UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2010
OR
o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
Commission file number: 1-13703
SIX FLAGS ENTERTAINMENT CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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13-3995059 |
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(State or Other Jurisdiction of |
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(I.R.S. Employer Identification No.) |
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Incorporation or Organization) |
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1540 Broadway, 15th Fl., New York, NY 10036
(Address of Principal Executive Offices, Including Zip Code)
(212) 652-9403
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o |
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Accelerated filer o |
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Non-accelerated filer
x
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate by check mark whether the registrant has filed all documents and reports required to be filed under Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No o
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: At May 10, 2010, Six Flags Entertainment Corporation had 27,388,889 outstanding shares of common stock, par value $0.025 per share.
SIX FLAGS ENTERTAINMENT CORPORATION
FORM 10-Q
INDEX
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document and the documents incorporated herein by reference contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, our ability to successfully consummate a restructuring plan.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. These risks and uncertainties include, but are not limited to, statements we make regarding: (i) the potential adverse impact of the Chapter 11 Filing (as defined herein) on our global operations, management and employees (See “Chapter 11 Reorganization” herein), (ii) customer response to the Chapter 11 Filing, (iii) the adequacy of cash flows from operations, available cash and available amounts under our credit facilities to meet our future liquidity needs, or (iv) our operations and results of operations. Additional important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and include the following:
· factors impacting attendance, such as local conditions, contagious diseases, events, disturbances and terrorist activities;
· accidents occurring at our parks;
· adverse weather conditions;
· competition with other theme parks and other entertainment alternatives;
· changes in consumer spending patterns;
· pending, threatened or future legal proceedings; and
· other factors that are described in “Risk Factors.”
A more complete discussion of these factors and other risks applicable to our business is contained in Exhibit 99.1 to this Quarterly Report on Form 10-Q (this “Quarterly Report”), Item 2A of our Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 Annual Report”), our Current Reports on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on March 19, 2010 and April 2, 2010.
Any forward-looking statement made by us in this document, or on our behalf by our directors, officers or employees related to the information contained herein, speaks only as of the date of this Quarterly Report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
Available Information
Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, if applicable, are available free of charge through our website at www.sixflags.com. References to our website in this Quarterly Report are provided as a convenience and do not constitute an incorporation by reference of the information contained on, or accessible through, the website. Therefore, such information should not be considered part of this Quarterly Report. These reports, and any amendments to these reports, are made available on our website as soon as reasonably practicable after we electronically file such reports with, or furnish them to, the SEC. Copies are also available, without charge, by sending a written request to Six Flags Entertainment Corporation , 1540 Broadway, New York, NY 10036, Attn: Secretary.
SIX FLAGS ENTERTAINMENT CORPORATION
(Debtor-In-Possession from June 13, 2009 through April 30, 2010)
CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31, |
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December 31, |
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2010 |
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2009 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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|
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||
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Cash and cash equivalents |
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$ |
86,717,000 |
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$ |
164,830,000 |
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Accounts receivable |
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24,020,000 |
|
19,862,000 |
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||
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Inventories |
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36,895,000 |
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21,809,000 |
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||
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Prepaid expenses and other current assets |
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52,297,000 |
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48,646,000 |
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Total current assets |
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199,929,000 |
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255,147,000 |
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Other assets: |
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|
|
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|
||
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Debt issuance costs |
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11,755,000 |
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12,478,000 |
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||
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Restricted-use investment securities |
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2,706,000 |
|
2,387,000 |
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||
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Deposits and other assets |
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96,894,000 |
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98,583,000 |
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||
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Total other assets |
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111,355,000 |
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113,448,000 |
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||
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|
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|
|
||
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Property and equipment, at cost |
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2,729,955,000 |
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2,655,636,000 |
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Less accumulated depreciation |
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1,219,754,000 |
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1,178,404,000 |
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Total property and equipment |
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1,510,201,000 |
|
1,477,232,000 |
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||
|
|
|
|
|
|
|
||
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Assets held for sale |
|
1,278,000 |
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1,200,000 |
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||
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Intangible assets, net of accumulated amortization |
|
1,061,139,000 |
|
1,060,625,000 |
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||
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Total assets |
|
$ |
2,883,902,000 |
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$ |
2,907,652,000 |
|
Item 1. Financial Statements (Continued)
SIX FLAGS ENTERTAINMENT CORPORATION
(Debtor-In-Possession from June 13, 2009 through April 30, 2010)
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
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2010 |
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2009 |
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(Unaudited) |
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LIABILITIES and STOCKHOLDERS’ DEFICIT |
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Liabilities not subject to compromise: |
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Current liabilities: |
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|
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Accounts payable |
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$ |
47,277,000 |
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$ |
25,323,000 |
|
|
Accrued compensation, payroll taxes and benefits |
|
10,739,000 |
|
15,836,000 |
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||
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Accrued insurance reserves |
|
18,448,000 |
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18,542,000 |
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||
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Accrued interest payable |
|
21,037,000 |
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14,332,000 |
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||
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Other accrued liabilities |
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47,063,000 |
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20,761,000 |
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Deferred income |
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53,240,000 |
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19,904,000 |
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Current portion of long-term debt |
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356,142,000 |
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308,749,000 |
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Total current liabilities not subject to compromise |
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553,946,000 |
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423,447,000 |
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Long-term debt |
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818,965,000 |
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829,526,000 |
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Other long-term liabilities |
|
51,852,000 |
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71,094,000 |
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Deferred income taxes |
|
118,708,000 |
|
120,602,000 |
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Total liabilities not subject to compromise |
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1,543,471,000 |
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1,444,669,000 |
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Liabilities subject to compromise |
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1,741,971,000 |
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1,691,224,000 |
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Total liabilities |
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3,285,442,000 |
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3,135,893,000 |
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Redeemable noncontrolling interests |
|
355,933,000 |
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355,933,000 |
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Stockholders’ deficit: |
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Preferred stock of $1.00 par value |
|
— |
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— |
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Common stock, $.025 par value, 210,000,000 shares authorized and 98,324,181 and 98,325,936 shares outstanding at March 31, 2010 and December 31, 2009, respectively |
|
2,458,000 |
|
2,458,000 |
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||
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Capital in excess of par value |
|
1,506,750,000 |
|
1,506,152,000 |
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Accumulated deficit |
|
(2,243,063,000 |
) |
(2,059,487,000 |
) |
||
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Accumulated other comprehensive loss |
|
(28,718,000 |
) |
(33,297,000 |
) |
||
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Total Six Flags Entertainment Corporation stockholders’ deficit |
|
(762,573,000 |
) |
(584,174,000 |
) |
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Noncontrolling interests |
|
5,100,000 |
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— |
|
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Total stockholders’ deficit |
|
(757,473,000 |
) |
(584,174,000 |
) |
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Total liabilities and stockholders’ deficit |
|
$ |
2,883,902,000 |
|
$ |
2,907,652,000 |
|
See accompanying notes to condensed consolidated financial statements.
Item 1. Financial Statements (Continued)
SIX FLAGS ENTERTAINMENT CORPORATION
(Debtor-In-Possession from June 13, 2009 through April 30, 2010)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)
|
|
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2010 |
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2009 |
|
||
|
Theme park admissions |
|
$ |
23,831,000 |
|
$ |
23,220,000 |
|
|
Theme park food, merchandise and other |
|
20,843,000 |
|
18,720,000 |
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||
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Sponsorship, licensing and other fees |
|
8,293,000 |
|
9,162,000 |
|
||
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Accomodations revenue |
|
4,296,000 |
|
— |
|
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Total revenue |
|
57,263,000 |
|
51,102,000 |
|
||
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Operating expenses (excluding depreciation and amortization shown separately below) |
|
79,745,000 |
|
74,120,000 |
|
||
|
Selling, general and administrative (including stock-based compensation of $598,000 and $839,000 in 2010 and 2009, respectively, and excluding depreciation and amortization shown separately below) |
|
34,070,000 |
|
34,693,000 |
|
||
|
Costs of products sold |
|
5,496,000 |
|
4,698,000 |
|
||
|
Depreciation |
|
36,521,000 |
|
33,881,000 |
|
||
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Amortization |
|
227,000 |
|
224,000 |
|
||
|
Loss on disposal of assets |
|
570,000 |
|
3,054,000 |
|
||
|
Interest expense (contractual interest expense was $46,375,000 in 2010) |
|
60,632,000 |
|
39,337,000 |
|
||
|
Interest income |
|
(197,000 |
) |
(421,000 |
) |
||
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Equity in (income) loss of partnerships |
|
183,000 |
|
(189,000 |
) |
||
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Other (income) expense |
|
(639,000 |
) |
1,669,000 |
|
||
|
Loss from continuing operations before reorganization items, income taxes and discontinued operations |
|
(159,345,000 |
) |
(139,964,000 |
) |
||
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Reorganization items |
|
20,461,000 |
|
— |
|
||
|
Loss from continuing operations before income taxes and discontinued operations |
|
(179,806,000 |
) |
(139,964,000 |
) |
||
|
Income tax expense (benefit) |
|
913,000 |
|
(2,930,000 |
) |
||
|
Loss from continuing operations before discontinued operations |
|
(180,719,000 |
) |
(137,034,000 |
) |
||
|
Discontinued operations |
|
(2,773,000 |
) |
(3,764,000 |
) |
||
|
Net loss |
|
(183,492,000 |
) |
(140,798,000 |
) |
||
|
Less: Net income attributable to noncontrolling interests |
|
(84,000 |
) |
— |
|
||
|
Net loss attributable to Six Flags Entertainment Corporation |
|
$ |
(183,576,000 |
) |
$ |
(140,798,000 |
) |
|
Net loss applicable to Six Flags Entertainment Corporation common stockholders |
|
$ |
(183,576,000 |
) |
$ |
(146,291,000 |
) |
|
Weighted average number of common shares outstanding - basic and diluted: |
|
98,054,000 |
|
97,470,000 |
|
||
|
Net loss per average common share outstanding - basic and diluted: |
|
|
|
|
|
||
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Loss from continuing operations applicable to Six Flags Entertainment Corporation common stockholders |
|
$ |
(1.84 |
) |
$ |
(1.46 |
) |
|
Discontinued operations applicable to Six Flags Entertainment Corporation common stockholders |
|
(0.03 |
) |
(0.04 |
) |
||
|
Net loss attributable to Six Flags Entertainment Corporation common stockholders |
|
$ |
(1.87 |
) |
$ |
(1.50 |
) |
|
|
|
|
|
|
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Amounts attributable to Six Flags Entertainment Corporation: |
|
|
|
|
|
||
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Loss from continuing operations |
|
$ |
(180,803,000 |
) |
$ |
(137,034,000 |
) |
|
Discontinued operations |
|
(2,773,000 |
) |
(3,764,000 |
) |
||
|
Net loss |
|
$ |
(183,576,000 |
) |
$ |
(140,798,000 |
) |
See accompanying notes to condensed consolidated financial statements.
Item 1. Financial Statements (Continued)
SIX FLAGS ENTERTAINMENT CORPORATION
(Debtor-In-Possession from June 13, 2009 through April 30, 2010)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
|
|
|
2010 |
|
2009 |
|
||
|
Net loss |
|
$ |
(183,492,000 |
) |
$ |
(140,798,000 |
) |
|
Other comprehensive income (loss): |
|
|
|
|
|
||
|
Foreign currency translation adjustment |
|
4,872,000 |
|
(3,140,000 |
) |
||
|
Defined benefit retirement plan |
|
203,000 |
|
2,365,000 |
|
||
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Change in cash flow hedging |
|
(496,000 |
) |
(1,587,000 |
) |
||
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Comprehensive loss |
|
(178,913,000 |
) |
(143,160,000 |
) |
||
|
|
|
|
|
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Comprehensive income attributable to noncontrolling interests |
|
(84,000 |
) |
— |
|
||
|
Comprehensive loss attributable to Six Flags Entertainment Corporation |
|
$ |
(178,997,000) |
|
$ |
(143,160,000 |
) |
See accompanying notes to condensed consolidated financial statements.
Item 1. Financial Statements (Continued)
SIX FLAGS ENTERTAINMENT CORPORATION
( Debtor-In-Possession from June 13, 2009 through April 30, 2010 )
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(UNAUDITED)
|
|
|
2010 |
|
2009 |
|
||
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Cash flow from operating activities: |
|
|
|
|
|
||
|
Net loss |
|
$ |
(183,492,000 |
) |
$ |
(140,798,000 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
||
|
Depreciation and amortization |
|
36,748,000 |
|
34,105,000 |
|
||
|
Reorganization items |
|
20,461,000 |
|
— |
|
||
|
Stock-based compensation |
|
598,000 |
|
839,000 |
|
||
|
Interest accretion on notes payable |
|
— |
|
1,541,000 |
|
||
|
Loss on discontinued operations |
|
— |
|
1,687,000 |
|
||
|
Amortization of debt issuance costs |
|
723,000 |
|
1,317,000 |
|
||
|
Other including loss on disposal of assets |
|
(350,000 |
) |
(736,000 |
) |
||
|
Increase in accounts receivable |
|
(6,740,000 |
) |
(6,794,000 |
) |
||
|
Increase in inventories, prepaid expenses and other current assets |
|
(17,981,000 |
) |
(19,034,000 |
) |
||
|
Decrease in deposits and other assets |
|
146,000 |
|
843,000 |
|
||
|
Increase in accounts payable, deferred income, accrued liabilities and other long-term liabilities |
|
49,195,000 |
|
21,976,000 |
|
||
|
Increase (decrease) in accrued interest payable |
|
52,039,000 |
|
(6,389,000 |
) |
||
|
Deferred income tax benefit |
|
(2,435,000 |
) |
(3,910,000 |
) |
||
|
Total adjustments |
|
132,404,000 |
|
25,445,000 |
|
||
|
Net cash used in operating activities before reorganization activities |
|
(51,088,000 |
) |
(115,353,000 |
) |
||
|
Cash flow from reorganization activities: |
|
|
|
|
|
||
|
Net cash used in reorganization activities |
|
(8,034,000 |
) |
— |
|
||
|
|
|
|
|
|
|
||
|
Total net cash used in operating activities |
|
(59,122,000 |
) |
(115,353,000 |
) |
||
|
Cash flow from investing activities: |
|
|
|
|
|
||
|
Additions to property and equipment |
|
(30,759,000 |
) |
(38,445,000 |
) |
||
|
Property insurance recovery |
|
5,831,000 |
|
1,620,000 |
|
||
|
Capital expenditures of discontinued operations |
|
(78,000 |
) |
(159,000 |
) |
||
|
Cash from the consolidation of HWP Development, LLC |
|
462,000 |
|
— |
|
||
|
Purchase of restricted-use investments |
|
— |
|
(37,000 |
) |
||
|
Maturities of restricted-use investments |
|
25,000 |
|
9,320,000 |
|
||
|
Proceeds from sale of assets |
|
12,000 |
|
366,000 |
|
||
|
Net cash used in investing activities |
|
(24,507,000 |
) |
(27,335,000 |
) |
||
Item 1. Financial Statements (Continued)
SIX FLAGS ENTERTAINMENT CORPORATION
( Debtor-In-Possession from June 13, 2009 through April 30, 2010 )
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(UNAUDITED)
|
|
|
2010 |
|
2009 |
|
||
|
Cash flow from financing activities: |
|
|
|
|
|
||
|
Repayment of borrowings |
|
(8,000 |
) |
(3,732,000 |
) |
||
|
Proceeds from borrowings |
|
4,500,000 |
|
15,900,000 |
|
||
|
Payment of debt issuance costs |
|
— |
|
(52,000 |
) |
||
|
Net cash provided by financing activities |
|
4,492,000 |
|
12,116,000 |
|
||
|
Effect of exchange rate changes on cash |
|
1,024,000 |
|
(348,000 |
) |
||
|
Decrease in cash and cash equivalents |
|
(78,113,000 |
) |
(130,920,000 |
) |
||
|
Cash and cash equivalents at beginning of year |
|
164,830,000 |
|
210,332,000 |
|
||
|
Cash and cash equivalents at end of period |
|
$ |
86,717,000 |
|
$ |
79,412,000 |
|
|
|
|
|
|
|
|
||
|
Supplemental cash flow information: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Cash paid for interest |
|
$ |
7,869,000 |
|
$ |
48,252,000 |
|
|
|
|
|
|
|
|
||
|
Cash paid for income taxes |
|
$ |
3,030,000 |
|
$ |
1,459,000 |
|
See accompanying notes to condensed consolidated financial statements.
SIX FLAGS ENTERTAINMENT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Chapter 11 Reorganization
On June 13, 2009 (the “Petition Date”), Six Flags, Inc. (“SFI”), Six Flags Operations Inc. (“SFO”) and Six Flags Theme Parks Inc. (“SFTP”) and certain of SFTP’s domestic subsidiaries (the “SFTP Subsidiaries” and, collectively with SFI, SFO and SFTP, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Filing”) under Chapter 11 in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) (Case No. 09-12019). SFI’s subsidiaries that own interests in Six Flags Over Texas (“SFOT”) and Six Flags Over Georgia (including Six Flags White Water Atlanta) (“SFOG” and together with SFOT, the “Partnership Parks”) and the parks in Canada and Mexico were not debtors in the Chapter 11 Filing.
On April 1, 2010, the Debtors filed with the Bankruptcy Court their Modified Fourth Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the “Plan”). On April 30, 2010, the Bankruptcy Court entered an Order Confirming Debtors’ Modified Fourth Amended Joint Plan of Reorganization Under Chapter 11 (“Chapter 11”) of the Bankruptcy Code (the “Confirmation Order”), dated April 29, 2010, which approved and confirmed the Plan. The Confirmation Order and the Plan have been filed as Exhibits 99.1 and 2.1, respectively, to the Current Report on Form 8-K filed with the SEC on May 4, 2010.
Pursuant to the Plan, on the Effective Date, but after the Plan became effective and prior to the distribution of securities under the Plan, SFI filed with the Secretary of State of the State of Delaware a Restated Certificate of Incorporation (the “Certificate of Incorporation”) which, among other things, changed SFI’s corporate name to “Six Flags Entertainment Corporation.” As used herein, “SFI” means Six Flags, Inc. as a Debtor or prior to its name change to Six Flags Entertainment Corporation, references to “Holdings” or “SFEC” mean Six Flags Entertainment Corporation following the filing of the Certificate of Incorporation with the Secretary of State of the State of Delaware, and the terms “we,” “our” or “Company” refer collectively to SFI or SFEC, as the case may be, and its consolidated subsidiaries.
On April 30, 2010 (the “Effective Date”), the Debtors emerged from Chapter 11 by consummating their restructuring through a series of transactions contemplated by the Plan and the Plan became effective pursuant to its terms. On May 3, 2010, the Debtors filed a notice of the occurrence of the Effective Date with the Bankruptcy Court.
(a) Plan of Reorganization
General
The Plan includes (i) the Exit Facilities (as defined below) of $1.140 billion; (ii) the assignment to SFI of SFO’s 12-1/4% Notes due 2016 (the “2016 Notes”) held by certain holders of Prepetition Notes (the “SFO Equity Conversion”) in an aggregate amount of $69.5 million in exchange for a number of shares of common stock of SFEC, representing 8.625% of the equity of SFEC on the Effective Date (the “Common Stock”), in full satisfaction of their claims arising under such assigned 2016 Notes; (iii) a $505.5 million rights offering (the “Offering”), which represents 62.733% of the Common Stock, to the holders of certain unsecured claims (“Allowed Unsecured Claims”) specified in the Plan, that are “Accredited Investors,” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (“Eligible Holders”); except that if the net proceeds from the Offering are less than $505.5 million, the parties who have agreed to backstop the Offering (the “Backstop Purchasers”), pursuant to the terms and conditions set forth in the commitment agreement executed by the Debtors and the Backstop Purchasers (the
“Equity Commitment Agreement”), will subscribe for any amount of Common Stock offered but not purchased pursuant to the Offering; (iv) an offering (the “Direct Equity Purchase”) to the Backstop Purchasers for an aggregate purchase price of $75.0 million (the “Direct Purchase Amount”) of a number of shares of Common Stock, representing 12.410% of the Common Stock; and (v) an offering (the “Additional Equity Purchase”) to certain Backstop Purchasers for an aggregate purchase price of $50.0 million (the “Additional Purchase Amount”), on the same pricing terms as the Offering, a number of shares of Common Stock, representing 6.205% of the Common Stock. In addition, the Plan also contemplates the New TW Loan (as defined below) and the Delayed Draw Equity Purchase (as defined below).
Pursuant to the Confirmation Order, the Plan also contemplates that SFEC shall send to e ach SFI Noteholder (as such term is defined in the Plan) who did not return an accredited investor questionnaire in accordance with the Offering Procedures (as such term is defined in the Plan) on or before April 21, 2010 (excluding any SFI Noteholder who was deemed to return such questionnaire on or before April 21, 2010 pursuant to Section 2.11 of the Offering Procedures) (each, an “Unconfirmed Holder”) (i) a questionnaire seeking certification that such Unconfirmed Holder is not an Accredited Investor (the “Non-Accredited Investor Questionnaire”) and (ii) a notice setting forth the rights of the Unaccredited SFI Noteholders. Each Unconfirmed Holder who returns a completed Non-Accredited Investor Questionnaire, subject to certain conditions, shall be considered an “Unaccredited SFI Noteholder” and shall have the right to receive such Unaccredited SFI Noteholder’s Unaccredited Pro Rata Share (as defined below) of the Offering Net Value (as defined below); except that if the aggregate amount of the Offering Net Value to be distributed to the Unaccredited SFI Noteholders would exceed $2.94 million (the “Offering Net Value Cash Cap”), then the aggregate amount to be distributed to the Unaccredited SFI Noteholders shall be limited to the Offering Net Value Cash Cap, which shall be distributed to the Unaccredited SFI Noteholders based on each holder’s Unaccredited Pro Rata Share. As used herein, the “Offering Net Value” means $29.4 million and the “Unaccredited Pro Rata Share” is a fraction, the numerator of which shall be the face value of the SFI Notes held by an Unaccredited SFI Noteholder and the denominator of which shall be $868.3 million.
Summary of Classification and Treatment of Claims and Preconfirmation Equity Interests
Pursuant to the Plan, the Preconfirmation SFTP Equity Interests (as such term is defined in the Plan) are unimpaired by the Plan, and each holder of a Preconfirmation SFTP Equity Interest is conclusively presumed to accept the Plan and is not entitled to vote to accept or reject the Plan. On the Effective Date, Preconfirmation SFTP Equity Interests shall be reinstated and rendered unimpaired in accordance with the Bankruptcy Code.
Under the Plan, recoveries to the holders of SFTP Prepetition Credit Agreement Claims (as such term is defined in the Plan) and holders of SFO Unsecured Claims (as such term is defined in the Plan) are 100%. Recoveries to the holders of SFI Unsecured Claims (as such term is defined in the Plan) (excluding any value attributable to the Offering) based upon the implied transaction value of $1.865 billion is 8.2% (based upon a 9.5% allocation of the Common Stock under the Plan). Holders of SFI Preconfirmation Equity Interests (as defined below) will receive no distributions or other consideration under the Plan.
The classification and treatment of all Claims (as such term is defined in the Plan) against the Debtors is more fully described in Article III of the Plan.
Assets and Liabilities
Information as to the assets and liabilities of SFI as of the most recent practicable date is contained in the consolidated financial statements filed with the 2009 Annual Report and should be referred to in conjunction with this Quarterly Report.
(b) New Indebtedness
On the Effective Date, SFEC, SFO and SFTP entered into a First Lien Credit Agreement (the “First Lien Credit Agreement”) with several lenders including JPMorgan Chase Bank N.A., as administrative agent, and related loan and security documentation (the “Exit First Lien Facility”). The Exit First Lien Facility consists of an $890,000,000 senior secured credit facility comprised of a $120,000,000 revolving loan facility (none of which was outstanding as of May 17, 2010 (excluding letters of credit in the amount of $1,739,000)) (the “Exit Revolving Loan”), which may be increased to up to $150,000,000 in certain circumstances, and a $770,000,000 term loan facility (all of which was outstanding as of May 17, 2010) (the “Exit Facility First Lien Term Loan” and, together with the Exit Revolving Loan, the “Exit Facility First Lien Loans”). Interest on the Exit First Lien Facility accrues at an annual rate equal to the London Interbank Offered Rate (“LIBOR”) + 4.25% in the case of the Exit Revolving Loan and LIBOR + 4.00% in the case of the Exit Facility First Lien Term Loan, with a 2.00% LIBOR floor and a 1.50% commitment fee on the average daily unused portion of the Exit Revolving Loan. The principal amount of the Exit Revolving Loan is due and payable on June 30, 2015. The First Lien Credit Agreement requires quarterly repayments of principal on the Exit Facility First Lien Term Loan beginning in March 2013 in an amount equal to 0.25% of the initial aggregate principal amount of the Exit Facility First Lien Term Loan and all remaining outstanding principal is due and payable on June 30, 2016.
On the Effective Date, SFEC, SFO and SFTP entered into a Second Lien Credit Agreement (the “Second Lien Credit Agreement” and, together with the First Lien Credit Agreement, the “Exit Facility Credit Agreements”) with several lenders including Goldman Sachs Lending Partners LLC, as administrative agent, and related loan and security documentation (the “Exit Second Lien Facility” and together with the Exit First Lien Facility, the “Exit Facilities”). The Exit Second Lien Facility consists of a $250,000,000 senior secured term loan facility (all of which was outstanding as of May 17, 2010) (the “Exit Facility Second Lien Loan” and, together with the Exit Facility First Lien Loans, the “Exit Facility Loans”). Interest on the Exit Facility Second Lien Loan accrues at an annual rate equal to LIBOR + 7.25% with a 2.00% LIBOR floor. The Second Lien Credit Agreement does not require any amortization of principal and the entire outstanding principal amount of the Exit Facility Second Lien Loan is due and payable on December 31, 2016.
Pursuant to the First Lien Guarantee and Collateral Agreement and the Second Lien Guarantee and Collateral Agreement, amounts outstanding on the Exit First Lien Facility and the Exit Second Lien Facility, respectively, are guaranteed by SFEC, SFO and each of the current and future direct and indirect domestic subsidiaries of SFTP; provided that to the extent SFTP acquires any non-wholly owned direct or indirect subsidiary after the Effective Date, such subsidiary will not be required to be a guarantor and/or pledgor of the Exit Facilities (together with SFTP, collectively, the “Exit Financing Loan Parties”). The First Lien Facility is secured by first priority liens upon substantially all existing and after-acquired assets of the Exit Financing Loan Parties and the Exit Second Lien Facility is secured by second priority liens upon substantially all existing and after-acquired assets of the Exit Financing Loan Parties. The Exit Facility Credit Agreements contain certain representations, warranties and affirmative covenants, including minimum interest coverage and maximum senior leverage maintenance covenants and, with respect to the First Lien Credit Agreement, a maximum first lien leverage maintenance covenant. In addition, the Exit Facility Credit Agreements contain restrictive covenants that, subject to certain exceptions, limit or restrict, among other things, the ability of the Exit Financing Loan Parties to incur indebtedness, create liens, engage in mergers, consolidations and other fundamental changes, make investments or loans, engage in transactions with affiliates, pay dividends, make capital expenditures and repurchase capital stock. The Exit Facility Credit Agreements contain certain events of default, including payment, breaches of covenants and representations, cross defaults to other material indebtedness, judgment, and changes of control and bankruptcy events of default.
On the Effective Date, SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., SFOT Acquisition I, Inc. and SFOT Acquisition II, Inc. (collectively, the “Acquisition Parties”) entered into the Multiple Draw Term Credit Agreement (the “New TW Loan Agreement”) with TW-SF, LLC (the “New TW Lender”). The New TW Loan Agreement provided the Acquisition Parties with a $150,000,000 multi-draw term loan facility (the “New TW Loan”). Interest on the New TW Loan accrues at a rate equal to (i) the greater of (a) LIBOR and (b) 2.50% (or to the extent that any LIBOR or similar rate floor under the Exit Facility First Lien Loans (or under any senior term credit facility that amends, restates, amends and restates, refinances, modifies or extends the Exit First Lien Term Loan) is higher than 2.50%, such higher floor) plus (ii) the then “Applicable Margin” under the Exit First Lien Term Loan (or, if higher) under any successor term facility plus (iii) 1.00%. In the event that any of the loan parties issue corporate bonds or other public debt, and the then applicable credit default swap spread is higher than the “Applicable Margin” referenced in the foregoing sentence, such “Applicable Margin” will be increased based on the applicable default swap spread then in effect, subject to a fixed cap. Funding during the availability period under the New TW Loan will occur only on May 14th (or the immediately preceding business day) of each fiscal year (each a “Funding Date”) in which amounts required to satisfy the “put” obligations exceeds (a) for the fiscal year ending December 31, 2010, $10,000,000, (b) for the fiscal year ending December 31, 2011, $12,500,000 and (c) for each subsequent fiscal year, $15,000,000. The principal amount of the New TW Loan borrowed on each Funding Date will be due and payable five years from such Funding Date. The New TW Loan Agreement requires prepayments with any cash of the Acquisition Parties (other than up to $50,000 per year) including the proceeds received by the Acquisition Parties from the limited partnership interests in the Partnership Parks and is prepayable at any time at the option of the Acquisition Parties. The New TW Loan is unconditionally guaranteed on a joint and several and senior unsecured basis by SFEC, SFO, SFTP and each of the current direct and indirect domestic subsidiaries of SFEC who are or in the future become guarantors under the Exit Facilities (collectively, the “New TW Guarantors”) under the terms of the Guarantee Agreement (the “New TW Guarantee Agreement”) entered into by the New TW Guarantors in favor of the New TW Lender on the Effective Date. The New TW Loan Agreement and New TW Guarantee Agreement contain representations, warranties, covenants and events of default on substantially similar terms as those contained in the First Lien Credit Agreement. No borrowing will occur on May 14, 2010 under the New TW Loan with respect to the 2010 “put” obligations.
(c) New Common Stock
Pursuant to the Plan, on the Effective Date, SFEC issued an aggregate of 27,388,889 shares of Common Stock at 0.025 par value. SFEC has reserved approximately 5,000,000 shares of Common Stock for issuance pursuant to the Long-Term Incentive Plan in accordance with the Plan. SFEC has also reserved 500,000 shares of Common Stock in the event the board of directors determines to pay up to 50% of the annual director fees payable to non-employee members of the board of directors in shares of Common Stock.
Under the Plan, 2,601,944 shares of Common Stock, which represents 9.5% of the Common Stock, were issued to the holders of unsecured claims against SFI pursuant to Section 1145 (a)(1) of the Bankruptcy Code, which exempts the offer and sale of securities under a plan of reorganization from registration under Section 5 of the Securities Act in certain circumstances. On the Effective Date and pursuant to the Plan, the Company relied upon the exemption from registration pursuant to Section 4(2) of the Securities Act, and Rule 506 promulgated thereunder, to effect the following sales and issuance of Common Stock:
· The SFO Equity Conversion resulted in certain holders of the 2016 Notes in the aggregate amount of $69.5 million exchanging such 2016 Notes for 2,362,309 shares of Common Stock, which represents 8.625% of the Common Stock;
· Eligible Holders that subscribed for Common Stock in the Offering purchased 17,181,975 shares of Common Stock, which represents 62.733% of the Common Stock;
· The Direct Equity Purchase by the Backstop Purchasers for the Direct Purchase Amount resulted in the sale and issuance of 3,399,006 shares of Common Stock, which represents 12.410% of the Common Stock;
· The Additional Equity Purchase by certain Backstop Purchasers for the Additional Purchase Amount resulted in the sale and issuance of 1,699,503 shares of Common Stock, which represents 6.205% of the Common Stock; and
· 144,152 shares of Common Stock, which represents 0.526% of the Common Stock, were issued to certain delayed draw equity purchasers as consideration for their commitment to purchase an additional $25.0 million of Common Stock (the “Delayed Draw Shares”) on or before June 1, 2011, following approval by a majority of the members of SFEC’s board of directors (the “Delayed Draw Equity Purchase”).
(d) Preconfirmation Equity Interests
Upon the Effective Date, by operation of the Plan, all of SFI’s common stock, preferred stock purchase rights, preferred income equity redeemable shares (“PIERS”) and any other ownership interest in SFI, whether or not transferable, and all options, warrants or rights, contractual or otherwise (including, but not limited to, stockholders agreements, registration rights agreements, rights agreements, repurchase agreements and arrangements, or other similar instruments or documents), (collectively, the “SFI Preconfirmation Equity Interests”) were cancelled as of the Effective Date. Included in the SFI Preconfirmation Equity Interests were (i) SFI’s 2001 Stock Option and Incentive Plan, which was filed as Exhibit 4(dd) to SFI’s Annual Report on Form 10-K for the year ended December 31, 2002; (ii) the SFI Stock Option Plan for Directors, which was filed as Exhibit 4(ee) to SFI’s Annual Report on Form 10-K for the year ended December 31, 2002; (iii) SFI’s 2004 Stock Option and Incentive Plan, which was filed as Exhibit 10.1 to SFI’s Registration Statement on Form S-8 (Reg. No. 333-131831), filed on February 14, 2006; (iv) the SFI’s 2006 Stock Option and Incentive Plan, which was filed as Exhibit 10.1 to SFI’s Current Report on Form 8-K, filed on May 30, 2006; (v) SFI’s 2006 Employee Stock Purchase Plan, which was filed as Exhibit 10.2 to SFI’s Current Report on Form 8-K, filed on May 30, 2006; (vi) the SFI 2007 Stock Option and Incentive Plan, which was filed as Exhibit 10.1 to SFI’s Current Report on Form 8-K filed on May 24, 2007; (vii) the SFI 2008 Stock Option and Incentive Plan, which was filed as Exhibit 10.1 to SFI’s Current Report on Form 8-K, filed on May 28, 2008; and (viii) all outstanding awards and grants thereunder. Former stockholders of SFI and holders of other SFI Preconfirmation Equity Interests will receive no distributions or other consideration under the Plan.
(e) Prepetition Debt Securities
On the Effective Date, by operation of the Plan, all outstanding obligations under the following notes issued by SFI and SFO (collectively, the “Prepetition Notes”) were cancelled and the indentures governing such obligations were cancelled, except to the extent to allow the Debtors, Reorganized Debtors (as such term is defined in the Plan) or the relevant Prepetition Notes indenture trustee, as applicable, to make distributions pursuant to the Plan on account of claims related to such Prepetition Notes:
· SFI’s 8-7/8% Senior Notes due 2010 (the “2010 Notes”), which were issued pursuant to the Indenture, dated as of February 11, 2002, between the Company and The Bank of New York Mellon (“BONY”), as trustee;
· SFI’s 9-3/4% Senior Notes due 2013 (the “2013 Notes”), which were issued pursuant to the Indenture, dated as of April 16, 2003, between the Company and BONY, as trustee;
· SFI’s 9-5/8% Senior Notes due 2014 (the “2014 Notes”), which were issued pursuant to the Indenture, dated as of December 5, 2003, between the Company and BONY, as trustee;
· SFI’s 4.50% Convertible Senior Notes due 2015 (the “2015 Notes”), which were issued pursuant to the Indenture, dated as of June 30, 1999, between the Company and BONY, as trustee, and the Second Supplemental Indenture, dated as of November 19, 2004, between the Company and BONY, as trustee; and
· The 2016 Notes, which were issued pursuant to the Indenture, dated as of June 16, 2008, among SFO, as issuer, the Company, as parent guarantor, and HSBC Bank USA, National Association, as trustee.
(f) Prepetition Credit Agreement
On the Effective Date, pursuant to the Plan and the Confirmation Order, the Second Amended and Restated Credit Agreement, dated as of May 25, 2007 (as amended, modified or otherwise supplemented from time to time, the “Prepetition Credit Agreement”), among SFI, SFO, SFTP (as the primary borrower), certain of SFTP’s foreign subsidiaries party thereto, the lenders thereto, the agent banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”), was cancelled (except that the Prepetition Credit Agreement continues in effect solely for the purposes of allowing creditors under the Prepetition Credit Agreement to receive distributions under the Plan and allowing the Administrative Agent to exercise certain rights).
(g) Fresh Start Accounting
As required by accounting principles generally accepted in the United States (“GAAP”), effective as of May 1, 2010, we adopted fresh start accounting following the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 852, Reorganizations (“FASB ASC 852”). The actual impact at emergence on April 30, 2010 will be reported in our Form 10-Q for the second quarter of 2010. The consolidated financial statements for the periods ended March 31, 2010 and prior do not include the effect of any changes in our capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting. As a result of the fresh start accounting adjustments governed by FASB ASC 852, we anticipate a substantial adjustment to our goodwill.
(h) Impact on Net Operating Loss Carryforwards (“NOLs”)
For U.S. federal income tax purposes, Holdings is the common parent of an affiliated group of corporations (the “Six Flags Group”) of which join in the filing of a consolidated federal income tax return. We estimate that as of March 31, 2010, the Six Flags Group has consolidated NOLs of approximately $2.1 billion.
Pursuant to the Plan, our aggregate outstanding indebtedness was substantially reduced. In general, the discharge of a debt obligation for cash and property (including common stock) having a value less than the amount owed gives rise to taxable cancellation of debt (“COD”) income. However, an exception is made for COD income arising in a bankruptcy proceeding. Under this exception, the taxpayer does not include the COD income in its taxable income, but must instead reduce the following tax attributes, in the following order, by the amount of its COD income: (i) NOLs (beginning with NOLs for the year of the COD income, then the oldest and then next-to-oldest NOLs, and so on), (ii) general business tax credits (in the order generally taken into account in computing tax liability), (iii) alternative minimum tax credits, (iv) net capital losses (beginning with capital losses for the year of the COD income, then the oldest and then next to oldest capital losses, and so on), (v) tax basis of assets (but not below the liabilities remaining after debt cancellation); (vi) passive activity losses, and (vii) foreign tax credits (in the order generally taken into account in computing tax liability). Alternatively, a debtor may elect to first reduce the basis of its depreciable and amortizable property. The debtor’s tax attributes are not reduced until after determination of the debtor’s tax liability for the year of the COD income. COD
income in excess of available tax attributes is forgiven, but may result in excess loss account recapture income. However, our COD income does not exceed our available tax attributes.
The issuance of common stock to creditors pursuant to the Plan causes an “ownership change” under section 382 of the Tax Code. If a corporation undergoes an “ownership change,” the amount of its pre-change losses and certain other tax attributes that may be utilized to offset future taxable income is subject to an annual “Section 382 limitation” (unless the Bankruptcy Exception, discussed below, applies). NOLs that are not utilized in a given year because of the Section 382 limitation remain available for use in future years until their normal expiration date, subject to the Section 382 limitation in such future years. The Section 382 limitation generally is equal to the value of the corporation’s equity immediately before the ownership change multiplied by the applicable “long-term tax-exempt bond rate,” which is published monthly by the Internal Revenue Service. However, under one of two special rules for companies in bankruptcy proceedings, the value of the corporation’s equity for purposes of computing the Section 382 limitation is increased to reflect cancellation of debt that occurred in the bankruptcy reorganization. Under this rule, the value of the our equity for purposes of computing our Section 382 limitation is the lesser of the value of our common stock immediately after the ownership change or the value of our assets immediately before the ownership change. In lieu of the Section 382 limitation, a second bankruptcy exception would reduce our NOLs by interest deducted during a specified period on debt converted into stock in the bankruptcy. We expect to make an election for this second bankruptcy exception not to apply.
The Section 382 limitation is increased by built-in income and gains recognized (or treated as recognized) during the five years following an ownership change (up to the total amount of built-in income and gain that existed at the time of the ownership change). Built-in income for this purpose includes the amount by which tax depreciation and amortization expenses during this five-year period are less than they would have been if our assets had a tax basis on the date of the ownership change equal to their fair market value on such date. Because most of our assets are theme park assets, which are depreciated on an accelerated basis over a seven-year recovery period, it is expected that our NOL limitation for the five years following the ownership change will be substantially increased by built-in income. To the extent the Section 382 limitation exceeds taxable income in a given year, the excess is carried forward and increases the Section 382 limitation in succeeding taxable years.
Alternative minimum tax (“AMT”) is owed on a corporation’s AMT income, at a 20% tax rate, to the extent AMT exceeds the corporation’s regular U.S. federal income tax in a given year. In computing taxable income for AMT purposes, certain deductions and beneficial allowances are modified or eliminated. One modification is a limitation on the use of NOLs for AMT purposes. Specifically, no more than 90% of AMT income can be offset with NOLs (as recomputed for AMT purposes). Therefore, AMT will be owed in years we have positive AMT income, even if all of our regular taxable income for the year is offset with NOLs. As a result, our AMT income (before AMT NOLs) in those years will be taxed at a 2% effective U.S. federal income tax rate (i.e., 10% of AMT income that cannot be offset with NOLs, multiplied by 20% AMT rate). The amount of AMT we pay will be allowed as a nonrefundable credit against regular federal income tax in future taxable year to the extent regular tax exceeds AMT in such years.
2. General — Basis of Presentation
We own and operate regional theme, water and zoological parks. Of the 19 parks we own or operate, 17 are located in the United States. Of the other two, one is located in Mexico City, Mexico and the other is located in Montreal, Canada. During the second quarter of 2008, we decided that we would not re-open our New Orleans park, which sustained very extensive damage during Hurricane Katrina in late August 2005 and has not re-opened since. During the third quarter of 2009, the Company and the City of New Orleans mutually agreed to terminate the Company’s lease with the City of New Orleans and to settle the related litigation, pursuant to which the Company agreed, among other things, to pay $3
million and to transfer title to the Company’s property and equipment at the site to the City of New Orleans, including land owned by the Company adjacent to the leased site. We have recorded appropriate provisions for impairment and liabilities related to discontinuing the New Orleans park operations. The condensed consolidated financial statements as of and for all periods presented reflect the assets, liabilities and results of the facilities sold and held for sale as discontinued operations. See Notes 3 and 7.
In February 2010, in connection with the Chapter 11 Filing, the Company decided to reject the lease with the Kentucky State Fair Board relating to our Louisville park and we no longer operate the park. The condensed consolidated financial statements as of and for all periods presented, reflect the assets, liabilities and results operations for our Louisville park as discontinued operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, which follows these notes, contain additional information on our results of operations and our financial position. That discussion should be read in conjunction with the condensed consolidated financial statements and these notes. Our 2009 Annual Report includes additional information about us, our operations and our financial position, and should be referred to in conjunction with this Quarterly Report. The information furnished in this report reflects all adjustments (which are normal and recurring) that are, in the opinion of management, necessary to present a fair statement of the results for the periods presented.
Results of operations for the three-month periods ended March 31, 2010 are not indicative of the results expected for the full year. In particular, our park operations contribute a substantial majority of their annual revenue during the period from Memorial Day to Labor Day each year, while expenses are incurred year round.
The accompanying condensed consolidated financial statements do not purport to reflect or provide for the consequences of our Chapter 11 Filing. In particular, the financial statements do not purport to show (1) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities, (2) as to liabilities arising prior to the Petition Date, the amounts that may be allowed for claims or contingencies, or the status and priority thereof, (3) as to stockholders’ equity accounts, the effect of any changes that may be made in our capitalization, or (4) as to operations, the effect of any changes that may be made to our business.
We evaluated subsequent events through the date the financial statements were issued. No reportable subsequent events were identified as a result of our evaluation.
Our accounting policies reflect industry practices and conform to GAAP.
The condensed consolidated financial statements include our accounts and the accounts of our wholly owned subsidiaries. We also consolidate the partnerships and joint ventures that own SFOT and SFOG, as we have determined that we have the power to direct the activities of those entities that most significantly impact the entities’ economic performance and we have the obligation to absorb losses and receive benefits from the entities that can be potentially significant to these entities. Furthermore, as a result of adopting FASB ASC Topic 810, Consolidation (“FASB ASC 810”) on January 1, 2010, we consolidated HWP Development, LLC, a joint venture in which we own an approximate 41% interest (“HWP”), as a subsidiary in our consolidated financial statements beginning with the first quarter of 2010. The equity interests owned by non-affiliated parties in SFOT and SFOG are reflected in the accompanying condensed consolidated balance sheets as redeemable noncontrolling interests. The equity interests owned by non-affiliated parties in HWP are reflected in the accompanying March 31, 2010 condensed consolidated balance sheet as noncontrolling interests. The portion of earnings or loss from each of the entities attributable to non-affiliated parties is reflected as net income (loss) attributable to noncontrolling interests in the accompanying condensed consolidated statements of operations. See further discussion in Note 2 (k) and Note 8.
While operating as debtors-in-possession, the Debtors were able to sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as permitted in the ordinary course of business. These dispositions and settlements may be in amounts other than those reflected in the condensed consolidated financial statements.
We follow the accounting prescribed by FASB ASC 852. This accounting literature provides guidance for periods subsequent to a Chapter 11 filing regarding the presentation of liabilities that are and are not subject to compromise by the Bankruptcy Court proceedings, as well as the treatment of interest expense and presentation of costs associated with the proceedings.
In accordance with FASB ASC 852, debt discounts or premiums as well as debt issuance costs should be viewed as valuations of the related debt. When the debt has become an allowed claim and the allowed claim differs from the carrying amount of the debt, the recorded amount should be adjusted to the allowed claim. During the second quarter of 2009, we wrote off costs that are associated with unsecured debt that is included in liabilities subject to compromise at March 31, 2010. Premiums and discounts as well as debt issuance cost on debt that is not subject to compromise, such as fully secured claims, have not been adjusted.
Because SFI’s stockholders own less than 50% of the voting shares after Holdings emerged from bankruptcy, we will apply “Fresh-Start Reporting,” in which our assets and liabilities will be recorded at their estimated fair value using the principles of purchase accounting contained in FASB ASC Topic 805, Business Combinations. The difference, if any, between our estimated fair value and our identifiable assets and liabilities will be recognized as goodwill (see Note 1(g)).
c. Reorganization Items
FASB ASC 852 requires separate disclosure of reorganization items such as realized gains and losses from the settlement of liabilities subject to compromise, provisions for losses resulting from the reorganization and restructuring of the business, as well as professional fees directly related to the process of reorganizing the Debtors under the Bankruptcy Code. The Debtors’ reorganization items consist of the following:
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Three
months ended
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(in thousands) |
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Costs and expenses directly related to the reorganization |
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$ |
20,461 |
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Costs and expenses directly related to the reorganization primarily include fees associated with advisors to the Debtors, certain creditors and the Creditors’ Committee (as such term is defined in the Plan).
Net cash paid for reorganization items, entirely constituting professional fees, as of March 31, 2010 totaled $8,034,000.
In February 2010, in connection with the Chapter 11 Filing, we decided to reject the lease with the Kentucky State Fair Board relating to our Louisville park and we no longer operate the park. We recorded a $36.9 million impairment of the Louisville park assets, including $0.6 million of inventory and prepaid expenses, as part of reorganization items in the statement of operations for the year ended December 31, 2009. The fair value of the park assets that will remain, except for the land we own, was valued at zero based on the rejection of the lease. The land was valued at the appraised value based on comparable sales information, which is a level 2 fair value measurement. The condensed consolidated financial statements as of and for all periods presented reflect the assets, liabilities and results of
operations for our Louisville park as discontinued operations. See further discussion in Note 3 to the consolidated financial statements.
Liabilities Subject to Compromise
Liabilities subject to compromise refers to unsecured obligations that will be accounted for under a plan of reorganization. Generally, actions to enforce or otherwise effect payment of liabilities arising before the date of filing of the plan of reorganization are stayed. FASB ASC 852 requires liabilities that are subject to compromise to be reported at the claim amounts expected to be allowed, even if they may be settled for lesser amounts. These liabilities represent the estimated amount of claims expected to be allowed on known or potential claims to be resolved through the bankruptcy process, and remain subject to future adjustments arising from negotiated settlements, actions of the Bankruptcy Court, rejection of executory contracts and unexpired leases, the determination as to the value of collateral securing the claims, proofs of claim, or other events. Liabilities subject to compromise also include certain items that may be assumed under the plan of reorganization, and as such, may be subsequently reclassified to liabilities not subject to compromise. The Company has not included the Prepetition Credit Agreement obligations, and swap obligations secured ratably therewith, as liabilities subject to compromise as these secured liabilities are expected to be fully recovered by the Lenders. The Bankruptcy Court granted final approval of the Debtors’ “first day” motions covering, among other things, human resource obligations, supplier relations, insurance, customer relations, business operations, certain tax matters, cash management, post-petition utilities, case management and retention of professionals. Obligations associated with these matters are not classified as liabilities subject to compromise.
The Debtors were permitted to reject prepetition executory contracts and unexpired leases with respect to the Debtors’ operations, with the approval of the Bankruptcy Court. Damages resulting from rejection of executory contracts and unexpired leases are generally treated as general unsecured claims and will be classified as liabilities subject to compromise. Holders of such prepetition claims were required to file proofs of claims by a bar date set by the Bankruptcy Court. A bar date is the date by which claims against the Debtors must be filed if the claimants wish to receive any distribution in the Chapter 11 Filing. The Debtors notified all known claimants subject to the bar date of their need to file a proof of claim with the Bankruptcy Court. Differences between liability amounts estimated by the Debtors and claims filed by creditors will be investigated and, if necessary, the Bankruptcy Court will make a final determination of the allowable claim.
Liabilities subject to compromise consist of the following:
|
|
|
March 31, 2010 |
|
December 31, 2009 |
|
||
|
|
|
(in thousands) |
|
||||
|
Accounts payable and other accrued expenses |
|
$ |
71,805 |
|
$ |
66,392 |
|
|
Accrued interest payable |
|
95,211 |
|
49,877 |
|
||
|
Unsecured debt |
|
988,305 |
|
988,305 |
|
||
|
Unsecured convertible notes |
|
280,000 |
|
280,000 |
|
||
|
PIERS |
|
306,650 |
|
306,650 |
|
||
|
Total liabilities subject to compromise |
|
$ |
1,741,971 |
|
$ |
1,691,224 |
|
Liabilities subject to compromise, at March 31, 2010, include trade accounts payable of approximately $19.8 million related to purchases prior to the Petition Date, which generally have not been paid. As a result, the Company’s cash flows from operations were favorably affected by the stay of payments related to these liabilities.
In accordance with the guidance provided in FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC 852, during the third quarter of 2009 we reclassified the $275.4 million redemption value of PIERS plus accrued and unpaid dividends of approximately $31.2 million from mezzanine equity to liabilities subject to compromise, as the PIERS became an unconditional obligation as of August 15, 2009. Upon the Effective Date, by operation of the Plan, the PIERS were cancelled as of the Effective Date.
We recorded the $37.0 million note that we received pursuant to the sale of seven parks in April 2007 (the “PARC Note”) at an estimated fair value of $11.4 million, reflecting the risk of collectability due to the PARC Note’s subordination to other obligations. We will not recognize interest income from the PARC Note until the entire carrying amount has been recovered, in accordance with the guidance of FASB ASC Topic 310, Receivables. As of March 31, 2010, we have collected payments in the amount of $10.4 million leaving the PARC Note receivable balance at $1.0 million. See Note 7.
Income taxes are accounted for under the asset and liability method. At December 31, 2009, we had recorded a valuation allowance of $620,229,000 due to uncertainties related to our ability to utilize some of our deferred tax assets before they expire. The valuation allowance was increased by $76,412,000 through March 31, 2010, in respect of the net loss before income taxes generated during the first three months of 2010. In addition, we decreased the valuation allowance by $1,720,000 through March 31, 2010 related to other comprehensive income (loss).
We classify interest and penalties attributable to income taxes as part of income tax expense. As of March 31, 2010, we have a liability of approximately $2.1 million accrued for interest and penalties.
We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or group of assets to future net cash flows expected to be generated by the asset or group of assets. If such assets are not considered to be fully recoverable, any impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
With our adoption of fresh start accounting upon emergence, assets will be revalued based on the fair values of long-lived assets (see Note 1(g)).
We account for derivatives and hedging activities in accordance with FASB ASC Topic 815, Derivatives and Hedging (“FASB ASC 815”). This accounting guidance establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge for accounting purposes. The accounting for changes in the fair value of a derivative (e.g., gains and losses) depends on the intended use of the derivative and the resulting designation.
We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and our strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash-flow hedges to forecasted transactions.
We also assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.
Changes in the fair value of a derivative that is effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss), until operations are affected by the variability in cash flows of the designated hedged item. Changes in fair value of a derivative that is not designated as a hedge are recorded in other expense in our condensed consolidated statements of operations on a current basis.
During the fourth quarter of 2008, we discontinued hedge accounting treatment for the interest rate swaps, as they no longer met the probability test as detailed in FASB ASC 815. See Note 4.
Basic loss per share is computed by dividing net loss applicable to common stock by the weighted average number of common shares outstanding for the period.
The weighted average number of shares of common stock used in the calculation of diluted loss per share for the three-month periods ended March 31, 2010 and 2009 does not include the effect of potential common stock issuable upon the exercise of employee stock options, the impact in either period of the potential conversion of the PIERS or the impact of the potential conversion of the 2015 Notes, as the effects of the exercise such options and such conversions and resulting decrease in preferred stock dividends or interest payments, as the case may be, is antidilutive. The PIERS, which are included in the liabilities subject to compromise as of March 31, 2010 and December 31, 2009, were issued in January 2001 and were convertible into 13,209,000 (after giving effect to 483,000 PIERS that converted to common stock in the third quarter of 2009) and 13,789,000 shares of common stock as of March 31, 2009. The 2015 Notes were convertible at the option of the holder into 44,094,000 shares of common stock. No adjustments were made to the weighted average number of shares of common stock for the three months ended March 31, 2010.
PIERS dividends and amortization of related issue costs of $5,493,000 were included in determining net income (loss) attributable to SFI’s common stockholders for the three months ended March 31, 2009.
i. Reclassifications
Reclassifications have been made to certain amounts reported in 2009 to conform to the 2010 presentation.
j. Stock Benefit Plans
Pursuant to the Plan, on the Effective Date, the Six Flags Entertainment Corporation Long-Term Incentive Plan became effective (the “Long-Term Incentive Plan”). Pursuant to the Long-Term Incentive Plan, SFEC may grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, deferred stock units, performance and cash-settled awards and dividend equivalents (collectively, “Awards”) to select employees, officers, directors and consultants of SFEC and its affiliates (collectively, “Eligible Persons”). The Long-Term Incentive Plan provides that no more than 4,833,333 shares of Common Stock may be issued pursuant to Awards under the Long-Term Incentive Plan as of the Effective Date, and if and to the extent the Delayed Draw Equity Purchase is consummated, up to 149,956 additional shares of Common Stock shall be available for issuance under the Long-Term Incentive Plan. At least one-third of the total shares available for issuance under the Long-Term Incentive Plan shall be available for grants of restricted stock or restricted stock units.
Pursuant to the Plan, all stock-based compensation arrangements and awards were cancelled including, without limitation, the following: (i) SFI’s 2001 Stock Option and Incentive Plan; (ii) the SFI Stock Option Plan for Directors; (iii) SFI’s 2004 Stock Option and Incentive Plan; (iv) SFI’s 2006 Stock
Option and Incentive Plan; (v) SFI’s 2006 Employee Stock Purchase Plan; (vi) SFI’s 2007 Stock Option and Incentive Plan; (vii) the SFI 2008 Stock Option and Incentive Plan; and (viii) all outstanding awards and grants thereunder (collectively, the “Preconfirmation Stock Incentive Plans”).
During the three months ended March 31, 2010 and 2009, stock-based compensation expense related to the Preconfirmation Stock Incentive Plans was $598,000 and $839,000, respectively.
Under the Preconfirmation Stock Incentive Plans, our officers and non-employee directors were awarded stock options, restricted stock and other stock-based awards. As of March 31, 2010, options to purchase 6,480,000 shares of SFI’s common stock and approximately 970,000 shares of restricted stock were outstanding under the Preconfirmation Stock Incentive Plans and approximately 3,887,000 shares were available for future grant. As of March 31, 2009, options to purchase 6,660,000 shares of SFI’s common stock and approximately 1,776,000 shares of restricted stock were outstanding under the Preconfirmation Stock Incentive Plans and approximately 3,676,000 shares were available for future grant.
Stock Options
Options granted under the Preconfirmation Stock Incentive Plans could have been designated as either incentive stock options or non-qualified stock options. Options were generally granted with an exercise price equal to the market value of SFI’s common stock at the date of grant. These option awards generally vested 20% per annum, commencing with the date of grant, and had a contractual term of either 7, 8 or 10 years. In addition, our President and Chief Executive Officer was granted 475,000 options during the first quarter of 2006 that became exercisable only if certain market prices of SFI’s common stock were maintained for consecutive 90 day periods. Stock option compensation is recognized over the vesting period using the graded vesting terms of the respective grant.
The estimated fair value of options granted was calculated using the Black-Scholes option pricing valuation model. This model takes into account several factors and assumptions. The risk-free interest rate is based on the yield on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumption at the time of grant. The expected term (estimated period of time outstanding) is estimated using the contractual term of the option and the historical effects of employees’ expected exercise and post-vesting employment termination behavior. Expected volatility was calculated based on historical volatility for a period equal to the stock option’s expected life, calculated on a daily basis. The expected dividend yield is based on expected dividends for the expected term of the stock options. The fair value of stock options on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards.
The weighted-average assumptions used for options granted in the three months ended March 31, 2010 and 2009 are as follows:
|
|
|
March 31, |
|
||||||
|
|
|
2010 |
|
2009 |
|
||||
|
|
|
Employees |
|
Directors |
|
Employees |
|
Directors |
|
|
Risk-free interest rate |
|
— |
|
— |
|
1.79 |
% |
— |
|
|
Expected life (in years) |
|
— |
|
— |
|
5.67 |
|
— |
|
|
Expected volatility |
|
— |
|
— |
|
68.47 |
% |
— |
|
|
Expected dividend yield |
|
— |
|
— |
|
— |
|
— |
|
A summary of the status of our option awards as of March 31, 2010 and changes during the three months then ended is presented below:
|
|
|
Shares |
|
Weighted
|
|
Weighted
|
|
Aggregate
|
|
|
Balance at January 1, 2010 |
|
6,490,000 |
|
6.23 |
|
|
|
|
|
|
Granted |
|
— |
|
— |
|
|
|
|
|
|
Exercised |
|
— |
|
— |
|
|
|
|
|
|
Canceled or exchanged |
|
— |
|
— |
|
|
|
|
|
|
Forfeited |
|
(10,000 |
) |
2.17 |
|
|
|
|
|
|
Expired |
|
— |
|
— |
|
|
|
|
|
|
Balance at March 31, 2010 |
|
6,480,000 |
|
6.24 |
|
6.09 |
|
— |
|
|
Vested and expected to vest at March 31, 2010 |
|
6,481,000 |
|
6.33 |
|
6.08 |
|
— |
|
|
Options exercisable at March 31, 2010 |
|
4,810,000 |
|
6.64 |
|
5.95 |
|
— |
|
There were no options granted in the first three months ended March 31, 2010. The weighted average grant date fair value of our option awards granted during the three months ended 2009 was $0.20. The total intrinsic value of options exercised for both periods was $0. The total fair value of options that vested during the three months ended March 31, 2010 and 2009 was $3.0 million and $3.1 million, respectively.
As of March 31, 2010, there was $0.4 million of unrecognized compensation expense related to our option awards. The weighted average period over which that cost is expected to be recognized, without regard to the potential impact of the Chapter 11 Filing and proceedings, is 1.27 years.
Restricted Stock
Restricted shares of SFI’s common stock could have been awarded under the Preconfirmation Stock Incentive Plans and were subject to restrictions on transferability and other restrictions, if any, as the compensation committee (the “Compensation Committee”) of SFI’s board of directors could have imposed. The Compensation Committee could have also determined when and under what circumstances the restrictions may lapse and whether the participant received the rights of a stockholder, including, without limitation, the right to vote and receive dividends. Unless the Compensation Committee determined otherwise, restricted stock that was still subject to restrictions was forfeited upon termination of employment. The fair value of restricted stock awards on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards.
No restricted shares were issued in the three months ended March 31, 2010. We issued 50,000 shares of restricted stock during the three months ended March 31, 2009 to our Chief Financial Officer pursuant to the terms of his employment agreement.
We issued 2,505,518 shares of restricted stock during the year ended December 31, 2008 as settlement for 2007 accrued bonuses to certain key employees and to fund a portion of our 401(k) plan match for 2007. Of the 2,505,518 shares issued (i) 1,029,109 vested on March 11, 2008, (ii) 1,050,985 shares vested on April 7, 2008, (iii) 113,333 shares, related to the 401(k) plan match vested on September 10, 2008, (iv) 19,013 shares were forfeited upon the termination of several employees throughout 2008,
(v) 21,082 shares were forfeited upon the termination of several employees in 2009, (vi) 1,755 shares were forfeited upon the termination of several employees in 2010, and (vii) 270,241 shares would have vested in 2011 if certain performance based financial goals of the Company were met.
A summary of the status of our restricted stock awards as of March 31, 2010 and changes during the three months then ended is presented below:
|
|
|
Shares |
|
Weighted Average
|
|
|
Non-vested balance at January 1, 2010 |
|
1,746,997 |
|
4.88 |
|
|
Granted |
|
— |
|
— |
|
|
Vested |
|
(504,996 |
) |
5.90 |
|
|
Forfeited |
|
(1,755 |
) |
1.84 |
|
|
Non-vested balance at March 31, 2010 |
|
1,240,246 |
|
4.46 |
|
There was no restricted stock granted in the first three months of 2010. The weighted average grant date fair value per share of restricted stock awards granted during the three months ended March 31, 2009 was $0.33.
The total grant date fair value of the restricted stock awards granted during the three months ended March 31, 2009 was $0.02 million. The total fair value of restricted stock awards that vested during the three months ended March 31, 2010 and 2009 was $3.0 million and $0.03 million, respectively. As of March 31, 2010, the unrecognized compensation costs related to restricted stock awards was $0.7 million. The weighted average period over which that cost is expected to be recognized, without regard to the potential impact of the Chapter 11 Filing and proceedings, is 0.76 years.
k. New Accounting Pronouncements
In January 2010, the FASB issued ASC Update No. 2010-06, Fair Value Measurements and Disclosures (“ASC Update No. 2010-06”). The updated guidance calls for new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurement and information on purchases, sales, issuance, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements. The FASB also clarified existing fair-value measurement disclosure guidance about the level of disaggregation, inputs, and valuation techniques. The new disclosures and clarification of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuance, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. We adopted this guidance for the interim period ending March 31, 2010 and updated our disclosures to comply with the current accounting guidance described in ASC Update No. 2010-06. See Note 5.
In August of 2009, the FASB issued ASC Update No. 2009-05, Measuring Liabilities at Fair Value (“ASC Update No. 2009-05”). ASC Update No. 2009-05 provides amendments to ASC Topic 820, Fair Value Measurements and Disclosures (“FASB ASC 820”) for the fair value measurement of liabilities. The updated guidance states that when the quoted price in an active market for the identical liability is not available, a reporting entity can measure fair value of the liability using quoted prices of the identical or similar liability when traded as an asset. Such valuation method will result in Level 1 fair value measurement. The updated guidance also provides for other valuation techniques that are consistent with the principles of FASB ASC Topic 820. A further clarification is provided for the fair value estimate of the liability, stating that such estimate does not have to be adjusted for the existing restrictions that prevent the transfer of the liability. ASC Update No. 2009-05 is effective for the first reporting period, including interim periods, beginning after issuance. We adopted ASC Update No. 2009-
05 for the interim period ending March 31, 2010. The adoption did not impact our existing approach used in determining fair-value measurement of the liabilities.
In August 2009, the FASB issued ASC Update No. 2009-04, Accounting for Redeemable Equity Instruments (“ASC Update No. 2009-04”). This guidance updates FASB ASC Topic 480, “Distinguishing Liabilities from Equity” of the current Codification per EITF Topic D-98, “Classification and Measurement of Redeemable Securities.” ASC Update No. 2009-04 does not change the existing accounting guidance for classification and disclosures related to preferred securities that are redeemable for cash or other assets. Rather, it expands on the application of the current guidance to other redeemable equity instruments, providing specific examples for applying the guidance to freestanding financial instruments, equity instruments subject to registration payment arrangements, share-based payment awards, convertible debt instruments that contain a separately classified equity component, certain redemptions upon liquidation events, and certain redemptions covered by insurance proceeds. We adopted ASC Update No. 2009-04 for the interim period ending March 31, 2010. The adoption of ASC Update No. 2009-04 did not affect our condensed consolidated financial statement presentation and disclosures.
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), codified into FASB ASC 810. FASB ASC 810 changes the consolidation guidance applicable to a variable interest entity. It also amends the guidance governing the determination of whether an enterprise is the primary beneficiary of a variable interest entity, and is, therefore, required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis will include, among other things, consideration of who has the power to direct the activities of the entity that most significantly impact the entity’s economic performance and who has the obligation to absorb losses or the right to receive benefits of the variable interest entity that could potentially be significant to the variable interest entity. This standard also requires continuous reassessments of whether an enterprise is the primary beneficiary of a variable interest entity. Previously, the applicable guidance required reconsideration of whether an enterprise was the primary beneficiary of a variable interest entity only when specific events had occurred. Qualifying special-purpose entities, which were previously exempt from the application of this standard, will be subject to the provisions of this standard when it becomes effective. FASB ASC 810 also requires enhanced disclosures about an enterprise’s involvement with a variable interest entity. FASB ASC 810 is effective as of the beginning of interim and annual reporting periods that begin after November 15, 2009. We adopted the new guidance at January 1, 2010. As a result of adopting FASB ASC 810, we consolidated HWP as of January 1, 2010, as we satisfy the qualifications of being a primary beneficiary of this entity: (i) we have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, and (ii) we have the obligation to absorb losses and receive benefits, which are deemed to be potentially significant to the entity. As a result of consolidating HWP, our total assets, total liabilities and noncontrolling interest on January 1, 2010 increased by approximately $38.8 million, $33.8 million and $5.0 million, respectively. As of March 31, 2010 the equity interests owned by non-affiliated parties in HWP are reflected in the accompanying consolidated balance sheets as noncontrolling interest. The portion of earnings attributable to the non-affiliated parties is reflected as net income attributable to noncontrolling interest in the accompanying consolidated statement of operations as of March 31, 2010. The adoption of FASB ASC 810 did not change accounting treatment of the partnerships that own SFOT and SFOG, which we continued to consolidate. See Note 8.
3. Disposition of Parks
In February 2010, in connection with the Chapter 11 Filing, we decided to reject the lease with the Kentucky State Fair Board relating to our Louisville park and we no longer operate the park.
During the second quarter of 2008, we decided that we would not re-open our New Orleans park, which sustained very extensive damage during Hurricane Katrina in late August 2005. See Notes 2 and 7.
