition Documents;
(v) all certificates required by Article VIII;
(vi) the Consulting Agreement, duly executed by Buyer (or any controlled Affiliate designated by Buyer);
(vii) the South Padre Shared Services Agreement, duly executed by Buyer (or any controlled Affiliate designated by Buyer);
(viii) the Corpus Christi Shared Services Agreement, duly executed by Buyer (or any controlled Affiliate designated by Buyer);
(ix) the Family Tail Shared Services Agreement, duly executed by Buyer (or any controlled Affiliate designated by Buyer); and
(x) the Corpus Christi License Agreement, duly executed by Buyer (or any controlled Affiliate designated by Buyer).
In addition to the above deliveries, Buyer shall take all other actions and execute any additional documents as any Seller may reasonably request as may be necessary or advisable for the assumption by Buyer (or any controlled Affiliate designated by Buyer) of the Assumed Liabilities and to complete the Subject Transactions.
2.07 Allocation of Purchase Price. The Purchase Price received by the Seller Parties and the Assumed Liabilities shall be allocated among the Assets for all purposes (including Tax and financial accounting) in accordance with Exhibit G attached hereto. Buyer shall prepare and deliver IRS Form 8594, consistent with the purchase price allocation attached hereto, to Sellers’ Representative within forty-five (45) days after the Closing Date to be filed with the IRS. Each Seller agrees that promptly after such Seller’s receipt of the IRS Form 8594 it shall return an executed copy thereof to Buyer (through the Sellers’ Representative). Buyer and Sellers’ Representative each agree to file IRS Form 8594, and all related United States federal, state and local, and non-U.S., Tax Returns consistent with the purchase price allocation attached hereto. Buyer and Sellers’ Representative each agrees to provide the other promptly with any other information required to complete IRS Form 8594. Furthermore, any event occurring post-Closing that requires a purchase price adjustment will result in both Buyer and Sellers’ Representative amending Form 8594 as may be required under the Code and regulations thereunder.
2.08 Closing Financial Statements; Purchase Price Adjustments.
(a) As soon as practicable following the Closing, but in no event later than One Hundred Twenty (120) days following the Closing Date, Buyer shall cause to be prepared and delivered to the Sellers’ Representative a report (the “Adjustment Report”), which shall set forth and show in reasonable detail Buyer’s computation of: (i) the book value of the Current Assets, the amount of Current Liabilities, and the corresponding Net Asset Value, all as of the Closing Date, (ii) Indebtedness as of the Closing, (iii) Transaction Expenses as of the Closing, (iv) the computation of the Positive Adjustment Amount or Negative Adjustment Amount, as set forth in Section 2.08(d), and (v) the computation of the Purchase Price based on item (i) of this sentence. The Adjustment Report shall be calculated and prepared in accordance with GAAP and will provide reasonable detail with respect to items (i), (ii) and (iii), including a breakdown of those items as between the Galveston Sellers, the Kansas City Sellers and the New Braunfels Sellers. The book value of the Current Assets as reflected on the Adjustment Report shall hereinafter be referred to as the “Asset Value” and the amount of the Current Liabilities as reflected on the Adjustment Report shall hereinafter be referred to as the “Liability Amount.” The term “Net Asset Value” means an amount (expressed as a positive or negative number, as necessary) equal to the Asset Value, minus the Liability Amount.
(b) Within fifteen (15) Business Days after Buyer’s delivery of the Adjustment Report, the Sellers’ Representative may deliver a written notice (a “Protest Notice”) to Buyer of any objections to the Adjustment Report, in reasonable detail, indicating each disputed item or amount (the “Disputed Matters”) and the basis for the disagreement with how such Disputed Matter is calculated in the Adjustment Report. During the ten (10) Business Days (the “Resolution Period”) following Buyer’s receipt of a Protest Notice, Buyer and the Sellers’ Representative shall attempt to resolve any Disputed Matters. If at the end of the Resolution Period, Buyer and the Sellers’ Representative shall have failed to resolve their dispute, the Disputed Matters only shall be referred to Ernst & Young or such other accounting firm of national reputation as may be agreed to by Buyer and the Sellers’ Representative (the “Adjustment Arbitrator”), for final determination of the Disputed Matters only within forty-five (45) days after the date of such referral. The Adjustment Arbitrator shall only decide the Disputed Matters and their decision for each Disputed Matter must be within the range of values assigned to each such item in the Adjustment Report and the Protest Notice, as applicable. For the avoidance of doubt, if Sellers’ Representative does not include any item from the Adjustment Report as a Disputed Matter in the Protest Notice, then Sellers’ Representative shall be deemed to have accepted the calculation of such item in the Adjustment Report and such calculation shall be final. This provision for arbitration shall be specifically enforceable by the parties, and the determination of the Adjustment Arbitrator with respect to the Disputed Matters in accordance with the provisions hereof shall be final and binding upon Buyer and the Sellers’ Representative, with no right of appeal therefrom. The fees and expenses of the Adjustment Arbitrator for each Disputed Matter shall be paid by the party (i.e., Buyer, on the one hand, or the Sellers’ Representative (on behalf of the Seller Parties), on the other hand) whose last proposed written offer for the settlement of the applicable Disputed Matter prior to the commencement of such arbitration, taken as a whole, was farther away from the final determination of the Adjustment Arbitrator. If the final determination of the Adjustment Arbitrator is equal to the difference between the last proposed written offers of Buyer, on the one hand, and the Sellers’ Representative, on the other hand, then Buyer and the Sellers’ Representative (on behalf of the Seller Parties) shall each pay one-half of the fees and expenses of the Adjustment Arbitrator with respect to the applicable Disputed Matter.
(c) If Sellers’ Representative accepts the Adjustment Report as delivered or does not timely deliver a Protest Notice, then Sellers’ Representative shall be deemed to have accepted the calculation of the Net Asset Value as of the Closing Date,
Indebtedness as of the Closing, Transaction Expenses as of the Closing, and the corresponding Positive Adjustment Amount or Negative Adjustment Amount, as the case may be, and Purchase Price, as applicable, all as set forth in the Adjustment Report. If the Sellers’ Representative timely delivers a Protest Notice in accordance with Section 2.08(b), then any of the Net Asset Value, Indebtedness, Transaction Expenses or the corresponding Positive Adjustment Amount or Negative Adjustment Amount, as the case may be, and Purchase Price, as applicable, that are included in the Protest Notice as a Disputed Matter shall be determined in accordance with the arbitration mechanism set forth in Section 2.08(b).
(d) If the Final Net Asset Value is greater than the Estimated Net Asset Value, then the amount of such difference is referred to herein as the “Positive Adjustment Amount”. If the Final Net Asset Value is less than the Estimated Net Asset Value, then the amount of such difference is referred to herein as the “Negative Adjustment Amount”.
(e) If there is a Positive Adjustment Amount under Section 2.08(d), then Buyer shall pay to the Galveston Sellers and the New Braunfels Sellers (in accordance with the allocation set forth in the following sentence, with one wire transfer of immediately available funds being sent to the Galveston Sellers and a separate wire transfer of immediately available funds being sent to the Sellers’ Representative for distribution to the New Braunfels Sellers), an aggregate amount equal to the Positive Adjustment Amount within five (5) Business Days after Buyer’s receipt of the Allocation Notice from Sellers’ Representative; provided that, notwithstanding anything to the contrary contained herein, in no event shall the Seller Parties be entitled to recover under this section more than an aggregate amount equal to the sum of the Adjustment Escrow Amount and the Indemnity Escrow Amount. Within three (3) Business Days after the amounts set forth on the Adjustment Report are finally determined under Section 2.08(c) the Sellers’ Representative shall provide to Buyer an allocation (the “Allocation Notice”) of the Positive Adjustment Amount as between the Galveston Sellers and the New Braunfels Sellers, along with wire transfer instructions for the Galveston Sellers and the Sellers’ Representative (for distribution to the New Braunfels Sellers). In addition, within five (5) Business Days after Buyer’s receipt of the Allocation Notice from Sellers’ Representative, Buyer and Sellers’ Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release to the Galveston Sellers and the Sellers’ Representative (for distribution to the New Braunfels Sellers) the Adjustment Escrow Amount in accordance with the Allocation Notice.
(f) If there is a Negative Adjustment Amount under Section 2.08(d), then, within five (5) Business Days after the amounts set forth on the Adjustment Report are finally determined under Section 2.08(c), Buyer and Sellers’ Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to:
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disburse to Buyer the Negative Adjustment Amount from the Adjustment Escrow Account (and to the extent the Adjustment Escrow Amount is insufficient, from the Indemnity Escrow Account); it being understood that, in no event shall Buyer be entitled to recover more than the sum of the Adjustment Escrow Amount and the Indemnity Escrow Amount; it being further understood that the Seller Parties will replenish any and all funds used from the Indemnity Escrow Account to pay the Negative Adjustment Amount within five (5) Business Days of such funds being disbursed from the Indemnity Escrow Account; and
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disburse to the Galveston Sellers and the New Braunfels Sellers (in accordance with the Allocation Notice, with one wire transfer of immediately available funds being sent to the Galveston Sellers and a separate wire transfer of immediately available funds being sent to the Sellers’ Representative for distribution to the New Braunfels Sellers) any remaining funds in the Adjustment Escrow Account (if any).
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(g) If the Final Indebtedness is greater than the Closing Date Indebtedness, then, to the extent that Buyer (or any of its Affiliates) actually assumes or otherwise suffers any Losses with respect to such difference, then Buyer and Sellers’ Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to disburse to Buyer the amount of such difference (to the extent of such assumption and/or Losses) from the Adjustment Escrow Account (and to the extent the amount in the Adjustment Escrow Account is insufficient, from the Indemnity Escrow Account). If the Final Transaction Expenses are greater than the Closing Date Transaction Expenses, then, to the extent that Buyer (or any of its Affiliates) actually assumes or otherwise suffers any Losses with respect to such difference, then Buyer and Sellers’ Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to disburse to Buyer the amount of such difference (to the extent of such assumption and/or Losses) from the Adjustment Escrow Account (and to the extent the amount in the Adjustment Escrow Account is insufficient, from the Indemnity Escrow Account). In addition, the Seller Parties will replenish any and all funds used from the Indemnity Escrow Account to pay for the Losses described in this Section 2.08(g) within five (5) Business Days of such funds being disbursed from the Indemnity Escrow Account.
(h) For the avoidance of doubt, in the event of a Delayed KC Closing Scenario, (i) for the Texas Transaction, the Adjustment Report will not include the Kansas City Purchase Price, the Kansas City Indebtedness or the Kansas City Transaction Expenses, and (ii) for the KC Delayed Closing, no Adjustment Report is required. If at any time after the KC Delayed Closing, Buyer (or any of its Affiliates) actually assumes or otherwise suffers any Losses with respect to the Kansas City Indebtedness or the Kansas City Transaction Expenses, as applicable, then Buyer and Sellers’ Representative shall deliver joint written instructions
to the Escrow Agent instructing the Escrow Agent to disburse to Buyer the amount of any and all such Losses from the Adjustment Escrow Account (and to the extent the amount in the Adjustment Escrow Account is insufficient or if the funds in the Adjustment Escrow Account have already been released, as applicable, from the Indemnity Escrow Account). In addition, the Seller Parties will replenish any and all funds used from the Indemnity Escrow Account to pay for the Losses described in this Section 2.08(h) within five (5) Business Days of such funds being disbursed from the Indemnity Escrow Account.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLER PARTIES
Each of the Seller Parties represents and warrants as follows with respect to itself as a Seller and the Assets to which it is transferring pursuant to Section 2.01 (the “Seller’s Assets”), in each case taking into account the Reorganization as applicable:
3.01 Ownership; Authorization. The equity owners of each Seller are set forth on Schedule 3.01. Seller has full legal right, power and authority to execute, deliver, and perform this Agreement and each of the other Acquisition Documents to which it is a party, and to sell, assign, transfer, convey and deliver the Seller’s Assets pursuant hereto and thereto. Each Governing Authority of Seller has taken all actions required by Law, its Organizational Documents or otherwise to duly authorize the execution and delivery of this Agreement, and the other Acquisition Documents to which it is a party, and the performance of its obligations hereunder and thereunder and no further authorization or consent of the Governing Authority is required in order to approve the consummation of the Subject Transactions. This Agreement has been duly executed and delivered by the Seller Parties and upon the execution and delivery of the remaining Acquisition Documents by a duly authorized officer of Seller, the remaining Acquisition Documents will have been duly executed and delivered by the Seller Parties, and this Agreement is, and such other Acquisition Documents will be, upon due execution and delivery thereof, the legal, valid, and binding obligations of the Seller Parties enforceable against them in accordance with the respective terms thereof.
3.02 Title and Sufficiency of Assets; Inventory.
(a) Except as set forth on Schedule 3.02, (i) Seller has, and Buyer will have upon Closing, good and indefeasible title to all of the Seller’s Assets, free and clear of all Encumbrances other than Permitted Encumbrances, and upon delivery to Buyer, Seller will transfer to Buyer (or any controlled Affiliate designated by Buyer) good and indefeasible title to the Seller’s Assets, free and clear of all Encumbrances, except for Permitted Encumbrances, and (ii) except for properties and assets, which have been sold or otherwise disposed of in the Ordinary Course of Business since the Balance Sheet Date, Seller has not sold, transferred or otherwise disposed of any of its assets since the Balance Sheet Date. All of the tangible assets forming a part of the Seller’s Assets, including, without limitation, the Improvements and Tangible Personal Property, are in good operating condition, are adequate for the purpose used, and none of such tangible assets are in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or costs. As of the Closing Date, the Seller’s Assets are sufficient for the continued operation of the Parks after the Closing Date in substantially the same manner as conducted prior to the Closing Date, including, without limitation, the right to access the amount of water necessary to operate the Parks and dispose of such water in compliance with all Laws. None of the Excluded Assets are material to the business or operation of the Parks.
(b) All items of inventory and Supplies (including raw materials, work-in-process and finished goods) reflected on the Balance Sheet or thereafter acquired (and not subsequently disposed of in the Ordinary Course of Business) are merchantable and are held for sale in the Ordinary Course of Business as first quality goods at normal mark-ups, none of such items is obsolete or below standard quality, and each item of such inventory reflected on the Balance Sheet and the books and records of Seller is so reflected on the basis of a complete physical count and is valued at the lower of cost (on a first in, first out basis) or market in accordance with GAAP. All items of inventory and Supplies are owned by Seller free and clear of all Encumbrances, and no inventory or Supplies is held on a consignment basis.
3.03 Existence; Good Standing; and Authority. Seller is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which Seller is organized or incorporated, as applicable. Seller has the power and authority to own, operate or lease its properties and assets and to carry on the business and operation of the Parks as now being conducted. Seller is duly qualified to transact business and is in good standing in all jurisdiction(s) set forth on Schedule 3.03, and Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the ownership of Seller’s Assets or the business or operation of the Parks as currently conducted makes such licensing or qualification necessary. No other jurisdiction has demanded, requested or otherwise indicated in writing that Seller is required to so qualify on account of the ownership or leasing of the Seller’s Assets or the business or operation of the Parks. Seller has provided to Buyer true and complete copies of all of the Organizational Documents for Seller.
3.04 Subsidiaries and Investments. Except as set forth on Schedule 3.04, Seller does not, directly or indirectly own, of record or beneficially, any outstanding voting securities or other equity interests in any corporation, general partnership, limited partnership, limited liability partnership, joint venture, limited liability company or other entity.
3.05 Financial Statements.
(a) Schedule 3.05(a) sets forth (i) the unaudited consolidated balance sheets of Seller dated as of December 31, 2016, 2017 and 2018, and the related statements of income and operations for the years then ended and (ii) the unaudited interim balance sheets of Seller dated as of March 31, 2019 and the related unaudited interim statements of income and operations for the three (3) month period then ended (collectively, the “Financial Statements”). The balance sheet of Seller dated as of March 31, 2019 (the “Balance Sheet Date”) is referred to as the “Balance Sheet”. The Financial Statements have been prepared from the books and records of Seller in accordance with GAAP and fairly present in all material respects the financial position of Seller with respect to the business and operation of the Parks.
(b) Seller maintains internal controls over financial reporting that provide reasonable assurance that: (i) receipts and expenditures are made, and access to Seller’s assets are permitted only in accordance with, management’s authorization; (ii) Seller’s books and records accurately and fairly reflect in reasonable detail the transactions and dispositions of the assets of Seller; and (iii) transactions are recorded as necessary to permit preparation of financial statements of Seller in accordance with GAAP and to maintain accountability for the assets of Seller.
3.06 No Material Changes. Since the Balance Sheet Date, and except as reflected on Schedule 3.06, Seller has operated the Parks in the Ordinary Course of Business and there has been (a) no Material Adverse Effect, (b) no fact or condition exists or is contemplated, or, to the Knowledge of the Seller Parties, threatened, which might cause a material adverse change in the future, and (c) no event, condition, action, or effect that, if it were to occur after the date hereof and prior to the Closing Date, would constitute a breach of Section 5.01. The statements of income included in the Financial Statements do not contain any items of special or non-recurring income or any other income not earned in the Ordinary Course of Business, except as expressly specified therein.
3.07 Books and Records. The Business Records and other books of account, minute books, stock record books, and other records of Seller, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices. The minute books of Seller contain accurate and complete records of all meetings held of, and action taken by, the Governing Authority of Seller, and committees of the Governing Authority of Seller, and no meeting of any such Governing Authority, or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of the Business Records will be in the possession of Seller, except to the extent that such Business Records are Excluded Assets.
3.08 Affiliate Transactions. Neither any Related Person nor any Affiliate of any Seller has, or has had, any interest in any property or asset (whether real, personal, or mixed and whether tangible or intangible), used in or pertaining to the Seller’s Assets. Except as set forth on Schedule 3.08, neither any Related Person nor any Affiliate of any Seller is a party to any Contract with, has any claim or right against Seller, or owes any Indebtedness to Seller.
3.09 Real Property and Leases.
(a) Schedule 3.09(a) sets forth each parcel of Owned Real Property, including with respect to each property, the address location and use. The Seller Parties have provided Buyer with copies of any title insurance policies, opinions, abstracts and surveys in the possession or control of Seller with respect to such parcel. Except as set forth on Schedule 3.09(a), with respect to each parcel of Owned Real Property: (i) Seller has good and indefeasible fee simple title, free and clear of all Encumbrances, except for Permitted Encumbrances; (ii) except as otherwise set forth herein, Seller has not leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof; and (iii) to the Knowledge of the Seller Parties, there are no unrecorded outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein.
(b) Schedule 3.09(b) sets forth each parcel of Leased Real Property, and a true and complete list of all leases, subleases, licenses, concessions and other agreements (whether written or oral), including all amendments, extensions renewals, guaranties and other agreements with respect thereto, pursuant to which Seller holds any Leased Real Property (collectively, the “Leases”). Each applicable Seller has delivered to Buyer a true and complete copy of each Lease, and will deliver to Buyer within thirty (30) days prior to Closing estoppel certificates signed by the lessors under each material Lease being assigned to Buyer, in form and content reasonably satisfactory to Buyer, setting forth each of the items in subsections (i)-(v) (with such below language being conformed as reasonably necessary to account for the fact that such estoppel will be given by the landlord rather than the
applicable Seller) of the following sentence with respect to each such Lease. Except as set forth on Schedule 3.09(b), with respect to each Lease: (i) such Lease is valid, binding, enforceable and in full force and effect, and Seller enjoys peaceful and undisturbed possession of the Leased Real Property; (ii) Seller is not in breach or default under such Lease, and, no event has occurred or circumstance exists which, with the delivery of notice, passage of time or both, would constitute such a breach or default, and Seller has paid all rent due and payable under such Lease; (iii) Seller has not received nor given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by Seller under any of the Leases and, to the Knowledge of the Seller Parties, no other party is in default thereof, and no party to any Lease has exercised any termination rights with respect thereto; (iv) Seller has not subleased, assigned or otherwise granted to any Person the right to use or occupy such Leased Real Property or any portion thereof; and (v) Seller has not pledged, mortgaged or otherwise granted an Encumbrance on its leasehold interest in any Leased Real Property, except, with respect to the Galveston Lease, the deeds of trust and other Encumbrances in favor of American National Insurance Company. The Seller Parties acknowledge that such deeds of trust and other Encumbrances in favor of American National Insurance Company are to be paid off and released at Closing. Notwithstanding the foregoing, the landlord estoppel certificate for the Galveston Lease would be substantially in the form as attached to Exhibit E to the Galveston Lease.
(c) Except as set forth on Schedule 3.09(c), Seller has not received any written notice of (i) violations of building codes or zoning ordinances or other governmental or regulatory Laws affecting the Owned Real Property or the Leased Real Property, (ii) existing, pending or threatened condemnation proceedings affecting the Owned Real Property or the Leased Real Property, or (iii) existing, pending or threatened zoning, building code or other moratorium proceedings, or similar matters which could reasonably be expected to adversely affect the ability to operate the Owned Real Property or the Leased Real Property as currently operated. Except as set forth on Schedule 3.09(c), neither the whole nor any portion of any Owned Real Property or the Leased Real Property has been damaged or destroyed by fire or other casualty since January 1, 2012.
3.10 Contracts.
(a) Set forth on Schedule 3.10(a) is a complete list of each of the following Contracts by which any of the Seller’s Assets are bound or affected or by which Seller is bound in connection with the business or operation of the Parks as of the date of this Agreement: (i) all Contracts relating to the employment or engagement of any individual, all severance agreements, and all bonus, deferred compensation, change of control, pension, profit sharing, stock option, employee stock purchase, phantom stock, retirement and other employee benefit plans and agreements; (ii) all loans to, advances to, and investments in, any other Person, and all Contracts relating to the making of any such loan, advance or investment; (iii) all Contracts for the guarantee of the obligations of Seller’s clients, suppliers, partners, employees, Affiliates or others or which provides for, or relates to, the incurrence of indebtedness for borrowed money; (iv) all management services, consulting, independent contractor, and any other similar type Contracts; (v) all leases of personal property; (vi) all Contracts limiting or prohibiting the right of Seller to engage in any line of business or to compete with any other Person; (vii) all Contracts that constitute a joint venture or partnership agreement or a limited liability company operating agreement; (viii) all Contracts for Indebtedness; (ix) all Contracts containing a most favored nation provision in favor of any Person other than Seller; (x) all Contracts containing the settlement, release, compromise or waiver of any rights, claims or Liabilities; (xi) all Contracts with any Affiliate or Related Person of a Seller; (xii) all Contracts containing a nonsolicitation or similar provision in favor of any Person other than Seller; (xiii) all Contracts for the purchase, licensing or development of software; (xiv) all Contracts for Licensed Intellectual Property (other than mass market software licensed to Seller that is commercially available and subject to “shrinkwrap” or click through” license arrangements); (xv) all Contracts not entered into in the Ordinary Course of Business; (xvi) all Contracts which involve the expenditure by Seller of more than $100,000 in aggregate annual payments in any calendar year; (xvii) all Contracts which might reasonably be expected to have a potential adverse impact on operations of Seller; (xviii) all Contracts binding Seller to an exclusive arrangement; (xix) all Contracts that require Seller to purchase or sell a stated portion of the requirements or outputs of the business or operations of the Parks or that contain “take or pay” provisions; (xx) all Contracts that relate to the acquisition or disposition of any business, any stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise); (xxi) all Contracts for the sale of any of the Seller’s Assets (other than the sale of products sold by Seller in the Ordinary Course of Business) or for the grant to any Person of any option, right of first refusal or preferential or similar right to purchase any of the Seller’s Assets (other than the sale of products sold by Seller in the Ordinary Course of Business); (xxii) all customer Contracts that involve consideration in excess of $25,000 and which, in each case, cannot be cancelled without penalty or without more than 90 days' notice; (xxiii) all supplier and vendor Contracts that involve consideration in excess of $25,000 and which, in each case, cannot be cancelled without penalty or without more than 90 days' notice; (xxiv) all distribution Contracts; (xxv) all Contracts pursuant to which Seller grants a power of attorney to any Person; (xxvi) all collective bargaining agreements or Contracts with any labor union; (xxvii) all Contracts with any Governmental Body; and (xxviii) all other Contracts that are material to the Seller’s Assets or the operation or business of the Parks and not previously disclosed pursuant to this Section 3.10(a).
(b) Except as set forth on Schedule 3.10(b), each Assigned Contract and each Contract set forth on Schedule 3.10(a) is a valid and binding agreement of Seller and any other Person that is a party thereto, is in full force and effect, and is enforceable
in accordance with its terms. The enforceability of such Contracts will not be affected in any manner by the execution and delivery of this Agreement and the consummation of the Subject Transactions. Seller has not violated any of the terms or conditions of any Assigned Contract or any Contract set forth on Schedule 3.10(a) and is not otherwise in default thereof, and, to the Knowledge of the Seller Parties, no party to such Contracts other than Seller is in breach of or default under such Contracts and all of the terms and conditions to be performed under such Contracts by any party thereto other than Seller have been fully performed and such Contract is free from any right of termination on the part of any party thereto. There exists no default or event of default or event, occurrence, condition or act (including the purchase of the Seller’s Assets hereunder) which, with the giving of notice or the lapse of time or the happening of any other event or condition, would become a default or event of default thereunder or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. None of the parties to any Assigned Contract or any Contract set forth on Schedule 3.10(a) has given notice (whether written or oral) of its intent to terminate such Contract and Seller has no reason to believe that any party intends to terminate any such Contract prior to or following the consummation of the Subject Transactions. There have been no amendments or modifications to any Assigned Contract or any Contract set forth on Schedule 3.10(a) which would make any of the information disclosed herein inaccurate or incomplete. Complete and correct copies of each of the Assigned Contracts (including all modifications, amendments and supplements thereto) and Contracts on Schedule 3.10(a) have been made available to Buyer. There are no disputes pending, or to the Knowledge of the Seller Parties threatened, under any Contract included in the Seller’s Assets.
3.11 No Conflict.
(a) Except for such filings as may be required under the HSR Act and as set forth on Schedule 3.11(a), neither the execution and delivery of this Agreement or any of the other Acquisition Documents nor the consummation or performance of the Subject Transactions will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of Seller, or (B) any resolution adopted by the Governing Authority of Seller that is currently in effect;
(ii) contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Subject Transactions or to exercise any remedy or obtain any relief under, any Law or any Order to which Seller, or any of the Seller’s Assets, may be subject;
(iii) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by Seller or that otherwise relates to any of the Seller’s Assets;
(iv) cause Buyer to become subject to, or to become liable for the payment of, any Tax;
(v) contravene, conflict with, or result in a violation or breach of any provision of, give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Assigned Contract, Contract set forth on Schedule 3.10(a), or Governmental Authorizations to which Seller is a party or to which Seller is bound by or to which any of Seller’s Assets are subject; or
(vi) result in the imposition or creation of any Encumbrance upon or with respect to any of the Seller’s Assets.
(b) Except for such filings as may be required under the HSR Act and as set forth on Schedule 3.11(b), no Seller is or will be required to give any notice or other action to, or obtain any Consent from, any Person, under any Contract or Governmental Authorizations to which Seller is a party or to which Seller is bound by or to which any of Seller’s Assets are subject (including the Assigned Contracts) in connection with the execution and delivery of this Agreement or the other Acquisition Documents or the consummation or performance of the Subject Transactions.
(c) All such filings, consents and waivers (i) as may be required under the HSR Act will be duly filed, given, or taken on or prior to the Closing Date, and (ii) set forth on Schedules 3.11(a) and (b) will be duly filed, requested or taken on or prior to the Closing Date (except those consents expressly required by Article VII to be obtained prior to the Closing Date, which will be obtained and in full force and effect on the Closing Date as a condition to closing under Article VII).
3.12 Litigation. Except as set forth on Schedule 3.12, (a) there is no Proceeding by any Person, or by or before (or any investigation by) any Governmental Body, pending, or to the Knowledge of the Seller Parties threatened, against or affecting Seller, the Seller’s Assets or the Assumed Liabilities, and, to the Knowledge of Seller Parties, there is no valid basis for any such Proceeding, and (b) neither Seller, Seller’s Assets or the Assumed Liabilities have been subject to any such Proceeding in the past
five (5) years. There is no pending Proceeding that has been commenced against Seller and that challenges, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Subject Transactions and, to the Knowledge of the Seller Parties, no such Proceeding has been threatened. There are no outstanding Orders and no unsatisfied judgments, penalties or awards against, relating to or affecting Seller or the Seller’s Assets.
3.13 Tax Returns and Payments. All of the Tax Returns of Seller (and any Affiliate or predecessor of any Seller that previously owned any of the Seller’s Assets) required by Law to be filed on or before the date of this Agreement have been duly and timely filed. All such Tax Returns were correct and complete in all respects and were prepared in substantial compliance with applicable Law. Except as set forth on Schedule 3.13, all Taxes owed by Seller (and any Affiliate or predecessor of any Seller that previously owned any of the Seller’s Assets), whether or not shown or required to be shown on any Tax Return, have been paid. There are in effect no waivers or extensions of any applicable statute of limitations related to such Tax Returns. No claim has been made by any Governmental Body where Tax Returns have not been filed that any Seller (or any Affiliate or predecessor of any Seller that previously owned any of the Seller’s Assets) is subject to tax in such jurisdiction. There are no liens on any of the Seller’s Assets with respect to unpaid Taxes. Except as set forth on Schedule 3.13, no Seller (or Affiliate or predecessor of any Seller that previously owned any of the Seller’s Assets) is subject to any audit or dispute in respect of its Taxes, no deficiency assessment or proposed adjustment for Taxes is pending, and, to the Knowledge of the Seller Parties, no Seller (or any Affiliate or predecessor of any Seller that previously owned any of the Seller’s Assets) is subject to any Liability for Taxes, whether or not proposed, with respect to any period through the date of this Agreement or which could be imposed upon any of its properties or assets. Each Seller (and any Affiliate or predecessor of any Seller that previously owned any of the Seller’s Assets) has withheld and paid all taxes in connection with any amounts paid or owing to any employee, independent contractor, creditor or other third party, and all Forms W-2 and 1099 required with respect thereto have been properly completed and filed.
3.14 No Undisclosed Liabilities. Seller does not have, and none of the Seller’s Assets are subject to, any outstanding claims, Liabilities or Indebtedness, accrued, contingent or otherwise, and whether due or to become due, except as reflected or reserved against in the Financial Statements (or referred to in the footnotes thereto) or the Balance Sheet as of the Balance Sheet Date, or on Schedule 3.14(a), other than Liabilities incurred subsequent to the Balance Sheet Date in the Ordinary Course of Business consistent with past practice and which are not, individually or in the aggregate, material in amount. The reserves reflected on the Balance Sheet are adequate, appropriate and reasonable in accordance with GAAP. To the Knowledge of the Seller Parties, there is no basis for the assertion against Seller of any Liability not fully reflected or accrued for on the Balance Sheet. All Closing Date Indebtedness (as estimated on the date of this Agreement) is set forth on Schedule 3.14(b). Except as set forth on Schedule 3.14(b), Seller is not in default in respect of the terms or conditions of any Indebtedness, nor are there any facts which, with the passage of time, would result in any such default.