Our condensed consolidated financial statements have been reclassified for all relevant periods presented to reflect the operations, assets and liabilities of our Louisville and New Orleans parks and the parks sold in or prior to 2007 as discontinued operations. The discontinued operations, excluding contingent liabilities discussed in Note 7, have been presented on March 31, 2010 and December 31, 2009 consolidated balance sheets as follows:
|
|
|
March 31,
|
|
December 31,
|
|
||
|
|
|
(in thousands) |
|
||||
|
Current assets |
|
$ |
— |
|
$ |
— |
|
|
Property, plant and equipment, net |
|
1,278,000 |
|
1,200,000 |
|
||
|
Total assets held for sale |
|
$ |
1,278,000 |
|
$ |
1,200,000 |
|
The net gain (loss) from discontinued operations was classified on the condensed consolidated statements of operations for the three-month periods ended March 31, 2010 and 2009 as “discontinued operations.” Summarized results of discontinued operations are as follows:
|
|
|
Three months ended
|
|
||||
|
|
|
2010 |
|
2009 |
|
||
|
|
|
(in thousands) |
|
||||
|
Operating revenue |
|
$ |
127 |
|
$ |
798 |
|
|
Loss from discontinued operations before income taxes |
|
(2,457 |
) |
(3,416 |
) |
||
|
Decrease (increase) in contingent liabilities from sale indemnities |
|
(316 |
) |
(348 |
) |
||
|
Net results of discontinued operations |
|
$ |
(2,773 |
) |
$ |
(3,764 |
) |
Our long-term debt is not directly associated with discontinued operations, and we have not allocated a portion of our interest expense to the discontinued operations.
4. Derivative Financial Instruments
In February 2008, we entered into two interest rate swap agreements that effectively converted $600,000,000 of the term loan component of the Prepetition Credit Agreement (see Note 6), into a fixed rate obligation. The terms of the agreements, each of which had a notional amount of $300,000,000, began in February 2008 and expire in February 2011. Our term loan borrowings bear interest based upon LIBOR plus a fixed margin. Under our interest rate swap arrangements, our interest rates ranged from 5.325% to 5.358% (with an average of 5.342%). On June 16, 2009, we were informed by the counterparties to the interest rate swap agreements that as a result of the Chapter 11 Filing the interest rate swap agreements were being terminated.
We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and our strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash-flow hedges to forecasted transactions. We also assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.
Changes in the fair value of a derivative that is effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss), until operations are affected by the variability in cash flows of the designated hedged item. Changes in fair value of a derivative that is not
designated as a hedge are recorded in other expense in our consolidated statements of operations on a current basis.
The following is a summary of the changes recorded in accumulated other comprehensive income (loss) during the first three months of 2010:
|
|
|
Gain |
|
|
|
Beginning balance at January 1, 2010 |
|
$ |
1,270,000 |
|
|
Reclassification to other (income) expense |
|
(496,000 |
) |
|
|
Ending balance at March 31, 2010 |
|
$ |
774,000 |
|
As of March 31, 2010, approximately $774,000 of net deferred gains on derivative instruments accumulated in other comprehensive income (loss) are expected to be reclassified to operations during the next twelve months.
During the fourth quarter of 2008, it was determined that our interest rate swaps no longer met the probability test under FASB ASC 815. At that time, hedge accounting treatment was discontinued for the two interest rate swaps. As a result, during the first three months of 2010, we recorded a $496,000 gain in other (income) expense.
The principal market in which we execute interest rate swap contracts is the retail/over-the-counter market (as opposed to the broker or interbank market). Market participants can be described as large money center banks. For recognizing the most appropriate value, the highest and best use of our derivatives are measured using an in-exchange valuation premise that considers the assumptions that market participants would use in pricing the derivatives.
Up until the notification by the counterparties on June 16, 2009 that the interest rate swaps were being terminated, we elected to use the income approach to value the derivatives, using observable Level 2 market expectations at measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted) assuming that participants are motivated, but not compelled to transact. Level 2 inputs for the swap valuations were limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts on LIBOR for the first two years) and inputs other than quoted prices that were observable for the asset or liability (specifically LIBOR cash and swap rates) at commonly quoted intervals, and credit risk. Mid-market LIBOR pricing was used as a practical expedient for fair value measurements. Key inputs, including the LIBOR cash rates for very short term, futures rates for up to three years and LIBOR swap rates beyond the derivative maturity, were bootstrapped to provide spot rates at resets specified by each swap as well as to discount those future cash flows to present value at measurement date. Inputs were collected from Bloomberg on the last market day of the period. The same rates used to bootstrap the yield curve were used to discount the future cash flows. We were required to discount derivative liabilities to reflect the potential credit risk to lenders. We elected to discount the cash flows of the derivative liabilities using a credit default swap basis available from Bloomberg and applied it to all cash flows. Discounting for our credit default swap rates resulted in a substantial reduction of the liability recorded at December 31, 2008.
The counterparties to the interest rate swap agreements provided four independent quotations for replacement transactions that were used to determine the derivative liability at termination. These quoted prices were for specific transactions and are considered Level 1 fair value measurements.
The fair value of our obligation under the interest rate swaps was approximately $19,992,000 at March 31, 2010 and December 31, 2009 and is recorded in other accrued liabilities and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets and is considered a Level 1 fair value measurement.
By using derivative instruments to hedge exposures to changes in interest rates, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments were placed with counterparties that we believe are minimal credit risks.
Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or currency exchange rates. The market risk associated with interest rate swap agreements is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
We do not hold or issue derivative instruments for trading purposes. Changes in the fair value of derivatives that are designated as hedges are reported on the condensed consolidated balance sheet in “Accumulated other comprehensive loss” when in qualifying effective relationships, and directly in other expense when they are not. These amounts are reclassified to interest expense when the forecasted transaction takes place.
The critical terms, such as the index, settlement dates, and notional amounts, of the derivative instruments were substantially the same as the provisions of our hedged borrowings under the Credit Agreement. As a result, no material ineffectiveness of the cash-flow hedges was recorded in the consolidated statements of operations prior to the loss of hedge accounting treatment in the fourth quarter of 2008.
5. Fair Value of Financial Instruments
The following table and accompanying information present the estimated fair values of our financial instruments at March 31, 2010 and December 31, 2009 and classification of such instruments in accordance with FASB ASC 820. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.
|
|
|
March 31, 2010 |
|
December 31, 2009 |
|
||||||
|
|
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
|
||
|
Financial assets (liabilities): |
|
|
|
|
|
|
|
|
|
||
|
Restricted-use investment securities |
|
$ |
2,706,000 |
|
2,706,000 |
|
$ |
2,387,0000 |
|
2,387,000 |
|
|
Long-term debt (including current portion) — Secured |
|
(1,175,107,000 |
) |
(1,176,519,000 |
) |
(1,138,275,000 |
) |
(1,119,338,000 |
) |
||
|
Long-term debt (including current portion) — Subject to Compromise |
|
(1,268,305,000 |
) |
(737,862,000 |
) |
(1,268,305,000 |
) |
(694,744,000 |
) |
||
|
PIERS — Subject to Compromise |
|
(306,650,000 |
) |
(5,175,000 |
) |
(306,650,000 |
) |
(5,750,000 |
) |
||
|
Interest rate swaps |
|
(19,992,000 |
) |
(19,992,000 |
) |
(19,992,000 |
) |
(19,992,000 |
) |
||
The carrying amounts shown in the table are included in the condensed consolidated balance sheets under the indicated captions.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
· The carrying values of cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and accrued liabilities approximate fair value because of the short maturity of these instruments.
· Restricted-use investment securities: The carrying value of restricted-use investment securities consist of interest bearing bank accounts and approximates fair value because of their short term maturity and are considered a Level 2 fair value measurement.
· Long-term debt: The fair value of our long-term debt is based upon quoted market prices and is considered a Level 1 fair value measurement.
· PIERS: The fair value of our mandatorily redeemable preferred stock is based upon quoted market prices and is considered a Level 1 fair value measurement. In accordance with the guidance provided in FASB ASC 480 and FASB ASC 852, we classified the $275.4 million redemption value of PIERS plus accrued and unpaid dividends of approximately $31.2 million as liabilities subject to compromise, as the PIERS became an unconditional obligation as of August 15, 2009. Pursuant to the Plan, PIERS are considered an unsecured equity interest subject to compromise and the holders of such instruments received no recovery.
· Interest rate swaps: The fair value of our interest rate swaps at March 31, 2010 and December 31, 2009 is based on quoted prices from multiple brokers for replacement transactions which are considered Level 1 fair value measurements (See Note 4).
6. Long-Term Indebtedness
On May 15, 2009, the Acquisition Parties entered into a promissory note with TW-SF LLC, a subsidiary of Time Warner, pursuant to which TW-SF LLC loaned approximately $52.5 million to the Acquisition Parties ($30.7 million of which was outstanding at March 31, 2010 (excluding interest)) (the “Promissory Note”) , which are obligated to fund the “put” obligations related to the Partnership Parks. Interest on the loan accrued at a rate of 14% per annum and the principal amount of the loan was to mature on March 15, 2011. The loan required semi-annual prepayments with the proceeds received by the Acquisition Parties from the limited partnership units held by them in the Partnership Parks and was prepayable at any time at the option of the Acquisition Parties. Up to an aggregate of $10 million of the loan was guaranteed by SFI, SFO and SFTP (collectively, the “Guarantors”) under the terms of a guarantee agreement entered into by the Guarantors in favor of TW-SF LLC, dated May 15, 2009. On the Effective Date, the Acquisition Parties repaid in full all amounts outstanding under the Promissory Note, which as of the Effective Date was $32,561,779 (including interest).
On November 5, 2007, HWP entered into a $33,000,000 refinance loan with Deutsche Bank Mortgage Capital, L.L.C. (“Refinance Loan”) retiring (i) the $31,000,000 construction-term loan with Marshall Investments Corporation incurred December 17, 2004 and (ii) the term loan and revolving line of credit with BankFirst incurred April 20, 2006. Borrowings under the Refinance Loan bear interest at 6.72%. Monthly payments of principal and interest of $213,000 are payable through November 1, 2017. On December 1, 2017, all unpaid principal and interest shall be due and payable. HWP is subject to various covenants under the Refinance Loan that place certain restrictions limiting or prohibiting engaging in certain types of transactions. Pursuant to the Refinance Loan, HWP deposited into escrow $282,000 and $344,000 at March 31, 2010 and December 31, 2009, respectively, and will make additional monthly deposits to cover annual amounts owed for insurance, taxes and furniture, fixture and equipment purchases.
In connection with the issuance of the Refinance Loan, we provided a limited guarantee of the loan, which becomes operative under certain limited circumstances, including the voluntary bankruptcy of HWP or its managing member. The limited guarantee will be released five years following full payment and discharge of the loan. As additional security for the Refinance Loan, we also provided a $1,000,000 letter of credit to secure the Refinance Loan. In addition, one of our joint venture partners provided a guarantee of the Refinance Loan in the event of certain specific events of default attributable to acts or failure to act by members of HWP.
On May 25, 2007, we entered into the Prepetition Credit Agreement, which provided for the following: (i) an $850,000,000 term loan maturing on April 30, 2015 ($835,125,000 of which was outstanding at March 31, 2010 and March 31, 2009); (ii) a revolving facility totaling $275,000,000 ($270,269,000 and $242,658,000 of which was outstanding at March 31, 2010 and March 31, 2009,
respectively (as well as letters of credit in the amount of $2,163,000 and $31,402,000 on those dates)), and (iii) an uncommitted optional term loan tranche of up to $300,000,000. The interest rate on borrowings under the Prepetition Credit Agreement could have been fixed for periods ranging from one to twelve months, subject to certain conditions. At our option, the interest rate was based upon specified levels in excess of the applicable base rate, or LIBOR. At March 31, 2010, the weighted average interest rate for borrowings under the term loan and the revolving facility was 4.48% and 4.94%, respectively. At March 31, 2009, the weighted average interest rate for borrowing under the term loan and the revolving facility was 4.86% and 3.79%, respectively. Commencing on September 30, 2007, SFTP, the primary borrower under the Prepetition Credit Agreement and an indirect wholly owned subsidiary of Holdings, was required to make quarterly principal repayments on the term loan in the amount of $2,125,000 with all remaining principal due on April 30, 2015. The utilization of the revolving facility was available until March 31, 2013. The Prepetition Credit Agreement contained customary representations and warranties and affirmative and negative covenants, including, but not limited to, a financial covenant related to the maintenance of a minimum senior secured leverage ratio in the event of utilization of the revolving facility and certain other events, as well as limitations on the ability to dispose of assets, incur additional indebtedness or liens, make restricted payments, make investments and engage in mergers or consolidations. On the Effective Date, pursuant to the Plan and the Confirmation Order, the Prepetition Credit Agreement was cancelled and the lenders thereunder were paid in full.
Since the Chapter 11 Filing, we record post-petition interest on prepetition obligations only to the extent we believe the interest will be paid during the Chapter 11 Filing or that it is probable that the interest will be an allowed claim. Included in interest expense for the quarter ended March 31, 2010, is $31,362,000 related to interest on the 2016 Notes, for the period of June 13, 2009 through December 31, 2009 that was recorded based on a change in the estimated probable allowed claim under the Chapter 11 Filing. In addition, had we recorded interest on the 2010 Notes, the 2013 Notes, the 2014 Notes and the 2015 Notes based on our prepetition contractual obligations, interest expense would have increased by $17,105,000 during the three months ended March 31, 2010.
See Note 7 to the Consolidated Financial Statements in the 2009 Annual Report for additional information regarding our indebtedness. See Note 1 for a description of our new indebtedness incurred in connection with the Plan and impact on all prepetition debt.
7. Commitments and Contingencies
Our New Orleans park sustained extensive damage in Hurricane Katrina in late August 2005 and has not re-opened since. We have determined that our carrying value of the assets destroyed was approximately $34.0 million, for which we recorded a receivable in 2005. This amount does not include the property and equipment owned by the lessor, which is also covered by our insurance policies. The park is covered by up to approximately $180 million in property insurance, subject to an insurer-calculated deductible in the case of named storms of approximately $5.5 million. The property insurance includes business interruption coverage.
The flood insurance provisions of the policies contain a $27.5 million sublimit. In December 2006, we commenced a declaratory action in Louisiana federal district court seeking judicial determination that the flood insurance sublimit was not applicable by virtue of the separate “Named Storm” peril. In February 2008, the court ruled in summary judgment that the flood insurance sublimit was applicable to the policies, including the Named Storm provision. In April 2009, the U.S. Court of Appeals for the Fifth Circuit upheld the district court ruling, with the exception of one policy, the Commonwealth Insurance Company policy, which was remanded to the district court for further consideration of our claim. In January 2010, we entered into a settlement agreement with Commonwealth Insurance Company, which was approved by the Bankruptcy Court in February 2010.
We have filed property insurance claims, including business interruption, with our insurers. We have an insurance receivable of $0.4 million at March 31, 2010, which reflects part of our claim for business interruption and the destroyed assets. The receivable is net of $38.3 million in payments received from our insurance carriers.
In April 2009, the Industrial Development Board of the City of New Orleans and the City of New Orleans (collectively, the “New Orleans Parties”) sought to accept an offer the Company made years earlier to buy out its lease with the New Orleans Parties for a $10 million cash payment and an exchange of contiguous real estate the Company owned. When we declined to extend the same offer, the Mayor of New Orleans announced to the press that the New Orleans Parties would sue. We were current on our lease payments to the New Orleans Parties, however, and in our view, not in default. The New Orleans Parties filed suit in Louisiana state court on May 11, 2009, alleging that we breached the lease with the New Orleans Parties by removing rides and assets from the park property; by failing to secure the property; and by accepting interim insurance payments for Hurricane Katrina damage claims instead of designating the New Orleans Parties as loss payee. On May 12, 2009, the New Orleans Parties obtained an ex parte state court temporary restraining order that enjoined us from: (a) removing any rides or attractions without the New Orleans Parties’ approval, (b) not properly securing the premises, and (c) “converting and/or secreting insurance proceeds received . . . as a result of Hurricane Katrina.” We removed the action to the United States District Court for the Eastern District of Louisiana (the “Court”), and the parties stipulated to stay the federal action for sixty days, while leaving the temporary restraining order in place, with us reserving the right to contest our propriety at a later time. In an order dated June 1, 2009, the Court imposed the agreed-upon stay but shortened the period to thirty days, until June 29, 2009. The Court issued an order on June 22, 2009, directing the clerk to mark the action as closed due to the stay resulting from the Chapter 11 Filing, but retaining jurisdiction for restoration to the calendar should circumstances change.
Subsequently, however, the parties reached an agreement to settle the matter pursuant to which the New Orleans Parties and we entered into a general release of all claims against one another. Additionally, the New Orleans Parties entered into a stipulation dismissing, with prejudice, the action pending in the United States District Court for the Eastern District of Louisiana, and dissolving the temporary restraining order obtained by the New Orleans Parties on May 12, 2009. The New Orleans Parties also agreed not to file any proof of claim or otherwise assert any entitlement to relief in the Chapter 11 Filing. Other material terms and conditions of the settlement are as follows:
· Within 35 days of the Bankruptcy Court’s final approval of the final settlement agreement, which approval occurred on October 8, 2009, we were required to make, and did make, a cash payment to the New Orleans Parties in the amount of $3 million;
· We vacated and delivered to the New Orleans Parties the leased premises and 86 acres of land, including any improvements thereto in their current condition, “as is”;
· The New Orleans Parties will be entitled to receive 25% of any net insurance proceeds we recover on our insurance claims for property damage caused by Hurricane Katrina to the extent our net recovery exceeds $65 million. We retain absolute discretion in prosecution, and any potential settlement of, claims with insurers, subject to any required Bankruptcy Court approval; and
· All other agreements between the New Orleans Parties and us related in any way to the leased premises and any other such related agreements, were deemed terminated upon the Bankruptcy Court’s final approval of the settlement agreement.
The settlement occurred on November 12, 2009.
On April 1, 1998, we acquired all of the capital stock of the former Six Flags Entertainment Corporation (“Former SFEC”) for $976,000,000, paid in cash. In addition to our obligations under outstanding indebtedness and other securities issued or assumed in the Former SFEC acquisition, we also guaranteed in connection therewith certain contractual obligations relating to the Partnership Parks. Specifically, we guaranteed the obligations of the general partners of those partnerships to (i) make minimum annual distributions of approximately $ 62,317,000 (as of 2010 and subject to annual cost of living adjustments thereafter) to the limited partners in the Partnership Parks of which our share based on our ownership of units as of March 31, 2010 will be approximately $26,290,000, (ii) make minimum capital expenditures at each of the Partnership Parks during rolling five-year periods, based generally on 6% of the Partnership Parks’ revenues. Cash flow from operations at the Partnership Parks is used to satisfy these requirements first, before any funds are required from us. We also guaranteed the obligation of our subsidiaries to purchase a maximum amount of 5% per year (accumulating to the extent not purchased in any given year) of the total limited partnership units outstanding as of the date of the agreements (the “Partnership Agreements”) that govern the partnerships (to the extent tendered by the unit holders). The agreed price for these purchases is based on a valuation for each respective Partnership Park equal to the greater of (i) a value derived by multiplying such park’s weighted average four year EBITDA (as defined in the Partnership Agreements) by a specified multiple (8.0 in the case of SFOG and 8.5 in the case of SFOT) or (ii) $250.0 million in the case of SFOG and $374.8 million in the case of SFOT. As of March 31, 2010, we owned approximately 28.9% and 52.0% of the Georgia limited partner interests and Texas limited partner interests, respectively. The remaining redeemable interests of approximately 71.1% and 48.0% of the Georgia limited partner and Texas limited partner, respectively, represent an ultimate redemption value for the limited partnership units of approximately $355.9 million. Our obligations with respect to SFOG and SFOT will continue until 2027 and 2028, respectively.
As we purchase units relating to either Partnership Park, we are entitled to the minimum distribution and other distributions attributable to such units, unless we are then in default under the applicable agreements with our partners at such Partnership Park. The annual unit purchase obligation (without taking into account accumulation from prior years) aggregated approximately $31.0 million for both parks based on current purchase prices. To address the 2009 purchase of limited partnership units, a subsidiary of Time Warner provided a loan to our subsidiaries that were required to purchase the put units, which was repaid in connection with the Plan. To address future purchase obligations of limited partnership units, we entered into the New TW Loan, under which we will not borrow in 2010. Pursuant to the 2010 annual offer, we will purchase 1.77 units from the Texas partnership and 0.83 units from the Georgia partnership for approximately $4.8 million in May 2010. The maximum unit purchase obligations for 2010 at both parks aggregated approximately $307.8 million, representing approximately 61.4% of the outstanding units of SFOG and 41.6% of the outstanding units of SFOT. See Notes 1 and 6.
In connection with our acquisition of the Former SFEC, we entered into the Subordinated Indemnity Agreement with certain of the Company’s entities, Time Warner and an affiliate of Time Warner, pursuant to which, among other things, we transferred to Time Warner (which has guaranteed all of our obligations under the Partnership Park arrangements) record title to the corporations which own the entities that have purchased and will purchase limited partnership units of the Partnership Parks, and we received an assignment from Time Warner of all cash flow received on such limited partnership units, and we otherwise control such entities. In addition, we issued preferred stock of the managing partner of the partnerships to Time Warner. In the event of a default by us under the Subordinated Indemnity Agreement or of our obligations to our partners in the Partnership Parks, these arrangements would permit Time Warner to take full control of both the entities that own limited partnership units and the managing partner. If we satisfy all such obligations, Time Warner is required to transfer to us the entire equity interests of these entities. We intend to incur approximately $18.4 million of capital expenditures at these parks for the 2010 season, an amount in excess of the minimum required expenditure. Cash flows from operations at the Partnership Parks will be used to satisfy the annual distribution and capital expenditure
requirements, before any funds are required from us. The two partnerships generated approximately $24.3 million of cash in 2009 from operating activities after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or payments to SFI. At March 31, 2010, we had total loans receivable outstanding of $233.0 million from the partnerships that own the Partnership Parks, primarily to fund the acquisition of Six Flags White Water Atlanta, and to make capital improvements and distributions to the limited partners.
We maintain insurance of the type and in amounts that we believe is commercially reasonable and that is available to businesses in our industry. We maintain multi-layered general liability policies that provide for excess liability coverage of up to $100,000,000 per occurrence. For incidents arising after November 15, 2003, our self-insured retention is $2,500,000 per occurrence ($2,000,000 per occurrence for the twelve months ended November 15, 2003 and $1,000,000 per occurrence for the twelve months ended November 15, 2002) for our domestic parks and a nominal amount per occurrence for our international parks. Defense costs are in addition to these retentions. In addition, for incidents arising after November 1, 2004 but prior to December 31, 2008, we have a one-time additional $500,000 self-insured retention, in the aggregate, applicable to all claims in the policy year. For incidents arising on or after December 31, 2008, our self-insured retention is $2,000,000, followed by a $500,000 deductible per occurrence applicable to all claims in the policy year for our domestic parks and our parks in Canada and a nominal amount per occurrence for our park in Mexico. Our deductible after November 15, 2003 is $750,000 for workers’ compensation claims ($500,000 deductible for the period from November 15, 2001 to November 15, 2003). Our general liability policies cover the cost of punitive damages only in certain jurisdictions. Based upon reported claims and an estimate for incurred, but not reported claims, we accrue a liability for our self-insured retention contingencies. We also maintain fire and extended coverage, business interruption, terrorism and other forms of insurance typical to businesses in this industry. The fire and extended coverage policies insure our real and personal properties (other than land) against physical damage resulting from a variety of hazards. Our current insurance policies expire on December 31, 2010. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any self-insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.
We are party to various legal actions arising in the normal course of business, including the cases discussed below. Matters that are probable of unfavorable outcome to us and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, our estimate of the outcomes of such matters and our experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve amounts that would be material to our consolidated financial position, results of operations, or liquidity after consideration of recorded accruals.
In 2005, certain plaintiffs filed a complaint on behalf of a purported class of current and former employees against us in the Superior Court of California, Los Angeles County alleging unpaid wages and related penalties and violations of law governing employee meal and rest breaks related to our current and formerly owned parks in California between November 2001 and December 18, 2007. While we denied any violation of law or other wrongdoing, we settled the case in 2007 and deposited into escrow $9,225,000 to be applied to the initial settlement fund, which was recorded in other expense. In April 2009, we paid approximately $255,000 (which was recorded in other expense as of December 31, 2008) into the settlement fund based on our meeting certain performance criteria in 2008. We do not expect to pay any further amounts under this obligation based on our 2009 operating results. This litigation has been stayed since the Petition Date and, as of the Effective Date, any further action against the Company with respect to this litigation is enjoined pursuant to the Plan.
On February 1, 2007, Images Everywhere, Inc. and John Shawn Productions, Inc. filed a case against SFTP and Event Imaging Solutions, Inc. in the Superior Court of the State of California County of Los Angeles, Central District. The plaintiffs provided photographic services to certain of our parks under
license agreements and/or under a consulting arrangement. In October 2006, the Company terminated its business relationship with the plaintiffs and thereafter entered into a settlement agreement with John Shawn Productions, Inc. regarding certain of the license agreements. As a result of this termination, the plaintiffs brought suit claiming an unspecified amount in “excess of” $20 million in damages, which they later revised to two alternative theories in the respective amounts of approximately $15 million or $11 million. The plaintiffs claimed that their services were wrongfully terminated and asserted causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing. The plaintiffs brought separate claims against defendant Event Imaging Solutions, Inc. for intentional interference with contractual relations. In a summary judgment ruling on December 19, 2007, the Court dismissed additional claims against the Company for breach of fiduciary duty, constructive fraud and punitive damages. The case was tried before a jury during the two-week period from March 17 to March 28, 2008, and the jury rendered a verdict in the Company’s favor, dismissing the claim. The plaintiffs filed a motion for a new trial, which was dismissed by the Court on May 12, 2008. On May 28, 2008, the plaintiffs filed a notice of appeal with the Court of Appeal of the State of California, Second Appellate District. This litigation has been stayed since the Petition Date and, as of the Effective Date, any further action against the Company with respect to this litigation is enjoined pursuant to the Plan.
On March 1, 2007, Safety Braking Corporation, Magnetar Technologies Corp. and G&T Conveyor Co. filed a Complaint for Patent Infringement (the “Patent Complaint”) in the United States District Court for the District of Delaware naming SFI, SFTP, and certain of our other subsidiaries as defendants, along with other industry theme park owners and operators. The Patent Complaint alleges that the Company is liable for direct or indirect infringement of United States Patent No. 5,277,125 because of its ownership and/or operation of various theme parks and amusement rides. The Patent Complaint does not include specific allegations concerning the location or manner of alleged infringement. The Patent Complaint seeks damages and injunctive relief. On or about July 1, 2008, the Court entered a Stipulation and Order of Dismissal of Safety Braking Corporation. Thus, as of that date, only Magnetar Technologies Corp. and G&T Conveyor Co. remain as plaintiffs. The Company has contacted the manufacturers of the amusement rides that it believes may be impacted by this case, requiring such manufacturers to honor their indemnification obligations with respect to this case. The Company tendered the defense of this matter to certain of the ride manufacturers. This litigation has been stayed with respect to the Debtors since the Petition Date and, as of the Effective Date, any further action against the Debtors with respect to this litigation is enjoined pursuant to the Plan.
On January 6, 2009, a civil action against the Company was commenced in the State Court of Cobb County, Georgia. The plaintiff sought damages for personal injuries, including an alleged brain injury, as a result of an altercation with a group of individuals on property next to SFOG on July 3, 2007. Certain of the individuals were employees of the park and were off-duty at the time the altercation occurred. The plaintiff, who had exited the park, claims that the Company was negligent in its security of the premises. Four of the individuals who allegedly participated in the altercation are also named as defendants in the litigation.
On October 31, 2008, a civil action against the Company was commenced in the District Court of Bexar County, Texas. The plaintiff is seeking damages against the Company for personal injuries as a result of an accident while attempting to board a ride at Six Flags Fiesta Texas. The ride manufacturer is a co-defendant in the litigation. This litigation was stayed during the Chapter 11 proceedings and, as of the Effective Date, the stay has been lifted.
We had guaranteed the payment of a $32,200,000 construction term loan incurred by HWP for the purpose of financing the construction and development of a hotel and indoor water park project located adjacent to The Great Escape park near Lake George, New York, which opened in February 2006. This joint venture is not a debtor in the Chapter 11 Filing. On November 5, 2007, we refinanced the loan with a $33,000,000 term loan ($32,243,000 and $32,593,000 of which was outstanding at March 31, 2010
and March 31, 2009, respectively), the proceeds of which were used to repay the existing loan. In connection with the refinancing, we replaced our unconditional guarantee with a limited guarantee of the loan, which becomes operative under certain limited circumstances, including the voluntary bankruptcy of HWP or its managing member (in which we own a 41% interest). Our limited guarantee will be released five years following full payment and discharge of the loan, which matures on December 1, 2017. The ability of HWP to repay the loan will be dependent upon HWP’s ability to generate sufficient cash flow, which cannot be assured. As additional security for the loan, we have provided a $1.0 million letter of credit. In the event we are required to fund amounts under the guarantee or the letter of credit, our joint venture partners must reimburse us for their respective pro rata share or have their joint venture ownership diluted or forfeited. As a result of the Chapter 11 Filing, the lender under the term loan is permitted to accelerate payment thereof. In that event, we could lose our interest in the hotel and indoor water park.
For the three months ended March 31, 2010 and 2009, we have received or accrued $216,000 and $200,000, respectively, in management fee revenues from HWP. As of March 31, 2010 and December 31, 2009, HWP owed us approximately $28,000 and $56,000, respectively, related to short-term intercompany transactions between the entities. During the first three months of 2009, we contributed approximately $197,000 to HWP for our portion of a capital call and as of the date of this filing there have been no capital calls required in 2010. See Note 8.
In connection with the sale of seven parks in April 2007, we agreed to provide a limited guarantee to a creditor of the buyer related to the future results of operations of the sold parks of up to $10 million, decreasing by a minimum of one million dollars annually. The limited guarantee has been recorded in other long-term liabilities at its estimated fair value of $1.4 million. In connection with the sale of our park near Seattle, Washington to PARC 7F-Operations Corporation, our guarantee of the lease of the land underlying the park remains in effect, except that (i) the landlord has agreed to proceed first against the parent company of the new lessee, CNL Income Properties, Inc., before asserting any rights in respect of our guarantee and (ii) in the event we are required to honor our guarantee, our remedies include our reacquisition of the park. The lease expires in 2030 with renewal options for an additional 46 years.
At March 31, 2010, we have accrued liabilities for tax and other indemnification contingencies of $11.0 million related to certain parks sold in previous years that could be recognized as a recovery of losses from discontinued operations in the future if such liabilities are not required to be paid.
8. Noncontrolling Interests, Partnerships and Joint Ventures
Redeemable noncontrolling interests represent the third parties’ share of the assets of the three parks that are less than wholly-owned, SFOT and SFOG. Noncontrolling interests represent the third parties’ share of the assets of HWP.
The following table presents a rollforward of redeemable noncontrolling interests in SFOT and SFOG:
|
Balance at January 1, 2010 |
|
$ |
355,933,000 |
|
|
Purchase of redeemable units of SFOT and SFOG |
|
— |
|
|
|
Net income attributable to noncontrolling interests |
|
— |
|
|
|
Distributions to noncontrolling interests |
|
— |
|
|
|
Balance at March 31, 2010 |
|
$ |
355,933,000 |
|
See Notes 6 and 7 for a description of the partnership arrangements applicable to SFOT and SFOG, the accounts of which are included in our condensed financial statements.
As a result of adopting FASB ASC 810, we consolidated HWP in our consolidated financial statements beginning with the first quarter of 2010. The following table presents a rollforward of noncontrolling interests in HWP:
|
Balance at January 1, 2010 |
|
$ |
5,016,000 |
|
|
Net income attributable to noncontrolling interests |
|
84,000 |
|
|
|
Distributions to noncontrolling interests |
|
— |
|
|
|
Balance at March 31, 2010 |
|
$ |
5,100,000 |
|
Prior to adopting FASB ASC 810, we accounted for our interests in HWP under the equity method in accordance with the previously established accounting guidance. As of December 31, 2009, we included our investment of $1,800,000 in deposits and other assets in the accompanying condensed consolidated balance sheets. See Note 2(k).
On June 18, 2007, we acquired a 40% interest in a venture that owns 100% of dick clark productions, inc. (“DCP”). The other investor in the venture, Red Zone Capital Partners II, L.P. (“Red Zone”), is managed by two of our former directors, Daniel M. Snyder and Dwight C. Schar. During the fourth quarter of 2007, an additional third party investor purchased approximately 2.0% of the interest in DCP from us and Red Zone. As a result, our ownership interest is approximately 39.2% at March 31, 2010. We have accounted for our investment under the equity method and have included our investment of $43,523,000 and $43,453,000 as of March 31, 2010 and December 31, 2009, respectively, in deposits and other assets in the accompanying condensed consolidated balance sheets.
9. Business Segments
We manage our operations on an individual park location basis. Discrete financial information is maintained for each park and provided to our corporate management for review and as a basis for decision making. The primary performance measures used to allocate resources are park earnings before interest, tax expense, depreciation and amortization (Park EBITDA) and Park Free Cash Flow (Park EBITDA less park capital expenditures). All of our parks provide similar products and services through a similar process to the same class of customer through a consistent method. We also believe that the parks share common economic characteristics. As such, we have only one reportable segment — theme parks. The following tables present segment financial information and a reconciliation of the primary segment performance measure to loss from continuing operations before income taxes. Park level expenses exclude all non-cash operating expenses, principally depreciation and amortization and all non-operating expenses.
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|
Three months ended |
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March 31, |
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2010 |
|
2009 |
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||
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(in thousands) |
|
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|
Theme park revenue |
|
$ |
57,263 |
|
$ |
51,102 |
|
|
Theme park cash expenses |
|
(106,553 |
) |
(97,524 |
) |
||
|
Aggregate park EBITDA |
|
(49,290 |
) |
(46,422 |
) |
||
|
Equity in income (loss) of partnerships — EBITDA |
|
2,244 |
|
2,095 |
|
||
|
Corporate expenses |
|
(12,160 |
) |
(15,148 |
) |
||
|
Stock-based compensation |
|
(598 |
) |
(839 |
) |
||
|
Other income (expense) |
|
639 |
|
(1,669 |
) |
||
|
Equity in income (loss) of partnerships |
|
(2,427 |
) |
(1,906 |
) |
||
|
Depreciation and amortization |
|
(36,748 |
) |
(34,105 |
) |
||
|
Loss on disposal of fixed assets |
|
(570 |
) |
(3,054 |
) |
||
|
Reorganization items |
|
(20,461 |
) |
— |
|
||
|
Interest expense |
|
(60,632 |
) |
(39,337 |
) |
||
|
Interest income |
|
197 |
|
421 |
|
||
|
Loss from continuing operations before income taxes and discontinued operations |
|
$ |
(179,806 |
) |
$ |
(139,964 |
) |
All of our parks are located in the United States except one park located in Mexico City, Mexico and one located in Montreal, Canada. The following information reflects our long-lived assets, revenues and income (loss) from continuing operations by domestic and foreign categories as of and for the first three months of 2010 and 2009:
|
|
|
(in thousands) |
|
|||||
|
|
|
Domestic |
|
Foreign |
|
Total |
|
|
|
2010 |
|
|
|
|
|
|
|
|
|
Long-lived assets |
|
$ |
2,436,846 |
|
134,494 |
|
2,571,340 |
|
|
Revenue |
|
43,814 |
|
13,449 |
|
57,263 |
|
|
|
Loss from continuing operations before income taxes and discontinued operations |
|
(177,178 |
) |
(2,628 |
) |
(179,806 |
) |
|
|
2009 |
|
|
|
|
|
|
|
|
|
Long-lived assets |
|
$ |
2,459,442 |
|
112,105 |
|
2,571,547 |
|
|
Revenue |
|
39,442 |
|
11,660 |
|
51,102 |
|
|
|
Loss from continuing operations before income taxes and discontinued operations |
|
(138,243 |
) |
(1,721 |
) |
(139,964 |
) |
|
Long-lived assets include property and equipment and intangible assets.
10. Pension Benefits
We froze our pension plan effective March 31, 2006, pursuant to which most participants no longer earned future pension benefits. Effective February 16, 2009, the remaining participants in the pension plan no longer earned future benefits.
Components of Net Periodic Cost (Benefit)
|
|
|
Three months ended
|
|
||||
|
|
|
2010 |
|
2009 |
|
||
|
Service cost |
|
$ |
— |
|
$ |
233,000 |
|
|
Interest cost |
|
2,421,000 |
|
2,413,000 |
|
||
|
Expected return on plan assets |
|
(2,420,000 |
) |
(2,082,000 |
) |
||
|
Amortization of net actuarial loss |
|
203,000 |
|
333,000 |
|
||
|
Curtailment loss |
|
— |
|
70,000 |
|
||
|
Total net periodic cost |
|
$ |
204,000 |
|
$ |
967,000 |
|
Weighted-Average Assumptions Used To Determine Net Cost
|
|
|
Three months ended
|
|
||
|
|
|
2010 |
|
2009 |
|
|
Discount rate |
|
5.900 |
% |
6.125 |
% |
|
Rate of compensation increase |
|
N/A |
|
4.000 |
% |
|
Expected return on plan assets |
|
7.500 |
% |
7.500 |
% |
Employer Contributions
During the three months ended March 31, 2010, we made pension contributions of $540,000.
11. Supplemental Condensed Consolidated Financial Information
The following tables present condensed consolidated financial information, segregating those entities that have filed for re-organization under Chapter 11 of the Bankruptcy Code and those that have not filed for re-organization under Chapter 11 of the Bankruptcy Code.
|
|
|
March 31, 2010 |
|
|||||||
|
|
|
Filers |
|
Non-filers |
|
Eliminations |
|
Consolidated |
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
68,390,000 |
|
18,327,000 |
|
— |
|
86,717,000 |
|
|
Account receivable |
|
15,190,000 |
|
8,830,000 |
|
— |
|
24,020,000 |
|
|
|
Receivables from non-filers |
|
64,209,000 |
|
— |
|
(64,209,000 |
) |
— |
|
|
|
Other current assets |
|
67,825,000 |
|
21,367,000 |
|
— |
|
89,192,000 |
|
|
|
Total current assets |
|
215,614,000 |
|
48,524,000 |
|
(64,209,000 |
) |
199,929,000 |
|
|
|
Property and equipment, net |
|
1,155,892,000 |
|
354,309,000 |
|
— |
|
1,510,201,000 |
|
|
|
Intangible assets, net |
|
882,123,000 |
|
179,016,000 |
|
— |
|
1,061,139,000 |
|
|
|
Investments in non-filers |
|
(43,382,000 |
) |
— |
|
43,382,000 |
|
— |
|
|
|
Other assets |
|
111,109,000 |
|
1,524,000 |
|
— |
|
112,633,000 |
|
|
|
Total assets |
|
$ |
2,321,356,000 |
|
583,373,000 |
|
(20,827,000 |
) |
2,883,902,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES and STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities not subject to compromise: |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities |
|
$ |
156,736,000 |
|
41,068,000 |
|
— |
|
197,804,000 |
|
|
Payables to filers |
|
— |
|
64,209,000 |
|
(64,209,000 |
) |
— |
|
|
|
Current portion of long-term debt |
|
287,368,000 |
|
68,774,000 |
|
— |
|
356,142,000 |
|
|
|
Total current liabilities not subject to compromise |
|
444,104,000 |
|
174,051,000 |
|
(64,209,000 |
) |
553,946,000 |
|
|
|
Long-term debt |
|
818,331,000 |
|
634,000 |
|
— |
|
818,965,000 |
|
|
|
Other long-term liabilities |
|
79,523,000 |
|
91,037,000 |
|
— |
|
170,560,000 |
|
|
|
Total liabilities not subject to compromise |
|
1,341,958,000 |
|
265,722,000 |
|
(64,209,000 |
) |
1,543,471,000 |
|
|
|
Liabilities subject to compromise |
|
1,741,971,000 |
|
— |
|
— |
|
1,741,971,000 |
|
|
|
Total liabilities |
|
3,083,929,000 |
|
265,722,000 |
|
(64,209,000 |
) |
3,285,442,000 |
|
|
|
Redeemable noncontrolling interests |
|
— |
|
355,933,000 |
|
— |
|
355,933,000 |
|
|
|
Stockholders’ deficit: |
|
(762,573,000 |
) |
(43,382,000 |
) |
43,382,000 |
|
(762,573,000 |
) |
|
|
Noncontrolling interest |
|
— |
|
5,100,000 |
|
— |
|
5,100,000 |
|
|
|
Total stockholders’ deficit: |
|
(762,573,000 |
) |
(38,282,000 |
) |
43,382,000 |
|
(757,473,000 |
) |
|
|
Total liabilities and stockholders’ deficit |
|
$ |
2,321,356,000 |
|
583,373,000 |
|
(20,827,000 |
) |
2,883,902,000 |
|
|
|
|
December 31, 2009 |
|
|||||||
|
|
|
Filers |
|
Non-filers |
|
Eliminations |
|
Consolidated |
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
138,583,000 |
|
26,247,000 |
|
— |
|
164,830,000 |
|
|
Account receivable |
|
8,652,000 |
|
11,210,000 |
|
— |
|
19,862,000 |
|
|
|
Receivables from non-filers |
|
74,698,000 |
|
— |
|
(74,698,000 |
) |
— |
|
|
|
Other current assets |
|
54,882,000 |
|
15,573,000 |
|
— |
|
70,455,000 |
|
|
|
Total current assets |
|
276,815,000 |
|
53,030,000 |
|
(74,698,000 |
) |
255,147,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
1,168,512,000 |
|
308,720,000 |
|
— |
|
1,477,232,000 |
|
|
|
Intangible assets, net |
|
882,343,000 |
|
178,282,000 |
|
— |
|
1,060,625,000 |
|
|
|
Investments in non-filers |
|
(35,367,000 |
) |
— |
|
35,367,000 |
|
— |
|
|
|
Other assets |
|
113,405,000 |
|
1,243,000 |
|
— |
|
114,648,000 |
|
|
|
Total assets |
|
$ |
2,405,708,000 |
|
541,275,000 |
|
(39,331,000 |
) |
2,907,652,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES and STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities not subject to compromise: |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities |
|
$ |
92,236,000 |
|
22,462,000 |
|
— |
|
114,698,000 |
|
|
Payables to filers |
|
— |
|
74,698,000 |
|
(74,698,000 |
) |
— |
|
|
|
Current portion of long-term debt |
|
285,240,000 |
|
23,509,000 |
|
— |
|
308,749,000 |
|
|
|
Total current liabilities not subject to compromise |
|
377,476,000 |
|
120,669,000 |
|
(74,698,000 |
) |
423,447,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
820,491,000 |
|
9,035,000 |
|
— |
|
829,526,000 |
|
|
|
Other long-term liabilities |
|
100,691,000 |
|
91,005,000 |
|
— |
|
191,696,000 |
|
|
|
Total liabilities not subject to compromise |
|
1,298,658,000 |
|
220,709,000 |
|
(74,698,000 |
) |
1,444,669,000 |
|
|
|
Liabilities subject to compromise |
|
1,691,224,000 |
|
— |
|
— |
|
1,691,224,000 |
|
|
|
Total liabilities |
|
2,989,882,000 |
|
220,709,000 |
|
(74,698,000 |
) |
3,135,893,000 |
|
|
|
Redeemable noncontrolling interests |
|
— |
|
355,933,000 |
|
— |
|
355,933,000 |
|
|
|
Stockholders’ deficit: |
|
(584,174,000 |
) |
(35,367,000 |
) |
35,367,000 |
|
(584,174,000 |
) |
|
|
Total liabilities and stockholders’ deficit |
|
$ |
2,405,708,000 |
|
541,275,000 |
|
(39,331,000 |
) |
2,907,652,000 |
|
|
|
|
Three Months Ended March 31, 2010 |
|
|||||||
|
|
|
Filers |
|
Non-filers |
|
Eliminations |
|
Consolidated |
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Theme park admissions |
|
$ |
12,013,000 |
|
11,818,000 |
|
— |
|
23,831,000 |
|
|
Theme park food, merchandise and other |
|
9,397,000 |
|
11,446,000 |
|
— |
|
20,843,000 |
|
|
|
Sponsorship, licensing and other fees |
|
5,885,000 |
|
2,408,000 |
|
— |
|
8,293,000 |
|
|
|
Accommodations revenue |
|
— |
|
4,296,000 |
|
— |
|
4,296,000 |
|
|
|
Total revenue |
|
27,295,000 |
|
29,968,000 |
|
— |
|
57,263,000 |
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
56,283,000 |
|
23,462,000 |
|
— |
|
79,745,000 |
|
|
|
Selling, general and administrative |
|
26,301,000 |
|
7,769,000 |
|
— |
|
34,070,000 |
|
|
|
Costs of products sold |
|
2,387,000 |
|
3,109,000 |
|
— |
|
5,496,000 |
|
|
|
Depreciation |
|
27,910,000 |
|
8,611,000 |
|
— |
|
36,521,000 |
|
|
|
Amortization |
|
221,000 |
|
6,000 |
|
— |
|
227,000 |
|
|
|
Loss on disposal of assets |
|
3,312,000 |
|
(2,742,000 |
) |
— |
|
570,000 |
|
|
|
Interest expense, net |
|
58,675,000 |
|
1,760,000 |
|
— |
|
60,435,000 |
|
|
|
Affiliate interest |
|
(282,000 |
) |
282,000 |
|
— |
|
— |
|
|
|
Equity in loss of partnerships |
|
183,000 |
|
— |
|
— |
|
183,000 |
|
|
|
Other income |
|
(489,000 |
) |
(150,000 |
) |
— |
|
(639,000 |
) |
|
|
Loss from continuing operations before reorganization items, income taxes and discontinued operations |
|
(147,206,000 |
) |
(12,139,000 |
) |
— |
|
(159,345,000 |
) |
|
|
Reorganization items, net |
|
20,461,000 |
|
— |
|
— |
|
20,461,000 |
|
|
|
Loss from continuing operations before income taxes and discontinued operations |
|
(167,667,000 |
) |
(12,139,000 |
) |
— |
|
(179,806,000 |
) |
|
|
Income tax expense |
|
67,000 |
|
846,000 |
|
— |
|
913,000 |
|
|
|
Loss from continuing operations before discontinued operations |
|
(167,734,000 |
) |
(12,985,000 |
) |
— |
|
(180,719,000 |
) |
|
|
Discontinued operations |
|
(2,773,000 |
) |
— |
|
— |
|
(2,773,000 |
) |
|
|
Net loss |
|
(170,507,000 |
) |
(12,985,000 |
) |
— |
|
(183,492,000 |
) |
|
|
Less: Net income attributable to noncontrolling interests |
|
— |
|
(84,000 |
) |
— |
|
(84,000 |
) |
|
|
Net loss attributable to Six Flags Entertainment Corporation |
|
$ |
(170,507,000 |
) |
(13,069,000 |
) |
— |
|
(183,576,000 |
) |
|
|
|
Three Months Ended March 31, 2010 |
|
|||||||
|
|
|
Filers |
|
Non-filers |
|
Eliminations |
|
Consolidated |
|
|
|
Cash used in operating activities |
|
$ |
(52,328,000 |
) |
(6,794,000 |
) |
— |
|
(59,122,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities |
|
(17,857,000 |
) |
(6,650,000 |
) |
— |
|
(24,507,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in) financing activities |
|
(8,000 |
) |
4,500,000 |
|
— |
|
4,492,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
— |
|
1,024,000 |
|
— |
|
1,024,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
(70,193,000 |
) |
(7,920,000 |
) |
— |
|
(78,113,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
138,583,000 |
|
26,247,000 |
|
— |
|
164,830,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
68,390,000 |
|
18,327,000 |
|
— |
|
86,717,000 |
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
General
Results of operations for the three-month periods ended March 31, 2010 and 2009 are not indicative of the results expected for the full year. In particular, our park operations contribute a significant majority of their annual revenue during the period from Memorial Day to Labor Day each year while expenses are incurred year round.
Our revenue is primarily derived from the sale of tickets for entrance to our parks (approximately 42% of total revenues in the first three months of 2010) and the sale of food and beverages, merchandise, games and attractions, parking and other services inside our parks, as well as sponsorship, licensing and other fees.
Our principal costs of operations include salaries and wages, employee benefits, advertising, third party services, repairs and maintenance, utilities and insurance. A large portion of our expenses is relatively fixed. Costs for full-time employees, repairs and maintenance, utilities, advertising and insurance do not vary significantly with attendance.
Recent Developments
On June 13, 2009, the Debtors filed the Chapter 11 Filing and on April 1, 2010, the Debtors filed the Plan with the Bankruptcy Court. On April 30, 2010, the Bankruptcy Court entered the Confirmation Order, dated April 29, 2010, which approved and confirmed the Plan. On the Effective Date, the Debtors emerged from Chapter 11, and in connection with the Plan, the Debtors entered into the Exit Facilities and the New TW Loan. See Note 1 to the Condensed Consolidated Financial Statements.
In February 2010, in connection with the Chapter 11 Filing, we decided to reject the lease with the Kentucky State Fair Board relating to our Louisville park and we no longer operate the park. As a result, we recorded appropriate provisions for the impairment of our Louisville park operations, which was included in reorganization items in the statement of operations for the quarter ended December 31, 2009. The condensed consolidated financial statements as of and for all periods presented reflect the assets, liabilities and results of operations for our Louisville park as discontinued operations.
Basis of Presentation
We follow the accounting prescribed by FASB ASC 852, which provides guidance for periods subsequent to a Chapter 11 filing, among other things, the presentation of liabilities that are and are not subject to compromise by the Bankruptcy Court proceedings, as well as the treatment of interest expense and presentation of costs associated with the proceedings.
In accordance with FASB ASC 852 debt discounts or premiums as well as debt issuance costs should be viewed as valuations of the related debt. When the debt has become an allowed claim and the allowed claim differs from the carrying amount of the debt, the recorded amount should be adjusted to the allowed claim. During the second quarter of 2009, we wrote off the costs that were associated with our unsecured debt that is included in liabilities subject to compromise at March 31, 2010. See Note 2(c) to the Condensed Consolidated Financial Statements. Premiums and discounts as well as debt issuance cost on debts that are not subject to compromise, such as fully secured claims, have not been adjusted.
Our condensed consolidated financial statements do not purport to reflect or provide for the consequences of our Chapter 11 Filing. In particular, the financial statements do not purport to show (1) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities, (2) as to liabilities arising prior to the Petition Date, the amounts that may be allowed for claims or contingencies, or the status and priority thereof, (3) as to stockholders’ equity accounts, the effect of any changes that may be made in our capitalization, or (4) as to operations, the effect of any changes that may be made to our business.
Negative events associated with the Chapter 11 Filing could adversely affect revenues and the Debtors’ relationship with customers, as well as with vendors and employees, which in turn could adversely affect the Debtors’ operations and financial condition.
Critical Accounting Policies
In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles. The 2009 Annual Report discusses our most critical accounting policies. Since December 31, 2009, there have been no material developments with respect to any critical accounting policies discussed in the 2009 Annual Report.
Summary of Operations
Summary data for the three-month periods ended March 31, 2010 and 2009 were as follows (in thousands, except per capita total revenue and percentage changes):
|
|
|
Unaudited
|
|
Percentage
|
|
||||
|
|
|
2010 |
|
2009 |
|
(%) |
|
||
|
Total revenue |
|
$ |
57,263 |
|
$ |
51,102 |
|
12 |
|
|
Operating expenses |
|
79,745 |
|
74,120 |
|
8 |
|
||
|
Selling, general and administrative |
|
34,070 |
|
34,693 |
|
(2 |
) |
||
|
Costs of products sold |
|
5,496 |
|
4,698 |
|
17 |
|
||
|
Depreciation and amortization |
|
36,748 |
|
34,105 |
|
8 |
|
||
|
Loss on disposal of assets |
|
570 |
|
3,054 |
|
(81 |
) |
||
|
Interest expense, net |
|
60,435 |
|
38,916 |
|
55 |
|
||
|
Equity in (income) loss of partnerships |
|
183 |
|
(189 |
) |
(197 |
) |
||
|
Other (income) expense |
|
(639 |
) |
1,669 |
|
(138 |
) |
||
|
Loss from continuing operations before reorganization items, income taxes and discontinued operations |
|
(159,345 |
) |
(139,964 |
) |
14 |
|
||
|
Reorganization items |
|
20,461 |
|
— |
|
N/A |
|
||
|
Loss from continuing operations before income taxes and discontinued operations |
|
(179,806 |
) |
(139,964 |
) |
28 |
|
||
|
Income tax benefit (expense) |
|
913 |
|
(2,930 |
) |
(131 |
) |
||
|
Loss from continuing operations before discontinued operations |
|
$ |
(180,719 |
) |
$ |
(137,034 |
) |
32 |
|
|
|
|
|
|
|
|
|
|
||
|
Other Data: |
|
|
|
|
|
|
|
||
|
Attendance |
|
1,261 |
|
1,224 |
|
3 |
|
||
|
Total revenue per capita (excludes $4,296 of revenue from HWP that is not driven by attendance) |
|
$ |
42.02 |
|
$ |
41.76 |
|
1 |
|
Revenue in the first quarter of 2010 totaled $57.3 million compared to $51.1 million for the first quarter of 2009, representing a 12% increase. The increase is primarily related to $4.3 million of revenues from HWP, which was consolidated in the first quarter of 2010 as a result of adopting new consolidation accounting rules (FASB ASC 810). Excluding the consolidation of HWP, total revenues increased $1.8 million, or 4%, which is attributable to a slight increase in attendance coupled with a $0.26 (1%) increase in total revenue per capita (representing total revenue (less $4.3 million of revenues from HWP) divided by total attendance). The attendance increase is primarily related to more favorable weather conditions and a 2% increase in operating days in the first quarter of 2010 compared to the first quarter of 2009. The increase in total revenue per capita reflects increased guest spending on food and beverage, rentals, retail, parking, games and other in-park revenues as well as decreased guest spending on admissions and decreased sponsorship, licensing and other fees. Per capita guest spending, which excludes sponsorship, licensing and other fees, increased $1.17 (3%) to $35.44 from $34.27 in the first quarter of 2009. Admissions revenue per capita decreased $0.07 (0%) in the first quarter of 2010
compared to the prior year period, and was driven primarily by price and ticket mix mostly offset by the positive exchange rate impact on admissions revenue per capita at our park in Mexico of $0.47. Increased revenues from food and beverage, rentals, retail, parking, games and other guest services resulted in a $1.24 (8%) increase in non-admissions per capita guest spending in the first quarter of 2010 compared to the first quarter of 2009, of which approximately $0.55 was attributable to the stronger Mexican peso.
Operating expenses for the first quarter of 2010 increased $5.6 million (8%) compared to expenses in the prior year period. The increase was primarily driven by: (i) expenses of HWP ($1.9 million), (ii) increased labor related expenses ($1.7 million), (iii) an increase in operating taxes ($1.0 million), and (iv) an increase in expenses related to the exchange rate impact at our parks in Montreal and Mexico City ($0.8 million). The increase was partially offset by a decrease in employee benefits expense ($0.8 million).
Selling, general and administrative expenses for the first quarter of 2010 decreased $0.6 million (2%) compared to the first quarter of 2009. The decrease primarily reflects (i) decreased marketing expenses ($1.3 million) primarily related to the timing of expenditures, (ii) decreased salaries, wages and benefits ($1.3 million) primarily due to a reduction in cash-based incentive compensation and employee benefits, and (iii) a decrease in real estate taxes ($0.5 million), partially offset by (i) increased insurance costs ($1.3 million), (ii) an increase in expenses related to the exchange rate impact at our parks in Montreal and Mexico City ($0.5 million), and (iii) expenses of HWP ($0.5 million).
Costs of products sold in the first quarter of 2010 increased $0.8 million (17%) compared to the same quarter of the prior year primarily due to increased revenues in food and beverage, retail and games coupled with the exchange rate impact at our park in Mexico. As a percentage of our in-park guest spending (excluding HWP), cost of products sold decreased slightly in the first quarter of 2010.
Depreciation and amortization expense for the first quarter of 2010 increased $2.6 million (8%) compared to the first quarter of 2009. The increase is primarily attributable to our on-going capital program as well as an increase in depreciation expense related to the exchange rate impact at our parks in Canada and Mexico.
Loss on disposal of assets decreased by $2.5 million in the first quarter of 2010 compared to the prior year quarter primarily related to insurance proceeds received for the flood that occurred at our Atlanta parks during the third quarter of 2009, partially offset by the write-off of several assets no longer being utilized in park operations in the first quarter of 2010.
Interest expense, net, for the first quarter of 2010 increased $21.5 million (55%) compared to the first quarter of 2009, primarily reflecting an additional $45.3 million of interest accrued on the $400 million outstanding aggregate principal amount of the 2016 Notes to record the liability at the probable estimated allowed claim as of March 31, 2010. Due to an unresolved make-whole claim, the debt and accrued interest remained classified as liabilities subject to compromise . The increase in interest expense was partially offset by the cessation of interest accruals and the write-off of discounts, premiums and deferred financing costs on our unsecured debt which is subject to compromise as a result of the Chapter 11 Filing, as well as lower effective rates.
Income tax expense was $0.9 million for the first quarter of 2010 compared to a $2.9 million benefit for the first quarter of 2009, primarily reflecting a 2009 non-cash income tax credit of approximately $3.6 million due to a decrease in our valuation allowance for deferred tax assets that are primarily derived from our carryforward of net operating losses.
Liquidity, Capital Commitments and Resources
Our principal sources of liquidity are cash generated from operations, funds from borrowings and existing cash on hand. Our principal uses of cash include the funding of working capital obligations, debt service, investments in our parks (including capital projects), and payments to our partners in the Partnership Parks. SFI did not pay a dividend on SFI’s common stock during 2009 or the three months ended March 31, 2010, and SFEC does not currently anticipate paying any dividends on the Common Stock in the foreseeable future. We believe that, based on historical and anticipated operating results, cash flows
from operations, available cash and available amounts under the Exit Facilities, the New TW Loan and the Delayed Draw Equity Purchase, our liquidity will be adequate to meet our needs, including anticipated requirements for working capital, capital expenditures, scheduled debt requirements and obligations under arrangements relating to the Partnership Parks.
Our current and future liquidity is greatly dependent upon our operating results, which are driven largely by overall economic conditions as well as the price and perceived quality of the entertainment experience at our parks. Our liquidity could also be adversely affected by disruption in the availability of credit as well as unfavorable weather, contagious diseases, such as swine flu, accidents or the occurrence of an event or condition at our parks, including terrorist acts or threats, negative publicity or significant local competitive events, that could significantly reduce paid attendance and, therefore, revenue at any of our parks. See “Cautionary Note Regarding Forward-Looking Statements” and the references to the Risk Factors contained in the filings cited therein. If such an adverse event were to occur, we may be unable to borrow under the Exit Revolving Loan or be required to repay amounts outstanding under the Exit Facilities and/or may need to seek additional financing. In addition, we expect that we may be required to refinance all or a significant portion of our existing debt on or prior to maturity and potentially seek additional financing. The degree to which we are leveraged could adversely affect our ability to obtain any additional financing. See “Cautionary Note Regarding Forward-Looking Statements.”
As of the Effective Date, our total indebtedness was approximately $1.0 billion. Based on estimated interest rates for floating-rate debt, annual cash interest payments for the twelve months following the Effective Date on non-revolving credit debt outstanding on that date and anticipated levels of working capital revolving borrowings for the period will aggregate approximately $77 million, net of cash interest expected to be received. None of the Exit Facilities mature before June 30, 2015 except that $7.7 million of principal amortizes each year commencing in March 2013. We currently plan on spending approximately $91.0 million (net of property insurance recoveries) on capital expenditures for the 2010 calendar year. After giving effect to the transactions consummated under the Plan, as of the Effective Date, we had approximately $65 million of unrestricted cash, $120 million available for borrowing under the Exit Revolving Loan and $25 million available from the potential issuance of the Delayed Draw Shares pursuant to the Delayed Draw Equity Purchase.
Due to the seasonal nature of our business, we are largely dependent upon the Exit Revolving Loan totaling $120.0 million to fund off-season expenses. Our ability to borrow under the Exit Revolving Loan is dependent upon compliance with certain conditions, including a senior leverage ratio, minimum interest coverage, a first lien leverage ratio and the absence of any material adverse change in our business or financial condition. If we were to become unable to borrow under the Exit Revolving Loan, we would likely be unable to pay in full our off-season obligations. A default under the Exit Revolving Loan could permit the lenders under the other Exit Facilities to accelerate the obligations thereunder. The Exit Revolving Loan expires on June 30, 2015. The terms and availability of the Exit Facilities and other indebtedness are not affected by changes in the ratings issued by rating agencies in respect of our indebtedness.
As more fully described in Note 1 to the Condensed Consolidated Financial Statements, on the Effective Date we entered into a $150,000,000 New TW Loan to provide a source of funds to permit us to purchase limited partnership units in the Partnership Parks above specified levels pursuant to our annual offer to purchase. We will not make any borrowings under the New TW Loan to fund our “put” obligations in 2010. See Note 7 to the Condensed Consolidated Financial Statements for a more detailed description of our obligations under the Partnership Park arrangements.
For a more detailed descriptions of the indebtedness incurred on the Effective Date, see Note 1(b) to the Condensed Consolidated Financial Statements.
During the three months ended March 31, 2010, net cash used in operating activities was $59.1 million. Net cash used in investing activities in the first three months of 2010 was $24.5 million, consisting primarily of capital expenditures, partially offset by the property insurance proceeds we received for insurance claims related to our parks in Atlanta and New Orleans. Net cash provided by financing activities in the first three months of 2010 was $4.5 million, primarily due to proceeds from the borrowings under the revolving facilities of the Partnership Parks.
Our net operating cash flows are largely driven by attendance and per capita spending levels because much of our cash-based expenses are relatively fixed and do not vary significantly with either attendance or per capita spending. These cash-based operating expenses include salaries and wages, employee benefits, advertising, third party services, repairs and maintenance, utilities and insurance.
As of March 31, 2010, there have been no material changes in our market risk exposure from that disclosed in the 2009 Annual Report, with the exception that interest expense was stayed by the Bankruptcy Court for all Prepetition Notes, thereby reducing the impact of interest rate fluctuations. See Note 6 to the Condensed Consolidated Financial Statements regarding the termination of our interest rate swap agreements as a result of the Chapter 11 Filing.
The Company’s management evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of March 31, 2010. Based on their evaluation, the Company’s management concluded that the Company’s disclosure controls and procedures were effective (i) to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) to ensure that information required to be disclosed by the Company in the reports that it submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended March 31, 2010, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
The nature of the industry in which we operate tends to expose us to claims by guests, generally for injuries. Accordingly, we are party to various legal actions arising in the normal course of business. Historically, the great majority of these claims have been minor. Although we believe that we are adequately insured against guests’ claims, if we become subject to damages that cannot by law be insured against, such as punitive damages or certain intentional misconduct by employees, there may be a material adverse effect on our operations.
Certain legal proceedings in which we are involved are discussed in Item 3 of the 2009 Annual Report and in Notes 1 and 7 to the Condensed Consolidated Financial Statements. There are no material recent developments concerning our legal proceedings. To the extent any legal proceedings were asserted against a Debtor prior to the Petition Date, such proceedings have been stayed since the Petition Date with respect to such Debtor as a result of the Chapter 11 Filing. As of the Effective Date, the stay has been lifted with respect to personal injury proceedings against the Debtors. Most other legal proceedings asserted against the Debtors are enjoined pursuant to the Plan.
The business, results of operations and financial condition, and therefore the value of Holdings’ securities, are subject to a number of risks. In addition to the risk factors discussed below and the other information set forth in this Quarterly Report, you should carefully consider the risk factors discussed under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in the 2009 Annual Report and the Current Reports on Form 8-K filed with the SEC on March 19, 2010 and April 2, 2010.
RECENT CHANGES IN OUR SENIOR MANAGEMENT MAY CAUSE UNCERTAINTY IN, OR BE DISRUPTIVE TO, OUR BUSINESS.
We have recently experienced significant changes in our senior management and our board of directors. On May 11, 2010, Alexander “Al” Weber, Jr., was named our President and Interim Chief Executive Officer, and we announced that we are retaining an executive search firm and will consider both internal and external candidates to serve as our Chief Executive Officer on a permanent basis. Effective as of May 11, 2010, Mark Shapiro is no longer serving as our President and Chief Executive Officer, and effective as of June 10, 2010, he will no longer be with the Company. In addition, Mark Jennings resigned as a member of our board of directors effective as of May 11, 2010. These changes in our senior management and board of directors may be disruptive to our business and, during the transition period, there may be uncertainly among investors, employees and others concerning our future direction and performance.
WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR INDEBTEDNESS AND TO FUND CAPITAL EXPENDITURES AND OTHER OBLIGATIONS. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
Following our emergence from Chapter 11 under the Plan, we have approximately $1.0 billion of outstanding indebtedness on a pro forma basis, excluding any amounts under the Exit Revolving Loan. Our ability to make scheduled payments of principal of, or to pay the interest on our indebtedness, or to fund planned capital expenditures will depend on our future performance, which, to a large extent, is subject to general economic conditions, financial, competitive, legislative, regulatory, political, business and other factors that are beyond our control. Based on the terms of the Exit Facility Loans, which are subject to change, and current interest rates, SFEC expects that its annual cash interest expense will be approximately $77 million.
We must satisfy the following obligations with respect to the Partnership Parks:
· We must make annual distributions to our partners in the Partnership Parks, which will amount to approximately $62.3 million in 2010 (of which SFEC will receive approximately $26.3 million in 2010 as a result of our ownership interest in the Partnership Parks as of March 31, 2010) with similar amounts (adjusted for changes in cost of living) payable in future years.
· We must spend a minimum of approximately 6% of each park’s annual revenues over specified periods for capital expenditures.
· Each year we must offer to purchase a specified maximum number of partnership units from our partners in the Partnership Parks, which number accumulates to the extent units are not tendered. The annual incremental unit purchase obligation (without taking into account accumulation from prior years) aggregates approximately $31.0 million for both parks based on current purchase prices. As we purchase additional units, we are entitled to a proportionate increase in our share of the minimum annual distributions. In 2010, we received “put” notices from holders of partnership units with an aggregate “put” price of approximately $5.6 million, of which the general partner of the Georgia limited partnership elected to purchase 50% of a portion of the Georgia units that were “put” for a total purchase price of approximately $0.8 million. We did not make any borrowings under the New TW Loan to fund our “put” obligations in 2010. In future years, we may need to incur indebtedness under the New TW Loan to satisfy such unit purchase obligations.