3.15 Insurance. Seller has maintained and has in effect such policies of motor vehicle, property, casualty, workers’ compensation, general liability and other insurance, including group insurance and other life, health, disability or other insurance for the benefit of employees or their dependents or both as are required by Law and are adequate and appropriate with respect to the Seller’s Assets. Set forth on Schedule 3.15 is (a) a complete list, with a summary thereof, of all insurance policies (“Insurance Policies”) which Seller maintains with respect to the Seller’s Assets, its properties (including the Parks) or employees, which Insurance Policies are in full force and effect, and (b) a list of all pending claims and the claims history under such Insurance Policies for the past five (5) years. Neither Seller nor any of its Affiliates has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All such Insurance Policies (i) are in full force and effect and enforceable in accordance with their terms; (ii) are provided by carriers who are financially solvent; and (iii) have not been subject to any lapse in coverage. None of Seller or any of its Affiliates is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are sufficient for compliance with all applicable Laws and Contracts to which Seller is a party or by which it is bound. True and complete copies of the Insurance Policies have been made available to Buyer.
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Intellectual Property.
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(a) Schedule 3.16(a) lists all (i) Owned Intellectual Property, including for any such Owned Intellectual Property that is registered or subject to a pending application for registration, (A) the record owner, (B) the jurisdiction where the application or registration is located, (C) the application or registration number, and (D) the application or registration date, and (ii) all Licensed Intellectual Property.
(b) Seller is the sole and exclusive legal, beneficial and, with respect to registered Intellectual Property, record owner of all right, title and interest in the Owned Intellectual Property, free and clear of all Encumbrances. No government funding; facilities of a university, college, other educational institution or research center; or funding from third parties was used in the development of any Owned Intellectual Property. With respect to applications for registration and registered Owned Intellectual Property, (i) all such Intellectual Property is valid, enforceable, subsisting and in full force and effect and (ii) Seller has paid all
registration, renewal and maintenance fees and taxes that are due and payable in respect of such applications and registrations and made all filings required to maintain Seller’s ownership thereof. There are no facts, information, or circumstances, including any information or facts that would constitute prior art, that would render any of the issued or registered Owned Intellectual Property invalid or unenforceable, or would affect any pending application for any Owned Intellectual Property. Schedule 3.16(b) sets forth any actions that must be taken with respect to the applications for and registrations of Owned Intellectual Property within six (6) months of the Closing Date, including payment of any registration, maintenance or renewal fees or the filing of any responses to office actions for the purposes of obtaining, maintaining, perfecting, preserving or renewing any such Owned Intellectual Property.
(c) The Purchased Intellectual Property constitutes all of the Intellectual Property necessary for, or used or held for use in, the business and operation of the Parks. Seller owns, licenses or otherwise has valid and enforceable rights to use all the Purchased Intellectual Property, free and clear of all Encumbrances. Neither the execution, delivery or performance of this Agreement, nor the consummation of the transactions contemplated hereunder, will result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, the Buyer's right to own or use any Purchased Intellectual Property. Seller is not bound by any outstanding judgment, injunction, order or decree restricting the use of the Purchased Intellectual Property, or restricting the licensing thereof to any person or entity.
(d) Except as set forth on Schedule 3.16(d), Seller’s prior and current use of the Purchased Intellectual Property and the business and operation of the Parks as currently and formerly conducted have not, do not and will not infringe, violate, dilute or misappropriate the Intellectual Property of any person or entity and there are no claims pending or threatened by any person or entity (i) claiming that the Seller has infringed, misappropriated or otherwise violated any of the Intellectual Property owned by such Person, (ii) otherwise challenging the ownership, validity, enforceability, registrability, effectiveness or use of the Purchased Intellectual Property, or (iii) to the effect that the exercise of rights in any Purchased Intellectual Property by the Seller or any predecessor-in-interest to any Seller infringes or will infringe any Intellectual Property right or other proprietary or personal right of any Person. Except as set forth on Schedule 3.16(d), to the Knowledge of the Seller Parties, (i) no Person has infringed, misappropriated, diluted or otherwise violated any Purchased Intellectual Property, (ii) no Person is infringing, misappropriating, diluting, or otherwise violating any of the Purchased Intellectual Property, and Seller has not made or asserted any claim, demand or notice against any Person alleging any such infringement, misappropriation, dilution or other violation.
3.17 Compliance with Laws. Except as set forth on Schedule 3.17, Seller is, and has in the past five (5) years been, in compliance with all Laws applicable to the business and operation of the Parks or the ownership and use of the Seller’s Assets, including, without limitation, the Federal Occupational Safety and Health Act, ERISA, Fair Labor Standards Act, all Laws relating to the safe conduct of business, and all Environmental Health and Safety Requirements. Except as set forth on Schedule 3.17, Seller has not received any notice of any asserted present or past failure of Seller to comply with any Laws.
3.18 Employees.
(a) Schedule 3.18(a)(i) contains a complete and accurate list of the following information for each employee, officer or director of Seller, including each employee on leave of absence or layoff status: employer; name; job title; full-time, part-time, or seasonal; FLSA classification (exempt or non-exempt); current compensation paid or payable and any change in compensation since December 31, 2018; vacation accrued; and service credited for purposes of vesting and eligibility to participate under Seller’s pension, retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus, stock option, cash bonus, employee stock ownership (including investment credit or payroll stock ownership), severance pay, insurance, medical, welfare, or vacation plan, or any other Employee Benefit Plan. Unless otherwise disclosed in Schedule 3.18(a)(ii), all employees are “employees at will” and are employed directly by a Seller.
(b) Schedule 3.18(b) contains a complete and accurate list of the following information for each retired employee, officer, manager or director of Seller, or their dependents, receiving benefits or scheduled to receive benefits in the future: name, pension benefit, pension option election, retiree medical insurance coverage, retiree life insurance coverage, and other benefits.
3.19 Labor and Employee Relations; Compliance. Seller has never been and is not a party to any collective bargaining or other labor Contract. In the past five (5) years, there has not been, there is not presently pending or existing, and to Knowledge of the Seller Parties there is not threatened, (a) any strike, slowdown, picketing, work stoppage, or employee grievance process, in each case, with respect to Seller’s current or former employees, (b) any Proceeding against or affecting Seller relating to the alleged violation of any Law pertaining to labor relations or employment matters, including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Department of Labor, the Equal Employment Opportunity Commission, or any comparable Governmental Body, organizational activity, or other labor or employment dispute against or affecting Seller or its premises, or (c) any application for certification of a collective bargaining agent. To the Knowledge of the Seller Parties, no event has occurred or circumstance exists that could provide the basis for any work stoppage or other labor
dispute. There is no lockout of any employees by Seller, and no such action is contemplated by Seller. Seller has complied in all respects with all Laws relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health, and plant closings. Seller does not have any Liabilities in connection with the payment of any compensation, damages, taxes, fines, penalties, or other amounts, however designated, for failure to comply with any of the foregoing Laws. All employees have been properly classified as employees and as exempt or nonexempt under applicable Law and have been paid properly under applicable Law. All independent contractors have been properly classified as independent contractors.
3.20 Employee Benefit Plans.
(a) Set forth on Schedule 3.20 is a complete and accurate list of all Employee Benefit Plans established, maintained or contributed to by Seller (including for this purpose and for the purpose of all of the representations in this Section 3.20, all ERISA Affiliates) at any time during the five (5) year period ending on the Closing Date.
(b) Seller does not take part in and is not a party to, and has never taken part in or been a party to, (i) maintaining or contributing to any Employee Benefit Plan subject to ERISA which is not in material compliance with ERISA and the Code, or (ii) maintaining or contributing to any employee benefit plans other than those listed on Schedule 3.20. The assets of Seller’s Employee Benefit Plans are adequate to pay all debts, Liabilities and claims with respect to such plan to the extent that claims have been made on or prior to the Closing Date. None of the Employee Benefit Plans ever maintained by Seller has ever provided health care or any other non-pension benefits to any employees after their employment was terminated (other than as required by COBRA) or has ever promised to provide such post-termination benefits. There are no promised increases in benefits (whether expressed, implied, oral or written) under any Employee Benefit Plan maintained by Seller, nor are there any obligations, commitments or understandings to continue any such Employee Benefit Plans (whether expressed, implied, oral or written), except as required by COBRA. Each Employee Benefit Plan maintained by Seller as of the Closing Date is subject to termination by Seller without any further Liability on the part of Seller to make further contributions to any such plan following such termination, and the termination of any Employee Benefit Plan would not accelerate or increase any benefits payable under such Employee Benefit Plan. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (A) result in any payment to be made by Seller (including, without limitation, severance, unemployment compensation, golden parachute (defined in Section 280G of the Code), or otherwise) becoming due to any employee, director or consultant, or (B) increase any benefits otherwise payable under any Employee Benefit Plan.
(c) Each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so qualified by the IRS and nothing has occurred since the date of the last such determination which resulted or is likely to result in the revocation of such determination. Full payment has been made of all amounts which Seller is required, under applicable Law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which Seller is a party, to have paid as contributions thereto as of the Closing Date. Seller has made adequate provision for reserves to meet contributions that have not been made because they are not yet due under the terms of any Employee Benefit Plan or related agreements. Benefits under all Employee Benefit Plans are as represented and have not been increased subsequent to the date as of which documents have been provided.
(d) There has not been any material failure of any party to comply with any Law applicable to any Employee Benefit Plan maintained by Seller. Seller has not engaged in any material transaction with respect to the Employee Benefit Plans which would subject Seller to a tax, penalty or Liability for prohibited transactions under ERISA or the Code, or for any other reason, and none of its directors, officers or employees to the extent they or any of them are fiduciaries with respect to such plans, breached any of their responsibilities or obligations imposed upon fiduciaries under Title I of ERISA or taken or failed to take any action that would result in any claim being made under, by or on behalf of any such plans by any party with standing to make such claim. No litigation, claim, arbitration, governmental proceeding, audit, or investigation or other proceeding (other than those relating to routine claims for benefits) is pending or threatened with respect to any Employee Benefit Plan.
(e) Seller has delivered or caused to be delivered to Buyer and its counsel true and complete copies of (i) all Employee Benefit Plans as in effect for Seller, together with all amendments thereto which will become effective at a later date, as well as the latest IRS determination letter obtained with respect to any such Employee Benefit Plan qualified under Section 401 or 501 of the Code, (ii) Form 5500 for the three (3) most recent completed fiscal years for each Employee Benefit Plan required to file such form, (iii) a current Summary Plan Description for each Employee Benefit Plan, together with any summary of any modifications thereto, (iv) any insurance or annuity policy (including any fiduciary liability insurance policy) related to any Employee Benefit Plan, and (v) the three (3) most recent Summary Annual Reports provided to participants for each Employee Benefit Plan.
(f) Seller and its ERISA Affiliates have materially complied with COBRA.
(g) There is no pending or threatened action, claim or Proceeding relating to any Employee Benefit Plan (other than Ordinary Course of Business claims for benefits) that is, or could be or become a Liability of Buyer.
(h) Neither Seller nor any ERISA Affiliate contributes to, ever has contributed to, or ever has been required to contribute to any “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA, or any Multiemployer Plan or has any Liability (including withdraw liability) relating thereto.
3.21 Certain Payments. Neither Seller nor any director, officer, agent or employee of Seller, nor any other Person associated with or acting for or on behalf of Seller, has directly or indirectly (a) made, offered or agreed to offer any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of Seller or any Affiliate of Seller, or (iv) in violation of any Law, or (b) established or maintained any fund or asset that has not been recorded in the books and records of Seller.
3.22 Broker’s or Finder’s Fees. Except for Camino Real Advisors, LLC, no agent, broker, person or firm acting on behalf of the Seller Parties is, or will be, entitled to any commission or broker’s or finder’s fees from any of the parties hereto, or from any Affiliate of the parties hereto, in connection with any of the Subject Transactions.
3.23 Licenses, Permits, Consents and Approvals. Except as set forth on Schedule 3.23(a), Seller has (except for the Required Consent), and at the Closing Date will have, all Governmental Authorizations required to conduct the business and operations of the Parks as currently conducted or for the ownership and use of the Seller’s Assets. All such Governmental Authorizations are valid and in full force and effect. All fees and charges with respect to such Governmental Authorizations as of the date hereof have been paid in full. Schedule 3.23(b) lists all current Governmental Authorizations issued to Seller which are related to the business or operation of the Parks as currently conducted or the ownership and use of the Seller’s Assets, including the names of the Governmental Authorizations and their respective dates of issuance and expiration. To the Knowledge of Seller Parties, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Governmental Authorization set forth in Schedule 3.23.
3.24 Environmental and Health and Safety Matters.
(a) Except as set forth on Schedule 3.24:
(i) Seller is and has been (A) in material compliance at all times with all applicable Environmental and Safety Requirements, (B) is not in violation of any Environmental and Safety Requirement, and (C) has not received any notice, report or information regarding any Environmental and Safety Liabilities or any corrective, investigatory or remedial obligations, arising under Environmental and Safety Requirements with respect to the past or present operations, properties or business of the Parks.
(ii) Seller has obtained, and is and has been in material compliance at all times with all terms and conditions of, all permits, licenses, registrations, water rights and other Governmental Authorizations required pursuant to Environmental and Safety Requirements for the occupation of the Real Properties and the business and operation of the Parks. To the Knowledge of Seller Parties, all such permits, licenses, registrations, water rights and other Governmental Authorizations are in full force and effect and all steps have been taken that are required to maintain their continued existence and effectiveness.
(iii) None of the following exists at any Real Property: asbestos-containing material in any form or condition; paint containing elevated levels of lead; polychlorinated biphenyl-containing materials or equipment; or underground storage tanks except in compliance with all applicable Environmental and Safety Requirements and as would not reasonably be expected to create an Environmental and Safety Liability.
(iv) To the Knowledge of Seller Parties, the Subject Transactions do not impose any obligations under Environmental and Safety Requirements for site investigation or cleanup or notification to or consent of any Governmental Body or third parties.
(v) No facts, events or conditions relating to past properties, the Real Property or the business or operation of the Parks or properties contiguous thereto will (A) materially prevent, hinder or limit continued compliance by Buyer with Environmental and Safety Requirements, (B) give rise to any corrective, investigatory or remedial obligations on the part of Buyer pursuant to Environmental and Safety Requirements, or (C) give rise to any Environmental and Safety Liabilities.
(vi) Seller has not assumed, whether by Contract or operation of Law, any Liabilities or obligations of any third party under Environmental and Safety Requirements.
(vii) Seller has not transported, stored, treated, or disposed of, nor has Seller allowed or arranged for any third parties to transport, store, treat, or dispose of Hazardous Materials or other waste to or at any location other than a site lawfully permitted to receive such Hazardous Materials or waste and then in such a manner as would not be reasonably expected to create Environmental and Safety Liabilities.
(viii) There are no claims pending, or to the Knowledge of the Seller Parties threatened, against, or affecting the Real Property, the business or operations of the Parks or the Seller’s Assets, related to or arising under Environmental and Safety Requirements existing as of the date hereof. No Real Property is subject to any judgment, order or decree pursuant to Environmental and Safety Requirements.
(iv) No lien, covenant or use restriction has been imposed on any of the Seller’s Assets (including the Real Property) in connection with Environmental and Safety Requirements.
(b) Seller has delivered or made available to Buyer true, complete and correct copies of any environmental reports, audits, assessments, analyses, tests, monitorings, and all other documents materially bearing on compliance with Environmental and Safety Requirements, in the possession, custody or control of Seller pertaining to any property owned or operated in connection with the business and operation of the Parks, and a true, complete and correct list identifying all third party facilities at which Hazardous Materials are generated in connection with the business and operation of the Parks (whether by Seller or any prior owner or occupant), or where Hazardous Materials have been transported, treated, stored, handled or disposed within the past five years.
3.25 Accounts Receivable. Except as set forth on Schedule 3.25, the Accounts Receivable reflected on the Balance Sheet and the Accounts Receivable arising after the date thereof, with respect to the business and operation of the Parks, (a) have arisen from bona fide transactions entered into by Seller involving the sale of goods or the rendering of services in the Ordinary Course of Business consistent with past practice; (b) constitute only valid, undisputed claims of Seller not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the Ordinary Course of Business consistent with past practice; and (c) subject to a reserve for bad debts shown on the Balance Sheet or, with respect to Accounts Receivable arising after the Balance Sheet Date, on the accounting records of Seller, are collectible in full within ninety (90) days after billing. The reserve for bad debts shown on the Balance Sheet or, with respect to Accounts Receivable arising after the Balance Sheet Date, on the accounting records of Seller have been determined in accordance with GAAP, consistently applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.
3.26 No Other Representations and Warranties. Except for the representations and warranties contained in this Article III (including the related portions of the applicable Schedules), Seller has not made and does not make any other express or implied representation or warranty, either written or oral, on behalf of Seller, including any representation or warranty as to the accuracy or completeness of any information regarding the Seller’s Assets furnished or made available to Buyer and its Representatives, or as to the future revenue, profitability or success of the Seller’s business, or any representation or warranty arising from statute or otherwise in Law.
ARTICLE IV
REPRESENTATIONS OF BUYER
Buyer represents and warrants as follows:
4.01 Existence; Good Standing; and Authority of Buyer. Buyer is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware.
4.02 Power and Authority. Buyer has full legal power and authority to make, execute, deliver, and perform this Agreement and each of the other Acquisition Documents, and this Agreement and each of the other Acquisition Documents has been duly authorized and approved by all required action of Buyer, including by its Governing Authority. Buyer has taken all actions required by Law, its Organizational Documents or otherwise to duly authorize the execution and delivery of this Agreement and the other Acquisition Documents and the performance of its obligations hereunder and thereunder and no further authorization or consent of the Governing Authority or its equity owners is required in order to approve and consummate the Subject Transactions. This Agreement has been duly executed and delivered by Buyer and upon the execution and delivery of the remaining Acquisition Documents by a duly authorized officer of Buyer, the remaining Acquisition Documents will have been duly executed and delivered
by Buyer, and this Agreement is, and such other Acquisition Documents will be, upon due execution and delivery thereof, the legal, valid, and binding obligations of Buyer enforceable against it in accordance with the respective terms thereof.
4.03 Broker’s or Finder’s Fees. No agent, broker, person or firm acting on behalf of Buyer is, or will be, entitled to any commission or broker’s or finder’s fees from any of the parties hereto, or from any Affiliate of the parties hereto, in connection with any of the Subject Transactions.
4.04 No Conflict.
(a) Except for such filings as may be required under the HSR Act, neither the execution and delivery of this Agreement or any of the other Acquisition Documents nor the consummation or performance of any of the Subject Transactions will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of Buyer, or (B) any resolution adopted by the Governing Authority or equity owners of Buyer that is currently in effect;
(ii) contravene, conflict with, or result in a violation of, or give any Governmental Body of other Person the right to challenge any of the Subject Transactions or to exercise any remedy or obtain any relief under, any Law or any Order to which Buyer may be subject; or
(iii) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract to which Buyer is a party.
(b) Except for such filings as may be required under the HSR Act, Buyer is not required, and will not be required, to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the other Acquisition Documents or the consummation or performance of any of the Subject Transactions.
4.05 Litigation. There is no pending Proceeding that has been commenced against Buyer and that challenges, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Subject Transactions. To the Knowledge of Buyer, no such Proceeding has been threatened.
4.06 Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the Subject Transactions.
ARTICLE V
COVENANTS OF THE SELLER PARTIES
.Conduct of Business of the Seller Parties. Except as otherwise expressly permitted or required by the terms of this Agreement, or as set forth on Schedule 5.01, or consented to in writing by Buyer, during the period from the date of this Agreement to the Closing Date, each Seller shall conduct the operations of such Seller only in the Ordinary Course of Business and preserve intact the business organizations of such Seller, keep available the services of officers and employees of such Seller and maintain and preserve the rights, franchises, goodwill and satisfactory relationships with licensors, suppliers, distributors, lessees, customers and others having business relationships with such Seller. Without limiting the foregoing, during the period from the date of this Agreement to the Closing Date, unless otherwise expressly permitted or required by the terms of this Agreement, set forth on Schedule 5.01, or a Seller otherwise obtains the prior written approval of Buyer, each Seller will:
(a) refrain from modifying, amending or terminating the Organizational Documents of Seller;
(b) maintain the compensation payable, or to become payable, by Seller to any officer, employee or agent at their levels on the date of this Agreement;
(c) refrain from entering into any Contract or commitment except Contracts that are entered into in the Ordinary Course of Business;
(d) refrain from making any loans, advances or capital contributions to, or investments in, any other Person;
(e) refrain from incurring or committing to any capital expenditure, obligations or Liabilities in respect thereof which in the aggregate exceed or would exceed $100,000 on a cumulative basis;
(f) refrain from selling, issuing or authorizing the issuance of (i) any equity interests or other securities of any Seller; (ii) any option or right to acquire any equity interests or other securities of any Seller; or (iii) any instrument convertible into or exchangeable for any equity interests or other securities of any Seller;
(g) refrain from any action which may subject the respective assets of Seller to any Encumbrance of any kind or character (other than a Permitted Encumbrance);
(a)refrain from creating any easement, restriction or other Encumbrance on the Owned Real Properties (other than a Permitted Encumbrance), grant any lien or security interest on any portion of the Owned Real Property or Leased Real Property to secure any indebtedness or performance obligation, or modify, amend, or waive any provision of the Leases.
(i) refrain from modifying, amending or terminating any of the Assigned Contracts, except (i) for terminations upon expiration of such Assigned Contracts; or (ii) as required by applicable Law;
(j) refrain from selling, leasing (as lessor), transferring or otherwise disposing of, or mortgaging or pledging, or imposing any Encumbrance (other than any Permitted Encumbrance) on, any of the Seller’s Assets;
(k) refrain from (i) preparing or filing any Tax Return inconsistent with past practice or, on any such Tax Return, taking any position, making any election, or adopting any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods (including positions, elections or methods which would have the effect of deferring income to periods for which Buyer is liable pursuant to Section 6.10(a) or accelerating deductions to periods for which Seller is liable pursuant to Section 6.10(a)), (ii) settling or otherwise resolving any Tax claim, dispute or controversy with any Governmental Body or tax authority, and (iii) entering into any voluntary disclosure agreement in jurisdictions where Tax Returns are not filed as of the date hereof;
(l) refrain from accelerating or delaying collection of any notes or Accounts Receivable in advance of or beyond their regular due dates or the dates when the same would have been collected in the Ordinary Course of Business other than to the extent relating solely to the Excluded Assets;
(m) refrain from canceling any debts owed to or claims held by Seller (including the settlement of any claims or litigation) other than to the extent relating solely to the Excluded Assets;
(n) refrain from modifying or amending in any manner the executed Family Settlement Documents that have been deposited in escrow pending the Closing;
(o) preserve and maintain all Governmental Authorizations required for the operation or business of the Parks as currently conducted or the ownership and use of the Seller’s Assets;
(p) pay the debts, Taxes and other obligations when due that are applicable to the operation and business of the Parks or the ownership and use of the Seller’s Assets;
(q) continue to collect Accounts Receivable in a manner consistent with past practice, without discounting such Accounts Receivable other than to the extent relating solely to the Excluded Assets;
(r) maintain the properties and assets included in the Seller’s Assets in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;
(s) continue in full force and effect without modification all Insurance Policies, except as required by applicable Law;
(t) defend and protect the properties and assets included in the Seller’s Assets from infringement or usurpation;
(u) perform all of its obligations under all Assigned Contracts;
(v) maintain the Business Records in accordance with past practice;
(w) comply in all material respects with all Laws applicable to the operation and business of the Parks or the ownership and use of the Seller’s Assets; and
(x) refrain from taking any action, the taking of which, or from omitting to take any action, the omission of which, would cause any of the representations and warranties contained in Article III to fail to be true and correct in all respects as of the Closing Date as though made on and as of the Closing Date.
5.02 Review of Seller. The Seller Parties shall (a) permit Buyer and its Representatives to have, after the date of execution hereof, full and complete access to the premises (including, the Owned Real Property and the Leased Real Property) and to all the properties, assets, books, records and other documents of the Seller Parties to enable Buyer to make an examination of the Parks, Seller’s Assets, business, properties, assets, books, records and other documents of the Seller Parties as Buyer and its Representatives may determine; (b) cause the officers or other Representatives of the Seller Parties to furnish Buyer with such financial and operating data and other information with respect to the operations and business of the Parks and the Seller’s Assets as Buyer shall from time to time reasonably request, and (c) instruct the Representatives of the Seller Parties to cooperate with Buyer in connection with subsection (a) and (b) of this Section 5.02. Without limiting the foregoing, Seller shall permit Buyer and its Representatives to conduct environmental due diligence of the Real Property consistent with ASTM Standard: E1527-13 - Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process. No Phase II testing or intrusive testing will be allowed without the advance written approval of the Seller Parties which shall not be unreasonably withheld, conditioned or delayed, and which shall be deemed approved with respect to any Recognized Environmental Conditions identified in Buyer’s Phase I reports. Any investigation pursuant to this Section 5.02 shall be conducted in such manner as not to interfere with the operation and business of the Parks or any other businesses of Seller. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement.
5.03 No Negotiation. Until such time, if any, as this Agreement is terminated pursuant to Section 10.01, the Seller Parties and their Affiliates will not, and will cause their Representatives not to, directly or indirectly, solicit, initiate, or encourage any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, enter into any letter of intent or other agreements with, or consider the merits of any inquiries or proposals from, any Person (other than Buyer) relating to any transaction involving the sale of the Seller’s Assets or the business of the Parks (other than with respect to the sale of inventory in the Ordinary Course of Business), or any of the ownership interests in any Seller, or any merger, consolidation, business combination, or similar transaction involving any Seller. The Seller Parties will promptly communicate to Buyer the terms of any proposal received or the fact that any Seller has received inquiry with respect to, any such transaction, and the identity of any Persons who initiated or participated in such discussions or negotiations. The Seller Parties shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, any of the foregoing transactions. Seller agrees that the rights and remedies for noncompliance with this Section 5.03 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.
5.04 License Agreements. From and after the Closing, except for the limited purpose and duration set forth in the South Padre License Agreements attached to Schedule 5.04(a) and the Corpus Christi License Agreement attached to Exhibit J, the Seller Parties (i) shall cease their use of and shall have no right to use the name “SCHLITTERBAHN” in any form, and shall remove, permanently delete or destroy, or otherwise cover the name “SCHLITTERBAHN” that appears on any Excluded Asset, and (ii) agree not to use the “SCHLITTERBAHN” name or any variation thereof in any respect following the Closing. Without Buyer’s prior written consent, the Seller Parties shall not, and shall not permit any third party to, amend, modify or in any way alter the terms and conditions of the South Padre License Agreements prior to Closing or otherwise.
5.05 Lien and Guaranty Release. Three (3) days prior to Closing, the Seller Parties shall deliver to Buyer duly executed letters or similar written confirmation from the financial institutions and other Persons to which any Indebtedness is outstanding or otherwise available and that are listed on Schedule 3.14(b) (each, a “Lender” and, such letters or written confirmations, the “Payoff and Release Letters”), in form and substance reasonably satisfactory to Buyer and in each case conditioned upon the Closing: (a) indicating the total amount required to be paid to fully satisfy all Indebtedness as of the Closing Date (and the daily accrual thereafter) (the “Payoff Amount”); (b) providing that upon receipt of the Payoff Amount, the agreements, notes and related instruments evidencing such Indebtedness shall be terminated, all commitments thereunder shall be terminated and all obligations of Seller relating to such Indebtedness shall be released; (c) stating that all Encumbrances, guarantees and agreements to subordinate in connection therewith relating to any Assets securing such Indebtedness shall be, upon the payment of the Payoff Amount, released and terminated; and (d) authorizing the applicable Seller or its designee (which may be Buyer or
its counsel) to file and/or deliver, as applicable, all necessary Uniform Commercial Code termination statements and mortgage releases upon payment of the Payoff Amount. After the Closing, the Seller Parties shall make and cause to be made, and execute, and cause to be executed, all filings, releases, discharges, deeds and other documents necessary to evidence the termination and release by all Lenders of all Encumbrances in respect of such Indebtedness.
5.06 Transition of Business Records.
(a) From and after the Closing, the Seller Parties shall transition the Business Records (excluding the Business Records that constitute Excluded Assets), to a platform or file(s) reasonably acceptable to Buyer and cooperate and consult with Buyer in connection therewith. Any such Business Records requested by Buyer shall be provided to Buyer by the Seller Parties within a commercially reasonable period of time.
(b) For a period of five (5) years after the Closing, in order to facilitate the resolution of any claims made against or incurred by the Seller Parties prior to Closing or for any other reasonable purpose, the Buyer shall (i) retain the Business Records (including personnel files of Hired Employees) relating to periods prior to the Closing in a commercially reasonable manner, and (ii) upon reasonable notice, afford the Sellers’ Representative reasonable access (including the right to make, at Seller Parties’ expense, photocopies), during normal business hours, to such Business Records.
(c) Neither Buyer nor the Seller Parties shall be obligated to provide the other party with access to any books or records or business records (including personnel files) pursuant to this Section 5.06 where such access would violate any Law.
ARTICLE VI
ADDITIONAL COVENANTS
6.01 Return of Documents and Disclosure. If this Agreement is terminated for any reason pursuant to Section 10.01, each party shall return all documents and materials and copies thereof which shall have been furnished by or on behalf of the other party, and each party hereby covenants that such party will not disclose to any Person any confidential or proprietary information about the other party or any information regarding the Subject Transactions, except insofar as may be necessary to assert its rights hereunder or as required by Law.
6.02 Cooperation. From the date hereof until the Closing, the Seller Parties shall use their Best Efforts to cause the conditions in Article VII to be satisfied. From the date hereof until the Closing, Buyer shall use its Best Efforts to cause the conditions in Article VIII to be satisfied.
6.03 Publicity. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements or otherwise communicate with any news media in respect of this Agreement or the Subject Transactions without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement.
6.04 Confidentiality.
(a) Buyer acknowledges and agrees that the Confidentiality Agreement remains in full force and effect in accordance with its terms and, in addition, covenants and agrees to keep confidential, in accordance with the provisions of the Confidentiality Agreement, information provided to Buyer pursuant to this Agreement. If this Agreement is, for any reason, terminated prior to the Closing, the Confidentiality Agreement and the provisions of this Section 6.04 shall nonetheless continue in full force and effect.