We expect to use cash flow from the operations at the Partnership Parks to satisfy all or part of our annual distribution and capital expenditure obligations with respect to these parks before we use any of our other funds. The two partnerships generated approximately $24.3 million of cash in 2009 from operating activities after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or repayments to SFEC. At March 31, 2010 and December 31, 2009, we had total loans, which are subordinated, outstanding of $233.0 million to the partnerships that own the Partnership Parks, primarily to fund the acquisition of Six Flags White Water Atlanta, working capital and capital improvements. The obligations relating to SFOG continue until 2027 and those relating to SFOT continue until 2028.
Although we are contractually committed to make approximately CAD$4.5 million of capital and other expenditures at La Ronde no later than May 1, 2011 (which we anticipate to be completed in 2010 primarily related to the addition of a new rollercoaster), the vast majority of our capital expenditures in 2010 and beyond will be made on a discretionary basis, although such expenditures are important to the parks’ ability to sustain and grow revenues. We spent $97.9 million on capital expenditures for all of our continuing operations in the 2009 calendar year (net of property insurance recoveries) and we currently plan on spending approximately $91.0 million on capital expenditures in 2010 (net of property insurance recoveries).
Following our emergence from Chapter 11 under the Plan, our high level of debt under the Exit Facility Loans and the New TW Loan and our other obligations could have important negative consequences to us and investors in our securities. These include the following:
· We may not be able to satisfy all of our obligations, including, but not limited to, our obligations under the instruments governing our outstanding debt, which may cause a cross-default or cross-acceleration on other debt we may have incurred.
· We could have difficulties obtaining necessary financing in the future for working capital, capital expenditures, debt service requirements, refinancing or other purposes.
· We will have to use a significant part of our cash flow to make payments on our debt and to satisfy the other obligations set forth above, which may reduce the capital available for operations and expansion.
· Adverse economic or industry conditions may have more of a negative impact on us.
We cannot be sure that cash generated from our parks will be as high as we expect or that our expenses will not be higher than we expect. Because a large portion of our expenses are fixed in any given year, our operating cash flow margins are highly dependent on revenues, which are largely driven by attendance levels, in-park spending and sponsorship and licensing activity. A lower amount of cash generated from our parks or higher expenses than expected, when coupled with our debt obligations, could adversely affect our ability to fund our operations.
OUR EXIT FACILITY CREDIT AGREEMENTS AND THE NEW TW LOAN AGREEMENT INCLUDE FINANCIAL AND OTHER COVENANTS THAT IMPOSE RESTRICTIONS ON OUR FINANCIAL AND BUSINESS OPERATIONS.
As part of the Plan, we entered into the Exit Facility Credit Agreements with various lenders, which Exit Facility Credit Agreements contain financial covenants that require us to maintain a minimum interest coverage ratio, a maximum senior secured leverage ratio and, with respect to the First Lien Credit Agreement, a maximum first lien leverage ratio.
In addition, our Exit Facility Credit Agreements restrict our ability to, among other things:
· incur additional indebtedness,
· incur liens,
· make investments,
· sell assets,
· pay dividends, repurchase stock and make other restricted payments, or
· engage in transactions with affiliates.
We also entered into the New TW Loan Agreement and New TW Guarantee Agreement with the New TW Lender. The New TW Loan Agreement and New TW Guarantee Agreement contain covenants and events of default on substantially similar terms as those contained in the First Lien Credit Agreement.
Events beyond our control, such as weather and economic, financial and industry conditions, may affect our ability to continue meeting our financial covenant ratios under the Exit Facility Credit Agreements and the New TW Loan Agreement. The need to comply with these financial covenants and restrictions could limit our ability to execute our strategy and expand our business or prevent us from borrowing more money when necessary.
If we breach any of the covenants contained in the Exit Facility Credit Agreements or the New TW Loan Agreement, the principal of and accrued interest on the debt outstanding thereunder could become immediately due and payable. In addition, that default could constitute a cross-default under the instruments governing other indebtedness we may incur. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and the debt would become immediately due and payable. If that happens, we may not be able to satisfy our debt obligations, which would have a material adverse effect on our operations and the interests of our creditors and stockholders.
We can make no assurances that we will be able to comply with these restrictions in the future or that our compliance would not cause us to forego opportunities that might otherwise be beneficial to us.
HISTORICAL FINANCIAL INFORMATION WILL NOT BE COMPARABLE.
Following the consummation of the Plan, our financial condition and results of operations from and after the Effective Date will not be comparable to the financial condition or results of operations reflected in our historical financial statements. Our Quarterly Report for the period ended June 30, 2010 will reflect the consummation of the Plan.
OUR RESTRUCTURING WILL HAVE OTHER ACCOUNTING IMPLICATIONS.
As a result of our restructuring under Chapter 11 of the Bankruptcy Code, our financial statements will be subject to the accounting prescribed by FASB ASC Topic 852, Reorganizations. Given that the stockholders of SFI prior to the consummation of the Plan received less than 50% of the voting shares of SFI’s common stock following our emergence from Chapter 11, we will apply “Fresh-
Start Reporting,” in which our assets, liabilities and redeemable noncontrolling interests will be recorded at their estimated fair value using the principles of purchase accounting contained in FASB ASC Topic 805, Business Combinations (“FASB ASC 805”). Goodwill, if any, will result if the reorganization value of SFEC exceeds the net total of the fair value of its assets, liabilities and redeemable noncontrolling interests. Adjustments to the carrying amounts could be material and could affect prospective results of operations as balance sheet items are settled, depreciated, amortized or impaired.
CHANGES IN OUR CREDIT RATINGS MAY ADVERSELY AFFECT THE PRICE OF SFEC’S COMMON STOCK AND NEGATIVELY IMPACT OUR ABILITY TO REFINANCE OUR REMAINING DEBT.
Credit rating agencies continually review their ratings for the companies they follow, including us. In May 2010, Moody’s Investors Service (“Moody’s”) updated its ratings of us and assigned a (i) corporate credit rating of “B2,”(ii) debt rating for the First Lien Credit Facility of “B1” and (iii) debt rating for the Second Lien Facility of “Caa1.” Moody’s has placed our corporate credit ratings on “stable outlook.” Also in May 2010, Standard and Poor’s Ratings Service (“S&P” ) assigned a (i) corporate credit rating of “B,” (ii) debt rating for the Exit First Lien Credit Facility of “BB-,” and (iii) debt rating for the Second Lien Facility of “B-.” S&P has placed our corporate credit ratings on “stable outlook.” A further negative change in our ratings or the perception that such a change could occur may further adversely affect the market price of our securities, including the Common Stock and public debt.
HOLDING COMPANY STRUCTURE—ACCESS TO CASH FLOW OF MOST OF SFEC’S SUBSIDIARIES IS LIMITED.
SFEC and SFO are holding companies whose primary assets consist of shares of stock or other equity interests in its subsidiaries, and SFEC and SFO conduct substantially all of their current operations through their subsidiaries. Almost all of their income is derived from their subsidiaries. Accordingly, SFEC is dependent on dividends and other distributions from its subsidiaries to generate the funds necessary to meet its obligations. We had $86.7 million of cash and cash equivalents on a consolidated basis at March 31, 2010, of which $0.1 million was held at SFEC.
Other than SFEC’s interests in the Partnership Parks, all of SFEC’s current operations are conducted by subsidiaries of SFO, SFEC’s principal direct wholly-owned subsidiary. SFEC may, in the future, transfer other assets to SFO or other entities owned by SFEC. The Exit Facility Loans and the New TW Loan will limit the ability of SFO and its subsidiaries to pay dividends or make other distributions to SFEC.
ANTI-TAKEOVER PROVISIONS—PROVISIONS IN SFEC ’S CORPORATE DOCUMENTS AND THE LAW OF THE STATE OF DELAWARE AS WELL AS CHANGE OF CONTROL PROVISIONS IN CERTAIN OF OUR DEBT AND OTHER AGREEMENTS COULD DELAY OR PREVENT A CHANGE OF CONTROL, EVEN IF THAT CHANGE WOULD BE BENEFICIAL TO STOCKHOLDERS, OR COULD HAVE A MATERIALLY NEGATIVE IMPACT ON OUR BUSINESS.
Certain provisions in SFEC’s Restated Certificate of Incorporation, the Exit Facility Credit Agreements and the New TW Loan Agreement may have the effect of deterring transactions involving a change in control of us, including transactions in which stockholders might receive a premium for their shares.
SFEC’s Restated Certificate of Incorporation provides for the issuance of up to 5,000,000 shares of preferred stock with such designations, rights and preferences as may be determined from time to time by SFEC’s board of directors. The authorization of preferred shares empowers SFEC’s board of directors, without further stockholder approval, to issue preferred shares with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of the Common Stock. If issued, the preferred stock could also dilute the holders of SFEC’s the Common Stock and could be used to discourage, delay or prevent a change of control of us.
Additionally, SFEC’s Restated Certificate of Incorporation contains a provision pursuant to
which, for one year following the Effective Date, stockholders are prohibited from calling a special meeting of stockholders for the purpose of removing directors unless a majority of the board of directors as of the Effective Date (the “Initial Board”) calls a special meeting at which 80% of the stockholders would have to approve any such removal. Moreover, under SFEC’s Restated Certificate of Incorporation, there shall be no election of directors for at least one year following the Effective Date unless a majority of the full Initial Board calls an earlier annual meeting.
If the Common Stock is listed on a national securities exchange or held of record by more than 2,000 holders, SFEC will be subject to the anti-takeover provisions of the Delaware General Corporation Law, which could have the effect of delaying or preventing a change of control in some circumstances. These provisions may have the effect of delaying or preventing a change of control. All of these factors could materially adversely affect the price of the Common Stock.
The Exit Facility Credit Agreements and the New TW Loan Agreement contain provisions pursuant to which it is an event of default under the Exit Facility Credit Agreements and the New TW Loan Agreement if any “person” becomes the beneficial owner of more than 35% of the Common Stock. This could deter certain parties from seeking to acquire us and if any “person” were to become the beneficial owner of more than 35% of the Common Stock, we would not be able to repay such indebtedness.
We have the exclusive right to use certain Warner Bros. and DC Comics characters in our theme parks in the United States (except in the Las Vegas metropolitan area), Canada, Mexico and other countries. Warner Bros. can terminate these licenses under certain circumstances, including the acquisition of us by persons engaged in the movie or television industries. This could deter certain parties from seeking to acquire us.
WE MAY BE REQUIRED TO RECOGNIZE CANCELLATION OF INDEBTEDNESS INCOME AND OUR ABILITY TO UTILIZE OUR NET OPERATING LOSS CARRYFORWARDS MAY BE LIMITED IF WE SUCCESSFULLY CONSUMMATE THE PLAN.
For U.S. federal income tax purposes, the Six Flags Group files a consolidated federal income tax return. We estimate that as of March 31, 2010, the Six Flags Group has consolidated NOLs of approximately $2.1 billion.
Pursuant to the Plan, our aggregate outstanding indebtedness was substantially reduced. In general, the discharge of a debt obligation for cash and property (including common stock) having a value less than the amount owed gives rise to cancellation of debt (“COD”) income. However, exception is made for COD income arising in a bankruptcy proceeding. Under this exception, the taxpayer does not include the COD income in its taxable income, but must instead reduce the following tax attributes, in the following order, by the amount of COD income: (i) NOLs (beginning with NOLs for the year of the COD income, then the oldest and then next-to-oldest NOLs, and so on), (ii) general business tax credits (in the order generally taken into account in computing tax liability), (iii) alternative minimum tax credits, (iv) net capital losses (beginning with capital losses for the year of the COD income, then the oldest and then next to oldest capital losses, and so on), (v) tax basis of assets (but not below the liabilities remaining after debt cancellation), (vi) passive activity losses, and (vii) foreign tax credits (in the order generally taken into account in computing tax liability). Alternatively, a debtor may elect to first reduce the basis of its depreciable and amortizable property. The debtor’s tax attributes are not reduced until after determination of the debtor’s tax liability for the year of the COD income. Any COD income in excess of available tax attributes is forgiven, but may result in excess loss account recapture income. We do not expect to have COD income that exceeds our available tax attributes.
The issuance of the Common Stock to creditors pursuant to the Plan caused an “ownership change” under section 382 of the Tax Code. If a corporation undergoes an “ownership change,” the amount of its pre-change losses and certain other tax attributes that may be utilized to offset future taxable income will be subject to an annual “Section 382 limitation” (unless the Bankruptcy Exception, discussed below, applies). Any NOLs that are not utilized in a given year because of the Section 382 limitation remain available for use in future years until their normal expiration date, subject to the Section 382
limitation in such future years. The Section 382 limitation generally is equal to the value of the corporation’s equity immediately before the ownership change multiplied by the applicable “long-term tax-exempt bond rate,” which is published monthly by the Internal Revenue Service. The value of the corporation’s equity is subject to adjustment in the case of certain corporate contractions, the existence of substantial nonbusiness assets and capital contributions. Under one of two special rules for companies in bankruptcy proceedings, the value of the corporation’s equity for purposes of computing the Section 382 limitation is increased to reflect cancellation of debt that occurred in the bankruptcy reorganization. Under this rule, the value of the our equity for purposes of computing our Section 382 limitation will be the lesser of the value of the Common Stock immediately after the ownership change or the value of our assets immediately before the ownership change.
The Section 382 limitation is increased by certain built-in income and gains recognized (or treated as recognized) during the five years following an ownership change (up to the total amount of built-in income and gain that existed at the time of the ownership change). Built-in income for this purpose includes the amount by which tax depreciation and amortization expenses during the five-year period are less than they would have been if our assets had a tax basis on the date of the ownership change equal to their fair market value at such time. Because most of our assets are theme park assets, which are depreciated on an accelerated basis over a seven-year recovery period, it is expected that our NOL limitation for the five years following the ownership change will be substantially increased by built-in income. To the extent the Section 382 limitation exceeds taxable income in a given year, the excess is carried forward and increases the Section 382 limitation in succeeding taxable years.
An alternate bankruptcy exception applies if qualified creditors acquire 50% of the common stock in exchange for their Claims (the “Bankruptcy Exception”). If the Bankruptcy Exception applied, our use of pre-change losses would not be subject to the Section 382 limitation. Instead, our NOLs would be reduced by the amount of interest deducted, during the taxable year that includes the Effective Date and the three preceding taxable years, on claims exchanged for common stock. If a second ownership change occurred during the two years following the Effective Date, our NOLs at the time of the second ownership change would be effectively eliminated. We expect to make an election for the Bankruptcy Exception not to apply.
Alternative minimum tax (“AMT”) is owed on a corporation’s AMT income, at a 20% tax rate, to the extent AMT exceeds the corporation’s regular U.S. federal income tax in a given year. In computing taxable income for AMT purposes, certain deductions and beneficial allowances are modified or eliminated. One modification is a limitation on the use of NOLs for AMT purposes. Specifically, no more than 90% of AMT income can be offset with NOLs (as recomputed for AMT purposes). Therefore, AMT will be owed in years we have positive AMT income, even if all of our regular taxable income for the year is offset with NOLs. As a result, our AMT income (before AMT NOLs) in those years will be taxed at a 2% effective U.S. federal income tax rate (i.e., 10% of AMT income that cannot be offset with NOLs, multiplied by 20% AMT rate). The amount of AMT we pay will be allowed as a nonrefundable credit against regular federal income tax in future taxable year to the extent regular tax exceeds AMT in such years.
SFEC DOES NOT CURRENTLY ANTICIPATE PAYING CASH DIVIDENDS ON ITS COMMON STOCK IN THE FORESEEABLE FUTURE.
SFI did not pay a dividend on SFI’s common stock during 2009 or the three months ended March 31, 2010. SFEC has not paid cash dividends to date on its Common Stock and does not currently anticipate paying any cash dividends on its Common Stock in the foreseeable future. The terms of the Exit Facility Loans and the New TW Loan restrict SFEC’s ability to pay cash dividends on the Common Stock and repurchase shares of the Common Stock.
THE POTENTIAL ISSUANCE BY SFEC OF ADDITIONAL SHARES OF COMMON STOCK PURSUANT TO THE DELAYED DRAW EQUITY PURCHASE MAY DILUTE THE OWNERSHIP INTEREST OF EXISTING STOCKHOLDERS.
At any time until June 1, 2011, SFEC, if so authorized by a majority of the members of SFEC’s board of directors, shall have the right, by delivering written notice to certain Backstop Purchasers, to
require such Backstop Purchasers to purchase an aggregate of $25 million of Common Stock (the “Delayed Draw Shares”). Any issuance of the Delayed Draw Shares will dilute the ownership interests of existing stockholders. In addition, the perceived risk associated with the possible issuance of a large number of shares of Common Stock could cause some of SFEC’s stockholders to sell their Common Stock, thus causing the trading price of the Common Stock to decline. Any sales in the public market of shares of Common Stock could adversely affect prevailing trading prices of shares of Common Stock. If the Common Stock price declines, it may be more difficult for SFEC to raise additional capital through future offerings of equity or equity-related securities.
SFEC ’S STOCK IS NOT LISTED ON A NATIONAL SECURITIES EXCHANGE. IT WILL LIKELY BE MORE DIFFICULT FOR STOCKHOLDERS AND INVESTORS TO SELL THEIR COMMON STOCK OR TO OBTAIN ACCURATE QUOTATIONS OF THE SHARE PRICE OF SFEC ’S COMMON STOCK.
Following our emergence from chapter 11, while SFEC intends to apply to have the Common Stock listed on the New York Stock Exchange, it can provide no assurance that it will be able to obtain a listing for the Common Stock on the New York Stock Exchange.
Item 3. Defaults Upon Senior Securities
As previously announced, as a result of the Chapter 11 Filing, we were in default on substantially all of our debt and preferred equity securities and lease obligations incurred prior to June 13, 2009. Specifically, the Chapter 11 Filing constituted an event of default under the indentures governing the 2010 Notes, the 2013 Notes, the 2014 Notes, the 2015 Notes and the 2016 Notes, and upon the Chapter 11 Filing, all of the outstanding notes under such indentures became due and payable without further action or notice. Furthermore, all commitments, loans (with accrued interest thereon) and other amounts under our Prepetition Credit Agreement and the other Loan Documents, as defined therein (including, without limitation, all amounts under any letters of credit), became immediately due and payable as a result of the Chapter 11 Filing. See our Current Report on Form 8-K, filed with the SEC on June 15, 2009, which is incorporated by reference herein. All such debt securities and the Prepetition Credit Agreement were cancelled pursuant to the terms of the Plan.
As previously announced, our Board of Directors determined not to declare and pay a quarterly dividend on our outstanding PIERS for the quarters ending May 15, 2008, August 15, 2008, November 15, 2008, February 15, 2009, May 15, 2009, and August 15, 2009. Each such PIERS represents one one-hundredth of a share of our 7-¼% Convertible Preferred Stock. The payment of the quarterly dividend on our outstanding PIERS is currently stayed as a result of our Chapter 11 Filing. On the redemption date on August 15, 2009, the total liquidation preference on the PIERS as a result of the failure to pay dividends would have been $306.6 million. See Item 8.01 of our Current Report on Form 8-K, filed with the SEC on May 7, 2009, which is incorporated by reference herein. The PIERS were cancelled pursuant to the terms of the Plan.
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Exhibit 10.1* |
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First Lien Credit Agreement, dated as of April 30, 2010, among Six Flags Entertainment Corporation, Six Flags Operations Inc., Six Flags Theme Parks Inc., as Borrower, the Several Lenders from Time to Time Parties Hereto, Bank of America, N.A. and Barclays Capital, as Co-Syndication Agents, Deutsche Bank Securities Inc. and Goldman Sachs Lending Partners LLC, as Co-Documentation Agents, and JPMorgan Chase Bank, N.A., as Administrative Agent |
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Exhibit 10.2* |
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First Lien Guarantee and Collateral Agreement, dated as of April 30, 2010, among Six Flags Entertainment Corporation, Six Flags Operations Inc. and each of the current and future direct and indirect domestic subsidiaries of Six Flags Theme Parks Inc., and JPMorgan Chase Bank, N.A., as Administrative Agent |
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Exhibit 10.3* |
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Second Lien Credit Agreement, dated as of April 30, 2010, among Six Flags Entertainment Corporation, Six Flags Operations Inc., Six Flags Theme Parks Inc., as Borrower, the Several Lenders from Time to Time Parties Hereto, Goldman Sachs Lending Partners LLC, as Syndication Agent, Goldman Sachs Lending Partners LLC, as Documentation Agent, and Goldman Sachs Lending Partners LLC, as Administrative Agent |
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Exhibit 10.4* |
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Second Lien Guarantee and Collateral Agreement, dated as of April 30, 2010, among Six Flags Entertainment Corporation, Six Flags Operations Inc. and each of the current and future direct and indirect domestic subsidiaries of Six Flags Theme Parks Inc., and Goldman Sachs Lending Partners LLC, as Administrative Agent |
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Exhibit 10.5* |
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Multiple Draw Term Credit Agreement, dated as of April 30, 2010, among SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., SFOT Acquisition I, Inc. and SFOT Acquisition II, Inc., and TW-SF LLC |
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Exhibit 10.6* |
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Guarantee Agreement, dated as of April 30, 2010, made by Six Flags Entertainment Corporation, Six Flags Operations Inc., Six Flags Theme Parks Inc. and each of the other signatories hereto, in favor of TW-SF LLC |
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Exhibit 10.7* |
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Amendment No. 7 to the Subordinated Indemnity Agreement, dated as of April 30, 2010, among Six Flags Operations Inc., Six Flags Theme Parks Inc., SFOG II, Inc., SFT Holdings, Inc., Historic TW Inc., Warner Bros. Entertainment Inc., TW-SPV Co., Six Flags Entertainment Corporation, the other subsidiaries of Six Flags Entertainment Corporation and GP Holdings Inc. |
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Exhibit 10.8* |
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Form of Indemnity Agreement |
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Exhibit 31.1* |
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Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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Exhibit 31.2* |
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Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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Exhibit 32.1* |
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Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Exhibit 32.2* |
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Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* Filed herewith
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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SIX FLAGS ENTERTAINMENT CORPORATION |
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(Registrant) |
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/s/ Alexander Weber, Jr. |
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Alexander Weber, Jr. |
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President and Interim Chief Executive Officer |
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/s/ Jeffrey R. Speed |
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Jeffrey R. Speed |
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Executive Vice President and |
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Chief Financial Officer |
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Date: May 17, 2010 |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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Exhibit 10.1* |
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First Lien Credit Agreement, dated as of April 30, 2010, among Six Flags Entertainment Corporation, Six Flags Operations Inc., Six Flags Theme Parks Inc., as Borrower, the Several Lenders from Time to Time Parties Hereto, Bank of America, N.A. and Barclays Capital, as Co-Syndication Agents, Deutsche Bank Securities Inc. and Goldman Sachs Lending Partners LLC, as Co-Documentation Agents, and JPMorgan Chase Bank, N.A., as Administrative Agent |
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Exhibit 10.2* |
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First Lien Guarantee and Collateral Agreement, dated as of April 30, 2010, among Six Flags Entertainment Corporation, Six Flags Operations Inc. and each of the current and future direct and indirect domestic subsidiaries of Six Flags Theme Parks Inc., and JPMorgan Chase Bank, N.A., as Administrative Agent |
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Exhibit 10.3* |
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Second Lien Credit Agreement, dated as of April 30, 2010, among Six Flags Entertainment Corporation, Six Flags Operations Inc., Six Flags Theme Parks Inc., as Borrower, the Several Lenders from Time to Time Parties Hereto, Goldman Sachs Lending Partners LLC, as Syndication Agent, Goldman Sachs Lending Partners LLC, as Documentation Agent, and Goldman Sachs Lending Partners LLC, as Administrative Agent |
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Exhibit 10.4* |
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Second Lien Guarantee and Collateral Agreement, dated as of April 30, 2010, among Six Flags Entertainment Corporation, Six Flags Operations Inc. and each of the current and future direct and indirect domestic subsidiaries of Six Flags Theme Parks Inc., and Goldman Sachs Lending Partners LLC, as Administrative Agent |
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Exhibit 10.5* |
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Multiple Draw Term Credit Agreement, dated as of April 30, 2010, among SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., SFOT Acquisition I, Inc. and SFOT Acquisition II, Inc., and TW-SF LLC |
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Exhibit 10.6* |
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Guarantee Agreement, dated as of April 30, 2010, made by Six Flags Entertainment Corporation, Six Flags Operations Inc., Six Flags Theme Parks Inc. and each of the other signatories hereto, in favor of TW-SF LLC |
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Exhibit 10.7* |
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Amendment No. 7 to the Subordinated Indemnity Agreement, dated as of April 30, 2010, among Six Flags Operations Inc., Six Flags Theme Parks Inc., SFOG II, Inc., SFT Holdings, Inc., Historic TW Inc., Warner Bros. Entertainment Inc., TW-SPV Co., Six Flags Entertainment Corporation, the other subsidiaries of Six Flags Entertainment Corporation and GP Holdings Inc. |
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Exhibit 10.8* |
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Form of Indemnity Agreement |
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Exhibit 31.1* |
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Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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Exhibit 31.2* |
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Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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Exhibit 32.1* |
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Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Exhibit 32.2* |
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Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* Filed herewith
Exhibit 10.1
EXECUTION COPY
$890,000,000
FIRST LIEN CREDIT AGREEMENT
among
SIX FLAGS ENTERTAINMENT CORPORATION (FORMERLY KNOWN AS SIX FLAGS, INC.),
SIX FLAGS OPERATIONS INC.,
SIX FLAGS THEME PARKS INC.,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
BANK OF AMERICA, N.A. and BARCLAYS CAPITAL,
as Co-Syndication Agents,
DEUTSCHE BANK SECURITIES INC. and GOLDMAN SACHS LENDING PARTNERS LLC,
as Co-Documentation Agents,
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent,
Dated as of April 30, 2010
J.P. MORGAN SECURITIES INC., BANC OF AMERICA SECURITIES LLC, BARCLAYS CAPITAL AND DEUTSCHE BANK SECURITIES INC.,
as Joint Bookrunners and Joint Lead Arrangers
TABLE OF CONTENTS
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Section 1. |
DEFINITIONS |
1 |
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1.1. |
Defined Terms |
1 |
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1.2. |
Other Definitional Provisions |
39 |
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Section 2. |
AMOUNT AND TERMS OF TRANCHE B TERM LOAN COMMITMENTS |
40 |
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2.1. |
Tranche B Term Loan Commitments |
40 |
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2.2. |
Procedure for Term Loan Borrowing |
40 |
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2.3. |
Repayment of Tranche B Term Loans |
40 |
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Section 3. |
AMOUNT AND TERMS OF THE REVOLVING FACILITIES COMMITMENTS AND SWING LINE COMMITMENT |
41 |
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3.1. |
Revolving Credit Commitments |
41 |
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3.2. |
Procedure for Revolving Credit Borrowing |
41 |
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3.3. |
Increase in Revolving Credit Commitments |
42 |
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Section 4. |
LETTERS OF CREDIT; SWING LINE LOANS |
42 |
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4.1. |
L/C Commitment |
42 |
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4.2. |
Procedure for Issuance of Letter of Credit |
43 |
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4.3. |
Fees and Other Charges |
43 |
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4.4. |
L/C Participations |
44 |
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4.5. |
Reimbursement Obligation of the Borrower |
45 |
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4.6. |
Obligations Absolute |
45 |
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4.7. |
Letter of Credit Payments |
46 |
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4.8. |
Applications |
46 |
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4.9. |
Swing Line Commitment |
46 |
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4.10. |
Procedure for Swing Line Borrowing; Refunding of Swing Line Loans |
46 |
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Section 5. |
CERTAIN PROVISIONS APPLICABLE TO THE LOANS AND THE LETTERS OF CREDIT |
48 |
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5.1. |
Repayment of Loans; Evidence of Debt |
48 |
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5.2. |
Commitment Fees, Etc. |
49 |
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5.3. |
Termination or Reduction of Revolving Credit Commitments |
49 |
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5.4. |
Optional Prepayments |
49 |
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5.5. |
Mandatory Prepayments and Commitment Reductions |
50 |
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5.6. |
Conversion and Continuation Options |
51 |
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5.7. |
Minimum Amounts and Maximum Number of Eurocurrency Tranches |
52 |
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5.8. |
Interest Rates and Payment Dates |
52 |
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5.9. |
Computation of Interest and Fees |
53 |
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5.10. |
Inability to Determine Interest Rate |
53 |
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5.11. |
Pro Rata Treatment and Payments |
53 |
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5.12. |
Requirements of Law |
56 |
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5.13. |
Taxes |
57 |
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5.14. |
Indemnity |
59 |
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5.15. |
Illegality |
59 |
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5.16. |
Change of Lending Office |
60 |
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5.17. |
Replacement of Lenders under Certain Circumstances |
60 |
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5.18. |
Loan Auctions |
61 |
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5.19. |
Auction Procedures |
61 |
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5.20. |
Defaulting Lenders |
63 |
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Section 6. |
REPRESENTATIONS AND WARRANTIES |
65 |
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6.1. |
Financial Condition |
65 |
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6.2. |
No Change |
66 |
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6.3. |
Existence; Compliance with Law |
66 |
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6.4. |
Corporate Power; Authorization; Enforceable Obligations |
66 |
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6.5. |
No Legal Bar |
67 |
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6.6. |
Litigation |
67 |
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6.7. |
No Default |
67 |
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6.8. |
Ownership of Property; Liens |
67 |
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6.9. |
Intellectual Property |
67 |
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6.10. |
Taxes |
68 |
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6.11. |
Federal Regulations |
68 |
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6.12. |
Labor Matters |
68 |
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6.13. |
ERISA |
68 |
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6.14. |
Investment Company Act; Other Regulations |
69 |
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6.15. |
Subsidiaries |
69 |
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6.16. |
Use of Proceeds |
69 |
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6.17. |
Environmental Matters |
70 |
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6.18. |
Accuracy of Information, Etc. |
71 |
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6.19. |
Security Documents |
71 |
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6.20. |
Solvency |
72 |
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6.21. |
Regulation H |
72 |
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6.22. |
Parks |
72 |
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Section 7. |
CONDITIONS PRECEDENT |
72 |
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7.1. |
Conditions Precedent to Initial Borrowing |
72 |
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7.2. |
Conditions to Each Extension of Credit |
78 |
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Section 8. |
AFFIRMATIVE COVENANTS |
78 |
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8.1. |
Financial Statements and Other Information |
78 |
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8.2. |
Notices of Material Events |
81 |
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8.3. |
Existence, Etc. |
82 |
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8.4. |
Insurance |
83 |
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8.5. |
Compliance with Contractual Obligations and Requirements of Law |
83 |
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8.6. |
Additional Collateral, Etc. |
83 |
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8.7. |
Further Assurances |
86 |
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8.8. |
Environmental Laws |
86 |
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8.9. |
Ratings by S&P and Moody’s |
86 |
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Section 9. |
NEGATIVE COVENANTS |
87 |
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9.1. |
Leverage Ratios |
87 |
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9.2. |
Consolidated Interest Coverage Ratio |
88 |
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9.3. |
Indebtedness |
89 |
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9.4. |
Liens |
93 |
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9.5. |
Prohibition of Fundamental Changes |
96 |
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9.6. |
Restricted Payments |
100 |
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9.7. |
Capital Expenditures |
103 |
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9.8. |
Investments |
103 |
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9.9. |
Prepayment of Certain Indebtedness |
106 |
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9.10. |
Transactions with Affiliates |
107 |
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9.11. |
Changes in Fiscal Periods |
107 |
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9.12. |
Certain Restrictions |
107 |
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9.13. |
Lines of Business |
108 |
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9.14. |
Modifications of Certain Documents |
108 |
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9.15. |
Limitation on Activities of Parent and Holdings |
109 |
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9.16. |
Limitation on Hedging Agreements |
110 |
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9.17. |
Anti-Hoarding |
110 |
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Section 10. |
EVENTS OF DEFAULT |
110 |
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Section 11. |
THE AGENTS |
114 |
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11.1. |
Appointment |
114 |
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11.2. |
Delegation of Duties |
114 |
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11.3. |
Exculpatory Provisions |
114 |
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11.4. |
Reliance by Agents |
115 |
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11.5. |
Notice of Default |
115 |
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11.6. |
Non-Reliance on Agents and Other Lenders |
115 |
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11.7. |
Indemnification |
116 |
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11.8. |
Agent in Its Individual Capacity |
116 |
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11.9. |
Successor Agents |
117 |
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11.10. |
Authorization to Release Liens and Guarantees |
117 |
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11.11. |
Authorization to Enter into Intercreditor Agreement |
117 |
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11.12. |
The Arrangers, Co-Syndication Agents and Co-Documentation Agents |
117 |
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Section 12. |
MISCELLANEOUS |
117 |
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12.1. |
Amendments and Waivers |
117 |
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12.2. |
Notices |
120 |
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12.3. |
No Waiver; Cumulative Remedies |
122 |
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12.4. |
Survival of Representations and Warranties |
122 |
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12.5. |
Payment of Expenses |
122 |
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12.6. |
Successors and Assigns; Participations and Assignments |
123 |
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12.7. |
Adjustments; Set-off |
127 |
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12.8. |
U.S.A. Patriot Act |
128 |
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12.9. |
Counterparts |
128 |
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12.10. |
Severability |
128 |
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12.11. |
Integration |
128 |
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12.12. |
GOVERNING LAW |
128 |
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12.13. |
Submission To Jurisdiction; Waivers |
128 |
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12.14. |
Acknowledgments |
129 |
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12.15. |
Confidentiality |
129 |
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12.16. |
Release of Collateral and Guarantee Obligations |
130 |
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12.17. |
Accounting Changes |
131 |
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12.18. |
Delivery of Lender Addenda |
131 |
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12.19. |
WAIVERS OF JURY TRIAL |
131 |
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12.20. |
Intercreditor Agreement |
131 |
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ANNEXES: |
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A |
Existing Letters of Credit |
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SCHEDULES: |
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1.1(a) |
Mortgaged Property |
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6.4 |
Consents, Authorizations, Filings and Notices |
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6.8 |
Material Real Properties |
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6.13 |
ERISA |
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6.15 |
Subsidiaries |
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6.19(a)-1 |
UCC Filing Jurisdictions |
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6.19(a)-2 |
UCC Financing Statements to Remain on File |
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6.19(a)-3 |
UCC Financing Statements to be Terminated |
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6.19(b) |
Mortgage Filing Jurisdictions |
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6.21 |
Mortgaged Properties in Flood Zones |
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6.22 |
Existing Parks |
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9.3(b) |
Existing Indebtedness |
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9.4(b) |
Liens |
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9.8(a) |
Existing Investments |
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9.13 |
Business Activities |
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EXHIBITS: |
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A |
Form of First Lien Guarantee and Collateral Agreement |
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B |
Form of Compliance Certificate |
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C |
Form of Closing Certificate |
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D |
[Reserved] |
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E |
Form of Assignment and Acceptance |
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F |
Form of Legal Opinion of Paul, Hastings, Janofsky & Walker LLP |
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G-1 |
Form of Term Note |
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G-2 |
Form of Revolving Credit Note |
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G-3 |
Form of Swing Line Note |
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H |
Form of Prepayment Option Notice |
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I |
Form of Exemption Certificate |
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J |
Form of Lender Addendum |
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K |
Form of Borrowing Notice |
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L |
Form of Auction Notice |
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M |
Form of Return Bid |
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N |
Form of Intercompany Subordinated Note |
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O |
Form of Intercreditor Agreement |
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FIRST LIEN CREDIT AGREEMENT, dated as of April 30, 2010, among SIX FLAGS ENTERTAINMENT CORPORATION (formerly known as SIX FLAGS, INC.), a Delaware corporation (“ Parent ”), SIX FLAGS OPERATIONS INC., a Delaware corporation (“ Holdings ”), SIX FLAGS THEME PARKS INC., a Delaware corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (as defined below) (the “ Lenders ”) and JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
WHEREAS, on June 13, 2009, Parent, Holdings, the Borrower and certain of the Borrower’s Domestic Subsidiaries (together with Parent, Holdings and the Borrower, the “ Debtors ”) filed a voluntary petition for relief, Case No. 09-12019, under Chapter 11 of Title 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”) and continued in the possession of their property and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, on April 29, 2010, the Bankruptcy Court entered the Confirmation Order confirming the Debtors’ Modified Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated April 1, 2010 (as in effect on the date of confirmation thereof and as thereafter may be amended as provided in this Agreement, the “ Plan of Reorganization ”); and
WHEREAS, in connection with the confirmation and implementation of the Plan of Reorganization, the reorganized Debtors have requested the Lenders to make loans and other credit available to them to enable the reorganized Debtors to, among other things, consummate the transactions contemplated by the Plan of Reorganization, pay related fees and expenses and finance the working capital needs and general corporate purposes of the Borrower, and the Lenders have agreed, subject to the terms and conditions hereof, to enter into this Agreement.
Accordingly, the parties hereto hereby agree as follows:
1.1. Defined Terms . As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.
“ Accepting Lenders ”: as defined in Section 5.11(d).
“ Accounting Changes ”: as defined in Section 12.17.
“ Acquisition ”: any acquisition, whether in a single transaction or series of related transactions, by Parent or any one or more of its Subsidiaries of (a) all or a substantial part of the assets, or of a business, unit or division, of any Person, whether through purchase of assets or securities, by merger or otherwise; or (b) any Person that becomes a Subsidiary after giving effect to such acquisition.
“ Acquisition Parties ”: SFOG Acquisition A, Inc., a Delaware corporation, SFOG Acquisition B, L.L.C., a Delaware limited liability company, SFOT Acquisition I, Inc., a Delaware corporation, and SFOT Acquisition II, Inc., a Delaware corporation.
“ Additional Extensions of Credit ”: as defined in Section 12.1.
“ Administrative Agent ”: as defined in the preamble hereto.
“ Affiliate ”: any Person that directly or indirectly controls, or is under common control with, or is controlled by, Parent and, if such Person is an individual, any member of the immediate family (including parents, spouse, children) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). Notwithstanding the foregoing, (a) no individual shall be an Affiliate solely by reason of his or her being a director, officer or employee of Parent, Holdings or any of its Subsidiaries and (b) none of the Wholly Owned Subsidiaries of Holdings or HWP shall be Affiliates.
“ Agents ”: the collective reference to the Co-Documentation Agents, the Co-Syndication Agents and the Administrative Agent.
“ Aggregate Exposure ”: with respect to any Lender at any time, an amount equal to the sum of (i) the aggregate then unpaid principal amount of such Lender’s Tranche B Term Loans and (ii) the amount of such Lender’s Revolving Credit Commitment then in effect or, if the Revolving Credit Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.
“ Aggregate Exposure Percentage ”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the sum of the Aggregate Exposures of all Lenders at such time.
“ Agreement ”: this First Lien Credit Agreement, as amended, supplemented or otherwise modified from time to time.
“ Applicable Discount ”: as defined in Section 5.19(c).
“ Applicable Margin ”: (a) (i) in the case of Revolving Credit Loans or Swing Line Loans which are Base Rate Loans, 3.25% per annum and (ii) in the case of Tranche B Term Loans which are Base Rate Loans, 3.00% and (b) (i) in the case of Revolving Credit Loans which are Eurocurrency Loans, 4.25% per annum and (ii) in the case of Tranche B Term Loans which are Eurocurrency Loans, 4.00%.
“ Application ”: an application, in such form as the relevant Issuing Lender may specify from time to time, requesting such Issuing Lender to issue a Letter of Credit.
“ Approved Fund ”: as defined in Section 12.6(b).
“ Arrangers ”: the collective reference to J.P. Morgan Securities Inc., Banc of America Securities LLC, Barclays Capital, the investment banking division of Barclays Bank PLC, and Deutsche Bank Securities Inc., in their capacities as joint lead arrangers.
“ Asset Sale ”: any Disposition of Property or series of related Dispositions of Property (excluding any such Disposition permitted by clauses (i) through (vi) and clauses (ix) through (xii) and clauses (xiv) through (xvii) of Section 9.5(c) except for clause (ii) to the extent referred to therein) which yields gross proceeds to the Parent, or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $2,500,000.
“ Assignee ”: as defined in Section 12.6(b)(i).
“ Assignment and Acceptance ”: an Assignment and Acceptance substantially in the form of Exhibit E.
“ Auction ”: a “Dutch” auction whereby the Borrower offers to purchase Tranche B Term Loans pursuant to the auction procedures set forth in Section 5.19.
“ Auction Amount ”: as defined in Section 5.19(a).
“ Auction Notice ”: as defined in Section 5.19(a).
“ Available LC/Swing Line Revolving Commitment ”: with respect to any LC/Swing Line Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s LC/Swing Line Revolving Commitment then in effect over (b) such Lender’s LC/Swing Line Extensions of Credit then outstanding; provided , that in calculating any Lender’s LC/Swing Line Extensions of Credit for the purpose of determining such Lender’s Available LC/Swing Line Revolving Commitment pursuant to Section 5.2(a), the aggregate principal amount of Swing Line Loans then outstanding shall be deemed to be zero.
“ Available Non-LC/Swing Line Revolving Commitment ”: with respect to any Non-LC/Swing Line Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Non-LC/Swing Line Revolving Commitment then in effect over (b) such Lender’s Non-LC/Swing Line Extensions of Credit then outstanding.
“ Available Revolving Commitment ”: the sum of (a) the Available LC/Swing Line Revolving Commitments and (b) the Available Non-LC/Swing Line Revolving Commitments.
“ Bankruptcy Code ”: the Federal Bankruptcy Code of 1978, as amended from time to time.
“ Bankruptcy Court ”: as defined in the recitals hereto.
“ Base Capital Expenditure Amount ”: as defined in Section 9.7.
“ Base Rate ”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Eurocurrency Rate for a one month Interest Period beginning on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the avoidance of doubt, the Eurocurrency Rate for any day shall be the greater of (i) 2.0% and (ii) the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at approximately 11:00 a.m. London time on such day. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or such Eurocurrency Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Federal Funds Effective Rate or such Eurocurrency Rate, respectively.
“ Base Rate Loans ”: Loans for which the applicable rate of interest is based upon the Base Rate.
“ Beneficial Share Assignment Agreement ”: the Beneficial Share Assignment Agreement, dated as of April 1, 1998, by and between TW-SPV Co., GP Holdings, Inc. and Parent (as successor Premier Parks Inc.), as the same may be amended on or prior to the Closing Date and as the same may be further modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.
“ Benefited Lender ”: as defined in Section 12.7(a).
“ Board ”: the Board of Governors of the Federal Reserve System of the United States (or any successor).
“ Borrower ”: as defined in the preamble hereto.
“ Borrower Consolidated Adjusted EBITDA ”: for any period, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) means Parent Consolidated Adjusted EBITDA plus (a) administrative and other corporate charges of Parent that are not allocated to or paid by the Borrower or its Subsidiaries and excluding (b) any portion of Parent Consolidated Adjusted EBITDA (calculated on a net basis, taking into account positive and negative items) attributable to any Person (other than the Borrower or its Subsidiaries) to the extent that the Borrower or any of its Subsidiaries is not the owner of the interests in, or recipients of the cash received from, such Person. The parties hereby agree that the Borrower Consolidated Adjusted EBITDA for the fiscal quarter ending (a) June 30, 2009 was $47,603,000, (b) September 30, 2009 was $190,348,000 and (c) December 31, 2009 was ($15,780,000).
“ Borrowing Date ”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans, or issue Letters of Credit, hereunder.
“ Business ”: as defined in Section 6.17(b).
“ Business Day ”: (a) for all purposes other than as covered by clause (b) below, a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurocurrency Loans, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks for deposits in Dollars in the London Interbank Eurocurrency market.
“ Capex Stub Amount ”: as defined in the definition of “Excess Cash Flow”.
“ Capital Expenditures ”: for any period, expenditures made in cash by Parent or any of its Subsidiaries or any of the Partnership Park Entities (or, for purposes of the definition of “Excess Cash Flow”, by the Borrower or any of its Subsidiaries) to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements) during such period, computed in accordance with GAAP, but excluding (a) repairs or restorations in respect of any such assets paid in cash, (b) the amount of cash expended (i) with, or in an amount equal to, the Net Cash Proceeds of (A) Recovery Events or (B) awards of compensation arising from the taking by eminent domain or condemnation of assets being replaced, (ii) as part of an Acquisition permitted hereunder (other than an Acquisition permitted by Section 9.5(b)(iii)), or (c) expenditures that are accounted for as capital expenditures made in cash by Parent or any of its Subsidiaries or any of the Partnership Park Entities (or, for purposes of the definition of “Excess Cash Flow”, by the Borrower or any of its Subsidiaries) and that actually are paid for by a Person other than Parent or any Subsidiary or any Partnership Park Entity and (d) any non-cash compensation or other non-cash costs reflected as additions to property, plant or equipment in the consolidated balance sheet of Parent and its Subsidiaries or in the balance sheet of any Partnership Park Entity (or, for purposes of the definition of “Excess Cash Flow” in the consolidated balance sheet of the Borrower and its Subsidiaries).
“ Capital Lease Obligations ”: for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“ Capital Stock ”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.
“ Cases ”: the cases of the Debtors before the Bankruptcy Court.
“ Change in Law ”: (a) the adoption of any law, rule or regulation, (b) the issuance of any administrative guidance, or (c) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority.
“ Closing Date ”: the date on which the conditions precedent set forth in Section 7.1 shall have been satisfied, which date shall be no later than May 28, 2010.
“ Code ”: the Internal Revenue Code of 1986, as amended from time to time.
“ Co-Documentation Agents ”: Deutsche Bank Securities Inc. and Goldman Sachs Lending Partners LLC.
“ Collateral ”: all Property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.
“ Commitment ”: with respect to any Lender, each of the Tranche B Term Loan Commitment and the Revolving Credit Commitment.
“ Commitment Fee Rate ”: 1.50% per annum.
“ Compliance Certificate ”: a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.
“ Confidential Information Memorandum ”: the Confidential Information Memorandum dated January, 2010, as supplemented by the Lenders Update Materials, dated April 8, 2010 and furnished to the Lenders prior to the Closing Date.
“ Confirmation Order ”: as defined in Section 7.1(b).
“ Consolidated Current Assets ”: at any date, all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date.
“ Consolidated Current Liabilities ”: at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, but excluding (a) the current portion of interest, income taxes or any Funded Debt of the Borrower and its Subsidiaries and (b), without duplication, all Indebtedness consisting of Revolving Credit Loans or Swing Line Loans, to the extent otherwise included therein.
“ Consolidated Interest Coverage Ratio ”: as at any date, the ratio of (a) Parent Consolidated Adjusted EBITDA for such Measurement Period to (b) Consolidated Interest Expense for such Measurement Period.
“ Consolidated Interest Expense ”: for any Measurement Period, total interest expense that has been paid in cash during such period (including that attributable to
Capital Lease Obligations) of Parent and its Subsidiaries for such period with respect to all outstanding Indebtedness of Parent and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Hedging Agreements in respect of interest rates to the extent such net costs have been or are required to be paid in cash during such period), minus cash interest income for such Measurement Period.
“ Consolidated Leverage Ratio ”: as at any date, the ratio of (a) Consolidated Total Debt as at such date to (b) Parent Consolidated Adjusted EBITDA for such Measurement Period.
“ Consolidated Net Income ”: of any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided , that in calculating Consolidated Net Income for any period, there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of Parent or is merged into or consolidated with Parent or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of Parent) in which Parent or any of its Subsidiaries has an ownership interest accounted for under the equity method, (c) the cumulative effect of a change in accounting principle and changes as a result of the adoption or modification of accounting policies during such period, (d) any effect of income (loss) from the early extinguishment of (i) Indebtedness and (ii) obligations under any Hedging Agreement or other derivative instruments, (e) the effects of non-cash acquisition accounting adjustments and non-cash adjustments from the application of fresh start reporting, (f) any net gains, losses, income or expense attributable to non-controlling interests and (g) the undistributed earnings of any Subsidiary of Parent to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.
“ Consolidated Total Debt ”: as at the last day of any fiscal quarter, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than Revolver Indebtedness and the undrawn portion of any outstanding letters of credit) of Parent and its Subsidiaries that would, in conformity with GAAP, be set forth on the balance sheet of Parent and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amounts of Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the Revolver Indebtedness as of each of September 30, 2009, December 31, 2009 and March 31, 2010 was $0.
“ Consolidated Working Capital ”: at any date, the difference of (a) Consolidated Current Assets on such date less (b) Consolidated Current Liabilities on such date.
“ Contractual Obligation ”: as to any Person, any provision of any security issued by such Person or of any material agreement, lease, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.
“ Control Investment Affiliate ”: as to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
“ Co-Syndication Agents ”: Bank of America, N.A. and Barclays Capital, the investment banking division of Barclays Bank PLC.
“ Debtors ”: as defined in the recitals hereto.
“ Default ”: any of the events specified in Section 10, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“ Defaulting Lender ”: any Lender that has (a) failed to fund any portion of its Revolving Credit Loans or participations in Letters of Credit or Swing Line Loans within three Business Days of the date required to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent, the Issuing Lender, the Swing Line Lender or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements generally in which it commits to extend credit, (c) failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Line Loans, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) in the case of a Revolving Credit Lender, becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition by a Governmental Authority or an instrumentality thereof of any equity interest in such Lender or a parent company thereof.
“ Delayed Draw Equity Commitment ”: the commitment of Pentwater Capital Management LP or its Affiliates (or any assignee or transferee thereof or successor thereto permitted under the Delayed Draw Equity Commitment Agreement dated as of April 15, 2010 among Parent and certain Pentwater Capital Management LP affiliated funds party thereto, as in effect on such date) to Parent to purchase additional shares of common stock of Parent after the Closing Date pursuant to Section 5.2 of the Plan of Reorganization.
“ Dick Clark ”: dick clark productions, inc., a Delaware corporation.
“ Discount Range ”: as defined in Section 5.19(a).
“ Disposition ”: with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof, but excluding any termination of the economic and voting rights of GP Holdings Inc. pursuant to the Beneficial Share Assignment Agreement; and the terms “Dispose” and “Disposed of” shall have correlative meanings.
“ Disposition Investment ”: with respect to any Disposition, any promissory notes or other evidences of indebtedness or Investments received by Parent or any of its Subsidiaries in connection with such Disposition.
“ Disqualified Capital Stock ” shall mean any Capital Stock of Parent that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is putable or exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock of Parent), pursuant to a sinking fund or otherwise, (b) is redeemable or exchangeable, in whole or in part, at the option of the holder thereof (other than solely for Qualified Capital Stock of Parent), or (c) provides for the scheduled payment of dividends in cash, in each case prior to the date that is one year after the Tranche B Maturity Date; provided that (i) if such Capital Stock is issued pursuant to any plan for the benefit of employees of Parent or any of its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by Parent or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations and (ii) any Capital Stock that would not constitute Disqualified Capital Stock but for the provisions thereof giving holders thereof the right to require Parent to purchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” prior to the date that is one year after the Tranche B Maturity Date shall not constitute Disqualified Capital Stock so long as the terms of such Capital Stock provide that the Loans and all other Obligations (other than obligations under Specified Hedging Agreements and Specified Cash Management Agreements) are repaid in full prior to such purchase or redemption.
“ Dollars ” and “ $ ”: lawful currency of the United States of America.
“ Domestic Subsidiary ”: any Subsidiary of Parent organized under the laws of any jurisdiction within the United States of America.
“ Environmental Claim ”: with respect to any Person, any written notice, claim, demand or other communication (collectively, a “ claim ”) by any other Person alleging or asserting such Person’s liability for investigatory costs, cleanup costs, governmental response costs, damages to natural resources or other Property, personal injuries, fines or penalties arising out of, based on or resulting from (a) the presence, or Release into the environment, of any Hazardous Material at any location, whether or not owned by such Person, or (b) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law. The term “ Environmental Claim ” shall include, without limitation, any claim by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, as a result of any of the foregoing.
“ Environmental Laws ”: any and all present and future Federal, state, local and foreign laws, rules or regulations, and any orders or decrees, in each case as now or hereafter in effect, relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes into the indoor or outdoor environment, including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes.
“ Environmental Permits ”: any and all permits, licenses, approvals, registrations, notifications, exemptions and other authorizations required under any Environmental Law.
“ ERISA ”: the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ ERISA Affiliate ”: any corporation or trade or business that is a member of any group of organizations (a) described in Section 414(b) or (c) of the Code of which Parent is a member and (b) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which Parent is a member.
“ ERISA Event ”: any of the following events or conditions:
“ Eurocurrency Base Rate ”: with respect to each day during each Interest Period pertaining to a Eurocurrency Loan, the higher of (a) 2% per annum and (b) the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on the applicable page of the Reuters Screen LIBOR01 Page as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on such page, the “Eurocurrency Base Rate” for purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying eurocurrency rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered deposits in Dollars at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurocurrency market where its eurocurrency and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.
“ Eurocurrency Loans ”: Loans under any Facility for which the applicable rate of interest is based upon the Eurocurrency Rate.
“ Eurocurrency Rate ”: with respect to each day during each Interest Period, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):
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Eurocurrency Base Rate |
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1.00 - Eurocurrency Reserve Requirements |
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“ Eurocurrency Reserve Requirements ”: for any day, as applied to a Eurocurrency Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves) under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the Federal Reserve System.
“ Eurocurrency Tranche ”: the collective reference to Eurocurrency Loans under any Facility, the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).
“ Event of Default ”: any of the events specified in Section 10, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“ Excess Cash Flow ”: for any fiscal year of Parent, the difference, if any, of (a) the sum, without duplication, of (i) Borrower Consolidated Adjusted EBITDA less the sum of (1) Consolidated Interest Expense (provided that, for purposes of calculating Excess Cash Flow, Consolidated Interest Expense shall be calculated for the Borrower and its Subsidiaries) and (2) any cash expenditures made during such period on account of any loss, expense or charge, and any cash received during such period on account of any gain, included in the calculation of Consolidated Net Income but excluded in the determination of Parent Consolidated Adjusted EBITDA pursuant to clauses (a)(iv), (v) and (vi) of the definition thereof, in each case for such fiscal year, (ii) the amount of the decrease, if any, in Consolidated Working Capital for such fiscal year (other than any decrease arising from acquisitions by Parent or its Subsidiaries completed during such period or the application of acquisition accounting or fresh start reporting adjustments) and (iii) total pension expenses for such period minus (b) the sum, without duplication, of (i) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such fiscal year on account of (A) (1) Capital Expenditures and (2) the amount of Capital Expenditures included as part of the “capital expenditures” budget for such fiscal year in the budget delivered pursuant to Section 8.1(g) and certified by a Responsible Officer at or about the end of such fiscal year as being expected to be made in cash on or prior to March 31 of the immediately following fiscal year and made on or prior to such date (such amount under this subclause (b)(i)(A)(2) being the “ Capex Stub Amount ”) ((minus the principal amount of Indebtedness (other than Revolving Credit Loans) incurred to finance such Capital Expenditures, and excluding any such Capital Expenditures financed with the proceeds of any Reinvestment Deferred Amount and the Capex Stub Amount
deducted in determining Excess Cash Flow for the prior fiscal year of Parent) and (B) cash acquisitions of intellectual property , (ii) the aggregate amount of all optional and regularly scheduled principal payments of the Tranche B Term Loans and other Funded Debt of the Borrower and its Subsidiaries made during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (iii) the aggregate amount of all prepayments or repayments of Revolving Credit Loans and Swing Line Loans during such fiscal year to the extent accompanying permanent reductions (to the extent not replaced) of the Revolving Credit Commitments, (iv) the amount of the increase, if any, in Consolidated Working Capital for such fiscal year (other than any increase arising from acquisitions by the Borrower or its Subsidiaries completed during such period or the application of acquisition accounting), (v) the aggregate amount of expenditures actually made by the Borrower and its Subsidiaries in cash during such period (including expenditures for the payment of financing, letter of credit and annual agency fees but excluding expenditures on account of pensions) to the extent that such expenditures are not expensed during such period (with such expenditures to be excluded in the fiscal period when they are expensed), (vi) the amount of cash taxes paid or tax reserves set aside or payable (without duplication) in such period, (vii) the amount of cash payments made on account of pensions in such period, and (viii) the aggregate amount of Restricted Payments made in cash during such fiscal year (to the extent permitted under Section 9.6).
“ Excess Cash Flow Application Date ”: as defined in Section 5.5(c).
“ Excluded Foreign Subsidiaries ”: any Foreign Subsidiary in respect of which either (a) the pledge of all of the Capital Stock of, or any Property of, such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would, in the good faith judgment of Parent, result in adverse tax consequences to Parent, Holdings or the Borrower. Any Subsidiary that Guarantees Indebtedness under any Indenture shall not be an Excluded Foreign Subsidiary.
“ Excluded Taxes ”: with respect to any Agent, any Lender or Transferee (a) net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on any Agent, Lender or Transferee as a result of a present or former connection between such Agent, Lender or Transferee and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent’s, Lender’s or Transferee’s having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document), (b) branch profits taxes imposed on any Agent, Lender or Transferee by the United States of America, (c) any withholding taxes to the extent attributable to a failure to comply with Section 5.13(e), (d) any backup withholding tax to the extent attributable to a “Notified Payee Underreporting” as described in Section 3406(c) or a notification by the US Internal Revenue Service that the “Taxpayer Identification Number” furnished by such Agent, Lender or Transferee is incorrect, (e) United States withholding taxes that are imposed on amounts payable to such Agent, Lender or Transferee (and in the case of a Participant, the Lender selling the participation to such Participant), except to the extent that such withholding taxes are imposed (i) as a result of a Change in Law after the date the Agent, Lender or Transferee
becomes a party to this Agreement, (ii) as a result of a change in fact after the date the Agent, Lender or Transferee becomes a party to this Agreement that is attributable to the Borrower or other Loan Party (or any Person related to a Borrower or Loan Party), (iii) on such Agent’s, Lender’s or Transferee’s assignor (if any) (or, in the case of a Participant, the Lender selling participations to such Participant) and such Agent’s, Lender’s or Transferee’s assignor was entitled, at the time of assignment (or the sale of the participations), to receive additional amounts from the Borrower with respect to such withholding Taxes pursuant to Section 5.13, or (iv) on an Agent, Lender or Transferee following an assignment, designation of a new lending office, acquisition or the appointment of a successor Agent pursuant to Sections 5.16 or 5.17.
“ Existing Credit Agreement ”: the Second Amended and Restated Credit Agreement, dated as of May 25, 2007, among Parent, Holdings, the Borrower, JPMorgan Chase Bank, N.A., as the administrative agent, and the lenders and other agents party thereto.
“ Existing Issuing Lender ”: JPMorgan Chase Bank, N.A., in its capacity as issuer of any Letter of Credit under the Existing Credit Agreement.
“ Existing Letters of Credit ”: the letters of credit described on Annex A.
“ Existing Parks ”: as defined in Section 6.22.
“ Existing Time Warner Facility ”: the loan facility provided by TW to the Acquisition Parties (and guaranteed by the Borrower, Holdings and Parent) as evidenced by (i) that certain Promissory Note, dated as of May 15, 2009, by and among TW and the Acquisition Parties, in the original principal amount of $52,507,000, and each other loan document entered in connection therewith and (ii) that certain Guarantee Agreement, dated as of May 15, 2009, made by Parent, Holdings and Borrower in favor of TW.
“ Facility ”: each of (a) the Tranche B Term Loan Commitments and the Tranche B Term Loans made thereunder (the “ Tranche B Term Loan Facility ”) and (b) the Revolving Credit Commitments and the extensions of credit made thereunder (the “ Revolving Credit Facility ”).
“ Federal Funds Effective Rate ”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by JPMorgan Chase Bank, N.A. from three federal funds brokers of recognized standing selected by it.
“ First Lien Debt ”: as at the last day of any Measurement Period, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than Revolver Indebtedness and the undrawn portion of any outstanding letters of credit), including, without limitation, Capital Lease Obligations, of the Borrower and its Subsidiaries that is secured on a first lien basis by property or assets of the Borrower and its Subsidiaries and
that would, in conformity with GAAP, be set forth on the balance sheet of the Borrower and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amount of Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the Revolver Indebtedness as of each of September 30, 2009, December 31, 2009 and March 31, 2010 was $0.
“ First Lien Leverage Ratio ”: as at any date, the ratio of (a) First Lien Debt as at such date to (b) Borrower Consolidated Adjusted EBITDA for the Measurement Period most recently ended prior to such date.
“ Fixed-to-Floating Swap ”: as defined in Section 9.16.
“ Foreign Benefit Arrangement ”: as defined in Section 6.13(b).
“ Foreign Plan ”: as defined in Section 6.13(b).
“ Foreign Subsidiary ”: any Subsidiary of Parent that is not a Domestic Subsidiary.
“ Funded Debt ”: with respect to any Person at any date of determination, all Indebtedness of such Person of the types described in clauses (a) through (e) of the definition of “Indebtedness” in this Section that matures more than one year from such date of determination.
“ Funding Office ”: the office specified from time to time by the Administrative Agent as its funding office by notice to the Borrower and the Lenders.
“ GAAP ”: generally accepted accounting principles in the United States of America as in effect from time to time.
“ Governmental Authority ”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners) having jurisdiction over the Business or the Property of Parent and its Subsidiaries.
“ Great Escape Agreements ”: collectively, (a) that certain Second Amended and Restated Operating Agreement of HWP dated as of October 29, 2007 among HWP Management, Inc., HWP Development Holdings LLC, BBL HWP LLC, DACWP LLC and Leisure Water LLC, as members, and the following as guarantors or pledgors with respect to certain obligations: Parent, Donald R. Led Duke, DACWP, LLC and Leisure Water, LLC (as may, subject to Section 9.14, be modified, amended, restated and/or substituted), (b) any and all agreements delivered pursuant thereto or in connection therewith or with the development and operation of the Property described therein, including the financing and refinancing thereof and (c) any and all agreements,
documents or instruments entered into in connection with any expansion or development of the Great Escape’s lodge or any hotel or timeshare arrangements located on or adjacent to it.
“ Guarantee ”: a guarantee, an indorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor’s obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms “Guarantee” and “Guaranteed” used as verbs have the correlative meanings.
“ Guarantee and Collateral Agreement ”: the First Lien Guarantee and Collateral Agreement to be executed and delivered by Parent, Holdings, the Borrower and each Subsidiary Guarantor in favor of the Administrative Agent, substantially in the form of Exhibit A as the same may be amended, supplemented or otherwise modified from time to time.
“ Guarantors ”: the collective reference to Parent, Holdings and the Subsidiary Guarantors.
“ Hazardous Material ”: any chemical or other material or substance which is now or hereafter prohibited, limited or otherwise regulated in any way under any Environmental Law.
“ Hedging Agreement ”: all interest rate or currency swaps, caps or collar agreements, foreign exchange agreements, commodity contracts or similar arrangements entered into by Parent or any of its Subsidiaries providing for protection against fluctuations in interest rates, currency exchange rates, commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies. For avoidance of doubt, Hedging Agreements shall include any interest rate swap or similar agreement that provides for the payment by Parent or any of its Subsidiaries of amounts based upon a floating rate in exchange for receipt by Parent or such Subsidiary of amounts based upon a fixed rate.
“ Holdings ”: as defined in the preamble hereto.
“ HWP ”: HWP Development LLC, a New York limited liability company.
“ Inactive Subsidiary ”: any Subsidiary of Parent that (a) has aggregate assets with a value not in excess of $100,000, (b) conducts no Business and (c) does not Guarantee any Indebtedness of Parent or any of its Subsidiaries.
“ Indebtedness ”: for any Person, without duplication: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than (i) trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 180 days (365 days in the case of payables arising out of the purchase of inventory or Capital Expenditures determined without regard to the exclusion contained in the definition of Capital Expenditures in this Section 1.1) of the date the respective goods are delivered or the respective services are rendered and (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and is not paid after becoming due and payable; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments (including negotiable instruments) issued or accepted by banks and other financial institutions for account of such Person; (e) Capital Lease Obligations of such Person; (f) the liquidation value of all redeemable preferred Capital Stock of such Person to the extent redeemable prior to the date which is 91 days after the later of the (i) Revolving Facility Termination Date and (ii) maturity date of the Tranche B Term Loans, and (g) Indebtedness of others Guaranteed by such Person; provided , however , that the provision by Parent or any of its Subsidiaries of covenants, Guarantees and indemnities that are customary for non-recourse financings (as determined by Parent in good faith) with respect to Indebtedness incurred by a Person that is not a Subsidiary of Parent and that is otherwise non-recourse to Parent and its Subsidiaries shall not be deemed to be Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner to the extent such Indebtedness is recourse, provided that if such Person’s liability for such Indebtedness is contractually limited, only such Person’s share thereof shall be so included. The amount of Indebtedness for any Person for purposes of clause (c) above shall be deemed equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness, and (ii) the fair market value of the Property encumbered thereby as determined in good faith by such Person. Anything herein to the contrary notwithstanding, the following shall not constitute Indebtedness: (i) obligations under Hedging Agreements, (ii) obligations in respect of any Indebtedness that has been defeased (either covenant or legal) pursuant to the terms of the instrument creating or governing such Indebtedness and (iii) obligations under the Partnership Parks Agreements; provided , that obligations described in the foregoing clause (iii) shall constitute Indebtedness for purposes of Section 10(e).
“ Indemnified Liabilities ”: as defined in Section 12.5.
“ Indemnified Taxes ”: all Taxes (other than Excluded Taxes) and Other Taxes.
“ Indemnitee ”: as defined in Section 12.5.
“ Indentures ”: collectively, any indenture or other agreement pursuant to which Indebtedness of Parent, Holdings or the Borrower may be outstanding at any time, in each case as amended as permitted by this Agreement.
“ Insolvent ”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.
“ Intellectual Property ”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights and copyrightable works, copyright licenses, patents, inventions, discoveries and developments, patent licenses, trademarks, service marks, trade names, brand names, corporate names, domain names, logos, trade dress and other source indicators and the goodwill of any business symbolized thereby, trademark licenses, technology, know-how, processes, trade secrets and confidential or proprietary business information, all registrations and applications related thereto, the right to obtain renewals, extensions, substitutions, continuations, continuations-in-part, divisions, reissues, re-examinations or similar legal protections related thereto, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
“ Intercreditor Agreement ”: the Intercreditor Agreement, dated as of the date hereof, among the Administrative Agent, the “Administrative Agent” referred to in the Second Lien Credit Agreement, and acknowledged and agreed to by Parent, Holdings, the Borrower and the Subsidiary Guarantors.
“ Interest Payment Date ”: (a) as to any Base Rate Loan, the last day of each March, June, September and December to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Eurocurrency Loan having an Interest Period of three months or shorter, the last day of such Interest Period, (c) as to any Eurocurrency Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Loan (other than any Revolving Credit Loan and any Swing Line Loan), the date of any repayment or prepayment made in respect thereof.
“ Interest Period ”: as to any Eurocurrency Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurocurrency Loan and ending one, two, three or six months (or, to the extent available to all applicable Lenders, nine or twelve months) thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or six months (or, to the extent available to all applicable Lenders, nine or twelve months) thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then
current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:
“ Investment ”: for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit having a stated term not exceeding 360 days arising in connection with the sale of inventory, supplies or patron services by such Person in the ordinary course of business, and excluding also any deposit made by such Person in the ordinary course of business of such Person or as an advance payment in respect of a Capital Expenditure (to the extent the making of such Capital Expenditure will not result in a violation of any of the provisions of Section 9.7); (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person, other than any Guarantee under the Partnership Parks Agreements; provided , however , that the provision by Parent or any of its Subsidiaries of covenants, Guarantees and indemnities that are customary for non-recourse financings (as determined by Parent in good faith) with respect to Indebtedness incurred by a Person that is not a Subsidiary of Parent and that is otherwise non-recourse to Parent and its Subsidiaries shall not be deemed an Investment; or (d) the entering into of any Hedging Agreement. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment and shall include any and all fees, expenses, commission costs and charges related to such Investment.
“ Investment Grade Rating ”: a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.
“ IP Percentage ”: (a) with respect to Indebtedness incurred by the Borrower or any of its Subsidiaries, 100% and (b) with respect to Indebtedness incurred by Parent or Holdings, 25% if (for purposes of this clause (b)) on the applicable date of determination the First Lien Leverage Ratio is greater than 3.25 to 1.00 and 0% otherwise.
“ Issuing Lender ”: JPMorgan Chase Bank, N.A., and any other LC/Swing Line Revolving Lender from time to time designated by the Borrower as an Issuing Lender with the consent of such LC/Swing Line Revolving Lender and the Administrative Agent, or any of their respective affiliates, in each case in its capacity as issuer of any Letter of Credit.
“ LC/Swing Line Extensions of Credit ”: as to any LC/Swing Line Revolving Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of LC/Swing Line Revolving Loans, (b) such Lender’s LC/Swing Line Revolving Percentage of the aggregate principal amount of Swing Line Loans then outstanding plus (c) such Lender’s LC/Swing Line Revolving Percentage of the L/C Obligations then outstanding.
“ LC/Swing Line Revolving Commitment ”: as to any Lender, the obligation of such Lender, if any, to make LC/Swing Line Revolving Loans and participate in Swing Line Loans and Letters of Credit in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “LC/Swing Line Revolving Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Total LC/Swing Line Revolving Commitments is $55,000,000.
“ LC/Swing Line Revolving Lender ”: each Lender that has an LC/Swing Line Revolving Commitment or that is the holder of LC/Swing Line Revolving Loans.
“ LC/Swing Line Revolving Loans ”: as defined in Section 3.1.
“ LC/Swing Line Revolving Percentage ”: as to any LC/Swing Line Revolving Lender at any time, the percentage which such Lender’s LC/Swing Line Revolving Commitment then constitutes of the Total LC/Swing Line Revolving Commitments (or, at any time after the LC/Swing Line Revolving Commitments shall have expired or been terminated, the percentage which the aggregate amount of such Lender’s LC/Swing Line Extensions of Credit then outstanding constitutes of the amount of the Total LC/Swing Line Extensions of Credit then outstanding).
“ LC/Swing Line Revolving Subfacility ”: the LC/Swing Line Revolving Commitments and the LC/Swing Line Revolving Loans made thereunder.
“ L/C Commitment ”: $40,000,000.
“ L/C Fee Payment Date ”: the last day of each March, June, September and December and the last day of the Revolving Facility Commitment Period.
“ L/C Obligations ”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 4.5. The L/C Obligations of any Lender shall be its LC/Swing Line Revolving Percentage of the L/C Obligations.
“ L/C Participants ”: with respect to any Letter of Credit, the collective reference to all the LC/Swing Line Revolving Lenders other than the Issuing Lender that issued such Letter of Credit.
“ Lender Addendum ”: with respect to any Lender, a Lender Addendum, substantially in the form of Exhibit J, to be executed and delivered by such Lender on the Closing Date as provided in Section 12.18.
“ Lenders ”: as defined in the preamble hereto.
“ Letters of Credit ”: as defined in Section 4.1.
“ Lien ”: with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance having the effect of security in respect of such Property. For purposes of this Agreement and the other Loan Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property.
“ Liquidity ”: the sum of (a) Unrestricted Cash and Permitted Investments held by the Loan Parties and their consolidated Subsidiaries, (b) the Available Revolving Commitments on such date (with satisfaction of the applicable conditions precedent to Revolving Extensions of Credit to be tested as of such date) and (c) cash proceeds available to be received by the Loan Parties in exchange for the issuance of shares of Parent common stock pursuant to the Delayed Draw Equity Commitment.
“ Liquidity Put Threshold Amount ”: as defined in the New Time Warner Facility as in effect on the Closing Date or as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.
“ Loan ”: any loan made by any Lender pursuant to this Agreement.
“ Loan Documents ”: this Agreement, the Security Documents, the Applications and the Notes.
“ Loan Parties ”: Parent, Holdings, the Borrower and each Subsidiary of the Borrower that is a party to a Loan Document.
“ Majority Revolving Lenders ”: the holders of more than 50% of the sum of (a) the Total Non-LC/Swing Line Revolving Commitments then in effect (or, if the Non-LC/Swing Line Revolving Commitments have been terminated, the Total Non-LC/Swing Line Extensions of Credit then outstanding) and (b) the Total LC/Swing Line Revolving Commitments then in effect (or, if the LC/Swing Line Revolving Commitments have been terminated, the Total LC/Swing Line Extensions of Credit then outstanding).
“ Majority Term Lenders ”: the holders of more than 50% of the aggregate unpaid principal amount of the Tranche B Term Loans.
“ Margin Stock ”: “margin stock” within the meaning of Regulations T, U and X of the Board.
“ Material Adverse Effect ”: a material adverse effect on (a) the Loans, (b) the Business, Property or financial condition of Parent and its Subsidiaries taken as a whole or (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.
“ Materials of Environmental Concern ”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
“ Measurement Period ”: for any determination under this Agreement, the four consecutive fiscal quarters of Parent or Borrower, as applicable, then last ended for which financial statements are required to be delivered pursuant to Section 8.1(a) or (d).
“ Moody’s ”: Moody’s Investors Service, Inc. and any successor thereto.
“ Mortgaged Properties ”: the Real Properties listed on Schedule 1.1(a), as to which the Administrative Agent for the benefit of the Lenders has been granted a Lien pursuant to the Mortgages.
“ Mortgages ”: each of the mortgages and deeds of trust encumbering the Mortgaged Properties made by the Loan Party party thereto in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, as delivered on the Closing Date in form and substance reasonably satisfactory to the Administrative Agent, together with any other mortgages and deeds of trust made by any Loan Party in accordance with Section 8.6(b) in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, substantially in the form of the mortgages and deeds of trust delivered on the Closing Date (with such changes thereto as shall be reasonably advisable under the law of the jurisdiction in which such mortgage or deed of trust is to be recorded), in each case as the same may be amended, supplemented, substituted or otherwise modified from time to time.
“ Multiemployer Plan ”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“ Net Cash Proceeds ”: (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof received by Parent or any Subsidiary in the form of cash and Permitted Investments (including any such proceeds received in such form by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such Asset Sale or Recovery Event, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness and other obligations secured by a Lien expressly permitted hereunder on, or amount required to be paid under Capital Lease Obligations relating to, any asset which is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith and net of (i) taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements applicable to the transactions) and (ii) any reserve for adjustment in respect of (A) the sale price of such asset or assets established in accordance with GAAP and (B) any liabilities associated with such asset or assets retained by Parent or any of its Subsidiaries after such sale or other disposition thereof and (b) in connection with any issuance or sale of debt securities or instruments or the incurrence of loans or other Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.
“ New Time Warner Facility ”: the loan facility provided by TW to the Acquisition Parties (and guaranteed by Parent, Holdings, the Borrower and each other of Parent’s Subsidiaries that are or become Subsidiary Guarantors pursuant to, or otherwise guarantee obligations under, this Agreement and the other Loan Documents), evidenced by (i) that certain Loan Agreement, dated as of the date hereof, by and among TW and the Acquisition Parties, in the original principal amount of $150,000,000, and each other loan document entered in connection therewith, and (ii) that certain Guarantee Agreement, dated as of the date hereof, made by the Guarantors in favor of TW, in each case, as the same may be refinanced, refunded, replaced or renewed in accordance with Section 9.3(c) and as may be amended, restated, supplemented or otherwise modified from time to time, provided such amendment, restatement, supplement or other modification does not violate Section 9.14.
“ New York Collateral ”: as defined in Section 12.7(a).
“ Non-Consenting Lender ”: in the event that (i) the Borrower or the Administrative Agent has requested the Lenders to consent to a departure or waiver of any provisions of the Loan Documents or to agree to any amendment thereto, (ii) the consent, waiver or amendment in question requires the agreement of all Lenders or all affected Lenders in accordance with the terms of Section 12.1 or all the Lenders with respect to a certain class of Loans or Commitments and (iii) the Required Lenders have
agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed a “Non-Consenting Lender”.
“ Non-Guarantor Subsidiary ”: any Subsidiary of the Borrower that is not a Subsidiary Guarantor.
“ Non-LC/Swing Line Extensions of Credit ”: as to any Non-LC/Swing Line Revolving Lender at any time, an amount equal to the aggregate principal amount of Non-LC/Swing Line Revolving Loans made by such Lender.
“ Non-LC/Swing Line Revolving Commitment ”: as to any Lender, the obligation of such Lender, if any, to make Non-LC/Swing Line Revolving Loans in an aggregate principal amount not to exceed the amount set forth under the heading “Non-LC/Swing Line Revolving Commitment” opposite such Lender’s name on Schedule 1 to the Lender addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Total Non-LC/Swing Line Revolving Commitments is $65,000,000.
“ Non-LC/Swing Line Revolving Percentage ”: as to any Non-LC/Swing Line Revolving Lender at any time, the percentage which such Lender’s Non-LC/Swing Line Revolving Commitment then constitutes of the Total Non-LC/Swing Line Revolving Commitments (or, at any time after the Non-LC/Swing Line Revolving Commitments shall have expired or been terminated, the percentage which the aggregate amount of such Lender’s Non-LC/Swing Line Extensions of Credit then outstanding constitutes of the amount of the Total Non-LC/Swing Line Extensions of Credit then outstanding).
“ Non-LC/Swing Line Revolving Subfacility ”: the Non-LC/Swing Line Revolving Commitments and the Non-LC/Swing Line Revolving Loans made thereunder.
“ Non-LC/Swing Line Revolving Lender ”: each Lender that has a Non-LC/Swing Line Revolving Commitment or that is the holder of Non-LC/Swing Line Revolving Loans.
“ Non-LC/Swing Line Revolving Loans ”: as defined in Section 3.1.
“ Non-U.S. Lender ”: as defined in Section 5.13(e).
“ Note ”: any promissory note evidencing any Loan.
“ Obligations ”: the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans, the Reimbursement Obligations and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender (or, in the case of
Specified Hedge Agreements and Specified Cash Management Agreements, obligations and liabilities of Parent, Holdings or the Borrower to any Lender or any affiliate of any Lender or any Person that was a Lender or an affiliate of a Lender at the time of entry into a Specified Hedge Agreement), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement, any Specified Cash Management Agreement or any other document made, delivered or given by any Loan Party in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise; provided , that (a) obligations of Parent, Holdings or the Borrower under any Specified Hedge Agreement or any Specified Cash Management Agreement shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (b) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Specified Hedge Agreements or Specified Cash Management Agreements.
“ Operated Properties ”: as defined in Section 6.17(a).
“ Other Taxes ”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.
“ Parent ”: as defined in the preamble hereto.
“ Parent Backstop Group ”: as defined in Section 7.1(t).
“ Parent Consolidated Adjusted EBITDA ”: for any period, the sum, for Parent and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following:
(a) Consolidated Net Income of Parent and its Subsidiaries for such period excluding those amounts which, in the determination of Consolidated Net Income for such period, have been added or deducted for (i) total interest expense and, to the extent not reflected in such total interest expense, any losses on hedging or other derivative instruments, net of interest income and gains on such hedging obligations, (ii) provisions for federal, state, local and foreign income tax, franchise taxes and similar taxes imposed in lieu of income tax, (iii) depreciation and amortization expense (including, without limitation, amortization of goodwill and other intangible assets) and any impairment of property, equipment, goodwill or other intangible assets, (iv) any effect of extraordinary, non-recurring or unusual gains or losses or expenses and curtailments or modifications to pension and post-retirement employee benefit plans, provided that the amount of cash expenditures added back as a result of this clause (iv) shall not exceed $15,000,000 in any twelve-month period, (v) any net gains or losses of disposed, abandoned or
discontinued assets or operations except for income and expenses prior to disposition, (vi) any fees, expenses, commissions, costs or other charges related to (A) any securities offering, Investment, acquisition, disposition or other similar transaction permitted hereunder or the incurrence of Indebtedness permitted to be incurred hereunder (including any extension, renewal, refinancing or replacement thereof), in each case whether or not successful and whether or not consummated prior to, on, or after the Closing Date, (B) the Cases, the Plan of Reorganization and the transactions contemplated by the Cases and the Plan of Reorganization, and (C) emergence compensation, the termination or settlement of leases and executory contracts, litigation costs and settlements, asset write-ups or write-downs, income and gains recorded in connection with the corporate reorganization effected in connection with the administration of the Debtors’ Cases, (vii)(A) any net unrealized gain or loss (after any offset) resulting in such period from obligations under any hedging obligations or other derivative instruments and the application of Statement of Financial Accounting Standards No. 133 and (B) any net unrealized gain or loss (after any offset) resulting in such period from currency translation, in each case to the extent not incurred in cash and (viii) the Consolidated Net Income of any Person (adjusted for items (i) through (vii) of this paragraph (a)) to the extent (A) attributable to interests held by third parties in Subsidiaries of Parent that are not wholly-owned by Parent or (B) attributable to interests in Persons accounted for under the equity method except to the extent of the cash received by Parent or any of its Subsidiaries from such Person, net of the Investments therein, in respect of such period, plus
(b) any non-cash or stock-based compensation costs or expenses incurred by Parent or any of its Subsidiaries pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, less any cash costs of such plans or agreements incurred during such period.
Calculations of Parent Consolidated Adjusted EBITDA shall be as set forth on Exhibit B attached hereto.
Notwithstanding the foregoing if, during any period for which Parent Consolidated Adjusted EBITDA is being determined, Parent or any of its Subsidiaries shall have consummated any Acquisition or Disposition then, for all purposes of this Agreement, Parent Consolidated Adjusted EBITDA shall be determined on a pro forma basis as if such Acquisition or Disposition had been made or consummated on the first day of such period. The parties hereby agree that Parent Consolidated Adjusted EBITDA for the fiscal quarter ending (a) June 30, 2009 was $53,241,000, (b) September 30, 2009 was $205,755,000 and (c) December 31, 2009 was ($16,926,000).
“ Park ”: collectively, the Existing Parks and any other amusement or attraction park acquired by any of Parent and its Subsidiaries after the date hereof.
“ Participant ”: as defined in Section 12.6(c).
“ Participant Register ”: as defined in Section 12.6(b)(iv).
“ Partnership Parks Agreements ”: (a) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., the Borrower and Six Flags Entertainment Corporation and the Related Agreements (as defined therein), (b) the Overall Agreement dated as of November 24, 1997 among Six Flags Over Texas Fund, Ltd., Flags’ Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., the Borrower and Six Flags Entertainment Corporation, as amended by the Agreement dated as of December 6, 1999 between and among the foregoing parties and Six Flags Fund II, Ltd., and the Related Agreements (as defined therein), and (c) the Subordinated Indemnity Agreement, and each related agreement entered into in connection therewith (including, without limitation, the Beneficial Share Assignment Agreement, the Subordinated Indemnity Escrow Agreement, dated as of September 28, 2006, by and among Parent, Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), Historic TW Inc. (formerly known as Time Warner Inc.) and the Bank of New York, as the same has been amended, supplemented, waived or otherwise modified on or prior to the Closing Date, and the Acquisition Company Liquidity Agreement dated as of December 8, 2006 by and among Parent, Holdings, Borrower, GP Holdings, Inc., SFOG II, Inc., SFT Holdings, Inc., Time Warner Inc., TW-SPV Co., Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), the Acquisition Parties, SFOG Acquisition A Holdings, Inc., SFOG Acquisition B Holdings, Inc., SFOT Acquisition I Holdings, Inc. and SFOT Acquisition II Holdings, Inc.), in each case, as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.
“ Partnership Parks Entities ”: (i) Six Flags Over Georgia II, L.P., a Delaware limited partnership, Texas Flags, Ltd., a Texas limited partnership, GP Holdings Inc., a Delaware corporation, SFOT Acquisition I Holdings, Inc., a Delaware corporation, SFOT Acquisition II Holdings, Inc., a Delaware corporation, SFOG Acquisition A Holdings, Inc., a Delaware corporation, SFOG Acquisition B Holdings, Inc., a Delaware corporation, Six Flags Over Georgia, Inc., a Delaware corporation, and the Acquisition Parties and (ii) any of their respective Subsidiaries.
“ Payment Amount ”: as defined in Section 4.5.
“ Payment Office ”: the office specified from time to time by the Administrative Agent as its payment office by notice to the Borrower and the Lenders.
“ PBGC ”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).
“ Permitted Acquisition ”: as defined in Section 9.5(e)(i).
“ Permitted Holders ”: Any fund affiliated with Stark Investments, CQS, Tricadia Capital Management, LLC, 1798 Global Partners, Capital Ventures International, Altai Capital Management, H Partners Management LLC, Bay Harbour Management, Pentwater Capital Management LP, Fortelus Capital Management LLP, Credit Suisse Securities (USA) LLC and Candlewood Special Situations Master Fund Ltd.
“ Permitted Investments ”: (a) Dollars; (b)(i) Pounds Sterling or Euros or (ii) in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business; (c) securities issued or directly and fully and unconditionally guaranteed or insured by the United States government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition; (d) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $500,000,000 in the case of U.S. banks and $100,000,000 (or the Dollar equivalent as of the date of determination) in the case of non-U.S. banks; (e) repurchase obligations for underlying securities of the types described in clauses (c), (d) and (h) entered into with any financial institution meeting the qualifications specified in clause (d) above; (f) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case maturing within 24 months after the date of creation thereof and Indebtedness or preferred stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date of acquisition; (g) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Borrower) and in each case maturing within 24 months after the date of creation or acquisition thereof; (h) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition; (i) readily marketable direct obligations issued by any foreign government or any political subdivision or public instrumentality thereof, in each case having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition; (j) Investments with average maturities of 12 months or less from the date of acquisition in money market funds; (k) investment funds investing 90% of their assets in securities of the types described in clauses (a) through (j) above; and (l) in the case of Foreign Subsidiaries, substantially similar investments to those set forth in clauses (a) through (k) above denominated in foreign currencies, provided that references to the United States of America (or any agency or instrumentality thereof) shall be deemed to mean foreign countries having a sovereign rating of “A” or better from either S&P or Moody’s (or another nationally recognized statistical rating agency selected by the Borrower and reasonably acceptable to the Administrative Agent).
“ Permitted Liens ”: as defined in Section 9.4.
“ Permitted Second Lien Refinancing Indebtedness ”: as defined in Section 9.3(i).
“ Person ”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“ Plan ”: an employee benefit plan (within the meaning of Section 3(3) of ERISA) and in respect of which Parent or any ERISA Affiliate is (or if such Plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an employer as defined in Section 305 of ERISA.
“ Plan of Reorganization ”: as defined in the recitals hereto.
“ Platform ”: as defined in Section 7.1(f).
“ Prepayment Date ”: as defined in Section 5.11(d).
“ Prepayment Option Notice ”: as defined in Section 5.11(d).
“ Prime Rate ”: the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged JPMorgan Chase Bank, N.A. in connection with extensions of credit to borrowers).
“ Pro Forma Balance Sheet ”: as defined in Section 6.1.
“ Property ”: any right or interest in or to property of any kind whatsoever, whether Real Property, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.
“ Pro Rata Share ”: as to any LC/Swing Line Revolving Lender at any time, such Lender’s LC/Swing Line Revolving Percentage and as to any Non-LC/Swing Line Revolving Lender at any time, such Lender’s Non-LC/Swing Line Revolving Percentage.
“ Purchase Money Indebtedness ”: (a) Indebtedness consisting of the deferred purchase price of Property, conditional sale or other obligations under any title retention agreement, installment sales and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the Property being financed, and (b) Indebtedness incurred to finance the acquisition of Property (including Acquisitions), including additions and improvements; provided , however , that any Lien arising in connection with any such Indebtedness shall be limited to the specified asset being financed (or replacement items) or, in the case of Real Property, the Real Property on which such asset is attached; and provided further , that such Indebtedness is incurred within 180 days after such acquisition, addition or improvement by the Borrower or a Subsidiary of such asset.
“ Purchase Price ”: with respect to any Acquisition, the sum (without duplication) of (a) the amount of cash paid by Parent and its Subsidiaries in connection with such Acquisition, (b) the value (as determined for purposes of such Acquisition in accordance with the applicable acquisition agreement) of all Capital Stock of Parent or any of its Subsidiaries issued or given as consideration in connection with such Acquisition (other than Qualified Net Cash Equity Proceeds applied to finance such Acquisition within 180 days of such Acquisition or Capital Stock of Parent that is issued in connection with and as consideration for an Acquisition), (c) the principal amount (or, if less, the accreted value) at the time of such Acquisition of all Indebtedness incurred, assumed or acquired by Parent and its Subsidiaries in connection with such Acquisition, (d) all additional purchase price amounts in connection with such Acquisition in the form of earnouts, deferred purchase price and other contingent obligations that are required to be recorded as a liability on the balance sheet of Parent and its Subsidiaries in accordance with GAAP, Regulation S-X under the Securities Act of 1933, as amended, or any other rule or regulation of the SEC, (e) all amounts paid by Parent and its Subsidiaries in respect of covenants not to compete, consulting agreements and other affiliated contracts in connection with such Acquisition, and (f) the aggregate fair market value of all other consideration given by Parent and its Subsidiaries in connection with such Acquisition.
“ Qualified Capital Stock ” shall mean any Capital Stock that is not Disqualified Capital Stock.
“ Qualified Counterparty ”: with respect to any Specified Hedge Agreement or any Specified Cash Management Agreement, any counterparty thereto that, at the time such Specified Hedge Agreement or such Specified Cash Management Agreement was entered into, was a Lender or an affiliate of a Lender.
“ Qualified Net Cash Equity Proceeds ”: the Net Cash Proceeds of any offering of Capital Stock of Parent so long as (a) such offering was made in express contemplation of an Acquisition or an Investment, as the case may be, (b) such Capital Stock is not mandatorily redeemable prior to the date that is one year after the Tranche B Maturity Date and (c) such Acquisition or Investment, as the case may be, is consummated within 180 days after receipt by Parent of such Net Cash Proceeds.
“ Qualifying Bids ” as defined in Section 5.19(c).
“ Qualifying Lender ” as defined in Section 5.19(d).
“ Real Properties ”: all real property, including the improvements thereon, owned by, or leased by, Parent, Holdings, the Borrower or its Subsidiaries.
“ Recovery Event ”: any settlement of or payment in excess of $2,500,000 in respect of any Property or casualty insurance claim or any condemnation proceeding relating to any Property of Borrower or any of its Subsidiaries.
“ Refinancing Expenses ”: with respect to any refinancing, refunding, replacement or renewal of any Indebtedness, accrued and unpaid interest (or dividends) and premium
thereon plus other reasonable amounts paid and fees and expenses incurred in connection therewith.
“ Refunded Swing Line Loans ”: as defined in Section 4.10(b).
“ Refunding Date ”: as defined in Section 4.10(c).
“ Register ”: as defined in Section 12.6(b)(iv).
“ Regulation H ”: Regulation H of the Board as in effect from time to time.
“ Regulation U ”: Regulation U of the Board as in effect from time to time.
“ Reimbursement Obligation ”: the obligation of the Borrower to reimburse each Issuing Lender pursuant to Section 4.5 for amounts drawn under Letters of Credit issued by such Issuing Lender for the account of the Borrower.
“ Reinvestment Deferred Amount ”: with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by the Borrower or any of its Subsidiaries in connection therewith that, as a result of the delivery of a Reinvestment Notice, are not applied to repay the Loans pursuant to Section 5.5(b).
“ Reinvestment Event ”: any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.
“ Reinvestment Notice ”: a written notice executed by a Responsible Officer of Holdings or the Borrower stating that no Default or Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire, restore or reconstruct assets useful in its business (including for Permitted Acquisitions).
“ Reinvestment Prepayment Amount ”: with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire, restore, or reconstruct assets useful in business of the Borrower and its Subsidiaries (including for Permitted Acquisitions).
“ Reinvestment Prepayment Date ”: with respect to any Reinvestment Event, the earlier of (a) the date occurring one year after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire, restore or reconstruct assets useful in the business of Parent and its Subsidiaries (including for Permitted Acquisitions) with all or any portion of the relevant Reinvestment Deferred Amount.
“ Related Transactions ”: the execution, delivery and performance of the New Time Warner Facility by the parties thereto, the repayment in full of the Existing Time Warner Facility, the amendment to, or amendment and restatement of, supplement or
other modification to certain Partnership Parks Agreement or other Contractual Obligations of the Partnership Parks Entities in connection with the Plan of Reorganization and any other transactions consummated in connection with the Plan of Reorganization, including the contemplated rights offering to purchase common stock of Parent.
“ Release ”: any release, threatened release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata that violates or creates any liability under any Environmental Law.
“ Reorganization ”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“ Reply Amount ”: as defined in Section 5.19(b).
“ Reply Discount ”: as defined in Section 5.19(b).
“ Reportable Event ”: any of the events set forth in Section 4043(c) of ERISA and the regulations issued thereunder, with respect to a Single Employer Plan, as to which the PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event ( provided that a failure of any Single Employer Plan to meet the minimum funding standards of Section 412 or 430 of the Code or Section 302 of ERISA, including, without limitation, the failure to make on or before its due date a required installment under Section 430(j) of the Code, shall be a reportable event).
“ Repricing Transaction ”: (a) any prepayment of the Tranche B Term Loans using proceeds of Indebtedness incurred by the Borrower from a substantially concurrent incurrence of syndicated term loans for which the interest rate payable thereon on the date of such prepayment is lower than the Eurocurrency Rate on the date of such prepayment plus the Applicable Margin with respect to the Tranche B Term Loans on the date of such prepayment, provided that the primary purpose of such prepayment is to refinance Tranche B Term Loans at a lower interest rate or (b) any repricing of the Tranche B Term Loans pursuant to an amendment hereto resulting in the interest rate payable thereon on the date of such amendment being lower than the Eurocurrency Rate on the date of such prepayment plus the Applicable Margin with respect to the Tranche B Term Loans on the date of such prepayment.
“ Required Lenders ”: at any time, the holders of more than 50% of the sum of (a) the aggregate unpaid principal amount of the Tranche B Term Loans then outstanding and (b) the Total Revolving Credit Commitments then in effect or, if the Revolving Credit Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding.
“ Requirement of Law ”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty,
rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.
“ Responsible Officer ”: as to any Person, the chief executive officer, president, chief financial officer, senior vice president or treasurer of such Person, but in any event, with respect to financial matters, the chief financial officer, senior vice president-finance or treasurer of such Person.
“ Restricted Payment ”: dividends (in cash, Property or obligations) on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of, any shares of any Capital Stock of Parent, Holdings or the Borrower or of any warrants, options or other rights to acquire the same (or to make any payments to any Person (except “earn-out” payments or similar payments in connection with an Acquisition or pursuant to any agreement entered into in connection therewith, in each case where such obligation does not constitute Indebtedness) such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market or equity value of Parent, Holdings or the Borrower), but excluding dividends payable solely in shares of common stock of Parent, Holdings or the Borrower.
“ Revolver Indebtedness ”: Indebtedness of the Borrower in respect of Revolving Credit Loans and Swing Line Loans.
“ Revolving Credit Commitment ”: as to any Lender, the obligation of such Lender, if any, to make Revolving Credit Loans and participate in Swing Line Loans and Letters of Credit, if applicable, in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Revolving Credit Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original aggregate amount of the Total Revolving Credit Commitments is $120,000,000. Each Lender’s Revolving Credit Commitment shall be either an LC/Swing Line Revolving Commitment or Non-LC/Swing Line Revolving Commitment as set forth on Schedule 1 to the Lender Addendum delivered by such Lender or such Assignment and Acceptance.
“ Revolving Credit Facility ”: as defined in the definition of “Facility” in this Section 1.1.
“ Revolving Credit Lender ”: each Lender that has a Revolving Credit Commitment or that is the holder of Revolving Credit Loans.
“ Revolving Credit Loans ”: as defined in Section 3.1.
“ Revolving Extensions of Credit ”: as to any Lender, its LC/Swing Line Extensions of Credit or Non-LC/Swing Line Extensions of Credit, as applicable.
“ Revolving Facility Commitment Period ”: the period from and including the Closing Date to the Revolving Facility Termination Date.
“ Revolving Facility Termination Date ”: June 30, 2015.
“ Revolving Subfacility ”: each of (a) the LC/Swing Line Revolving Subfacility and (b) the Non-LC/Swing Line Revolving Subfacility.
“ RP Eligible Proceeds ”: Net Cash Proceeds from Dispositions permitted under Sections 9.5(c)(ii), 9.5(c)(vi), 9.5(c)(vii), 9.5(c)(viii) and 9.5(c)(xiii).
“ S&P ”: Standard & Poor’s Ratings Services, a subsidiary of The McGraw-Hill Companies, Inc., and any successor thereto.
“ SEC ”: the Securities and Exchange Commission (or successors thereto or an analogous federal Governmental Authority).
“ Second Lien Credit Agreement ”: the Second Lien Credit Agreement dated as of the date hereof among Parent, Holdings, the Borrower, the Subsidiary Guarantors, the lenders thereunder and Goldman Sachs Lending Partners LLC, as administrative agent thereunder, as the same may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, and including any agreement, instrument or other document extending the maturity of, refinancing, replacing, renewing, refunding or otherwise restructuring all or a portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.
“ Second Lien Credit Documents ”: the Second Lien Credit Agreement and all agreements, instruments and documents executed and delivered pursuant to or in connection with any of the foregoing in connection with the Second Lien Credit Agreement or any Permitted Second Lien Refinancing Indebtedness (including indentures, notes, guarantees, security agreements, mortgages and other collateral documents), in each case, as such agreements, instruments or other documents may be amended, amended and restated, supplemented, modified, refunded, renewed or extended, refinanced, replaced or otherwise restructured as permitted under this Agreement and the Intercreditor Agreement, in whole or in part from time to time with respect to all or any portion of the Indebtedness under such agreement or agreements or any successor replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.
“ Security Documents ”: the collective reference to the Guarantee and Collateral Agreement (and all assumptions thereof), the Mortgages and all other security documents which shall have been delivered on or prior to the Closing Date, or are hereafter delivered to the Administrative Agent granting a Lien on any Property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document, as the same have been, and on and after the Closing Date shall be modified, amended, amended and restated, restated or supplemented in accordance herewith.
“ Senior Secured Debt ”: as at the last day of any Measurement Period, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than Revolver Indebtedness and the undrawn portion of any outstanding letters of credit) of the Borrower and its Subsidiaries hereunder and under the Second Lien Credit Agreement or that otherwise is secured by property or assets of the Borrower and its Subsidiaries and that would, in conformity with GAAP, be set forth on the balance sheet of the Borrower and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amount of Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the Revolver Indebtedness as of each of September 30, 2009, December 31, 2009 and March 31, 2010 was $0.
“ Senior Secured Leverage Ratio ”: as at any date, the ratio of (a) Senior Secured Debt as at such date to (b) Borrower Consolidated Adjusted EBITDA for the Measurement Period most recently ended prior to such date.
“ SFO Notes ”: as defined in Section 7.1(t).
“ Shared Services Agreement ”: the Amended and Restated Shared Services Agreement, dated as of January 1, 2006, among Parent, Holdings, the Borrower and PP Data Services Inc., a Subsidiary of Holdings, as the same may be amended in a manner not materially adverse to the interests of the Lenders.
“ Single Employer Plan ”: any Plan that is covered by Title IV of ERISA, but which is not a Multiemployer Plan.
“ Solvent ”: with respect to any Person, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured and (iii) assets shall include insurance coverage and/or indemnification available with respect to any liability.
“ Specified Cash Management Agreement ”: any agreement, or any Guarantee of any agreement, providing for treasury, depositary, purchasing card or cash management services, including in connection with any automated clearing house transfers of funds or any similar transactions, between Parent, Holdings, the Borrower or any Subsidiary Guarantor and any Qualified Counterparty.
“ Specified Hedge Agreement ”: any Hedging Agreement entered into by Parent, Holdings, the Borrower or any Subsidiary Guarantor and any Qualified Counterparty.
“ Subordinated Indemnity Agreement ”: the Subordinated Indemnity Agreement, dated as of April 1, 1998, among Parent, GP Holdings Inc., Time Warner Inc., Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), TW-SPV Co., Holdings, the Borrower, SFOG II, Inc. and SFT Holdings, Inc., as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.
“ Subsidiary ”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person; provided that, notwithstanding the foregoing, each of the Partnership Parks Entities will be deemed to be a Subsidiary of Parent for all purposes under this Agreement, provided further that none of the joint ventures established pursuant to the Great Escape Agreements, any Inactive Subsidiary, Six Flags Over Texas Fund, Ltd. or Six Flags Fund, Ltd. will be deemed to be a Subsidiary of Parent for any purpose under this Agreement. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Parent.
“ Subsidiary Guarantor ”: each Subsidiary of the Borrower other than (a) any Excluded Foreign Subsidiary, (b) Flags Beverages, Inc., Fiesta Texas Hospitality LLC and any other Subsidiary whose only material asset is a liquor license, (c) HWP, (d) HWP Development Holdings LLC, (e) SFRCC Corp., (f) any Inactive Subsidiary and (g) after the Closing Date, any non-Wholly Owned Subsidiary that does not execute the Guarantee and Collateral Agreement as permitted by Section 8.6.
“ Swing Line Commitment ”: the obligation of the Swing Line Lender to make Swing Line Loans pursuant to Section 4.9 in an aggregate principal amount at any one time outstanding not to exceed $15,000,000.
“ Swing Line Exposure ”: at any time, the aggregate principal amount of all Swing Line Loans outstanding at such time. The Swing Line Exposure of any Lender in respect of any Swing Line Loan shall be its LC/Swing Line Revolving Percentage of the principal amount of such Swing Line Loan.
“ Swing Line Lender ”: JPMorgan Chase Bank, N.A., in its capacity as the lender of Swing Line Loans.
“ Swing Line Loans ”: as defined in Section 4.9.
“ Swing Line Participation Amount ”: as defined in Section 4.10(c).
“ Tax Sharing Agreement ”: that certain Tax Sharing Agreement, effective as of January 1, 1999 and as amended on or prior to the Closing Date, among Parent, Holdings, and those Subsidiaries which are parties thereto, as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 9.14.
“ Taxes ”: any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority.
“ Time Warner ”: Historic TW Inc. and/or its affiliates.
“ Total LC/Swing Line Extensions of Credit ”: at any time, the aggregate amount of the LC/Swing Line Extensions of Credit of the LC/Swing Line Revolving Lenders outstanding at such time.
“ Total LC/Swing Line Revolving Commitments ”: at any time, the aggregate amount of the LC/Swing Line Revolving Commitments then in effect.
“ Total Non-LC/Swing Line Extensions of Credit ”: at any time, the aggregate amount of the Non-LC/Swing Line Extensions of Credit of the Non-LC Swing Line Revolving Lenders outstanding at such time.
“ Total Non-LC/Swing Line Revolving Commitments ”: at any time, the aggregate amount of the Non-LC/Swing Line Revolving Commitments then in effect.
“ Total Revolving Credit Commitments ”: at any time, the aggregate amount of the Revolving Credit Commitments then in effect.
“ Total Revolving Extensions of Credit ”: at any time, the aggregate amount of the Revolving Extensions of Credit of the Revolving Credit Lenders outstanding at such time.
“ Tranche B Maturity Date ”: June 30, 2016.
“ Tranche B Prepayment Amount ”: as defined in Section 5.11(d).
“ Tranche B Term Loan ”: as defined in Section 2.1.
“ Tranche B Term Loan Commitment ”: as to any Lender, the obligation of such Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder in a principal
amount not to exceed the amount set forth under the heading “Tranche B Term Loan Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender, or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The aggregate amount of the Tranche B Term Loan Commitments on the Closing Date is $770,000,000.
“ Tranche B Term Loan Facility ”: as defined in the definition of “Facility” in this Section 1.1.
“ Tranche B Term Loan Lender ”: each Lender that has a Tranche B Term Loan Commitment or is the holder of a Tranche B Term Loan.
“ Tranche B Term Loan Percentage ”: as to any Lender at any time, the percentage which the principal amount of such Lender’s Tranche B Term Loan then outstanding constitutes of the aggregate principal amount of all Tranche B Term Loans then outstanding.
“ Transactions ”: (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is or is to be a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, (b) the execution, delivery and performance by each Loan Party of the Second Lien Loan Documents to which it is or is to be a party, the borrowings under the Second Lien Loan Documents and the use of the proceeds thereof, and (c) the transactions consummated in connection with the Plan of Reorganization.
“ Transferee ”: as defined in Section 12.15.
“ TW ”: TW-SF LLC, a Delaware limited liability company or its permitted successors and assigns.
“ Type ”: as to any Loan, its nature as a Base Rate Loan or a Eurocurrency Loan.
“ Uniform Commercial Code ”: the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided , however , that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority (but not attachment) and for purposes of definitions related to such provisions.
“ Unrestricted Cash ”: all cash that is not restricted cash, as determined in accordance with GAAP.
“ U.S.A. PATRIOT Act ”: (a) the Trading with the Enemy Act, as amended, and each of the foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as amended or modified from time to time.
“ Wholly Owned Non-Guarantor Foreign Subsidiary ”: as defined in Section 9.3(f).
“ Wholly Owned Subsidiary ”: with respect to any Person, any corporation, partnership, limited liability company or other entity of which all of the equity securities or other ownership interests (other than, in the case of a corporation, directors’ qualifying shares or equity interests held by foreign nationals, in each case to the extent mandated by applicable law) are directly or indirectly owned or controlled by such Person or one or more Wholly Owned Subsidiaries of such Person.
“ Withdrawal Liability ”: liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
1.2. Other Definitional Provisions . (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.
2.1. Tranche B Term Loan Commitments . Subject to the terms and conditions hereof, the Tranche B Term Loan Lenders severally agree to make term loans denominated in Dollars (each, a “ Tranche B Term Loan ”) to the Borrower on the Closing Date in an amount for each Tranche B Term Loan Lender not to exceed the Tranche B Term Loan Commitment of such Lender. The Tranche B Term Loans may from time to time be Eurocurrency Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 5.6.
2.2. Procedure for Term Loan Borrowing . The Borrower shall deliver to the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (i) three Business Days prior to the anticipated Closing Date, in the case of Eurocurrency Loans and (ii) one Business Day prior to the anticipated Closing Date, in the case of Base Rate Loans) requesting that the Tranche B Term Loan Lenders make the Tranche B Term Loans on the Closing Date and specifying the amount to be borrowed. No Tranche B Term Loan may be converted into or continued as a Eurocurrency Loan having an interest period in excess of one month prior to the date that is 30 days after the Closing Date. Upon receipt of such notice the Administrative Agent shall promptly notify each Tranche B Term Loan Lender thereof. Not later than 12:00 Noon, New York City time, on the Closing Date each Tranche B Term Loan Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Tranche B Term Loan to be made by such Lender.
2.3. Repayment of Tranche B Term Loans . The Tranche B Term Loan of each Tranche B Term Loan Lender shall mature in 14 installments, commencing on March 31, 2013, each of which shall be in an amount equal to such Lender’s Tranche B Term Loan Percentage multiplied by the amount set forth below opposite such installment and on the date indicated for such installment:
|
Installment |
|
Principal Amount |
|
|
|
March 31, 2013 |
|
$ |
1,925,000.00 |
|
|
June 30, 2013 |
|
$ |
1,925,000.00 |
|
|
September 30, 2013 |
|
$ |
1,925,000.00 |
|
|
December 31, 2013 |
|
$ |
1,925,000.00 |
|
|
March 31, 2014 |
|
$ |
1,925,000.00 |
|
|
June 30, 2014 |
|
$ |
1,925,000.00 |
|
|
September 30, 2014 |
|
$ |
1,925,000.00 |
|
|
Installment |
|
Principal Amount |
|
|
|
December 31, 2014 |
|
$ |
1,925,000.00 |
|
|
March 31, 2015 |
|
$ |
1,925,000.00 |
|
|
June 30, 2015 |
|
$ |
1,925,000.00 |
|
|
September 30, 2015 |
|
$ |
1,925,000.00 |
|
|
December 31, 2015 |
|
$ |
1,925,000.00 |
|
|
March 31, 2016 |
|
$ |
1,925,000.00 |
|
|
Tranche B Maturity Date |
|
$ |
744,975,000.00 |
|
3.1. Revolving Credit Commitments . (a) Subject to the terms and conditions hereof, (i) the LC/Swing Line Revolving Lenders severally agree to make revolving credit loans denominated in Dollars (“ LC/Swing Line Revolving Loans ”) to the Borrower from time to time during the Revolving Facility Commitment Period in an aggregate principal amount at any one time outstanding for each LC/Swing Line Revolving Lender which, when added to such Lender’s LC/Swing Line Revolving Percentage of the sum of (x) the L/C Obligations then outstanding and (y) the aggregate principal amount of the Swing Line Loans then outstanding, does not exceed the amount of such Lender’s LC/Swing Line Revolving Commitment and (ii) the Non-LC/Swing Line Revolving Lenders severally agree to make revolving credit loans denominated in Dollars (“ Non-LC/Swing Line Revolving Loans ”; together with the LC/Swing Line Revolving Loans, the “ Revolving Credit Loans ”) to the Borrower from time to time during the Revolving Facility Commitment Period in an aggregate principal amount at any one time outstanding for each Non-LC/Swing Line Revolving Lender which does not exceed the amount of such Lender’s Non-LC/Swing Line Revolving Commitment. During the Revolving Facility Commitment Period the Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Credit Loans may from time to time be Eurocurrency Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 3.2 and 5.6, provided that no Revolving Credit Loan shall be made as a Eurocurrency Loan after the day that is one month prior to the Revolving Facility Termination Date.
3.2. Procedure for Revolving Credit Borrowing . The Borrower may borrow under the Revolving Credit Commitments on any Business Day during the Revolving Facility Commitment Period, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business Days prior to the requested Borrowing Date, in the case of Eurocurrency Loans, or (b) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans), specifying (i) the amount and Type of Revolving Credit Loans to be
borrowed, (ii) the Revolving Subfacility under which such Revolving Credit Loans are to be borrowed; provided that each borrowing shall be considered to be a Non-LC/Swing Line Revolving Loan to the extent of the aggregate Available Non-LC/Swing Line Revolving Commitments, unless otherwise notified by the Borrower, (iii) the requested Borrowing Date and (iv) in the case of Eurocurrency Loans, the length of the initial Interest Period therefor. Each borrowing of Revolving Credit Loans under the Revolving Credit Commitments shall be in an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then aggregate Available LC/Swing Line Revolving Commitments or Available Non-LC/Swing Line Revolving Commitments, as applicable, are less than $1,000,000, such lesser amount) and (y) in the case of Eurocurrency Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof; provided, that the Swing Line Lender may request, on behalf of the Borrower, borrowings of Base Rate Loans under the Revolving Credit Commitments in other amounts pursuant to Section 4.10. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will make its Pro Rata Share of the amount of each borrowing of Revolving Credit Loans available to the Administrative Agent for the account of the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent in like funds as received by the Administrative Agent.
3.3. Increase in Revolving Credit Commitments . The Borrower may, at its option, at any time or from time to time prior to the Revolving Facility Termination Date, increase the Revolving Credit Commitments to be in an aggregate principal amount of up to $150,000,000 by requesting existing Lenders or new lenders to commit to any such increase; provided that (a) no Lender shall be required to commit to any such increase, (b) no such increase shall become effective unless at the time thereof and after giving effect thereto (i) no Default or Event of Default shall have occurred and be continuing, (ii) each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects, except to the extent such representations and warranties expressly relate to an earlier time, in which case such representations and warranties were true and correct in all material respects as of such earlier time, provided , that, to the extent any such representation and warranty is already qualified by materiality or by reference to material adverse effect, such representation shall be true and correct in all respects and (iii) the Administrative Agent shall have received a certificate from the Borrower to the effect of (i) and (ii) of clause (b), (c) the Administrative Agent shall have received a legal opinion reasonably satisfactory to it as to such increase and (d) no Lender or new lender shall become an LC/Swing Line Revolving Lender pursuant to this Section 3.3 unless the Administrative Agent and Issuing Lender shall have given their prior written consent.
4.1. L/C Commitment . (a) Prior to the Closing Date, the Existing Issuing Lender has issued the Existing Letters of Credit under the Existing Credit Agreement, which, from and after the Closing Date, shall constitute Letters of Credit hereunder. Subject to the terms and conditions hereof, each Issuing Lender, in reliance on the agreements of the other
LC/Swing Line Revolving Lenders set forth in Section 4.4(a), agrees to issue letters of credit (the letters of credit issued on and after the Closing Date pursuant to this Section 4, the “ Letters of Credit ”) for the account of the Borrower on any Business Day during the Revolving Facility Commitment Period in such form as may be approved from time to time by such Issuing Lender; provided , that no Issuing Lender shall have any obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the outstanding L/C Obligations would exceed the L/C Commitment, (ii) the sum of (x) the L/C Obligations plus (y) the aggregate principal amount of Swing Line Loans outstanding at any time, plus (z) the aggregate amount of LC/Swing Line Revolving Loans then outstanding would exceed the LC/Swing Line Revolving Commitment or (iii) the sum of (x) the L/C Obligations, plus (y) the aggregate principal amount of Swing Line Loans outstanding at any time plus (z) the aggregate amount of Revolving Credit Loans then outstanding would exceed the Total Revolving Credit Commitment. Each Letter of Credit shall (i) be denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the date which is five Business Days prior to the Revolving Facility Termination Date, provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (y) above).
4.2. Procedure for Issuance of Letter of Credit . The Borrower may from time to time request that an Issuing Lender issue a Letter of Credit by delivering to such Issuing Lender at its address for notices specified herein an Application therefor, completed to the reasonable satisfaction of such Issuing Lender, and such other certificates, documents and other papers and information as such Issuing Lender may request. Upon receipt of any Application, an Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by such Issuing Lender and the Borrower (but in no event shall any Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto). Promptly after issuance by an Issuing Lender of a Letter of Credit, such Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower. Each Issuing Lender shall promptly furnish to the Administrative Agent, notice of the issuance of each Letter of Credit issued by it (including the amount thereof).
4.3. Fees and Other Charges . (a) The Borrower will pay a fee on the aggregate daily average drawable amount of all outstanding Letters of Credit issued for the Borrower’s account at a per annum rate equal to the Applicable Margin then in effect with respect to Eurocurrency Loans under the Revolving Credit Facility, shared ratably among the LC/Swing Line Revolving Lenders in accordance with their respective LC/Swing Line Revolving Percentages and payable quarterly in arrears on each L/C Fee Payment Date after the issuance date of any such Letter of Credit. In addition, the Borrower shall pay to the relevant Issuing Lender for its own account a fronting fee on the aggregate daily average drawable amount of all
outstanding Letters of Credit issued for the Borrower’s account by such Issuing Lender of an amount to be agreed upon by the Borrower and the relevant Issuing Lender, payable on such terms as are agreed to by the Borrower and the Issuing Lender.
4.4. L/C Participations . (a) Each Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce each Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from each Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant’s own account and risk an undivided interest equal to such L/C Participant’s LC/Swing Line Revolving Percentage in each Issuing Lender’s obligations and rights under each Letter of Credit issued by such Issuing Lender hereunder and the amount of each draft paid by such Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with each Issuing Lender that, if a draft is paid under any Letter of Credit issued by such Issuing Lender for which such Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to such Issuing Lender upon demand at such Issuing Lender’s address for notices specified herein an amount equal to such L/C Participant’s LC/Swing Line Revolving Percentage of the amount of such draft, or any part thereof, that is not so reimbursed.
4.5. Reimbursement Obligation of the Borrower . The Borrower agrees to reimburse each Issuing Lender for the amount of (a) such draft so paid and (b) any Other Taxes or expenses incurred by such Issuing Lender in connection with such payment (the amounts described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the “Payment Amount”), on the Business Day that the Borrower receives notice of such draft, if such notice is received on such day (or if the Borrower shall have received such notice later than 10:00 A.M. New York City time on such Business Day, on the immediately following Business Day). Each such payment shall be made to such Issuing Lender at its address for notices specified herein in Dollars and in immediately available funds. Interest shall be payable on each Payment Amount from the date of the applicable drawing until payment in full at the rate set forth in (i) until the second Business Day following the date of the applicable drawing, Section 5.8(b) and (ii) thereafter, Section 5.8(c). Each drawing under any Letter of Credit shall (unless an event of the type described in Section 10(g), (h) or (i) shall have occurred and be continuing with respect to the Borrower, in which case the procedures specified in Section 4.4(a) for funding by L/C Participants shall apply) constitute a request by the Borrower to the Administrative Agent for a borrowing pursuant to Section 3.2 of Base Rate Loans in the amount of such drawing. The Borrowing Date with respect to such borrowing shall be the first date on which a borrowing of Revolving Credit Loans could be made, pursuant to Section 3.2, if the Administrative Agent had received a notice of such borrowing at the time the Administrative Agent receives notice from the relevant Issuing Lender of such drawing under such Letter of Credit.
4.6. Obligations Absolute . The Borrower’s obligations under this Section 4 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against any Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with each Issuing Lender that such Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 4.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. No Issuing Lender shall be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found to have resulted from the gross negligence or willful misconduct of such Issuing Lender. The Borrower agrees that any action taken or omitted by an Issuing Lender under or in connection with any Letter of Credit issued by it for the Borrower’s account, or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of such Issuing Lender to the Borrower.
4.7. Letter of Credit Payments . If any draft shall be presented for payment under any Letter of Credit, the relevant Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the relevant Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit issued by such Issuing Lender, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.
4.8. Applications . To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 4, the provisions of this Section 4 shall apply.
4.9. Swing Line Commitment . (a) Subject to the terms and conditions hereof, the Swing Line Lender agrees that, during the Revolving Facility Commitment Period, it will make available to the Borrower in the form of swing line loans denominated in Dollars (“ Swing Line Loans ”) a portion of the credit otherwise available to the Borrower under the LC/Swing Line Revolving Commitments; provided that (i) the aggregate principal amount of Swing Line Loans outstanding at any time shall not exceed the Swing Line Commitment, (ii) the aggregate principal amount of Swing Line Loans outstanding at any time, when aggregated with the L/C Obligations, shall not exceed the LC/Swing Line Revolving Commitments and (iii) the sum of (x) the aggregate principal amount of Swing Line Loans outstanding at any time plus (y) the L/C Obligations plus (z) the aggregate amount of Revolving Credit Loans then outstanding shall not exceed the Total Revolving Credit Commitment. During the Revolving Facility Commitment Period, the Borrower may use the Swing Line Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof. Swing Line Loans shall be Base Rate Loans only.
4.10. Procedure for Swing Line Borrowing; Refunding of Swing Line Loans . (a) The Borrower may borrow under the Swing Line Commitment on any Business Day during the Revolving Facility Commitment Period, provided , the Borrower shall give the Swing Line Lender irrevocable telephonic notice confirmed promptly in writing (which telephonic notice must be received by the Swing Line Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date. Each borrowing under the Swing Line Commitment shall be in an amount equal to $500,000 or a whole multiple of $100,000 in excess thereof. Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in the borrowing notice in respect of any Swing Line Loan, the Swing Line Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the amount of such Swing Line Loan. The Administrative Agent shall make the proceeds of such Swing Line Loan available to the Borrower on such Borrowing Date in like funds as received by the Administrative Agent.
5.1. Repayment of Loans; Evidence of Debt . (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the appropriate Lender (i) the then unpaid principal amount of each Revolving Credit Loan and Swing Line Loan made by such Lender to the Borrower, on the Revolving Facility Termination Date (or on such earlier date on which the Loans become due and payable pursuant to Section 10) and (ii) the principal amount of the Tranche B Term Loan made by such Lender to the Borrower, in installments according to the amortization schedule set forth in Section 2.3 (or on such earlier date on which the Loans become due and payable pursuant to Section 10). The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans made to it from time to time outstanding from the date of such Loans until payment in full thereof at the rates per annum, and on the dates, set forth in Section 5.8.
5.2. Commitment Fees, Etc. (a) The Borrower agrees to pay to the Administrative Agent for the account of each LC/Swing Line Revolving Lender and Non-LC/Swing Line Revolving Lender a commitment fee for the period from and including the Closing Date to the last day of the Revolving Facility Commitment Period, computed at the Commitment Fee Rate on the average daily amount of the Available LC/Swing Line Revolving Commitment and Available Non-LC/Swing Line Revolving Commitment, respectively, of such Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December and on the Revolving Facility Termination Date, commencing on the first of such dates to occur after the date hereof.
5.3. Termination or Reduction of Revolving Credit Commitments . The Borrower shall have the right, upon not less than three Business Days’ notice to the Administrative Agent, to (i) terminate the Non-LC/Swing Line Revolving Commitments or, from time to time, to reduce the aggregate amount of the Non-LC/Swing Line Revolving Commitments and (ii) terminate the LC/Swing Line Revolving Commitments or, from time to time, to reduce the aggregate amount of the LC/Swing Line Revolving Commitments; provided , that such termination or reduction shall be permitted only to the extent that (x) with respect to Non-LC/Swing Line Revolving Commitments, after giving effect thereto and to any prepayments of the Non-LC/Swing Line Revolving Loans thereof, the Total Non-LC/Swing Line Extensions of Credit do not exceed the Total Non-LC/Swing Line Revolving Commitments and (y) with respect to LC/Swing Line Revolving Commitments, after giving effect thereto and to any prepayments of the Swing Line Loans made on the effective date thereof, (A) the sum of the aggregate principal amount of Swing Line Loans outstanding at any time shall not exceed the Swing Line Commitment and (B) the sum of (x) the aggregate principal amount of Swing Line Loans outstanding at any time plus (y) the L/C Obligations shall not exceed the LC/Swing Line Revolving Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce permanently the Revolving Credit Commitments then in effect.
5.4. Optional Prepayments . The Borrower may at any time and from time to time prepay the Loans made to it, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent at least three Business Days prior thereto in the case of Eurocurrency Loans and at least one Business Day prior thereto in the case of Base Rate Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurocurrency Loans or Base Rate Loans; provided, that (a) if a Eurocurrency Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 5.14 and (b) no prior notice is required for the prepayment of Swing Line Loans. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein,
together with (except in the case of Revolving Credit Loans that are Base Rate Loans and Swing Line Loans) accrued interest to such date on the amount prepaid. Partial prepayments of Loans (other than Swing Line Loans) shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof. Partial prepayments of Swing Line Loans shall be in an aggregate principal amount of $100,000 or a whole multiple thereof. Notwithstanding anything to the contrary in this Section 5.4, any prepayment or repricing of the Tranche B Term Loans effected on or prior to the first anniversary of the Closing Date as a result of a Repricing Transaction shall be accompanied by a fee equal to 1.00% of the principal amount of Tranche B Term Loans prepaid or repriced, unless such fee is waived by the applicable Tranche B Term Loan Lender. If in connection with a Repricing Transaction on or prior to such first anniversary any Lender is replaced as a result of its being a Non-Consenting Lender in respect of such Repricing Transaction pursuant to Section 5.17, such Lender shall be entitled to the fee provided under this Section 5.4.
5.5. Mandatory Prepayments and Commitment Reductions . (a) If any Indebtedness shall be incurred by Parent, Holdings or the Borrower or any of its Subsidiaries (excluding any Indebtedness permitted by Section 9.3 other than (i) Section 9.3(a) (to the extent pertaining to any refinancing, refund, replacement or renewal of Indebtedness pursuant to the Loan Documents), (ii) Section 9.3(n)(i) (to the extent the Net Cash Proceeds of such Indebtedness are not applied by the Borrower to purchase Tranche B Term Loans pursuant to an Auction as set forth in Section 5.19) and (iii) subclauses (ii) and (iii) of 9.3(n)), then, on the date of such incurrence the Tranche B Term Loans shall be prepaid, by an amount equal to the IP Percentage (or as set forth in Section 9.3(n)(ii)) of the Net Cash Proceeds of such incurrence, as set forth in Section 5.5(d).
Notwithstanding any of the other provisions of this Section 5.5, so long as no Event of Default shall have occurred and be continuing, if any prepayment of Eurocurrency Loans is required to be made under this Section 5.5 prior to the last day of the Interest Period therefor and less than three months are remaining in such Interest Period, in lieu of making any payment pursuant to this Section 5.5 in respect of any such Eurocurrency Loan prior to the last day of the Interest Period therefor, the Borrower may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made into a cash collateral account maintained with the Administrative Agent until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of such Loans in accordance with this Section 5.5. Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent shall also be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of the outstanding Loans in accordance with the relevant provisions of this Section 5.5.
5.6. Conversion and Continuation Options . (a) The Borrower may elect from time to time to convert Eurocurrency Loans of the Borrower under any Facility to Base Rate Loans under such Facility by giving the Administrative Agent at least two Business Days’ prior irrevocable notice of such election, provided that any such conversion of Eurocurrency Loans may be made only on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert Base Rate Loans under any Facility to Eurocurrency Loans under such Facility by giving the Administrative Agent at least three Business Days’ prior irrevocable notice of such election (which notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Loan under a particular Facility may be converted into a Eurocurrency Loan (i) when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Majority Term Lenders or the Majority Revolving Lenders, as applicable, have determined in its or their sole discretion not to permit such conversions or (ii) after the date that is one month prior to the final scheduled termination or maturity date of such Facility. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.
5.7. Minimum Amounts and Maximum Number of Eurocurrency Tranches . Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions, continuations and optional prepayments of Eurocurrency Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more than 12 Eurocurrency Tranches shall be outstanding at any one time.
5.8. Interest Rates and Payment Dates . (a) Each Eurocurrency Loan under each Facility shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurocurrency Rate determined for such day plus the Applicable Margin for such Facility.
5.9. Computation of Interest and Fees . (a) Interest, fees and commissions payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to Base Rate Loans on which interest is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurocurrency Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.
5.10. Inability to Determine Interest Rate . If prior to the first day of any Interest Period:
the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurocurrency Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Eurocurrency Loans shall be continued as Base Rate Loans and (z) any outstanding Eurocurrency Loans under the relevant Facility shall be converted, on the last day of the then current Interest Period with respect thereto, to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurocurrency Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Eurocurrency Loans.
5.11. Pro Rata Treatment and Payments . (a) Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any commitment fee or Letter of Credit fee, and any reduction of the Commitments of the Lenders, shall be made pro
rata according to the respective Tranche B Term Loan Percentages or Pro Rata Share, as the case may be, of the relevant Lenders.
5.12. Requirements of Law . (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:
and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender reasonably deems to be material, of making, converting into, continuing or maintaining Eurocurrency Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled. No amount shall be payable pursuant to this Section 5.12 with respect to Taxes, the indemnification of which shall be governed solely and exclusively by Section 5.13.
5.13. Taxes . (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any Indemnified Taxes. If any such Indemnified Taxes are required to be withheld from any amounts payable to any Agent, Lender or Transferee hereunder, the amounts so payable to such Agent, Lender or Transferee shall be increased to the extent necessary so that after making all required deductions and withholdings (including deductions or withholdings applicable to additional sums payable under this Section 5.13), such Agent, Lender or Transferee receives an amount equal to the after tax sum it would have received had no such deductions or withholdings been made .
5.14. Indemnity . The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurocurrency Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making by the Borrower of a prepayment or conversion of Eurocurrency Loans on a day that is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurocurrency market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower, on behalf of the Borrower, by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
5.15. Illegality . Notwithstanding any other provision herein, if the adoption of or any change after the date hereof in any Requirement of Law or in the interpretation or application thereof after the date hereof shall make it unlawful for any Lender to make or
maintain Eurocurrency Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans as such and convert Base Rate Loans to Eurocurrency Loans shall forthwith be canceled and (b) such Lender’s Loans then outstanding as Eurocurrency Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurocurrency Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower in respect of such Eurocurrency Loans shall pay to such Lender such amounts, if any, as may be required pursuant to Section 5.14.
5.16. Change of Lending Office . Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Sections 5.12, 5.13 or 5.15 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Sections 5.12, 5.13 or 5.15.
5.17. Replacement of Lenders under Certain Circumstances . The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for amounts owing pursuant to Section 5.12 or 5.13, or gives a notice of illegality pursuant to Section 5.15, (b) becomes a Defaulting Lender or (c) becomes a Non-Consenting Lender, with a replacement financial institution; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) solely with respect to clause (a) above, no Default or Event of Default shall have occurred and be continuing at the time of such replacement, (iii) if applicable, prior to any such replacement, such Lender shall not have taken all actions under Section 5.16 so as to eliminate the continued need for payment of amounts owing pursuant to Section 5.12 or 5.13 or to eliminate any illegality described in a notice of illegality under Section 5.15, (iv) if applicable, the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) if applicable, the Borrower shall be liable to such replaced Lender under Section 5.14 (as though Section 5.14 were applicable) if any Eurocurrency Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (vi) if applicable, the replacement financial institution, if not already a Lender, an affiliate of a Lender or an Approved Fund, shall be reasonably satisfactory to the Administrative Agent, (vii) if applicable, the replaced Lender shall be obligated to make such replacement, without such Lender’s consent, in accordance with the provisions of Section 12.6 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (viii) if applicable, the Borrower shall pay all additional amounts (if any) required pursuant to Section 5.12 or 5.13, as the case may be, in respect of any period prior to the date on which such replacement shall be consummated, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender; provided that in the case of any Assignee in respect of Non-Consenting Lenders, the replacement Lender shall agree to the consent, waiver or amendment to which the Non-Consenting Lender did not agree.
5.18. Loan Auctions . (a) Notwithstanding any provision in this Agreement or the other Loan Documents to the contrary, the Borrower shall be permitted to enter into an Auction so long as each of the Tranche B Term Loan Lenders hereunder shall be offered an opportunity to ratably participate in the applicable Auction, provided , that (i) the Borrower shall be in compliance with Sections 9.1 and 9.2 immediately before and immediately after giving effect to such Auction on a pro forma basis and (ii) the Liquidity shall be no less than (x) $75,000,000, if the Auction is scheduled during the months of March, April and May of any given year, (y) $250,000,000, if the Auction is scheduled during the months of August, September, October and November of any given year, and (z) $150,000,000, if the Auction is scheduled during any other month of any given year, each on a pro forma basis immediately after giving effect to such Auction (assuming maximum participation therein).
5.19. Auction Procedures . (a) In connection with an Auction, the Borrower will provide notification to the Administrative Agent (for distribution to the Tranche B Term Loan Lenders) of the Auction (an “ Auction Notice ”), which shall be substantially in the form of Exhibit L. Each Auction Notice shall contain (i) the total cash value of the bid, in a minimum amount of $5,000,000 with minimum increments of $1,000,000 (the “ Auction Amount ”), and (ii) the discount to par, which shall be a range (the “ Discount Range ”) of percentages of the par principal amount of the Tranche B Term Loans that represents the range of purchase prices that could be paid in the Auction.
(f) By providing an Auction Notice or purchasing any Tranche B Term Loans (or any portions of any thereof) in the Auction initiated thereby, the Borrower shall be deemed to represent and warrant as of the date of such notice or purchase as the case may be that the Borrower is not in possession of any information regarding any Loan Party, its assets, its ability to perform its Obligations or any other matter that may be material to a decision by any Tranche B Term Lender to participate in such Auction or participate in any of the transactions contemplated thereby, that has not previously been disclosed to the Administrative Agent and the Lenders.
5.20. Defaulting Lenders . Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
In the event that the Administrative Agent, the Borrower, the Issuing Lender and the Swing Line Lender (as applicable) each agrees that a Defaulting Lender which is an LC/Swing Line Revolving Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swing Line Exposure and L/C Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Line Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its LC/Swing Line Revolving Percentage.
To induce the Agents and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, Parent, Holdings and the Borrower hereby jointly and severally represent and warrant to each Agent and each Lender that:
6.1. Financial Condition . (a) The unaudited pro forma consolidated balance sheet of Parent and its consolidated Subsidiaries as at December 31, 2009 (the “ Pro Forma Balance Sheet ”), copies of which have heretofore been furnished to each Lender, has been prepared giving effect (as if such events had occurred on such date) to (i) the Loans to be made on the Closing Date and the use of proceeds thereof and (ii) the payment of fees and expenses in connection with the foregoing. The Pro Forma Balance Sheet has been prepared in good faith based on assumptions believed by Parent to be reasonable and as of the date of delivery thereof, and presents fairly in all material respects on a pro forma basis the estimated financial position of Parent and its consolidated Subsidiaries as at December 31, 2009, assuming that the events specified in the preceding sentence had actually occurred at such date and giving effect to the other assumptions set forth therein.
6.2. No Change . Since December 31, 2009, except as otherwise described in the Confidential Information Memorandum and the Plan of Reorganization, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.
6.3. Existence; Compliance with Law . Each of Parent, Holdings and its Subsidiaries (other than the Inactive Subsidiaries) (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate (or equivalent) power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the Business in which it is currently engaged, (c) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its Business requires such qualification and (d) is in compliance with all Requirements of Law except in each case referred to in clauses (b), (c) or (d), to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.4. Corporate Power; Authorization; Enforceable Obligations . Upon entry by the Bankruptcy Court of the Confirmation Order, each Loan Party has the corporate (or equivalent) power and authority, and the legal right, to make, deliver and perform the Loan Documents (as well as the corporate (or equivalent) power and authority, and the legal right, to make and deliver the Intercreditor Agreement) to which it is a party and to consummate the Transactions and, in the case of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary corporate (or equivalent) action to authorize the execution, delivery and performance of the Loan Documents to which it is a party (as well as the Intercreditor Agreement) and the consummation of the Transactions and, in the case of the Borrower, to authorize the borrowings on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required to be obtained by any Loan Party in connection with the Transactions and the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 6.4 and Schedule 6.19(b), which consents, authorizations, filings and notices have been obtained or made and are in full force and effect, (ii) the filings referred to in Schedule 6.19(a)-1 and Schedule 6.19(a)-2 and (iii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect. Each Loan Document and the Intercreditor Agreement has been duly executed and delivered on behalf of each Loan Party that is a party thereto. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
6.5. No Legal Bar . The execution, delivery and performance of this Agreement and the other Loan Documents by the Loan Parties, the issuance of Letters of Credit, the borrowings hereunder, the use of the proceeds thereof and the consummation of the Transactions will not violate any Requirement of Law applicable to, or any Contractual Obligation of, Parent, Holdings or any of its Subsidiaries except to the extent such violation could not reasonably be expected to have a Material Adverse Effect and will not result in, or require, the creation or imposition of any Lien on any of their respective Properties or revenues pursuant to any such Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents and the Liens created under the Second Lien Credit Facility).