(b) From and after the Closing, each Seller shall, and shall cause its Affiliates and Representatives to, hold in confidence, any and all information, whether written or oral, concerning the business or operations of the Parks or the Seller’s Assets, except to the extent that Seller can show that such information (i) is generally available to and known by the public through no fault of Seller, any of its Affiliates or their respective Representatives; or (ii) is lawfully acquired by Seller, any of its Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Seller or any of its Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, Seller shall promptly notify Buyer in writing and shall disclose only that portion of such information which Seller is advised by its counsel in writing is legally required to be disclosed, provided that Seller shall use its Best Efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.
6.05 Notification.
(a) Between the date of this Agreement and the Closing Date, the Seller Parties (through the Sellers’ Representative) shall promptly notify Buyer in writing of:
(i) any fact, circumstance, event or action, the taking of which, (A) has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in or would result in, any representation and warranty or covenant made by any Seller hereunder not being true and correct, or (C) has resulted in or would result in, the failure of any of the conditions set forth in Article VII to be satisfied;
(ii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Subject Transactions; and
(iii) any notice or other communication from any Governmental Body in connection with the Subject Transactions.
(b) Buyer’s receipt of information pursuant to this Section 6.05 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the Seller Parties in this Agreement and shall not be deemed to amend or supplement the Schedules.
6.06 Non-Competition; Non-Solicitation.
(a) For a period of five (5) years commencing on the Closing Date (the “Restricted Period”), the Restricted Persons, shall not, and shall not permit any of their Affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) cause, induce or encourage any material actual or prospective client, customer, supplier or licensor of the Parks (including any existing or former client or customer of Seller and any Person that becomes a client or customer of Buyer or its Affiliates or the Parks after the Closing), or any other Person who has a material business relationship with the Parks, to terminate or modify any such actual or prospective relationship. Notwithstanding the foregoing, each Restricted Person may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if such Restricted Person is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own five percent (5%) or more of any class of securities of such Person. Notwithstanding anything in this Section 6.06, pursuant to the Family Settlement Documents it is contemplated that the Restricted Persons will retain their ownership in, and continue the operation of, the following entities that own and operate the indoor waterpark located at the waterpark commonly known as “Schlitterbahn South Padre Island” (the “Indoor South Padre Waterpark”): (i) SPI Beach Resort Waterpark, LLC, (ii) Schlitterbahn Beach Resort Management, LLC, and (iii) SPI BRWP Holdings, LLC, each a Texas limited liability company (collectively, the “South Padre Entities”), and the parties hereby agree that the South Padre Entities’ continued ownership and operation of the Indoor South Padre Waterpark will not be in violation of the provisions set forth in this Section 6.06(a) or in the Consulting Agreement; provided however, that the Restricted Persons shall not, through the South Padre Entities or otherwise, expand the business of the Indoor South Padre Waterpark, including, without limitation, through the acquisition of additional real properties, assets or businesses that engage in the Restricted Business.
(b) During the Restricted Period, each Restricted Person shall not, and shall not permit any of their Affiliates to, directly or indirectly, hire or solicit any Person who is offered employment by Buyer pursuant to Section 6.08 or is or was employed by Buyer or its Affiliates in the Restricted Business during the Restricted Period, or encourage any such employee to leave such employment or hire any such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any such employees.
(c) Each Restricted Person acknowledges that a breach or threatened breach of this Section 6.06 would give rise to irreparable harm to Buyer and its Affiliates, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by any Restricted Person or their Affiliates of any such obligations, Buyer and its Affiliates shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).
(d) Each Restricted Person acknowledges that the restrictions contained in this Section 6.06 are reasonable and necessary to protect the legitimate interests of Buyer and its Affiliates and constitute a material inducement to Buyer to enter into this Agreement and consummate the Subject Transactions. In the event that any covenant contained in this Section 6.06 should
ever be adjudicated to exceed the time, geographic, product or service or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by applicable Law. The covenants contained in this Section 6.06 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.
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Required Approvals; Consents.
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(a) As promptly as practicable after the date of this Agreement, the Seller Parties shall (i) make all filings required by Laws to be made by them in order to consummate the Subject Transactions, and (ii) give all notices and use Best Efforts to obtain all consents (provided, however, that nothing in this Agreement will require any of the Seller Parties to pay any amounts or other consideration to such Persons in exchange for the provision of such consents), as applicable, from the Persons set forth on Schedule 2.06(a)(xv). Between the date of this Agreement and the Closing Date, the Seller Parties shall cooperate with Buyer with respect to all filings that Buyer elects to make or is required by Laws to make in connection with the Subject Transactions.
(b) As promptly as practicable after the date of this Agreement, Buyer shall make all filings required by Laws to be made by it in order to consummate the Subject Transactions. Between the date of this Agreement and the Closing Date, Buyer shall (i) cooperate with the Seller Parties with respect to all filings that the Seller Parties elect to make or are required by Laws to make in connection with the Subject Transactions, and (ii) cooperate with the Seller Parties in giving all notices and obtaining all consents, as applicable, that are set forth on Schedule 2.06(a)(xv).
(c) Notwithstanding Section 6.07(a) and (b), if required by the HSR Act and if not filed prior to the date hereof, each of the parties hereto agrees to cause any necessary filings pursuant to the HSR Act with respect to the Subject Transactions to be made within five (5) Business Days after the date hereof, and to include in such filings a request for early termination of the applicable HSR Act waiting period. Any filing fees for any filings under the HSR Act will be paid by Buyer. In connection with the foregoing, Buyer and the Seller Parties will cooperate using Best Efforts to:
(i) promptly and fully inform the other party of any written or oral communication received from or given to the Federal Trade Commission, the Antitrust Division of the Department of Justice, or any other Governmental Body or any Person relating to any inquiry, investigation, or proceeding relating to the Subject Transactions or any filing submitted to any Governmental Body and promptly provide the other a copy of any written communication or filing received from or provided to any Governmental Body or Person regarding the Subject Transactions;
(ii) allow the other party to review in advance and to the extent practicable, consult with one another on and consider in good faith the views of the other with respect to any written communication or submission to any Governmental Body relating to any inquiry, investigation, or proceeding involving the Subject Transactions; and
(iii) agree not to participate in any substantive meeting or discussion with any Governmental Body regarding any filing, inquiry, or investigation relating to the Subject Transactions unless, to the extent practicable, it consults with the other party in advance, and to the extent not prohibited by Law and permitted by the Governmental Body, gives the other party, or its outside counsel, reasonable notice and an opportunity to attend and participate.
(iv) Buyer and the Seller Parties may reasonably designate any competitively sensitive information provided to the other under this Section as “Antitrust Counsel Only Material”. So designated materials and information contained therein shall be given only to outside antitrust counsel of the recipient unless express permission otherwise is obtained from the source of the materials or its legal counsel. In addition, Buyer agrees to pull and refile its initial filing under the HSR Act, pursuant to 16 C.F.R. § 803.12, if, after consultation with Seller, Buyer deems that it is reasonably likely to avoid issuance of a request for additional information and documentary materials under the HSR Act.
(d) Notwithstanding the foregoing, nothing in this Section 6.07 shall require, or be construed to require, Buyer or any of its Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Buyer or any of its Affiliates; (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect or materially and adversely impact the economic or business benefits to Buyer of the Subject Transactions; or (iii) any material modification or waiver of the terms and conditions of this Agreement.
6.08 Employees and Employee Benefits.
(a) Effective immediately prior to the Closing, Seller shall terminate all employees of Seller set forth on Schedule 6.08 (the “Terminated Employees”) who are actively employed as of the Closing, and, at Buyer’s sole discretion, Buyer may offer employment, with employment effective immediately after the Closing Date on an “at will” basis, to any or all of such employees (any employees so hired, a “Hired Employee”). Buyer shall hire and retain (for a sufficient period of time) a sufficient number of employees of the Seller immediately after the Closing such that notice shall not be required under the federal WARN Act as a result of the Subject Transactions.
(b) Seller shall be solely responsible, and Buyer shall have no obligations whatsoever for, any compensation or other amounts payable under any Employee Benefit Plan or otherwise to any current or former employee, officer, director, independent contractor or consultant of Seller (including the Terminated Employees), including hourly pay, commission, bonus, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay for any period relating to the service with Seller at any time on or prior to the Closing Date and Seller shall pay all such amounts to all entitled persons on or prior to the Closing Date.
(c) Seller shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health accident or disability benefits brought by or in respect of current or former employees, officers, directors, independent contractors or consultants of Seller (including the Terminated Employees) or the spouses, dependents or beneficiaries thereof, which claims relate to events occurring on or prior to the Closing Date. Seller also shall remain solely responsible for all worker’s compensation claims of any current or former employees, officers, directors, independent contractors or consultants of Seller (including the Terminated Employees), which relate to events occurring on or prior to the Closing Date. Seller shall pay, or cause to be paid, all such amounts to the appropriate persons as and when due.
(d) Each Terminated Employee who becomes a Hired Employee shall be given service credit for the purpose of eligibility under the group health plan and eligibility and vesting only under the defined contribution retirement plan for his or her period of service with Seller prior to the Closing Date; provided, however, that (i) such credit shall be given pursuant to payroll or plan records, and (ii) such service crediting shall be permitted and consistent with Buyer’s defined contribution retirement plan.
6.09 Bulk Sales Laws. The parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Assets to Buyer; it being understood that any Liabilities arising out of the failure of the Seller Parties to comply with the requirements and provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction which would not otherwise constitute Assumed Liabilities shall be treated as Excluded Liabilities.
6.10 Tax Matters.
(a) The Seller Parties shall be liable for and covenant to pay pursuant to this Section 6.10, and the Seller Parties jointly and severally agree to indemnify and hold harmless each Buyer Group Member from and against any and all Losses incurred by such Buyer Group Member in connection with or arising from, all Taxes (whether assessed or unassessed) applicable to any Seller, the Assets and the Assumed Liabilities, in each case, attributable to taxable years or periods ending on or prior to the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period ending on or prior to the Closing Date.
(b) Buyer shall be liable for and shall pay all Taxes (whether assessed or unassessed) applicable to the Assets and the Assumed Liabilities that are attributable to taxable years or periods beginning after the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period beginning after the Closing Date; provided, that Buyer shall not be liable for any Taxes for which any Seller is liable under this Agreement. For purposes of this Section 6.10, any Straddle Period shall be treated on a “closing of the books” basis as two partial periods, one ending at the close of the Closing Date and the other beginning on the day after Closing Date, except that Taxes (such as property Taxes) imposed on a periodic basis shall be allocated on a daily basis.
(c) Notwithstanding Section 6.10(a), any transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) attributable to the sale or transfer of the Assets or the Assumed Liabilities (including any real property transfer Tax and any other similar Tax) shall be borne and paid half by the Seller Parties and half by Buyer when due. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).
(d) The Seller Parties, on the one hand, or Buyer, on the other hand, shall provide reimbursement for any Tax paid by one party all or a portion of which is the responsibility of the other party in accordance with the terms of this Section 6.10. Within a reasonable time prior to the payment of any said Tax, the party paying such Tax shall give notice to the other party of
the Tax payable and the portion which is the liability of each party, although failure to do so will not relieve the other party from its liability hereunder.
(e) All Tax Returns for any Straddle Period shall be prepared by Seller and presented to Buyer for its comments no later than thirty (30) days before the due date of such Tax Return. Seller shall consider in good faith any comments received from Buyer and then file such Tax Returns.
(f) After the Closing Date, the Seller Parties (through the Sellers’ Representative) and Buyer shall (and cause their respective Affiliates to): (i) assist the other party in preparing any Tax Returns which such other party is responsible for preparing and filing; (ii) cooperate fully in preparing for any audits of, or disputes with taxing authorities regarding, any Tax Returns or the Assets; (iii) make available to the other and to any taxing authority as reasonably requested all information, records and documents relating to Taxes or the Assets; (iv) provide timely notice to the other in writing of any pending or threatened Tax audits or assessments relating to Taxes or the Assets for taxable periods for which the other may have a liability under this Section 6.10; and (v) furnish the other with copies of all correspondence received from any taxing authority in connection with any Tax audit or information request with respect to any such taxable period.
(g) Notwithstanding anything to the contrary in this Agreement, the obligations of the parties set forth in this Section 6.10 shall be unconditional and absolute and shall remain in effect without limitation as to time.
6.11 R&W Insurance Policy. Prior to the Closing, Buyer shall use Best Efforts to obtain and bind the R&W Insurance Policy on the terms and conditions reasonably satisfactory to Buyer and the Seller Parties. The Seller Parties shall cooperate with Buyer’s efforts and provide assistance as reasonably requested by Buyer to obtain and bind the R&W Insurance Policy. Prior to the Closing, the Seller Parties and Buyer shall cause to be paid, all costs and expenses related to the R&W Insurance Policy, including the total premium, underwriting costs, brokerage commissions, and other fees and expenses of such policy. An amount equal to 50% of such premium, underwriting costs, brokerage expenses, and other fees and expenses of such policy shall be the responsibility of Buyer and the other 50% shall be responsibility of Seller Parties and shall be deemed Transaction Expenses hereunder.
6.12 Real Estate Matters.
(a) Existing Title Policies. Each applicable Seller has provided Buyer with copies of their existing title insurance policies issued by a title company for the Owned Real Property.
(b) Title Insurance Policies. At Closing, Buyer may obtain a title insurance policy or policies (and any available extended coverages and/or endorsements) from the Title Company or any other title company selected by Buyer for the Owned Real Property to be conveyed and transferred to Buyer under this Agreement, and/or one leasehold policy for the Leased Real Property. The title insurance policy or policies for the Owned Real Property and/or the Leased Real Property will insure indefeasible title to each such Owned Real Property and/or Leased Real Property subject to the standard exceptions to title. Buyer shall be responsible for the cost of the base premium title insurance policy, and for the costs of any extended coverage, any title endorsements requested by Buyer, as well as the cost of any lender coverage.
(c) Conveyance of Title. At Closing, each applicable Seller will convey the Owned Real Property pursuant to the special warranty deeds described in Section 2.06(a)(iii). Each applicable Seller shall remove from title, at or before Closing, all mortgages or deeds of trust or other security interest secured by a lien on any Owned Real Property or any part thereof.
(d) Title or Survey Objections. Buyer shall have the right to order a title search to be performed with regard to the Owned Real Property and Leased Real Property, and to order a commitment for title insurance (each, a “Commitment,” and together, the “Commitments”) to be issued by the Title Company or any other nationally recognized title insurance company with regard to all or part of such Owned Real Properties and Leased Real Properties, all at Buyer’s sole cost and expense. No later than the later of (i) thirty (30) days after the date of this Agreement, or (ii) thirty (30) days after receipt of the Commitments (the “Title Objection Date”) Buyer may deliver written notice to the Sellers’ Representative of any title or survey defect, lien, or other matter set forth in the Commitment that encumbers or adversely affects any such Owned Real Property or Leased Real Property that is reasonably unacceptable to Buyer, together with complete copies of each of any title report or Commitment, and all documents and instruments referred to therein. If Buyer does not deliver such written notice to the Sellers’ Representative on or before the Title Objection Date, Buyer shall be deemed to waive any right to object to such defects, shall accept title to the affected Owned Real Property and/or Leased Real Property subject to such defects. If, on or before the Title Objection Date, Buyer properly gives notice to the Sellers’ Representative of Buyer’s objections, Sellers’ Representative shall, within ten (10) Business Days after receiving such notice, notify Buyer whether Sellers’ Representative will or will not attempt to cure such objections. Failure by Sellers’ Representative to deliver such notice shall be deemed the Sellers’ Representative’s election not to cure any objections.
(e) Buyer Notice. If Sellers’ Representative elects (or is deemed to have elected) not to attempt to cure such objections, Buyer shall be entitled, by giving notice (the “Buyer Notice”) to the Sellers’ Representative within five (5) Business Days after receiving such notice from Sellers’ Representative (or the date on which Sellers’ Representative was deemed to have provided such notice), to (x) proceed to Closing without any reduction in the Purchase Price, (y) remove the Owned Real Property or Leased Real Property with the uncured material defect from this Agreement in which case the Closing shall nevertheless proceed, except that the Purchase Price shall be reduced by the portion of the Purchase Price allocation attached hereto allocated to such Owned Real Property or Leased Real Property, and such Owned Real Property or Leased Real Property shall no longer be a part of the Real Property being transferred hereunder, or (z) terminate this Agreement in which event the parties shall have no further rights or obligations under this Agreement except for those that specifically survive termination.
6.13 Accounts Receivables. From and after the Closing, if any Seller or any of its Affiliates receives or collects any funds relating to any Accounts Receivable or any other Assets, such Seller or its Affiliate shall remit such funds to Buyer within five (5) Business Days after its receipt thereof. From and after the Closing, if Buyer or its Affiliates receives or collects any funds relating to any Excluded Asset, Buyer or its Affiliates shall remit any such funds to Sellers’ Representative within five (5) Business Days after its receipt thereof.
6.14 Lot Splitting. Regarding the Owned Real Property located at 635 E. Torrey (parcel number 48750) in New Braunfels, Texas, Buyer and the Seller Parties agree that (i) the Seller Parties will transfer at Closing .974 acres of such Owned Real Property (as described on Appendix 5 of the Family Settlement Agreement included in the Family Settlement Documents) pursuant to the terms of Section 7(b) of that Family Settlement Agreement; and (ii) the Seller Parties (or a Person designated by the Seller Parties) shall transfer ownership and title of the remaining portion of such Owned Real Property (1.833 acres in aggregate) to Buyer (or controlled Affiliates designated by Buyer) at Closing.
ARTICLE VII
CONDITIONS TO BUYER’S OBLIGATIONS
7.01 The Buyer’s obligation to consummate the Subject Transactions is subject to the satisfaction of the following conditions:
(a) Truth of Representations and Warranties of the Seller Parties. (i) The Seller Fundamental Reps shall be true and correct as of the Closing Date as though made on and as of the Closing Date (except for the Seller Fundamental Reps specifically made as of an earlier date, which shall be true and correct as of such specified date) and (ii) the other representations and warranties set forth in Article III shall be true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” qualifier set forth therein) at and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date (except for such representations and warranties specifically made as of an earlier date, which shall be true and correct as of such specified date), except, in the case of clause (ii) for any inaccuracies which would not reasonably be expected to result in a Material Adverse Effect.
(b) Covenants and Agreements of the Seller Parties. The Seller Parties shall have performed in all material respects all covenants, agreements and obligations required to be performed by the Seller Parties under this Agreement at or prior to Closing. The Seller Parties shall have delivered to Buyer a certificate to such effect, dated as of the Closing Date and signed on behalf of the Seller Parties by an authorized officer of each such Seller.
(c) No Material Adverse Effect. Prior to the Closing Date, there shall not have occurred, with respect to the Assets or the business or operations of the Parks, any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect, and the Seller Parties shall have delivered to Buyer a certificate to such effect, dated as of the Closing Date and signed on behalf of the Seller Parties by an authorized officer of each such Seller. For the avoidance of doubt, the certificates called for in Section 7.01(a)-(c) can be the same certificate.
(d) No Injunction. No Proceeding shall have been instituted to prohibit or otherwise challenge the legality or validity of the consummation of the Subject Transactions.
(e) Necessary Governmental Approvals. The parties shall have received all approvals and actions of or by all Governmental Bodies necessary to consummate the Subject Transactions that are required to be obtained prior to the Closing by applicable Law, and the filings of Buyer and the Seller Parties pursuant to the HSR Act, if any, shall have been made and the applicable waiting period and any extensions thereof shall have expired or been terminated.
(f) Required Consent. The Seller Parties shall have delivered to Buyer the Required Consent and such Required Consent shall be in full force and effect.
(g) Seller Closing Deliverables. The Seller Parties shall have delivered to Buyer all of the items described in Section 2.06(a).
(h) Title Insurance Policies. The Title Company is prepared to issue the title insurance policies with respect to each Owned Real Property and Leased Real Property (if Buyer elects to purchase such leasehold title policies), subject only to (a) Permitted Encumbrances, (b) the encumbrances or exceptions to title shown on the Title Commitment to which Buyer does not object pursuant to the terms hereof or which are otherwise allowed pursuant to this Agreement, and (c) any matters shown on the survey to which Buyer does not object pursuant to the terms hereof or which are otherwise allowed pursuant to this Agreement.
(i) Consent of UG and STAR Bonds Agreement. The Seller Parties shall have delivered to Buyer: (i) the written consent of UG (which, for the avoidance of doubt, can be included in the STAR Bonds Acknowledgement and Assumption Agreement) to transfer to Buyer (or controlled Affiliates designated by Buyer) certain obligations, covenants and agreements of the STAR Bonds Agreement applicable to the Kansas City Waterpark, and (ii) the STAR Bonds Acknowledgement and Assumption Agreement, each in form and substance satisfactory to Buyer in its sole and absolute discretion.
7.02 KC Delayed Closing. Notwithstanding anything to the contrary in this Agreement, if, on the potential Closing Date, each of the conditions set forth in Section 7.01 above has been satisfied or waived other than the condition set forth in Section 7.01(i) (the “Delayed KC Closing Scenario”), Buyer shall be obligated to consummate the Texas Transaction subject to the terms of this Agreement. In the event of a Delayed KC Closing Scenario (the “KC Delayed Closing”) the Buyer’s obligation to consummate the Subject Transactions involving the Kansas City Waterpark is subject to the satisfaction of the following condition:
(a) The conditions precedent of Section 7.01 (other than the condition precedent in Section 7.01(f)) shall apply, mutatis mutandis, to the consummation of the Subject Transactions involving the Kansas City Waterpark.
7.03 Delayed KC Closing Scenario; Interpretation. In the event of the Delayed KC Closing Scenario, for purposes of interpreting certain defined terms in this Agreement, the following defined terms shall be modified as set forth below:
(a) Whenever the terms “Closing” and “Closing Date” are used in Article 3 and Sections 2.01, 2.03, 2.04, 2.06(a), 2.07, 5.01, 5.05, 5.06, 6.02, 6.05, 6.07, 6.08, 6.10 and 6.12 such terms shall, in respect of the Subject Transactions applicable to the Kansas City Waterpark in the event of a Delayed KC Closing Scenario, be deemed to refer, mutatis mutandis, to the KC Delayed Closing and the date of the KC Delayed Closing, respectively. For the avoidance of doubt, in the event of a Delayed KC Closing Scenario and after the consummation of the Texas Transaction, the Seller Parties will not be in breach of Section 6.06 as the result of the Kansas City Sellers’ ownership of the Kansas City Waterpark;
(b) Whenever the term “Parks” is used in Sections 2.01 and 2.03 such term shall, in respect of the Texas Transaction in the event of a Delayed KC Closing Scenario, be deemed to refer, mutatis mutandis, to the Galveston Waterpark and the New Braunfels Waterpark; and
(c) Whenever the term “Parks” is used in Sections 2.01 and 2.03 such term shall, in respect of the Subject Transactions applicable to the Kansas City Waterpark in the event of a Delayed KC Closing Scenario, be deemed to refer, mutatis mutandis, to the Kansas City Waterpark.
7.04 Should the KC Delayed Closing not have occurred by the date that is One Hundred Twenty (120) days after the effective date of this Agreement, Buyer may elect, in its sole and absolute discretion, to not consummate the Subject Transactions applicable to the Kansas City Waterpark, in which case, all obligations of Buyer under this Agreement related to the Kansas City Waterpark shall terminate, including, without limitation, the obligation to acquire the Assets applicable to the Kansas City Waterpark and the obligations set forth in Section 2.02(g).
ARTICLE VIII
CONDITIONS TO SELLER PARTIES’ OBLIGATIONS
The Seller Parties’ obligation to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions:
8.01 Truth of Representations and Warranties of Buyer. (a) the Buyer Fundamental Reps shall be true and correct as of the Closing Date as though made on and as of the Closing Date (except for the Buyer Fundamental Reps specifically made as of an earlier date, which shall be true and correct as of such specified date) and (b) the other representations and warranties set forth in Article IV above shall be true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” qualifier set forth therein) at and as of the Closing Date, with the same force and effect as if made on and as of the Closing Date (except for such representations and warranties specifically made as of an earlier date, which shall be true and correct as of such specified date), except, in the case of clause (b) for any inaccuracies which would not reasonably be expected to have a material adverse effect on Buyer’s ability to perform its obligations under this Agreement or prevent the consummation of the Subject Transactions.
8.02 Covenants and Agreements of Buyer. Buyer shall have performed in all material respects all covenants, agreements and obligations required to be performed by Buyer under this Agreement at or prior to Closing, and Buyer shall have delivered to the Sellers’ Representative a certificate to such effect, dated the Closing Date and signed on behalf of Buyer by an authorized officer of Buyer. For the avoidance of doubt, the certificates called for in Section 8.01 and 8.02 can be the same certificate.
8.03 No Injunction. No Proceeding shall have been instituted to prohibit or otherwise challenge the legality or validity of the consummation of the Subject Transactions.
8.04 Necessary Governmental Approvals. The parties shall have received all approvals and actions of or by all Governmental Bodies necessary to consummate the Subject Transactions that are required to be obtained prior to the Closing by applicable Law, and the filings of Buyer and the Seller Parties pursuant to the HSR Act, if any, shall have been made and the applicable waiting period and any extensions thereof shall have expired or been terminated.
8.05 Buyer Closing Deliverables. Buyer shall have delivered to the Sellers’ Representative all of the items described in Section 2.06(b).
8.06 Delayed KC Closing Scenario.
(a) For the avoidance of doubt, in the event of the Delayed KC Closing Scenario, any conditions or obligations in this Article VIII related to the Kansas City Waterpark shall not be applicable to the Texas Transaction, and the Galveston Sellers and the New Braunfels Sellers shall be obligated to consummate the Texas Transaction if all of the conditions in this Article VIII that are unrelated to the Kansas City Waterpark have been satisfied or waived, as applicable.
(b) For the avoidance of doubt, in the event of the Delayed KC Closing Scenario, any conditions or obligations in this Article VIII related to the New Braunfels Waterpark and the Galveston Waterpark shall not be applicable to the KC Delayed Closing, and the Kansas City Sellers shall be obligated to consummate the KC Delayed Closing if all of the conditions in this Article VIII that are related to the Kansas City Waterpark have been satisfied or waived, as applicable.
ARTICLE IX
INDEMNIFICATION
9.01 Indemnification by Seller Parties.
(a) Subject to the limitations set forth herein, the Seller Parties jointly and severally (other than with respect to the Galveston Sellers, whose indemnification obligations hereunder shall be several and not joint and shall be limited to Losses set forth in Section 9.01(c)) shall indemnify and hold harmless Buyer, its Representatives and Affiliates (collectively, the “Buyer Group Members”), from and against any and all Losses incurred by such Buyer Group Members arising from or in connection with:
(i) any breach of any warranty or the inaccuracy of any representation or certification of a Seller contained or referred to in this Agreement or in any certificate or other document delivered by or on behalf of a Seller pursuant to this Agreement or in any other Acquisition Document;
(ii) any breach by a Seller of any of its covenants or agreements, or any failure of a Seller to perform any of its obligations, in this Agreement or in any other Acquisition Document;
(iii) any Excluded Liability; or
(iv) any claim by any Person for broker’s or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with any Seller (or any Person acting on the behalf of a Seller) in connection with the Subject Transactions.
(b) The indemnification provided for in clause (i) of Section 9.01(a) shall terminate on the date that is twelve (12) months after the Closing Date (and no claims shall be made by any Buyer Group Member under clause (i) of Section 9.01(a) thereafter), except that the indemnification by the Seller Parties shall continue as to the representations and warranties set forth in (i) Sections 3.01, 3.03, and 3.22 (the “Seller Fundamental Reps”), as to which no time limitation shall apply, (ii) Section 3.24, until the date that is forty-eight (48) months after the Closing Date, and (iii) Section 3.13, until sixty (60) days following the expiration of the statute of limitations (taking into account any extensions or waivers thereof) applicable to the collection of the applicable Tax that is the subject of such representations and warranties. All covenants and agreements of the Seller Parties contained herein shall survive the Closing indefinitely or for the period of time explicitly given to such covenant or agreement. Notwithstanding the foregoing, any claims of which any Buyer Group Member has notified the Sellers’ Representative of in accordance with the requirements of Section 9.04 on or prior to the date such indemnification would otherwise terminate in accordance with this Section 9.01(b), shall continue until the liability of the Seller Parties shall have been determined pursuant to this Article IX and the Seller Parties shall have reimbursed all Buyer Group Members for the full amount of such Loss in accordance with this Article IX.
(c) The Galveston Sellers’ obligations under Section 9.01, and their obligation to indemnify the Buyer Group Members, are limited to (i) the representations and warranties applicable to the Assets of the Galveston Sellers, (ii) the covenants to which such Galveston Sellers’ are subject, and (iii) the Losses pertaining to such Galveston Sellers, the Galveston Waterpark and the Assets used in the operation of the Galveston Waterpark, including, without limitation, any Losses incurred by the Buyer Group Members pursuant to Section 9.01(a) as a result of items (i)-(iii) of this Section 9.01(c). Except to the extent of amounts held in the Indemnity Escrow Account, the Galveston Sellers will have no responsibility to indemnify the Buyer Group Members for Losses that arise from or relate to the representations made by the New Braunfels Sellers or the Kansas City Sellers, Excluded Liabilities pertaining to the New Braunfels Sellers or the Kansas City Sellers, the obligations of the New Braunfels Sellers for other Losses that arise from or relate to the New Braunfels Waterpark or the Assets used in the operation of the New Braunfels Waterpark, or the obligations of the Kansas City Sellers for other Losses that arise from or relate to the Kansas City Waterpark or the Assets used in the operation of the Kansas City Waterpark.
9.02 Indemnification by Buyer.
(a) Subject to the limitations set forth herein, Buyer shall indemnify and hold harmless the Seller Parties, their Representatives and Affiliates (collectively, the “Seller Group Members”) from and against any and all Losses incurred by such Seller Group Members arising from or in connection with:
(i) any breach of any warranty or the inaccuracy of any representation or certification of Buyer contained or referred to in this Agreement or in any certificate or other document delivered by or on behalf of Buyer pursuant to this Agreement or in any other Acquisition Document;
(ii) any breach by Buyer of any of its covenants or agreements, or any failure by Buyer to perform any of its obligations, in this Agreement or in any other Acquisition Document;
(iii) any Assumed Liability; or
(iv) any claim by any Person for broker’s or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer (or any Person acting on the behalf of Buyer) in connection with the Subject Transactions.
(b) The indemnification provided for in clause (i) of Section 9.02(a) shall terminate on the date that is twelve (12) months after the Closing Date (and no claims shall be made by the Seller Parties under clause (i) of Section 9.02(a) thereafter), except that the indemnification by Buyer shall continue as to Sections 4.01, 4.02, and 4.03 (the “Buyer Fundamental Reps”), as to which no time limitation shall apply. All covenants and agreements of the Buyer contained herein shall survive the Closing indefinitely or for the period of time explicitly given to such covenant or agreement. Notwithstanding the foregoing, any claims
of which a Seller Group Member has notified Buyer in accordance with the requirements of Section 9.04 on or prior to the date such indemnification would otherwise terminate in accordance with this Section 9.02(b), shall continue until the liability of Buyer shall have been determined pursuant to this Article IX and Buyer shall have reimbursed all Seller Group Members for the full amount of such Loss in accordance with this Article IX.
9.03 Certain Limitations.
(a) The indemnification provided for in Section 9.01 and Section 9.02, as applicable, shall be subject to the limitations set forth in this Section 9.03.
(b) Except for inaccuracies in the Seller Fundamental Reps, the Tax representation and warranties set forth in Section 3.13 and claims arising from fraud or willful misconduct, the Seller Parties shall not be liable to any Buyer Group Member for indemnification under Section 9.01(a)(i), until the aggregate amount of all Losses in respect of indemnification under Section 9.01(a)(i) exceeds $1,335,000.00 (the “Deductible”), in which event the Seller Parties shall only be required to pay or be liable for Losses in excess of the Deductible. Except for inaccuracies in the Buyer Fundamental Reps and claims arising from fraud or willful misconduct, the Buyer shall not be liable to any Seller Group Member for indemnification under Section 9.02(a)(i) until the aggregate amount of all Losses in respect of indemnification under Section 9.02(a)(i) exceeds an amount equal to the Deductible, in which event the Buyer shall only be required to pay or be liable for Losses in excess of the Deductible.
(c) Except for inaccuracies in the Seller Fundamental Reps, the Tax representation and warranties set forth in Section 3.13 and claims arising from fraud or willful misconduct, the aggregate amount of all Losses for which the Seller Parties shall be liable pursuant to Section 9.01(a)(i) shall not exceed $1,335,000.00 (the “Cap”). Except for inaccuracies in the Buyer Fundamental Reps and claims arising from fraud or willful misconduct, the aggregate amount of all Losses for which the Buyer shall be liable pursuant to Section 9.02(a)(i) shall not exceed the Cap.
(d) From and after the Closing, any Losses for which a Buyer Group Member is entitled to indemnification pursuant to Section 9.01(a)(i) shall be satisfied:
(i) first, from the Indemnity Escrow Account, pursuant to the terms of the Escrow Agreement; and
(ii) second, by recovery under the R&W Insurance Policy (with the R&W Insurance Policy and the Indemnity Escrow Account serving as the Buyer Group Members’ sole and exclusive source of recovery for any Losses arising under Section 9.01(a)(i), except for inaccuracies in any Seller Fundamental Reps, the Tax representation and warranties set forth in Section 3.13 and claims arising from fraud or willful misconduct).
(e) From and after the Closing, with respect to any Losses for which a Buyer Group Member is entitled that arise from (i) an inaccuracy in the Seller Fundamental Reps, (ii) an inaccuracy in the Tax representation and warranties set forth in Section 3.13, (iii) fraud or willful misconduct of the Seller Parties, or (iv) claims made pursuant to Sections 9.01(a)(ii)-(iv), Buyer shall utilize the Indemnity Escrow Account as the first source of recovery and then, to the extent the amount remaining in the Indemnity Escrow Account is insufficient, Buyer shall be able to recover all such Losses directly from the applicable Seller Parties and such Losses shall not be subject to the Deductible and Cap; provided, however, that if any funds in the Indemnity Escrow Account are used as a source of recovery for any Losses for which a Buyer Group Member is entitled (A) based on the fraud or willful misconduct of the Seller Parties or (B) claims made pursuant to Sections 9.01(a)(ii)-(iv), the applicable Seller Parties agree to replenish all funds taken from the Indemnity Escrow Account for such purpose within five (5) Business Days from the date of disbursement of such funds from the Indemnity Escrow Account.
(f) For purposes of this Article IX, any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty.
(g) Payments by an Indemnitor pursuant to Section 9.01 or Section 9.02, as applicable, in respect of any indemnifiable Loss shall be net of any insurance recovery (after deducting therefrom the amount of any expenses incurred by the Indemnified Party in procuring such recovery) actually received by the Indemnified Party on account of such indemnifiable Loss from an unaffiliated party. The Indemnified Party shall use its Best Efforts to recover under insurance policies or indemnity, contribution or other similar agreements for any Losses prior to seeking indemnification under this Agreement.
9.04 Notice of Claims. Any Buyer Group Member or Seller Group Member making a claim for indemnification under this Article IX is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this Article IX is referred to as the “Indemnitor”.
(a) Any Indemnified Party seeking indemnification hereunder shall give to the Indemnitor a notice (a “Claim Notice”) describing in reasonable detail the facts giving rise to any claim for indemnification hereunder and shall include in such Claim Notice (if then known) the amount or the method of computation of the amount of such claim, and a reference to the provision of this Agreement or any other Acquisition Document, agreement, document or instrument executed hereunder or in connection herewith upon which such claim is based; provided, that a Claim Notice in respect of any pending or threatened action at Law or suit in equity by or against a third Person as to which indemnification will be sought (each such action or suit being a “Third Person Claim”) shall be given reasonably promptly after the action or suit is commenced, but in any event not later than thirty (30) days after receipt of, or becoming aware of, such Third Party Claim; provided, further, that failure to give such notice shall not relieve the Indemnitor of its obligations hereunder except to the extent it shall have been materially prejudiced by such failure.
(b) After the giving of any Claim Notice pursuant hereto, the amount of indemnification to which an Indemnified Party shall be entitled under this Article IX shall be determined: (i) by the written agreement between the Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any court of competent jurisdiction; or (iii) by any other means to which the Indemnified Party and the Indemnitor may agree. The judgment or decree of a court shall be deemed final when the time for appeal, if any, shall have expired and no appeal shall have been taken or when all appeals taken shall have been finally determined. Promptly after the determination of the amount of indemnification pursuant to this Section 9.04(b), the Indemnitor shall satisfy such amount in the manner provided in Section 9.03.
9.05 Third Person Claims. The Indemnified Party shall have the right to conduct and control, through counsel of its choosing, the defense, compromise or settlement of any Third Person Claim against such Indemnified Party as to which indemnification will be sought by any Indemnified Party from any Indemnitor hereunder, and in any such case the Indemnitor shall reasonably cooperate in connection therewith and shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the Indemnified Party in connection therewith (excluding, for avoidance of doubt, any records, information, testimony or materials that the Indemnitor reasonably believes are subject to protection under the attorney-client privilege or work product doctrine as it concerns the Indemnitor and its legal counsel); provided, that: (i) the Indemnitor may participate, through counsel chosen by it and at its own expense, in the defense of any such Third Person Claim as to which the Indemnified Party has so elected to conduct and control the defense thereof; and (ii) the Indemnified Party shall not, without the written consent of the Indemnitor (which written consent shall not be unreasonably withheld or delayed), pay, compromise or settle any such Third Person Claim.
9.06 Mitigation. Except with respect to Taxes, each party shall take, and cause its Affiliates to take, commercially reasonable steps to mitigate any Losses upon becoming aware of any event or circumstances that would reasonably be expected to be subject to indemnification pursuant to this Article IX, except that no party shall be required to commence any action, suit, claim or proceeding against any Person even if it would otherwise be commercially reasonable to do so.
9.07 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.
9.08 Manner of Payment; Escrow.
(a) Within five (5) Business Days following the final determination of an indemnification claim to which a Buyer Group Member is entitled pursuant to this Article IX, Buyer and Sellers’ Representative shall deliver joint written instructions to the Escrow Agent, instructing the Escrow Agent to release funds from the Indemnity Escrow Account to Buyer in the amount of such finally determined claim.
(b) Promptly, and in any event within five (5) Business Days following the twelve (12) month anniversary of the Closing Date (and at any time thereafter to the extent the funds then held by the Escrow Agent exceed the aggregate amount claimed by Buyer pursuant to claims timely made prior to the twelve (12) month anniversary of the Closing Date in accordance with this Article IX and the Escrow Agreement, but that have not been finally determined), Buyer and Sellers’ Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to distribute any remaining funds held by the Escrow Agent (minus the aggregate amount claimed by Buyer pursuant to claims timely made in accordance with this Article IX and the Escrow Agreement, and not finally determined prior to such date) to Sellers’ Representative (for further distribution to the New Braunfels Sellers and the Kansas City Sellers, as applicable) and to the Galveston Sellers pursuant to the Allocation Notice and such wiring instructions provided by the Sellers’ Representative in joint written instructions to the Escrow Agent.
9.09 Exclusive Remedies. Except for remedies that cannot be waived as a matter of Law and injunctive and provisional relief (including specific performance), this Article IX and the provisions of Section 6.10 shall be the exclusive remedy for breaches of this Agreement (including the breach of or inaccuracy in any covenant, obligation, representation or warranty contained in this
Agreement or in any certificate or other document delivered pursuant to this Agreement); provided, however, that in the event of intentional fraud, intentional misrepresentation or willful breach of the covenants or agreements contained herein, by Buyer or any Seller, any Indemnified Party shall have all remedies available at Law or in equity (including for tort) with respect thereto. In furtherance of the foregoing, each party hereby waives (on behalf of itself and of its Affiliates), to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of or inaccuracy in any representation, warranty, covenant, agreement or obligation set forth in this Agreement or otherwise relating to the subject matter of this Agreement that it may have against the other parties and their respective Affiliates, based on any Law, except pursuant to the indemnification provisions set forth in this Article IX, Section 6.10, and as otherwise expressly provided in the preceding sentence.
ARTICLE X
TERMINATION
10.01 Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual written agreement of Buyer and the Seller Parties;
(b) by Buyer by written notice to the Sellers’ Representative if:
(i) Buyer is not then in material breach of any provision of this Agreement and there has been a breach of, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by any Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VII and such breach, inaccuracy or failure has not been cured by such Seller within five days of the Sellers’ Representative’s receipt of written notice of such breach from Buyer; or
(ii) any of the conditions specified in Article VII shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by July 31, 2019 (the “Termination Date”), unless such failure shall be due to the failure of Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing.
(c) by the Seller Parties by written notice to Buyer if:
(i) the Seller Parties are not then in material breach of any provision of this Agreement and there has been a breach of, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VIII and such breach, inaccuracy or failure has not been cured by Buyer within five days of Buyer’s receipt of written notice of such breach from the Sellers’ Representative; or
(ii) any of the conditions set forth in Article VIII shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by the Termination Date, unless such failure shall be due to the failure of the Seller Parties to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by such Seller Parties prior to the Closing;
(d) by Buyer or the Seller Parties if:
(i) there shall be any Law that makes consummation of the Subject Transactions illegal or otherwise prohibited;
(ii) any Governmental Body shall have issued a Governmental Authorization or Order restraining or enjoining the Subject Transactions, and such Governmental Authorization or Order shall have become final and non-appealable; or
(iii) if the waiting period under the HSR Act relating to the Subject Transactions has not expired or otherwise been terminated within sixty (60) days after the HSR Filing Date.
10.02 Effect of Termination. Each of the party’s right of termination under Section 10.01 is in addition to any other rights it may have under this Agreement or otherwise, including, without limitation, its right to specific performance under Section 11.09, and the exercise of such right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 10.01, all obligations of the parties under this Agreement will terminate, except that the obligations of the parties in Section 6.04, this Article X, and Article XI will survive such termination; provided, however, that if this Agreement is terminated
pursuant to Section 10.01, nothing shall relieve either party from Losses arising from or relating to (i) any breach of this Agreement by such party occurring prior to such termination; or (ii) any inaccuracy in any representation or warranty made by such party in this Agreement, and the parties shall have the right to pursue all legal and equitable remedies with respect thereto.
ARTICLE XI
MISCELLANEOUS
11.01 Assignment; Successors and Assigns. The rights of the parties under this Agreement shall not be assignable and the performance obligations of the parties under this Agreement may not be delegated, whether by transfer, merger, operation of law, change of control or otherwise, without the prior written consent of the other party; provided, however, that Buyer may assign its rights to purchase the Assets and assume the Assumed Liabilities to one or more of its controlled Affiliates, but no such assignment shall relieve it of its performance obligations hereunder. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns. The successors and permitted assigns hereunder shall include, in the case of Buyer, any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise). Except as set forth in Article IX, nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon any Person other than the parties and successors and assigns permitted by this Section 11.01 any right, remedy or claim under or by reason of this Agreement. Any assignment of rights or delegation of performance obligations violating this Agreement will be void.
11.02 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02):
If to the Seller Parties: Schlitterbahn Seller Rep, LLC
600 N. Hickory
New Braunfels, Texas 78130
Attention: Gary Henry
Email: ghenry53@outlook.com
and: GALVESTON ISLAND WATER PARK, L.P.
c/o AN H20, Inc.
Attention: Mortgage and Real Estate Investment Department
2525 South Shore Blvd., Suite 207
League City, Texas 77573
With a copy to: Dykema Gossett PLLC
112 E. Pecan Street, Suite 1800
San Antonio, Texas 78205
Attention: Will Liebmann
Email: wliebmann@dykema.com
Greer, Herz & Adams, LLP
2525 South Shore Blvd., Suite 203
League City, Texas 77573
Attention: Darryl H. Levy
Email: dlevy@greerherz.com
If to Buyer: Millennium Operations LLC
One Cedar Point Drive
Sandusky, OH 44870
Attention: Duffield Milkie
Email: dmilkie@cedarfair.com
With a copy to: Squire Patton Boggs (US) LLP
127 Public Square, Suite 4900
Cleveland, OH 44114
Attention: Cipriano S. Beredo, Esq.
Facsimile: (216) 479-8780
Email: Cipriano.Beredo@SquirePB.com
11.03 Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each of the parties hereto and delivered to each of the Buyer and the Seller Parties. Delivery of a facsimile copy of an executed signature page, or delivery via email of a PDF or other electronic copy of an executed signature page to this Agreement shall be as effective as manual delivery of a manually executed counterpart of this Agreement.
11.04 Entire Agreement; Amendments. This Agreement, the Acquisition Documents, the Exhibits and Schedules referred to herein and/or attached hereto contain the sole and entire understanding and agreement of the parties hereto with regard to the subject matter contained herein or therein, and supersede all prior and contemporaneous agreements and understandings, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the Acquisition Documents, the Exhibits and Schedules (other than an exception expressly set forth as such in the Schedules), the statements in the body of this Agreement will control. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by Buyer and the Seller Parties.
11.05 Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any party, it is authorized in writing by an authorized representative of such party. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.
11.06 Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable Law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such invalid, illegal or unenforceable provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.
11.07 Further Assurances. From time to time following the Closing, the Seller Parties shall execute and deliver, or cause to be executed and delivered, to Buyer such other instruments of conveyance, assignment, and transfer and take such other action as Buyer may reasonably request or as may be otherwise necessary to more effectively convey, assign, and transfer to, and vest in, Buyer and put Buyer in possession of, any part of the Assets, and, in the case of Assigned Contracts, licenses, certificates, approvals, authorizations, easements and other commitments included in the Assets.
11.08 Governing Law; Submission to Jurisdiction; Specific Performance; Service of Process; Waiver of Jury Trial.
(a) This Agreement and each of the other Acquisition Documents (except to the extent otherwise expressly set forth therein) shall be governed by and construed in accordance with the internal Laws (as opposed to the conflicts of law provisions) of the State of Delaware. Except as otherwise expressly set forth in any other Acquisition Documents and subject to the arbitration provisions contained Section 2.08(b) with regard to the adjudication of certain specified disputes by the Adjustment Arbitrator, by the execution and delivery of this Agreement all parties hereto irrevocably and exclusively submit to the personal jurisdiction of any state or federal court in the State of Delaware located in New Castle County in any suit or proceeding arising out of or relating to this Agreement or any other Acquisition Document (except to the extent otherwise expressly set forth therein) and waive any and all objections to such jurisdiction, including any claim or objection that such court is in an inconvenient forum. This Agreement may be pleaded by any party or any of their respective Affiliates or Representatives as a full and complete defense and may be used as the basis for an injunction against any action, suit or proceeding instituted or maintained against it in violation of this Agreement. Except as otherwise expressly set forth in any other Acquisition Document, each of the parties to this Agreement agree that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or any other Acquisition Document shall be properly served or delivered if delivered in the manner contemplated by Section 11.02.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE ACQUISITION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ACQUISITION DOCUMENTS OR THE SUBJECT TRANSACTION. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.08(b).
11.09 Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity. Without limiting the preceding sentence, if any party commits a breach, or threatens to commit a breach, of any of the provisions of Section 5.03, 6.03 or 6.04, the other party or parties shall have the right and remedy, in addition to any others, to have the provisions of those respective sections, as the case may be, specifically enforced by any court having equity jurisdiction, together with an accounting therefor, it being acknowledged and understood by the parties that any such breach or threatened breach of any of those provisions by the breaching party would cause irreparable injury to the non-breaching party and that money damages would not provide an adequate remedy therefor.
11.10 Expenses. Unless otherwise expressly set forth herein, each party hereto will pay all costs and expenses incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its Representatives.
11.11 Mutual Drafting. Each party hereto has participated in the drafting of this Agreement, which each party acknowledges is the result of extensive arms-length negotiations between the parties. In the event that any ambiguity or question of intent arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption, burden of proof or rule requiring construction or interpretation shall arise or be imposed favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. In addition, the other Acquisition Documents shall be construed as if drafted jointly by the parties and no presumption, burden of proof or rule requiring construction or interpretation shall arise or be imposed favoring or disfavoring any party by virtue of the authorship of any of the provisions of the Acquisition Documents.
11.12 Release.
(a) Subject to Section 11.12(c) below, effective for all purposes as of the Closing, each Seller, on behalf of himself and his successors and assigns (collectively, the “Releasing Parties”), hereby unconditionally and irrevocably and forever releases and discharges Buyer, and its respective Affiliates, and each of their respective successors and assigns, and any present or former directors, managers, officers, employees or agents of such Person (each, a “Released Party”), of and from, and hereby unconditionally and irrevocably waive, any and all claims, debts, losses, expenses, proceedings, covenants, liabilities, suits, judgments, damages, actions and causes of action, obligations, accounts, and liabilities of any kind or character whatsoever, known or unknown, suspected or unsuspected, in contract, direct or indirect, at law or in equity that such party ever had or now has against any Released Party, for or by reason of any matter, circumstance, event, action, inaction, omission, cause or thing whatsoever in respect of (i) his, her or its ownership of the Parks or the Assets prior to Closing, and (ii) any Excluded Liabilities. Each Seller, on behalf of himself, herself or itself, and his, her or its successors and assigns, expressly waives all rights afforded by any statute which limits the effect of a release with respect to unknown claims.
(b) The Seller Parties understand the significance of this release of unknown claims and waiver of statutory protection against a release of unknown claims, and acknowledge and agree that this waiver is essential and material consideration in exchange for Buyer’s entry into this Agreement. The Seller Parties acknowledge that Buyer will be relying on the waiver and release provided in this Section 11.12 in connection with entering into this Agreement.
(c) Notwithstanding anything to the contrary set forth herein, (i) nothing contained in this Section 11.12 shall release any Released Party from its respective obligations and liabilities under this Agreement or any Acquisition Document or constitute a waiver of any claims that a Seller may bring or have to enforce any provision of this Agreement or any Acquisition Document, and (ii) this release shall only relate to those claims arising from conduct occurring on or before the Closing or any agreement in effect on or before the Closing (other than any agreement entered into in order to effectuate this Agreement).
11.13 Sellers’ Representative.
(a) At the Closing, without further act of any Seller, the Sellers’ Representative is hereby irrevocably appointed as agent and attorney-in-fact (with full power of substitution for each Seller) for and on behalf of the Seller Parties, to give and receive notices and communications, to authorize delivery to any Indemnified Party of cash in satisfaction of claims to any Indemnified Party for any breach of a representation or warranty in Article III of this Agreement or breach of covenant or agreement to be performed by the Seller Parties contained in this Agreement to be performed at or prior to Closing (a “Buyer Claim”); (i) to object to such deliveries, to retain and appoint advisors and to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, to negotiate and execute any waivers or amendments of this Agreement (provided that any such waiver or amendment that is materially and disproportionately adverse to any Seller shall also require the written consent of such Seller, as applicable), (ii) to take all actions necessary or appropriate in the judgment of the Sellers’ Representative for the accomplishment of the foregoing and in the defense of any Buyer Claim and any adjustment to the Purchase Price to be made pursuant to Section 2.08 of this Agreement, and (iii) to take all other actions which under this Agreement may be taken by the Sellers’ Representative and to do or refrain from doing any further act or deed on behalf of such Seller which Sellers’ Representative deems necessary or appropriate in its sole discretion relating to the Subject Transactions as fully and completely as such Seller could do if personally present. The Sellers’ Representative may resign from such position at any time upon written notice to Buyer, and shall appoint a replacement Sellers’ Representative on written notice to Buyer. In the event that the Sellers’ Representative does not appoint a replacement within thirty (30) days of such resignation, the position of Sellers’ Representative may be filled by approval of the Sellers. No bond shall be required of the Sellers’ Representative, and the Sellers’ Representative shall not receive compensation for its services. Notices or communications to or from the Sellers’ Representative shall constitute notice to or from each of the Sellers. The death or incapacity of any Seller shall not terminate the agency and power of attorney granted hereby to the Sellers’ Representative.
(b) A decision, act, consent or instruction of the Sellers’ Representative shall constitute a decision, act, consent or instruction of all the Seller Parties, with respect to the matters set forth in this Section 11.13 and shall be final, binding upon and conclusive with respect to each of such Seller, and Buyer may rely upon any such decision, act, consent or instruction of the Sellers’ Representative as being the decision, act, consent or instruction of each and every Seller. Buyer is hereby relieved from any liability to any Person for any acts done by it in accordance with such decision, act, consent or instruction of the Sellers’ Representative. Buyer shall be entitled to disregard any decisions or communications or writing made, given or executed by any Seller in connection with this Agreement unless the same is made, given or executed by the Sellers’ Representative in its capacity as such, and shall be entitled to deal exclusively with the Sellers’ Representative on all matters relating to this Agreement.
(c) All reasonable out-of-pocket fees and expenses (including fees payable to counsel, accountants and other professional fees) incurred by the Sellers’ Representative in connection with performing such function and in connection with the Subject Transactions and all payments, damages, costs, fees and expenses in connection with any dispute between the Sellers’ Representative and the Seller Parties under this Agreement shall be paid by the Seller Parties.
11.14 Third Party Consents. To the extent that Seller’s rights under any Assigned Contract or Governmental Authorization constituting an Asset, or any other Asset, may not be assigned to Buyer without the consent of another Person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and the Seller Parties, at their expense, shall use their Best Efforts to obtain any such consents; provided, however, that nothing in this Agreement will require any of the Seller Parties to pay any amounts or other consideration to such Persons in exchange for the provision of such consents. If any such consent is not obtained or if any attempted assignment would be ineffective or would impair Buyer’s rights under the Asset in question so that Buyer would not in effect acquire the benefit of all such rights, the Seller Parties, to the maximum extent permitted by Law and the Asset, shall act after the Closing as Buyer’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and the Asset, with Buyer in any other reasonable arrangement designed to provide such benefits to Buyer. Notwithstanding any provision in this Section 11.14 to the contrary, Buyer shall not be deemed to have waived its rights under Section 6.07(a) or Article VII unless and until Buyer either provides written waivers thereof or elects to proceed to consummate the transactions contemplated by this Agreement at Closing.
[Signature Page Follows]
The parties have executed this Agreement to be effective as of the date first set forth above.
BUYER:
MILLENIUM OPERATIONS LLC
By: /s/ Brian C. Witherow
Name: Brian C. Witherow
Title: EVP & CFO
SELLER PARTIES:
WATERPARK MANAGEMENT, INC.
By: /s/ Gary Henry
Name: Gary Henry
Title: President
GOLDEN SEAL INVESTMENTS, INC.
By: /s/ Gary Henry
Name: Gary Henry
Title: President
BAD-SCHLOSS, INC.
By: /s/ Gary Henry
Name: Gary Henry
Title: President
LIBERTY PARTNERSHIP, LTD.
By: /s/ Gary Henry
Name: Gary Henry
Title: General Partner
HENRY CONDO 1, LTD.
By: /s/ Gary Henry
Name: Gary Henry
Title: General Partner
HENRY-WALNUT, LTD.
By: /s/ Gary Henry
Name: Gary Henry
Title: General Partner
SVV I, LLC
By: /s/ Gary Henry
Name: Gary Henry
Title: Manager
KC WATERPARK MANAGEMENT, LLC
By: /s/ Gary Henry
Name: Gary Henry
Title: Manager
GALVESTON ISLAND WATER PARK, L.P.
By: ANH20, Inc., its General Partner
By: /s/ Robert J. Kirchner
Name: Robert J. Kirchner
Title: Vice President
GALVESTON WATERPARK MANAGEMENT, INC.
By: /s/ Gary Henry
Name: Gary Henry
Title: President
SELLERS’ REPRESENTATIVE:
Schlitterbahn Seller Rep, LLC
By: /s/ Gary Henry
Name: Gary Henry
Title: Manager
Solely with respect to their obligations under Section 6.06:
/s/ Gary Henry
Gary Henry
/s/ Jana Faber
Jana Faber
Exhibits
Exhibit A Definitions
Exhibit B Form of Bill of Sale, Assignment and Assumption Agreement
Exhibit C Form of Intellectual Property Assignment
Exhibit D-1 Form of Special Warranty Deed
Exhibit D-2 Form of Assignment and Assumption of Lease
Exhibit E Form of Consulting Agreement
Exhibit F-1 Form of South Padre Shared Services Agreement
Exhibit F-2 Form of Corpus Christi Shared Services Agreement
Exhibit F-3 Form of Family Tail Shared Services Agreement
Exhibit G Allocation of Purchase Price
Exhibit H Form of Escrow Agreement
Exhibit I Forms of Family Settlement Documents
Exhibit J Form of Corpus Christi License Agreement
Exhibit 3.1
SIXTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CEDAR FAIR, L.P.
TABLE OF CONTENTS
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Page
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ARTICLE I
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ORGANIZATIONAL MATTERS..................................................
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1
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1.1
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Domicile.................................................................................................
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1
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1.2
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Name......................................................................................................
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2
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1.3
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Registered Office and Agent: Principal Office......................................
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2
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1.4
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Power of Attorney..................................................................................
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2
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1.5
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Term........................................................................................................
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3
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ARTICLE II
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DEFINITIONS................................................................................
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3
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2.1
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Definitions.............................................................................................
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3
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ARTICLE III
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PURPOSE.......................................................................................
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11
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3.1
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Purpose..................................................................................................
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11
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ARTICLE IV
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CAPITAL CONTRIBUTIONS.......................................................
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11
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4.1
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General Partner.....................................................................................
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11
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4.2
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Limited Partners....................................................................................
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11
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4.3
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Additional Issuances of Units and Securities........................................
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11
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4.4
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No Preemptive Rights............................................................................
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12
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4.5
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Capital Accounts...................................................................................
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12
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4.6
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Interest....................................................................................................
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15
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4.7
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No Withdrawal......................................................................................
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15
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4.8
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Loans from Partners..............................................................................
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15
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4.9
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Splits and Combinations.......................................................................
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15
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ARTICLE V
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ALLOCATIONS AND DISTRIBUTIONS.....................................
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16
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5.1
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Allocations for Capital Account Purposes............................................
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16
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5.2
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Allocations for Tax Purposes................................................................
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17
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5.3
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Distributions..............................................................................................
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19
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ARTICLE VI
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MANAGEMENT AND OPERATION OF BUSINESS.................
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21
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6.1
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Management..........................................................................................
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21
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6.2
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Election of Board of Directors of General Partner by Limited Partners; Governance Matters..............................................................
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22
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6.3
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Certificate of Limited Partnership........................................................
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26
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6.4
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Reliance by Third Parties......................................................................
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26
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6.5
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Rights of General Partner as Limited Partner......................................
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27
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6.6
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Compensation and Reimbursement of General Partner........................
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27
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6.7
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Outside Activities...................................................................................
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27
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6.8
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Partnership Funds.................................................................................
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28
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6.9
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Loans to or from General Partners; Contracts with Affiliates.............
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28
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6.10
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Indemnification..........................................................................................
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29
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6.11
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Liability of General Partner..................................................................
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31
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6.12
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Resolution of Conflicts of Interest.........................................................
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31
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6.13
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Other Matters Concerning General Partners.......................................
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32
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6.14
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Title to Partnership Assets.....................................................................
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32
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ARTICLE VII
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RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.........
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32
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7.1
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Limitation of Liability............................................................................
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32
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7.2
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Management of Business.......................................................................
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32
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7.3
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Outside Activities...................................................................................
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32
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7.4
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Return of Capital...................................................................................
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32
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7.5
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Rights of Limited Partners Relating to the Partnership........................
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33
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7.6
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Rights of Special Limited Partners Relating to the Partnership...........
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33
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ARTICLE VIII
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BOOKS, RECORDS, ACCOUNTING AND REPORTS...............
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34
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8.1
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Records and Accounting........................................................................
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34
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8.2
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Fiscal Year.............................................................................................
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34
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8.3
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Reports..................................................................................................
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34
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8.4
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Other information..................................................................................
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35
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ARTICLE IX
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TAX MATTERS..............................................................................
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35
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9.1
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Preparation of Tax Return.....................................................................
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35
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9.2
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Tax Election...........................................................................................
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35
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9.3
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Tax Controversies..................................................................................
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35
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9.4
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Organizational Expenses.......................................................................
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36
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9.5
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Taxation as a Partnership.....................................................................
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36
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9.6
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Opinions Regarding Taxation as a Partnership....................................
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36
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9.7
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Withholding...........................................................................................
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36
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ARTICLE X
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PROHIBITIONS AND LIMITATIONS..........................................
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36
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10.1
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Prohibitions and Limitations.................................................................
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36
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ARTICLE XI
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TRANSFER OF INTEREST...........................................................
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37
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11.1
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Transfer..................................................................................................
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37
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11.2
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Transfer of Interests of General Partner...............................................
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37
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11.3
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Transfer of Units...................................................................................
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37
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11.4
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Transfer of Depositary Units.................................................................
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37
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11.5
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Restrictions on Transfer.........................................................................