6.6. Litigation . No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Parent, Holdings or the Borrower, threatened by or against Parent, Holdings or any of its Subsidiaries or against any of their respective Properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that, if adversely determined, could reasonably be expected to have a Material Adverse Effect.
6.7. No Default . Neither Parent, Holdings, nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
6.8. Ownership of Property; Liens . Each of Holdings and its Subsidiaries has title in fee simple to, or a valid leasehold interest in, all its material Real Property, and good title to, or a valid leasehold interest in, all its other material Property, and none of such Property (including the Real Property) is subject to any Lien except a Permitted Lien. Attached as Schedule 6.8 is a list of all Real Property and Operated Property which are material to the operation of the Business of Holdings or its Subsidiaries as of the Closing Date.
6.9. Intellectual Property . Holdings and each of its Subsidiaries owns, or is licensed to use, all Intellectual Property material to the conduct of its business as currently conducted, free and clear of all Liens other than Permitted Liens, and takes reasonable actions to protect, preserve and maintain such Intellectual Property. Except as could not reasonably be expected to have a Material Adverse Effect, all such Intellectual Property is valid and enforceable and all registrations and applications for such Intellectual Property have not expired or been abandoned. No action or proceeding is pending by any Person or, to the knowledge of Holdings or the Borrower, threatened, or imminent, on the date hereof, and no holding, decision or judgment has been rendered by any Governmental Authority or arbitrator which may limit, cancel or challenge the validity, enforceability, ownership or use of, such Intellectual Property which could reasonably be expected to have a Material Adverse Effect, nor does Holdings or the Borrower know of any valid basis for any such claim except for claims, actions, proceedings, holdings, decisions or judgments which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The operation of the Business of Holdings and its Subsidiaries does not infringe, impair, misappropriate or otherwise violate the rights of any Person to an extent which could reasonably be expected to have a Material Adverse Effect, and to the knowledge of Holdings or the Borrower, no Person is infringing, impairing,
misappropriating or otherwise violating any Intellectual Property owned by any of Holdings or its Subsidiaries to an extent which could reasonably be expected to have a Material Adverse Effect.
6.10. Taxes . Each of Parent, Holdings and each of its Subsidiaries has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its Property and all other material taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (in each case other than any taxes, fees or charges the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves (to the extent required by GAAP) have been provided on the books of Parent, Holdings or its Subsidiaries, as the case may be, and those which, with respect to taxes or other assessments on Real Properties, can be contested without payment under applicable law); no material tax Lien has been filed, and, to the knowledge of Parent, Holdings and the Borrower, no claim is being asserted with respect to any such tax, fee or other charge except claims that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.
6.11. Federal Regulations . No part of the proceeds of any Loans will be used for “buying” or “carrying” any Margin Stock within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the Regulations of the Board. If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.
6.12. Labor Matters . Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against Holdings or any of its Subsidiaries pending or, to the knowledge of Holdings or the Borrower, threatened; (b) hours worked by and payment made to employees of Holdings and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from Holdings or any of its Subsidiaries on account of employee health and welfare insurance have been paid or accrued as a liability on the books of Holdings or the relevant Subsidiary.
6.13. ERISA . (a) Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (i) no ERISA Event has occurred during the three-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied, and is in compliance, with its terms and the applicable provisions of ERISA and the Code; (ii) no termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such three-year period, (iii) the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits resulting in an “at risk” status for the Single Employer Plan; and, except as described in Schedule 6.13, the present value of all accrued benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) does not exceed the value of the assets of all such underfunded Plans; (iv) neither Parent, Holdings, nor any ERISA Affiliate would become subject to any Withdrawal Liability if Parent, Holdings, or any ERISA Affiliate were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made; and (v) none of Parent, Holdings, the Subsidiaries and the ERISA Affiliates has received any written notification that any Multiemployer Plan is Insolvent, in Reorganization, in “endangered” or “critical” status, or has been terminated (all within the meaning of Title IV of ERISA), or has knowledge that any Multiemployer Plan is reasonably expected to be Insolvent, in Reorganization, in “endangered” or “critical” status, or terminated.
6.14. Investment Company Act; Other Regulations . No Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness.
6.15. Subsidiaries . Schedule 6.15, as of the Closing Date, sets forth the name and jurisdiction of formation of each Subsidiary (other than Inactive Subsidiaries and other than Subsidiaries that are included in Excluded Assets (as defined in the Guarantee and Collateral Agreement)) of Parent and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party, and, except as so disclosed, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than directors’ qualifying shares) of any nature relating to any Capital Stock of Holdings, the Borrower or any such Subsidiary, except as created by the Loan Documents.
6.16. Use of Proceeds . The proceeds of the Tranche B Term Loans made on the Closing Date shall be used to repay in part the outstanding Indebtedness under the Existing Credit Agreement. The proceeds of the Revolving Credit Loans, the Swing Line Loans, and the
Letters of Credit, shall be used to finance the working capital needs and general corporate purposes of the Borrower.
6.17. Environmental Matters . Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:
6.18. Accuracy of Information, Etc . No financial statement or written information (other than projections, estimates, forward-looking information and information of a general industry or economic nature) contained in this Agreement or any other Loan Document, or furnished by or on behalf of any Loan Party in the Confidential Information Memorandum, or contained in any other document, certificate or financial statement furnished by or on behalf of any Loan Party to the Administrative Agent, the Lenders, the Bankruptcy Court or any of them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, when considered as a whole, contained as of the date such financial statement, written information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made not materially misleading. The projections, estimates and forward-looking information contained in the materials referenced above were based upon good faith estimates and assumptions believed by the management of Holdings to be reasonable at the time made, it being recognized by the Lenders that such projections, estimates and forward-looking information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such projections, estimates and forward-looking information may differ from the projected results set forth therein, and such differences may be material. There is no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information Memorandum, in the Plan of Reorganization or in any other documents, certificates and written financial statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.
6.19. Security Documents . (a) The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral (other than the Mortgaged Properties) described therein and proceeds thereof. In the case of the Pledged Stock and Pledged Notes described in the Guarantee and Collateral Agreement, when any certificates representing such Pledged Stock or promissory notes representing Pledged Notes, as applicable, are delivered to the Administrative Agent, and in the case of the other Collateral described in the Guarantee and Collateral Agreement (other than any Deposit Accounts and future Commercial Tort Claims, each as defined therein), when financing statements in appropriate form are filed in the offices specified on Schedule 6.19 (a) -1 (which financing statements have been duly completed and delivered to the Administrative Agent) and such other filings or agreements as are specified on Schedule 3 to the Guarantee and Collateral Agreement (all documentation in respect of which other filings have been or will have been duly completed and executed and delivered to the Administrative Agent on or prior to the Closing Date), the Guarantee and Collateral Agreement
shall constitute a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case prior and superior in right to any other Person (except, in the case of Collateral other than Pledged Stock, Liens permitted by Section 9.4). Schedule 6.19 (a) -2 lists each UCC Financing Statement that (i) names any Loan Party as debtor and (ii) will remain on file after the Closing Date. Schedule 6.19 (a) -3 lists each UCC Financing Statement that (i) names any Loan Party as debtor and (ii) will be terminated on or prior to the Closing Date; and on or prior to the Closing Date, the Borrower will have delivered to the Administrative Agent, or caused to be filed, duly completed UCC termination statements, authorized by the relevant secured party, in respect of each UCC Financing Statement listed in Schedule 6.19 (a) -3.
6.20. Solvency . Parent and its Subsidiaries (taken as a whole) are, and after giving effect to the Transactions and the incurrence of all Indebtedness and Obligations being incurred in connection herewith and therewith will be Solvent.
6.21. Regulation H . Except as set forth on Schedule 6.21, no Mortgage shall encumber improved Real Property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has not been made available under the National Flood Insurance Act of 1968.
6.22. Parks . Set forth on Schedule 6.22 is a complete and correct list of all of the amusement and attraction parks owned or leased, and currently operated (the “Existing Parks”), by Parent or its Subsidiaries as of the Closing Date.
7.1. Conditions Precedent to Initial Borrowing . The agreement of each Lender to make the initial extension of credit requested to be made by it hereunder is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent:
Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.
7.2. Conditions to Each Extension of Credit . The agreement of each Lender to make any extension of credit requested to be made by it hereunder on any date (including, without limitation, its initial extension of credit) is subject to the satisfaction of the following conditions precedent:
Each borrowing by, and issuance of a Letter of Credit on behalf of, the Borrower hereunder shall constitute a representation and warranty by Parent, Holdings and the Borrower as of the date of such extension of credit that the conditions contained in this Section 7.2 have been satisfied.
Parent, Holdings and the Borrower hereby jointly and severally agree that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or any Agent hereunder, each of Parent, Holdings and the Borrower shall and shall cause each of their respective Subsidiaries to:
8.1. Financial Statements and Other Information . Deliver to the Administrative Agent for prompt distribution to each of the Lenders:
Notwithstanding the foregoing, the obligations in paragraphs (a), (d) and (h) of this Section 8.1 may be satisfied with respect to financial information of Parent and its Subsidiaries by furnishing Parent’s Form 10-K or 10-Q, as applicable, to the extent filed with the SEC.
Documents required to be delivered pursuant to Section 8.1(a), (d), (g), (h) or (i) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Parent posts such documents, or provides a link thereto on Parent’s website on the Internet; or (ii) on which such documents are posted on Parent’s or the Borrower’s behalf on a Platform; provided that (i) upon written request by the Administrative Agent, Parent or the Borrower shall deliver paper copies of such documents to the Administrative Agent for further
distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) Parent or the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 8.1(f) to the Administrative Agent. Each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.
8.2. Notices of Material Events . Furnish the following to the Administrative Agent in writing:
Each notice delivered under this Section 8.2 shall be accompanied by a statement of a Responsible Officer of Parent or the Borrower setting forth in reasonable detail the facts and circumstances of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
8.3. Existence, Etc.
8.4. Insurance . Maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as Holdings and its Subsidiaries) as are customarily carried under similar circumstances by such other Persons.
8.5. Compliance with Contractual Obligations and Requirements of Law . Comply with Contractual Obligations and Requirements of Laws, unless failure to comply with such Contractual Obligations or Requirements of Law could not (either individually or in the aggregate) reasonably be expected to have a Material Adverse Effect.
8.6. Additional Collateral, Etc . (a) With respect to any personal Property acquired after the Closing Date by Parent, Holdings, the Borrower or any of Parent’s Wholly Owned Subsidiaries (other than (w) any personal Property described in paragraph (c) of this Section, (x) any Property subject to a Lien expressly permitted by clauses 9.4(h), (k) and (l), (y) any Property acquired by an Excluded Foreign Subsidiary and (z) any Property acquired after the date hereof to the extent that the creation of a security interest therein would be prohibited by a Contractual Obligation binding on Parent, Holdings, the Borrower or any Subsidiary that is the owner of such Property (including pursuant to the New Time Warner Facility or the Partnership Parks Agreements), provided that such Contractual Obligation existed at the time such Property was acquired and was not entered into in anticipation of such acquisition) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly, and in any event on or prior to 30 days after such acquisition (or such longer period as the Administrative Agent may agree in its reasonable discretion) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent reasonably deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in such Property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in such Property (subject to Permitted Liens), including without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Administrative Agent.
8.7. Further Assurances . From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Administrative Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing the rights of the Administrative Agent and the Lenders with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other Property or assets hereafter acquired by Parent or any Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative Agent or any Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, Parent will, or will cause the relevant Subsidiary to, execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or such Lender may be required to obtain from Parent or any of its Subsidiaries for such governmental consent, approval, recording, qualification or authorization.
8.8. Environmental Laws . Except to the extent that, in the aggregate, the failure to do so could not reasonably be expected to have a Material Adverse Effect: (a) comply with, and ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply with and maintain, and ensure that all tenants and subtenants obtain and comply with and maintain, any and all Environmental Permits, and (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.
8.9. Ratings by S&P and Moody’s . Use commercially reasonable efforts (a) to cause a public corporate credit rating and a facility rating (or the equivalents thereof) in respect of the Facilities to be issued by S&P and Moody’s within 90 days of the Closing Date and to be
maintained thereafter until the Tranche B Maturity Date and (b) to assure that each such rating is updated or confirmed at least once per year so long as S&P and Moody’s are providing such yearly updates and confirmations in the ordinary course.
Parent, Holdings and the Borrower hereby jointly and severally agree that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or any Agent hereunder, Parent, Holdings and the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:
9.1. Leverage Ratios . (a) Permit the First Lien Leverage Ratio as at the last day of any Measurement Period of the Borrower ending on or closest to the applicable date set forth below to exceed the ratio set forth opposite such date:
(b) Permit the Senior Secured Leverage Ratio as at the last day of any Measurement Period of the Borrower ending on or closest to the applicable date set forth below to exceed the ratio set forth opposite such date:
9.2. Consolidated Interest Coverage Ratio . Permit the Consolidated Interest Coverage Ratio as at the last day of any Measurement Period of the Borrower ending on or closest to the applicable date set forth below to be less than the ratio set forth opposite such date:
provided that for the purpose of determining Consolidated Interest Coverage Ratio for the fiscal quarters ending September 30, 2010, December 31, 2010 and March 31, 2011, Consolidated Interest Expense for the relevant period shall be deemed to equal Consolidated Interest Expense for each such fiscal quarter (and, in the case of September 30, 2010, December 31, 2010 and
March 31, 2011, each previous fiscal quarter commencing after the Closing Date) multiplied by 4, 2 and 4/3, respectively.
9.3. Indebtedness . Create, incur or suffer to exist any Indebtedness except:
For purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange
rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased.
9.4. Liens . Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except the following (“Permitted Liens”):
9.5. Prohibition of Fundamental Changes .
To the extent any Collateral is Disposed of as expressly permitted by this Section 9.5 to any Person other than Parent or any of its Subsidiaries, such Collateral shall be sold free and clear of the Liens created by the Loan Documents, and, if requested by the Administrative Agent, upon the certification by the Borrower that such Disposition is permitted by this Agreement, the Administrative Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing.
(A) the Loan Parties shall be in pro forma compliance with Sections 9.1 and 9.2 after giving effect to such Permitted Acquisition (as if such Permitted Acquisition had been consummated on the first day of such period), with the First Lien Leverage Ratio being deemed, for this purpose, to be 0.25 to 1.00 times lower than that required under Section 9.1; provided , however , that (x) any Indebtedness incurred or repaid in connection with such Permitted Acquisition shall be deemed to have be incurred or repaid, as the case may be, on such first day, and (y) Parent shall have delivered to the Administrative Agent, at least five Business Days prior to the date of any such Permitted
Acquisition, a certificate of a Responsible Officer of Parent setting forth computations in reasonable detail demonstrating satisfaction of the foregoing conditions as at the date of such certificate reflecting the terms of the transaction as of such date; provided further that if prior to consummation of such Permitted Acquisition changes are made to the terms that would alter the computations previously delivered, Parent shall deliver a revised certificate demonstrating satisfaction of the foregoing conditions on the date of the consummation of such Permitted Acquisition;
(B) such Permitted Acquisition (if by purchase of assets, merger or consolidation) shall be effected in such manner so that the acquired business, and the related assets, are owned either by the Borrower, a Subsidiary Guarantor or a Foreign Subsidiary and, if effected by merger or consolidation involving the Borrower, a Subsidiary Guarantor or a Foreign Subsidiary, then the Borrower, such Subsidiary Guarantor or such Foreign Subsidiary shall be the continuing or surviving entity and, if effected by merger or consolidation involving a Wholly Owned Subsidiary of the Borrower, a Wholly Owned Subsidiary shall be the continuing or surviving entity; provided , however , that with respect to any Permitted Acquisition effected in such manner so that the acquired business, and the related assets, are owned by a Foreign Subsidiary, such acquired business, and the related assets, shall be located outside of the United States of America;
(C) the Borrower shall deliver to the Administrative Agent (which shall promptly forward copies thereof to each Lender) (i) as soon as possible and in any event no later than five days prior to the consummation of each such Permitted Acquisition (or, if executed, such earlier date as shall be five Business Days after the execution and delivery thereof), the most recent drafts of the respective agreements or instruments pursuant to which such Permitted Acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements or instruments and all other material ancillary documents to be executed or delivered in connection therewith and (ii) promptly following request therefor (but in any event within three Business Days following such request), copies of such other information or documents (including, without limitation, environmental risk assessments) relating to such Permitted Acquisition as the Administrative Agent or the Required Lenders shall have reasonably requested (and which is available, or obtainable within such period by Parent with reasonable efforts);
(D) to the extent applicable, the Borrower shall have complied with the provisions of Section 8.6, including, without limitation, to the extent not theretofore delivered, delivery to the Administrative Agent of (x) the certificates evidencing 100% (or, in the case of any new Foreign Subsidiary the Capital Stock of which is held by a Domestic Subsidiary, 65%) of the Capital Stock of any new Subsidiary formed or acquired in connection with such Permitted Acquisition, accompanied by undated stock powers executed in blank, and (y) the agreements, instruments, opinions of counsel and other documents required under Section 8.6;
(E) the aggregate Purchase Price for each such Permitted Acquisition shall not exceed $250,000,000 or, at any time the First Lien Leverage Ratio is less than 3.25 to
1.00 after giving effect to such Permitted Acquisition and the incurrence of any related Indebtedness, $350,000,000, plus, in each case, the Net Cash Proceeds received from the issuance of Capital Stock of Parent and from the related contribution of cash to Holdings from Parent, in each case as contributed to the Borrower, that are not otherwise expended pursuant to Sections 9.7 or 9.8(i), plus the portion of any consideration paid with Qualified Net Cash Equity Proceeds and/or in Qualified Capital Stock of Parent; and
(F) immediately prior to such Permitted Acquisition and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing.
9.6. Restricted Payments . Declare or make any Restricted Payment, except that:
Nothing herein shall be deemed to prohibit the payment of Restricted Payments by (i) any Subsidiary of Holdings to Holdings or the Borrower or to any other Wholly Owned Subsidiary of Holdings which is a Subsidiary Guarantor, or by an Excluded Foreign Subsidiary to any other Subsidiary of Holdings or (ii) any Subsidiary of Parent (other than Holdings or any of its Subsidiaries) to Parent or to any other Subsidiary of Parent or to prohibit any dividend payments or other distributions payable solely in Capital Stock of such Person.
9.7. Capital Expenditures . Make or commit to make any Capital Expenditure, except Capital Expenditures of Parent and its Subsidiaries not exceeding the Base Capital Expenditure Amount during any fiscal year or period of Parent; provided, that (i) the lesser of (x) any such amount referred to above, if not so expended in the fiscal year or period for which it is permitted and (y) 50% of the amount of the Base Capital Expenditure Amount for such fiscal year may be carried over for expenditure in the next succeeding fiscal year and (ii) Capital Expenditures made during any fiscal year shall be deemed made, first, in respect of amounts carried over from the prior fiscal year pursuant to subclause (i) above and, second, in respect of amounts permitted for such fiscal year as provided above. For purposes of the foregoing, the “Base Capital Expenditure Amount” shall be an amount equal to $100,000,000 for the fiscal year ending December 31, 2010 and an amount equal to $110,000,000 for any subsequent fiscal year plus, in each case, with respect to each fiscal year in which an Acquisition is consummated and the immediately following fiscal year, an amount for each such fiscal year equal to 40% of the EBITDA of the Person so acquired for the four fiscal quarters of such Person immediately preceding the date of such Acquisition (it being understood and agreed that EBITDA shall be calculated as set forth in the definition of “Parent Consolidated Adjusted EBITDA”) plus, in each case, the Net Cash Proceeds received from the issuance of Capital Stock of Parent and from the related contribution of cash to Holdings from Parent, in each case as contributed to the Borrower, that are not otherwise expended pursuant to Section 9.5(e) or 9.8(i).
9.8. Investments . Make or permit to remain outstanding any Investments except:
provided , that neither Parent nor any of its Subsidiaries (other than a Partnership Park Entity) shall make any Investment in any Partnership Park Entity, Holdings, Borrower or any Subsidiary of Parent that is not a Subsidiary Guarantor other than pursuant to Section 9.8(g) and 9.8(e).
9.9. Prepayment of Certain Indebtedness . Purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of, or enter into any derivative transaction or similar transaction obligating Holdings or any of its Subsidiaries to make payments to any other Person as a result of a change in market value of, Indebtedness outstanding under the Second Lien Credit Agreement, any Permitted Second Lien Refinancing Indebtedness or any Indenture of Parent or Holdings (it being understood that the following shall be permitted: (a) payments of regularly scheduled principal and interest and mandatory prepayments of Indebtedness of Parent and its Subsidiaries (including, without limitation, the Second Lien Credit Agreement, any Permitted Second Lien Refinancing Indebtedness and the New Time Warner Facility) shall be permitted, (b) payments of the principal amount of Indebtedness (or accreted value, if applicable) of Parent or Holdings shall be permitted, with the Net Cash Proceeds of the Second Lien Credit Agreement or any Permitted Second Lien Refinancing Indebtedness permitted under Section 9.3(i), (c) payments of the principal amount of Indebtedness (or accreted value, if applicable) of Parent or Holdings shall be permitted, with the Net Cash Proceeds of Indebtedness of Parent or Holdings, as the case may be (to the extent such Indebtedness constitutes a refinancing, refunding, replacement or renewal thereof plus all interest capitalized in connection therewith, any Refinancing Expenses and any costs and premiums associated with such refinancing, refunding, replacement or renewal) and is permitted pursuant to Section 9.3, to the extent not required to prepay any Loans or Facility pursuant to Section 5.5), (d) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to a Loan Party, (e) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to Parent so long as immediately prior to and after giving effect thereto no Default or Event of Default shall have occurred and be continuing (it being agreed that in determining compliance with Section 9.6, any such payments shall be deemed to constitute Restricted Payments), (f) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to any Non-Guarantor Subsidiary so long as immediately prior to and after giving effect thereto no Default or Event of Default shall have occurred and be continuing, (g) payments of the principal amount of Indebtedness (or accreted value, if applicable) of Parent or Holdings shall be permitted with Qualified Capital Stock of Parent so long as such Qualified Capital Stock is issued in contemplation of such repayment, and (h) payments of regularly scheduled principal and interest of Indebtedness (or accreted value, if applicable) incurred pursuant to Sections 9.3(g), (h) and (k) to the extent that the assets securing such Indebtedness are Disposed of in compliance with Section 9.5(c).
9.10. Transactions with Affiliates . Enter into any transaction with any Affiliate unless such transaction is upon fair and reasonable terms no less favorable to Parent, Holdings, the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, (i) any Affiliate who is an individual may serve as a director, officer or employee of Parent or any of its Subsidiaries and such Person may receive, and Parent and its Subsidiaries may engage in any transaction or series of transactions related to, reasonable compensation, severance, indemnities and reimbursement of reasonable expenses, including stock incentive and option plans and agreements relating thereto, (ii) Parent and its Subsidiaries may enter into transactions (other than extensions of credit by Parent or any of its Subsidiaries to an Affiliate) providing for the leasing of Property, the rendering or receipt of services or the purchase or sale of inventory and other Property in the ordinary course of business if the monetary or business consideration arising therefrom would be substantially as advantageous to Parent and its Subsidiaries as the monetary or business consideration that would obtain in a comparable transaction with a Person not an Affiliate, (iii) the Borrower or any of its Subsidiaries may make an Acquisition of assets of any Person which is an Affiliate solely by reason of such Person being controlled by Parent or any of its Subsidiaries and may make Investments in such Person, provided that such Acquisitions and Investments are (A) permitted under Section 9.5(e)(i) or 9.8 and (B) made upon fair and reasonable terms no less favorable to Parent or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate, (iv) Parent or any of its Subsidiaries may enter into any transaction required of it pursuant to (A) Section 9.8, (B) its agreement with Dick Clark, or (C) the Great Escape Agreements, (v) Parent and its Subsidiaries may be parties to and may perform their respective obligations under the Shared Services Agreement and the Tax Sharing Agreement, (vi) Parent or any of its Subsidiaries may perform their duties and obligations under the Partnership Parks Agreements and (vii) Parent or any of its Subsidiaries may enter into or consummate any transaction permitted for it by Sections 9.3(b), 9.3(c), 9.3(d), 9.3(e), 9.3(f), 9.3(i), 9.3(j), 9.3(k), 9.3(n), 9.3(o), 9.3(r), 9.3(s), 9.4(j), 9.4(k), 9.4(l), 9.4(v), 9.5(a), 9.5(c)(iii), 9.5(c)(iv), 9.5(c)(v), 9.5(c)(ix), 9.5(c)(xi), 9.5(c)(xiv), 9.5(e)(ii), 9.6, 9.8(a), 9.8(e), 9.8(f), 9.8(g), 9.8(h), 9.8(i), 9.8(j), 9.8(k), 9.8(l), 9.8(m), 9.8(n), 9.8(o), 9.8(p), 9.8(q), 9.8(s), 9.8(t), 9.8(u), 9.8(v) or 9.8(w).
9.11. Changes in Fiscal Periods . Permit the fiscal year of Parent, Holdings or the Borrower to end on a day other than December 31 or change Parent’s, Holdings’ or the Borrower’s method of determining fiscal quarters.
9.12. Certain Restrictions . Enter into, after the date hereof, any indenture, agreement, instrument or other arrangement that, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the granting of Liens, the declaration or payment of dividends, the making of loans, advances or Investments or the sale, assignment, transfer or other disposition of Property, other than any such prohibition or restraint (a) set forth in any agreement providing for the disposition of Property (so long as such prohibition or restraint relates only to the Property to be disposed of), (b) set forth in any of the Loan Documents, the Second Lien Credit Documents, any Indenture (so long as such prohibition or restraint is not, in the good faith judgment of Parent, more restrictive than those required for comparable Indebtedness incurred by comparable entities), or any other document relating to any existing Indebtedness or any Indebtedness referred to in Section 9.3(b), 9.3(c), 9.3(g), 9.3(h), 9.3(i), 9.3(n), 9.3(o) and 9.3(s)
(and any comparable prohibitions or restraints in any document governing any Indebtedness incurred to refinance any of the foregoing, so long as such prohibitions or restraints are, in the good faith judgment of Parent, no more restrictive than those applicable to the Indebtedness being refinanced), (c) set forth in any Real Property lease agreement, licenses, joint venture agreements, contracts entered into in the ordinary course of business to the extent that such prohibition or restraint relates only to the Property which is the subject of such instrument and could not reasonably be expected to result in a Material Adverse Effect, (d) set forth in any instrument relating to a Permitted Lien, so long as such prohibitions or restraints relate only to the Property encumbered by such Permitted Lien and (e) set forth in any Contractual Obligation with respect to (i) negative pledges and restrictions on Liens in favor of any holder of Indebtedness permitted under Section 9.3(g), 9.3(h) and 9.3(s) but solely to the extent any negative pledge relates to the property financed by or the subject of such Indebtedness, (ii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest, and (iii) customary provisions restricting assignment or transfer of any agreement entered into in the ordinary course of business.
9.13. Lines of Business . Engage to any substantial extent in any line or lines of business activity other than the business of owning and operating amusement and attraction parks, and businesses related, ancillary or complementary thereto and the businesses and activities related thereto more fully described on Schedule 9.13 attached hereto.
9.14. Modifications of Certain Documents . Consent to any modification, supplement or waiver of:
9.15. Limitation on Activities of Parent and Holdings . (a) In the case of Holdings, conduct, transact or otherwise engage in any business or operations other than those incidental to (i) its ownership of the Capital Stock of the Borrower and PP Data Services Inc., (ii) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance), (iii) the performance of its obligations in the Loan Documents, the Second Lien Credit Documents, the Partnership Parks Agreements and the New Time Warner Facility, or (iv) not otherwise prohibited by the Loan Documents; provided that, notwithstanding anything herein to the contrary, Holdings may not (1) make any Acquisitions (except as expressly contemplated in Section 9.5(b)(ii) in connection with Investments permitted by clause (2) below only), (2) make any Investments except as expressly contemplated by Sections 9.8(a), (b), (c), (e)(i), (g), (h), (k), (m), (n), (o), (p), (r) (in connection with Indebtedness permitted under Section 9.3(n)(iii) only), (s), (t) (with respect to Section 9.5(b)(ii) in connection with Investments permitted by this clause (2) only), (u) and (w), (3) create any Subsidiaries that are not Subsidiaries of Borrower or any of its Subsidiaries or (4) own any operating entity other than Borrower or act as an operating entity.
9.16. Limitation on Hedging Agreements . Enter into any Hedging Agreement other than Hedging Agreements entered into for the purpose of mitigating risks to which Parent and its Subsidiaries have actual exposure and not for speculative purposes, in respect of interest rates or foreign exchange rates; provided, that Parent and its Subsidiaries will not enter into any Hedging Agreement providing for payment by Parent or any Subsidiary of amounts based upon a floating interest rate in exchange for receipt by Parent or any Subsidiary of amounts based upon a fixed interest rate (each, a “Fixed-to-Floating Swap”) if, on the date of such Hedging Agreement and after giving effect thereto, the sum of (i) the aggregate notional principal amount covered by all such Fixed-to-Floating Swaps plus (ii) the aggregate principal amount of all then outstanding consolidated Indebtedness of Parent and its Subsidiaries (determined without duplication in accordance with GAAP) that as of such date bears interest at a floating rate (and is not effectively bearing interest at a fixed rate through a Hedging Agreement) would exceed 50% of then outstanding consolidated Indebtedness of Parent and its Subsidiaries (determined in accordance with GAAP).
9.17. Anti-Hoarding . When any Revolving Credit Loans are outstanding, permit the aggregate amount of Unrestricted Cash and Permitted Investments held by the Loan Parties , as of the end of any fiscal month, to exceed $50,000,000.
If any of the following events shall occur and be continuing:
then, and in any such event, (A) upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the United States Bankruptcy Code, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, then, any or all of the following actions may be taken: (i) with the consent of the Majority Revolving Lenders, the Administrative Agent may, or upon the request of the Majority Revolving Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Revolving Credit Commitments to be terminated forthwith, whereupon the Revolving Credit Commitments shall immediately terminate; (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, exercise any remedy with respect to the Collateral provided for in any Security Document and (iii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. In the case of all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto).
11.1. Appointment . Each Lender hereby irrevocably designates and appoints the Agents as the agents of such Lender under this Agreement and the other Loan Documents, and each Lender irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Agent.
11.2. Delegation of Duties . Each Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
11.3. Exculpatory Provisions . Neither any Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document
or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.
11.4. Reliance by Agents . Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex, electronic mail or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Loan Parties), independent accountants and other experts selected by such Agent. The Agents may deem and treat the payee of any Note as the owner thereof for all purposes unless such Note shall have been transferred in accordance with Section 12.6 and all actions required by such Section in connection with such transfer shall have been taken. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.
11.5. Notice of Default . No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent shall have received notice from a Lender, Parent, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent shall receive such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
11.6. Non-Reliance on Agents and Other Lenders . Each Lender expressly acknowledges that neither any of the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, Property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, Property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the Business, Property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.
11.7. Indemnification . The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by Parent, Holdings or the Borrower and without limiting the obligation of Parent, Holdings or the Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such date), for, and to save each Agent harmless from and against, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct. The Administrative Agent shall have the right to deduct any amount owed to it by any Lender under this Section from any payment made by it to such Lender hereunder. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.
11.8. Agent in Its Individual Capacity . Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued or participated in by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.
11.9. Successor Agents . The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 10(g), (h) or (i) with respect to Parent, Holdings or the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. Either Co-Syndication Agent may, at any time, by notice to the Lenders and the Administrative Agent, resign as Co-Syndication Agent hereunder, whereupon the duties, rights, obligations and responsibilities of such Co-Syndication Agent hereunder shall automatically be assumed by, and inure to the benefit of, the Administrative Agent, without any further act by such Co-Syndication Agent, the Administrative Agent or any Lender. After any retiring Agent’s resignation as Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents.
11.10. Authorization to Release Liens and Guarantees . The Administrative Agent is hereby irrevocably authorized by each of the Lenders to effect any release of Liens or guarantee obligations contemplated by Section 12.16.
11.11. Authorization to Enter into Intercreditor Agreement . The Lenders hereby authorize the Administrative Agent to enter into the Intercreditor Agreement and acknowledge that they will be bound thereby.
11.12. The Arrangers, Co-Syndication Agents and Co-Documentation Agents . Neither the Arrangers nor the Co-Syndication Agents, nor the Co-Documentation Agents, in their respective capacities as such, shall have any duties or responsibilities, and none of them shall incur any liability, under this Agreement and the other Loan Documents.
12.1. Amendments and Waivers . Neither this Agreement or any other Loan Document, nor any terms hereof or thereof, may be amended, supplemented or modified except
in accordance with the provisions of this Section 12.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, or (with the written consent of the Required Lenders) the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents (including amendments and restatements hereof or thereof) for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (ii) waive, on such terms and conditions as may be specified in the instrument of waiver, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided , however , that no such waiver and no such amendment, supplement or modification shall:
(A) forgive the principal amount or extend the final scheduled date of maturity of any Loan or Reimbursement Obligation, extend the scheduled date or decrease the amount of any amortization payment in respect of any Loan, reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Commitment of any Lender, in each case without the consent of each Lender directly affected thereby (it being understood that a waiver of any condition precedent set forth in Section 7.2 or the waiver of any Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender and it being further understood that the waiver of (or amendment to the terms of ) any mandatory prepayment of the Loans shall not constitute a postponement of any date scheduled for the payment of principal or interest); provided that only the consent of the Required Lenders shall be necessary to amend the default rate of interest set forth in Section 5.8(c) or to waive any obligation of the Borrower to pay interest or letter of credit fees at such default rate;
(B) amend, modify or waive any provision of this Section or reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement, release all or substantially all of the Collateral, release Parent as a Guarantor or release all or substantially all of the aggregate value of the Guarantees of the Obligations, in each case without the consent of all Lenders (in each case, except as permitted by any Loan Document);
(C) change the percentage specified in the definition of the Majority Term Lenders without the written consent of all Lenders under such Facility;
(D) change the percentage specified in the definition of Majority Revolving Lenders without the written consent of all Revolving Lenders;
(E) amend, modify or waive any provision of Section 11, or any other provision affecting any Agent or Arrangers without the consent of such Agent or Arrangers directly affected thereby;
(F) amend, modify or waive any provision of Sections 4.9 or 4.10 without the written consent of the Swing Line Lender;
(G) amend, modify or waive any provision of Section 5.11 without the consent of each Lender directly affected thereby;
(H) amend, modify or waive any provision of Section 4 without the consent of the Issuing Lender; and
(I) amend, modify or waive the application of the proceeds from any realization or recovery on the Collateral after the date on which all Loans shall have become due and payable without the consent of the Majority Revolving Lenders or the Majority Term Lenders if such amendment, modification or waiver disproportionately and adversely affects the Revolving Credit Lenders or the Tranche B Term Loan Lenders, as the case may be.
Any such waiver and any such amendment, supplement or modification effected pursuant to the foregoing shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, Parent, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Any such waiver, amendment, supplement or modification shall be effected by a written instrument signed by the parties required to sign pursuant to the foregoing provisions of this Section; provided , that delivery of an executed signature page of any such instrument by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.
Notwithstanding anything to the contrary contained in this Section 12.1, (a) this Agreement and the other Loan Documents may be amended with the consent of the Administrative Agent at the request of the Borrower without the need to obtain the consent of any other Lender if such amendment is delivered in order to cure any ambiguity or defect and such amendment is requested within 30 days of the Closing Date, (b) in the event that the Borrower requests that this Agreement be modified or amended in a manner that would require the unanimous consent of all of the Lenders and such modification or amendment is agreed to by the Required Lenders, then with the consent of the Borrower and the Required Lenders, the Borrower and the Required Lenders shall be permitted to amend the Agreement without the consent of the Non-Consenting Lenders to provide for (i) the termination of the Commitment of each Non-Consenting Lender that are (w) Revolving Credit Lenders, (x) LC/Swing Line Revolving Lenders, (y) Tranche B Term Loan Lenders or (z) all three, at the election of the Borrowers and the Required Lenders, (ii) the addition to this Agreement of one or more other financial institutions (each of which shall be a Lender, an affiliate of a Lender or an Approved Fund), or an increase in the Commitment of one or more of the Required Lenders (with the written consent thereof), so that the total Commitment after giving effect to such amendment shall be in the same amount as the total Commitment immediately before giving effect to such amendment, (iii) if any Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new financial institutions or Required Lender or Lenders, as the case may be, as may be necessary to repay in full, at par, the outstanding Loans of the Non-Consenting Lenders immediately before giving effect to such amendment and (iv) such other modifications to this Agreement as may be appropriate to effect the foregoing clauses (i), (ii) and (iii).
For the avoidance of doubt, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and each Loan Party to each relevant Loan Document (x) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest, fees and other amounts in respect thereof (collectively, the “ Additional Extensions of Credit ”) to share ratably in the benefits of this Agreement and the other Loan Documents with the Tranche B Term Loans, LC/Swing Line Loans and Revolving Extensions of Credit and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Majority Revolving Lenders; provided , however , that no such amendment shall permit the Additional Extensions of Credit to share ratably with or with preference to the Loans in the application of prepayments without the consent of the Required Lenders, and no such amendment shall, without the consent of all Lenders, subordinate any of the Loans, or any of the rights in the Collateral of any Lenders, to any such Additional Extension of Credit.
12.2. Notices . Unless otherwise expressly provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by (including by telecopy or electronic mail pursuant to procedures approved by the Administrative Agent), and shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy or electronic mail notice, when received, addressed (i) in the case of Parent, Holdings, the Borrower, the Agents and the Issuing Lenders as set forth below, (ii) in the case of the Lenders, as set forth in an administrative questionnaire delivered to the Administrative Agent or on Schedule I to the Lender Addendum to which such Lender is a party or, in the case of a Lender which becomes a party to this Agreement pursuant to an Assignment and Acceptance, in such Assignment and Acceptance or (iii) in the case of any party, to such other address as such party may hereafter notify to the other parties hereto:
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Parent or Holdings |
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c/o Six
Flags Operations Inc.
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with a copy to: |
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Six Flags
Operations Inc.
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The Borrower: |
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Six Flags
Theme Parks Inc.
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with a copy to, with respect to Sections 5.13(e), 12.6(b)(ii) and 12.6(c)(ii): |
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Andrews
Kurth LLP
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The Co-Syndication Agents: |
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Bank of
America, N.A.
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Barclays
Bank PLC
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The Administrative Agent: |
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JPMorgan
Chase Bank, N.A.
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with a copy to: |
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JPMorgan
Chase Bank, N.A.
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Issuing Lender: |
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As notified by such Issuing Lender to the Administrative Agent and the Borrower |
provided that any notice, request or demand to or upon the any Agent, the Issuing Lender or any Lender shall not be effective until received. The attorneys for any party may, but shall not be required to, give any notice on behalf of their respective client.
12.3. No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
12.4. Survival of Representations and Warranties . All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.
12.5. Payment of Expenses . The Borrower agrees (a) to pay or reimburse the Administrative Agent and the Arrangers for all their reasonable and documented out-of-pocket costs and expenses incurred in connection with the syndication of the Facilities (including the charges of Intralinks but excluding fees payable to syndicate members) and the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements and other charges of one primary counsel to the Administrative Agent (and, if
necessary, one local counsel in each relevant jurisdiction (which, for the avoidance of doubt, may include each jurisdiction where a Mortgaged Property is located and, without duplication, each other jurisdiction where a Guarantor is organized)), (b) to pay or reimburse each Lender and the Agents for all their costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents (including in connection with any workout, restructuring or negotiations in respect thereof), including, without limitation, the fees and disbursements of counsel to the Lenders and the Agents, (c) to pay, indemnify, or reimburse each Lender and the Agents for, and hold each Lender and the Agents harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify or reimburse each Lender, each Agent, their respective affiliates, and their respective officers, directors, trustees, employees, advisors, agents and controlling persons (each, an “Indemnitee”) for, and hold each Indemnitee harmless from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including, without limitation, any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of Parent or any of its Subsidiaries or any of the Properties and the fees and disbursements and other charges of legal counsel in connection with claims, actions or proceedings by any Indemnitee against any Loan Party hereunder (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”), provided, that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee or of any director, officer, or employee of such Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, Parent agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries so to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee. All amounts due under this Section shall be payable not later than 30 days after written demand therefor. Statements for amounts payable by the Borrower pursuant to this Section shall be submitted to the attention of the Chief Financial Officer (Telephone No. 212-652-9384) (Fax No. 212-354-3089), at the address of the Borrower set forth in Section 12.2, or to such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent. The agreements in this Section shall survive repayment of the Loans and all other amounts payable hereunder.
12.6. Successors and Assigns; Participations and Assignments .
(A) the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default under Section 10(g), (h) or (i) has occurred and is continuing, any other Person; and
(B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Tranche B Term Loan to a Lender, an affiliate of a Lender or an Approved Fund.
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 in the case of the Revolving Credit Facility (or, in the case of the Tranche B Term Loan Facility, $1,000,000) unless each of the Borrower and the Administrative Agent otherwise consent, provided that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;
(B) (1) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (payable among the Lenders party to the Assignment and Acceptance, which shall be paid once in connection with simultaneous assignments for a Lender and its affiliates and Approved Funds) and (2) the assigning Lender shall have paid in full any amounts owing by it to the Administrative Agent;
(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities) will be made available and who may receive such
information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws; and
(D) the Assignee shall not be a Loan Party; provided that the Borrower may be an Assignee in connection with an Auction.
For the purposes of this Section 12.6, “ Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.
12.7. Adjustments; Set-off . (a) Except to the extent that this Agreement provides for payments to be allocated to a particular Lender or to the Lenders under a particular Facility, (i) except to the extent that the Loan Documents provide that only the Tranche B Term Loans shall be secured by the Mortgaged Property of the Borrower or any Subsidiary thereof located in the State of New York (the “ New York Collateral ”), if any Lender shall at any time receive any payment of all or part of the Obligations owing to it, or receive any Collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 10(g), (h) or (i), or otherwise), in a greater proportion than any such payment to or Collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, or (ii) if, as a result of any exercise of rights and remedies with respect to the New York Collateral, any Lender holding a Tranche B Term Loan shall at any time receive any payment of all or part of the Obligations owing to it (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 10(g), (h) or (i), or otherwise), in a greater proportion than any such payment to any other Lender, if any, in respect of the Obligations owing to such other Lender, such benefited Lender (each benefited Lender referred to in clauses (i) and (ii) above, a “ Benefited Lender ”) shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such Collateral, or the proceeds thereof, ratably with each of the Lenders; provided , however , that if all or any portion of such excess payment, benefits or proceeds is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.
12.8. U.S.A. Patriot Act . Each Lender hereby notifies the Borrower that pursuant to the requirements of the U.S.A. Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lenders to identify the Borrower in accordance with the U.S.A. Patriot Act.
12.9. Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement or of a Lender Addendum by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with Holdings and the Administrative Agent.
12.10. Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
12.11. Integration . This Agreement and the other Loan Documents represent the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Arrangers, any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.
12.12. GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
12.13. Submission To Jurisdiction; Waivers . Each of the Agents, the Lenders, Parent, Holdings and the Borrower hereby irrevocably and unconditionally:
12.14. Acknowledgments . Each of Parent, Holdings and the Borrower hereby acknowledges that:
12.15. Confidentiality . Each of the Agents and the Lenders agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent any Agent or any Lender from disclosing any such information (a) to any Arranger, any Agent, any other Lender or any affiliate of any thereof, (b) to any Participant or Assignee (each, a “ Transferee ”) or prospective Transferee that agrees to comply with the provisions of this Section, (c) to any of its employees, directors, agents, attorneys, accountants and other professional advisors, (d) to any financial institution that is a direct or indirect contractual counterparty in swap agreements or such contractual counterparty’s professional advisor (so long
as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section), (e) upon the request or demand of any Governmental Authority having jurisdiction over it, (f) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (g) in connection with any litigation or similar proceeding, (h) that has been publicly disclosed other than in breach of this Section, (i) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender or (j) in connection with the exercise of any remedy hereunder or under any other Loan Document.
EACH LENDER ACKNOWLEDGES THAT INFORMATION FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
12.16. Release of Collateral and Guarantee Obligations .
12.17. Accounting Changes . In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then Parent, the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the financial condition of Parent and the Borrower shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by Parent, Holdings, the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants or, if applicable, the SEC.
12.18. Delivery of Lender Addenda . Each initial Lender shall become a party to this Agreement by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender, the Borrower and the Administrative Agent.
12.19. WAIVERS OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.20. Intercreditor Agreement . In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control.
[Remainder of the page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
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SIX FLAGS ENTERTAINMENT |
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General Counsel |
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SIX FLAGS OPERATIONS INC |
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/s/ James M. Coughlin |
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James M. Coughlin |
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General Counsel |
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SIX FLAGS THEME PARKS INC., |
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as Borrower |
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/s/ James M. Coughlin |
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James M. Coughlin |
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General Counsel |
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JPMORGAN CHASE BANK, N.A., as |
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Administrative Agent and Lender |
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/s/ Christophe Vohmann |
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Name: Christophe Vohmann |
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Title: Authorized Signatory |
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Exhibit 10.2
FIRST LIEN GUARANTEE AND COLLATERAL AGREEMENT, dated as of April 30, 2010 made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “ Grantors ”), in favor of JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such capacity, the “ Administrative Agent ”) for the banks and other financial institutions or entities (the “ Lenders ”) from time to time parties to the First Lien Credit Agreement, dated as of April 30, 2010 (as amended, supplemented, restated or otherwise modified from time to time, the “ Credit Agreement ”), among SIX FLAGS ENTERTAINMENT CORPORATION (formerly known as SIX FLAGS, INC.), a Delaware corporation (“ Parent ”), SIX FLAGS OPERATIONS INC., a Delaware corporation (“ Holdings ”), SIX FLAGS THEME PARKS INC., a Delaware corporation (the “ Borrower ”), the Administrative Agent and the other agents named therein.
W I T N E S S E T H :
WHEREAS, in connection with the confirmation and implementation of the Plan of Reorganization, the Borrower has requested that the Lenders make loans and other credit available to the Borrower under the Credit Agreement in order to enable the reorganized Debtors to consummate the transactions contemplated by the Plan of Reorganization, pay related fees and expenses and finance the working capital needs and general corporate purposes of the Borrower;
WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement;
WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Secured Parties;
NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, and to induce the Qualified Counterparties to enter into the Specified Cash Management Agreements and Specified Hedge Agreements, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions . (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms are used herein as defined in the New York UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Documents, Equipment, General Intangibles, Instruments, Inventory, Letter-of-Credit Rights and Supporting Obligations; provided that none of the foregoing UCC terms shall be deemed to include Excluded Assets.
(b) The following terms shall have the following meanings:
“ Agreement ”: this First Lien Guarantee and Collateral Agreement, as the same may be amended, supplemented, restated or otherwise modified from time to time.
“ Borrower Obligations ”: the collective unpaid principal of and interest on (including, without limitation, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans, the Reimbursement Obligations and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Secured Party, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge Agreement, any Specified Cash Management Agreement or any other document made, delivered or given by any Loan Party in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or to any Secured Party that are required to be paid by the Borrower pursuant hereto) or otherwise.
“ Collateral ”: as defined in Section 3.
“ Copyrights ”: (i) all works of authorship and copyrights arising under the laws of the United States, any group of countries, other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations thereof, and all applications in connection therewith, including, without limitation, all registrations and applications in the United States Copyright Office, including, without limitation, any of the foregoing listed in Schedule 5, and (ii) the right to obtain all renewals thereof.
“ Copyright Licenses ”: any written or oral agreement naming any Grantor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright, including, without limitation, any of the foregoing listed in Schedule 5.
“ Deposit Account ”: as defined in the Uniform Commercial Code of any applicable jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook or like account maintained with a depositary institution.
“ Excluded Assets ”: the collective reference to (i) all Capital Stock owned by any Grantor in (A) Flags Beverages, Inc., Fiesta Texas Hospitality LLC, Spring Beverage Holding Corp. and other Subsidiaries, if any, which have no material assets other than a liquor license, (B) HWP Development Holdings, LLC, HWP Development LLC and any other entity formed pursuant to the Great Escape Agreements and (C) Servicios de Restaurantes Especializados, S.A. De C.V. so long as it owns no assets (other than a de minimus amount), (ii) any Trademark License with Warner Bros. or its affiliates that expressly prohibits the granting of a security
interest therein (including but not limited to (A) those licenses contemplated by the German WB Acquisition, and (B) the Amended and Restated License Agreement #5854-WB/DC dated as of April 1, 1998 with the Borrower and the License Agreement #8898-TOON dated January 1, 1998 between the Borrower and Warner Bros. Consumer Products Division (Cartoon Network), as any of the foregoing may be amended from time to time), except, in each case, to the extent that such term in such license providing for such prohibition is ineffective under applicable law, (iii) any other Trademark License that expressly prohibits the granting of a security interest therein, except, in each case, to the extent that such term in such license providing for such prohibition is ineffective under applicable law, (iv) that portion of the Capital Stock of any Excluded Foreign Subsidiary that is in excess of 65% of the total outstanding Capital Stock of such Excluded Foreign Subsidiary, (v) the Capital Stock of a Subsidiary acquired after the date hereof to the extent that Section 8.6(f) of the Credit Agreement does not require the granting of a security interest therein, (vi) any Property of any Grantor covered by a pledge or security interest under the New Time Warner Facility or subject to a negative pledge thereunder, (vii) any Property owned by any Grantor to the extent that creation of a security interest therein would be prohibited by a Contractual Obligation binding on any Grantor that is the owner of such Property, including pursuant to the New Time Warner Facility or the Partnership Parks Agreements (provided that, with respect to Property acquired after the date hereof, such Contractual Obligation existed at the time such property was acquired and was not entered into in anticipation of such acquisition); provided , however , that such Property shall no longer constitute “Excluded Assets” immediately at such time as such security interest ceases to be prohibited by a binding Contractual Obligation, (viii) any Property of any Grantor to the extent that the Administrative Agent shall determine in its sole discretion that the costs of obtaining a security interest in such Property is excessive in relation to the value of the security to be afforded thereby and (ix) United States intent-to-use Trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law.
“ Foreign Subsidiary ”: any Subsidiary organized under the laws of any jurisdiction outside the United States of America.
“ Foreign Subsidiary Voting Stock ”: the voting Capital Stock of any Foreign Subsidiary.
“ Guarantor Obligations ”: with respect to any Guarantor, all obligations and liabilities of such Guarantor which may arise under or in connection with this Agreement (including, without limitation, Section 2) or any other Loan Document, or any Specified Hedge Agreements or Specified Cash Management Agreements to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Secured Parties that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Loan Document to which such Guarantor is a party).
“ Guarantors ”: the collective reference to each Grantor other than the Borrower.
“ Infringement ”: infringement, misappropriation, dilution or other impairment or violation.
“ Intellectual Property ”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, and the Trademark Licenses, and all rights to sue at law or in equity for any Infringement thereof, including the right to receive all proceeds and damages therefrom; provided that Intellectual Property excludes any Excluded Assets.
“ Intercompany Note ”: any promissory note evidencing loans made by any Grantor to Parent or any of its Subsidiaries.
“ Intercreditor Agreement ”: the Intercreditor Agreement dated as of April 30, 2010 (as amended, restated, supplemented or otherwise modified from time to time) among Parent, Holdings, the Borrower, the Subsidiary Guarantors, the First Priority Representative (as defined therein) and the Second Priority Representative (as defined therein).
“ Investment Property ”: the collective reference to (i) all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Foreign Subsidiary Voting Stock excluded from the definition of “Pledged Stock”) and (ii) whether or not constituting “investment property” as so defined, all Pledged Notes and all Pledged Stock; provided that Investment Property excludes any Excluded Assets.
“ Issuers ”: the collective reference to each issuer of any Investment Property.
“ Material Trademarks ”: all Trademarks included in the Collateral that are material to the business of the applicable Grantor.
“ New York UCC ”: the Uniform Commercial Code as from time to time in effect in the State of New York.
“ Obligations ”: (i) in the case of the Borrower, the Borrower Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
“ Patents ”: (i) all letters patent of the United States, any group of countries, other country or any political subdivision thereof, all reissues and extensions thereof, and (ii) all applications for letters patent of the United States or any group of countries, other country or any political subdivision thereof, and all reissues, divisions, extensions, continuations and continuations-in-part thereof, similar legal protections related thereto, or rights to obtain the foregoing, including, without limitation, any of the foregoing listed in Schedule 5.
“ Patent License ”: any written or oral agreement providing for the grant by or to any Grantor of any right to make, have made, manufacture, use or sell (directly or indirectly), offer to sell, import or dispose of any invention or practice any method covered in whole or in part by a Patent, including, without limitation, any of the foregoing listed in Schedule 5.
“ Pledged Notes ”: all promissory notes listed on Schedule 2, all Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held
by any Grantor (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business), excluding any Excluded Assets.
“ Pledged Securities ”: means any Instruments, Certificated Securities, Chattel Paper and Investment Property.
“ Pledged Stock ”: the shares of Capital Stock listed on Schedule 2, together with any other shares, stock certificates, options, interests or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect, excluding any Excluded Assets; provided that in no event shall more than 65% of the total outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be required to be pledged hereunder.
“ Proceeds ”: all “proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.
“ Receivable ”: any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account).
“ Registered Intellectual Property ”: all registrations and applications for registration of Trademarks, Patents and Copyrights.
“ Second Lien Guarantee and Collateral Agreement ”: the Second Lien Guarantee and Collateral Agreement, dated as of the date hereof, made by Parent, Holdings, the Borrower and each Subsidiary Guarantor, in favor of the Second Priority Representative (as defined in the Intercreditor Agreement) for the benefit of the secured parties thereunder.
“ Secured Parties ”: the collective reference to the Lenders and each Qualified Counterparty.
“ Securities Act ”: the Securities Act of 1933, as amended.
“ Subsidiary Guarantor ”: each Grantor other than Parent, Holdings and the Borrower.
“ Trademarks ”: (i) all trademarks, trade names, brand names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, domain names, service marks, logos and other source or business identifiers, and all goodwill associated therewith or symbolized thereby, now existing or hereafter adopted or acquired, all registrations thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any group of countries, other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including,
without limitation, any of the foregoing listed in Schedule 5, and (ii) the right to obtain all renewals thereof.
“ Trademark License ”: any written or oral agreement providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing listed in Schedule 5, but excluding the Excluded Assets.
“ Vehicles ”: all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title law of any state and all tires and other appurtenances to any of the foregoing.
1.2 Other Definitional Provisions . (a) The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole as amended from time to time and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee . (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Secured Parties, and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Security Documents and the maximum amount which may be secured by the Liens granted with respect to the Collateral hereunder and the Collateral under the other Security Documents, in each case, shall in no event exceed the amount which can be guaranteed by such Guarantor, or secured by assets of such Guarantor, under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent or any Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full force and effect until all of the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to time the Borrower may be free from any Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any Secured Party from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Borrower Obligations or any payment received or collected from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated.
2.2 Right of Contribution . Each Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against any other Subsidiary Guarantor hereunder which has not paid its proportionate share of such payment. Each Subsidiary Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Subsidiary Guarantor to the Administrative Agent and the Secured Parties, and each Subsidiary Guarantor shall remain liable to the Administrative Agent and the Secured Parties for the full amount guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation . Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Administrative Agent or any Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or any Secured Party against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any Secured Party for the payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent and the Secured Parties by the Borrower on account of the Borrower Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent and the Secured Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations . Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made by the Administrative Agent or any Secured Party may be rescinded by the Administrative Agent or such Secured Party and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any Secured Party, and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Secured Party for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional . Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent or any Secured Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the Guarantors with respect to the Borrower Obligations to the extent permitted by law. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Secured Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower or any other Person against the Administrative Agent or any Secured Party, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent or any Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any Guarantor or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative
Agent or any Secured Party against any Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.
2.6 Reinstatement . The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.
2.7 Payments . Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim, in immediately available funds in the currency in which the relevant Obligation is denominated, at the applicable Payment Office.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “ Collateral ”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all Equipment;
(f) all Fixtures;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all other personal property not otherwise described above;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing.
Notwithstanding the foregoing, (i) the Collateral shall not include the Excluded Assets and (ii) the Partnership Parks Entities and their Property and any other Property of Parent and its Subsidiaries subject to the Partnership Parks Agreements shall be expressly excluded from, and shall not be subject to, any provisions of this Agreement so long as the creation of a security interest under, or the execution of, this Agreement is prohibited by a Contractual Obligation binding on the Partnership Park Entities or, with respect to any other Property of Parent and its Subsidiaries, is prohibited by the Partnership Parks Agreements.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, and to induce the Qualified Counterparties to enter into the Specified Cash Management Agreements and Specified Hedge Agreements, as applicable, each Grantor hereby represents and warrants to the Administrative Agent and each Secured Party that:
4.1 Investment Property . (a) The shares of Pledged Stock pledged by such Grantor hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by such Grantor or, in the case of Foreign Subsidiary Voting Stock, 65% of the outstanding Foreign Subsidiary Voting Stock of each relevant Issuer.
(b) All the shares of the Pledged Stock issued by each Issuer (other than any Issuer that is a Foreign Subsidiary, a partnership or a limited liability company) have been duly and validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes, to the knowledge of the Grantors, constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by the Second Lien Guarantee and Collateral Agreement and this Agreement.
4.2 Intellectual Property . (a) Schedule 5 lists all (i) Registered Intellectual Property owned by such Grantor in its own name on the date hereof and (ii) all material Registered Intellectual Property exclusively licensed by such Grantor as of the date hereof, noting in each case the relevant registration, application or serial number, the jurisdiction of registration or application, and, in the case of (ii), the title of the license, the counterparty to such
license and the date of such license, provided that with respect to the foregoing clause (ii), the applicable Registered Intellectual Property is identified in the applicable license.
(b) Except as set forth in Schedule 5 and except for joint marketing and sponsorship agreements entered into by such Grantor in the ordinary course of its business, on the date hereof, none of the Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor.
(c) Such Grantor owns, or is licensed to use, all Intellectual Property material to the conduct of its business as currently conducted, free and clear of all Liens other than Permitted Liens, and takes reasonable actions to protect, preserve and maintain such Intellectual Property except as permitted by Sections 9.5(c)(i) and (c)(xvi) of the Credit Agreement. Except as could not reasonably be expected to have a Material Adverse Effect, (i) all such Intellectual Property is valid and enforceable and (ii) all Registered Intellectual Property has not expired or been abandoned except as permitted by Sections 9.5(c)(i) and (c)(xvi) of the Credit Agreement. No claim, action or proceeding is pending by any Person or, to the knowledge of such Grantor, threatened, or imminent, on the date hereof, and no holding, decision or judgment has been rendered by any Governmental Authority or arbitrator, which may limit, cancel or challenge the validity, enforceability, ownership or use of, any material Intellectual Property in any material respect, except for claims, actions, proceedings, holdings, decisions or judgments which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. To the knowledge of such Grantor, (i) the operation of the business of such Grantor does not Infringe the Intellectual Property rights of any Person, and, (ii) no Person is Infringing any Intellectual Property owned by such Grantor to an extent which could reasonably be expected to have a Material Adverse Effect.
(d) Commercial Tort Claims . On the date hereof, no Grantor has rights in any Commercial Tort Claim with potential value in excess of $100,000.
4.3 Additional Representations and Warranties .
(a) On the date of this Agreement, such Grantor’s jurisdiction of organization, identification number from the jurisdiction of organization (if any) and the location of such Grantor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 4. Such Grantor has furnished to the Administrative Agent a certified charter, certificate of incorporation or other organization document and good standing certificate as of a date which is recent to the date hereof.
(b) Each Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant a security interest hereunder and has full power and authority to grant to the Administrative Agent a security interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained and is in full force and effect.
(c) The UCC financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations for filing in each governmental, municipal or other office specified in Schedule 3 hereto, and with respect to Collateral consisting of registered and applied for United States Patents, Trademarks, or Copyrights, to the extent required by
applicable Federal law, filings made at the United States Patent and Trademark Office and the United States Copyright Office, as applicable, are all the filings, recordings and registrations that are necessary to establish a legal, valid and perfected security interest in favor of the Administrative Agent (for the benefit of the Secured Parties) in respect of all Collateral in which a security interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements.
(d) The security interest granted to the Administrative Agent constitutes (i) a legal and valid security interest in all the Collateral securing the payment and performance of the Obligations and (ii) subject to the filings described in Section 4.4(c), a perfected security interest in all Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code in the relevant jurisdiction. The security interest granted to the Administrative Agent is and shall be prior to any other Lien on any of the Collateral, other than Liens expressly permitted under the Credit Agreement.
(e) The Collateral is owned by the Grantors free and clear of any Lien, except for Permitted Liens under the Credit Agreement. None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the New York UCC or any other applicable laws covering any Collateral or (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted under the Credit Agreement, or those which are for notice purposes only.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and the Secured Parties that, from and after the date of this Agreement until the Obligations shall have been paid in full (other than Obligations under Specified Hedge Agreements and Specified Cash Management Agreements that are not yet due and payable, and contingent indemnification obligations not yet accrued and payable), no Letter of Credit shall be outstanding and the Commitments shall have terminated:
5.1 Delivery of Pledged Securities .
(a) Each Grantor agrees promptly to deliver or cause to be delivered to the Administrative Agent, for the benefit of the Secured Parties, any and all Pledged Securities (other than any uncertificated Capital Stock, but only for so long as such Capital Stock remains uncertificated) to the extent such Pledged Securities, in the case of promissory notes or other instruments evidencing Indebtedness, are required to be delivered pursuant to paragraph (b) of this Section 5.1 (it being understood that, with respect to Reino Aventura, S.A. De C.V. and Ventas Y Servicios Al Consumidor, S.A. De C.V, such Pledged Securities shall be delivered
within 30 days following the Closing Date (or such later date as consented to by the Administrative Agent in its reasonable discretion)).
(b) Each Grantor will cause (i) any Indebtedness for borrowed money (other than intercompany loans referred to in clause (ii) below) having an aggregate principal amount in excess of $1,000,000 owed to such Grantor by any Person and (ii) any intercompany loans made by such Grantor to any Person that is not a Loan Party to be evidenced by a duly executed promissory note (or pursuant to a global note) that is pledged and delivered to the Administrative Agent, for the benefit of the Secured Parties, pursuant to the terms hereof.
(c) Upon delivery to the Administrative Agent, (i) any Pledged Securities shall be accompanied by stock powers duly executed in blank or other instruments of transfer reasonably satisfactory to the Administrative Agent and by such other instruments and documents as the Administrative Agent may reasonably request and (ii) all other property comprising part of the Pledged Securities shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Administrative Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing such Pledged Securities, which schedule shall be attached hereto as Schedule 2 and made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
(d) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (i) filing any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and (ii) in the case of Investment Property, Deposit Accounts, Letter-of-Credit Rights and any other relevant Collateral, taking any actions necessary to enable the Administrative Agent to obtain “control” (within the meaning of the applicable Uniform Commercial Code) with respect thereto.
(e) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Investment Property issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.4(b) with respect to the Investment Property issued by it and (iii) the terms of Sections 6.2(d) and 6.7 shall apply to it, mutatis mutandis , with respect to all actions that may be required of it pursuant to Section 6.2(d) or 6.7 with respect to the Investment Property issued by it.
5.2 Intellectual Property . (a) Except as permitted by Sections 9.5(c)(i) and (c)(xvi) of the Credit Agreement, such Grantor (either itself or through licensees) will (i) continue to use each Material Trademark in order to maintain such Material Trademark in full force free from any claim of abandonment for non-use, (ii) maintain in all material respects as in the past the quality of all products and services offered under any Material Trademark, (iii) use each Material Trademark with all appropriate notices of registration and all other notices and legends required by applicable Requirements of Law, (iv) not adopt or use any new mark, or any
mark which is confusingly similar or a colorable imitation of a Trademark included in the Collateral unless the Administrative Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement, and (v) not (and will use commercially reasonable efforts to prohibit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby a Material Trademark could reasonably be expected to become invalidated or diluted in any way, except, in each case, as could not reasonably be expected to have a Material Adverse Effect.
(b) Except as permitted by Sections 9.5(c)(i) and (c)(xvi) of the Credit Agreement, such Grantor will not do any act, or omit to do any act (and will use commercially reasonable efforts to ensure that any licensee or sublicensee does not do any act or omit to do any act) whereby any material Patent included in the Collateral is abandoned or dedicated to the public, or allowed to prematurely lapse.
(c) Such Grantor will not do any act or knowingly omit to do any act (and will use commercially reasonable efforts to ensure that any licensee or sublicensee does not do any act or omit to do any act) whereby any material portion of the Copyrights included in the Collateral could reasonably be expected to become invalidated or otherwise materially impaired. Such Grantor will not do any act (and will use commercially reasonable efforts to ensure that any licensee or sublicensee does not do any act) whereby a material portion of any Copyright included in the Collateral falls into the public domain.
(d) Such Grantor will not (and will use commercially reasonable efforts to ensure that any licensee or sublicense does not) knowingly Infringe in any material respect upon the intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent in the next Compliance Certificate required to be delivered by it pursuant to Section 8.1(f) of the Credit Agreement if it knows, or has reason to know, that any material Registered Intellectual Property may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency, or any court or tribunal in any country) regarding such Grantor’s rights in, or the validity, enforceability, ownership or use of, any material Intellectual Property, including, without limitation, such Grantor’s right to register or maintain same.
(f) Whenever such Grantor, either by itself or through any agent, employee, licensee or designee, shall acquire, become the exclusive licensee of, or file an application for the registration of, any Registered Intellectual Property with the United States Copyright Office or the United States Patent and Trademark Office, or any similar office or agency in any group of countries, other country or any political subdivision thereof, such Grantor shall report such filing to the Administrative Agent on the first Compliance Certificate delivered pursuant to Section 8.1(f) of the Credit Agreement after such acquisition, licensing, or filing. Upon request of the Administrative Agent, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent’s and the Secured Parties security interest in any Registered Intellectual Property which is not an Excluded Asset.
(g) Such Grantor will take such actions as it reasonably deems appropriate under the circumstances, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of all Registered Intellectual Property, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability.