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38
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ARTICLE XII
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ADMISSION OF PARTNERS........................................................
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38
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12.1
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Existing Partners...................................................................................
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38
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12.2
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Admission of Additional Limited Partners............................................
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38
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12.3
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Admission of Successor General Partner..............................................
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39
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12.4
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Amendment of Agreement and of Certificate of Limited Partnership...
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39
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ARTICLE XIII
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WITHDRAWAL OR REMOVAL OF PARTNERS........................
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40
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13.1
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Withdrawal or Removal of General Partner.........................................
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40
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13.2
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Withdrawal of Limited Partners............................................................
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41
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13.3
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Continuation of Partnership.................................................................
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41
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ARTICLE XIV
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DISSOLUTION AND LIQUIDATION..........................................
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41
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14.1
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Dissolution............................................................................................
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41
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14.2
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Continuation of Business of Partnership after Dissolution..................
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41
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14.3
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Liquidation............................................................................................
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42
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14.4
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Distribution in Kind..............................................................................
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43
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14.5
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Cancellation of Certificate of Limited Partnership...............................
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43
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14.6
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Reasonable Time for Winding Up..........................................................
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43
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14.7
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Return of Capital...................................................................................
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44
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14.8
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Capital Account Restoration.................................................................
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44
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14.9
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Waiver of Partition................................................................................
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44
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ARTICLE XV
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AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE.......................................................
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44
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15.1
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Amendments to be Adopted Solely by General Partner.........................
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44
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15.2
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Amendment Procedures.........................................................................
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45
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15.3
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Amendment Requirements.....................................................................
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45
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15.4
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Meetings................................................................................................
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45
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15.5
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Notice of a Meeting...............................................................................
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46
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15.6
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Record Date...........................................................................................
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46
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15.7
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Adjournment..........................................................................................
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46
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15.8
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Waiver of Notice; Consent to Meeting; Approval of Minutes...............
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46
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15.9
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Quorum.................................................................................................
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47
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15.10
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Conduct of Meeting...............................................................................
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47
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15.11
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Action Without a Meeting......................................................................
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47
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15.12
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Voting Rights.........................................................................................
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48
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ARTICLE XVI
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GENERAL PROVISIONS..............................................................
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48
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16.1
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Addresses and Notices...........................................................................
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48
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16.2
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Titles and Captions................................................................................
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49
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16.3
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Pronouns and Plurals............................................................................
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49
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16.4
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Further Action.......................................................................................
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49
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16.5
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Binding Effect........................................................................................
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49
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16.6
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Integration.............................................................................................
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49
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16.7
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Creditors................................................................................................
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49
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16.8
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Waiver....................................................................................................
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49
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16.9
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Counterparts...........................................................................................
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49
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SIXTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CEDAR FAIR, L.P.
WHEREAS, the Partnership was organized as a limited partnership under the laws of the State of Minnesota on May 13, 1983 under the name “Cedar Fair Limited Partnership” by the filing of a Certificate of Limited Partnership and Limited Partnership Agreement in the Office of the Secretary of State of the State of Minnesota under file number LP-1167, which was amended and restated on July 22, 1983 by the filing of a Certificate of Amendment to the Certificate of Limited Partnership and Amended and Restated Limited Partnership Agreement, which was further amended by the filing of a Certificate of Amendment to the Certificate of Limited Partnership and Amendment to the Amended and Restated Limited Partnership Agreement dated as of November 25, 1986, and which was amended and restated on December 30, 1986 by the filing of a Second Amended and Restated Certificate and Agreement of Limited Partnership (“Second Restated Agreement”); and
WHEREAS, the Partners caused (i) the domicile of the Partnership to be changed from the State of Minnesota to the State of Delaware, and, (ii) the name of the Partnership to be changed from “Cedar Fair Limited Partnership” to “Cedar Fair, L.P.” by filing a Certificate of Limited Partnership in the State of Delaware, which certificate amended the Second Restated Agreement, effective as of March 4, 1987; and
WHEREAS, the Partners amended and restated in its entirety the Second Restated Agreement as of April 21, 1987 (“Third Restated Agreement”); and
WHEREAS, the Partners amended and restated in its entirety the Third Restated Agreement as of March 5, 2004 (“Fourth Restated Agreement”); and
WHEREAS, the Partners amended and restated in its entirety the Fourth Restated Agreement as of June 8, 2004 (“Fifth Restated Agreement”);
WHEREAS, the Partners now desire to amend and restate in its entirety the Fifth Restated Agreement, all as hereinafter provided:
NOW, THEREFORE, this SIXTHAMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Cedar Fair, L.P., dated as of October 27, 2011, is entered into by and among Cedar Fair Management, Inc. an Ohio corporation, as General Partner, and all Persons who are Limited Partners as of such date, together with the Persons who become Partners as provided herein.
ARTICLE I
Organizational Matters
1.1 Domicile. (a) The Partners hereby enter into this Agreement in order to set forth their rights and obligations and certain matters related thereto. Except as expressly provided
herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Delaware Act.
(b) A Partnership Interest shall be personal property for all purposes.
1.2 Name. The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name of, “Cedar Fair, L.P.” The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words “limited partnership” or an abbreviation thereof shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction or for other general business purposes as the General Partner may deem appropriate. The General Partner in its sole discretion may change the name of the partnership at any time and from time to time.
1.3 Registered Office and Agent; Principal Office. The address of the registered office of the Partnership in the State of Delaware shall be located at Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801, and the registered agent for service of process on the Partnership in the State of Delaware at such registered office shall be The Corporation Trust Company. The principal office of the Partnership shall be located at One Cedar Point Drive, Sandusky, Ohio 44870, or such other place as the General Partner may from time to time designate by notice to the Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable.
1.4 Power of Attorney. (a) Each Partner hereby constitutes and appoints the General Partner and the Liquidator (and any successor to either thereof by merger, assignment, election or otherwise), and the authorized officers of each, with full power of substitution as his true and lawful agent and attorney-in-fact, with full power and authority in his name, place and stead:
(i) to execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (A) this Agreement, all certificates and other instruments and all amendments thereof that the General Partner or the Liquidator deems reasonable and appropriate or necessary to form or qualify, or to continue the qualification of, the Partnership as a limited partnership (or a partnership in which limited partners have limited liability) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (B) all certificates and instruments that the General Partner or the Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (C) all conveyances, certificates and other instruments that the General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including a certificate of cancellation; (D) all certificates and other instruments relating to the admission, withdrawal or substitution of any Partner pursuant to Articles XI, XII or XIII; (E) all certificates and other instruments (including this Agreement and amendments and restatements hereof) relating to the determination of the rights, preferences and privileges
of any class or series of Units issued pursuant to Section 4.3; and (F) all certificates and other instruments relating to the formation of subsidiaries;
(ii) to execute, swear to and acknowledge all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole discretion of the General Partner or the Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action which is made or given by the Partners hereunder, which is consistent with the terms of this Agreement or which is appropriate or necessary, in the sole discretion of the General Partner or the Liquidator, to effectuate the terms or intent of this Agreement, provided that, when Section 15.3 or 15.9 or any other provision of this Agreement establishes a percentage of the Limited Partners required to take any action, the General Partner or the Liquidator may exercise the power of attorney made in this Section 1.4(a)(ii) only after the necessary vote, consent or approval by a Majority Interest or other required percentage, as the case may be; and
(iii) to enter into the Deposit Agreement and to deposit Certificates owned by any Partner in the Deposit Account pursuant to the Deposit Agreement.
Nothing herein contained shall be construed as authorizing the General Partner to amend this Agreement except in accordance with Article XV or as may be otherwise expressly provided in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and not be affected by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or termination of any Partner and the transfer of all or any portion of his Partnership Interest and shall extend to such Partner’s heirs, successors, assigns and personal representatives. Each Partner hereby agrees to be bound by any representations made by the General Partner or the Liquidator acting in good faith pursuant to such power of attorney; and each Partner hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the General Partner or the Liquidator taken in good faith pursuant thereto. Each Partner shall execute and deliver to the General Partner or the Liquidator, within fifteen (15) days after receipt of its request therefor, such further designations, powers of attorney and other instruments as the General Partner or the Liquidator deems necessary to effectuate this Agreement and the purposes of the Partnership.
1.5 Term. The Partnership was formed under the laws of the State of Minnesota on May 13, 1983 and redomiciled under the laws of the State of Delaware on March 4, 1987. The Partnership shall continue as a limited partnership under the Delaware Act until the termination of the Partnership in accordance with the provisions of Article XIV.
ARTICLE II
Definitions
2.1 Definitions. The following definitions shall be applied for all purposes, unless otherwise clearly indicated to the contrary, to the terms used in this Agreement.
“Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner pursuant to Section 12.2 and shown as a Limited Partner on the books and records of the Partnership.
“Adjusted Capital Account” means, as of the last day of a taxable period, a Partner’s Capital Account as maintained pursuant to Section 4.5(a), (a) increased by any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulation §§1.704-2(g)(1) and 1.704-2(i)(5) and (b) decreased by the items described in Regulation §§1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulation §1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Adjusted Property” means any property, the Carrying Value of which has been adjusted pursuant to Section 4.5(d)(i) or 4.5(d)(ii).
“Affiliate” means any Person that directly or indirectly controls, is controlled by or is under common control with the Person in question. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“Agreed Value” of any Contributed Property means the fair market value of such property as determined by the General Partner using such reasonable method of valuation as it may adopt. The General Partner shall, in its discretion, use such method as it deems reasonable and appropriate to allocate the aggregate Agreed Value of Contributed Properties transferred to the Partnership in a single or integrated transaction among each separate property
“Agreement” means this Fifth Amended and Restated Agreement of Limited Partnership of the Partnership.
“Assignee” means a Person to whom one or more Units have been transferred, by assignment of a Depositary Receipt or otherwise in a manner permitted under this Agreement, and who has delivered a Transfer Application to the Depositary pursuant to the Deposit Agreement but who has not become an Additional Limited Partner.
“Available Cash” means (a) operating revenues of the Partnership, (including interest income, if any), less (b) the sum of (i) operating costs of the Partnership, (ii) payments of principal and interest on debt (including net scheduled and optional principal payments, excluding any amounts refinanced), (iii) provisions for the Fixed Asset Reserve, the Working Capital Reserve, provision for taxes, if any, and such other cash reserves from operating revenues as the General Partner, in its sole discretion, deems appropriate and (iv) capital expenditures to the extent not made out of the Fixed Asset Reserve. In computing Available Cash, no deduction shall be made for depreciation and amortization. For purposes of the computation, operating revenues shall not include Capital Transaction Proceeds, and operating costs shall include all ongoing costs of the Partnership and allocated general and administrative costs.
“Book-Tax Disparity” means, with respect to a Contributed Property or Adjusted Property, as of any date of determination, the difference between the Carrying Value of such Contributed Property or Adjusted Property, as of such date, and the adjusted basis thereof for federal income tax purposes, as of such date. A Partner’s or Assignee’s share of the Partnership’s Book-Tax Disparities in all of its Contributed Property and Adjusted Property will be reflected by the difference between such Partner’s or Assignee’s Capital Account balance, as maintained pursuant to Section 4.5, and such balance had the Capital Account been maintained strictly in accordance with tax accounting principles.
“Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the Government of the United States or the State of Delaware, New York or Ohio shall not be regarded as a Business Day.
“Capital Account” means the capital account maintained for a Partner or Assignee pursuant to Section 4.5(a).
“Capital Contribution” means any cash, cash equivalents or Contributed Property which a Partner contributes to the Partnership pursuant to Section 4.1, 4.2 or 4.3.
“Capital Transaction” means any of the following transactions: (a) a sale, refinancing, repayment, exchange, transfer, assignment or other disposition of all or a portion of any asset (but not including occasional sales in the ordinary course of business of inventory, furniture, fixtures and equipment); (b) any condemnation or deeding in lieu of condemnation of all or a portion of any asset; (c) any collection in respect of property, hazard or casualty insurance (but not rental or other income interruption insurance), unless such insurance proceeds are to be reinvested to replace the lost or damaged property, or any damage award; or (d) any other transaction the proceeds of which, in accordance with generally accepted accounting principles, are considered to be capital in nature.
“Capital Transaction Proceeds” means the net proceeds attributable to a Capital Transaction, determined after any repayments of Debt made, or expenses incurred, in connection with such Capital Transaction.
“Carrying Value” means (a) with respect to a Contributed Property or Adjusted Property, the Agreed Value of such property reduced (but not below zero) by all depreciation (as calculated pursuant to Section 4.5(b)(ii)) with respect to such Contributed Property or Adjusted Property, as the case may be, and (b) with respect to any other property the adjusted basis thereof for federal income tax purposes, as of any date of determination. The Carrying Value of any property shall be adjusted from time to time in accordance with Section 4.5(d) and to reflect changes, additions or other adjustments to the Carrying Value for dispositions, acquisitions or improvements of Partnership properties, as deemed appropriate by the General Partner.
“Certificate” means a non-negotiable certificate issued by the Partnership, substantially in the form of Annex I hereto, which is made a part hereof for all purposes, evidencing ownership of a limited partner Partnership Interest.
“Certificate of Limited Partnership” means the certificate of limited partnership of the Partnership filed with the Secretary of State of the State of Delaware, as it may be amended or restated from time to time.
“Change in Control” shall be deemed to occur if: (a) any person or group (as such term is defined in section 13(d)(3) of the Securities Exchange Act of 1934, as then in effect), other than the Partnership or any trustee or other fiduciary holding securities under an employee benefit plan of the Partnership, shall acquire, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 of the Securities Exchange Act of 1934, as then in effect) of more than twenty percent (20%), on a fully diluted basis, of the economic or voting interest in the Partnership’s then Outstanding Units, other than the acquisition of Units from the Partnership or by virtue of a merger or consolidation to which the Partnership is a party, (b) a merger or consolidation of the Partnership with any other Person, other than a merger or consolidation that would result in the Units of the Partnership Outstanding immediately prior thereto continuing to represent (either by remaining Outstanding or by being converted or exchanged for voting securities of the surviving or resulting entity or its parent corporation) more than fifty-one percent (51%) of the voting interest of the partnership interests or other voting securities of the Partnership or such surviving or resulting entity outstanding after such merger or consolidation, or (c) the liquidation of the Partnership or an agreement or agreements for the sale or disposition by the Partnership of all or substantially all of the assets of the Partnership.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.
“Contributed Property” means each property or other asset contributed to the Partnership, but excluding cash contributed or deemed contributed to the Partnership. Once the Carrying Value of a Contributed Property is adjusted pursuant to Section 4.5(d), such property shall no longer constitute a Contributed Property for purposes of Section 5.2(b) but shall thereafter constitute an Adjusted Property for such purposes.
“Debt” means, as to any Person, as of any date of determination, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (b) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person, (c) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof, and (d) lease obligations of such Person which in accordance with generally accepted accounting principles, should be capitalized.
“Delaware Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time, and any successor thereto.
“Deposit Account” means the account established by the Depositary pursuant to the Deposit Agreement.
“Deposit Agreement” means that agreement among the General Partner, in its capacity both as General Partner and as attorney-in-fact of holders of Depositary Units, the Partnership and the Depositary, as it may be amended or restated from time to time.
“Depositary” means the bank or other institution appointed by the General Partner in its sole discretion to act as depositary for the Depositary Units pursuant to the Deposit Agreement, or any successor to it as depositary.
“Depositary Receipt” means a depositary receipt, issued by the Depositary or agents appointed by the Depositary in accordance with the Deposit Agreement, evidencing ownership of one or more Depositary Units.
“Depositary Unit” means a depositary unit representing a Unit on deposit with the Depositary pursuant to the Depositary Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor to such statute.
“Fiscal Period” means each full calendar year or any period from the commencement of the calendar year during which the Partnership is wound up (including the application or distribution of all the assets pursuant to Article XIV) to the date of such final winding up.
“Fixed Asset Reserve” means the reserve to be established by the Partnership for fixed asset improvement and additional purposes pursuant to Section 6.1(d).
“General Partner” means Cedar Fair Management, Inc. and any successor thereto pursuant to the terms of this Agreement.
“Governance Documents” means the articles of incorporation, code of regulations or equivalent governance documents of the General Partner.
“Indemnitee” means the General Partner and its Affiliates and any partner, director, officer, employee, member or agent thereof, any officer, employee or agent of the Partnership or its Affiliates; and the trustee under the Trust Agreement (as defined in Section 6.2(b)(vi)).
“Limited Partner” means each Person who is shown as a limited partner of the Partnership on the books and records of the Partnership.
“Limited Partner Book Capital” means, as of any date of determination, the amount equal to the sum of the balances of the Capital Accounts of all Limited Partners, determined pursuant to Section 4.5 (prior to any adjustment pursuant to Section 4.5(d) requiring such valuation).
“Limited Partner Revaluation Adjustment” means, as of any date of determination, the amount, whether positive or negative, equal to (a) the product of (i) the total number of Units Outstanding multiplied by (ii) the Unit Price less (b) Limited Partner Book Capital.
“Liquidator” means the General Partner, or, if the General Partner has withdrawn or been removed from the Partnership or has dissolved or become bankrupt (as defined in Section 14.1),
the Person or committee approved by a Majority Interest to liquidate the Partnership pursuant to Section 14.3.
“Majority Interest” means the Record Holders holding more than fifty percent (50%) of the Units Outstanding at any particular time.
“NASDAQ” means the National Association of Securities Dealers Automated Quotation System.
“National Securities Exchange” means an exchange registered with the Securities and Exchange Commission under Section 6(a) of the Exchange Act.
“Net Agreed Value” means (a) in the case of any Contributed Property, the Agreed Value of such property reduced by any indebtedness or liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed and (b) in the case of any property currently distributed to a Partner pursuant to Section 5.3 or distributed in liquidation of the Partnership pursuant to Sections 14.3 and 14.4, the Partnership’s Carrying Value of such property at the time such property is distributed (as adjusted pursuant to Section 4.5(d) immediately prior to such distribution), reduced by any indebtedness either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution.
“Opinion of Counsel” means a written opinion of counsel (who may be regular counsel to the Partnership or the General Partner and who shall be acceptable to the General Partner) in form and substance acceptable to the Partnership or the General Partner.
“Outstanding” means (a) as to undeposited Units, the number of undeposited Units shown to be outstanding on the books and records of the Partnership and not deposited in the Deposit Account pursuant to the Deposit Agreement and (b) as to Depositary Units, the number of Depositary Units shown to be outstanding on the books and records of the Depositary.
“Partner” means the General Partner or a Limited Partner.
“Partnership” means the limited partnership as continued pursuant to this Agreement, including, unless the context clearly requires otherwise, all subsidiaries of the Partnership.
“Partnership Interest” means the interest of a Partner or Assignee in the Partnership.
“Partnership Revaluation Adjustment” means, as of any date of determination, the amount, whether positive or negative, equal to the Limited Partner Revaluation Adjustment divided by 99.999%.
“Percentage Interest” means (a) as to the General Partner, 0.001%, and (b) as to any Limited Partner or Assignee, the product of (i) 99.999% multiplied by (ii) a fraction, the numerator of which is the number of such Limited Partner’s or Assignee’s Units and the denominator of which is the total number of Units Outstanding as of the date of determination.
“Person” means an individual or a corporation, partnership, limited liability company, trust, unincorporated organization, association or other entity.
“Prescribed Asset Value” means, as of any date of determination, an amount equal to (a) the total cash amount or Carrying Value, as the case may be, of all Partnership assets as of such date of determination plus (b) the Partnership Revaluation Adjustment (whether positive or negative in amount).
“Recapture Income” means any gain recognized by the Partnership (computed without regard to any adjustment required by Section 734 or 743 of the Code) upon the disposition of any property or asset of the Partnership that does not constitute capital gain for federal income tax purposes because such gain represents the recapture of deductions previously taken with respect to such property or asset.
“Record Date” means the date established by the General Partner for determining the identity of (a) Limited Partners entitled to notice of or to vote at any meeting of Limited Partners, to vote by ballot or approve of Partnership action in writing without a meeting or to exercise rights in respect of any other lawful action of Limited Partners or (b) Record Holders of Units entitled to receive any report, notice or distribution.
“Record Holder” means (a) as to a Unit which is not on deposit pursuant to the Deposit Agreement, the Person shown as the owner of such Unit on the books and records of the Partnership, (b) as to a Depositary Unit, the Person in whose name the Depositary Units are registered on the books and records of the Depositary and (c) as to a general partner Partnership Interest, the Person shown as the owner of such Partnership Interest on the books and records of the Partnership.
“Regulation” or “Regulations” means the Treasury Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Residual Gain” or “Residual Loss” means any net gain or net loss, as the case may be, of the Partnership recognized for federal income tax purposes resulting from a sale, exchange or other disposition of a Contributed Property or an Adjusted Property, to the extent such net gain or net loss is not allocated pursuant to Section 5.2(b)(i)(1) or 5.2(b)(ii)(1) to eliminate Book-Tax Disparities.
“Securities Act” means the Securities Act of 1933, as amended, and any successor to such statute.
“Transfer Agent” means the Depositary or any bank, trust company or other Person appointed by the Partnership or the Depositary to act as transfer agent for the Depositary Units.
“Unadjusted Capital Account” means a Capital Account maintained for a Partner in accordance with Section 4.5(a) but without regard to any adjustment directly or indirectly resulting from the application of Section 4.5(d).
“Unit” means a Partnership Interest of a Limited Partner or Assignee representing such fractional part of the Partnership Interests of all Limited Partners and Assignees as shall be determined by the General Partner pursuant to Sections 4.2 and 4.3; provided that each Unit at any time Outstanding shall represent the same fractional part of the Partnership Interests of all Limited Partners and Assignees as each other Unit (unless any class or series of Units issued pursuant to Section 4.3(a) shall have designations, preferences or special rights such that a Unit of such class or series shall represent a greater or lesser part of the Partnership Interests of all Limited Partners and Assignees than a Unit of any other class or series of Units, in which event the Partnership Interest represented by a Unit of such class or series shall be determined in accordance with such designations, preferences and special rights as are fixed by the General Partner pursuant to Section 4.3(a)). Unless otherwise clearly indicated to the contrary, “Units” includes Depositary Units.
“Unit Price” means, as of any date of determination, (a) if the Depositary Units are listed or admitted to trading on one or more National Securities Exchanges, the average of the last reported sale prices per Depositary Unit regular way or, in case no such reported sale has taken place on any such day, the average of the last reported bid and asked prices per Depositary Unit regular way, in either case on the principal National Securities Exchange on which the Depositary Units are listed or admitted to trading, for the four trading days immediately preceding the date of determination, (b) if the Depositary Units are not listed or admitted to trading on a National Securities Exchange but are quoted by NASDAQ, the average of the closing bid per Depositary Unit for the four trading days immediately preceding such date of determination, as furnished by the National Quotation Bureau Incorporated or such other nationally recognized quotation service as may be selected by the General Partner for such purpose if said Bureau is not at the time furnishing quotations or (c) if the Depositary Units are neither listed for trading on a National Securities Exchange nor quoted by NASDAQ an amount equal to the fair market value of a Unit as of such date as determined by the General Partner using any reasonable method of valuation.
“Unrealized Gain” attributable to a Partnership property means, as of any date of determination, the excess, if any, of the fair market value of such property (as determined pursuant to Section 4.5(d)) as of such date of determination over the Carrying Value of such property as of such date of determination (prior to any adjustment to be made pursuant to Section 4.5(d) as of such date).
“Unrealized Loss” attributable to a Partnership property means, as of any date of determination, the excess, if any, of the Carrying Value of such property as of such date of determination (prior to any adjustment to be made pursuant to Section 4.5(d) as of such date) over the fair market value of such property (as determined pursuant to Section 4.5(d)) as of such date of determination.
“Working Capital Reserve” means the reserve to the established by the Partnership for working capital purposes pursuant to Section 6.1(d).
ARTICLE III
Purpose
3.1 Purpose. The purpose of the Partnership shall be to conduct any business which may lawfully be conducted by a limited partnership organized pursuant to the Delaware Act.
ARTICLE IV
Capital Contributions
4.1 General Partner. The General Partner shall not be required to contribute to the capital of the Partnership except as may be necessary to pay liabilities of the Partnership for which provision cannot otherwise be made. The General Partner shall at all times while serving in such capacity retain a Percentage Interest entitling it, except as otherwise provided in Article V, to at least .001% participation in the Partnership’s income, gains, losses, deductions and credits, but only for so long as the General Partner continues in such capacity.
4.2 Limited Partners. The Limited Partners own Units as set forth on the books and records of the Partnership.
4.3 Additional Issuances of Units and Securities. (a) Subject to Section 4.3(b), in order to raise additional capital or to acquire assets, to redeem or retire Partnership debt, to provide compensation or incentives to employees of the Partnership or of its Affiliates, including, without limitation, the General Partner, or for any other Partnership purposes, the General Partner is authorized to cause the Partnership to issue up to 750 million Units and options or other rights to acquire Units for any price, including a price that is more than or less than the fair market value of the Units at the time such options or other rights are either issued or exercised, at any time or from time to time to the General Partner, the Limited Partners, or other Persons and to admit them to the Partnership as Additional Limited Partners. Subject to Section 4.3(b), the General Partner shall have sole and complete discretion in determining the consideration and terms and conditions with respect to any future issuance of Units or options or other rights to acquire Units. In addition, the General Partner shall have sole and complete discretion, without the approval of any other Partners, to cause the Partnership to issue such Units, options or other rights to acquire Units, from time to time in one or more classes, or one or more series of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior or subordinate to existing classes and series of Limited Partners, as shall be fixed by the General Partner in the exercise of its sole and complete discretion, including, without limitation, (i) the allocation of items of Partnership income, gain, loss, deduction and credit to each such class or series of Units; (ii) the right of each such class or series of Units to share in Partnership distributions; (iii) the rights of each such class or series of Units upon dissolution and liquidation of the Partnership; (iv) the price at which and the terms and conditions, if any, upon which each such class or series of Units may be redeemed by the Partnership; (v) the rate at which and the terms and conditions upon which each such class or series of Units may be converted into another class or series of Units of the Partnership, if any such class or series is convertible into other securities of the Partnership; (vi) the terms and conditions upon which each such class or
series of Units will be issued, deposited with the Depositary, evidenced by the Depositary Receipts and assigned or transferred, (vii) the right of each such class or series of Units to vote on Partnership matters, including matters relating to the relative rights, preferences and privileges of each such class or series; and (viii) the right of each such class or series of Units to share in capital or to require the increase or reduction of Capital Accounts or the shifting of capital between and among Limited Partners. Upon or prior to the issuance of any class or series of Units which shall not be identical to the Units outstanding on the date hereof, the General Partner, without the approval at the time of any Limited Partner, may amend any provision of this Agreement, each Limited Partner hereby approving any and each such amendment, and, exercising the power of attorney granted pursuant to Section 1.4(a)(i)(E), may execute, swear to, acknowledge, deliver, file and record such documents as the General Partner may, in its sole discretion, determine to be necessary or appropriate in connection therewith in order to reflect the authorization and issuance of each such class or series of Units or options or rights to acquire Units and the relative rights and preferences thereof. The General Partner is also authorized to cause the Partnership to issue any other type of security (including, without limitation, secured and unsecured debt obligations of the Partnership, debt obligations of the Partnership convertible into or exchangeable for any class or series of Units that may be issued by the Partnership or options, rights, warrants or appreciation rights relating to any class or series of Units, any debt obligations or any combination of any of the foregoing) from time to time to the General Partner, the Limited Partners or other Persons on terms and conditions established in the sole and complete discretion of the General Partner. The General Partner shall do all things it deems to be appropriate or necessary to comply with the Delaware Act and is authorized and directed to do all things it deems to be appropriate or necessary in connection with any such future issuance, including compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency or any securities exchange on which the Units or other such security are listed for trading.
(b) The General Partner or any Affiliate thereof may, but is not obligated to, make Capital Contributions to the Partnership in the form of cash or other property in exchange for Units. The number of Units issued to the General Partner or any such Affiliate in exchange for any Capital Contribution shall not exceed the Net Agreed Value of the Contributed Property or the amount of cash, as the case may be, divided by the Unit Price as of the date of such issuance. The Net Agreed Value of any obligation of the Partnership held by the General Partner or any Affiliate thereof which is contributed pursuant to this Section 4.3(b) in exchange for Units shall be the unpaid principal amount thereof plus accrued interest to the date of contribution.
4.4 No Preemptive Rights. No Partner shall have any preemptive or preferential right, including any such right with respect to (a) additional Capital Contributions; (b) issuance or sale of Units; (c) issuance of any obligations, evidences of indebtedness or other securities of the Partnership convertible into or exchangeable for, or carrying or accompanied by any rights to receive, purchase or subscribe to, Units; (d) issuance of any right of, subscription to or right to receive, or any warrant or option for the purchase of, any of the foregoing securities; or (e) issuance or sale of any other securities that may be issued or sold by the Partnership.
4.5 Capital Accounts. (a) The Partnership shall maintain for each Partner a separate Capital Account in accordance with Regulation §1.704-1(b)(2)(iv). Such Capital Account shall be (A) increased by (1) the cash amount or Net Agreed Value of all Capital Contributions made
by such Partner to the Partnership, pursuant to this Agreement and (2) all items of Partnership income and gain (including income and gain exempt from tax) computed in accordance with Section 4.5(b) and allocated to such Partner, pursuant to Section 5.1 and (B) decreased by (1) the cash amount or Net Agreed Value of all actual and deemed distributions of cash or property made to such Partner, pursuant to this Agreement and (2) all items of Partnership deduction and loss computed in accordance with Section 4.5(b) and allocated to such Partner, pursuant to Section 5.1.
(b) For purposes of computing the amount of any item of income, gain, deduction or loss to be reflected in a Partner’s Capital Account, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for federal income tax purposes (including any method of depreciation, cost recovery or amortization used for this purpose); provided that:
(i) Solely for purposes of the application of the provisions hereof, the Partnership shall be treated as owning directly its proportionate share of all property owned by any partnership, joint venture, limited liability company or similar entity in which the Partnership has an interest (as determined by the General Partner based upon the provisions of the governing documents of such entity).
(ii) In accordance with the requirements of Section 704(b) of the Code, any deductions for depreciation, cost recovery or amortization attributable to a Contributed Property shall be determined as if the adjusted basis of such property on the date it was acquired by the Partnership were equal to the Agreed Value of such property. Upon an adjustment pursuant to Section 4.5(d) to the Carrying Value of any Partnership property subject to depreciation, cost recovery or amortization, any further deductions for such depreciation, cost recovery or amortization attributable to such property shall be determined (A) as if the adjusted basis of such property were equal to the Carrying Value of such property immediately following such adjustment and (B) using a rate of depreciation, cost recovery or amortization derived under the same method and useful life as is applied for federal income tax purposes; provided, however, that if the asset has a zero adjusted basis, depreciation, cost recovery or amortization deductions shall be determined under the same method that would otherwise have applied for federal income tax purposes had such property not had a zero adjusted basis.