(h) In the event that any material Intellectual Property is Infringed by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value to the Grantors as a whole, promptly notify the Administrative Agent after it learns thereof and, after taking reasonable and customary measures to stop such Infringement and where appropriate in such Grantor’s reasonable business judgment, sue for Infringement, seek injunctive relief and to recover any and all damages for such Infringement.
5.3 Additional Covenants .
(a) The Borrower agrees, on its own behalf and on behalf of each Grantor, to notify the Administrative Agent in writing of any change (i) in legal name of any Grantor, (ii) in the identity or type of organization or corporate structure of any Grantor, or (iii) in the jurisdiction of organization of any Grantor, within 15 days of any such change.
(b) Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Collateral against all Persons and to defend the security interest of the Administrative Agent in the Collateral and the priority thereof against any Lien not expressly permitted by the Credit Agreement.
(c) The Borrower agrees, on its own behalf and on behalf of each other Grantor, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Administrative Agent may from time to time reasonably request to better assure, preserve, protect and perfect its security interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting to the Administrative Agent of a security interest and the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Collateral that is in excess of $1,000,000 shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be promptly pledged and delivered to the Administrative Agent, for the benefit of the Secured Parties, duly endorsed in a manner reasonably satisfactory to the Administrative Agent.
(d) At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral and not permitted under the Credit Agreement, and may pay for the maintenance and preservation of the Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement and within a reasonable period of time after the Administrative Agent has requested that it do so, and each Grantor jointly and severally agrees to reimburse the Administrative Agent within 10 days after demand for any payment made or any reasonable expense incurred by the Administrative Agent pursuant to the foregoing authorization. Nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any Secured Party to
cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein, in the other Loan Documents.
(e) If at any time any Grantor shall take a security interest in any property of any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account (an “ Account Debtor ”), or any other Person, the value of which is in excess of $1,000,000, to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Administrative Agent for the benefit of the Secured Parties. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.
(f) Each Grantor (rather than the Administrative Agent or any Secured Party) shall remain liable (as between itself and any relevant counterparty) to observe and perform all the material conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Administrative Agent and the Secured Parties from and against any and all liability for such performance; provided , that no Grantor shall have any obligation hereunder to the Administrative Agent or any Secured Party with respect to any such liabilities to the extent such liabilities are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Administrative Agent or any Secured Party or of any director, officer, or employee of the Administrative Agent or any Secured Party.
(g) If any Grantor shall at any time hold or acquire a Commercial Tort Claim with a value in excess of $1,000,000, such Grantor shall promptly notify the Administrative Agent in writing signed by such Grantor of the brief details thereof and grant to the Administrative Agent a security interest therein and in the proceeds thereof, all upon the terms of this Agreement pursuant to a document in form and substance reasonably satisfactory to the Administrative Agent.
(h) The aggregate book value of all Vehicles owned by all such Grantors will not exceed $10,000,000 or such higher book value as shall be reasonably satisfactory to the Administrative Agent.
5.4 Other Actions . In order to further ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce its security interest, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Collateral:
(a) Instruments . If any Grantor shall at any time hold or acquire any Instruments constituting Collateral and evidencing an amount in excess of $1,000,000, such Grantor shall forthwith endorse, assign and deliver the same to the Administrative Agent for the benefit of the Secured Parties, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request.
(b) Investment Property . If any Grantor shall at any time hold or acquire any certificated Capital Stock, such Grantor shall forthwith endorse, assign and deliver the same to the Administrative Agent for the benefit of the Secured Parties, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request. If any Capital Stock now or hereafter acquired by any Grantor are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall promptly notify the Administrative Agent thereof and, at the Administrative Agent’s reasonable request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, either (i) cause the Issuer to agree to comply with instructions from the Administrative Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Administrative Agent to become the registered owner of the securities. If any Capital Stock, whether certificated or uncertificated, or other Investment Property are held by any Grantor or its nominee through a securities intermediary or commodity intermediary, such Grantor shall promptly notify the Administrative Agent thereof and at the Administrative Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent shall either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from the Administrative Agent to such securities intermediary as to such security entitlements, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Administrative Agent to such commodity intermediary, in each case without further consent of any Grantor or such nominee, or (ii) in the case of financial assets or other Investment Property held through a securities intermediary, arrange for the Administrative Agent to become the entitlement holder with respect to such Investment Property, with the Grantor being permitted, only with the consent of the Administrative Agent, to exercise rights to withdraw or otherwise deal with such Investment Property. The Administrative Agent agrees with each of the Grantors that the Administrative Agent shall not give any such entitlement orders or instructions or directions to any such Issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Administrative Agent is the securities intermediary.
SECTION 6. REMEDIAL PROVISIONS
6.1 Registration in Nominee Name; Denominations . If an Event of Default shall occur and be continuing, (a) the Administrative Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Administrative Agent, and each Grantor will promptly give to the Administrative Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Grantor and (b) the Administrative Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.
6.2 Voting Rights; Dividends and Interest .
(a) Unless and until an Event of Default shall have occurred and be continuing and the Administrative Agent shall have notified the Borrower that the rights of the Grantors under this Section 6.2 are being suspended:
(i) Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights inuring to a holder of any Pledged Securities or the rights and remedies of any of the Administrative Agent or the other Secured Parties under this Agreement, the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.
(ii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable Laws; provided that any noncash dividends, interest, principal or other distributions, whether resulting from a subdivision, combination or reclassification of the outstanding equity interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent and the Secured Parties and shall be forthwith delivered to the Administrative Agent in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent).
(b) Upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have notified the Borrower of the suspension of the rights of the Grantors under paragraph (a)(ii) of this Section 6.2, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(ii) of this Section 6.2 shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 6.2 shall be (i) held in trust for the benefit of the Administrative Agent, (ii) segregated from other property or funds of such Grantor and (iii) forthwith delivered to the Administrative Agent in the same form as so received (with any necessary endorsement reasonably requested by the Administrative Agent). Any and all money and other property paid over to or received by the Administrative Agent pursuant to the provisions of this paragraph (b) shall be retained by the Administrative Agent in an account to be established by the Administrative Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 6.4. After all Events of Default have been cured or waived, the Administrative Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be
permitted to retain pursuant to the terms of paragraph (a)(ii) of this Section 6.2 and that remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have notified the Borrower of the suspension of the rights of the Grantors under paragraph (a)(i) of this Section 6.2, then all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 6.2 shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Administrative Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived, each Grantor shall have the exclusive right to exercise the voting and/or consensual rights and powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) of this Section 6.2.
(d) Each Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) pay any non-cash dividends or other non-cash payments with respect to the Investment Property directly to the Administrative Agent and, after such Issuer receives notice from the Administrative Agent that an Event of Default has occurred, pay any cash dividends or other payments with respect to the Investment Property directly to the Administrative Agent.
6.3 Additional Remedies upon Default .
(a) Upon the occurrence and during the continuance of an Event of Default, it is agreed that the Administrative Agent shall have the right to exercise any and all rights afforded to a Secured Party with respect to the Obligations under the Uniform Commercial Code or other applicable law and also may (i) require each Grantor to, and each Grantor agrees that it will at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place and time to be designated by the Administrative Agent; (ii) occupy any premises owned or, to the extent lawful and permitted, leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation; (iii) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral, provided that, with respect to any Collateral consisting of Pledged Stock of any Issuer that is not a Wholly Owned Subsidiary, such exercise shall be subject to any limitations or prohibitions of any Contractual Obligations among the holders of such Issuer’s Capital Stock; and (iv) subject to the mandatory requirements of applicable law, consent to the use by any Grantor of any cash collateral arising in respect of the Collateral on such terms as the Administrative Agent deems reasonable and/or may sell or otherwise dispose of, or acquire by credit bid on behalf of the Secured Parties, all or any part of the Collateral securing the Obligations at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the
Administrative Agent shall deem appropriate. The Administrative Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Administrative Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any sale of Collateral shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent not prohibited by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
(b) The Administrative Agent shall give the applicable Grantors 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Administrative Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Administrative Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute discretion) determine. The Administrative Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Administrative Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Administrative Agent until the sale price is paid by the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public or private sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent not prohibited by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Administrative Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that, after the Administrative Agent shall have entered into such an agreement, all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Administrative Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court appointed receiver. Any sale pursuant to the provisions of this Section 6.3 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.
6.4 Application of Proceeds . Subject to the terms of the Intercreditor Agreement, at such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent’s election, the Administrative Agent may apply all or any part of Proceeds of any collection or sale of Collateral, including any Collateral consisting of cash, and any proceeds of the guarantee set forth in Section 2 in payment of the Obligations in the following order:
First , to pay incurred and unpaid fees and expenses of the Administrative Agent under the Loan Documents;
Second , to the Administrative Agent, for application by it towards payment of amounts then due and owing and remaining unpaid in respect of the Obligations, pro rata among the Secured Parties according to the amounts of the Obligations then due and owing and remaining unpaid to the Secured Parties;
Third , to the Administrative Agent, for application by it towards prepayment of the Obligations (other than obligations in respect of Specified Hedge Agreements and Specified Cash Management Agreements), pro rata among the Lenders according to the amounts of the Obligations then held by the Lenders, with any such prepayment of Loans being applied, first, to Base Rate Loans and, second, to Eurocurrency Loans; and
Fourth , any balance of such Proceeds remaining after the Obligations shall have been paid in full, no Letters of Credit shall be outstanding and the Commitments shall have terminated shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same.
6.5 Deficiency . Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent to collect such deficiency.
6.6 Subordination . Each Grantor hereby agrees that, upon the occurrence and during the continuance of an Event of Default, unless otherwise agreed by the Administrative Agent, all Indebtedness owing by it to any Subsidiary of the Borrower shall be fully subordinated to the indefeasible payment in full in cash of such Grantor’s Obligations.
6.7 Registration Rights . (a) Upon the occurrence and during the continuance of an Event of Default, (i) if the Loans (with accrued interest thereon) and all other amounts owing under the Loan Documents have become due and payable in accordance with the Credit Agreement and (ii) if the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to Section 6.3, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer
thereof to (x) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (y) use its commercially reasonable efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (z) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each Grantor agrees to cause such Issuer to comply with the provisions of the securities or “Blue Sky” laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this Section 6.7 valid and binding and in compliance with any and all other applicable Requirements of Law. Each Grantor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the Administrative Agent and the Secured Parties, that the Administrative Agent and the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing under the Credit Agreement.
6.8 Grant of Intellectual Property License . During the continuance of an Event of Default, for the purpose of enabling the Administrative Agent to exercise the rights and remedies under this Agreement at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby (a) grants to the Administrative Agent, for the benefit of the Administrative Agent and the Secured Parties, a nonexclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, license or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to
all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, the right to prosecute and maintain all Intellectual Property included in the Collateral and the right to sue for past infringement of such Intellectual Property; and (b) agrees that the Administrative Agent may sell any of such Grantor’s Inventory directly to any person, including without limitation persons who have previously purchased the Grantor’s Inventory from such Grantor and in connection with any such sale or other enforcement of the Administrative Agent’s rights under this Agreement, may sell Inventory which bears any Trademark included in the Collateral and any Inventory that is covered by any Copyright included in the Collateral and the Administrative Agent may finish any work in process and affix any Trademark included in the Collateral and sell such Inventory as provided herein.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent’s Appointment as Attorney-in-Fact, etc . (a) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver, and record or have recorded, any and all agreements, instruments, financing statements, documents and papers as the Administrative Agent may request (A) to evidence the Administrative Agent’s and the Secured Parties’ security interest in such Intellectual Property, and (B) to perfect such security interest;
(iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with the exercise of any right or remedy provided for in Section 6.3 or 6.7, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (2) ask or demand for,
collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may deem appropriate; (7) assign any Intellectual Property, throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (8) generally, sell, transfer, pledge and make any agreement with respect to, or consent to any use of cash collateral arising in respect of or otherwise deal with, any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent’s and the Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 7.1(a) (other than any rights set forth in clause (ii) of Section 7.1(a)) unless an Event of Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at a rate per annum equal to the highest rate per annum at which interest would then be payable on any category of past due Revolving Credit Loans that are Base Rate Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. Each Secured Party, by its authorization of the Administrative Agent’s entering into this Agreement, consents to the exercise by the Administrative Agent of any power, right or remedy provided for herein. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.
7.2 Duty of Administrative Agent . The Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof unless such failure constitutes gross negligence, willful misconduct or fraud. The powers conferred on the Administrative Agent and the Secured Parties hereunder are solely to protect the Administrative Agent’s and the Secured Parties’ interests in the Collateral and shall not impose any duty upon the Administrative Agent or any Secured Party to exercise any such powers. The Administrative Agent and the Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their (or their officers, directors, employees or agents’) own gross negligence or willful misconduct.
7.3 Execution of Financing Statements . Pursuant to any applicable law, each Grantor authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Administrative Agent determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. Each Grantor authorizes the Administrative Agent to use the collateral description “all personal property” in any such financing statements. Each Grantor hereby ratifies and authorizes the filing by the Administrative Agent of any financing statement with respect to the Collateral made prior to the date hereof.
7.4 Authority of Administrative Agent . Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the Secured Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing . None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Sections 8.6 and 12.1 of the Credit Agreement.
8.2 Notices . All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 12.2 of the Credit Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies . Neither the Administrative Agent nor any Secured Party shall by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Secured Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification . (a) Subject to the limitations set forth in Section 12.5 of the Credit Agreement, each Guarantor agrees to pay or reimburse each Secured Party and the Administrative Agent for all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Guarantor is a party, including, without limitation, the fees and disbursements of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative Agent and the Secured Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative Agent and the Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to Section 12.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.
8.5 Successors and Assigns . This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Administrative Agent and the Secured Parties and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent.
8.6 Set-Off . Subject to the terms of the Intercreditor Agreement, in addition to any rights and remedies of the Secured Parties provided by law, each Secured Party shall have the right, without prior notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower and each Grantor hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency,
and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Secured Party or any branch or agency thereof to or for the credit or the account of such Grantor, as the case may be. Each Secured Party agrees promptly to notify Parent and the Administrative Agent after any such set-off and application made by such Secured Party, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each Secured Party under this Section 8.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such Secured Party may have.
8.7 Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
8.8 Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
8.9 Section Headings . The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
8.10 Integration . This Agreement and the other Loan Documents represent the agreement of the Grantors, the Administrative Agent and the Secured Parties with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Secured Party relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents. In the event of any conflict between the terms of this Agreement and the provisions of the Credit Agreement, the provisions of the Credit Agreement shall control. With respect to the pledge of any Foreign Subsidiary Voting Stock, in the event of any conflict between the terms of this Agreement and the provisions of any pledge agreement covering such Foreign Subsidiary Voting Stock, the provisions of such pledge agreement shall control.
8.11 GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers . Each of the Agents, the Secured Parties and each Grantor hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgments . Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent and Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties.
8.14 Additional Grantors . Each Subsidiary of Parent that is required to become a party to this Agreement pursuant to Section 8.6 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement substantially in the form of Annex 1 hereto.
8.15 Termination, Releases or Subordination .
(a) This Agreement, the security interest granted to the Administrative Agent and all other security interests granted hereby shall terminate with respect to all Obligations when all the outstanding Obligations (other than (x) obligations under Specified Hedge Agreements and Specified Cash Management Agreements not yet due and payable and (y) contingent indemnification obligations not yet accrued and payable) have been indefeasibly paid in full and the Lenders have no further commitment to lend under the Credit Agreement, the L/C Obligations have been reduced to zero and the Issuing Lenders have no further obligations to issue Letters of Credit under the Credit Agreement.
(b) A Grantor shall automatically be released from its obligations hereunder, and the security interest granted to the Administrative Agent in the Collateral of such Grantor
shall be automatically released, upon the consummation of any transaction permitted by the Credit Agreement as a result of which such Grantor ceases to be a Subsidiary; provided that the Required Lenders (or all Lenders, as the case may be) shall have consented to such transaction (to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise.
(c) Upon any Disposition by any Grantor of any Collateral that is permitted under the Credit Agreement, or upon the effectiveness of any written consent of the Required Lenders (or all Lenders, as the case may be) to the release of the security interest granted hereby in any Collateral, the security interest of such Grantor in such Collateral shall be automatically released or, to the extent permitted under Section 12.16(a) of the Credit Agreement, subordinated.
(d) In connection with any termination, release or subordination pursuant to paragraph (a), (b) or (c) of this Section 8.15, the Administrative Agent shall execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such termination, release or subordination, as applicable. Any execution and delivery of documents pursuant to this Section 8.15 shall be without recourse to or warranty by the Administrative Agent.
8.16 WAIVER OF JURY TRIAL . EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.17 INTERCREDITOR AGREEMENT . Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control.
IN WITNESS WHEREOF, each of the undersigned has caused this First Lien Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written.
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SIX FLAGS ENTERTAINMENT |
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CORPORATION |
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By: |
/s/ James M. Coughlin |
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Name: |
James M. Coughlin |
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Title: |
General Counsel |
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SIX FLAGS OPERATIONS INC. |
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By: |
/s/ James M. Coughlin |
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Name: |
James M. Coughlin |
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Title: |
General Counsel |
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SIX FLAGS THEME PARKS INC. |
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By: |
/s/ James M. Coughlin |
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Name: |
James M. Coughlin |
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Title: |
General Counsel |
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Fiesta Texas, Inc. |
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Funtime, Inc. |
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Funtime Parks, Inc. |
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Great America LLC |
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Great Escape Holding Inc. |
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Hurricane Harbor GP LLC |
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Hurricane Harbor LP LLC |
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KKI, LLC |
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Magic Mountain LLC |
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Park Management Corp. |
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Premier International Holdings Inc. |
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Premier Parks Holdings Inc. |
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Premier Parks of Colorado Inc. |
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Riverside Park Enterprises, Inc. |
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SF HWP management llc |
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SFJ Management Inc. |
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Six Flags America Property Corporation |
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Six Flags Great Adventure LLC |
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Six Flags Services, Inc. |
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Six Flags Services of Illinois, Inc. |
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Six Flags St. Louis LLC |
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South Street Holdings LLC |
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Stuart Amusement Company |
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/s/ Danielle J. Bernthal |
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Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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Hurricane Harbor LP |
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Hurricane Harbor GP LLC, |
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its General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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Six Flags America LP |
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Funtime, Inc., |
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its General Partner |
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/s/ Danielle J. Bernthal |
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Danielle J. Bernthal |
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Assistant Vice President |
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Six Flags Great Escape L.P. |
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Great Escape Theme Park L.P. |
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Great Escape Rides L.P. |
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Great Escape Holding Inc., |
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their General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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JPMORGAN CHASE BANK, N.A., as |
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Administrative Agent |
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/s/ Christophe Vohmann |
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Christophe Vohmann |
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Authorized Signatory |
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Exhibit 10.3
Execution Version
$250,000,000
SECOND LIEN CREDIT AGREEMENT
among
SIX FLAGS ENTERTAINMENT CORPORATION (FORMERLY KNOWN AS SIX FLAGS, INC.),
SIX FLAGS OPERATIONS INC.,
SIX FLAGS THEME PARKS INC.,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
GOLDMAN SACHS LENDING PARTNERS LLC,
as Syndication Agent,
GOLDMAN SACHS LENDING PARTNERS LLC,
as Documentation Agent,
and
GOLDMAN SACHS LENDING PARTNERS LLC,
as Administrative Agent,
Dated as of April 30 , 2010
GOLDMAN SACHS LENDING PARTNERS LLC,
as Sole Bookrunner and Sole Lead Arranger
TABLE OF CONTENTS
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SECTION 1. |
DEFINITIONS |
1 |
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1.1. |
Defined Terms |
1 |
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1.2. |
Other Definitional Provisions |
33 |
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SECTION 2. |
AMOUNT AND TERMS OF COMMITMENTS |
34 |
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2.1. |
Commitments |
34 |
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2.2. |
Procedure for Borrowing |
34 |
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2.3. |
Repayment of Loans |
34 |
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SECTION 3. |
CERTAIN PROVISIONS APPLICABLE TO THE LOANS |
34 |
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3.1. |
Repayment of Loans; Evidence of Debt |
34 |
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3.2. |
Fees |
35 |
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3.3. |
Optional Prepayments |
35 |
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3.4. |
Mandatory Prepayments |
35 |
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3.5. |
Conversion and Continuation Options |
37 |
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3.6. |
Minimum Amounts and Maximum Number of Eurocurrency Tranches |
37 |
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3.7. |
Interest Rates; Payment Dates; Prepayment Premium |
38 |
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3.8. |
Computation of Interest and Fees |
38 |
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3.9. |
Inability to Determine Interest Rate |
39 |
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3.10. |
Pro Rata Treatment and Payments |
39 |
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3.11. |
Requirements of Law |
40 |
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3.12. |
Taxes |
42 |
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3.13. |
Indemnity |
44 |
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3.14. |
Illegality |
44 |
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3.15. |
Change of Lending Office |
44 |
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3.16. |
Replacement of Lenders under Certain Circumstances |
45 |
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3.17. |
Loan Auctions |
45 |
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3.18. |
Auction Procedures |
46 |
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SECTION 4. |
REPRESENTATIONS AND WARRANTIES |
47 |
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4.1. |
Financial Condition |
47 |
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4.2. |
No Change |
48 |
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4.3. |
Existence; Compliance with Law |
48 |
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4.4. |
Corporate Power; Authorization; Enforceable Obligations |
48 |
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4.5. |
No Legal Bar |
49 |
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4.6. |
Litigation |
49 |
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4.7. |
No Default |
49 |
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4.8. |
Ownership of Property; Liens |
49 |
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4.9. |
Intellectual Property |
50 |
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4.10. |
Taxes |
50 |
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4.11. |
Federal Regulations |
50 |
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4.12. |
Labor Matters |
50 |
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4.13. |
ERISA |
51 |
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4.14. |
Investment Company Act; Other Regulations |
52 |
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4.15. |
Subsidiaries |
52 |
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4.16. |
Use of Proceeds |
52 |
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4.17. |
Environmental Matters |
52 |
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4.18. |
Accuracy of Information, Etc. |
53 |
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4.19. |
Security Documents |
54 |
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4.20. |
Solvency |
54 |
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4.21. |
Regulation H |
54 |
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4.22. |
Parks |
55 |
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SECTION 5. |
CONDITIONS PRECEDENT |
55 |
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5.1. |
Conditions Precedent to Loans |
55 |
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SECTION 6. |
AFFIRMATIVE COVENANTS |
60 |
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6.1. |
Financial Statements and Other Information |
60 |
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6.2. |
Notices of Material Events |
63 |
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6.3. |
Existence, Etc. |
64 |
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6.4. |
Insurance |
65 |
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6.5. |
Compliance with Contractual Obligations and Requirements of Law |
65 |
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6.6. |
Additional Collateral, Etc. |
65 |
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6.7. |
Further Assurances |
68 |
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6.8. |
Environmental Laws |
69 |
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6.9. |
Ratings by S&P and Moody’s |
69 |
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SECTION 7. |
NEGATIVE COVENANTS |
69 |
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7.1. |
Senior Secured Leverage Ratio |
69 |
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7.2. |
Consolidated Interest Coverage Ratio |
70 |
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7.3. |
Indebtedness |
70 |
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7.4. |
Liens |
74 |
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7.5. |
Prohibition of Fundamental Changes |
77 |
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7.6. |
Restricted Payments |
82 |
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7.7. |
Capital Expenditures |
84 |
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7.8. |
Investments |
85 |
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7.9. |
Prepayment of Certain Indebtedness |
87 |
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7.10. |
Transactions with Affiliates |
88 |
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7.11. |
Changes in Fiscal Periods |
89 |
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7.12. |
Certain Restrictions |
89 |
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7.13. |
Lines of Business |
89 |
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7.14. |
Modifications of Certain Documents |
90 |
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7.15. |
Limitation on Activities of Parent and Holdings |
90 |
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7.16. |
Limitation on Hedging Agreements |
91 |
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SECTION 8. |
EVENTS OF DEFAULT |
91 |
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SECTION 9. |
THE AGENTS |
95 |
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9.1. |
Appointment |
95 |
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9.2. |
Delegation of Duties |
95 |
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9.3. |
Exculpatory Provisions |
95 |
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9.4. |
Reliance by Agents |
96 |
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9.5. |
Notice of Default |
96 |
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9.6. |
Non-Reliance on Agents and Other Lenders |
96 |
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9.7. |
Indemnification |
97 |
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9.8. |
Agent in Its Individual Capacity |
97 |
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9.9. |
Successor Agents |
98 |
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9.10. |
Authorization to Release Liens and Guarantees |
98 |
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9.11. |
Authorization to Enter into Intercreditor Agreement |
98 |
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9.12. |
The Arranger, Syndication Agent and Documentation Agent |
98 |
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9.13. |
Withholding Taxes |
98 |
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SECTION 10. |
MISCELLANEOUS |
99 |
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10.1. |
Amendments and Waivers |
99 |
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10.2. |
Notices |
101 |
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10.3. |
No Waiver; Cumulative Remedies |
102 |
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10.4. |
Survival of Representations and Warranties |
102 |
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10.5. |
Payment of Expenses |
102 |
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10.6. |
Successors and Assigns; Participations and Assignments |
104 |
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10.7. |
Adjustments; Set-off |
107 |
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10.8. |
U.S.A. Patriot Act |
108 |
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10.9. |
Counterparts |
108 |
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10.10. |
Severability |
108 |
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10.11. |
Integration |
108 |
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10.12. |
GOVERNING LAW |
108 |
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10.13. |
Submission To Jurisdiction; Waivers |
108 |
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10.14. |
Acknowledgments |
109 |
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10.15. |
Confidentiality |
109 |
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10.16. |
Release of Collateral and Guarantee Obligations |
110 |
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10.17. |
Accounting Changes |
111 |
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10.18. |
Delivery of Lender Addenda |
111 |
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10.19. |
WAIVERS OF JURY TRIAL |
111 |
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10.20. |
Intercreditor Agreement |
111 |
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SCHEDULES: |
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1.1(a) |
Mortgaged Property |
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4.4 |
Consents, Authorizations, Filings and Notices |
|
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4.8 |
Material Real Properties |
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4.13 |
ERISA |
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4.15 |
Subsidiaries |
|
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4.19(a)-1 |
UCC Filing Jurisdictions |
|
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4.19(a)-2 |
UCC Financing Statements to Remain on File |
|
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4.19(a)-3 |
UCC Financing Statements to be Terminated |
|
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4.19(b) |
Mortgage Filing Jurisdictions |
|
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4.21 |
Mortgaged Properties in Flood Zones |
|
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4.22 |
Existing Parks |
|
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7.3(b) |
Existing Indebtedness |
|
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7.4(b) |
Liens |
|
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7.8(a) |
Existing Investments |
|
|
7.13 |
Business Activities |
|
|
|
|
|
|
EXHIBITS: |
|
|
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A |
Form of Second Lien Guarantee and Collateral Agreement |
|
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B |
Form of Compliance Certificate |
|
|
C |
Form of Closing Certificate |
|
|
D |
[Reserved] |
|
|
E |
Form of Assignment and Acceptance |
|
|
F |
Form of Legal Opinion of Paul, Hastings, Janofsky & Walker LLP |
|
|
G |
Form of Note |
|
|
H |
Form of Prepayment Option Notice |
|
|
I |
Form of Exemption Certificate |
|
|
J |
Form of Lender Addendum |
|
|
K |
Form of Borrowing Notice |
|
|
L |
Form of Auction Notice |
|
|
M |
Form of Return Bid |
|
|
N |
Form of Intercompany Subordinated Note |
|
|
O |
Form of Intercreditor Agreement |
|
SECOND LIEN CREDIT AGREEMENT, dated as of April 30, 2010, among SIX FLAGS ENTERTAINMENT CORPORATION (formerly known as SIX FLAGS, INC.), a Delaware corporation (“ Parent ”), SIX FLAGS OPERATIONS INC., a Delaware corporation (“ Holdings ”), SIX FLAGS THEME PARKS INC., a Delaware corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (as defined below) (the “ Lenders ”) and GOLDMAN SACHS LENDING PARTNERS LLC, as administrative agent (in such capacity, the “ Administrative Agent ”).
WHEREAS, on June 13, 2009, Parent, Holdings, the Borrower and certain of the Borrower’s Domestic Subsidiaries (together with Parent, Holdings and the Borrower, the “ Debtors ”) filed a voluntary petition for relief, Case No. 09-12019, under Chapter 11 of Title 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”) and continued in the possession of their property and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, on April 29, 2010, the Bankruptcy Court entered the Confirmation Order confirming the Debtors’ Modified Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated April 1, 2010 (as in effect on the date of confirmation thereof and as thereafter may be amended as provided in this Agreement, the “ Plan of Reorganization ”); and
WHEREAS, in connection with the confirmation and implementation of the Plan of Reorganization, the reorganized Debtors have requested the Lenders to make a loan of $250,000,000 to them on the Closing Date to enable the reorganized Debtors to, among other things, consummate the transactions contemplated by the Plan of Reorganization, pay related fees and expenses and finance the working capital needs and general corporate purposes of the Borrower, and the Lenders have agreed, subject to the terms and conditions hereof, to enter into this Agreement.
Accordingly, the parties hereto hereby agree as follows:
1.1. Defined Terms . As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.
“ Accepting Lenders ”: as defined in Section 3.10(d).
“ Accounting Changes ”: as defined in Section 10.17.
“ Acquisition ”: any acquisition, whether in a single transaction or series of related transactions, by Parent or any one or more of its Subsidiaries of (a) all or a substantial part of the assets, or of a business, unit or division, of any Person, whether through purchase of assets or securities, by merger or otherwise; or (b) any Person that becomes a Subsidiary after giving effect to such acquisition.
“ Acquisition Parties ”: SFOG Acquisition A, Inc., a Delaware corporation, SFOG Acquisition B, L.L.C., a Delaware limited liability company, SFOT Acquisition I, Inc., a Delaware corporation, and SFOT Acquisition II, Inc., a Delaware corporation.
“ Additional Extensions of Credit ”: as defined in Section 10.1.
“ Administrative Agent ”: as defined in the preamble hereto.
“ Affiliate ”: any Person that directly or indirectly controls, or is under common control with, or is controlled by, Parent and, if such Person is an individual, any member of the immediate family (including parents, spouse, children) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). Notwithstanding the foregoing, (a) no individual shall be an Affiliate solely by reason of his or her being a director, officer or employee of Parent, Holdings or any of its Subsidiaries and (b) none of the Wholly Owned Subsidiaries of Holdings or HWP shall be Affiliates.
“ Agents ”: the collective reference to the Documentation Agent, the Syndication Agent and the Administrative Agent.
“ Agreement ”: this Second Lien Credit Agreement, as amended, supplemented or otherwise modified from time to time.
“ Applicable Discount ”: as defined in Section 3.18(c).
“ Applicable Margin ”: (a) in the case of Loans which are Base Rate Loans, 6.25% and (b) in the case of Loans which are Eurocurrency Loans, 7.25%.
“ Approved Fund ”: as defined in Section 10.6(b).
“ Arranger ”: Goldman Sachs Lending Partners LLC, in its capacity as sole lead arranger.
“ Asset Sale ”: any Disposition of Property or series of related Dispositions of Property (excluding any such Disposition permitted by clauses (i) through (vi) and clauses (ix) through (xii) and clauses (xiv) through (xvii) of Section 7.5(c) except for clause (ii) to the extent referred to therein) which yields gross proceeds to the Parent, or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $2,500,000.
“ Assignee ”: as defined in Section 10.6(b)(i).
“ Assignment and Acceptance ”: an Assignment and Acceptance substantially in the form of Exhibit E .
“ Auction ”: a “Dutch” auction whereby the Borrower offers to purchase Loans pursuant to the auction procedures set forth in Section 3.18 .
“ Auction Amount ”: as defined in Section 3.18 (a).
“ Auction Notice ”: as defined in Section 3.18 (a).
“ Bankruptcy Code ”: the Federal Bankruptcy Code of 1978, as amended from time to time.
“ Bankruptcy Court ”: as defined in the recitals hereto.
“ Base Capital Expenditure Amount ”: as defined in Section 7.7.
“ Base Rate ”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Eurocurrency Rate for a one month Interest Period beginning on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the avoidance of doubt, the Eurocurrency Rate for any day shall be the greater of (i) 2.0% and (ii) the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such day. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or such Eurocurrency Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Federal Funds Effective Rate or such Eurocurrency Rate, respectively.
“ Base Rate Loans ”: Loans for which the applicable rate of interest is based upon the Base Rate.
“ Beneficial Share Assignment Agreement ”: the Beneficial Share Assignment Agreement, dated as of April 1, 1998, by and between TW-SPV Co., GP Holdings, Inc. and Parent (as successor Premier Parks Inc.), as the same may be amended on or prior to the Closing Date and as the same may be further modified or amended at any time from time to time, provided such modification or amendment does not violate Section 7.14.
“ Benefited Lender ”: as defined in Section 10.7(a).
“ Board ”: the Board of Governors of the Federal Reserve System of the United States (or any successor).
“ Borrower ”: as defined in the preamble hereto.
“ Borrower Consolidated Adjusted EBITDA ”: for any period, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) means Parent Consolidated Adjusted EBITDA plus (a) administrative and other corporate charges of Parent that are not allocated to or paid by the Borrower or its Subsidiaries and excluding (b) any portion of Parent Consolidated Adjusted EBITDA (calculated on a net basis, taking into account positive and negative items) attributable to any Person (other than the Borrower or its Subsidiaries) to the extent that the Borrower or any of its Subsidiaries is not the owner of the interests in, or recipients of the cash received from, such Person. The parties hereby agree that the Borrower Consolidated Adjusted EBITDA for the fiscal quarter ending (a) June 30, 2009 was $47,603,000, (b) September 30, 2009 was $190,348,000 and (c) December 31, 2009 was ($15,780,000).
“ Business ”: as defined in Section 4.17(b).
“ Business Day ”: (a) for all purposes other than as covered by clause (b) below, a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurocurrency Loans, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks for deposits in Dollars in the London Interbank Eurocurrency market.
“ Cap Amount ”: $1.03 billion in the aggregate less all mandatory payments of the principal of the First Lien Tranche B Term Loans and any permanent reductions of the First Lien Revolving Credit Commitments (specifically excluding, however, any such repayments and commitment reductions occurring solely as a result of any Permitted First Lien Refinancing Indebtedness permitted hereunder).
“ Capex Stub Amount ”: as defined in the definition of “Excess Cash Flow”.
“ Capital Expenditures ”: for any period, expenditures made in cash by Parent or any of its Subsidiaries or any of the Partnership Park Entities (or, for purposes of the definition of “Excess Cash Flow”, by the Borrower or any of its Subsidiaries) to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements) during such period, computed in accordance with GAAP, but excluding (a) repairs or restorations in respect of any such assets paid in cash, (b) the amount of cash expended (i) with, or in an amount equal to, the Net Cash Proceeds of (A) Recovery Events or (B) awards of compensation arising from the taking by eminent domain or condemnation of assets being replaced, (ii) as part of an Acquisition permitted hereunder (other than an Acquisition permitted by Section 7.5(b)(iii)), or (c) expenditures that are accounted for as capital expenditures made in cash by Parent or any of its Subsidiaries or any of the Partnership Park Entities (or, for purposes of the definition of “Excess Cash Flow”, by the Borrower or any of its Subsidiaries) and that actually are paid for by a Person other than Parent or any Subsidiary or any Partnership Park Entity and (d) any non-cash compensation or other non-cash costs reflected as additions to property, plant or equipment in the consolidated balance sheet of Parent and its Subsidiaries or in the
balance sheet of any Partnership Park Entity (or, for purposes of the definition of “Excess Cash Flow” in the consolidated balance sheet of the Borrower and its Subsidiaries).
“ Capital Lease Obligations ”: for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“ Capital Stock ”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.
“ Cases ”: the cases of the Debtors before the Bankruptcy Court.
“ Change in Law ”: (a) the adoption of any law, rule or regulation, (b) the issuance of any administrative guidance, or (c) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority.
“ Closing Date ”: the date on which the conditions precedent set forth in Section 5.1 shall have been satisfied, which date shall be no later than May 28, 2010.
“ Code ”: the Internal Revenue Code of 1986, as amended from time to time.
“ Collateral ”: all Property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.
“ Commitment ”: as to any Lender, the obligation of such Lender, if any, to make a Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading “Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender. The aggregate amount of the Commitments on the Closing Date is $250,000,000.
“ Compliance Certificate ”: a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B .
“ Confidential Information Memorandum ”: the Confidential Information Memorandum dated January, 2010, as supplemented by the Lenders Update Materials, dated April 8, 2010 and furnished to the Lenders prior to the Closing Date.
“ Confirmation Order ”: as defined in Section 5.1(b).
“ Consolidated Current Assets ”: at any date, all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date.
“ Consolidated Current Liabilities ”: at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, but excluding (a) the current portion of interest, income taxes or any Funded Debt of the Borrower and its Subsidiaries and (b), without duplication, all Indebtedness consisting of First Lien Revolver Indebtedness, to the extent otherwise included therein.
“ Consolidated Interest Coverage Ratio ”: as at any date, the ratio of (a) Parent Consolidated Adjusted EBITDA for such Measurement Period to (b) Consolidated Interest Expense for such Measurement Period.
“ Consolidated Interest Expense ”: for any Measurement Period, total interest expense that has been paid in cash during such period (including that attributable to Capital Lease Obligations) of Parent and its Subsidiaries for such period with respect to all outstanding Indebtedness of Parent and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Hedging Agreements in respect of interest rates to the extent such net costs have been or are required to be paid in cash during such period), minus cash interest income for such Measurement Period.
“ Consolidated Leverage Ratio ”: as at any date, the ratio of (a) Consolidated Total Debt as at such date to (b) Parent Consolidated Adjusted EBITDA for such Measurement Period.
“ Consolidated Net Income ”: of any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided , that in calculating Consolidated Net Income for any period, there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of Parent or is merged into or consolidated with Parent or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of Parent) in which Parent or any of its Subsidiaries has an ownership interest accounted for under the equity method, (c) the cumulative effect of a change in accounting principle and changes as a result of the adoption or modification of accounting policies during such period, (d) any effect of income (loss) from the early extinguishment of (i) Indebtedness and (ii) obligations under any Hedging Agreement or other derivative instruments, (e) the effects of non-cash acquisition accounting adjustments and non-cash adjustments from the application of fresh start reporting, (f) any net gains, losses, income or expense attributable to non-controlling interests and (g) the undistributed earnings of any Subsidiary of Parent to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.
“ Consolidated Total Debt ”: as at the last day of any fiscal quarter, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than First Lien Revolver Indebtedness and the undrawn portion of any outstanding letters of credit) of Parent and its Subsidiaries that would, in conformity with GAAP, be set forth on the
balance sheet of Parent and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amounts of First Lien Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the First Lien Revolver Indebtedness as of each of September 30, 2009, December 31, 2009 and March 31, 2010 was $0.
“ Consolidated Working Capital ”: at any date, the difference of (a) Consolidated Current Assets on such date less (b) Consolidated Current Liabilities on such date.
“ Contractual Obligation ”: as to any Person, any provision of any security issued by such Person or of any material agreement, lease, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.
“ Debtors ”: as defined in the recitals hereto.
“ Default ”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“ Delayed Draw Equity Commitment ”: the commitment of Pentwater Capital Management LP or its Affiliates (or any assignee or transferee thereof or successor thereto permitted under the Delayed Draw Equity Commitment Agreement dated as of April 15, 2010 among Parent and certain Pentwater Capital Management LP affiliated funds party thereto, as in effect on such date) to Parent to purchase additional shares of common stock of Parent after the Closing Date pursuant to Section 5.2 of the Plan of Reorganization.
“ Dick Clark ”: dick clark productions, inc., a Delaware corporation.
“ Discount Range ”: as defined in Section 3.18(a).
“ Disposition ”: with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof, but excluding any termination of the economic and voting rights of GP Holdings Inc. pursuant to the Beneficial Share Assignment Agreement; and the terms “Dispose” and “Disposed of” shall have correlative meanings.
“ Disqualified Capital Stock ” shall mean any Capital Stock of Parent that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is putable or exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock of Parent), pursuant to a sinking fund or otherwise, (b) is redeemable or exchangeable, in whole or in part, at the option of the holder thereof (other than solely for Qualified Capital Stock of Parent), or (c) provides for the scheduled payment of dividends in cash, in each case prior to the date that is one year after the Maturity Date; provided that (i) if such Capital Stock is issued pursuant to any plan for the benefit of employees of Parent or any of its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may
be required to be repurchased by Parent or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations and (ii) any Capital Stock that would not constitute Disqualified Capital Stock but for the provisions thereof giving holders thereof the right to require Parent to purchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” prior to the date that is one year after the Maturity Date shall not constitute Disqualified Capital Stock so long as the terms of such Capital Stock provide that the Loans and all other Obligations (other than obligations under “Specified Hedging Agreements” and “Specified Cash Management Agreements” (as each such term is defined in the First Lien Credit Agreement)) are repaid in full prior to such purchase or redemption.
“ Documentation Agent ”: Goldman Sachs Lending Partners LLC.
“ Dollars ” and “ $ ”: lawful currency of the United States of America.
“ Domestic Subsidiary ”: any Subsidiary of Parent organized under the laws of any jurisdiction within the United States of America.
“ Environmental Claim ”: with respect to any Person, any written notice, claim, demand or other communication (collectively, a “ claim ”) by any other Person alleging or asserting such Person’s liability for investigatory costs, cleanup costs, governmental response costs, damages to natural resources or other Property, personal injuries, fines or penalties arising out of, based on or resulting from (a) the presence, or Release into the environment, of any Materials of Environmental Concern at any location, whether or not owned by such Person, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. The term “ Environmental Claim ” shall include, without limitation, any claim by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of Materials of Environmental Concern or arising from alleged injury or threat of injury to health, safety or the environment, as a result of any of the foregoing.
“ Environmental Laws ”: any and all present and future Federal, state, local and foreign laws, rules or regulations, and any orders or decrees, in each case as now or hereafter in effect, relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes into the indoor or outdoor environment, including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes.
“ Environmental Permits ”: any and all permits, licenses, approvals, registrations, notifications, exemptions and other authorizations required under any Environmental Law.
“ ERISA ”: the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ ERISA Affiliate ”: any corporation or trade or business that is a member of any group of organizations (a) described in Section 414(b) or (c) of the Code of which Parent is a member and (b) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which Parent is a member.
“ ERISA Event ”: any of the following events or conditions:
“ Eurocurrency Loans ”: Loans for which the applicable rate of interest is based upon the Eurocurrency Rate.
“ Eurocurrency Rate ” : for any Interest Rate Determination Date with respect to an Interest Period for a Eurocurrency Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/100 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by Goldman Sachs Lending Partners LLC for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan of the Administrative Agent, in its capacity as a Lender, for which the Eurocurrency Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Eurocurrency Reserve Requirement; provided , however, that notwithstanding the foregoing, the Eurocurrency Rate shall at no time be less than 2.00% per annum.
“ Eurocurrency Reserve Requirements ”: at any time, for any Eurocurrency Loan, the maximum rate, expressed as a decimal, at which reserves (including any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors or other applicable banking regulator. Without limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Eurocurrency Rate or any other interest rate of a Loan is to be determined, or (ii) any category of extensions of credit or other assets which include Eurocurrency Loans. A Eurocurrency Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or
offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurocurrency Loans shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Requirement.
“ Eurocurrency Tranche ”: the collective reference to Eurocurrency Loans, the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day).
“ Event of Default ”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“ Excess Cash Flow ”: for any fiscal year of Parent, the difference, if any, of (a) the sum, without duplication, of (i) Borrower Consolidated Adjusted EBITDA less the sum of (1) Consolidated Interest Expense ( provided that, for purposes of calculating Excess Cash Flow, Consolidated Interest Expense shall be calculated for the Borrower and its Subsidiaries) and (2) any cash expenditures made during such period on account of any loss, expense or charge, and any cash received during such period on account of any gain, included in the calculation of Consolidated Net Income but excluded in the determination of Parent Consolidated Adjusted EBITDA pursuant to clauses (a)(iv), (v) and (vi) of the definition thereof, in each case for such fiscal year, (ii) the amount of the decrease, if any, in Consolidated Working Capital for such fiscal year (other than any decrease arising from acquisitions by Parent or its Subsidiaries completed during such period or the application of acquisition accounting or fresh start reporting adjustments) and (iii) total pension expenses for such period minus (b) the sum, without duplication, of (i) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such fiscal year on account of (A) (1) Capital Expenditures and (2) the amount of Capital Expenditures included as part of the “capital expenditures” budget for such fiscal year in the budget delivered pursuant to Section 6.1(g) and certified by a Responsible Officer at or about the end of such fiscal year as being expected to be made in cash on or prior to March 31 of the immediately following fiscal year and made on or prior to such date (such amount under this subclause (b)(i)(A)(2) being the “ Capex Stub Amount ”) (minus the principal amount of Indebtedness (other than First Lien Revolving Credit Loans) incurred to finance such Capital Expenditures, and excluding any such Capital Expenditures financed with the proceeds of any Reinvestment Deferred Amount and the Capex Stub Amount deducted in determining Excess Cash Flow for the prior fiscal year of Parent) and (B) cash acquisitions of intellectual property , (ii) the aggregate amount of all optional and regularly scheduled principal payments of the Loans and other Funded Debt of the Borrower and its Subsidiaries made during such fiscal year (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder), (iii) the aggregate amount of all prepayments or repayments of First Lien Revolver Indebtedness during such fiscal year to the extent accompanying permanent reductions (to the extent not replaced) of the First Lien Revolving Credit Commitments, (iv) the amount of the increase, if any, in Consolidated Working Capital for such fiscal year (other than any increase arising from acquisitions by the Borrower or its Subsidiaries completed during such period or the application of acquisition accounting), (v) the aggregate amount of expenditures actually made by the
Borrower and its Subsidiaries in cash during such period (including expenditures for the payment of financing, letter of credit and annual agency fees but excluding expenditures on account of pensions) to the extent that such expenditures are not expensed during such period (with such expenditures to be excluded in the fiscal period when they are expensed), (vi) the amount of cash taxes paid or tax reserves set aside or payable (without duplication) in such period, (vii) the amount of cash payments made on account of pensions in such period, and (viii) the aggregate amount of Restricted Payments made in cash during such fiscal year (to the extent permitted under Section 7.6).
“ Excess Cash Flow Application Date ”: as defined in Section 3.4(c).
“ Excluded Foreign Subsidiaries ”: any Foreign Subsidiary in respect of which either (a) the pledge of all of the Capital Stock of, or any Property of, such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would, in the good faith judgment of Parent, result in adverse tax consequences to Parent, Holdings or the Borrower. Any Subsidiary that Guarantees Indebtedness under any Indenture shall not be an Excluded Foreign Subsidiary.
“ Excluded Taxes ”: with respect to any Agent, any Lender or Transferee (a) net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on any Agent, Lender or Transferee as a result of a present or former connection between such Agent, Lender or Transferee and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Agent’s, Lender’s or Transferee’s having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document), (b) branch profits taxes imposed on any Agent, Lender or Transferee by the United States of America, (c) any withholding taxes to the extent attributable to a failure to comply with Section 3.12(e), (d) any backup withholding tax to the extent attributable to a “Notified Payee Underreporting” as described in Section 3406(c) or a notification by the US Internal Revenue Service that the “Taxpayer Identification Number” furnished by such Agent, Lender or Transferee is incorrect, (e) United States withholding taxes that are imposed on amounts payable to such Agent, Lender or Transferee (and in the case of a Participant, the Lender selling the participation to such Participant), except to the extent that such withholding taxes are imposed (i) as a result of a Change in Law after the date the Agent, Lender or Transferee becomes a party to this Agreement, (ii) as a result of a change in fact after the date the Agent, Lender or Transferee becomes a party to this Agreement that is attributable to the Borrower or other Loan Party (or any Person related to a Borrower or Loan Party), (iii) on such Agent’s, Lender’s or Transferee’s assignor (if any) (or, in the case of a Participant, the Lender selling participations to such Participant) and such Agent’s, Lender’s or Transferee’s assignor was entitled, at the time of assignment (or the sale of the participations), to receive additional amounts from the Borrower with respect to such withholding Taxes pursuant to Section 3.12, or (iv) on an Agent, Lender or Transferee following an assignment, designation of a new lending office, acquisition or the appointment of a successor Agent pursuant to Sections 3.15 or 3.16.
“ Existing Credit Agreement ”: the Second Amended and Restated Credit Agreement, dated as of May 25, 2007, among Parent, Holdings, the Borrower, JPMorgan Chase Bank, N.A., as the administrative agent, and the lenders and other agents party thereto.
“ Existing Parks ”: as defined in Section 4.22.
“ Existing Time Warner Facility ”: the loan facility provided by TW to the Acquisition Parties (and guaranteed by the Borrower, Holdings and Parent) as evidenced by (i) that certain Promissory Note, dated as of May 15, 2009, by and among TW and the Acquisition Parties, in the original principal amount of $52,507,000, and each other loan document entered in connection therewith and (ii) that certain Guarantee Agreement, dated as of May 15, 2009, made by Parent, Holdings and Borrower in favor of TW.
“ Facility ”: the Commitments and the Loans made thereunder.
“ Federal Funds Effective Rate ”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by JPMorgan Chase Bank, N.A. from three federal funds brokers of recognized standing selected by it.
“ First Lien Administrative Agent ”: JPMorgan Chase Bank, N.A., in its capacity as administrative agent under and as defined in the First Lien Credit Documents, or any successor administrative agent in accordance with the terms thereof and any administrative agent in respect of Permitted First Lien Refinancing Indebtedness.
“ First Lien Auction ”: the “Auction” under and as defined in the First Lien Credit Agreement (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Lien Commitments ”: the “Commitments” under and as defined in the First Lien Credit Agreement (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Lien Credit Agreement ”: the First Lien Credit Agreement dated as of the date hereof among Parent, Holdings, the Borrower, the Subsidiary Guarantors, the lenders thereunder and the First Lien Administrative Agent, as the same may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, and including any agreement, instrument or other document extending the maturity of, refinancing, replacing, renewing, refunding or otherwise restructuring all or a portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.
“ First Lien Credit Documents ”: the First Lien Credit Agreement and all agreements, instruments and documents executed and delivered pursuant to or in
connection with any of the foregoing (including indentures, notes, guarantees, security agreements, mortgages and other collateral documents), in each case, as such agreements, instruments or other documents may be amended, amended and restated, supplemented, modified, refunded, renewed or extended, refinanced, replaced or otherwise restructured as permitted under this Agreement and the Intercreditor Agreement, in whole or in part from time to time with respect to all or any portion of the Indebtedness under such agreement or agreements or any successor replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.
“ First Lien Letters of Credit ”: the “Letters of Credit” under and as defined in the First Lien Credit Agreement (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Lien Obligations ”: the “Obligations” under and as defined in the First Lien Credit Agreement (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Lien Revolver Indebtedness ”: the “Revolver Indebtedness” under and as defined in the First Lien Credit Agreement as of the date hereof (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Lien Revolving Credit Commitments ”: the “Revolving Credit Commitments” under and as defined in the First Lien Credit Agreement (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Lien Revolving Credit Loans ”: the “Revolving Credit Loans” under and as defined in the First Lien Credit Agreement (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Lien Swing Line Loans ”: the “Swingline Loans” under and as defined in the First Lien Credit Agreement (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Lien Tranche B Term Loans ”: the “Tranche B Term Loans” under and as defined in the First Lien Credit Agreement (and the corresponding term in any Permitted First Lien Refinancing Indebtedness ).
“ First Priority Lien ”: as defined in the Intercreditor Agreement.
“ Fixed-to-Floating Swap ”: as defined in Section 7.16.
“ Foreign Benefit Arrangement ”: as defined in Section 4.13(b).
“ Foreign Plan ”: as defined in Section 4.13(b).
“ Foreign Subsidiary ”: any Subsidiary of Parent that is not a Domestic Subsidiary.
“ Funded Debt ”: with respect to any Person at any date of determination, all Indebtedness of such Person of the types described in clauses (a) through (e) of the definition of “Indebtedness” in this Section that matures more than one year from such date of determination.
“ Funding Office ”: the office specified from time to time by the Administrative Agent as its funding office by notice to the Borrower and the Lenders.
“ GAAP ”: generally accepted accounting principles in the United States of America as in effect from time to time.
“ Governmental Authority ”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners) having jurisdiction over the Business or the Property of Parent and its Subsidiaries.
“ Great Escape Agreements ”: collectively, (a) that certain Second Amended and Restated Operating Agreement of HWP dated as of October 29, 2007 among HWP Management, Inc., HWP Development Holdings LLC, BBL HWP LLC, DACWP LLC and Leisure Water LLC, as members, and the following as guarantors or pledgors with respect to certain obligations: Parent, Donald R. Led Duke, DACWP, LLC and Leisure Water, LLC (as may, subject to Section 7.14, be modified, amended, restated and/or substituted), (b) any and all agreements delivered pursuant thereto or in connection therewith or with the development and operation of the Property described therein, including the financing and refinancing thereof and (c) any and all agreements, documents or instruments entered into in connection with any expansion or development of the Great Escape’s lodge or any hotel or timeshare arrangements located on or adjacent to it.
“ Guarantee ”: a guarantee, an indorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor’s obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms “Guarantee” and “Guaranteed” used as verbs have the correlative meanings.
“ Guarantee and Collateral Agreement ”: the Second Lien Guarantee and Collateral Agreement to be executed and delivered by Parent, Holdings, the Borrower
and each Subsidiary Guarantor in favor of the Administrative Agent, substantially in the form of Exhibit A as the same may be amended, supplemented or otherwise modified from time to time.
“ Guarantors ”: the collective reference to Parent, Holdings and the Subsidiary Guarantors.
“ Hedging Agreement ”: all interest rate or currency swaps, caps or collar agreements, foreign exchange agreements, commodity contracts or similar arrangements entered into by Parent or any of its Subsidiaries providing for protection against fluctuations in interest rates, currency exchange rates, commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies. For avoidance of doubt, Hedging Agreements shall include any interest rate swap or similar agreement that provides for the payment by Parent or any of its Subsidiaries of amounts based upon a floating rate in exchange for receipt by Parent or such Subsidiary of amounts based upon a fixed rate.
“ Holdings ”: as defined in the preamble hereto.
“ HWP ”: HWP Development LLC, a New York limited liability company.
“ Inactive Subsidiary ”: any Subsidiary of Parent that (a) has aggregate assets with a value not in excess of $100,000, (b) conducts no Business and (c) does not Guarantee any Indebtedness of Parent or any of its Subsidiaries.
“ Indebtedness ”: for any Person, without duplication: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than (i) trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 180 days (365 days in the case of payables arising out of the purchase of inventory or Capital Expenditures determined without regard to the exclusion contained in the definition of Capital Expenditures in this Section 1.1) of the date the respective goods are delivered or the respective services are rendered and (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and is not paid after becoming due and payable; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments (including negotiable instruments) issued or accepted by banks and other financial institutions for account of such Person; (e) Capital Lease Obligations of such Person; (f) the liquidation value of all redeemable preferred Capital Stock of such Person to the extent redeemable prior to the date which is 91 days after the Maturity Date, and (g) Indebtedness of others Guaranteed by such Person; provided , however , that the provision by Parent or any of its Subsidiaries of covenants, Guarantees and
indemnities that are customary for non-recourse financings (as determined by Parent in good faith) with respect to Indebtedness incurred by a Person that is not a Subsidiary of Parent and that is otherwise non-recourse to Parent and its Subsidiaries shall not be deemed to be Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner to the extent such Indebtedness is recourse, provided that if such Person’s liability for such Indebtedness is contractually limited, only such Person’s share thereof shall be so included. The amount of Indebtedness for any Person for purposes of clause (c) above shall be deemed equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness, and (ii) the fair market value of the Property encumbered thereby as determined in good faith by such Person. Anything herein to the contrary notwithstanding, the following shall not constitute Indebtedness: (i) obligations under Hedging Agreements, (ii) obligations in respect of any Indebtedness that has been defeased (either covenant or legal) pursuant to the terms of the instrument creating or governing such Indebtedness and (iii) obligations under the Partnership Parks Agreements; provided , that obligations described in the foregoing clause (iii) shall constitute Indebtedness for purposes of Section 8(e).
“ Indemnified Liabilities ”: as defined in Section 10.5.
“ Indemnified Taxes ”: all Taxes (other than Excluded Taxes) and Other Taxes.
“ Indemnitee ”: as defined in Section 10.5.
“ Indentures ”: collectively, any indenture or other agreement pursuant to which Indebtedness of Parent, Holdings or the Borrower may be outstanding at any time, in each case as amended as permitted by this Agreement.
“ Insolvent ”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.
“ Intellectual Property ”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights and copyrightable works, copyright licenses, patents, inventions, discoveries and developments, patent licenses, trademarks, service marks, trade names, brand names, corporate names, domain names, logos, trade dress and other source indicators and the goodwill of any business symbolized thereby, trademark licenses, technology, know-how, processes, trade secrets and confidential or proprietary business information, all registrations and applications related thereto, the right to obtain renewals, extensions, substitutions, continuations, continuations-in-part, divisions, reissues, re-examinations or similar legal protections related thereto, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
“ Intercreditor Agreement ”: the Intercreditor Agreement, dated as of the date hereof, among the Administrative Agent, the First Lien Administrative Agent, and
acknowledged and agreed to by Parent, Holdings, the Borrower and the Subsidiary Guarantors.
“ Interest Payment Date ”: (a) as to any Base Rate Loan, the last day of each March, June, September and December to occur while such Loan is outstanding and the Maturity Date, (b) as to any Eurocurrency Loan having an Interest Period of three months or shorter, the last day of such Interest Period, (c) as to any Eurocurrency Loan having an Interest Period longer than three months, each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Loan, the date of any repayment or prepayment made in respect thereof.
“ Interest Period ”: as to any Eurocurrency Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurocurrency Loan and ending one, two, three or six months (or, to the extent available to all applicable Lenders, nine or twelve months) thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurocurrency Loan and ending one, two, three or six months (or, to the extent available to all applicable Lenders, nine or twelve months) thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:
“ Interest Rate Determination Date ” : with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.
“ Investment ”: for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into
such sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit having a stated term not exceeding 360 days arising in connection with the sale of inventory, supplies or patron services by such Person in the ordinary course of business, and excluding also any deposit made by such Person in the ordinary course of business of such Person or as an advance payment in respect of a Capital Expenditure (to the extent the making of such Capital Expenditure will not result in a violation of any of the provisions of Section 7.7); (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person, other than any Guarantee under the Partnership Parks Agreements; provided , however , that the provision by Parent or any of its Subsidiaries of covenants, Guarantees and indemnities that are customary for non-recourse financings (as determined by Parent in good faith) with respect to Indebtedness incurred by a Person that is not a Subsidiary of Parent and that is otherwise non-recourse to Parent and its Subsidiaries shall not be deemed an Investment; or (d) the entering into of any Hedging Agreement. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment and shall include any and all fees, expenses, commission costs and charges related to such Investment.
“ Investment Grade Rating ”: a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.
“ IP Percentage ”: (a) with respect to Indebtedness incurred by the Borrower or any of its Subsidiaries, 100% and (b) with respect to Indebtedness incurred by Parent or Holdings, 25% if (for purposes of this clause (b)) on the applicable date of determination the Senior Secured Leverage Ratio is greater than 4.5 to 1.00 and 0% otherwise.
“ Lender Addendum ”: with respect to any Lender, a Lender Addendum, substantially in the form of Exhibit J , to be executed and delivered by such Lender on the Closing Date as provided in Section 10.18.
“ Lenders ”: as defined in the preamble hereto.
“ Lien ”: with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance having the effect of security in respect of such Property. For purposes of this Agreement and the other Loan Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property.
“ Liquidity ”: the sum of (a) Unrestricted Cash and Permitted Investments held by the Loan Parties and their consolidated Subsidiaries, (b) the Available Revolving Commitments (as defined in the First Lien Credit Agreement as of the date hereof) on
such date (with satisfaction of the applicable conditions precedent to Revolving Extensions of Credit (as defined in the First Lien Credit Agreement as of the date hereof) to be tested as of such date) and (c) cash proceeds available to be received by the Loan Parties in exchange for the issuance of shares of Parent common stock pursuant to the Delayed Draw Equity Commitment.
“ Liquidity Put Threshold Amount ”: as defined in the New Time Warner Facility as in effect on the Closing Date or as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 7.14.
“ Loan ”: as defined in Section 2.1.
“ Loan Documents ”: this Agreement, the Security Documents and the Notes.
“ Loan Parties ”: Parent, Holdings, the Borrower and each Subsidiary of the Borrower that is a party to a Loan Document.
“ Margin Stock ”: “margin stock” within the meaning of Regulations T, U and X of the Board.
“ Material Adverse Effect ”: a material adverse effect on (a) the Loans, (b) the Business, Property or financial condition of Parent and its Subsidiaries taken as a whole or (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.
“ Materials of Environmental Concern ”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
“ Maturity Date ”: December 31, 2016.
“ Measurement Period ”: for any determination under this Agreement, the four consecutive fiscal quarters of Parent or Borrower, as applicable, then last ended for which financial statements are required to be delivered pursuant to Section 6 .1(a) or (d).
“ Moody’s ”: Moody’s Investors Service, Inc. and any successor thereto.
“ Mortgaged Properties ”: the Real Properties listed on Schedule 1.1(a), as to which the Administrative Agent for the benefit of the Lenders has been granted a Lien pursuant to the Mortgages.
“ Mortgages ”: each of the mortgages and deeds of trust encumbering the Mortgaged Properties made by the Loan Party party thereto in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, as delivered on the Closing
Date in form and substance reasonably satisfactory to the Administrative Agent, together with any other mortgages and deeds of trust made by any Loan Party in accordance with Section 6.6(b) in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, substantially in the form of the mortgages and deeds of trust delivered on the Closing Date (with such changes thereto as shall be reasonably advisable under the law of the jurisdiction in which such mortgage or deed of trust is to be recorded), in each case as the same may be amended, supplemented, substituted or otherwise modified from time to time.
“ Multiemployer Plan ”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“ Net Cash Proceeds ”: (a) in connection with any Asset Sale or any Recovery Event, the proceeds thereof received by Parent or any Subsidiary in the form of cash and Permitted Investments (including any such proceeds received in such form by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such Asset Sale or Recovery Event, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness and other obligations secured by a Lien expressly permitted hereunder on, or amount required to be paid under Capital Lease Obligations relating to, any asset which is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith and net of (i) taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements applicable to the transactions) and (ii) any reserve for adjustment in respect of (A) the sale price of such asset or assets established in accordance with GAAP and (B) any liabilities associated with such asset or assets retained by Parent or any of its Subsidiaries after such sale or other disposition thereof and (b) in connection with any issuance or sale of debt securities or instruments or the incurrence of loans or other Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.
“ New Time Warner Facility ”: the loan facility provided by TW to the Acquisition Parties (and guaranteed by Parent, Holdings, the Borrower and each other of Parent’s Subsidiaries that are or become Subsidiary Guarantors pursuant to, or otherwise guarantee obligations under, this Agreement and the other Loan Documents), evidenced by (i) that certain Loan Agreement, dated as of the date hereof, by and among TW and the Acquisition Parties, in the original principal amount of $150,000,000, and each other loan document entered in connection therewith, and (ii) that certain Guarantee Agreement, dated as of the date hereof, made by the Guarantors in favor of TW, in each case, as the same may be refinanced, refunded, replaced or renewed in accordance with Section 7.3(c) and as may be amended, restated, supplemented or otherwise modified from time to time, provided such amendment, restatement, supplement or other modification does not violate Section 7.14.
“ Non-Consenting Lender ”: in the event that (i) the Borrower or the Administrative Agent has requested the Lenders to consent to a departure or waiver of any provisions of the Loan Documents or to agree to any amendment thereto, (ii) the consent, waiver or amendment in question requires the agreement of all Lenders or all affected Lenders in accordance with the terms of Section 10.1 or all the Lenders with respect to a certain class of Loans or Commitments and (iii) the Required Lenders have agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed a “Non-Consenting Lender”.
“ Non-Guarantor Subsidiary ”: any Subsidiary of the Borrower that is not a Subsidiary Guarantor.
“ Non-U.S. Lender ”: as defined in Section 3.12(e).
“ Note ”: any promissory note evidencing any Loan.
“ Obligations ”: the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document or any other document made, delivered or given by any Loan Party in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.
“ Operated Properties ”: as defined in Section 4.17(a).
“ Other Taxes ”: any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.
“ Parent ”: as defined in the preamble hereto.
“ Parent Backstop Group ”: as defined in Section 5.1(t).
“ Parent Consolidated Adjusted EBITDA ”: for any period, the sum, for Parent and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following:
(a) Consolidated Net Income of Parent and its Subsidiaries for such period excluding those amounts which, in the determination of Consolidated Net Income for such period, have been added or deducted for (i) total interest expense and, to the extent
not reflected in such total interest expense, any losses on hedging or other derivative instruments, net of interest income and gains on such hedging obligations, (ii) provisions for federal, state, local and foreign income tax, franchise taxes and similar taxes imposed in lieu of income tax, (iii) depreciation and amortization expense (including, without limitation, amortization of goodwill and other intangible assets) and any impairment of property, equipment, goodwill or other intangible assets, (iv) any effect of extraordinary, non-recurring or unusual gains or losses or expenses and curtailments or modifications to pension and post-retirement employee benefit plans, provided that the amount of cash expenditures added back as a result of this clause (iv) shall not exceed $15,000,000 in any twelve-month period, (v) any net gains or losses of disposed, abandoned or discontinued assets or operations except for income and expenses prior to disposition, (vi) any fees, expenses, commissions, costs or other charges related to (A) any securities offering, Investment, acquisition, disposition or other similar transaction permitted hereunder or the incurrence of Indebtedness permitted to be incurred hereunder (including any extension, renewal, refinancing or replacement thereof), in each case whether or not successful and whether or not consummated prior to, on, or after the Closing Date, (B) the Cases, the Plan of Reorganization and the transactions contemplated by the Cases and the Plan of Reorganization, and (C) emergence compensation, the termination or settlement of leases and executory contracts, litigation costs and settlements, asset write-ups or write-downs, income and gains recorded in connection with the corporate reorganization effected in connection with the administration of the Debtors’ Cases, (vii)(A) any net unrealized gain or loss (after any offset) resulting in such period from obligations under any hedging obligations or other derivative instruments and the application of Statement of Financial Accounting Standards No. 133 and (B) any net unrealized gain or loss (after any offset) resulting in such period from currency translation, in each case to the extent not incurred in cash and (viii) the Consolidated Net Income of any Person (adjusted for items (i) through (vii) of this paragraph (a)) to the extent (A) attributable to interests held by third parties in Subsidiaries of Parent that are not wholly-owned by Parent or (B) attributable to interests in Persons accounted for under the equity method except to the extent of the cash received by Parent or any of its Subsidiaries from such Person, net of the Investments therein, in respect of such period, plus
(b) any non-cash or stock-based compensation costs or expenses incurred by Parent or any of its Subsidiaries pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, less any cash costs of such plans or agreements incurred during such period.