(iii) Any income, gain or loss attributable to the taxable disposition of any property shall be determined by the Partnership as if the adjusted basis of such property as of such date of disposition were equal in amount to the Partnership’s Carrying Value with respect to such property as of such date.
(iv) Items described in Section 705(a)(2)(B) of the Code shall be treated as items of deduction. All fees and other expenses incurred by the Partnership to promote the sale of (or to sell) a Partnership Interest that can neither be deducted nor amortized under Section 709 of the Code shall, for purposes of Capital Account maintenance, be treated as an item described in Code Section 705(a)(2)(B).
(v) Except as otherwise provided in Regulation §1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and deduction shall be made without regard to any election under Section 754 of the Code.
(c) A transferee of a Partnership Interest shall succeed to the Capital Account relating to the Partnership Interest transferred.
(d) (i) Consistent with the provisions of Regulation §1.704-1(b)(2)(iv)(f), upon an issuance of additional Units for cash or Contributed Property pursuant to Section 4.3, the Capital Accounts of all Partners shall, immediately prior to such issuance, be adjusted (consistent with the provisions hereof) upwards or downwards to reflect any Unrealized Gain or Unrealized Loss attributable to each Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized upon an actual sale of each such property, immediately prior to such issuance, and had been allocated to the Partners at such time pursuant to Section 5.1. In determining Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair market value of all Partnership assets (including any cash or cash equivalents) immediately prior to the issuance of Units shall be deemed to be equal to the Prescribed Asset Value as of such time. Once the Prescribed Asset Value has been determined, the General Partner shall allocate such aggregate value among the properties of the Partnership in a manner it deems reasonable to determine a fair market value for individual properties. The Carrying Values of Partnership properties shall be adjusted to reflect their relative fair market values, as determined hereunder by the General Partner.
(ii) In accordance with Regulation §1.704-1(b)(2)(iv)(f), immediately prior to (A) the distribution of any Partnership property (other than cash), (B) the distribution of cash in redemption of the General Partner’s Partnership Interest pursuant to Section 13.1(c) or (C) the distribution of cash in redemption of a Limited Partner’s interest pursuant to Section 6.1(a)(x), the Capital Accounts of all Partners shall, immediately prior to any such distribution, be adjusted (consistent with the provisions hereof) upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to each Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized upon an actual sale of each property, immediately prior to such distribution, and had been allocated to the Partners at such time pursuant to Section 5.1. In determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair market value of Partnership assets (including any cash or cash equivalents) immediately prior to a distribution shall (x) in the case of a current distribution pursuant to Section 5.3 or 13.1(c), be determined in the manner provided in Section 4.5(d)(i) or (y) in the case of a liquidating distribution pursuant to Section 14.3 or 14.4, be determined by the General Partner using such reasonable methods of valuation as it may adopt. Immediately prior to a distribution described herein, the Carrying Values of Partnership properties shall be adjusted to reflect their fair market values, as determined hereunder by the General Partner.
(e) Notwithstanding any other provision of this Agreement, upon or prior to the issuance or exercise of any options or other rights to acquire Units, the General Partner shall have the sole and complete discretion, without the approval of any other Partner, to amend any provision of this Section 4.5, in any manner, as is necessary, appropriate or advisable to comply with any current or future provisions of the Code or the Regulations or to implement the terms
and conditions of any Units issued pursuant to Section 4.3(a), including the increase or reduction of the Capital Account of any Partner, or shifting capital between or among Limited Partners.
4.6 Interest. No interest shall be paid by the Partnership on Capital Contributions or on balances in Capital Accounts.
4.7 No Withdrawal. A Partner shall not be entitled to withdraw any part of his or its Capital Contribution or his or its Capital Account or to receive any distribution from the Partnership, except as provided in Section 5.3 and Articles XIII and XIV.
4.8 Loans from Partners. The General Partner may make loans to the Partnership only as provided in Section 6.8. A Limited Partner may make loans to the Partnership only with the consent of the General Partner, which consent may be withheld in its sole discretion. Any loans by a Partner to the Partnership shall not be considered Capital Contributions. If any Partner or Assignee shall advance funds to the Partnership in excess of the amounts required hereunder to be contributed by him or it to the capital of the Partnership, the making of such advances shall not result in any increase in the amount of the Capital Account of such Partner. The amounts of any such advances shall be a debt of the Partnership to such Partner or Assignee and shall be payable or collectible only out of the Partnership assets in accordance with the terms and conditions upon which such advances are made.
4.9 Splits and Combinations. (a) The General Partner may cause the Partnership to make a distribution in Units to all Record Holders or may effect a subdivision or combination of Units, but in each case only on a pro rata basis so that, after such distribution, subdivision or combination, each Partner and Assignee shall, subject to Section 4.9(d), have the same Percentage Interest in the Partnership as before such distribution, subdivision or combination.
(b) Whenever such a distribution, subdivision or combination is declared, the General Partner shall select a Record Date as of which the distribution, subdivision or combination shall be effective and shall send notice of the distribution, subdivision or combination at least twenty (20) days prior to such Record Date to each Record Holder as of the date ten (10) days prior to the date of such notice. The General Partner also may cause a firm of independent public accountants selected by it to calculate the number of Units to be held by each Record Holder after giving effect to such distribution, subdivision or combination. The General Partner shall be entitled to rely on any certificate provided by such firm as conclusive evidence of the correctness of such a calculation.
(c) Promptly following any such distribution, subdivision or combination, the General Partner may cause Certificates or Depositary Receipts to be issued to the Record Holders of Units or Depositary Units as of the applicable Record Date representing the new number of Units or Depositary Units held by such Record Holder, or the General Partner may adopt such other procedures as it may deem appropriate to reflect such distribution, subdivision or combination; provided that in the event any such distribution, subdivision or combination results in a smaller total number of Units Outstanding, the General Partner shall require, as a condition to the delivery to a Record Holder of such new Certificate or Depositary Receipt, the surrender of any Certificate or Depositary Receipt held by such Record Holder immediately prior to such Record Date.
(d) The Partnership shall not be required to issue fractional Units upon any distribution, subdivision or combination of Units. In the event any distribution, subdivision or combination of Units would result in the issuance of fractional Units but for the provisions of Section 4.9(d), each fractional Unit shall be rounded to the nearest whole Unit.
ARTICLE V
Allocations and Distributions
5.1 Allocations for Capital Account Purposes. (a) For purposes of maintaining the Capital Accounts and in determining the rights of the Partners among themselves, except as otherwise provided in this Section 5.1, each item of income, gain, loss and deduction (computed in accordance with Section 4.5(b)) shall be allocated to the Partners in accordance with their respective Percentage Interests.
(b) Any item of loss or deduction otherwise allocated to the General Partner pursuant to Section 5.1(a) which is in excess of such General Partner’s positive Adjusted Capital Account balance (following adjustment of such Adjusted Capital Account to reflect the allocation of all other items for such period) shall instead be allocated to the Limited Partners in accordance with their respective Percentage Interests to the extent such item of loss or deduction exceeds such General Partner’s Adjusted Capital Account balance; provided that the allocation of any such item of loss or deduction to the Limited Partners shall only be made hereunder to the extent such allocation would not result in or increase a negative balance in the Adjusted Capital Account of any Limited Partner. If any item of loss or deduction otherwise allocated to the General Partner is allocated to the Limited Partners pursuant to the preceding sentence, items of income or gain that would otherwise be allocated to such General Partner equal to the amount of such loss or deduction shall be allocated to the Limited Partners in accordance with their Percentage Interests as quickly as possible.
(c) If any Partner unexpectedly receives any adjustments, allocations or distributions described in Regulation §§1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate a deficit in its Adjusted Capital Account created by such adjustments, allocations or distributions as quickly as possible. This Section 5.1(c) is intended to constitute a “qualified income offset” within the meaning of Regulation §1.704-1(b)(2)(ii)(d).
(d)(i) Subject to the exceptions set forth in Regulation §§1.704-2(f)(2)--(5), if there is a net decrease in Partnership “minimum gain” (as defined in Regulation §§1.704-2(b)(2) and 1.704-2(d)) during any Fiscal Period, each Partner shall be specially allocated items of income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner’s share of the net decrease in minimum gain, determined in accordance with Regulation §1.704-2(g)(2). This Section 5.1(d)(i) is intended to comply with the minimum gain chargeback requirement in Regulation §§1.704-2(b)(2) and (f) and shall be interpreted consistently therewith.
(ii) Subject to the exceptions set forth in Regulation §1.704-2(i)(4), if there is a net decrease in “partner nonrecourse debt minimum gain” (as defined in Regulation §§1.704-2(i) and 1.704-2(b)(4)) during any Fiscal Period, each Partner who has a share of the partner nonrecourse debt minimum gain, determined in accordance with Regulation §1.704-2(i)(3), shall be specially allocated items of income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner’s share of the net decrease in partner nonrecourse debt minimum gain, determined in accordance with Regulation §1.704-2(i)(5). This paragraph is intended to comply with the minimum gain chargeback requirement in Regulation §1.704-2(i)(4) and shall be interpreted consistently therewith.
(e) Notwithstanding any other provision of this Agreement, upon or prior to the issuance or exercise of any options or other rights to acquire Units, the General Partner shall have the sole and complete discretion, without the approval of any other Partner, to amend any provision of this Section 5.1, in any manner, as is necessary, appropriate or advisable to comply with any current or future provisions of the Code or the Regulations or to implement the terms and conditions of any Units issued pursuant to Section 4.3(a).
5.2 Allocations for Tax Purposes. (a) For federal income tax purposes, except as otherwise provided in this Section 5.2, each item of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners in accordance with their respective Percentage Interests.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or Adjusted Property, items of income, gain, loss, depreciation and cost recovery deductions shall be allocated for federal income tax purposes among the Partners as follows:
(i) (1) In the case of a Contributed Property, such items attributable thereto shall be allocated among the Partners in the manner provided under Section 704(c) of the Code that takes into account the variation between the Agreed Value of such property and its adjusted basis at the time of contribution. (2) Except as otherwise provided in Section 5.2(c), any items of Residual Gain or Residual Loss attributable to a Contributed Property shall be allocated among the Partners in accordance with their Percentage Interests.
(ii) (1) In the case of an Adjusted Property, such items attributable thereto shall (A) first, be allocated among the Partners in a manner consistent with the principles of Section 704(c) of the Code to take into account the Unrealized Gain or Unrealized Loss attributable to such property and the allocations thereof pursuant to Section 4.5(d)(i) or 4.5(d)(ii), and (B) second, in the event such property was originally a Contributed Property, be allocated among the Partners in a manner consistent with Section 5.2(b)(i)(1). (2) Except as otherwise provided in Section 5.2(c), any items of Residual Gain or Residual Loss attributable to an Adjusted Property shall be allocated among the Partners in accordance with their Percentage Interests.
(iii) Except as otherwise provided in Sections 5.2(b)(iv) and 5.2(c), all other items of income, gain, loss and deduction shall be allocated among the Partners in accordance with their Percentage Interests.
(iv) Any items of income, gain, loss or deduction otherwise allocable under Section 5.2(b)(i)(2), 5.2(b)(ii)(2) or 5.2(b)(iii) shall be subject to allocation by the General Partner in a manner designed to eliminate, to the maximum extent possible, Book-Tax Disparities in a Contributed Property or Adjusted Property otherwise resulting from the application of the ceiling limitation (under Section 704(c) of the Code or Section 704(c) principles) to the allocations provided under Section 5.2(b)(i)(1) or 5.2(b)(ii)(1).
(c) Subject to Section 5.2(b), any item of income, gain, loss or deduction otherwise allocable to the General Partner pursuant to Section 5.2(a) that constitutes the tax corollary of an item of “book” income, gain, loss or deduction that has been allocated to the Limited Partners pursuant to Section 5.1(b) shall be allocated to the Limited Partners in the same manner and to the same extent provided in Section 5.1 (b).
(d) If any Partner unexpectedly receives any adjustments, allocations or distributions described in Regulation §1.704-1(b)(2)(ii)(d), items of income and gain shall be specially allocated to such Partner in an amount and manner consistent with the allocations of income and gain pursuant to Section 5.1(c).
(e) If there is a decrease in Partnership “minimum gain” or “partner nonrecourse debt minimum gain” as described in Section 5.1(j), items of income and gain shall be allocated to such Partner in an amount and manner consistent with the allocation of income and gain pursuant to Section 5.1(j).
(f) It is intended that the allocations prescribed in Sections 5.2(b)(i) and 5.2(b)(ii) constitute allocations for federal income tax purposes that are consistent with Section 704 of the Code and comply with any limitations or restrictions therein. To preserve the uniformity of the intrinsic tax characteristics of Units to implement the terms and conditions of any Units issued pursuant to Section 4.3(a), or to comply with any current or future provisions of the Code and Regulations, in addition to the allocation provided in Section 5.2(b)(iv), the General Partner shall have sole and complete discretion, without the approval of any other Partner, to (i) adopt such conventions as it deems necessary or appropriate in determining the amount of depreciation and cost recovery deductions and (ii) amend the provisions of this Agreement, in any manner, as necessary, appropriate or advisable (1) to reflect the proposal or promulgation of Regulations under Subchapter K of the Code, (2) otherwise to preserve the uniformity of Units issued or sold from time to time or (3) to implement the terms and conditions of any Units issued pursuant to Section 4.3(a). The General Partner may adopt such conventions and make such amendments to this Agreement as provided in this Section 5.2(f) only if they would not have a material adverse effect on the Limited Partners, except as provided in the terms and conditions of any Units or options or other rights to acquire Units. The General Partner is authorized, based on the advice of counsel, to depreciate the portion of a Section 743(b) adjustment attributable to unrealized appreciation in a Contributed Property or Adjusted Property which is a recovery property (to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived from the depreciation method and useful life applied to the Partnership’s common basis of such property, despite the inconsistency of such approach with Proposed Regulation Section 1.168-2(n). If the General Partner later determines that such reporting position cannot reasonably be taken, the General Partner may adopt, if deemed a reasonable position based upon advice of counsel, a depreciation convention under which all purchasers acquiring Units in the same month would
receive depreciation, whether attributable to common basis or Section 743(b) basis, based upon the same applicable rate as if they had purchased a direct interest in the Partnership’s property. If the General Partner chooses not to utilize such aggregate method, the General Partner may use any other reasonable depreciation convention to preserve the uniformity of the intrinsic tax characteristics of any Units that would not have a material adverse effect on the Limited Partners. If the General Partner determines, based upon advice of counsel, that no reasonably allowable convention or other method is available to preserve the uniformity of the intrinsic tax characteristics of any specifically identifiable group of Units pursuant to this Section 5.2(j), such Units will be separately identified, to the extent practicable, as distinct classes to reflect intrinsic differences in tax consequences, regardless of the cause of any such nonuniformity.
(g) To the extent of any Recapture Income resulting from the sale or other taxable disposition of Partnership assets, the amount of any gain from such disposition allocated to (or recognized by) a Partner (or his successor in interest) for federal income tax purposes pursuant to the above provisions shall be deemed to be Recapture Income to the extent such Partner has been allocated or has claimed any deduction directly or indirectly giving rise to the treatment of such gain as Recapture Income.
(h) All items of income, gain, loss and deduction recognized by the Partnership for federal income tax purposes and allocated to the Partners in accordance with the provisions hereof shall be determined without regard to any election under Section 754 of the Code which may be made by the Partnership; provided that such allocations, once made, shall be adjusted as necessary or appropriate to take into account those adjustments permitted by Sections 734 and 743 of the Code.
(i) Each item of Partnership income, gain, loss, deduction and credit attributable to a transferred Partnership Interest shall, for federal income tax purposes, be determined on an annual basis and prorated on a monthly basis (or other basis, as required or permitted by Section 706 of the Code) and shall be allocated to the Partners who own Partnership Interests as of the close of the New York Stock Exchange on the last day of the month in which the transfer is recognized by the Partnership; provided that, gain or loss on a sale or other disposition of all or a substantial portion of the assets of the Partnership shall be allocated to the Partners who own Partnership Interests as of the close of the New York Stock Exchange on the last day of the month in which such gain or loss is recognized for federal income tax purposes. The General Partner may revise, alter or otherwise modify such methods of determination and allocation as it determines necessary, to the extent permitted by Section 706 of the Code and the regulations or rulings promulgated thereunder.
(j) Allocations which would otherwise be made to a Limited Partner under the provisions of this Article V shall instead be made to the beneficial owner of the applicable Units, if the Partnership is notified in a manner satisfactory to the General Partner as to the identity of such beneficial owner by any broker, dealer, bank, trust company, clearing corporation or nominee holder that is the Record Holder of such Units.
5.3 Distributions. (a) The General Partner shall, in accordance with the provisions hereof, cause the Partnership to make regular cash distributions on a quarterly basis of all of the Partnership’s Available Cash and, to the extent set forth in Section 5.3(b), cash distributions of
Capital Transaction Proceeds and shall specify the Record Date for such distributions. All Available Cash shall be deemed distributed in any Fiscal Period prior to any distribution of Capital Transaction Proceeds. Any such amounts shall be distributed as soon as possible after the Record Date for such distribution and shall be divided among the Partners on the Record Date in accordance with their respective Percentage Interests.
(b) Upon the occurrence in any Fiscal Period of any one or more Capital Transactions, the General Partner shall be required to make a cash distribution from the Capital Transaction proceeds in accordance with paragraph (i) hereinbelow and may, in its sole discretion, distribute additional Capital Transaction Proceeds in accordance with paragraph (ii) hereinbelow.
(i) The General Partner shall determine the net gain or loss recognized for federal income tax purposes from each Capital Transaction and shall then determine the portion of the net gain or net loss from each Capital Transaction allocable to all Limited Partners holding Units in accordance with the provisions of Section 5.2. Once having done so, the General Partner shall aggregate the net gains and net losses allocable to Limited Partners holding Units (taking into account the character of any such gains and losses) to determine any “net capital gain” from such Capital Transactions (to the extent capital gains exceed capital losses from those Capital Transactions resulting in capital gains or losses) and any “net ordinary income” from such Capital Transactions (to the extent ordinary income exceeds ordinary losses from those Capital Transactions resulting in ordinary income or losses). The General Partner shall then divide the amount of any such “net capital gains” and “net ordinary income” by the number of the Outstanding Units, as of the date of such Capital Transaction and, solely for purposes hereof, attribute an equal amount of “net capital gain” and “net ordinary income” to each Outstanding Unit, as of such date. The General Partner shall then cause the Partnership to distribute Capital Transaction Proceeds to the Partners, in accordance with their respective Percentage Interests, until an amount has been distributed pursuant hereto with respect to each Outstanding Unit equal to 125% of the federal income tax liability that would be due with respect to the “net capital gain” and “net ordinary income” attributed to each Outstanding Unit pursuant to the preceding sentence (assuming for such purpose that the maximum marginal federal income tax rates for individuals, relating to either long-term capital gain or ordinary income, whichever the case may be, applied to all holders of Units at the time of such recognition).
(ii) The General Partner may, in its sole discretion, cause the Partnership to distribute any or all of the remaining Capital Transaction Proceeds to the Partners in accordance with their respective Percentage Interests.
(c) Any amounts paid pursuant to Section 6.6 shall not be deemed to be distributions for purposes of this Agreement.
ARTICLE VI
Management and Operation of Business
6.1 Management. (a) The General Partner shall conduct, direct and exercise full control over all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner shall have any right of control or management power over the business and affairs of the Partnership except in their capacities as officers, directors or members of the General Partner. Except as otherwise expressly provided in this Agreement, in addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provisions of this Agreement, the General Partner shall have full power and authority to do all things deemed necessary or desirable by it to conduct the business of the Partnership, including, without limitation, (i) the making of any expenditures, the borrowing of money, the guaranteeing of indebtedness and other liabilities, the issuance of evidences of indebtedness and the incurring of any obligations it deems necessary for the conduct of the activities of the Partnership; (ii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership and the merger of the Partnership with or into another entity; (iii) the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose and on any terms it sees fit, including, without limitation, the financing of the conduct of the operations of the Partnership, the lending of funds to other Persons and the repayment of obligations of the Partnership; (iv) the negotiation and execution of any terms deemed desirable in its sole discretion and the performance of any contracts, conveyances or other instruments that it considers useful or necessary to the conduct of the Partnership’s operations or the implementation of its powers under this Agreement; (v) the distribution of Partnership cash; (vi) the selection and dismissal of employees and attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring; (vii) the maintenance of such insurance for the benefit of the Partnership and the Partners as it deems necessary; (viii) the formation of any further limited or general partnerships, joint ventures or other relationships that it deems desirable; (ix) the control of any matters affecting the rights and obligations of the Partnership, including, without limitation, the conduct of litigation, the incurring of legal expense and the settlement of claims and litigation; (x) the purchase, sale or other acquisition or disposition of Units, and the cancellation of acquired Units, at such times and on such terms as it deems to be in the best interests of the Partnership and the Partners; (xi) the entering into of leases for real or personal property or agreements in connection with sale and lease-back transactions; and (xii) the execution of the Depositary Agreement.
(b) Each of the Partners hereby approves, ratifies and confirms the execution, delivery and performance of the Deposit Agreement and agrees that the General Partner is authorized to execute, deliver and perform the other agreements, acts, transactions and matters contemplated therein on behalf of the Partnership without any further act, approval or vote of the Partners of the Partnership, notwithstanding any other provision of this Agreement or the Delaware Act or any applicable law, rule or regulation. The participation by the General Partner in any agreement authorized or permitted by this Agreement shall not constitute a breach by such
General Partner of any duty that it may owe the Partnership or the Limited Partners under this Agreement or applicable law.
(c) The General Partner shall cause the Partnership to obtain and maintain to the extent available on a commercially reasonable basis (i) casualty and liability insurance on the properties of the Partnership and (ii) liability insurance for the General Partner and the Indemnitees hereunder.
(d) The General Partner shall cause the Partnership to maintain Working Capital Reserves and Fixed Asset Reserves in such amounts as the General Partner deems appropriate and reasonable from time to time.
6.2 Election of Board of Directors of General Partner by Limited Partners; Governance Matters.
(a) The General Partner and the Partnership shall hold an annual meeting of the Limited Partners for the purpose of electing the board of directors of the General Partner. The annual meeting of Limited Partner unitholders shall be held at such time and on such business day as the General Partner may determine each year. The annual meeting shall be held at the principal office of the Partnership or at such other place within or without the state of Delaware as the General Partner may determine.
(b) The annual meeting described in Section 6.2(a) above is intended to enable the Limited Partners to elect the board of directors of the General Partner in a manner consistent with the procedures for selection of directors at other successful publicly held entities. In furtherance of this goal, the General Partner hereby agrees to cause its Governance Documents to provide for the following:
(i) The General Partner shall call and hold an annual meeting of the Limited Partners to be held simultaneously with the annual meeting of its shareholders. The General Partner shall cause the persons receiving the greatest number of votes at the Limited Partners' meeting to be installed as the board of directors of the General Partner.
(ii) The directors of the General Partner shall be divided into three (3) classes, designated Class I, Class II, and Class III, as nearly equal in size as possible, and one of the classes shall be elected for a three-year term of office at each annual meeting of Limited Partners.
(iii) Except as otherwise provided by law, all the directors or all of a particular class, or any individual director, may be removed from office without assigning any cause, by the affirmative vote of Partners whose aggregate Percentage Interest constitutes at least eighty percent (80%) of the aggregate Percentage Interest of the Partners.
(iv) The board of directors of the General Partner shall have the same fiduciary obligation to the Limited Partners of the Partnership as it has to its shareholders.
(v) Any duties and responsibilities of the board of directors of the General Partner to its shareholders shall be discharged if the board of directors of the General Partner fulfills its duties and responsibilities to the Limited Partners.
(vi) As a condition precedent to qualification to serve as General Partner of the Partnership, the General Partner shall be required and does hereby agree to be structured such that its units or shares are held in trust pursuant to a trust agreement (the “Trust Agreement”) that obligates the trustee to vote the units or shares in accordance with the results of the vote of the unitholders at the annual meeting described in Section 6.2(a) above.
(vii) The provisions of the Governance Documents implementing the foregoing provisions shall not be amended or changed without the affirmative vote of Partners whose aggregate Percentage Interest constitutes at least eighty percent (80%) of the aggregate Percentage Interest of the Partners.
(c) The General Partner hereby agrees that, in the event of any breach of the provisions of this Section 6.2, money damages may not be a sufficient remedy, and the Limited Partners shall therefore be entitled to equitable relief, including in the form of injunctions and orders for specific performance and without the necessity of posting any bond.
(d) Nomination of Directors by Limited Partners at Annual Meetings
(i) Nominations. Any Limited Partner may nominate one or more persons for election or reelection to the Board at an annual meeting of Limited Partners in accordance with this Section 6.2(d).
(ii) Eligibility of Limited Partner Nominations. The requirements set forth herein shall be the exclusive means for a Limited Partner to make any nomination of a person or persons for election to the Board. No person nominated by a Limited Partner shall be eligible to serve as a director of the General Partner unless nominated at an annual meeting of Limited Partners in accordance with the procedures set forth herein. Notwithstanding the foregoing, a Limited Partner shall also comply with all applicable requirements of the Securities Exchange Act of 1934, and the rules and regulations thereunder with respect to any such nominations; provided, however, that any references in this Agreement to the Securities Exchange Act of 1934 or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations pursuant to this Section 6.2(d). The Chairman of the General Partner shall have the sole power to determine whether or not a nomination was made in accordance with the procedures set forth herein. Neither the Partnership nor the General Partner shall be required to recommend for election as a director or include in the Partnership’s proxy statement any person or persons nominated by a Limited Partner in accordance with the procedures set forth herein.
(iii) Timeliness of Notice.
(a) Nominations of persons for election to the Board at the Partnership’s annual meeting of Limited Partners may be made by any Limited Partner who is a Limited
Partner of record at the time of giving of notice provided for herein, who shall be entitled to vote for the election of directors at the Partnership’s annual meeting of Limited Partners, who is a Limited Partner at the time of the applicable annual meeting of Limited Partners and who complies with the notice procedures set forth herein. Such nominations by Limited Partners shall be made pursuant to timely notice in writing to the secretary of the Partnership. To be timely, a Limited Partner’s notice shall be delivered to or mailed and received at the principal executive offices of the Partnership not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year’s annual meeting of Limited Partners; provided, however, that in the event that the date of the annual meeting is advanced more than thirty (30) days prior to such anniversary date or delayed more than sixty (60) days after such anniversary date then to be timely such notice must be received by the Partnership no later than the later of seventy (70) days prior to the date of the meeting or the tenth (10th) day following the day on which public announcement of the date of the meeting was made. In no event shall any adjournment or postponement of an annual meeting of Limited Partners, or the public announcement thereof, commence a new time period for the giving of a Limited Partner’s notice as described above.
(b) In addition, to be timely, a Limited Partner’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the annual meeting of Limited Partners and as of the date that is ten (10) days prior to such meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to or mailed and received by the secretary of the Partnership at the principal executive offices of the Partnership not later than five (5) days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) days prior to the date for such meeting, any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) days prior to the meeting or any adjournment or postponement thereof.
(iv) Information Required in Notice. In order to be effective, a Limited Partner’s notice to the secretary of the Partnership shall set forth:
a. As to each person whom the Limited Partner proposes to nominate for election or reelection as a director:
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the name, age, business address and residence of such nominee;
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the principal occupation or employment of such nominee;
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the class and approximate number of units of the Partnership which are beneficially owned by such nominee on the date of such Limited Partner’s notice;
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a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such
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Limited Partner and any Limited Partner Associated Person (as defined below), on the one hand, and such nominee, and his or her respective affiliates and associates, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the Limited Partner making the nomination, or any Limited Partner Associated Person, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and
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all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in a contested election, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (including, without limitation, such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected).
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b. As to the Limited Partner giving the notice:
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a representation that the Limited Partner (a) is a holder of record of units of the Partnership entitled to vote at such meeting, including the class and number of units of such unit that are owned beneficially and of record by such Limited Partner, and (b) intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;
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the name and address, as they appear on the Partnership’s books, of such Limited Partner and any Limited Partner Associated Person known by such Limited Partner to be supporting such nominee(s);
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any derivative positions with respect to securities of the Partnership (including, without limitation, any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion right or a settlement payment or mechanism at a price related to any class of units of the Partnership or with a value derived in whole or in part from the value of any class of units of the Partnership) held or beneficially held by the Limited Partner and any Limited Partner Associated Person and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power and/or economic benefit and risks of, such Limited Partner or any Limited Partner Associated Person with respect to the Partnership’s units;
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any proxy, contract, arrangement, understanding, or relationship pursuant to which such Limited Partner or any Limited Partner Associated Person has a right to vote any class of units of the Partnership;
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an affirmative statement of such Limited Partner’s intent to deliver a proxy statement and form of proxy to holders of a sufficient number of holders of the Partnership’s voting units to elect such nominee or nominees or a statement that the Limited Partner does not intend to deliver a proxy statement and form of proxy to holders of a sufficient number of holders of the Partnership’s voting units to elect such nominee or nominees; and
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all other information relating to such Limited Partner and any Limited Partner Associated Person that is required to be disclosed in solicitations of proxies for election of directors in a contested election, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934.
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(v) Additional Information. The General Partner may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the General Partner or that could be material to a reasonable Limited Partner’s understanding of the independence, or lack thereof, of such nominee.
(vi) Definitions. “Limited Partner Associated Person” of any Limited Partner means (a) any person controlling, directly or indirectly, or acting in concert with, such Limited Partner, (b) any beneficial owner of limited partnership units of the Partnership owned of record or beneficially by such Limited Partner and (c) any person controlling, controlled by or under common control with such “Limited Partner Associated Person.”
6.3 Certificate of Limited Partnership. The General Partner shall file a Certificate of Limited Partnership with the Secretary of State of the State of Delaware as required by the Delaware Act and shall cause to be filed such other certificates or documents as may be determined by the General Partner to be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which limited partners have limited liability) in the State of Delaware or any other state in which the Partnership may elect to do business. To the extent that the General Partner in its sole discretion determines such action to be reasonable and necessary or appropriate, the General Partner shall file amendments to the Certificate of Limited Partnership and do all the things to maintain the Partnership a limited partnership (or a partnership in which limited partners have limited liability) under the laws of the State of Delaware or any other state in which the Partnership may elect to do business. Subject to the terms of Section 7.5(a), the General Partner shall not be required to deliver or mail a copy of the Certificate of Limited Partnership or any amendment thereto to any Limited Partner.
6.4 Reliance by Third Parties. Notwithstanding any other provision of this Agreement to the contrary, no lender, purchaser of property from the Partnership or other Person, shall be required to verify any representation by the General Partner as to the extent of the interest in the assets of the Partnership that the General Partner is entitled to encumber, sell or otherwise use, and any such lender, purchaser or other Person shall be entitled to rely exclusively on the representations of the General Partner as to its authority to enter into such financing or
sale arrangements or other transactions and shall be entitled to deal with the General Partner as if it were the sole party in interest therein, both legally and beneficially. Each Limited Partner and Assignee hereby waives any and all defenses or other remedies that may be available against such lender, purchaser or other Person to contest, negate or disaffirm any action of the General Partner in connection with any sale, financing or other transaction. In no event shall any Person dealing with the General Partner with respect to any business or property of the Partnership be obligated to ascertain that the terms of this Agreement have been complied with, or to inquire into the necessity or expediency of any act of the General Partner; and every contract, agreement, deed, mortgage, security agreement, promissory note or other instrument or document executed by the General Partner with respect to any business or property of the Partnership shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery thereof this Agreement was in full force and effect, (b) such instrument or document was duly executed in accordance with the terms and provisions of this Agreement and is binding upon the Partnership, and (c) the General Partner was duly authorized and empowered to execute and deliver any and every such instrument or document for and on behalf of the Partnership.
6.5 Rights of General Partner as Limited Partner. The General Partner may acquire Units pursuant to Section 4.3 and shall be entitled to exercise all the rights of a Limited Partner with respect to such Units. The General Partner may cause the Partnership to purchase or otherwise acquire (or may purchase or otherwise acquire on behalf of the Partnership) Units. As long as such Units are held by the Partnership, such Units shall not be considered Outstanding for any purpose, except as otherwise provided herein.
6.6 Compensation and Reimbursement of General Partner.
(a) Except as provided in this Section 6.6 and elsewhere in this Agreement, the General Partner shall not be compensated for its services as general partner of the Partnership.
(b) The General Partner shall be reimbursed for all expenses, disbursements and advances incurred or made in connection with the organization of the Partnership and the qualification of the Partnership and the General Partner to do business and any subsequent offerings of Units or other securities by the Partnership.
(c) The General Partner and any Affiliate thereof shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole discretion, for all direct and indirect expenses incurred or made on behalf of the Partnership (including amounts paid to any Person to perform services to the Partnership), including that portion of such General Partner’s and Affiliate’s internal legal and accounting costs and expenses, telephone, secretarial, bookkeeping, tax reporting, aircraft, travel and entertainment expenses, office rent and other office expenses, salaries and other compensation expenses of employees, officers and directors, other administrative expenses and other expenses necessary or appropriate to the conduct of the Partnership’s and the General Partner’s businesses and allocable to the Partnership or the activities of the General Partner in its capacity as general partner of the Partnership. The General Partner shall determine the expenses which are allocable to the Partnership in any reasonable manner. Such reimbursements shall be in addition to any reimbursement to the General Partner as a result of indemnification pursuant to Section 6.10.
(d) The General Partner may propose and adopt customary and reasonable fringe benefit plans, including plans involving the issuance of Units of the Partnership for the benefit of employees, officers and directors of the General Partner or the Partnership or their Affiliates in respect of services performed or to be performed, directly or indirectly, for the benefit of the Partnership.
6.7 Outside Activities. (a) The General Partner shall not enter into or conduct any business except in connection with its service as the general partner of the Partnership in accordance with the terms of this Agreement.
(b) The shareholders, directors, officers or members of the General Partner or the Partnership shall not compete with the Partnership, directly or indirectly, and the officers of such entities shall serve the General Partner or the Partnership on a full-time basis, but such shareholders, directors, officers or members shall be permitted to make any investments or engage in any outside activities not in contravention of this Section 6.7.
6.8 Partnership Funds. The funds of the Partnership shall be deposited in such account or accounts as are designated by the General Partner. The General Partner may, in its sole discretion, deposit funds of the Partnership in a central disbursing account maintained by or in the name of the General Partner in which funds of the General Partner are also deposited; provided that at all times books of account shall be maintained which show the amount of funds of the Partnership on deposit in such account. The General Partner may use the funds of the Partnership as compensating balances for its own benefit; provided that such funds shall not directly or indirectly secure, and shall not be otherwise at risk on account of, any indebtedness or other obligation of the General Partner or any partner, shareholder, director, officer, employee, member or agent of the General Partner or any Affiliate thereof. Nothing in this Section 6.8 shall be deemed to prohibit or limit in any manner the right of the Partnership to lend funds to the General Partner or any Affiliate thereof pursuant to Section 6.9(b). All withdrawals from or charges against such accounts shall be made by the General Partner or by its officers or agents. Funds of the Partnership may be invested as determined by the General Partner.
6.9 Loans to or from General Partners; Contracts with Affiliates. (a) The General Partner or any Affiliate thereof may lend to the Partnership funds needed by the Partnership for such period of time as the General Partner may determine; provided that the General Partner or such Affiliate may not charge the Partnership interest at a rate greater than the rate (including points or other financing charges or fees) that would be charged the Partnership (without reference to such General Partner’s or Affiliate’s financial abilities or guaranties) by unrelated lenders on comparable loans. The Partnership shall reimburse such General Partner or Affiliate for any costs incurred by it (other than interest charges incurred as a result of such borrowing) in connection with the borrowing of funds obtained by such General Partner or Affiliate and lent to the Partnership.
(b) With the approval or consent of a Majority Interest, the Partnership may lend funds to the General Partner or any Affiliate thereof; provided that the Partnership may not charge the General Partner or such Affiliate interest at a rate less than the rate (including points or other financing charges or fees) that would be charged such General Partner or Affiliate
(without reference to other third parties’ financial abilities or guaranties) by unrelated lenders on comparable loans.
(c) The General Partner may itself, or may enter into an agreement with an Affiliate of the General Partner to, render services for the Partnership. Any services rendered to the Partnership by such General Partner or Affiliate shall be on terms that are fair and reasonable to the Partnership. The provisions of Section 6.6 regarding reimbursement shall apply to services rendered pursuant to this Section 6.9(c).
(d) The Partnership may transfer assets to or lend funds to joint ventures, other partnerships, limited liability companies, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with applicable law as the General Partner deems appropriate.
(e) Neither the General Partner nor any Affiliate thereof shall sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, except pursuant to transactions that are fair and reasonable to the Partnership.
6.10 Indemnification. (a) To the fullest extent permitted by law, each Indemnitee shall be indemnified and held harmless by the Partnership from and against any and all losses, claims, damages, liabilities, expenses (including legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Indemnitee may be involved, or threatened to be involved, as a party or otherwise by reason of his or its management of the affairs of the Partnership, any subsidiary of the Partnership or the General Partner or his or its status as the General Partner, an Affiliate thereof, a partner, director, officer, employee, member or agent thereof or a Person serving at the request of the Partnership, a general partner or any Affiliate thereof in another entity in a similar capacity, which relates to or arises out of the Partnership, its property, business or affairs or the General Partner, their properties, businesses or affairs or any document filed with or submitted to the Securities and Exchange Commission or any indemnification of underwriters given in connection therewith, regardless of whether the Indemnitee continues to be the General Partner, an Affiliate thereof or a partner, director, officer, employee, member or agent thereof or a director, officer, employee or agent of the Partnership at the time any such liability or expense is paid or incurred, and regardless of whether the liability or expense accrued at or relates to, in whole or in part, any time before, on or after the date hereof, if the Indemnitee acted in good faith and in a manner it believed to be in, or not opposed to, the best interests of the Partnership, and, with respect to any criminal proceeding, had no reasonable cause to believe his or its conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that the Indemnitee acted in a manner contrary to such standard. Any indemnification pursuant to this Section 6.10 shall be made only out of the assets of the Partnership and to the extent provided by the first sentence of this Section 6.10(a).
(b) An Indemnitee shall not be entitled to indemnification under this Section 6.10 with respect to any claim, issue or matter in which it has been adjudged liable for willful misconduct, unless and only to the extent that the court in which such action was brought, or
another court of competent jurisdiction, determines upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnification for such liabilities and expenses as the court may deem proper.
(c) To the fullest extent permitted by law, expenses (including legal fees) incurred by an Indemnitee in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Partnership of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall be determined that the Indemnitee is not entitled to be indemnified as authorized in this Section 6.10.
(d) The indemnification provided by this Section 6.10 shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, bylaw or vote of the Partners or as a matter of law or otherwise, both as to action in the Indemnitee’s capacity as the General Partner, an Affiliate thereof or a partner, director, officer, employee, member or agent thereof and to action in any other capacity, shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of an Indemnitee.
(e) The General Partner and the Partnership shall purchase and maintain insurance, to the extent and in such amounts as shall be considered reasonable and commercially available, on behalf of Indemnitees and such other Persons as the General Partner shall determine against any liability that may be asserted against or expense that may be incurred by such Person in connection with activities of the Partnership or such Indemnitees, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement. The General Partner and the Partnership may enter into indemnity contracts with Indemnitees and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of obligations under this Section 6.10 and containing such other procedures regarding indemnification as are appropriate.
(f) For purposes of this Section 6.10, the Partnership, the General Partner or any Affiliate thereof shall be deemed to have requested an Indemnitee to serve as a fiduciary of an employee benefit plan whenever the performance by him of his duties to the Partnership, the General Partner or such Affiliate also imposes duties on, or otherwise involves services by, him to the plan or participants or beneficiaries of the plan. Excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall be deemed “fines” within the meaning of Section 6.10(a), and action taken or omitted by him with respect to an employee benefit plan in the performance of his duties for a purpose reasonably believed by him to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is in, or not opposed to, the best interests of the Partnership.
(g) In no event may an Indemnitee subject the Limited Partners or Assignees to personal liability by reason of these indemnification provisions.
(h) An Indemnitee shall not be denied indemnification in whole or in part under this Section 6.10 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(i) The provisions of this Section 6.10 are for the benefit of the Indemnitees and their heirs, successors, assigns, administrators and personal representatives and shall not be deemed to create any rights for the benefit of any other Persons. The provisions of this Section 6.10 shall not be amended in any way that would adversely affect the General Partner without the consent of such General Partner.
6.11 Liability of General Partner. (a) Neither the General Partner, any Affiliate thereof, nor the partners, shareholders, directors, officers, employees, members or agents thereof shall be liable for monetary damages to the Partnership, the Limited Partners, the Assignees or any Person who has acquired an interest in the Units, whether as a Limited Partner, an Assignee or otherwise, for errors in judgment or for breach of fiduciary duty (including breach of any duty of care or any duty of loyalty) as the General Partner, such Affiliate or a partner, shareholder, director, officer, employee, member or agent thereof unless it is proved by clear and convincing evidence that his or its action or failure to act involved an act or omission undertaken with deliberate intent to cause injury to the Partnership or undertaken with reckless disregard for the best interests of the Partnership.
(b) The General Partner may exercise any of the powers granted to it by this Agreement and may perform any of the duties imposed upon it hereunder directly or by or through its agents, and the General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.
6.12 Resolution of Conflicts of Interest. (a) At all times from and after the date hereof, a majority of the members of the board of directors of the General Partner shall be Persons who are not shareholders or members of the General Partner or a member of the immediate family of such a shareholder or member.
(b) Unless otherwise expressly provided herein, (i) whenever a conflict of interest exists or arises between the General Partner or any Affiliate thereof, on the one hand, and the Partnership, any Limited Partner or any Assignee, on the other hand, or (ii) whenever this Agreement or any other agreement contemplated herein or therein provides that the General Partner shall act in a manner which is, or provide terms which are, fair and reasonable to the Partnership or any Limited Partner, the General Partner shall resolve such conflict of interest, take such action or provide such terms considering, in each case, the relative interests of each party to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, any applicable generally accepted accounting practices or principles and any other factors deemed relevant, reasonable and appropriate. In the absence of bad faith by the General Partner, the resolution, action or terms so made, taken or provided by the General Partner shall not constitute a breach of this Agreement or any other agreement contemplated herein or therein.
(c) Whenever in this Agreement the General Partner is permitted or required to make a decision (i) in its “sole discretion” or “discretion,” with “complete discretion” or under a grant of similar authority or latitude, the General Partner shall be entitled to consider only such
interests and factors as it deems appropriate and shall have no duty or obligation to give any consideration to any other interest of or factors affecting the Partnership, the Limited Partners or the Assignees or (ii) in its “good faith” or under another express standard, the General Partner shall act under such express standard. Each Limited Partner hereby agrees that any standard of care or duty imposed in the Delaware Act or any other applicable law, rule or regulation shall be modified, waived or limited in each case as required to permit the General Partner to act under this Agreement or any other agreement contemplated herein and to make any decision pursuant to the authority prescribed in this Section 6.12(c) so long as such action or decision is reasonably believed by the General Partner to be consistent with the overall purposes of the Partnership.
6.13 Other Matters Concerning General Partners. (a) The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any opinion of any such Person as to matters which such General Partner believes to be within such Person’s professional or expert competence shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by such General Partner hereunder in good faith and in accordance with such opinion.
6.14 Title to Partnership Assets. Title to Partnership assets, whether real, personal or mixed, tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner or Assignee, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner shall be held in trust by the General Partner for the use and benefit of the Partnership in accordance with this Agreement. All Partnership assets shall be recorded as the property of the Partnership on its books and records, irrespective of the name in which legal title to such Partnership assets is held.
ARTICLE VII
Rights and Obligations of Limited Partners
7.1 Limitation of Liability. The Limited Partners shall have no liability under this Agreement except as provided in this Agreement or in the Delaware Act.
7.2 Management of Business. No Limited Partner (other than the General Partner, any Affiliate thereof or a general partner, shareholder, director, officer, employee, member or agent thereof solely in his or its capacity as such) shall take part in the operation, management or control (within the meaning of the Delaware Act) of the Partnership’s business, shall transact any business in the Partnership’s name or shall have the power to sign documents for or otherwise
bind the Partnership. The transaction of any business by any such Person in such capacity shall not affect, impair or eliminate the limitations on the liability of any Limited Partner under this Agreement.
7.3 Outside Activities. Subject to Section 6.7, a Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities in direct competition with the Partnership. Neither the Partnership, any other Partner nor any other Person shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner.
7.4 Return of Capital. No Limited Partner shall be entitled to the withdrawal or return of his Capital Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or upon termination of the Partnership may be considered as such by law and then only to the extent provided by this Agreement. Except to the extent provided by Section 4.3 or otherwise expressly provided herein, no Limited Partner shall have priority over any other Limited Partner either as to the return of Capital Contributions or as to profits, losses or distributions.
7.5 Rights of Limited Partners Relating to the Partnership. (a) In addition to other rights provided by this Agreement or by applicable law, and except as limited by Section 7.5(b), each Limited Partner shall have the following rights for a proper purpose reasonably related to his Partnership Interest, upon reasonable demand and at such Limited Partner’s own expense:
(i) to obtain true and full information regarding the status of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the Partnership’s federal, state and local income tax returns for each year;
(iii) to have furnished to him, upon notification to the General Partner, a current list of the name and last known business, residence or mailing address of each Partner;
(iv) to obtain true and full information regarding the amount of cash and a description and statement of the Agreed Value of any other property or other consideration contributed by each Partner and which each Partner has agreed to contribute in the future, and the date upon which each Partner became a Partner;
(v) to have furnished to him, upon notification to the General Partner, a copy of this Agreement and the Certificate of Limited Partnership and all amendments thereto, together with executed copies of any powers of attorney pursuant to which this Agreement, the Certificate of Limited Partnership and all amendments thereto have been executed; and
(vi) to inspect and copy any of the Partnership’s books and records and obtain such other information regarding the affairs of the Partnership as is just and reasonable.
(b) Notwithstanding the other provisions hereof, the General Partner may keep confidential from the Limited Partners for such period of time as the General Partner deems reasonable, any information the General Partner reasonably believes to be in the nature of trade secrets or other information, the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or could damage the Partnership or its business or which the Partnership is required by law or by agreements with third parties to keep confidential.
7.6 Rights of Special Limited Partners Relating to the Partnership. (a) The term “Special Limited Partner” means those persons who are listed on the books and records of the Partnership as owning a “Special LP Interest” and their transferees and assigns. A Special LP Interest is a limited interest in the capital of the Partnership as described in this Section.
(b) A capital account is maintained for each Special Limited Partner with respect to the Special LP Interests (“Special LP Capital Account”) distinct and separate from the Capital Accounts. The aggregate balance of all of the Special LP Capital Accounts is $5,290,500, which aggregate balance shall not change. A Special LP Capital Account shall not be adjusted pursuant to Section 4.6(d). A Special LP Capital Account shall not be treated as a Capital Account, except as provided in Section 7.6(g).
(c) A Special Limited Partner (in such capacity) is not required or permitted to make Capital Contributions to the Partnership.
(d) The Special Limited Partners shall not be entitled to any Units with respect to their Special LP Interests and the Special LP Interests shall not be represented by any Units.
(e) No items of income, gain, deduction, loss or credits shall be allocated to the Special Limited Partners pursuant to Article IV or Article V with respect to the Special LP Interests. No Special Limited Partner shall receive any allocation or distribution pursuant to Article V with respect to the Special LP Interests.
(f) A Special Limited Partner shall have no vote or approval pursuant to Articles VI and XV.
(g) For purposes of making distributions in liquidation of the Partnership pursuant to Article XIV, and only for such purposes, a Special LP Capital Account shall be treated the same as the Capital Accounts, and the Special Limited Partners shall be entitled to distributions in liquidation of $5,290,500 in the aggregate.
ARTICLE VIII
Books, Records, Accounting and Reports
8.1 Records and Accounting. The General Partner shall keep or cause to be kept at the principal office of the Partnership appropriate books and records with respect to the Partnerships business including, without limitation, all books and records necessary to provide to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 7.5(a). Any records maintained by the Partnership in the regular course of its
business, including the record of the holders of Units, books of account and records of Partnership proceedings, may be kept on or be in the form of magnetic tape, photographs, micrographics or any other information storage device; provided that the records so kept shall be convertible into clearly legible written form within a reasonable period of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an accrual basis in accordance with generally accepted accounting principles. All decisions as to accounting matters, except as specifically provided to the contrary herein, shall be made by the General Partner.
8.2 Fiscal Year. The fiscal year of the Partnership shall be the calendar year, unless the General Partner shall determine otherwise in its sole discretion.
8.3 Reports. (a) As soon as practicable, but in no event later than ninety (90) days after the close of each fiscal year, the General Partner shall cause to be mailed to each Record Holder of a Unit as of the last day of such fiscal year reports containing financial statements of the Partnership for the fiscal year, presented in accordance with generally accepted accounting principles, including a balance sheet, a statement of income, a statement of Partners’ equity and a statement of changes in financial position. Such statements shall be audited by a firm of independent public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than forty-five (45) days after the close of each calendar quarter, except the last calendar quarter of each fiscal year, the General Partner shall cause to be mailed to each Record Holder of a Unit as of the last day of such calendar quarter a report containing such financial information as the General Partner deems appropriate.
(c) Except as otherwise required by law, in the sole discretion of the General Partner, in lieu of sending any report or statement described in Section 8.3(a) or (b), the Partnership may create and maintain a secure, internet-based medium whereby the Unit holders are able to access, view and download such reports or statements. All reports or statements made available through such internet-based medium shall be made available to the Unit holders as of the dates on which the Partnership would have otherwise had to prepare and send such reports according to Section 8.3(a) or (b).
8.4 Other information. The General Partner may release information concerning the operations of the Partnership as is customary in the industry or required by law or regulation.
ARTICLE IX
Tax Matters
9.1 Preparation of Tax Returns. The General Partner shall arrange for the preparation and timely filing of all returns and reports required for federal and state income tax purposes and shall use all reasonable efforts to furnish to Partners within ninety (90) days of the close of the taxable year the tax information reasonably required for federal and state income tax reporting purposes. The classification, realization and recognition of income, gains, losses and deductions and other items shall be on the cash or accrual method of accounting for federal income tax purposes, as the General Partner shall determine in its sole discretion. The taxable year of the
Partnership shall be the calendar year, unless the General Partner shall determine otherwise in its sole discretion.
9.2 Tax Election. Except as otherwise provided herein, the General Partner shall, in its sole discretion, determine whether to make any available election pursuant to the Code. The General Partner shall keep in effect the election under Section 754 of the Code in accordance with applicable regulations thereunder, subject to the reservation of the right to seek to revoke any such election upon the General Partner’s determination that such revocation is in the best interests of the Limited Partners.
9.3 Tax Controversies. Subject to the provisions hereof, the General Partner is designated the Tax Matters Partner (as defined in Section 6231 of the Code) and is authorized and required to represent the Partnership (at the Partnership’s expense) in connection with all examinations of the Partnership’s affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend Partnership funds for professional services and costs associated therewith. Each Partner agrees to cooperate with the General Partner and to do or refrain from doing any or all things reasonably required by the General Partner to conduct such proceedings.
9.4 Organizational Expenses. The Partnership shall elect to deduct expenses incurred in organizing the Partnership ratably over a 60-month period as provided in Section 709 of the Code.
9.5 Taxation as a Partnership. No election shall be made by the Partnership or any Partner for the Partnership to be taxable as an association taxable as a corporation or to be excluded from the application of any of the provisions of Subchapter K, Chapter 1 of Subtitle A of the Code or from any similar provisions of any state tax laws.
9.6 Opinions Regarding Taxation as a Partnership. Notwithstanding any other provision of this Agreement, the requirement, as a condition to any action proposed to be taken under this Agreement, that the Partnership be furnished an Opinion of Counsel to the effect that the proposed transaction would not result in the Partnership being treated as an association taxable as a corporation for federal income tax purposes shall not be applicable if the Partnership is at such time treated in all material respects as an association taxable as a corporation for federal income tax purposes due to changes in federal income tax laws.
9.7 Withholding.
(a) Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the partnership to comply with any withholding requirements established under Section 1445 of the Code with regard to (i) the sale of “United States real property interests” (as defined in the Code), (ii) the distribution of cash or property to any Partner who is a “foreign person” (as defined in Regulation §1.1445-2T(b)(2)(i)(c)), or (iii) the transfer of Units or Depositary Units.
(b) In its sole and absolute discretion and as provided for in Regulations under Section 1445 of the Code, the General Partner may elect to withhold a portion of any distribution made to Partners and Assignees who are “foreign persons” or who fail to provide to the
Partnership an appropriate certificate in accordance with the applicable provisions of such Treasury Regulations.
(c) The General Partner is authorized to take any action that it deems to be necessary or appropriate to cause the Partnership to comply with any withholding requirements established under Sections 1441, 1442 or 1446 of the Code.
(d) The General Partner is authorized to withhold a portion of distributions made to Partners in order to satisfy state or local income tax obligations resulting from operations of the Partnership.
ARTICLE X
Prohibitions and Limitations
10.1 Prohibitions and Limitations.
Without the prior approval of Partners whose aggregate Percentage Interest constitutes at least 66 2/3% of the aggregate Percentage Interest of the Partners, the General Partner shall not approve a transaction or a series of related transactions which (i) results in a Change of Control, or (ii) results in the sale or exchange of all or substantially all of the assets of Cedar Point Park.
ARTICLE XI
Transfer of Interests
11.1 Transfer. (a) The term “transfer,” when used in this Article XI with respect to a Partnership Interest, shall be deemed to refer to a transaction by which the General Partner assigns all or any of its general partner Partnership Interest to another Person or by which the holder of a Unit assigns the Partnership Interest evidenced thereby to another Person, and such term includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or other disposition.
(b) No Partnership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article XI. Any transfer or purported transfer of any Partnership Interest not made in accordance with this Article XI shall be null and void.
11.2 Transfer of Interests of General Partner. The General Partner may not transfer all or any part of its general partner Partnership Interest unless (i) the holders of at least 66-2/3% of the Percentage Interest approve such transfer, (ii) the transferee agrees to be bound by the provisions of this Agreement and (iii) the Partnership receives an Opinion of Counsel that such transfer would not result in the loss of limited liability of any Limited Partner or cause the Partnership to be treated as an association taxable as a corporation for federal income tax purposes; provided that any transfer by the General Partner of all of its general partner Partnership Interest shall constitute a withdrawal for purposes of, and shall be effected by such General Partner only if not prohibited by, Section 13.1(a).
11.3 Transfer of Units. Any Units, including Units held by the General Partner, may be transferred following deposit in the Deposit Account, subject to the terms of the Deposit Agreement. Units that have never been deposited in the Deposit Account or that have been withdrawn from the Deposit Account and not redeposited are not transferable except upon death or by operation of law; provided that the General Partner or its Affiliates may, without restriction, transfer between or among themselves Units that have never been deposited in the Deposit Account or that have been withdrawn from the Deposit Account and not redeposited, and any Partner may transfer Units to the Partnership or the General Partner.
11.4 Transfer of Depositary Units. (a) Except as provided in Section 11.3, the Partnership shall not recognize transfers of Units or interests therein except by transfers of Depositary Units. Depositary Units may be transferred only in the manner provided in the Deposit Agreement.
(b) A transferee who has completed and delivered a Transfer Application shall be deemed (i) to have requested admission as a Limited Partner, (ii) to have agreed to be bound by, and to have executed, this Agreement (including specifically Sections 4.5(e), 5.1(e) and 5.2(f) hereof) and the Deposit Agreement, (iii) to have represented that such transferee has authority to enter into this Agreement and the Deposit Agreement, and (iv) to have granted powers of attorney to the General Partner and the Liquidator to make the consents and waivers contained herein. Until admitted as a Limited Partner pursuant to Article XII, the Record Holder of a Depositary Receipt shall be an Assignee in respect of the Depositary Units evidenced thereby.
(c) Each distribution in respect of Units shall be paid by the Partnership, directly or through the Depositary or through any other Person or agent, only to the Record Holders thereof as of the Record Date set for the distribution. Such payment shall constitute full payment and satisfaction of the Partnership’s liability in respect of such payment, regardless of any claim of any Person who may have an interest in such payment by reason of an assignment or otherwise.
11.5 Restrictions on Transfer. Notwithstanding the other provisions of this Article XI, no transfer of any Unit shall be made if such transfer (a) would violate the then applicable federal and state securities laws or rules and regulations of the Securities and Exchange Commission, any state securities commission or any other governmental authorities with jurisdiction over such transfer, or (b) would affect the Partnership’s existence or qualification as a limited partnership under the Delaware Act.
ARTICLE XII
Admission of Partners
12.1 Existing Partners. All the Persons who are Partners as of the date of this Agreement shall continue as Partners and have executed a counterpart of this Agreement (either individually or by attorney or agent) and thereby agree to be bound by the terms hereof as a Partner.
12.2 Admission of Additional Limited Partners. (a) The transferee of a Person’s Units shall have the right to seek admission as an Additional Limited Partner subject to the conditions
of and in the manner permitted under this Agreement. A transferor of a Depositary Receipt shall only have the authority to convey to a purchaser or other transferee who does not execute and deliver the Transfer Application, however, (i) the right to negotiate such Depositary Receipt to a purchaser or other transferee and (ii) the right to transfer the right to request admission as a Limited Partner to such purchaser or other transferee in respect of the transferred Depositary Units. Each transferee of a Unit (including any Person, such as a broker, dealer, bank, trust company, clearing corporation, other nominee holder or an agent of any of the foregoing, acquiring such Depositary Unit for the account of another Person) shall apply to become an Additional Limited Partner with respect to the Units transferred by executing and delivering a Transfer Application at the time of such transfer. Such transferee shall become an Additional Limited Partner at such time as the General Partner consents thereto, which consent may be given or withheld in the General Partner’s sole discretion, and when any such admission is shown on the books and records of the Partnership. If such consent is withheld, the transferee shall be an Assignee. An Assignee shall have a Partnership Interest equivalent to that of a Limited Partner with respect to allocations and distributions, including liquidating distributions of the Partnership. With respect to voting rights attributable to Units or Depositary Units that are held by Assignees, the General Partner shall be deemed to be the Limited Partner with respect thereto and shall, in exercising the voting rights in respect of such Units or Depositary Units on any matter, vote such Units or Depositary Units at the written direction of the Assignee who is the Record Holder of such Units or Depositary Units. If no such written direction is received, such Units or Depositary Units will not be voted. An Assignee shall have no other rights of a Limited Partner.
(b) The admission of an Assignee as an Additional Limited Partner shall be effected without the approval of any of the Partners other than the General Partner.
(c) A Person who makes a Capital Contribution to the Partnership shall be admitted to the Partnership as an Additional Limited Partner upon furnishing to the General Partner (i) an acceptance, in form satisfactory to the General Partner, of all the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 1.4 and (ii) such other documents or instruments as may be required in order to effect his admission as an Additional Limited Partner, and such admission shall become effective on the date that the General Partner determines in its sole discretion that such conditions have been satisfied and when any such admission is shown on the books and records of the Partnership.
12.3 Admission of Successor General Partner. A successor General Partner selected by the holders of a Majority Interest or the transferee of or successor to the entire Partnership Interest of the General Partner pursuant to Section 11.2 shall be admitted to the Partnership as the General Partner, effective immediately prior to the withdrawal or removal of the General Partner pursuant to Section 13.1.
12.4 Amendment of Agreement and of Certificate of Limited Partnership. For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate to prepare and file as soon as practical an amendment of this Agreement and the Certificate of Limited Partnership, if required by law, and for this purpose may exercise the power of attorney granted in Section 1.4.
ARTICLE XIII
Withdrawal or Removal of Partners
13.1 Withdrawal or Removal of General Partner. (a) The General Partner covenants and agrees that it will not withdraw as the General Partner before December 31, 2082, subject to its right to transfer its Partnership Interest pursuant to Section 11.2. Except for transfers permitted by Section 11.2, any transfer by the General Partner of all of its Partnership Interest as the General Partner pursuant to Section 11.2 shall constitute the withdrawal of the General Partner for purposes of this Section 13.1(a). On or after December 31, 2082, the General Partner may withdraw from the Partnership upon 120 days advance written notice to the Limited Partners, except as otherwise provided herein. Such withdrawal shall take effect on the date specified in such notice. Any withdrawal of the General Partner shall not become effective unless the Partnership has received an Opinion of Counsel that such withdrawal, and the selection and admission of a successor General Partner, will not result in the loss of limited liability of any Limited Partner or cause the Partnership to be treated as an association taxable as a corporation for federal income tax purposes. If the General Partner gives a notice of withdrawal, a Majority Interest may, prior to or within 90 days after such notice of intent to withdraw, select a successor General Partner. If no successor General Partner is selected, the Partnership shall be dissolved pursuant to Section 14.1. If a successor General Partner is selected, it shall be admitted immediately prior to the withdrawal of the General Partner and shall continue the business and operations of the Partnership without dissolution.