Calculations of Parent Consolidated Adjusted EBITDA shall be as set forth on Exhibit B attached hereto.
Notwithstanding the foregoing if, during any period for which Parent Consolidated Adjusted EBITDA is being determined, Parent or any of its Subsidiaries shall have consummated any Acquisition or Disposition then, for all purposes of this Agreement, Parent Consolidated Adjusted EBITDA shall be determined on a pro forma basis as if such Acquisition or Disposition had been made or consummated on the first day of such
period. The parties hereby agree that Parent Consolidated Adjusted EBITDA for the fiscal quarter ending (a) June 30, 2009 was $53,241,000, (b) September 30, 2009 was $205,755,000 and (c) December 31, 2009 was ($16,926,000).
“ Park ”: collectively, the Existing Parks and any other amusement or attraction park acquired by any of Parent and its Subsidiaries after the date hereof.
“ Participant ”: as defined in Section 10.6(c).
“ Participant Register ”: as defined in Section 10.6(b)(iv).
“ Partnership Parks Agreements ”: (a) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund, Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over Georgia, Inc., Six Flags Services of Georgia, Inc., the Borrower and Six Flags Entertainment Corporation and the Related Agreements (as defined therein), (b) the Overall Agreement dated as of November 24, 1997 among Six Flags Over Texas Fund, Ltd., Flags’ Directors, L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II, Inc., Six Flags Over Texas, Inc., the Borrower and Six Flags Entertainment Corporation, as amended by the Agreement dated as of December 6, 1999 between and among the foregoing parties and Six Flags Fund II, Ltd., and the Related Agreements (as defined therein), and (c) the Subordinated Indemnity Agreement, and each related agreement entered into in connection therewith (including, without limitation, the Beneficial Share Assignment Agreement, the Subordinated Indemnity Escrow Agreement, dated as of September 28, 2006, by and among Parent, Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), Historic TW Inc. (formerly known as Time Warner Inc.) and the Bank of New York, as the same has been amended, supplemented, waived or otherwise modified on or prior to the Closing Date, and the Acquisition Company Liquidity Agreement dated as of December 8, 2006 by and among Parent, Holdings, Borrower, GP Holdings, Inc., SFOG II, Inc., SFT Holdings, Inc., Time Warner Inc., TW-SPV Co., Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), the Acquisition Parties, SFOG Acquisition A Holdings, Inc., SFOG Acquisition B Holdings, Inc., SFOT Acquisition I Holdings, Inc. and SFOT Acquisition II Holdings, Inc.), in each case, as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 7.14.
“ Partnership Parks Entities ”: (i) Six Flags Over Georgia II, L.P., a Delaware limited partnership, Texas Flags, Ltd., a Texas limited partnership, GP Holdings Inc., a Delaware corporation, SFOT Acquisition I Holdings, Inc., a Delaware corporation, SFOT Acquisition II Holdings, Inc., a Delaware corporation, SFOG Acquisition A Holdings, Inc., a Delaware corporation, SFOG Acquisition B Holdings, Inc., a Delaware corporation, Six Flags Over Georgia, Inc., a Delaware corporation, and the Acquisition Parties and (ii) any of their respective Subsidiaries.
“ Payment Office ”: the office specified from time to time by the Administrative Agent as its payment office by notice to the Borrower and the Lenders.
“ PBGC ”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).
“ Permitted Acquisition ”: as defined in Section 7.5(e)(i).
“ Permitted First Lien Refinancing Indebtedness ”: as defined in Section 7.3(i).
“ Permitted Holders ”: Any fund affiliated with Stark Investments, CQS, Tricadia Capital Management, LLC, 1798 Global Partners, Capital Ventures International, Altai Capital Management, H Partners Management LLC, Bay Harbour Management, Pentwater Capital Management LP, Fortelus Capital Management LLP, Credit Suisse Securities (USA) LLC and Candlewood Special Situations Master Fund Ltd.
“ Permitted Investments ”: (a) Dollars; (b)(i) Pounds Sterling or Euros or (ii) in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business; (c) securities issued or directly and fully and unconditionally guaranteed or insured by the United States government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition; (d) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $500,000,000 in the case of U.S. banks and $100,000,000 (or the Dollar equivalent as of the date of determination) in the case of non-U.S. banks; (e) repurchase obligations for underlying securities of the types described in clauses (c), (d) and (h) entered into with any financial institution meeting the qualifications specified in clause (d) above; (f) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case maturing within 24 months after the date of creation thereof and Indebtedness or preferred stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date of acquisition; (g) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Borrower) and in each case maturing within 24 months after the date of creation or acquisition thereof; (h) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition; (i) readily marketable direct obligations issued by any foreign government or any political subdivision or public instrumentality thereof, in each case having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition; (j) Investments with average maturities of 12 months or less from the date of acquisition in money market funds; (k) investment funds investing
90% of their assets in securities of the types described in clauses (a) through (j) above; and (l) in the case of Foreign Subsidiaries, substantially similar investments to those set forth in clauses (a) through (k) above denominated in foreign currencies, provided that references to the United States of America (or any agency or instrumentality thereof) shall be deemed to mean foreign countries having a sovereign rating of “A” or better from either S&P or Moody’s (or another nationally recognized statistical rating agency selected by the Borrower and reasonably acceptable to the Administrative Agent).
“ Permitted Liens ”: as defined in Section 7.4.
“ Person ”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“ Plan ”: an employee benefit plan (within the meaning of Section 3(3) of ERISA) and in respect of which Parent or any ERISA Affiliate is (or if such Plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an employer as defined in Section 305 of ERISA.
“ Plan of Reorganization ”: as defined in the recitals hereto.
“ Platform ”: as defined in Section 5.1(f).
“ Prepayment Amount ”: as defined in Section 3.10(d).
“ Prepayment Date ”: as defined in Section 3.10(d).
“ Prepayment Option Notice ”: as defined in Section 3.10(d).
“ Prime Rate ”: the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged JPMorgan Chase Bank, N.A. in connection with extensions of credit to borrowers).
“ Pro Forma Balance Sheet ”: as defined in Section 4.1.
“ Property ”: any right or interest in or to property of any kind whatsoever, whether Real Property, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.
“ Purchase Money Indebtedness ”: (a) Indebtedness consisting of the deferred purchase price of Property, conditional sale or other obligations under any title retention agreement, installment sales and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the Property being financed, and (b) Indebtedness incurred to finance the acquisition of Property (including Acquisitions), including additions and improvements; provided , however , that any Lien arising in connection with any such Indebtedness shall be limited
to the specified asset being financed (or replacement items) or, in the case of Real Property, the Real Property on which such asset is attached; and provided further , that such Indebtedness is incurred within 180 days after such acquisition, addition or improvement by the Borrower or a Subsidiary of such asset.
“ Purchase Price ”: with respect to any Acquisition, the sum (without duplication) of (a) the amount of cash paid by Parent and its Subsidiaries in connection with such Acquisition, (b) the value (as determined for purposes of such Acquisition in accordance with the applicable acquisition agreement) of all Capital Stock of Parent or any of its Subsidiaries issued or given as consideration in connection with such Acquisition (other than Qualified Net Cash Equity Proceeds applied to finance such Acquisition within 180 days of such Acquisition or Capital Stock of Parent that is issued in connection with and as consideration for an Acquisition), (c) the principal amount (or, if less, the accreted value) at the time of such Acquisition of all Indebtedness incurred, assumed or acquired by Parent and its Subsidiaries in connection with such Acquisition, (d) all additional purchase price amounts in connection with such Acquisition in the form of earnouts, deferred purchase price and other contingent obligations that are required to be recorded as a liability on the balance sheet of Parent and its Subsidiaries in accordance with GAAP, Regulation S-X under the Securities Act of 1933, as amended, or any other rule or regulation of the SEC, (e) all amounts paid by Parent and its Subsidiaries in respect of covenants not to compete, consulting agreements and other affiliated contracts in connection with such Acquisition, and (f) the aggregate fair market value of all other consideration given by Parent and its Subsidiaries in connection with such Acquisition.
“ Qualified Capital Stock ” shall mean any Capital Stock that is not Disqualified Capital Stock.
“ Qualified Net Cash Equity Proceeds ”: the Net Cash Proceeds of any offering of Capital Stock of Parent so long as (a) such offering was made in express contemplation of an Acquisition or an Investment, as the case may be, (b) such Capital Stock is not mandatorily redeemable prior to the date that is one year after the Maturity Date and (c) such Acquisition or Investment, as the case may be, is consummated within 180 days after receipt by Parent of such Net Cash Proceeds.
“ Qualifying Bids ” as defined in Section 3.18(c).
“ Qualifying Lender ” as defined in Section 3.18(d).
“ Real Properties ”: all real property, including the improvements thereon, owned by, or leased by, Parent, Holdings, the Borrower or its Subsidiaries.
“ Recovery Event ”: any settlement of or payment in excess of $2,500,000 in respect of any Property or casualty insurance claim or any condemnation proceeding relating to any Property of Borrower or any of its Subsidiaries.
“ Refinancing Expenses ”: with respect to any refinancing, refunding, replacement or renewal of any Indebtedness, accrued and unpaid interest (or dividends) and premium
thereon plus other reasonable amounts paid and fees and expenses incurred in connection therewith.
“ Register ”: as defined in Section 10.6(b)(iv).
“ Regulation H ”: Regulation H of the Board as in effect from time to time.
“ Regulation U ”: Regulation U of the Board as in effect from time to time.
“ Reinvestment Deferred Amount ”: with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by the Borrower or any of its Subsidiaries in connection therewith that, as a result of the delivery of a Reinvestment Notice, are not applied to repay the Loans pursuant to Section 5.5(b).
“ Reinvestment Event ”: any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.
“ Reinvestment Notice ”: a written notice executed by a Responsible Officer of Holdings or the Borrower stating that no Default or Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire, restore or reconstruct assets useful in its business (including for Permitted Acquisitions).
“ Reinvestment Prepayment Amount ”: with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire, restore, or reconstruct assets useful in business of the Borrower and its Subsidiaries (including for Permitted Acquisitions).
“ Reinvestment Prepayment Date ”: with respect to any Reinvestment Event, the earlier of (a) the date occurring one year after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire, restore or reconstruct assets useful in the business of Parent and its Subsidiaries (including for Permitted Acquisitions) with all or any portion of the relevant Reinvestment Deferred Amount.
“ Related Transactions ”: the execution, delivery and performance of the New Time Warner Facility by the parties thereto, the repayment in full of the Existing Time Warner Facility, the amendment to, or amendment and restatement of, supplement or other modification to certain Partnership Parks Agreement or other Contractual Obligations of the Partnership Parks Entities in connection with the Plan of Reorganization and any other transactions consummated in connection with the Plan of Reorganization, including the contemplated rights offering to purchase common stock of Parent.
“ Release ”: any release, threatened release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or
outdoor environment, including, without limitation, the movement of Materials of Environmental Concern through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata that violates or creates any liability under any Environmental Law.
“ Reorganization ”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“ Reply Amount ”: as defined in Section 3.18(b).
“ Reply Discount ”: as defined in Section 3.18(b).
“ Reportable Event ”: any of the events set forth in Section 4043(c) of ERISA and the regulations issued thereunder, with respect to a Single Employer Plan, as to which the PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event ( provided that a failure of any Single Employer Plan to meet the minimum funding standards of Section 412 or 430 of the Code or Section 302 of ERISA, including, without limitation, the failure to make on or before its due date a required installment under Section 430(j) of the Code, shall be a reportable event).
“ Required Lenders ”: at any time, the holders of more than (i) 50% of the Commitments or (ii) following the making of the Loans hereunder, 50% of the sum of the aggregate unpaid principal amount of the Loans then outstanding.
“ Requirement of Law ”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.
“ Responsible Officer ”: as to any Person, the chief executive officer, president, chief financial officer, senior vice president or treasurer of such Person, but in any event, with respect to financial matters, the chief financial officer, senior vice president-finance or treasurer of such Person.
“ Restricted Payment ”: dividends (in cash, Property or obligations) on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of, any shares of any Capital Stock of Parent, Holdings or the Borrower or of any warrants, options or other rights to acquire the same (or to make any payments to any Person (except “earn-out” payments or similar payments in connection with an Acquisition or pursuant to any agreement entered into in connection therewith, in each case where such obligation does not constitute Indebtedness) such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market or equity value of Parent, Holdings or the Borrower), but excluding dividends payable solely in shares of common stock of Parent, Holdings or the Borrower.
“ Return Bid ”: as defined in Section 3.18(b).
“ RP Eligible Proceeds ”: Net Cash Proceeds from Dispositions permitted under Sections 7.5(c)(ii), 7.5(c)(vi), 7.5(c)(vii), 7.5(c)(viii) and 7.5(c)(xiii).
“ S&P ”: Standard & Poor’s Ratings Services, a subsidiary of The McGraw-Hill Companies, Inc., and any successor thereto.
“ SEC ”: the Securities and Exchange Commission (or successors thereto or an analogous federal Governmental Authority).
“ Security Documents ”: the collective reference to the Guarantee and Collateral Agreement (and all assumptions thereof), the Mortgages and all other security documents which shall have been delivered on or prior to the Closing Date, or are hereafter delivered to the Administrative Agent granting a Lien on any Property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document, as the same have been, and on and after the Closing Date shall be modified, amended, amended and restated, restated or supplemented in accordance herewith.
“ Senior Secured Debt ”: as at the last day of any Measurement Period, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than First Lien Revolver Indebtedness and the undrawn portion of any outstanding letters of credit) of the Borrower and its Subsidiaries hereunder and under the First Lien Credit Agreement or that otherwise is secured by property or assets of the Borrower and its Subsidiaries and that would, in conformity with GAAP, be set forth on the balance sheet of the Borrower and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amount of First Lien Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the First Lien Revolver Indebtedness as of each of September 30, 2009, December 31, 2009 and March 31, 2010 was $0.
“ Senior Secured Leverage Ratio ”: as at any date, the ratio of (a) Senior Secured Debt as at such date to (b) Borrower Consolidated Adjusted EBITDA for the Measurement Period most recently ended prior to such date.
“ SFO Notes ”: as defined in Section 5.1(t).
“ Shared Services Agreement ”: the Amended and Restated Shared Services Agreement, dated as of January 1, 2006, among Parent, Holdings, the Borrower and PP Data Services Inc., a Subsidiary of Holdings, as the same may be amended in a manner not materially adverse to the interests of the Lenders.
“ Single Employer Plan ”: any Plan that is covered by Title IV of ERISA, but which is not a Multiemployer Plan.
“ Solvent ”: with respect to any Person, as of any date of determination, (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such
date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured and (iii) assets shall include insurance coverage and/or indemnification available with respect to any liability.
“ Subordinated Indemnity Agreement ”: the Subordinated Indemnity Agreement, dated as of April 1, 1998, among Parent, GP Holdings Inc., Time Warner Inc., Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), TW-SPV Co., Holdings, the Borrower, SFOG II, Inc. and SFT Holdings, Inc., as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 7.14.
“ Subsidiary ”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person; provided that, notwithstanding the foregoing, each of the Partnership Parks Entities will be deemed to be a Subsidiary of Parent for all purposes under this Agreement, provided further that none of the joint ventures established pursuant to the Great Escape Agreements, any Inactive Subsidiary, Six Flags Over Texas Fund, Ltd. or Six Flags Fund, Ltd. will be deemed to be a Subsidiary of Parent for any purpose under this Agreement. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Parent.
“ Subsidiary Guarantor ”: each Subsidiary of the Borrower other than (a) any Excluded Foreign Subsidiary, (b) Flags Beverages, Inc., Fiesta Texas Hospitality LLC and any other Subsidiary whose only material asset is a liquor license, (c) HWP, (d) HWP Development Holdings LLC, (e) SFRCC Corp., (f) any Inactive Subsidiary and (g) after the Closing Date, any non-Wholly Owned Subsidiary that does not execute the Guarantee and Collateral Agreement as permitted by Section 6.6.
“ Syndication Agent ”: Goldman Sachs Lending Partners LLC.
“ Tax Sharing Agreement ”: that certain Tax Sharing Agreement, effective as of January 1, 1999 and as amended on or prior to the Closing Date, among Parent, Holdings, and those Subsidiaries which are parties thereto, as the same may be modified or amended at any time from time to time, provided such modification or amendment does not violate Section 7.14.
“ Taxes ”: any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority.
“ Time Warner ”: Historic TW Inc. and/or its affiliates.
“ Transactions ”: (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is or is to be a party, the borrowing of Loans, and the use of the proceeds thereof, (b) the execution, delivery and performance by each Loan Party of the First Lien Loan Documents to which it is or is to be a party, the borrowings under the First Lien Loan Documents, the use of the proceeds thereof and the issuance of letters of credit thereunder, and (c) the transactions consummated in connection with the Plan of Reorganization.
“ Transferee ”: as defined in Section 10.15.
“ TW ”: TW-SF LLC, a Delaware limited liability company or its permitted successors and assigns.
“ Type ”: as to any Loan, its nature as a Base Rate Loan or a Eurocurrency Loan.
“ Uniform Commercial Code ”: the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided , however , that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority (but not attachment) and for purposes of definitions related to such provisions.
“ Unrestricted Cash ”: all cash that is not restricted cash, as determined in accordance with GAAP.
“ U.S.A. PATRIOT Act ”: (a) the Trading with the Enemy Act, as amended, and each of the foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as amended or modified from time to time.
“ Wholly Owned Non-Guarantor Foreign Subsidiary ”: as defined in Section 7.3(f).
“ Wholly Owned Subsidiary ”: with respect to any Person, any corporation, partnership, limited liability company or other entity of which all of the equity securities or other ownership interests (other than, in the case of a corporation, directors’ qualifying shares or equity interests held by foreign nationals, in each case to the extent mandated by applicable law) are directly or indirectly owned or controlled by such Person or one or more Wholly Owned Subsidiaries of such Person.
“ Withdrawal Liability ”: liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
1.2. Other Definitional Provisions . (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.
2.1. Commitments . Subject to the terms and conditions hereof, the Lenders severally agree to make term loans denominated in Dollars (each, a “ Loan ”) to the Borrower on the Closing Date in an amount for each Lender not to exceed the Commitment of such Lender. The Loans may from time to time be Eurocurrency Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 3.5.
2.2. Procedure for Borrowing . The Borrower shall deliver to the Administrative Agent irrevocable notice in the form of Exhibit K (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (i) three Business Days prior to the anticipated Closing Date, in the case of Eurocurrency Loans and (ii) one Business Day prior to the anticipated Closing Date, in the case of Base Rate Loans) requesting that the Lenders make the Loans on the Closing Date and specifying the amount to be borrowed; provided , that until the date that is 30 days from the Closing Date (unless the primary syndication of the Loans has been completed on or prior to the Closing Date), the Loans shall be maintained as either (1) Eurocurrency Loans having an Interest Period of no longer than one month or (2) Base Rate Loans. Upon receipt of such notice the Administrative Agent shall promptly notify each Lender thereof. Not later than 12:00 Noon, New York City time, on the Closing Date each Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Loan to be made by such Lender.
2.3. Repayment of Loans . The Borrower shall repay all outstanding Loans, together with all other amounts owed hereunder with respect thereto, in full on the Maturity Date.
3.1. Repayment of Loans; Evidence of Debt . (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the appropriate Lender the principal amount of the Loan made by such Lender to the Borrower on the Maturity Date (or on such earlier date on which the Loans become due and payable pursuant to Section 8). The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans until payment in full thereof at the rates per annum, and on the dates, set forth in Section 3.7.
3.2. Fees.
3.3. Optional Prepayments . Subject to the terms of the First Lien Loan Documents and the Intercreditor Agreement, and to Section 3.7(e), the Borrower may at any time and from time to time prepay the Loans made to it, in whole or in part, without premium or penalty (except as set forth in Section 3.7(e)), upon irrevocable notice delivered to the Administrative Agent at least three Business Days prior thereto in the case of Eurocurrency Loans and at least one Business Day prior thereto in the case of Base Rate Loans, which notice shall specify the date and amount of prepayment and whether the prepayment is of Eurocurrency Loans or Base Rate Loans; provided , that if a Eurocurrency Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 3.13. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid and any additional amounts required pursuant to Section 3.7(e). Partial prepayments of Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.
3.4. Mandatory Prepayments . So long as (x) the First Lien Obligations have been paid in full and all commitments thereunder have been terminated and all letters of credit issued thereunder have been terminated or fully cash collateralized in accordance with the terms of the First Lien Credit Documents, or (y) expressly permitted under the First Lien Credit
Agreement or (z) due to a rejection of a mandatory prepayment of First Lien Tranche B Term Loans pursuant to Section 5.11(d) of the First Lien Credit Agreement:
Notwithstanding any of the other provisions of this Section 3.4, so long as no Event of Default shall have occurred and be continuing, if any prepayment of Eurocurrency Loans is required to be made under this Section 3.4 prior to the last day of the Interest Period therefor and less than three months are remaining in such Interest Period, in lieu of making any payment pursuant to this Section 3.4 in respect of any such Eurocurrency Loan prior to the last
day of the Interest Period therefor, the Borrower may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made into a cash collateral account maintained with the Administrative Agent until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of such Loans in accordance with this Section 3.4. Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent shall also be authorized (without any further action by or notice to or from the Borrower or any other Loan Party) to apply such amount to the prepayment of the outstanding Loans in accordance with the relevant provisions of this Section 3.4.
3.5. Conversion and Continuation Options . (a) The Borrower may elect from time to time to convert Eurocurrency Loans of the Borrower to Base Rate Loans by giving the Administrative Agent at least two Business Days’ prior irrevocable notice of such election, provided that any such conversion of Eurocurrency Loans may be made only on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert Base Rate Loans to Eurocurrency Loans by giving the Administrative Agent at least three Business Days’ prior irrevocable notice of such election (which notice shall specify the length of the initial Interest Period therefor), provided that no Base Rate Loan may be converted into a Eurocurrency Loan (i) when any Event of Default has occurred and is continuing and the Administrative Agent has, or the Required Lenders have determined in its or their sole discretion not to permit such conversions or (ii) after the date that is one month prior to the Maturity Date. Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof.
3.6. Minimum Amounts and Maximum Number of Eurocurrency Tranches . Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions, continuations and optional prepayments of Eurocurrency Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate principal amount of the Eurocurrency Loans comprising each Eurocurrency Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more than 12 Eurocurrency Tranches shall be outstanding at any one time.
3.7. Interest Rates; Payment Dates; Prepayment Premium . (a) Each Eurocurrency Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurocurrency Rate determined for such day plus the Applicable Margin.
3.8. Computation of Interest and Fees . (a) Interest, fees and commissions payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with respect to Base Rate Loans on which interest is calculated on the basis of the Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of each determination of a Eurocurrency Rate. Any change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as
soon as practicable notify the Borrower and the relevant Lenders of the effective date and the amount of each such change in interest rate.
3.9. Inability to Determine Interest Rate . If prior to the first day of any Interest Period:
the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given any Loans (x) that were to have been converted on the first day of such Interest Period to Eurocurrency Loans shall be continued as Base Rate Loans and (y) any outstanding Eurocurrency Loans shall be converted, on the last day of the then current Interest Period with respect thereto, to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurocurrency Loans shall be made or continued as such, nor shall the Borrower have the right to convert Loans to Eurocurrency Loans.
3.10. Pro Rata Treatment and Payments . (a) Except as otherwise provided in this Agreement, each payment (including each prepayment) of the Loans shall be allocated among the Lenders pro rata based on the principal amount of Loans held by such Lenders. Amounts prepaid on account of the Loans may not be reborrowed.
3.11. Requirements of Law . (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:
and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender reasonably deems to be material, of converting into, continuing or maintaining Eurocurrency Loans, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled. No amount shall be payable pursuant to this Section 3.11 with respect to Taxes, the indemnification of which shall be governed solely and exclusively by Section 3.12.
3.12. Taxes . (a) All payments made by or on behalf of the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any Indemnified Taxes. If any such Indemnified Taxes are required to be withheld from any amounts payable to any Agent, Lender or Transferee hereunder, the amounts so payable to such Agent, Lender or Transferee shall be increased to the extent necessary so that after making all required deductions and withholdings (including deductions or withholdings applicable to additional sums payable under this Section 3 .12 ), such Agent, Lender or Transferee receives an amount equal to the after tax sum it would have received had no such deductions or withholdings been made .
3.13. Indemnity . The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurocurrency Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making by the Borrower of a prepayment or conversion of Eurocurrency Loans on a day that is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurocurrency market. A certificate as to any amounts payable pursuant to this Section submitted to the Borrower, on behalf of the Borrower, by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
3.14. Illegality . Notwithstanding any other provision herein, if the adoption of or any change after the date hereof in any Requirement of Law or in the interpretation or application thereof after the date hereof shall make it unlawful for any Lender to make or maintain Eurocurrency Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans as such and convert Base Rate Loans to Eurocurrency Loans shall forthwith be canceled and (b) such Lender’s Loans then outstanding as Eurocurrency Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurocurrency Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower in respect of such Eurocurrency Loans shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.13.
3.15. Change of Lending Office . Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Sections 3.11, 3.12 or 3.14 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided , that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and
its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided , further , that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Sections 3.11, 3.12 or 3.14.
3.16. Replacement of Lenders under Certain Circumstances . The Borrower shall be permitted to replace any Lender that requests reimbursement for amounts owing pursuant to Section 3.11 or 3.12, or gives a notice of illegality pursuant to Section 3.14 or (b) becomes a Non-Consenting Lender, with a replacement financial institution; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) solely with respect to clause (a) above, no Default or Event of Default shall have occurred and be continuing at the time of such replacement, (iii) if applicable, prior to any such replacement, such Lender shall not have taken all actions under Section 3.15 so as to eliminate the continued need for payment of amounts owing pursuant to Section 3.11 or 3.12 or to eliminate any illegality described in a notice of illegality under Section 3.14, (iv) if applicable, the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement, (v) if applicable, the Borrower shall be liable to such replaced Lender under Section 3.13 (as though Section 3.13 were applicable) if any Eurocurrency Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (vi) if applicable, the replacement financial institution, if not already a Lender, an affiliate of a Lender or an Approved Fund, shall be reasonably satisfactory to the Administrative Agent, (vii) if applicable, the replaced Lender shall be obligated to make such replacement, without such Lender’s consent, in accordance with the provisions of Section 10.6 ( provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (viii) if applicable, the Borrower shall pay all additional amounts (if any) required pursuant to Section 3.11 or 3.12, as the case may be, in respect of any period prior to the date on which such replacement shall be consummated, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender; provided that in the case of any Assignee in respect of Non-Consenting Lenders, the replacement Lender shall agree to the consent, waiver or amendment to which the Non-Consenting Lender did not agree.
3.18. Auction Procedures . (a) In connection with an Auction, the Borrower will provide notification to the Administrative Agent (for distribution to the Lenders) of the Auction (an “ Auction Notice ”), which shall be substantially in the form of Exhibit L . Each Auction Notice shall contain (i) the total cash value of the bid, in a minimum amount of $5,000,000 with minimum increments of $1,000,000 (the “ Auction Amount ”), and (ii) the discount to par, which shall be a range (the “ Discount Range ”) of percentages of the par principal amount of the Loans that represents the range of purchase prices that could be paid in the Auction.
(e) Notwithstanding the provisions of this Section 3.18, the Administrative Agent in consultation with the Borrower, may amend or modify the procedures, notices, bids and Assignment and Acceptance Agreement in connection with any Auction (including, solely with Borrower’s consent), (i) any term to the extent Borrower’s commercial interests will be materially adversely affected by such amendment or modification and (ii) the economic terms to the extent no Lenders have validly tendered Loans requested in an offer, but excluding economic terms of an auction after any Lender has validly tendered Loans requested in an offer, other than to increase the Auction Amount or raise the Discount Range; provided that no such amendments or modifications may be implemented after 24 hours prior to the date and time return bids are due.
(f) By providing an Auction Notice or purchasing any Loans (or any portions of any thereof) in the Auction initiated thereby, the Borrower shall be deemed to represent and warrant as of the date of such notice or purchase as the case may be that the Borrower is not in possession of any information regarding any Loan Party; its assets, its ability perform its Obligations or any other matter that may be material to a decision by any Lender to participate in such Auction or participate in any of the transactions contemplated thereby, that has not previously been disclosed to the Administrative Agent and the Lenders.
To induce the Agents and the Lenders to enter into this Agreement and to make the Loans, Parent, Holdings and the Borrower hereby jointly and severally represent and warrant to each Agent and each Lender that:
4.1. Financial Condition . (a) The unaudited pro forma consolidated balance sheet of Parent and its consolidated Subsidiaries as at December 31, 2009 (the “ Pro Forma Balance Sheet ”), copies of which have heretofore been furnished to each Lender, has been prepared giving effect (as if such events had occurred on such date) to (i) the Loans to be made on the Closing Date and the use of proceeds thereof and (ii) the payment of fees and expenses in connection with the foregoing. The Pro Forma Balance Sheet has been prepared in good faith based on assumptions believed by Parent to be reasonable and as of the date of delivery thereof, and presents fairly in all material respects on a pro forma basis the estimated financial position of
Parent and its consolidated Subsidiaries as at December 31, 2009, assuming that the events specified in the preceding sentence had actually occurred at such date and giving effect to the other assumptions set forth therein.
4.2. No Change . Since December 31, 2009, except as otherwise described in the Confidential Information Memorandum and the Plan of Reorganization, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.
4.3. Existence; Compliance with Law . Each of Parent, Holdings and its Subsidiaries (other than the Inactive Subsidiaries) (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate (or equivalent) power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the Business in which it is currently engaged, (c) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its Business requires such qualification and (d) is in compliance with all Requirements of Law except in each case referred to in clauses (b), (c) or (d), to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.4. Corporate Power; Authorization; Enforceable Obligations . Upon entry by the Bankruptcy Court of the Confirmation Order, each Loan Party has the corporate (or equivalent) power and authority, and the legal right, to make, deliver and perform the Loan Documents (as well as the corporate (or equivalent) power and authority, and the legal right, to make and deliver the Intercreditor Agreement) to which it is a party and to consummate the Transactions and, in the case of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary corporate (or equivalent) action to authorize the execution, delivery and performance of the Loan Documents to which it is a party (as well as the Intercreditor Agreement) and the consummation of the Transactions and, in the case of the Borrower, to authorize the borrowings on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required to be obtained by any Loan Party in connection with the Transactions and the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations, filings and notices described in Schedule 4.4 and Schedule 4.19(b), which consents, authorizations, filings and notices have been obtained or made and are in full force and effect, (ii) the filings referred to in Schedule 4.19(a)-1 and Schedule 4.19(a)-2 and (iii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect. Each Loan Document and the Intercreditor Agreement has been duly executed and delivered on behalf of each Loan Party that is a party thereto. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and binding obligation of each Loan Party that is a party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
4.5. No Legal Bar . The execution, delivery and performance of this Agreement and the other Loan Documents by the Loan Parties, the borrowings hereunder, the use of the proceeds thereof and the consummation of the Transactions will not violate any Requirement of Law applicable to, or any Contractual Obligation of, Parent, Holdings or any of its Subsidiaries except to the extent such violation could not reasonably be expected to have a Material Adverse Effect and will not result in, or require, the creation or imposition of any Lien on any of their respective Properties or revenues pursuant to any such Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents and the Liens created under the First Lien Credit Documents).
4.6. Litigation . No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Parent, Holdings or the Borrower, threatened by or against Parent, Holdings or any of its Subsidiaries or against any of their respective Properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that, if adversely determined, could reasonably be expected to have a Material Adverse Effect.
4.7. No Default . Neither Parent, Holdings, nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8. Ownership of Property; Liens . Each of Holdings and its Subsidiaries has title in fee simple to, or a valid leasehold interest in, all its material Real Property, and good title to, or a valid leasehold interest in, all its other material Property, and none of such Property (including the Real Property) is subject to any Lien except a Permitted Lien. Attached as Schedule 4.8 is a list of all Real Property and Operated Property which are material to the operation of the Business of Holdings or its Subsidiaries as of the Closing Date.
4.9. Intellectual Property . Holdings and each of its Subsidiaries owns, or is licensed to use, all Intellectual Property material to the conduct of its business as currently conducted, free and clear of all Liens other than Permitted Liens, and takes reasonable actions to protect, preserve and maintain such Intellectual Property . Except as could not reasonably be expected to have a Material Adverse Effect, all such Intellectual Property is valid and enforceable and all registrations and applications for such Intellectual Property have not expired or been abandoned. No action or proceeding is pending by any Person or, to the knowledge of Holdings or the Borrower, threatened, or imminent, on the date hereof, and no holding, decision or judgment has been rendered by any Governmental Authority or arbitrator which may limit, cancel or challenge the validity, enforceability, ownership or use of, such Intellectual Property which could reasonably be expected to have a Material Adverse Effect, nor does Holdings or the Borrower know of any valid basis for any such claim except for claims, actions, proceedings, holdings, decisions or judgments which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The operation of the Business of Holdings and its Subsidiaries does not infringe, impair, misappropriate or otherwise violate the rights of any Person to an extent which could reasonably be expected to have a Material Adverse Effect, and to the knowledge of Holdings or the Borrower, no Person is infringing, impairing, misappropriating or otherwise violating any Intellectual Property owned by any of Holdings or its Subsidiaries to an extent which could reasonably be expected to have a Material Adverse Effect.
4.10. Taxes . Each of Parent, Holdings and each of its Subsidiaries has filed or caused to be filed all Federal, state and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its Property and all other material taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (in each case other than any taxes, fees or charges the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves (to the extent required by GAAP) have been provided on the books of Parent, Holdings or its Subsidiaries, as the case may be, and those which, with respect to taxes or other assessments on Real Properties, can be contested without payment under applicable law); no material tax Lien has been filed, and, to the knowledge of Parent, Holdings and the Borrower, no claim is being asserted with respect to any such tax, fee or other charge except claims that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.
4.11. Federal Regulations . No part of the proceeds of any Loans will be used for “buying” or “carrying” any Margin Stock within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the Regulations of the Board. If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.
4.12. Labor Matters . Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor disputes against Holdings or any of its Subsidiaries pending or, to the knowledge of Holdings or the Borrower, threatened; (b) hours worked by and payment made to employees of Holdings and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from Holdings or any of its Subsidiaries on account of employee health and welfare insurance have been paid or accrued as a liability on the books of Holdings or the relevant Subsidiary.
4.13. ERISA . (a) Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (i) no ERISA Event has occurred during the three-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied, and is in compliance, with its terms and the applicable provisions of ERISA and the Code; (ii) no termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such three-year period, (iii) the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits resulting in an “at risk” status for the Single Employer Plan; and, except as described in Schedule 4.13, the present value of all accrued benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) does not exceed the value of the assets of all such underfunded Plans; (iv) neither Parent, Holdings, nor any ERISA Affiliate would become subject to any Withdrawal Liability if Parent, Holdings, or any ERISA Affiliate were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made; and (v) none of Parent, Holdings, the Subsidiaries and the ERISA Affiliates has received any written notification that any Multiemployer Plan is Insolvent, in Reorganization, in “endangered” or “critical” status, or has been terminated (all within the meaning of Title IV of ERISA), or has knowledge that any Multiemployer Plan is reasonably expected to be Insolvent, in Reorganization, in “endangered” or “critical” status, or terminated.
(b) With respect to each employee benefit arrangement mandated by non-U.S. law (a “ Foreign Benefit Arrangement ”) and with respect to each employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) maintained or contributed by any of Parent, Holdings, the Subsidiaries or any ERISA Affiliate that is not subject to U.S. law (a “ Foreign Plan ”), except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (i) any employer and employer contributions required by applicable law or by the terms of such Foreign Benefit Arrangement or Foreign Plan have been made, or, if applicable, accrued in accordance with normal accounting practices; (ii) the accrued benefit obligations of each Foreign Plan (based on those assumptions used to fund such Foreign Plan) with respect to all current and former participants do not exceed the assets of such Foreign Plan; (iii) each Foreign Plan that is required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities; and (iv) each such Foreign Benefit Arrangement and Foreign Plan is in compliance (A) with all applicable provisions of law and all applicable regulations and published interpretations thereunder with respect to such Foreign Plan or Foreign Benefit Arrangement and (B) with the terms of such plan, except, in each case, for such noncompliance that could not reasonably be expected to have a Material Adverse Effect.
4.14. Investment Company Act; Other Regulations . No Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15. Subsidiaries . Schedule 4.15, as of the Closing Date, sets forth the name and jurisdiction of formation of each Subsidiary (other than Inactive Subsidiaries and other than Subsidiaries that are included in Excluded Assets (as defined in the Guarantee and Collateral Agreement)) of Parent and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party, and, except as so disclosed, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than directors’ qualifying shares) of any nature relating to any Capital Stock of Holdings, the Borrower or any such Subsidiary, except as created by the Loan Documents.
4.16. Use of Proceeds . The proceeds of the Loans shall be used, in part, to consummate the transactions contemplated by the Plan of Reorganization, pay related fees and expenses and finance the working capital needs and general corporate purposes of the Borrower.
4.17. Environmental Matters . Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:
4.18. Accuracy of Information, Etc. No financial statement or written information (other than projections, estimates, forward-looking information and information of a general industry or economic nature) contained in this Agreement or any other Loan Document, or furnished by or on behalf of any Loan Party in the Confidential Information Memorandum, or contained in any other document, certificate or financial statement furnished by or on behalf of any Loan Party to the Administrative Agent, the Lenders, the Bankruptcy Court or any of them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, when considered as a whole, contained as of the date such financial statement, written information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made not materially misleading. The projections, estimates and forward-looking information contained in the materials referenced above were based upon good faith estimates and assumptions believed by the management of Holdings to be reasonable at the time made, it being recognized by the Lenders that such projections, estimates and forward-looking information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such projections, estimates and forward-looking information may differ from the projected results set forth therein, and such differences may be material. There is no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information Memorandum, in the Plan of Reorganization or in any other documents, certificates and written financial statements
furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.
4.19. Security Documents . (a) The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral (other than the Mortgaged Properties) described therein and proceeds thereof. In the case of the Pledged Stock and Pledged Notes described in the Guarantee and Collateral Agreement, upon the effectiveness of the Intercreditor Agreement, and when any certificates representing such Pledged Stock or promissory notes representing Pledged Notes, as applicable, are delivered to the First Lien Administrative Agent or the Administrative Agent, and in the case of the other Collateral described in the Guarantee and Collateral Agreement (other than any Deposit Accounts and future Commercial Tort Claims, each as defined therein), when financing statements in appropriate form are filed in the offices specified on Schedule 4.19 (a) -1 (which financing statements have been duly completed and delivered to the Administrative Agent) and such other filings or agreements as are specified on Schedule 3 to the Guarantee and Collateral Agreement (all documentation in respect of which other filings have been or will have been duly completed and executed and delivered to the Administrative Agent on or prior to the Closing Date), the Guarantee and Collateral Agreement shall constitute a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case prior and superior in right to any other Person ( other than Persons holding Permitted Liens or other encumbrances or rights permitted hereunder ). Schedule 4.19 (a) -2 lists each UCC Financing Statement that (i) names any Loan Party as debtor and (ii) will remain on file after the Closing Date. Schedule 4.19 (a) -3 lists each UCC Financing Statement that (i) names any Loan Party as debtor and (ii) will be terminated on or prior to the Closing Date; and on or prior to the Closing Date, the Borrower will have delivered to the Administrative Agent, or caused to be filed, duly completed UCC termination statements, authorized by the relevant secured party, in respect of each UCC Financing Statement listed in Schedule 4.19 (a) -3.
4.20. Solvency . Parent and its Subsidiaries (taken as a whole) are, and after giving effect to the Transactions and the incurrence of all Indebtedness and Obligations being incurred in connection herewith and therewith will be Solvent.
4.21. Regulation H . Except as set forth on Schedule 4.21, no Mortgage shall encumber improved Real Property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in
which flood insurance has not been made available under the National Flood Insurance Act of 1968.
4.22. Parks . Set forth on Schedule 4.22 is a complete and correct list of all of the amusement and attraction parks owned or leased, and currently operated (the “ Existing Parks ”), by Parent or its Subsidiaries as of the Closing Date.
5.1. Conditions Precedent to Loans . The agreement of each Lender to make the Loans requested to be made by it hereunder is subject to the satisfaction, prior to or concurrently with the making of the Loans on the Closing Date, of the following conditions precedent:
Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.
Parent, Holdings and the Borrower hereby jointly and severally agree that, so long as any Loan or other amount is owing to any Lender or any Agent hereunder, each of Parent, Holdings and the Borrower shall and shall cause each of their respective Subsidiaries to:
6.1. Financial Statements and Other Information . Deliver to the Administrative Agent for prompt distribution to each of the Lenders:
Notwithstanding the foregoing, the obligations in paragraphs (a), (d) and (h) of this Section 6.1 may be satisfied with respect to financial information of Parent and its Subsidiaries by furnishing Parent’s Form 10-K or 10-Q, as applicable, to the extent filed with the SEC.
Documents required to be delivered pursuant to Section 6.1(a), (d), (g), (h) or (i) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Parent posts such documents, or provides a link thereto on Parent’s website on the Internet; or (ii) on which such documents are posted on Parent’s or the Borrower’s behalf on a Platform; provided that (i) upon written request by the Administrative Agent, Parent or the Borrower shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) Parent or the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.1(f) to the Administrative Agent. Each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.
6.2. Notices of Material Events . Furnish the following to the Administrative Agent in writing:
Each notice delivered under this Section 6.2 shall be accompanied by a statement of a Responsible Officer of Parent or the Borrower setting forth in reasonable detail the facts and circumstances of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
6.3. Existence, Etc.
6.4. Insurance . Maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as Holdings and its Subsidiaries) as are customarily carried under similar circumstances by such other Persons.
6.5. Compliance with Contractual Obligations and Requirements of Law . Comply with Contractual Obligations and Requirements of Laws, unless failure to comply with such Contractual Obligations or Requirements of Law could not (either individually or in the aggregate) reasonably be expected to have a Material Adverse Effect.
6.6. Additional Collateral, Etc. (a) With respect to any personal Property acquired after the Closing Date by Parent, Holdings, the Borrower or any of Parent’s Wholly Owned Subsidiaries (other than (w) any personal Property described in paragraph (c) of this Section, (x) any Property subject to a Lien expressly permitted by clauses 7.4(h), (k) and (l), (y) any Property acquired by an Excluded Foreign Subsidiary and (z) any Property acquired after the date hereof to the extent that the creation of a security interest therein would be prohibited by a Contractual Obligation binding on Parent, Holdings, the Borrower or any Subsidiary that is the owner of such Property (including pursuant to the New Time Warner Facility or the Partnership Parks Agreements), provided that such Contractual Obligation existed at the time such Property was acquired and was not entered into in anticipation of such acquisition) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly,
and in any event on or prior to 30 days after such acquisition (or such longer period as the Administrative Agent may agree in its reasonable discretion) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent reasonably deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in such Property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected Lien on such Property that is prior and superior in right to any other Person ( other than Persons holding Permitted Liens or other encumbrances or rights permitted hereunder ), including without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Administrative Agent.
6.7. Further Assurances . From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Administrative Agent may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing the rights of the Administrative Agent and the Lenders with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other Property or assets hereafter acquired by Parent or any Subsidiary which may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, Parent will, or will cause the relevant Subsidiary to, execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or such Lender may be required to obtain from Parent or any of its Subsidiaries for such governmental consent, approval, recording, qualification or authorization.
6.8. Environmental Laws . Except to the extent that, in the aggregate, the failure to do so could not reasonably be expected to have a Material Adverse Effect: (a) comply with, and ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply with and maintain, and ensure that all tenants and subtenants obtain and comply with and maintain, any and all Environmental Permits, and (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws.
6.9. Ratings by S&P and Moody’s . Use commercially reasonable efforts (a) to cause a public corporate credit rating and a facility rating (or the equivalents thereof) in respect of the Facility to be issued by S&P and Moody’s within 90 days of the Closing Date and to be maintained thereafter until the Maturity Date and (b) to assure that each such rating is updated or confirmed at least once per year so long as S&P and Moody’s are providing such yearly updates and confirmations in the ordinary course.
Parent, Holdings and the Borrower hereby jointly and severally agree that, so long as any Loan or other amount is owing to any Lender or any Agent hereunder, Parent, Holdings and the Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:
7.1. Senior Secured Leverage Ratio . Permit the Senior Secured Leverage Ratio as at the last day of any Measurement Period of the Borrower ending on or closest to the applicable date set forth below to exceed the ratio set forth opposite such date:
7.2. Consolidated Interest Coverage Ratio . Permit the Consolidated Interest Coverage Ratio as at the last day of any Measurement Period of the Borrower ending on or closest to the applicable date set forth below to be less than the ratio set forth opposite such date:
provided that for the purpose of determining Consolidated Interest Coverage Ratio for the fiscal quarters ending September 30, 2010, December 31, 2010 and March 31, 2011, Consolidated Interest Expense for the relevant period shall be deemed to equal Consolidated Interest Expense for each such fiscal quarter (and, in the case of September 30, 2010, December 31, 2010 and March 31, 2011, each previous fiscal quarter commencing after the Closing Date) multiplied by 4, 2 and 4/3, respectively.
7.3. Indebtedness . Create, incur or suffer to exist any Indebtedness except:
For purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased.
7.4. Liens . Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except the following (“ Permitted Liens ”):
7.5. Prohibition of Fundamental Changes .
To the extent any Collateral is Disposed of as expressly permitted by this Section 7.5 to any Person other than Parent or any of its Subsidiaries, such Collateral shall be sold free and clear of the Liens created by the Loan Documents, and, if requested by the Administrative Agent, upon the certification by the Borrower that such Disposition is permitted by this Agreement, the Administrative Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing.
(A) the Loan Parties shall be in pro forma compliance with Sections 7.1 and 7.2 after giving effect to such Permitted Acquisition (as if such Permitted Acquisition had been consummated on the first day of such period), with the Senior Secured Leverage Ratio being deemed, for this purpose, to be 0.25 to 1.00 times lower than that required under Section 7.1; provided , however , that (x) any Indebtedness incurred or repaid in connection with such Permitted Acquisition shall be deemed to have be incurred or repaid, as the case may be, on such first day, and (y) Parent shall have delivered to the Administrative Agent, at least five Business Days prior to the date of any such Permitted Acquisition, a certificate of a Responsible Officer of Parent setting forth computations in reasonable detail demonstrating satisfaction of the foregoing conditions as at the date of such certificate reflecting the terms of the transaction as of such date; provided further that if prior to consummation of such Permitted Acquisition changes are made to the terms that would alter the computations previously delivered, Parent shall deliver a revised certificate demonstrating satisfaction of the foregoing conditions on the date of the consummation of such Permitted Acquisition;
(B) such Permitted Acquisition (if by purchase of assets, merger or consolidation) shall be effected in such manner so that the acquired business, and the related assets, are owned either by the Borrower, a Subsidiary Guarantor or a Foreign Subsidiary and, if effected by merger or consolidation involving the Borrower, a Subsidiary Guarantor or a Foreign Subsidiary, then the Borrower, such Subsidiary
Guarantor or such Foreign Subsidiary shall be the continuing or surviving entity and, if effected by merger or consolidation involving a Wholly Owned Subsidiary of the Borrower, a Wholly Owned Subsidiary shall be the continuing or surviving entity; provided , however , that with respect to any Permitted Acquisition effected in such manner so that the acquired business, and the related assets, are owned by a Foreign Subsidiary, such acquired business, and the related assets, shall be located outside of the United States of America;
(C) the Borrower shall deliver to the Administrative Agent (which shall promptly forward copies thereof to each Lender) (i) as soon as possible and in any event no later than five days prior to the consummation of each such Permitted Acquisition (or, if executed, such earlier date as shall be five Business Days after the execution and delivery thereof), the most recent drafts of the respective agreements or instruments pursuant to which such Permitted Acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements or instruments and all other material ancillary documents to be executed or delivered in connection therewith and (ii) promptly following request therefor (but in any event within three Business Days following such request), copies of such other information or documents (including, without limitation, environmental risk assessments) relating to such Permitted Acquisition as the Administrative Agent or the Required Lenders shall have reasonably requested (and which is available, or obtainable within such period by Parent with reasonable efforts);
(D) to the extent applicable, the Borrower shall have complied with the provisions of Section 6.6, including, without limitation, to the extent not theretofore delivered, delivery to (x) the First Lien Administrative Agent or the Administrative Agent of the certificates evidencing 100% (or, in the case of any new Foreign Subsidiary the Capital Stock of which is held by a Domestic Subsidiary, 65%) of the Capital Stock of any new Subsidiary formed or acquired in connection with such Permitted Acquisition, accompanied by undated stock powers executed in blank, and (y) the Administrative Agent of the agreements, instruments, opinions of counsel and other documents required under Section 6.6;
(E) the aggregate Purchase Price for each such Permitted Acquisition shall not exceed $287,500,000 or, at any time the Senior Secured Leverage Ratio is less than 4.75 to 1.00 after giving effect to such Permitted Acquisition and the incurrence of any related Indebtedness, $402,500,000, plus, in each case, the Net Cash Proceeds received from the issuance of Capital Stock of Parent and from the related contribution of cash to Holdings from Parent, in each case as contributed to the Borrower, that are not otherwise expended pursuant to Sections 7.7 or 7.8(i), plus the portion of any consideration paid with Qualified Net Cash Equity Proceeds and/or in Qualified Capital Stock of Parent; and
(F) immediately prior to such Permitted Acquisition and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing.
7.6. Restricted Payments . Declare or make any Restricted Payment, except that:
Nothing herein shall be deemed to prohibit the payment of Restricted Payments by (i) any Subsidiary of Holdings to Holdings or the Borrower or to any other Wholly Owned Subsidiary of Holdings which is a Subsidiary Guarantor, or by an Excluded Foreign Subsidiary to any other Subsidiary of Holdings or (ii) any Subsidiary of Parent (other than Holdings or any of its Subsidiaries) to Parent or to any other Subsidiary of Parent or to prohibit any dividend payments or other distributions payable solely in Capital Stock of such Person.
7.7. Capital Expenditures . Make or commit to make any Capital Expenditure, except Capital Expenditures of Parent and its Subsidiaries not exceeding the Base Capital Expenditure Amount during any fiscal year or period of Parent; provided , that (i) the lesser of (x) any such amount referred to above, if not so expended in the fiscal year or period for which it is permitted and (y) 50% of the amount of the Base Capital Expenditure Amount for such fiscal year may be carried over for expenditure in the next succeeding fiscal year and (ii) Capital Expenditures made during any fiscal year shall be deemed made, first, in respect of amounts carried over from the prior fiscal year pursuant to subclause (i) above and, second, in respect of amounts permitted for such fiscal year as provided above. For purposes of the foregoing, the “ Base Capital Expenditure Amount ” shall be an amount equal to $115,000,000 for the fiscal year
ending December 31, 2010 and an amount equal to $126,500,000 for any subsequent fiscal year plus , in each case, with respect to each fiscal year in which an Acquisition is consummated and the immediately following fiscal year, an amount for each such fiscal year equal to 40% of the EBITDA of the Person so acquired for the four fiscal quarters of such Person immediately preceding the date of such Acquisition (it being understood and agreed that EBITDA shall be calculated as set forth in the definition of “ Parent Consolidated Adjusted EBITDA ”) plus , in each case, the Net Cash Proceeds received from the issuance of Capital Stock of Parent and from the related contribution of cash to Holdings from Parent, in each case as contributed to the Borrower, that are not otherwise expended pursuant to Section 7 .5(e) or 7.8(i).
7.8. Investments . Make or permit to remain outstanding any Investments except:
provided , that neither Parent nor any of its Subsidiaries (other than a Partnership Park Entity) shall make any Investment in any Partnership Park Entity, Holdings, Borrower or any Subsidiary of Parent that is not a Subsidiary Guarantor other than pursuant to Section 7.8(g) and 7.8(e).
7.9. Prepayment of Certain Indebtedness . Purchase, redeem, retire or otherwise acquire for value, or set apart any money for a sinking, defeasance or other analogous fund for the purchase, redemption, retirement or other acquisition of, or make any voluntary payment or prepayment of the principal of or interest on, or any other amount owing in respect of, or enter into any derivative transaction or similar transaction obligating Holdings or any of its
Subsidiaries to make payments to any other Person as a result of a change in market value of, Indebtedness (other than Indebtedness under the First Lien Credit Documents or Permitted First Lien Refinancing Indebtedness) outstanding under any Indenture of Parent or Holdings (it being understood that the following shall be permitted: (a) payments of regularly scheduled principal and interest and mandatory prepayments of Indebtedness of Parent and its Subsidiaries (including, without limitation, any Permitted First Lien Refinancing Indebtedness and the New Time Warner Facility) shall be permitted, (b) payments of the principal amount of Indebtedness (or accreted value, if applicable) of Parent or Holdings shall be permitted, with the Net Cash Proceeds of Indebtedness of Parent or Holdings, as the case may be (to the extent such Indebtedness constitutes a refinancing, refunding, replacement or renewal thereof plus all interest capitalized in connection therewith, any Refinancing Expenses and any costs and premiums associated with such refinancing, refunding, replacement or renewal) and is permitted pursuant to Section 7.3, to the extent not required to prepay any Loans pursuant to Section 3.4, (c) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to a Loan Party, (d) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to Parent so long as immediately prior to and after giving effect thereto no Default or Event of Default shall have occurred and be continuing (it being agreed that in determining compliance with Section 7.6, any such payments shall be deemed to constitute Restricted Payments), (e) payments with respect to intercompany Indebtedness permitted under this Agreement and owed to any Non-Guarantor Subsidiary so long as immediately prior to and after giving effect thereto no Default or Event of Default shall have occurred and be continuing, (f) payments of the principal amount of Indebtedness (or accreted value, if applicable) of Parent or Holdings shall be permitted with Qualified Capital Stock of Parent so long as such Qualified Capital Stock is issued in contemplation of such repayment, and (g) payments of regularly scheduled principal and interest of Indebtedness (or accreted value, if applicable) incurred pursuant to Sections 7.3(g), (h) and (k) to the extent that the assets securing such Indebtedness are Disposed of in compliance with Section 7.5(c)).
7.10. Transactions with Affiliates . Enter into any transaction with any Affiliate unless such transaction is upon fair and reasonable terms no less favorable to Parent, Holdings, the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, (i) any Affiliate who is an individual may serve as a director, officer or employee of Parent or any of its Subsidiaries and such Person may receive, and Parent and its Subsidiaries may engage in any transaction or series of transactions related to, reasonable compensation, severance, indemnities and reimbursement of reasonable expenses, including stock incentive and option plans and agreements relating thereto, (ii) Parent and its Subsidiaries may enter into transactions (other than extensions of credit by Parent or any of its Subsidiaries to an Affiliate) providing for the leasing of Property, the rendering or receipt of services or the purchase or sale of inventory and other Property in the ordinary course of business if the monetary or business consideration arising therefrom would be substantially as advantageous to Parent and its Subsidiaries as the monetary or business consideration that would obtain in a comparable transaction with a Person not an Affiliate, (iii) the Borrower or any of its Subsidiaries may make an Acquisition of assets of any Person which is an Affiliate solely by reason of such Person being controlled by Parent or any of its Subsidiaries and may make Investments in such Person, provided that such Acquisitions and Investments are (A) permitted under Section 7.5(e)(i) or 7.8 and (B) made upon fair and reasonable terms no less favorable to Parent or such Subsidiary, as the case may be, than
it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate, (iv) Parent or any of its Subsidiaries may enter into any transaction required of it pursuant to (A) Section 7 .8, (B) its agreement with Dick Clark, or (C) the Great Escape Agreements, (v) Parent and its Subsidiaries may be parties to and may perform their respective obligations under the Shared Services Agreement and the Tax Sharing Agreement, (vi) Parent or any of its Subsidiaries may perform their duties and obligations under the Partnership Parks Agreements and (vii) Parent or any of its Subsidiaries may enter into or consummate any transaction permitted for it by Sections 7.3(b), 7.3(c), 7.3(d), 7.3(e), 7.3(f), 7.3(i), 7.3(j), 7.3(k), 7.3(n), 7.3(o), 7.3(r), 7.3(s), 7.4(j), 7.4(k), 7.4(l), 7.4(v), 7.5(a), 7.5(c)(iii), 7.5(c)(iv), 7.5(c)(v), 7.5(c)(ix), 7.5(c)(xi), 7.5(c)(xiv), 7.5(e)(ii), 7.6, 7.8(a), 7.8(e), 7.8(f), 7.8(g), 7.8(h), 7.8(i), 7.8(j), 7.8(k), 7.8(l), 7.8(m), 7.8(n), 7.8(o), 7.8(p), 7.8(q), 7.8(s), 7.8(t), 7.8(u), 7.8(v) or 7.8(w).
7.11. Changes in Fiscal Periods . Permit the fiscal year of Parent, Holdings or the Borrower to end on a day other than December 31 or change Parent’s, Holdings’ or the Borrower’s method of determining fiscal quarters.
7.12. Certain Restrictions . Enter into, after the date hereof, any indenture, agreement, instrument or other arrangement that, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the granting of Liens, the declaration or payment of dividends, the making of loans, advances or Investments or the sale, assignment, transfer or other disposition of Property, other than any such prohibition or restraint (a) set forth in any agreement providing for the disposition of Property (so long as such prohibition or restraint relates only to the Property to be disposed of), (b) set forth in any of the Loan Documents, the First Lien Credit Documents, any Indenture (so long as such prohibition or restraint is not, in the good faith judgment of Parent, more restrictive than those required for comparable Indebtedness incurred by comparable entities), or any other document relating to any existing Indebtedness or any Indebtedness referred to in Section 7.3(b), 7.3(c), 7.3(g), 7.3(h), 7.3(i), 7.3(n), 7.3(o) and 7.3(s) (and any comparable prohibitions or restraints in any document governing any Indebtedness incurred to refinance any of the foregoing, so long as such prohibitions or restraints are, in the good faith judgment of Parent, no more restrictive than those applicable to the Indebtedness being refinanced), (c) set forth in any Real Property lease agreement, licenses, joint venture agreements, contracts entered into in the ordinary course of business to the extent that such prohibition or restraint relates only to the Property which is the subject of such instrument and could not reasonably be expected to result in a Material Adverse Effect, (d) set forth in any instrument relating to a Permitted Lien, so long as such prohibitions or restraints relate only to the Property encumbered by such Permitted Lien and (e) set forth in any Contractual Obligation with respect to (i) negative pledges and restrictions on Liens in favor of any holder of Indebtedness permitted under Section 7.3(g), 7.3(h) and 7.3(s) but solely to the extent any negative pledge relates to the property financed by or the subject of such Indebtedness, (ii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest, and (iii) customary provisions restricting assignment or transfer of any agreement entered into in the ordinary course of business.
7.13. Lines of Business . Engage to any substantial extent in any line or lines of business activity other than the business of owning and operating amusement and attraction
parks, and businesses related, ancillary or complementary thereto and the businesses and activities related thereto more fully described on Schedule 7.13 attached hereto.
7.14. Modifications of Certain Documents . Consent to any modification, supplement or waiver of:
7.15. Limitation on Activities of Parent and Holdings . (a) In the case of Holdings, conduct, transact or otherwise engage in any business or operations other than those incidental to (i) its ownership of the Capital Stock of the Borrower and PP Data Services Inc., (ii) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance), (iii) the performance of its obligations in the Loan Documents, the First Lien Credit Documents, the Partnership Parks Agreements and the New Time Warner Facility, or (iv) not otherwise prohibited by the Loan Documents; provided that, notwithstanding anything herein to the contrary, Holdings may not (1) make any Acquisitions (except as expressly contemplated in Section 7 .5(b)(ii) in connection with Investments permitted by clause (2) below only), (2) make any Investments except as expressly contemplated by Sections 7.8(a), (b), (c), (e)(i), (g), (h), (k), (m), (n), (o), (p), (r) (in connection with Indebtedness permitted under Section 7 .3(n)(iii) only), (s), (t) (with respect to Section 7 .5(b)(ii) in connection with Investments permitted by this clause (2) only), (u) and (w), (3) create any Subsidiaries that are not Subsidiaries of Borrower or any of its Subsidiaries or (4) own any operating entity other than Borrower or act as an operating entity.
(b) In the case of Parent, conduct, transact or otherwise engage in any business other than those incidental to (i) its ownership of the Capital Stock of its Subsidiaries and the parks subject to the Partnership Parks Agreements, (ii) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance), (iii) its status as a publicly traded company or public filer or as a member of the consolidated group of Parent and its Subsidiaries (including the ability to participate in tax, accounting and other
administrative matters or comply with laws relating thereto), (iv) the performance of its obligations in the Loan Documents, the First Lien Loan Documents, the Partnership Parks Agreements and the New Time Warner Facility, (v) any public offering or other issuance of its Capital Stock or (vi) not otherwise prohibited by the Loan Documents; provided that, notwithstanding anything herein to the contrary, Parent may not (1) make any Acquisitions (except as expressly contemplated by Sections 7.5(b)(ii) in connection with Investments permitted by clause (2) below only, 7.5(b)(iii) in connection with the Partnership Park Entities only and 7.5(b)(iv)), (2) make any Investments except as expressly contemplated by Sections 7.8(a), (b), (c), (d), (e)(i), (f)(i), (g), (h), (i), (k), (l)(ii), (m), (n), (p), (r) (in connection with Indebtedness permitted under Section 7.3(n)(iii) only), (s), (t) (with respect to Sections 7.5(b)(ii) in connection with Investments permitted by this clause (2) only, 7.5(b)(iii) in connection with the Partnership Park Entities only and 7.5(b)(iv) only) and (w), (3) create any Subsidiaries that are not either Subsidiaries of the Borrower or the Partnership Parks Entities or (4) own any operating entity other than the Borrower and its Subsidiaries and the Partnership Parks Entities or act as an operating entity (provided that nothing in this Section 7.15(b) shall limit the ability of Parent to enter into sponsorship agreements, licensing agreements, management agreements, supply agreements or other similar agreements in the ordinary course of business).
7.16. Limitation on Hedging Agreements . Enter into any Hedging Agreement other than Hedging Agreements entered into for the purpose of mitigating risks to which Parent and its Subsidiaries have actual exposure and not for speculative purposes, in respect of interest rates or foreign exchange rates; provided , that Parent and its Subsidiaries will not enter into any Hedging Agreement providing for payment by Parent or any Subsidiary of amounts based upon a floating interest rate in exchange for receipt by Parent or any Subsidiary of amounts based upon a fixed interest rate (each, a “ Fixed-to-Floating Swap ”) if, on the date of such Hedging Agreement and after giving effect thereto, the sum of (i) the aggregate notional principal amount covered by all such Fixed-to-Floating Swaps plus (ii) the aggregate principal amount of all then outstanding consolidated Indebtedness of Parent and its Subsidiaries (determined without duplication in accordance with GAAP) that as of such date bears interest at a floating rate (and is not effectively bearing interest at a fixed rate through a Hedging Agreement) would exceed 50% of then outstanding consolidated Indebtedness of Parent and its Subsidiaries (determined in accordance with GAAP).
If any of the following events shall occur and be continuing:
then, and in any such event, (A) upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the United States Bankruptcy Code, automatically the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents shall immediately become due and payable, and (B) if such event is any other Event of Default, then, any or all of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, exercise any remedy with respect to the Collateral provided for in any Security Document and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable.
9.1. Appointment . Each Lender hereby irrevocably designates and appoints the Agents as the agents of such Lender under this Agreement and the other Loan Documents, and each Lender irrevocably authorizes each Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Agent.
9.2. Delegation of Duties . Each Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
9.3. Exculpatory Provisions . Neither any Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or
received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.
9.4. Reliance by Agents . Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex, electronic mail or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Loan Parties), independent accountants and other experts selected by such Agent. The Agents may deem and treat the payee of any Note as the owner thereof for all purposes unless such Note shall have been transferred in accordance with Section 10.6 and all actions required by such Section in connection with such transfer shall have been taken. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.
9.5. Notice of Default . No Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent shall have received notice from a Lender, Parent, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent shall receive such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
9.6. Non-Reliance on Agents and Other Lenders . Each Lender expressly acknowledges that neither any of the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, Property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, Property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the Business, Property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the possession of such Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.
9.7. Indemnification . The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by Parent, Holdings or the Borrower and without limiting the obligation of Parent, Holdings or the Borrower to do so), ratably according to the respective amounts of outstanding Loans held by Lenders in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with the respective amounts of outstanding Loans held by Lenders immediately prior to such date), for, and to save each Agent harmless from and against, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct. The Administrative Agent shall have the right to deduct any amount owed to it by any Lender under this Section from any payment made by it to such Lender hereunder. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.
9.8. Agent in Its Individual Capacity . Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it, each Agent shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.
9.9. Successor Agents . The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 8(g), (h) or (i) with respect to Parent, Holdings or the Borrower shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. The Syndication Agent may, at any time, by notice to the Lenders and the Administrative Agent, resign as Syndication Agent hereunder, whereupon the duties, rights, obligations and responsibilities of such Syndication Agent hereunder shall automatically be assumed by, and inure to the benefit of, the Administrative Agent, without any further act by such Syndication Agent, the Administrative Agent or any Lender. After any retiring Agent’s resignation as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents.
9.10. Authorization to Release Liens and Guarantees . The Administrative Agent is hereby irrevocably authorized by each of the Lenders to effect any release of Liens or guarantee obligations contemplated by Section 10 .16.
9.11. Authorization to Enter into Intercreditor Agreement . The Lenders hereby authorize the Administrative Agent to enter into the Intercreditor Agreement and acknowledge that they will be bound thereby.
9.12. The Arranger, Syndication Agent and Documentation Agent . Neither the Arranger nor the Syndication Agent, nor the Documentation Agent, in its capacity as such, shall have any duties or responsibilities, and none of them shall incur any liability, under this Agreement and the other Loan Documents.
9.13. Withholding Taxes . To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender or Transferee because the appropriate form was
not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding tax ineffective or for any other reason, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.