(b) The General Partner may be removed only upon the affirmative votes of the holders of at least 66-2/3% of the Percentage Interests held by Limited Partners. Any such action for removal of the General Partner shall provide for the approval of a successor General Partner. Such removal shall be effective immediately after the selection of the successor General Partner pursuant to Article XII. The right to remove the General Partner shall not exist or be exercised unless the Partnership has received an Opinion of Counsel that such removal and the selection and admission of a successor General Partner will not result in the loss of limited liability of any Limited Partner or cause the partnership to be treated as an association taxable as a corporation for federal income tax purposes.
(c) Upon the withdrawal or removal of the General Partner under this Section 13.1, the Partnership shall distribute to such General Partner an amount of cash equal to the lesser of (A) the balance in its Unadjusted Capital Account or (B) the balance in its Capital Account (following the adjustment of such Capital Account in accordance with Section 4.5(d)); provided that, for purposes of the application of this Section 13.1(c)(i) only, a negative balance in either such Unadjusted Capital Account or such Capital Account shall be deemed to be zero. To the extent such Unadjusted Capital Account reflects the lesser balance, the Partnership shall be deemed to have distributed to the General Partner an amount of cash equal to the positive balance, if any, in its Capital Account, and the General Partner shall be deemed to have made a payment (as characterized under Section 707(a) of the Code) to the Partnership of a penalty for its withdrawal or removal in an amount equal to the excess of the positive balance, if any, in its Capital Account over the cash amount, if any, actually distributed.
13.2 Interest of Departing General Partner and Successor. The General Partner shall have no further interest in its Percentage Interest after its withdrawal or removal. The successor General Partner shall succeed to the Percentage Interest held by its predecessor.
13.3 Withdrawal of Limited Partners. No Limited Partner shall have any right to withdraw from the Partnership; provided that upon a transfer of a Limited Partners Units, upon the transferee’s becoming a Record Holder, the transferring Limited Partner shall cease to be a Limited Partner with respect to the Units transferred, but until such transferee becomes a Record Holder, the transferor shall continue to be a Limited Partner. No Limited Partner shall be entitled to receive any distribution from the Partnership except as expressly set forth in Articles V and XIV.
13.4 Continuation of Partnership. Upon the withdrawal or removal of any General Partner, any successor or additional general partner and any remaining general partner is authorized to and shall carry on the business of the Partnership.
ARTICLE XIV
Dissolution and Liquidation
14.1 Dissolution. The Partnership shall not be dissolved by the admission of Additional Limited Partners or the admission of additional or substituted General Partner in accordance with the terms of this Agreement. The Partnership shall dissolve, and its affairs shall be wound up, upon:
(a) [intentionally omitted];
(b) the removal of the General Partner, or any other event not specifically provided for herein that results in its ceasing to be the General Partner (other than by reason of a transfer pursuant to Section 11.2 or its withdrawal or removal followed by selection of a successor by a Majority Interest pursuant to Section 13.1);
(c) an election to dissolve the Partnership by the General Partner that is approved by the affirmative vote of a Majority Interest; or
(d) the bankruptcy or the dissolution of the General Partner;
provided that the Partnership shall not be dissolved upon an event described in Section 14.1(b) or (d) if within 90 days after such event, a Majority Interest agree in writing to continue the business of the Partnership and to approve a successor General Partner.
For purposes of this Section 14.1, bankruptcy of the General Partner shall be deemed to have occurred when (u) it commences a voluntary proceeding, or files an answer in any involuntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect; (v) it is adjudged bankrupt or insolvent, or has entered against it a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect; (w) it executes and delivers a
general assignment for the benefit of its creditors; (x) it files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of the nature described in clause (u); (y) it seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for it or for all or any substantial part of its properties; or (z) (1) any proceeding of the nature described in clause (u) has not been dismissed one hundred twenty (120) days after the commencement thereof, (2) the appointment without its consent or acquiescence of a trustee, receiver or liquidator for it or all or any substantial part of its properties has not been vacated or stayed within ninety (90) days of such appointment or (3) such appointment is not vacated within ninety (90) days after the expiration of any such stay.
14.2 Continuation of Business of Partnership after Dissolution. Upon dissolution of the Partnership in accordance with Section 14.1(b) and a failure of all Partners to agree to continue the business of the Partnership and to approve a successor General Partner as provided in Section 14.1 or upon a dissolution of the Partnership in accordance with Section 14.1(d), then within an additional ninety (90) days, a Majority Interest may elect to reconstitute the Partnership and to continue its business on the same terms and conditions set forth in this Agreement by forming a new partnership on terms identical to those set forth in this Agreement and having as its General Partner a Person elected by a Majority Interest. Upon any such election by a Majority Interest, all Partners shall be bound thereby and shall be deemed to have consented thereto. Unless such an election is made within one hundred eighty (180) days after dissolution, the Partnership shall conduct only activities necessary to wind up its affairs. If such an election is made within one hundred eighty (180) days after dissolution, then:
(a) the reconstituted Partnership shall continue until the end of the term set forth in Section 1.5 unless earlier dissolved in accordance with this Article XIV;
(b) if the successor General Partner is not the former General Partner, then Section 13.1(c) shall apply; and
(c) to the extent required by law, all necessary steps shall be taken to cancel this Agreement and the Certificate of Limited Partnership and to enter into a new partnership agreement and certificate of limited partnership, and the successor General Partner may for this purpose exercise the powers of attorney granted in Section 1.4;
provided that the right of a Majority Interest to select a successor General Partner and to reconstitute and continue the business of the Partnership shall not exist and may not be exercised unless the Partnership has received an Opinion of Counsel that the exercise of the right would not result in the loss of limited liability of any Limited Partner or cause either the Partnership or the reconstituted Partnership to be treated as an association taxable as a corporation for federal income tax purposes.
14.3 Liquidation. Upon dissolution of the Partnership, unless the Partnership is continued under an election to reconstitute and continue the Partnership pursuant to Section 14.2, the Liquidator shall liquidate the Partnership. The Liquidator (if other than the General Partner) shall be entitled to receive such compensation for its services as may be approved by a Majority Interest. The Liquidator shall agree not to resign at any time without 15 days prior written notice and (if other than the General Partner) may be removed at any time, with or without cause, by
notice of removal approved by a Majority Interest. Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within thirty (30) days thereafter be approved by a Majority Interest. The right to appoint a successor or substitute Liquidator in the manner provided herein shall be recurring and continuing for so long as the functions and services of the Liquidator are authorized to continue under the provisions hereof, and every reference herein to the Liquidator shall be deemed to refer also to any such successor or substitute Liquidator appointed in the manner herein provided. Except as expressly provided in this Article XIV, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or approval of any of the parties hereto, all of the powers conferred upon the General Partner under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers, other than the limitation on sale set forth in Article X) to the extent necessary or desirable in the good faith judgment of the Liquidator to carry out its duties and functions hereunder for and during such period of time as shall be reasonably required in the good faith judgment of the Liquidator to complete the winding up and liquidation of the Partnership as provided herein. The Liquidator shall liquidate the assets of the Partnership and shall apply and distribute the proceeds of such liquidation in the following order of priority, unless otherwise required by applicable law:
(a) to the payment of creditors of the Partnership, including Partners and the General Partner in respect of any expenses payable pursuant to Section 6.5 hereof, in order of priority provided by law and to the creation of a reserve of cash or other assets of the Partnership for contingent liabilities in an amount, if any, determined by the Liquidator to be appropriate for such purposes; and
(b) to the Partners in accordance with the positive balances in their respective Combined Capital Accounts.
14.4 Distribution in Kind. Notwithstanding the provisions of Section 14.3 which require the liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if upon dissolution of the Partnership the Liquidator determines that an immediate sale of part or all of the assets of the Partnership would be impractical or would cause undue loss to the Partners, the Liquidator may, in its absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership and may, in its absolute discretion, distribute to the Partners, in lieu of cash, as tenants in common and in accordance with the provisions of Section 14.3(b), undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. In addition, in the event the Partnership has not satisfied any or all of its recourse liabilities, the Liquidator shall (i) cause the General Partner to assume any such recourse liabilities not satisfied by the Partnership and (ii) designate specific assets (selecting first from among current assets) to be distributed to the General Partner (before any distribution is made pursuant to Section 14.3(b)) in an amount of cash or of property having a fair market value (based on independent appraisals to the extent reasonable) determined by the Liquidator to have been the amount necessary to satisfy such recourse liabilities if satisfied by the Partnership.
The Liquidator shall determine the fair market value of any property distributed in kind pursuant to this Section 14.4 using such reasonable method of valuation as it may adopt.
14.5 Cancellation of Certificate of Limited Partnership. Upon the completion of the distribution of partnership property as provided in Sections 14.3 and 14.4, the Partnership shall be terminated, and the Liquidator (or any of the Partners, if necessary) shall cause the cancellation of the Certificate of Limited Partnership and all formations and qualifications of the Partnership in jurisdictions other than the State of Delaware and shall take such other actions as may be necessary to terminate the Partnership.
14.6 Reasonable Time for Winding Up. A reasonable time shall be allowed for the orderly winding up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 14.3 in order to minimize any losses otherwise attendant upon such winding up.
14.7 Return of Capital. No General Partner shall be personally liable for the return of the Capital Contributions of the Limited Partners, or any portion thereof. Any such return shall be made solely from Partnership assets.
14.8 Capital Account Restoration. No Limited Partner shall have an obligation to restore a negative Capital Account balance.
14.9 Waiver of Partition. Each Partner hereby waives any right to partition of the Partnership property.
ARTICLE XV
Amendment of Partnership Agreement; Meetings; Record Date
15.1 Amendments to be Adopted Solely by General Partner. The General Partner (pursuant to its powers of attorney from the Partners), without the consent of any other Partner or Assignee, may amend any provision of this Agreement, and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect:
(a) the admission or substitution of Partners in accordance with this Agreement;
(b) a change that the General Partner in its sole discretion has determined to be reasonable and necessary or appropriate to form, qualify or continue the qualification of the Partnership as a limited partnership or a partnership in which limited partners have limited liability under the laws of any state or that is necessary or advisable in the opinion of the General Partner to ensure that the Partnership will not be treated as an association taxable as a corporation for federal income tax purposes;
(c) a change (i) that in the sole discretion of the General Partner does not adversely affect the Limited Partners in any material respect, (ii) that is necessary or desirable to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state
statute or that is necessary or desirable to facilitate the trading of the Depositary Units (including, without limitation, the division of Outstanding Units into different classes in order to facilitate uniformity of tax consequences within such classes of Units) or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the Depositary Units are or will be listed for trading, compliance with any of which the General Partner deems to be in the best interests of the Partnership and the Limited Partners, or (iii) that is required or contemplated by this Agreement;
(d) an amendment that is necessary, in the opinion of counsel to the Partnership, to prevent the Partnership, any General Partner or its partners, directors or officers from in any manner being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisers Act of 1940 or plan asset regulations adopted under the Employee Retirement Income Security Act of 1974, whether or not substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor;
(e) an amendment that in the sole discretion of the General Partner is necessary or desirable in connection with the authorization for issuance of any class or series of Units pursuant to Section 4.3(a);
(f) an amendment adopted by the General Partner in accordance with Sections 4.3(e), 4.5, 5.1(e) or 5.2(f); or
(g) any other amendments similar to the foregoing.
15.2 Amendment Procedures. Except as provided in Sections 15.1 and 15.3, all amendments to this Agreement shall be made in accordance with the following requirements. Amendments of this Agreement may be proposed by the General Partner or by the Record Holders of ten percent (10%) of the Outstanding Units. If an amendment is proposed, the General Partner shall seek the written approval of the requisite Percentage Interest or call a meeting of the Limited Partners to consider and vote on such proposed amendment. A proposed amendment shall be effective upon its approval by the General Partner and by a Majority Interest unless a greater Percentage Interest is required by this Agreement. The General Partner shall notify all Partners upon final adoption of any proposed amendment.
15.3 Amendment Requirements. (a) Notwithstanding the provisions of Sections 15.1 and 15.2, the approval of the General Partner and at least eighty-five percent (85%) of the aggregate Percentage Interest held by Limited Partners shall be required for any amendment unless the Partnership has received an Opinion of Counsel that such amendment would not result in the loss of limited liability of any Limited Partner or cause the Partnership to be treated as an association taxable as a corporation for federal income tax purposes.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2, no provision of this Agreement which establishes a Percentage Interest required to take any action shall be amended, altered, changed, repealed or rescinded in any respect which would have the effect of reducing such voting requirements, unless such is approved by written consent or the affirmative vote of Partners whose aggregate Percentage Interest constitutes not less than the voting requirement sought to be reduced. This Section 15.3(b) shall be amended only with the approval by written
consent or affirmative vote of Partners whose aggregate Percentage Interest constitutes at least 85% of the aggregate Percentage Interest of the Partners.
(c) The voting requirements in this Section 15.3 shall be in addition to voting requirements imposed by the other provisions contained herein.
15.4 Meetings. All acts of Limited Partners to be taken hereunder shall be taken in the manner provided in this Article XV. Meetings of the Limited Partners may be called by the General Partner or by Limited Partners owning at least ten percent (10%) of the aggregate Percentage Interest held by Limited Partners. Any Limited Partner calling a meeting shall specify the number of Units as to which he is exercising the right to call a meeting, and only the specified Units shall be counted for the purpose of determining whether such standard has been met. Limited Partners shall call a meeting by delivering to the General Partner one or more calls in writing stating that the signing Limited Partners wish to call a meeting and indicating the general or specific purposes for which the meeting is to be called. Within ten (10) days after receipt of such a call from Limited Partners or within such greater time as may be reasonably necessary for the Partnership to comply with any statutes, rules, regulations, or similar requirements governing the holding of a meeting or the solicitation of proxies for use at such a meeting, the General Partner shall send a notice of the meeting to the Limited Partners. A meeting shall be held at a time and place determined by the General Partner on a date not more than sixty (60) days after the mailing of notice of the meeting. Each Limited Partner shall have one vote for each Unit of which he is a Record Holder on the Record Date for such vote, and may cast such vote in person or by proxy. Limited Partners shall not vote on matters that would cause the Limited Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to subject the Limited Partners to unlimited liability.
15.5 Notice of a Meeting. Notice of a meeting called pursuant to Section 15.4 shall be given to the Record Holders in writing either personally or by mail or other means of written communication in accordance with Section 16.1. The notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication.
15.6 Record Date. For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners or to give approval without a meeting as provided in Section 15.11, the General Partner may set a Record Date, which shall not be less than ten (10) days nor more than sixty (60) days before the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline or requirement of any stock exchange on which the Depositary Units are listed for trading, in which case the rule, regulation, guideline or requirement of such stock exchange shall govern).
15.7 Adjournment. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are announced at the meeting at which the adjournment is taken, unless such adjournment shall be for more than thirty (30) days. At the adjourned meeting, the Partnership may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if a new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given in accordance with this Article XV.
15.8 Waiver of Notice; Consent to Meeting; Approval of Minutes. The transactions of any meeting of Limited Partners, however called and noticed, and whenever held, are as valid as though a meeting were duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the Limited Partners entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All waivers, consents and approvals shall be filed with the Partnership records or made a part of the minutes of the meeting. Attendance of a Limited Partner at a meeting shall constitute a waiver of notice of the meeting, except when the Limited Partner objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened; provided that attendance at a meeting shall not be a waiver of any right to object to the consideration of matters required to be included in the notice of the meeting, but not so included, if the objection is expressly made at the meeting.
15.9 Quorum. A Majority Interest represented in person or by proxy shall constitute a quorum at a meeting of Limited Partners. Notwithstanding anything elsewhere provided in this Agreement to the contrary, the Limited Partners shall be entitled to vote on, consent to or approve of matters only as provided in Sections 6.2, 11.2, 13.1, 13.2, 14.1, 14.2, 14.3, 15.2, 15.3, 15.4 and 15.11 and Article X and as submitted to them by the General Partner. At any meeting of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is present, the act of a Majority Interest shall be deemed to constitute the act of all Limited Partners, unless a higher percentage is required under this Agreement. The Limited Partners present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to leave less than a quorum, if any action taken (other than adjournment) is approved by the requisite Percentage Interest specified in this Agreement. In the absence of a quorum, any meeting of Limited Partners may be adjourned from time to time by the affirmative vote of a Majority Interest represented either in person or by proxy but no other business may be transacted, except as provided in Section 15.7.
15.10 Conduct of Meeting. The General Partner shall have full power and authority concerning the manner of conducting any meeting of the Limited Partners or solicitation of approvals in writing, including, without limitation, the determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the requirements of Section 15.4, the conduct of voting, the validity and effect of any proxies and the determination of any controversies, votes or challenges arising in connection with or during the meeting or voting. The General Partner shall designate a Person to serve as chairman of any meeting and shall further designate a Person to take the minutes of any meeting, in either case including, without limitation, a Partner or a director or officer of the General Partner. All minutes shall be kept with the records of the Partnership maintained by the General Partner. The General Partner may make such other regulations consistent with applicable law and this Agreement as it may deem advisable concerning the conduct of any meeting of the Limited Partners or solicitation of approvals in writing, including regulations in regard to the appointment of proxies, the appointment and duties of inspectors of votes and approvals, the submission and examination of proxies and other evidence of the right to vote and the revocation of approvals in writing.
15.11 Action Without a Meeting. Any action that may be taken at a meeting of the Limited Partners may be taken without a meeting if an approval in writing setting forth the action so taken is signed by Partners owning not less than the minimum Percentage Interest that would be necessary to authorize or take such action at a meeting at which all the Partners were present and voted. Prompt notice of the taking of action without a meeting shall be given to the Limited Partners who have not approved in writing. The General Partner may specify that any written ballot submitted to Limited Partners for the purpose of taking any action without a meeting shall be returned to the Partnership within the time, not less than twenty (20) days, specified by the General Partner. If a ballot returned to the Partnership does not vote all of the Units held by the Limited Partner, the Partnership shall be deemed to have failed to receive a ballot for the Units which were not voted. If approval of the taking of any action by the Limited Partner is solicited by any Person other than by or on behalf of the General Partner, the written approvals shall have no force and effect unless and until (a) they are deposited with the Partnership in care of the General Partner, (b) approvals sufficient to take the action proposed are dated as of a date not more than ninety (90) days prior to the date sufficient approvals are deposited with the Partnership and (c) an Opinion of Counsel is delivered to the General Partner to the effect that the exercise of such right and the action proposed to be taken with respect to any particular matter (i) will not cause the Limited Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to subject the Limited Partners to unlimited liability, (ii) will not cause the Partnership to be treated as an association taxable as a corporation for federal income tax purposes and (iii) is otherwise permissible under the state statutes then governing the rights, duties and liabilities of the Partnership and the Partners.
15.12 Voting Rights. (a) Only those Record Holders of Units on the Record Date set pursuant to Section 15.6 shall be entitled to notice of, and, subject to Section 12.2(a), to vote at, a meeting of Limited Partners or to act with respect to matters as to which approvals are solicited or required under this Agreement. With respect to voting rights attributable to Units that are held by Assignees, the General Partner shall be deemed to be the Limited Partner with respect thereto and shall, in exercising the voting rights in respect of Units on any matter, vote such Units at the direction of the Assignee.
(b) With respect to Units that are held for a Person’s account by another Person (such as a broker, dealer, bank, trust company, clearing corporation or an agent of any of the foregoing) in whose name such Units are registered, such representative Person shall, in exercising the voting rights in respect of such Units on any matter, and unless the arrangement between such Persons provides otherwise, vote such Units in favor of and at the direction of the Person for whom he holds, and the Partnership shall be entitled to assume he is so acting without further inquiry.
(c) If the General Partner is also a Limited Partner, it may vote its Percentage Interest, including such Percentage Interest represented by Units on any matter submitted to the Limited Partners for consideration in such manner as it in its sole discretion shall determine.
ARTICLE XVI
General Provisions
16.1 Addresses and Notices. Any notice, demand, request or report required or permitted to be given or made to a Partner under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class mail or by other means of written communication to the Partner at the address described below. Any notice, payment or report to be given or sent to a Partner hereunder shall be deemed conclusively to have been given or sent, and the obligation to give such notice or report or to make such payment shall be deemed conclusively to have been fully satisfied, upon mailing of such notice, payment or report to such Person at his address as shown on the records of the Partnership or the Depositary, regardless of any claim of any Person who may have an interest in such Unit or the Partnership Interest of such General Partner by reason of an assignment or otherwise. An affidavit or certificate of mailing of any notice, payment or report in accordance with the provisions of this Section 16.1 executed by the General Partner or a mailing organization shall be prima facie evidence of the giving or sending of such notice, payment or report. If any notice, payment or report addressed to a Record Holder at the address of such Record Holder appearing on the books of the Partnership or Depositary is returned by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver it, such notice, payment or report and any subsequent notices, payments and reports shall be deemed to have been duly given or sent without further mailing (until such time as such Record Holder or another Person notifies the Partnership of a change in his address) if they are available for the Limited Partner or Assignee at the principal office of the Partnership for a period of one year from the date of the giving or sending of such notice, payment or report to the other Limited Partners and Assignees. Any notice to the Partnership shall be deemed given if received by the General Partner at the principal office of the Partnership designated pursuant to Section 1.3. The Partnership and the General Partner may rely and shall be protected in relying on any notice or other document from a Partner or other Person if believed by them to be genuine.
16.2 Titles and Captions. All article or section titles or captions in this Agreement are for convenience only and shall not be deemed to be part of this Agreement or to define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” and “Sections” are to articles and sections of this Agreement.
16.3 Pronouns and Plurals. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.
16.4 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.
16.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.
16.6 Integration. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
16.7 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Partnership.
16.8 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.
16.9 Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a Unit, upon executing and delivering a Transfer Application as herein described, independently of the signature of any other party.
16.10 Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law.
16.11 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
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GENERAL PARTNER:
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CEDAR FAIR MANAGEMENT, INC.
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By:
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/s/ Richard L. Kinzel
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Richard L. Kinzel
Chief Executive Officer
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By:
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/s/ Matt Ouimet
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Matt Ouimet President
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LIMITED PARTNERS:
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By:
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CEDAR FAIR MANAGEMENT, INC.
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As attorney-in-fact pursuant to Section 1.4
of this Agreement
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By:
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/s/ Richard L. Kinzel
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Richard L. Kinzel
Chief Executive Officer
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By:
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/s/ Matt Ouimet
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Matt Ouimet
President
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Annex I
(FACE OF CERTIFICATE)
CERTIFICATE FOR
UNITS REPRESENTING LIMITED PARTNER INTERESTS
IN
CEDAR FAIR, L.P.
No. Units
________________________, as General Partner (the “General Partner”) of Cedar Fair, L.P., a Delaware limited partnership (the “Partnership”), hereby certifies that __________________ is a limited partner of the Partnership whose limited partner interest therein, as set forth in the Fifth Amended and Restated Agreement of Limited Partnership of the Partnership, as amended and restated from time to time (the “Partnership Agreement”) (copies of which are on file at the principal office of the Partnership in Sandusky, Ohio), represents ____ units representing limited partner interests in the Partnership (“Units”).
This certificate is not negotiable and is not transferable except upon death, by operation of law or as otherwise provided in the Partnership Agreement; provided that this certificate, when coupled with an assignment in the form set forth on the reverse hereof, duly executed in blank or assigned to a named assignee, may be deposited pursuant to the terms of the Deposit Agreement (as defined in the Partnership Agreement), to which reference is hereby made for a statement of the rights, preferences and limitations pertaining to the deposited Units.
Dated: __________________________________,
General Partner of Cedar Fair, L.P.
ATTEST:
By: ______________________________ By: __________________________________
(REVERSE OF CERTIFICATE)
ASSIGNMENT OF
UNITS REPRESENTING LIMITED PARTNER INTERESTS
IN
CEDAR FAIR, L.P.
FOR VALUE RECEIVED, the undersigned (the “Assignor”) hereby assigns, conveys, sells and transfers unto ___________________________________________________________
(Please insert Social (Please print or type
Security or other identifying name and address of Assignee)
number of Assignee)
all rights and interest of the Assignor in the aforementioned Units and irrevocably constitutes and appoints the General Partner as his attorney-in-fact with full power of substitution in the premises to transfer the Units on the books and records of the Partnership.
Dated: ___________________________________
Signature
Signature Guaranteed:
Note: The signature to any endorsement hereon must correspond with the name as written upon the face of this certificate, in every particular, without alteration or enlargement or any change whatever. If the endorsement is executed by an attorney, executor, administrator, trustee or guardian, the person executing the endorsement must give his full title in such capacity, and proper evidence of authority to act in such capacity, if not on file with the Partnership or its transfer agent, must be forwarded with this certificate. The signature must be guaranteed by an authorized employee of a bank, trust company or member of a national securities exchange.
FIRST AMENDMENT
TO
SIXTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CEDAR FAIR, L.P.
WHEREAS, the SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Cedar Fair, L.P., dated as of October 27, 2011 (“Partnership Agreement”), was entered by and among Cedar Fair Management, Inc. an Ohio corporation, as General Partner, and all Persons who are Limited Partners as of such date, together with the Persons who become Partners as provided herein; and
WHEREAS, the General Partner desires to revise the convention used to allocate income, gain, loss, deduction and credit among the Partners; and
NOW, THEREFORE, this FIRST AMENDMENT TO SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Cedar Fair, L.P., dated as of June 1, 2017, is entered into by Cedar Fair Management, Inc. an Ohio corporation, as General Partner, pursuant to the authority contained in Section 5.2(i) of the Partnership Agreement.
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1.
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Section 5.2(i) of the Partnership Agreement is amended to read as follows:
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Each item of Partnership income, gain, loss, deduction and credit, including extraordinary items, attributable to a transferred Partnership Interest shall, for federal income tax purposes, be determined on an annual basis and prorated on a monthly basis as if all transfers of Partnership Interests during any calendar month occurred at the end of the last day of that calendar month, and therefore shall be allocated to Partners who own Partnership Interests as of the beginning of the following month. The General Partner may revise, alter or otherwise modify such methods of determination and allocation as it determines necessary, to the extent permitted by Section 706 of the Code and the regulations or rulings promulgated thereunder.
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2.
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The remaining provisions of the Partnership Agreement are confirmed.
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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Sixth Amended and Restated Partnership Agreement as of the date first above written.
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GENERAL PARTNER:
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Cedar Fair Management, Inc.
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By:
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/s/ Matthew A. Ouimet
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Matthew A. Ouimet
Chief Executive Officer
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By:
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/s/ Richard A. Zimmerman
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Richard A. Zimmerman
President and Chief Operating Officer
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SECOND AMENDMENT
TO
SIXTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CEDAR FAIR, L.P.
WHEREAS, the SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Cedar Fair, L.P., dated as of October 27, 2011 (“Partnership Agreement”), was entered by and among Cedar Fair Management, Inc. an Ohio corporation, as General Partner, and all Persons who are Limited Partners as of such date, together with the Persons who become Partners as provided therein; and
WHEREAS, the Partnership Agreement was amended by that First Amendment to Sixth Amended and Restated Agreement of Limited Partnership dated as of June 1, 2017 (as so amended, the “Amended Partnership Agreement”), and
WHEREAS, the General Partner desires to further amend the Amended Partnership Agreement to add tax audit procedures consistent with new Code Sections 6221 through 6241 and regulations thereunder; and
NOW, THEREFORE, this SECOND AMENDMENT TO SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Cedar Fair, L.P., dated as of August 2, 2019, is entered into by Cedar Fair Management, Inc. an Ohio corporation, as General Partner, pursuant to the authority contained in Section 15.1(g) of the Amended Partnership Agreement.
1. Section 9.3 of the Amended Partnership Agreement is amended to read as follows:
9.3 Tax Controversies. (a) The General Partner is designated as the “tax matters partner” (as defined in Section 6231 of the Code, as in effect prior to amendment by the Bipartisan Budget Act of 2015), with respect to tax returns for taxable years prior to 2018. Each year the General Partner shall designate the “partnership representative” (as defined in Section 6223 of the Code, as in effect following amendment by the Bipartisan Budget Act of 2015) and the “designated individual” (as defined in Regulation §301.6223-1(b)(3), with respect to tax returns for taxable years after 2017. The partnership representative and designated individual serve at the pleasure of, and act at the direction of, the General Partner.
(b) The tax matters partner, partnership representative and designated individual are each authorized and required to represent the Partnership (at the Partnership’s expense) in connection with all examinations of the Partnership’s affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend Partnership funds for professional services and costs associated therewith, including, without limitation, (i) binding the Partnership and its Partners with respect to tax matters, and (ii) making or not making any election under Section 6221 through 6241 of the Code, as in effect following amendment by the Bipartisan Budget Act of 2015.
(c) Each Partner agrees to cooperate with and take any action requested by the partnership representative or designated individual permitted or required by the Code, including filing amended returns or statement or paying their share of any adjustment to income, gain, loss, deduction or credit, whether or not such person remains a Partner at such time. If the Partnership makes any payment to a tax authority in connection with any action or proceeding, each Partner (whether or not such person remains a Partner at such time) agrees to indemnify and reimburse the Partnership for the portion of such
payment attributable to such Partner (if and as determined by the partnership representative or designated individual based on the tax years to which such payments relate).
(d) Each Partner agrees that notice of or information concerning tax controversies shall be deemed conclusively to have been given or made if the Partnership has either (i) filed the notice or information with the Securities and Exchange Commission via its Electronic Data Gathering, Analysis and Retrieval system and such notice or information is publicly available on such system, or (ii) made the notice or information available on any publicly available website maintained by or on behalf of the Partnership, whether or not such person remains a Partner in the Partnership at the time such notice or information is made publicly available. Notwithstanding anything herein to the contrary, noting in this provision shall obligate the tax matters partner, partnership representative or designated individual to provide notices or information to the Partners other than as required by the Code or Regulations.
(e) The General Partner may amend the provisions of this Section as it determines is appropriate to satisfy any requirements, conditions or guidelines set forth in any amendment of Subchapter C of Chapter 63 of Subtitle F of the Code, any analogous provisions of state or local law, or the promulgation of regulations or other administrative guidance thereunder.
2. The remaining provisions of the Amended Partnership Agreement are confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Sixth Amended and Restated Partnership Agreement as of the date first above written.
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GENERAL PARTNER:
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Cedar Fair Management, Inc.
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By:
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/s/ Richard A. Zimmerman
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Richard A. Zimmerman
President and Chief Operating Officer
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