10.1. Amendments and Waivers . Neither this Agreement or any other Loan Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, or (with the written consent of the Required Lenders) the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents (including amendments and restatements hereof or thereof) for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (ii) waive, on such terms and conditions as may be specified in the instrument of waiver, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided , however , that no such waiver and no such amendment, supplement or modification shall:
(A) forgive the principal amount or extend the final scheduled date of maturity of any Loan, reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof, or increase the amount or extend the expiration date of any Commitment of any Lender, in each case without the consent of each Lender directly affected thereby (it being understood that a waiver of any condition precedent set forth in Section 5.1(v) and (w) or the waiver of any Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender and it being further understood that the waiver of (or amendment to the terms of) any mandatory prepayment of the Loans shall not constitute a postponement of any date scheduled for the payment of principal or interest); provided that only the consent of the Required Lenders shall be necessary to amend the default rate of interest set forth in Section 3.7(c) or to waive any obligation of the Borrower to pay interest at such default rate;
(B) amend, modify or waive any provision of this Section or reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement, release all or substantially all of the Collateral, release Parent as a Guarantor or release all or substantially all of the aggregate value of the Guarantees of the Obligations, in each case without the consent of all Lenders (in each case, except as permitted by any Loan Document);
(C) change the percentage specified in the definition of the Required Lenders without the written consent of all Lenders;
(D) amend, modify or waive any provision of Section 9, or any other provision affecting any Agent or Arranger without the consent of such Agent or Arranger directly affected thereby; and
(E) amend, modify or waive any provision of Section 3.10 without the consent of each Lender directly affected thereby.
Any such waiver and any such amendment, supplement or modification effected pursuant to the foregoing shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, Parent, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Any such waiver, amendment, supplement or modification shall be effected by a written instrument signed by the parties required to sign pursuant to the foregoing provisions of this Section; provided , that delivery of an executed signature page of any such instrument by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.
Notwithstanding anything to the contrary contained in this Section 10.1, (a) this Agreement and the other Loan Documents may be amended with the consent of the Administrative Agent at the request of the Borrower without the need to obtain the consent of any other Lender if such amendment is delivered in order to cure any ambiguity or defect and such amendment is requested within 30 days of the Closing Date, (b) in the event that the Borrower requests that this Agreement be modified or amended in a manner that would require the unanimous consent of all of the Lenders and such modification or amendment is agreed to by the Required Lenders, then with the consent of the Borrower and the Required Lenders, the Borrower and the Required Lenders shall be permitted to amend the Agreement without the consent of the Non-Consenting Lenders to provide for (i) the termination of the Commitment of each Non-Consenting Lender, (ii) (A) the addition to this Agreement of one or more other financial institutions (each of which shall be a Lender, an affiliate of a Lender or an Approved Fund), and the making of additional Loans by such new financial institutions or (B) the making of additional Loans by one or more of the Required Lenders (with the written consent thereof), as the case may be, in each case, as may be necessary to repay in full, at par, the outstanding Loans of the Non-Consenting Lenders immediately before giving effect to such amendment and (iii) such other modifications to this Agreement as may be appropriate to effect the foregoing clauses (i), (ii) and (iii).
For the avoidance of doubt, subject to the terms of the First Lien Credit Documents and the Intercreditor Agreement, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and each Loan Party to each relevant Loan Document (x) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder
and the accrued interest, fees and other amounts in respect thereof (collectively, the “ Additional Extensions of Credit ”) to share ratably in the benefits of this Agreement and the other Loan Documents with the Loans and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders; provided , however , that no such amendment shall permit the Additional Extensions of Credit to share ratably with or with preference to the Loans in the application of prepayments without the consent of the Required Lenders, and no such amendment shall, without the consent of all Lenders, subordinate any of the Loans, or any of the rights in the Collateral of any Lenders, to any such Additional Extension of Credit.
10.2. Notices . Unless otherwise expressly provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy or electronic mail pursuant to procedures approved by the Administrative Agent), and shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy or electronic mail notice, when received, addressed (i) in the case of Parent, Holdings, the Borrower and the Agents as set forth below, (ii) in the case of the Lenders, as set forth in an administrative questionnaire delivered to the Administrative Agent or on Schedule I to the Lender Addendum to which such Lender is a party or, in the case of a Lender which becomes a party to this Agreement pursuant to an Assignment and Acceptance, in such Assignment and Acceptance or (iii) in the case of any party, to such other address as such party may hereafter notify to the other parties hereto:
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Parent or Holdings: |
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c/o
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with a copy to: |
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Six
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The Borrower: |
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with a copy to, with respect to Sections 3.12(e), 10.6(b)(ii) and 10.6(c)(ii): |
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Andrews
Kurth LLP
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The Administrative Agent or the Syndication Agent: |
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Goldman
Sachs Lending Partners LLC
Attention:
Andrew Caditz
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with a copy to: |
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Goldman
Sachs Lending Partners LLC
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provided that any notice, request or demand to or upon the any Agent or any Lender shall not be effective until received. The attorneys for any party may, but shall not be required to, give any notice on behalf of their respective client.
10.3. No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
10.4. Survival of Representations and Warranties . All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.
10.5. Payment of Expenses . The Borrower agrees (a) to pay or reimburse the Administrative Agent and the Arranger for all their reasonable and documented out-of-pocket
costs and expenses incurred in connection with the syndication of the Facility (including the charges of Intralinks but excluding fees payable to syndicate members) and the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements and other charges of one primary counsel to the Administrative Agent (and, if necessary, one local counsel in each relevant jurisdiction (which, for the avoidance of doubt, may include each jurisdiction where a Mortgaged Property is located and, without duplication, each other jurisdiction where a Guarantor is organized)), (b) to pay or reimburse each Lender and the Agents for all their costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents (including in connection with any workout, restructuring or negotiations in respect thereof), including, without limitation, the fees and disbursements of counsel to the Lenders and the Agents, (c) to pay, indemnify, or reimburse each Lender and the Agents for, and hold each Lender and the Agents harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify or reimburse each Lender, each Agent, their respective affiliates, and their respective officers, directors, trustees, employees, advisors, agents and controlling persons (each, an “ Indemnitee ”) for, and hold each Indemnitee harmless from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including, without limitation, any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of Parent or any of its Subsidiaries or any of the Properties and the fees and disbursements and other charges of legal counsel in connection with claims, actions or proceedings by any Indemnitee against any Loan Party hereunder (all the foregoing in this clause (d), collectively, the “ Indemnified Liabilities ”), provided , that the Borrower shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee or of any director, officer, or employee of such Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, Parent agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries so to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee. All amounts due under this Section shall be payable not later than 30 days after written demand therefor. Statements for amounts payable by the Borrower pursuant to this Section shall be submitted to the attention of the Chief Financial Officer (Telephone No. 212-652-9384) (Fax No. 212-354-3089), at the address of the Borrower set forth in Section 10.2, or to
such other Person or address as may be hereafter designated by the Borrower in a written notice to the Administrative Agent. The agreements in this Section shall survive repayment of the Loans and all other amounts payable hereunder.
10.6. Successors and Assigns; Participations and Assignments
(A) the Borrower, provided that no consent of the Borrower shall be required for an assignment to (x) a Lender, an affiliate of a Lender, an Approved Fund (as defined below) or (y) if an Event of Default has occurred and is continuing or if the principal amount of Loans being assigned to an Assignee is in an aggregate amount of less than $10,000,000, any other Person (other than a natural person); and
(B) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Loan to a Lender, an affiliate of a Lender or an Approved Fund.
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Loans, the amount of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;
(B) (1) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (payable among the Lenders party to the Assignment and Acceptance), which shall be paid once in connection with simultaneous assignments for a Lender and its affiliates and Approved Funds ( provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment) and (2) the assigning Lender shall have paid in full any amounts owing by it to the Administrative Agent;
(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws; and
(D) the Assignee shall not be a Loan Party; provided that the Borrower may be an Assignee in connection with an Auction.
For the purposes of this Section 10.6, “ Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.
10.7. Adjustments; Set-off . (a) Except to the extent that this Agreement provides for payments to be allocated to a particular Lender, if any Lender shall at any time receive any payment of all or part of the Obligations owing to it, or receive any Collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(g), (h) or (i), or otherwise), in a greater proportion than any such payment to or Collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender (each benefited Lender referred to above, a “ Benefited Lender ”) shall purchase for cash from the other Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such Collateral, or the proceeds thereof, ratably with each of the Lenders; provided , however , that if all or any portion of such excess payment, benefits or proceeds is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.
10.8. U.S.A. Patriot Act . Each Lender hereby notifies the Borrower that pursuant to the requirements of the U.S.A. Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lenders to identify the Borrower in accordance with the U.S.A. Patriot Act.
10.9. Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement or of a Lender Addendum by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with Holdings and the Administrative Agent.
10.10. Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
10.11. Integration . This Agreement and the other Loan Documents represent the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Arranger, any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.
10.12. GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.13. Submission To Jurisdiction; Waivers . Each of the Agents, the Lenders, Parent, Holdings and the Borrower hereby irrevocably and unconditionally:
10.14. Acknowledgments . Each of Parent, Holdings and the Borrower hereby acknowledges that:
10.15. Confidentiality . Each of the Agents and the Lenders agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent any Agent or any Lender from disclosing any such information (a) to the Arranger, any Agent, any other Lender or any affiliate of any thereof, (b) to any Participant or Assignee (each, a “ Transferee ”) or prospective Transferee that agrees to comply with the provisions of this Section, (c) to any of its employees, directors, agents, attorneys, accountants and other professional advisors, (d) to any financial institution that is a direct or indirect contractual counterparty in swap agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section), (e) upon the request or demand of any Governmental Authority having jurisdiction over it, (f) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (g) in connection with any litigation or similar proceeding, (h) that has been publicly disclosed other than in breach of this Section, (i) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that
requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender or (j) in connection with the exercise of any remedy hereunder or under any other Loan Document.
EACH LENDER ACKNOWLEDGES THAT INFORMATION FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
10.16. Release of Collateral and Guarantee Obligations .
10.17. Accounting Changes . In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then Parent, the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the financial condition of Parent and the Borrower shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by Parent, Holdings, the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “ Accounting Changes ” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants or, if applicable, the SEC.
10.18. Delivery of Lender Addenda . Each initial Lender shall become a party to this Agreement by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender, the Borrower and the Administrative Agent.
10.19. WAIVERS OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.20. Intercreditor Agreement . In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control.
[Remainder of the page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
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SIX
FLAGS ENTERTAINMENT
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By: |
/s/ James M. Coughlin |
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Name: James M. Coughlin |
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Title: General Counsel |
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SIX FLAGS OPERATIONS INC. |
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Name: James M. Coughlin |
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Title: General Counsel |
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SIX FLAGS THEME PARKS INC., |
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as Borrower |
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Name: James M. Coughlin |
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Title: General Counsel |
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GOLDMAN
SACHS LENDING PARTNERS
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Authorized Signatory |
Exhibit 10.4
Execution Version
SECOND LIEN GUARANTEE AND COLLATERAL AGREEMENT, dated as of April 30, 2010 made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “ Grantors ”), in favor of GOLDMAN SACHS LENDING PARTNERS LLC, as Administrative Agent (in such capacity, the “ Administrative Agent ”) for the banks and other financial institutions or entities (the “ Lenders ”) from time to time parties to the Second Lien Credit Agreement, dated as of April 30, 2010 (as amended, supplemented, restated or otherwise modified from time to time, the “ Credit Agreement ”), among SIX FLAGS ENTERTAINMENT CORPORATION (formerly known as SIX FLAGS, INC.), a Delaware corporation (“ Parent ”), SIX FLAGS OPERATIONS INC., a Delaware corporation (“ Holdings ”), SIX FLAGS THEME PARKS INC., a Delaware corporation (the “ Borrower ”), the Administrative Agent and the other agents named therein.
W I T N E S S E T H :
WHEREAS, in connection with the confirmation and implementation of the Plan of Reorganization, the Borrower has requested that the Lenders make a loan of $250,000,000 to the Borrower under the Credit Agreement in order to enable the reorganized Debtors to consummate the transactions contemplated by the Plan of Reorganization, pay related fees and expenses and finance the working capital needs and general corporate purposes of the Borrower;
WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Secured Parties;
NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions . (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms are used herein as defined in the New York UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Documents, Equipment, General Intangibles, Instruments, Inventory, Letter-of-Credit Rights and Supporting Obligations; provided that none of the foregoing UCC terms shall be deemed to include Excluded Assets.
(b) The following terms shall have the following meanings:
“ Agreement ”: this Second Lien Guarantee and Collateral Agreement, as the same may be amended, supplemented, restated or otherwise modified from time to time.
“ Borrower Obligations ”: the collective unpaid principal of and interest on (including, without limitation, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Secured Party, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document or any other document made, delivered or given by any Loan Party in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or to any Secured Party that are required to be paid by the Borrower pursuant hereto) or otherwise.
“ Collateral ”: as defined in Section 3(a).
“ Copyrights ”: (i) all works of authorship and copyrights arising under the laws of the United States, any group of countries, other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations thereof, and all applications in connection therewith, including, without limitation, all registrations and applications in the United States Copyright Office, including, without limitation, any of the foregoing listed in Schedule 5, and (ii) the right to obtain all renewals thereof.
“ Copyright Licenses ”: any written or oral agreement naming any Grantor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright, including, without limitation, any of the foregoing listed in Schedule 5.
“ Deposit Account ”: as defined in the Uniform Commercial Code of any applicable jurisdiction and, in any event, including, without limitation, any demand, time, savings, passbook or like account maintained with a depositary institution.
“ Excluded Assets ”: the collective reference to (i) all Capital Stock owned by any Grantor in (A) Flags Beverages, Inc., Fiesta Texas Hospitality LLC, Spring Beverage Holding Corp. and other Subsidiaries, if any, which have no material assets other than a liquor license and (B) HWP Development Holdings, LLC, HWP Development LLC and any other entity formed pursuant to the Great Escape Agreements and (C) Servicios de Restaurantes Especializados, S.A. De C.V., (ii) any Trademark License with Warner Bros. or its affiliates that expressly prohibits the granting of a security interest therein (including but not limited to (A) those licenses contemplated by the German WB Acquisition, and (B) the Amended and Restated License Agreement #5854-WB/DC dated as of April 1, 1998 with the Borrower and the License
Agreement #8898-TOON dated January 1, 1998 between the Borrower and Warner Bros. Consumer Products Division (Cartoon Network), as any of the foregoing may be amended from time to time), except, in each case, to the extent that such term in such license providing for such prohibition is ineffective under applicable law, (iii) any other Trademark License that expressly prohibits the granting of a security interest therein, except, in each case, to the extent that such term in such license providing for such prohibition is ineffective under applicable law, (iv) that portion of the Capital Stock of any Excluded Foreign Subsidiary that is in excess of 65% of the total outstanding Capital Stock of such Excluded Foreign Subsidiary, (v) the Capital Stock of a Subsidiary acquired after the date hereof to the extent that Section 6.6(f) of the Credit Agreement does not require the granting of a security interest therein, (vi) any Property of any Grantor covered by a pledge or security interest under the New Time Warner Facility or subject to a negative pledge thereunder, (vii) any Property owned by any Grantor to the extent that creation of a security interest therein would be prohibited by a Contractual Obligation binding on any Grantor that is the owner of such Property, including pursuant to the New Time Warner Facility or the Partnership Parks Agreements (provided that, with respect to Property acquired after the date hereof, such Contractual Obligation existed at the time such property was acquired and was not entered into in anticipation of such acquisition); provided , however , that such Property shall no longer constitute “Excluded Assets” immediately at such time as such security interest ceases to be prohibited by a binding Contractual Obligation, (viii) any Property of any Grantor to the extent that the Administrative Agent shall determine in its sole discretion that the costs of obtaining a security interest in such Property is excessive in relation to the value of the security to be afforded thereby and (ix) United States intent-to-use Trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law .
“ First Lien Guarantee and Collateral Agreement ”: the First Lien Guarantee and Collateral Agreement, dated as of the date hereof, made by Parent, Holdings, the Borrower and each Subsidiary Guarantor, in favor of the First Lien Administrative Agent for the benefit of the secured parties thereunder.
“ Foreign Subsidiary ”: any Subsidiary organized under the laws of any jurisdiction outside the United States of America.
“ Foreign Subsidiary Voting Stock ”: the voting Capital Stock of any Foreign Subsidiary.
“ Guarantor Obligations ”: with respect to any Guarantor, all obligations and liabilities of such Guarantor which may arise under or in connection with this Agreement (including, without limitation, Section 2) or any other Loan Document to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Secured Parties that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Loan Document to which such Guarantor is a party).
“ Guarantors ”: the collective reference to each Grantor other than the Borrower.
“ Infringement ”: infringement, misappropriation, dilution or other impairment or violation.
“ Intellectual Property ”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, and the Trademark Licenses, and all rights to sue at law or in equity for any Infringement thereof, including the right to receive all proceeds and damages therefrom; provided that Intellectual Property excludes any Excluded Assets.
“ Intercompany Note ”: any promissory note evidencing loans made by any Grantor to Parent or any of its Subsidiaries.
“ Investment Property ”: the collective reference to (i) all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Foreign Subsidiary Voting Stock excluded from the definition of “Pledged Stock”) and (ii) whether or not constituting “investment property” as so defined, all Pledged Notes and all Pledged Stock; provided that Investment Property excludes any Excluded Assets.
“ Issuers ”: the collective reference to each issuer of any Investment Property.
“ Material Trademarks ”: all Trademarks included in the Collateral that are material to the business of the applicable Grantor.
“ New York UCC ”: the Uniform Commercial Code as from time to time in effect in the State of New York.
“ Obligations ”: (i) in the case of the Borrower, the Borrower Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
“ Patents ”: (i) all letters patent of the United States, any group of countries, other country or any political subdivision thereof, all reissues and extensions thereof, and (ii) all applications for letters patent of the United States or any group of countries, other country or any political subdivision thereof, and all reissues, divisions, extensions, continuations and continuations-in-part thereof, similar legal protections related thereto, or rights to obtain the foregoing, including, without limitation, any of the foregoing listed in Schedule 5.
“ Patent License ”: any written or oral agreement providing for the grant by or to any Grantor of any right to make, have made, manufacture, use or sell (directly or indirectly), offer to sell, import or dispose of any invention or practice any method covered in whole or in part by a Patent, including, without limitation, any of the foregoing listed in Schedule 5.
“ Pledged Notes ”: all promissory notes listed on Schedule 2, all Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held by any Grantor (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business), excluding any Excluded Assets.
“ Pledged Securities ”: means any Instruments, Certificated Securities, Chattel Paper and Investment Property.
“ Pledged Stock ”: the shares of Capital Stock listed on Schedule 2, together with any other shares, stock certificates, options, interests or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect, excluding any Excluded Assets; provided that in no event shall more than 65% of the total outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be required to be pledged hereunder.
“ Proceeds ”: all “proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.
“ Receivable ”: any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account).
“ Registered Intellectual Property ”: all registrations and applications for registration of Trademarks, Patents and Copyrights.
“ Secured Parties ”: the collective reference to the Lenders and the Agents.
“ Securities Act ”: the Securities Act of 1933, as amended.
“ Subsidiary Guarantor ”: each Grantor other than Parent, Holdings and the Borrower.
“ Trademarks ”: (i) all trademarks, trade names, brand names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, domain names, service marks, logos and other source or business identifiers, and all goodwill associated therewith or symbolized thereby, now existing or hereafter adopted or acquired, all registrations thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any group of countries, other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing listed in Schedule 5, and (ii) the right to obtain all renewals thereof.
“ Trademark License ”: any written or oral agreement providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing listed in Schedule 5, but excluding the Excluded Assets.
“ Vehicles ”: all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title law of any state and all tires and other appurtenances to any of the foregoing.
1.2 Other Definitional Provisions . (a) The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole as amended from time to time and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee . (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Secured Parties, and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Security Documents and the maximum amount which may be secured by the Liens granted with respect to the Collateral hereunder and the Collateral under the other Security Documents, in each case, shall in no event exceed the amount which can be guaranteed by such Guarantor, or secured by assets of such Guarantor, under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent or any Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full force and effect until all of the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full and the Commitments shall be terminated.
(e) No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any Secured Party from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Borrower Obligations or any payment received or collected from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations are paid in full and the Commitments are terminated.
2.2 Right of Contribution . Each Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against any other Subsidiary Guarantor hereunder which has not paid its proportionate share of such payment. Each Subsidiary Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Subsidiary Guarantor to the Administrative Agent and the Secured Parties, and each Subsidiary Guarantor shall remain liable to the Administrative Agent and the Secured Parties for the full amount guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation . Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Administrative Agent or any Secured Party, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or any Secured Party against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any Secured Party for the payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent and the Secured Parties by the Borrower on account of the Borrower Obligations are paid in full and the Commitments are terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent and the Secured Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations . Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made by the Administrative Agent or any Secured Party may be rescinded by the Administrative Agent or such Secured Party and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any Secured Party, and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Secured Party for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional . Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent or any Secured Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the Guarantors with respect to the Borrower Obligations to the extent permitted by law. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Secured Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower or any other Person against the Administrative Agent or any Secured Party, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent or any Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any Guarantor or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any Secured Party against any Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.
2.6 Reinstatement . The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.
2.7 Payments . Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim, in immediately
available funds in the currency in which the relevant Obligation is denominated, at the applicable Payment Office.
SECTION 3. GRANT OF SECURITY INTEREST
(a) Each Grantor hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest (the priority of which shall be as set forth in the Intercreditor Agreement) in all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “ Collateral ”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Obligations:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all Fixtures;
(vii) all General Intangibles;
(viii) all Instruments;
(ix) all Intellectual Property;
(x) all Inventory;
(xi) all Investment Property;
(xii) all other personal property not otherwise described above;
(xiii) all books and records pertaining to the Collateral; and
(xiv) to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing.
Notwithstanding the foregoing, (i) the Collateral shall not include the Excluded Assets and (ii) the Partnership Parks Entities and their Property and any other Property of Parent and its Subsidiaries subject to the Partnership Parks Agreements shall be expressly excluded from, and shall not be subject to, any provisions of this Agreement so long as the creation of a security interest under, or the execution of, this Agreement is prohibited by a Contractual Obligation binding on the Partnership Park Entities or, with respect to any other Property of Parent and its Subsidiaries, is prohibited by the Partnership Parks Agreements.
(b) Notwithstanding anything herein to the contrary, it is the understanding of the parties hereto that the Liens granted pursuant to Section 3(a) herein shall, prior to the First Priority Obligations Payment Date (under and as defined in the Intercreditor Agreement), be subject and subordinate to the Liens granted to the First Lien Administrative Agent, for the ratable benefit of the Secured Parties (under and as defined in the First Lien Credit Documents), to secure the First Priority Obligations (under and as defined in the Intercreditor Agreement). All other rights and remedies of the Administrative Agent and the other Secured Parties are further subject to the provisions of the Intercreditor Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby represents and warrants to the Administrative Agent and each Secured Party that:
4.1 Investment Property . (a) The shares of Pledged Stock pledged by such Grantor hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer owned by such Grantor or, in the case of Foreign Subsidiary Voting Stock, 65% of the outstanding Foreign Subsidiary Voting Stock of each relevant Issuer.
(b) All the shares of the Pledged Stock issued by each Issuer (other than any Issuer that is a Foreign Subsidiary, a partnership or a limited liability company) have been duly and validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes, to the knowledge of the Grantors, constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by the First Lien Guarantee and Collateral Agreement and this Agreement.
4.2 Intellectual Property . (a) Schedule 5 lists all (i) Registered Intellectual Property owned by such Grantor in its own name on the date hereof and (ii) all material Registered Intellectual Property exclusively licensed by such Grantor as of the date hereof, noting in each case the relevant registration, application or serial number, the jurisdiction of registration or application, and, in the case of (ii), the title of the license, the counterparty to such license and the date of such license, provided that with respect to the foregoing clause (ii), the applicable Registered Intellectual Property is identified in the applicable license.
(b) Except as set forth in Schedule 5 and except for joint marketing and sponsorship agreements entered into by such Grantor in the ordinary course of its business, on the date hereof, none of the Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor.
(c) Such Grantor owns, or is licensed to use, all Intellectual Property material to the conduct of its business as currently conducted, free and clear of all Liens other than Permitted Liens, and takes reasonable actions to protect, preserve and maintain such Intellectual Property except as permitted by Sections 7.5(c)(i) and (c)(xvi) of the Credit Agreement. Except as could not reasonably be expected to have a Material Adverse Effect, (i) all such Intellectual Property is valid and enforceable and (ii) all Registered Intellectual Property has not expired or been abandoned except as permitted by Sections 7.5(c)(i) and (c)(xvi) of the Credit Agreement. No claim, action or proceeding is pending by any Person or, to the knowledge of such Grantor, threatened, or imminent, on the date hereof, and no holding, decision or judgment has been rendered by any Governmental Authority or arbitrator, which may limit, cancel or challenge the validity, enforceability, ownership or use of, any material Intellectual Property in any material respect, except for claims, actions, proceedings, holdings, decisions or judgments which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. To the knowledge of such Grantor, (i) the operation of the business of such Grantor does not Infringe the Intellectual Property rights of any Person, and (ii) no Person is Infringing any Intellectual Property owned by such Grantor to an extent which could reasonably be expected to have a Material Adverse Effect.
(d) Commercial Tort Claims . On the date hereof, no Grantor has rights in any Commercial Tort Claim with potential value in excess of $100,000.
4.3 Additional Representations and Warranties .
(a) On the date of this Agreement, such Grantor’s jurisdiction of organization, identification number from the jurisdiction of organization (if any) and the location of such Grantor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 4. Such Grantor has furnished to the Administrative Agent a certified charter, certificate of incorporation or other organization document and good standing certificate as of a date which is recent to the date hereof.
(b) Each Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant a security interest hereunder and has full power and authority to grant to the Administrative Agent a security interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained and is in full force and effect.
(c) The UCC financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations for filing in each governmental, municipal or other office specified in Schedule 3 hereto, and with respect to Collateral consisting of registered and applied for United States Patents, Trademarks, or Copyrights, to the extent required by applicable Federal law, filings made at the United States Patent and Trademark Office and the United States Copyright Office, as applicable, are all the filings, recordings and registrations that are necessary to establish a legal, valid and perfected security interest in favor of the Administrative Agent (for the benefit of the Secured Parties) in respect of all Collateral in which a security interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing of continuation statements.
(d) The security interest granted to the Administrative Agent constitutes (i) a legal and valid security interest in all the Collateral securing the payment and performance of the Obligations and (ii) subject to the filings described in Section 4.4(c), a perfected security interest in all Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code in the relevant jurisdiction. The security interest granted to the Administrative Agent is and shall be, subject to the terms of the Intercreditor Agreement, prior to any other Lien on any of the Collateral, other than Liens expressly permitted under the Credit Agreement.
(e) The Collateral is owned by the Grantors free and clear of any Lien, except for Permitted Liens under the Credit Agreement. None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the New York UCC or any other applicable laws covering any Collateral or (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted under the Credit Agreement, or those which are for notice purposes only.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and the Secured Parties that, from and after the date of this Agreement until the Obligations shall have been paid in full (other than contingent indemnification obligations not yet accrued and payable), and the Commitments shall have terminated:
5.1 Delivery of Pledged Securities .
(a) Subject to Section 5.1(f), each Grantor agrees promptly to deliver or cause to be delivered to the First Lien Administrative Agent or the Administrative Agent for the benefit of the Secured Parties, as applicable, in accordance with the terms of the Intercreditor Agreement, any and all Pledged Securities (other than any uncertificated Capital Stock, but only for so long as such Capital Stock remains uncertificated) to the extent such Pledged Securities, in the case of promissory notes or other instruments evidencing Indebtedness, are required to be delivered pursuant to paragraph (b) of this Section 5.1 (it being understood that with respect to Reino Aventura, S.A. De C.V. and Ventas Y Servicios Al Consumidor, S.A. De C.V., such Pledged Securities shall be delivered within 30 days following the Closing Date (or such later date as consented to by the Administrative Agent in its reasonable discretion)).
(b) Each Grantor will cause (i) any Indebtedness for borrowed money (other than intercompany loans referred to in clause (ii) below) having an aggregate principal amount in excess of $1,000,000 owed to such Grantor by any Person and (ii) any intercompany loans made by such Grantor to any Person that is not a Loan Party to be evidenced by a duly executed promissory note (or pursuant to a global note) that is pledged and delivered to the First Lien Administrative Agent or the Administrative Agent, for the benefit of the Secured Parties, as
applicable, in accordance with the terms of the Intercreditor Agreement, pursuant to the terms hereof.
(c) Upon delivery to the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, (i) any Pledged Securities shall be accompanied by stock powers duly executed in blank or other instruments of transfer reasonably satisfactory to the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, and by such other instruments and documents as the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, may reasonably request and (ii) all other property comprising part of the Pledged Securities shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing such Pledged Securities, which schedule shall be attached hereto as Schedule 2 and made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
(d) Subject to the terms of the Intercreditor Agreement, at any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (i) filing any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and (ii) in the case of Investment Property, Deposit Accounts, Letter-of-Credit Rights and any other relevant Collateral, taking any actions necessary to enable the Administrative Agent to obtain “control” (within the meaning of the applicable Uniform Commercial Code) with respect thereto.
(e) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Investment Property issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.4(b) with respect to the Investment Property issued by it and (iii) the terms of Sections 6.2(d) and 6.7 shall apply to it, mutatis mutandis , with respect to all actions that may be required of it pursuant to Section 6.2(d) or 6.7 with respect to the Investment Property issued by it.
(f) Notwithstanding any of the foregoing or any other provisions of this Agreement, the parties hereto acknowledge and agree that the First Lien Administrative Agent, for the ratable benefit of the Secured Parties (under and as defined in the First Lien Credit Documents), has a prior security interest in the Collateral and that certificates, instruments and documents representing or evidencing the Collateral are required to be delivered to and held by the First Lien Administrative Agent under the applicable First Lien Credit Documents, subject to Section 2.3(c) of the Intercreditor Agreement, and such delivery to the First Lien Administrative Agent under the applicable First Lien Credit Documents shall be deemed to satisfy any requirement for such delivery to the Administrative Agent under this Agreement until the First
Priority Obligations Payment Date (as defined in the Intercreditor Agreement) shall have occurred.
5.2 Intellectual Property . (a) Except as permitted by Sections 7.5(c)(i) and (c)(xvi) of the Credit Agreement, such Grantor (either itself or through licensees) will (i) continue to use each Material Trademark in order to maintain such Material Trademark in full force free from any claim of abandonment for non-use, (ii) maintain in all material respects as in the past the quality of all products and services offered under any Material Trademark, (iii) use each Material Trademark with all appropriate notices of registration and all other notices and legends required by applicable Requirements of Law, (iv) not adopt or use any new mark, or any mark which is confusingly similar or a colorable imitation of a Trademark included in the Collateral unless the Administrative Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement, and (v) not (and will use commercially reasonable efforts to prohibit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby a Material Trademark could reasonably be expected to become invalidated or diluted in any way, except, in each case, as could not reasonably be expected to have a Material Adverse Effect.
(b) Except as permitted by Sections 7.5(c)(i) and (c)(xvi) of the Credit Agreement, such Grantor will not do any act, or omit to do any act (and will use commercially reasonable efforts to ensure that any licensee or sublicensee does not do any act or omit to do any act) whereby any material Patent included in the Collateral is abandoned or dedicated to the public, or allowed to prematurely lapse.
(c) Such Grantor will not do any act or knowingly omit to do any act (and will use commercially reasonable efforts to ensure that any licensee or sublicensee does not do any act or omit to do any act) whereby any material portion of the Copyrights included in the Collateral could reasonably be expected to become invalidated or otherwise materially impaired. Such Grantor will not do any act (and will use commercially reasonable efforts to ensure that any licensee or sublicensee does not do any act) whereby a material portion of any Copyright included in the Collateral falls into the public domain.
(d) Such Grantor will not (and will use commercially reasonable efforts to ensure that any licensee or sublicense does not) knowingly Infringe in any material respect upon the intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent in the next Compliance Certificate required to be delivered by it pursuant to Section 6.1(f) of the Credit Agreement if it knows, or has reason to know, that any material Registered Intellectual Property may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency, or any court or tribunal in any country) regarding such Grantor’s rights in, or the validity, enforceability, ownership or use of, any material Intellectual Property, including, without limitation, such Grantor’s right to register or maintain same.
(f) Whenever such Grantor, either by itself or through any agent, employee, licensee or designee, shall acquire, become the exclusive licensee of, or file an application for the registration of, any Registered Intellectual Property with the United States Copyright Office or
the United States Patent and Trademark Office, or any similar office or agency in any group of countries, other country or any political subdivision thereof, such Grantor shall report such filing to the Administrative Agent on the first Compliance Certificate delivered pursuant to Section 6.1(f) of the Credit Agreement after such acquisition, licensing, or filing. Upon request of the Administrative Agent, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent’s and the Secured Parties’ security interest in any Registered Intellectual Property which is not an Excluded Asset.
(g) Such Grantor will take such actions as it reasonably deems appropriate under the circumstances, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of all Registered Intellectual Property, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability.
(h) In the event that any material Intellectual Property is Infringed by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value to the Grantors as a whole, promptly notify the Administrative Agent after it learns thereof and, after taking reasonable and customary measures to stop such Infringement and where appropriate in such Grantor’s reasonable business judgment, sue for Infringement, seek injunctive relief and to recover any and all damages for such Infringement.
5.3 Additional Covenants .
(a) The Borrower agrees, on its own behalf and on behalf of each Grantor, to notify the Administrative Agent in writing of any change (i) in legal name of any Grantor, (ii) in the identity or type of organization or corporate structure of any Grantor, or (iii) in the jurisdiction of organization of any Grantor, within 15 days of any such change.
(b) Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Collateral against all Persons and to defend the security interest of the Administrative Agent in the Collateral and the priority thereof against any Lien not expressly permitted by the Credit Agreement.
(c) Subject to the terms of the Intercreditor Agreement, the Borrower agrees, on its own behalf and on behalf of each other Grantor, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Administrative Agent may from time to time reasonably request to better assure, preserve, protect and perfect its security interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting to the Administrative Agent of a security interest and the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Collateral that is in excess of $1,000,000 shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be promptly pledged and delivered to the Administrative Agent, for the benefit of the Secured Parties, duly endorsed in a manner reasonably satisfactory to the Administrative Agent.
(d) At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral and not permitted under the Credit Agreement, and may pay for the maintenance and preservation of the Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement and within a reasonable period of time after the Administrative Agent has requested that it do so, and each Grantor jointly and severally agrees to reimburse the Administrative Agent within 10 days after demand for any payment made or any reasonable expense incurred by the Administrative Agent pursuant to the foregoing authorization. Nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein, in the other Loan Documents.
(e) If at any time any Grantor shall take a security interest in any property of any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account (an “ Account Debtor ”), or any other Person, the value of which is in excess of $1,000,000, to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Administrative Agent for the benefit of the Secured Parties. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.
(f) Each Grantor (rather than the Administrative Agent or any Secured Party) shall remain liable (as between itself and any relevant counterparty) to observe and perform all the material conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Administrative Agent and the Secured Parties from and against any and all liability for such performance; provided , that no Grantor shall have any obligation hereunder to the Administrative Agent or any Secured Party with respect to any such liabilities to the extent such liabilities are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Administrative Agent or any Secured Party or of any director, officer, or employee of the Administrative Agent or any Secured Party.
(g) If any Grantor shall at any time hold or acquire a Commercial Tort Claim with a value in excess of $1,000,000, such Grantor shall promptly notify the Administrative Agent in writing signed by such Grantor of the brief details thereof and grant to the Administrative Agent a security interest therein and in the proceeds thereof, all upon the terms of this Agreement pursuant to a document in form and substance reasonably satisfactory to the Administrative Agent.
(h) The aggregate book value of all Vehicles owned by all such Grantors will not exceed $10,000,000 or such higher book value as shall be reasonably satisfactory to the Administrative Agent.
5.4 Other Actions . In order to further ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce its security interest, each
Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Collateral:
(a) Instruments . If any Grantor shall at any time hold or acquire any Instruments constituting Collateral and evidencing an amount in excess of $1,000,000, such Grantor shall forthwith endorse, assign and deliver the same to the First Lien Administrative Agent or the Administrative Agent for the benefit of the Secured Parties, as applicable, in accordance with the terms of the Intercreditor Agreement, accompanied by such instruments of transfer or assignment duly executed in blank as the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, may from time to time reasonably request.
(b) Investment Property . If any Grantor shall at any time hold or acquire any certificated Capital Stock, such Grantor shall forthwith endorse, assign and deliver the same to the First Lien Administrative Agent or the Administrative Agent for the benefit of the Secured Parties, as applicable, in accordance with the terms of the Intercreditor Agreement, accompanied by such instruments of transfer or assignment duly executed in blank as the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, may from time to time reasonably request. If any Capital Stock now or hereafter acquired by any Grantor are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall promptly notify the Administrative Agent thereof and, at the Administrative Agent’s reasonable request and option pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, subject to the terms of the Intercreditor Agreement, either (i) cause the Issuer to agree to comply with instructions from the Administrative Agent as to such securities, without further consent of any Grantor or such nominee, or (ii) arrange for the Administrative Agent to become the registered owner of the securities. If any Capital Stock, whether certificated or uncertificated, or other Investment Property are held by any Grantor or its nominee through a securities intermediary or commodity intermediary, such Grantor shall promptly notify the Administrative Agent thereof and at the Administrative Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent shall, subject to the terms of the Intercreditor Agreement, either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from the Administrative Agent to such securities intermediary as to such security entitlements, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Administrative Agent to such commodity intermediary, in each case without further consent of any Grantor or such nominee, or (ii) in the case of financial assets or other Investment Property held through a securities intermediary, arrange for the Administrative Agent to become the entitlement holder with respect to such Investment Property, with the Grantor being permitted, only with the consent of the Administrative Agent to exercise rights to withdraw or otherwise deal with such Investment Property. The Administrative Agent agrees with each of the Grantors that the Administrative Agent shall not give any such entitlement orders or instructions or directions to any such Issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Grantor, unless an Event of Default has occurred and is continuing. The provisions of this paragraph shall not apply to any financial assets credited to a securities account for which the Administrative Agent is the securities intermediary.
SECTION 6. REMEDIAL PROVISIONS
6.1 Registration in Nominee Name; Denominations . If an Event of Default shall occur and be continuing, subject to the terms of the Intercreditor Agreement (a) the Administrative Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Administrative Agent, and each Grantor will promptly give to the Administrative Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Grantor and (b) the Administrative Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.
6.2 Voting Rights; Dividends and Interest .
(a) Unless and until an Event of Default shall have occurred and be continuing and, subject to the terms of the Intercreditor Agreement, the Administrative Agent shall have notified the Borrower that the rights of the Grantors under this Section 6.2 are being suspended:
(i) Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights inuring to a holder of any Pledged Securities or the rights and remedies of any of the Administrative Agent or the other Secured Parties under this Agreement, the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.
(ii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable Laws; provided that any noncash dividends, interest, principal or other distributions, whether resulting from a subdivision, combination or reclassification of the outstanding equity interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent and the Secured Parties and shall be forthwith delivered to the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, in the same form as so received (with any necessary endorsement reasonably requested by the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement).
(b) Subject in each case to the terms of the Intercreditor Agreement, upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have notified the Borrower of the suspension of the rights of the Grantors under paragraph
(a)(ii) of this Section 6.2, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(ii) of this Section 6.2 shall cease, and all such rights shall thereupon become vested in the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 6.2 shall be (i) held in trust for the benefit of the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, (ii) segregated from other property or funds of such Grantor and (iii) forthwith delivered to the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, in the same form as so received (with any necessary endorsement reasonably requested by the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement). Any and all money and other property paid over to or received by the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, pursuant to the provisions of this paragraph (b) shall be retained by the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, in an account to be established by the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 6.4. After all Events of Default have been cured or waived, the First Lien Administrative Agent or the Administrative Agent, as applicable, in accordance with the terms of the Intercreditor Agreement, shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(ii) of this Section 6.2 and that remain in such account.
(c) Subject to the terms of the Intercreditor Agreement, upon the occurrence and during the continuance of an Event of Default, after the Administrative Agent shall have notified the Borrower of the suspension of the rights of the Grantors under paragraph (a)(i) of this Section 6.2, then all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 6.2 shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Administrative Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived, each Grantor shall have the exclusive right to exercise the voting and/or consensual rights and powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) of this Section 6.2.
(d) Each Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by such Grantor hereunder, subject to the terms of the Intercreditor Agreement, to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) pay any non-cash dividends or other non-cash payments with respect to
the Investment Property directly to the Administrative Agent and, after such Issuer receives notice from the Administrative Agent that an Event of Default has occurred, pay any cash dividends or other payments with respect to the Investment Property directly to the Administrative Agent.
6.3 Additional Remedies upon Default .
(a) Subject to the terms of the Intercreditor Agreement, upon the occurrence and during the continuance of an Event of Default, it is agreed that the Administrative Agent shall have the right to exercise any and all rights afforded to a Secured Party with respect to the Obligations under the Uniform Commercial Code or other applicable law and also may (i) require each Grantor to, and each Grantor agrees that it will at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place and time to be designated by the Administrative Agent; (ii) occupy any premises owned or, to the extent lawful and permitted, leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation; (iii) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral, provided that, with respect to any Collateral consisting of Pledged Stock of any Issuer that is not a Wholly Owned Subsidiary, such exercise shall be subject to any limitations or prohibitions of any Contractual Obligations among the holders of such Issuer’s Capital Stock; and (iv) subject to the mandatory requirements of applicable law, consent to the use by any Grantor of any cash collateral arising in respect of the Collateral on such terms as the Administrative Agent deems reasonable and/or may sell or otherwise dispose of, or acquire by credit bid on behalf of the Secured Parties, all or any part of the Collateral securing the Obligations at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate. The Administrative Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Administrative Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any sale of Collateral shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent not prohibited by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
(b) The Administrative Agent shall give the applicable Grantors 10 days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Administrative Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Administrative Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute discretion) determine. The Administrative Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Administrative Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Administrative Agent until the sale price is paid by the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public or private sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent not prohibited by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Administrative Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that, after the Administrative Agent shall have entered into such an agreement, all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Administrative Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court appointed receiver. Any sale pursuant to the provisions of this Section 6.3 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.
6.4 Application of Proceeds . Subject to the terms of the Intercreditor Agreement, at such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent’s election, the Administrative Agent may apply all or any part of Proceeds of any collection or sale of Collateral, including any Collateral consisting of cash, and any proceeds of the guarantee set forth in Section 2 in payment of the Obligations in the following order:
First , to pay incurred and unpaid fees and expenses of the Administrative Agent under the Loan Documents;
Second , to the Administrative Agent, for application by it towards payment of amounts then due and owing and remaining unpaid in respect of the Obligations, pro rata among the Secured Parties according to the amounts of the Obligations then due and owing and remaining unpaid to the Secured Parties;
Third , to the Administrative Agent, for application by it towards prepayment of the Obligations, pro rata among the Lenders according to the amounts of the Obligations then held by the Lenders, with any such prepayment of Loans being applied, first, to Base Rate Loans and, second, to Eurocurrency Loans; and
Fourth , any balance of such Proceeds remaining after the Obligations shall have been paid in full and the Commitments shall have terminated shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same.
6.5 Deficiency . Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent to collect such deficiency.
6.6 Subordination . Each Grantor hereby agrees that, upon the occurrence and during the continuance of an Event of Default, unless otherwise agreed by the Administrative Agent, all Indebtedness owing by it to any Subsidiary of the Borrower shall be fully subordinated to the indefeasible payment in full in cash of such Grantor’s Obligations.
6.7 Registration Rights . (a) Upon the occurrence and during the continuance of an Event of Default, subject to the terms of the Intercreditor Agreement (i) if the Loans (with accrued interest thereon) and all other amounts owing under the Loan Documents have become due and payable in accordance with the Credit Agreement and (ii) if the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to Section 6.3, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer thereof to (x) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (y) use its commercially reasonable efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (z) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each Grantor agrees to cause such Issuer to comply with the provisions of the securities or “Blue Sky” laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this Section 6.7 valid and binding and in compliance with any and all other applicable Requirements of Law. Each Grantor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the Administrative Agent and the Secured Parties, that the Administrative Agent and the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing under the Credit Agreement.
6.8 Grant of Intellectual Property License . During the continuance of an Event of Default, for the purpose of enabling the Administrative Agent to exercise the rights and remedies under this Agreement at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby (a) grants to the Administrative Agent, for the benefit of the Administrative Agent and the Secured Parties, a nonexclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, license or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, the right to prosecute and maintain all Intellectual Property included in the Collateral and the right to sue for past infringement of such Intellectual Property; and (b) subject to the terms of the Intercreditor Agreement, agrees that the Administrative Agent may sell any of such Grantor’s Inventory directly to any person, including without limitation persons who have previously purchased the Grantor’s Inventory from such Grantor and in connection with any such sale or other enforcement of the Administrative Agent’s rights under this Agreement, may sell Inventory which bears any Trademark included in the Collateral and any Inventory that is covered by any Copyright included in the Collateral and the Administrative Agent may finish any work in process and affix any Trademark included in the Collateral and sell such Inventory as provided herein.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent’s Appointment as Attorney-in-Fact, etc . (a) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following (subject to the terms of the Intercreditor Agreement):
(i) in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver, and record or have recorded, any and all agreements, instruments, financing statements, documents and papers as the Administrative Agent may request (A) to evidence the Administrative Agent’s and the Secured Parties’ security interest in such Intellectual Property, and (B) to perfect such security interest;
(iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with the exercise of any right or remedy provided for in Section 6.3 or 6.7, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may deem appropriate; (7) assign any Intellectual Property, throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (8) generally, sell, transfer, pledge and make any agreement with respect to, or consent to any use of cash collateral arising in respect of or otherwise deal with, any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent’s and the Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 7.1(a) (other than any rights set forth in clause (ii) of Section 7.1(a)) unless an Event of Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at a rate per annum equal to the highest rate per annum at which interest would then be payable on any category of past due Loans that are Base Rate Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. Each Secured Party, by its authorization of the Administrative Agent’s entering into this Agreement, consents to the exercise by the Administrative Agent of any power, right or remedy provided for herein. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.
7.2 Duty of Administrative Agent . The Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof unless such failure constitutes gross negligence, willful misconduct or fraud. The powers conferred on the Administrative Agent and the Secured Parties hereunder are solely to protect the Administrative Agent’s and the Secured Parties’ interests in the Collateral and shall not impose any duty upon the Administrative Agent or any Secured Party to exercise any such powers. The Administrative Agent and the Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their (or their officers, directors, employees or agents’) own gross negligence or willful misconduct.
7.3 Execution of Financing Statements . Pursuant to any applicable law, each Grantor authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Administrative Agent determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. Each Grantor authorizes the Administrative Agent to use the collateral description “all personal property” in any such financing statements. Each Grantor hereby ratifies and authorizes the
filing by the Administrative Agent of any financing statement with respect to the Collateral made prior to the date hereof.
7.4 Authority of Administrative Agent . Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the Secured Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing . None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Sections 6.6 and 10.1 of the Credit Agreement.
8.2 Notices . All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 10.2 of the Credit Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies . Neither the Administrative Agent nor any Secured Party shall by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Secured Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification . (a) Subject to the limitations set forth in Section 10.5 of the Credit Agreement, each Guarantor agrees to pay or reimburse each Secured Party and the Administrative Agent for all its costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Guarantor is a party, including, without limitation, the fees and disbursements of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative Agent and the Secured Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative Agent and the Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to Section 10.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.
8.5 Successors and Assigns . This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Administrative Agent and the Secured Parties and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent.
8.6 Set-Off . Subject to the terms of the Intercreditor Agreement, in addition to any rights and remedies of the Secured Parties provided by law, each Secured Party shall have the right, without prior notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower and each Grantor hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Secured Party or any branch or agency thereof to or for the credit or the account of such Grantor, as the case may be. Each Secured Party agrees promptly to notify Parent and the Administrative Agent after any such set-off and application made by such Secured Party, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each Secured Party under this Section 8.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such Secured Party may have.
8.7 Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
8.8 Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
8.9 Section Headings . The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
8.10 Integration . This Agreement and the other Loan Documents represent the agreement of the Grantors, the Administrative Agent and the Secured Parties with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Secured Party relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents. In the event of any conflict between the terms of this Agreement and the provisions of the Credit Agreement, the provisions of the Credit Agreement shall control. With respect to the pledge of any Foreign Subsidiary Voting Stock, in the event of any conflict between the terms of this Agreement and the provisions of any pledge agreement covering such Foreign Subsidiary Voting Stock, the provisions of such pledge agreement shall control.
8.11 GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers . Each of the Agents, the Secured Parties and each Grantor hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgments . Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent and Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties.
8.14 Additional Grantors . Each Subsidiary of Parent that is required to become a party to this Agreement pursuant to Section 6.6 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement substantially in the form of Annex 1 hereto.
8.15 Termination, Releases or Subordination .
(a) This Agreement, the security interest granted to the Administrative Agent and all other security interests granted hereby shall terminate with respect to all Obligations when all the outstanding Obligations (other than contingent indemnification obligations not yet accrued and payable) have been indefeasibly paid in full and the Lenders have no further commitment to lend under the Credit Agreement.
(b) A Grantor shall automatically be released from its obligations hereunder, and the security interest granted to the Administrative Agent in the Collateral of such Grantor shall be automatically released, upon the consummation of any transaction permitted by the Credit Agreement as a result of which such Grantor ceases to be a Subsidiary; provided that the Required Lenders (or all Lenders, as the case may be) shall have consented to such transaction (to the extent required by the Credit Agreement) and the terms of such consent did not provide otherwise.
(c) Upon any Disposition by any Grantor of any Collateral that is permitted under the Credit Agreement, or upon the effectiveness of any written consent of the Required Lenders (or all Lenders, as the case may be) to the release of the security interest granted hereby in any Collateral, the security interest of such Grantor in such Collateral shall be automatically released or, to the extent permitted under Section 10.16(a) of the Credit Agreement, subordinated.
(d) In connection with any termination, release or subordination pursuant to paragraph (a), (b) or (c) of this Section 8.15, the Administrative Agent shall execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such termination, release or subordination, as applicable. Any execution and delivery of documents pursuant to this Section 8.15 shall be without recourse to or warranty by the Administrative Agent.
8.16 WAIVER OF JURY TRIAL . EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.17 INTERCREDITOR AGREEMENT . NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED PURSUANT TO THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR REMEDY HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.
IN WITNESS WHEREOF, each of the undersigned has caused this Second Lien Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written.
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SIX FLAGS ENTERTAINMENT |
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CORPORATION |
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By: |
/s/ James M. Coughlin |
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Name: |
James M. Coughlin |
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Title: |
General Counsel |
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SIX FLAGS OPERATIONS INC. |
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By: |
/s/ James M. Coughlin |
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Name: |
James M. Coughlin |
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Title: |
General Counsel |
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SIX FLAGS THEME PARKS INC. |
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By: |
/s/ James M. Coughlin |
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Name: |
James M. Coughlin |
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Title: |
General Counsel |
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FIESTA TEXAS, INC. |
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FUNTIME, INC. |
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FUNTIME PARKS, INC. |
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GREAT AMERICA LLC |
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GREAT ESCAPE HOLDING INC. |
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HURRICANE HARBOR GP LLC |
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HURRICANE HARBOR LP LLC |
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KKI, LLC |
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MAGIC MOUNTAIN LLC |
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PARK MANAGEMENT CORP. |
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PREMIER INTERNATIONAL HOLDINGS
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PREMIER PARKS HOLDINGS INC. |
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PREMIER PARKS OF COLORADO INC. |
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RIVERSIDE PARK ENTERPRISES, INC. |
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SF HWP MANAGEMENT LLC |
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SFJ MANAGEMENT INC. |
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SIX FLAGS AMERICA PROPERTY
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SIX FLAGS GREAT ADVENTURE LLC |
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SIX FLAGS SERVICES, INC. |
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SIX FLAGS SERVICES OF ILLINOIS, INC. |
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SIX FLAGS ST. LOUIS LLC |
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SOUTH STREET HOLDINGS LLC |
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STUART AMUSEMENT COMPANY |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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HURRICANE HARBOR LP |
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By: |
HURRICANE HARBOR GP LLC, |
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its General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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SIX FLAGS AMERICA LP |
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By: |
FUNTIME, INC., |
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its General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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SIX FLAGS GREAT ESCAPE L.P. |
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GREAT ESCAPE THEME PARK L.P. |
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GREAT ESCAPE RIDES L.P. |
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By: |
GREAT ESCAPE HOLDING INC., |
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their General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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Exhibit 10.5
EXECUTION VERSION
$150,000,000
MULTIPLE DRAW TERM CREDIT AGREEMENT
among
SFOG ACQUISITION A, INC.,
SFOG ACQUISITION B, L.L.C.,
SFOT ACQUISITION I, INC.
and
SFOT ACQUISITION II, INC.,
as Borrowers,
and
TW-SF LLC,
as Lender
Dated as of April 30, 2010
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TABLE OF CONTENTS
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Page |
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SECTION 1. |
DEFINITIONS |
1 |
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1.1 |
Defined Terms |
1 |
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1.2 |
Other Definitional Provisions |
14 |
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SECTION 2. |
AMOUNT AND TERMS OF COMMITMENT |
15 |
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2.1 |
Commitment |
15 |
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2.2 |
Procedure for Borrowing |
15 |
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2.3 |
Repayment of Loans |
15 |
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SECTION 3. |
CERTAIN PROVISIONS APPLICABLE TO THE LOANS |
15 |
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3.1 |
Repayment of Loans; Evidence of Debt |
15 |
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3.2 |
Optional Prepayments |
16 |
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3.3 |
Mandatory Prepayments |
16 |
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3.4 |
Interest Rates and Payment Dates |
16 |
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3.5 |
Computation of Interest and Fees |
17 |
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3.6 |
Payments |
17 |
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SECTION 4. |
REPRESENTATIONS AND WARRANTIES |
17 |
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4.1 |
Existence; Compliance with Law |
17 |
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4.2 |
Power; Authorization; Enforceable Obligations |
18 |
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4.3 |
No Legal Bar or Conflicts; No Default |
18 |
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4.4 |
No Liabilities |
18 |
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4.5 |
Litigation |
18 |
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4.6 |
Subordinated Indemnity Agreement |
18 |
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4.7 |
Ownership of Property |
19 |
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4.8 |
Taxes |
19 |
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4.9 |
Accuracy of Information |
19 |
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4.10 |
Use of Proceeds; Funding of Liquidity Puts |
19 |
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SECTION 5. |
CONDITIONS PRECEDENT |
19 |
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5.1 |
Conditions Precedent to Closing |
19 |
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5.2 |
Conditions to Each Extension of Credit |
21 |
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SECTION 6. |
AFFIRMATIVE COVENANTS |
22 |
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6.1 |
Financial Statements and Other Information |
22 |
TABLE OF CONTENTS
(continued)
TABLE OF CONTENTS
(continued)
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Page |
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9.14 |
Release of Guarantee Obligations |
33 |
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9.15 |
Accounting Changes |
33 |
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9.16 |
Releases |
34 |
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9.17 |
Non-Recourse |
35 |
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9.18 |
Waivers of Jury Trial |
35 |
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EXHIBITS: |
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A |
Form of Assignment and Acceptance |
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B |
Form of Guarantee Agreement |
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C |
Form of Borrowing Notice |
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D |
Form of Note |
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E |
Form of Amendment to Subordinated Indemnity Agreement |
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F |
Form of Escrow Waiver Agreement |
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G |
Form of Legal Opinion of Paul, Hastings, Janofsky & Walker LLP |
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H |
Form of Closing Certificate |
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I |
Form of Intercompany Subordinated Note |
MULTIPLE DRAW TERM CREDIT AGREEMENT, dated as of April 30, 2010, among SFOG ACQUISITION A, INC., a Delaware corporation (“ SFOG A ”), SFOG ACQUISITION B, L.L.C., a Delaware limited liability company (“ SFOG B ”), SFOT ACQUISITION I, INC., a Delaware corporation (“ SFOT I ”), SFOT ACQUISITION II, INC., a Delaware corporation (“ SFOT II ”, together with SFOG A, SFOG B and SFOT I, each individually, a “ Borrower ” and collectively, the “ Borrowers ”), and TW-SF LLC, as lender (in such capacity, the “ Lender ”).
WHEREAS, SFOG A and SFOG B are parties to that certain Overall Agreement, dated as of February 15, 1997, by and among Six Flags Fund, Ltd. (L.P.) (“ GA Fund ”), the Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six Flags Over Georgia, Ltd. (now known as Six Flags Over Georgia, LLC), SFOG A, SFOG B, Six Flags Over Georgia, Inc., SFOG II, Inc., SFOG II Employee, Inc., Six Flags Services of Georgia, Inc., Six Flags Theme Parks, Inc. (“ SFTP ”), and Six Flags Operations Inc. (as successor to Six Flags Entertainment Corporation) (“ Holdings ”), as the same may be amended, supplemented or modified from time to time, the “ GA Overall Agreement ”;
WHEREAS, SFOT I and SFOT II are parties to that certain Overall Agreement, dated as of November 24, 1997, by and among Six Flags Over Texas Fund, Ltd. (“ TX Fund ”), Flags’ Directors L.L.C., FD-II, L.L.C., Texas Flags, Ltd., SFOT Employee, Inc., SFOT I, SFOT II, Six Flags Over Texas, Inc., SFTP, and Holdings (as successor to Six Flags Entertainment Corporation), as amended by the Agreement dated as of December 6, 1999 between and among the foregoing parties and Six Flags Fund II, Ltd. (as the same may be amended, supplemented or modified from time to time, “ TX Overall Agreement ”);
WHEREAS, pursuant to the GA Overall Agreement or the TX Overall Agreement, as applicable, the Borrowers have certain obligations to purchase limited partnership units (“ Units ”) in the GA Fund, or the TX Fund, as the case may be, pursuant to certain annual Liquidity Puts (as defined below); and
WHEREAS, the Borrowers have requested the Lender to make term loans available to them to enable the Borrowers to purchase Units pursuant to the Liquidity Puts and the Lender has agreed, subject to the terms and conditions hereof, to enter into this Agreement and to make such term loans available.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms . As used in this Agreement, the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.
“ Accounting Changes ”: as defined in Section 9.15.
“ Acquisition ”: any acquisition, whether in a single transaction or series of related transactions, by Parent or any one or more of its Subsidiaries of (a) all or a substantial part of the assets, or of a business, unit or division, of any Person, whether through purchase of assets or securities, by merger or otherwise; or (b) any Person that becomes a Subsidiary after giving effect to such acquisition.
“ Acquisition Company Guarantees ”: collectively, the Secured General Continuing Guarantee And Pledge Agreement of SFOG A and SFOG B dated as of March 18, 1997, in respect of the Georgia Park, and the General Continuing Guarantee Agreement of SFOT I and SFOT II, dated as of January 6, 1998, in respect of the Texas Park.
“ Acquisition Company Liquidity Agreement ”: that certain Acquisition Company Liquidity Agreement, dated as of December 8, 2006, by and among Parent, Holdings, SFTP, the Borrowers, GP Holdings, Inc., SFOG II, Inc., SFT Holdings, Inc., SFOT Acquisition I Holdings, Inc., SFOT Acquisition II Holdings, Inc., SFOG Acquisition A Holdings, Inc., SFOG Acquisition B Holdings, Inc., TW-SPV Co., Time Warner, Time Warner Entertainment Company, L.P. and Historic TW Inc. (formerly known as Time Warner Inc.).
“ Affiliate ”: any Person that directly or indirectly controls, or is under common control with, or is controlled by, Parent and, if such Person is an individual, any member of the immediate family (including parents, spouse, children) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). Notwithstanding the foregoing, (a) no individual shall be an Affiliate solely by reason of his or her being a director, officer or employee of Parent or any of its Subsidiaries and (b) none of the Wholly Owned Subsidiaries of Parent or HWP shall be Affiliates.
“ Aggregate Escrow Amount ”: as defined in the Subordinated Indemnity Escrow Agreement and determined by the Lender in its reasonable discretion.
“ Agreement ”: this Multiple Draw Term Credit Agreement, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time .
“ Applicable Margin ”: a rate per annum equal to the then applicable “Applicable Margin” with respect to the Tranche B Term Loans that are “Eurocurrency Loans” (whether or not any such loans are then outstanding) under and as each term, or any substantially equivalent term, is defined in the Six Flags First Lien Credit Agreement; provided that if after the repayment in full of the Tranche B Term Loans there is no Successor Six Flags First Lien Facility, or if the “Applicable Margin” under the Successor Six Flags First Lien Facility is less than that in effect under the Six Flags First Lien Credit Agreement upon such repayment in full, then the Applicable Margin will remain at the rate applicable under the Six Flags First Lien Credit Agreement at the time of such repayment in full. Notwithstanding the foregoing, in the event that (a) any Loan Party issues any long-term senior unsecured bonds or other debt, and (b) as of any CDS Determination Date, the Credit Default Swap Spread is greater than the “Applicable Margin” as determined in the preceding sentence, the Applicable Margin shall be the lower of (i) the Credit Default Swap Spread, and (ii) 9.00%.
“ Asset Sale ”: any Disposition of Property or series of related Dispositions of Property (excluding any such Disposition permitted by clauses (A) through (F) and clauses (I) through (L) and clauses (N) through (Q) of Section 12(e)(iii) of the Guarantee Agreement except for clause (B) to the extent referred to therein) which yields gross proceeds to the Parent, or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds
consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $2,500,000.
“ Assignment and Acceptance ”: an Assignment and Acceptance substantially in the form of Exhibit A .
“ Availability Period ”: the period from and including the Closing Date to the earliest of (a) April 30, 2015, (b) the occurrence of any event or condition that results in Indebtedness under the Six Flags First Lien Credit Agreement or the Six Flags Second Lien Credit Agreement becoming due prior to its scheduled maturity, or (c) the occurrence of any refinancing or replacement of the loans and other obligations under the Six Flags First Lien Credit Agreement or the Six Flags Second Lien Credit Agreement with refinancing or replacement Indebtedness other than Indebtedness incurred in reliance on Section 12(c)(xiv) of the Guarantee Agreement in an aggregate principal amount not to exceed $415,000,000.
“ Bankruptcy Code ”: the Federal Bankruptcy Code of 1978, as amended from time to time.
“ Bankruptcy Court ”: the United States Bankruptcy Court for the District of Delaware.
“ Borrowers ”: as defined in the preamble hereto.
“ Beneficial Share Assignment Agreement ”: that certain Beneficial Share Assignment Agreement, dated as of April 1, 1998, by and among TW-SPV Co., GP Holdings Inc. and Parent (as successor to Premier Parks Inc.), as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“ Borrowing Date ”: May 14th of each year during the Availability Period, beginning and including the first May 14th to occur following the Closing Date and through and including the fourth anniversary of such first date; provided that if May 14 of any year is not a Business Day, then such date will be the immediately preceding Business Day.
“ Business ”: means the business operated by Parent or any of its Subsidiaries.
“ Business Day ”: for all purposes, a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.
“ Capital Expenditures ”: for any period, expenditures made in cash by Parent or any of its Subsidiaries or any of the Partnership Park Entities to acquire or construct fixed assets, plant and equipment (including renewals, improvements and replacements) during such period, computed in accordance with GAAP, but excluding (a) repairs or restorations in respect of any such assets paid in cash, (b) the amount of cash expended (i) with, or in an amount equal to, the Net Cash Proceeds of (A) Recovery Events or (B) awards of compensation arising from the taking by eminent domain or condemnation of assets being replaced, (ii) as part of an Acquisition permitted under the Six Flags First Lien Credit Agreement (other than an Acquisition permitted by Section 9.5(b)(iii) of the Six Flags First Lien Credit Agreement), or (c) expenditures that are accounted for as capital expenditures made in cash by Parent or any of its Subsidiaries or any of the Partnership Park Entities and that actually are paid for by a Person other than Parent or any Subsidiary or any Partnership Park Entity and (d) any non-cash compensation or other non-cash costs reflected as additions to property, plant or equipment in the consolidated balance sheet of Parent and its Subsidiaries or in the balance sheet of any Partnership Park Entity.
“ Capital Lease Obligations ”: for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“ Capital Stock ”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.
“ CDS Determination Date ”: initially, the Borrowing Date for the applicable Loans and thereafter, the Business Day on which the one month interest period is determined as described in clause (a) of the defined term “Standard Rate.”
“ Change of Control ”: any one or more of the following shall occur and be continuing:
(i) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than the Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the voting stock of Parent (for purposes of calculating the voting stock held by a group, the voting stock beneficially owned by a Permitted Holder shall be excluded to the extent such Permitted Holder is part of such group);
(ii) during any period of two consecutive years (commencing immediately following the Closing Date), individuals who at the beginning of such period constituted the board of directors of Parent (together with any new directors whose election by such board of directors or whose nomination for election by Parent’s shareholders was approved by a vote of a majority of Parent’s directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of Parent’s directors then in office;
(iii) any change in control with respect to Parent (or similar event, however denominated) shall occur under and as defined in any Indenture or other agreement in respect of Indebtedness in an aggregate principal amount of at least $25,000,000 to which Parent or any of its Subsidiaries is a party; or
(iv) Parent shall cease to own directly or indirectly 100% of the Capital Stock of SFTP or Holdings (except as otherwise permitted by Section 12(e)(i) of the Guarantee Agreement).
“ Closing Date ”: the date on which the conditions precedent set forth in Section 5.1 shall have been satisfied, which date shall be no later than May 28, 2010.
“ Commitment ”: the commitment of the Lender during the Availability Period to make Loans to the Borrowers hereunder in a principal amount not to exceed the Maximum Commitment Amount.
“ Contractual Obligation ”: as to any Person, any provision of any security issued by such Person or of any material agreement, lease, instrument or other undertaking to which such Person is a party or by which it or any of its Property is bound.
“ Credit Default Swap Spread ”: at any CDS Determination Date, the credit default swap spread applicable to Parent’s long-term senior unsecured debt interpolated to the applicable Maturity Date (or if the period between the CDS Determination Date and the applicable Maturity Date is less than one year, then the one year credit default swap mid-rate spread applicable to Parent’s long-term senior unsecured debt), determined as of the close of business on the Business Day immediately preceding such CDS Determination Date, as reported and interpolated, if applicable, by Markit Group Limited or Bloomberg LP (or the respective successor(s) thereto), as selected by the Lender in its sole discretion.
“ Debtors ”: Parent, Holdings, SFTP and certain of SFTP’s Domestic Subsidiaries.
“ Default ”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“ Disposition ”: with respect to any Property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof, but excluding any termination of the economic and voting rights of GP Holdings Inc. pursuant to the Beneficial Share Assignment Agreement; and the terms “Dispose” and “Disposed of” shall have correlative meanings. “ Dollars ” and “ $ ”: lawful currency of the United States of America.
“ Domestic Subsidiary ”: any Subsidiary of Parent organized under the laws of any jurisdiction within the United States of America.
“ Eligible Assignee ”: (a) any affiliate of the Lender that has creditworthiness that is reasonably acceptable to the Borrowers and Parent, (b) with respect to the assignment of any unused Commitment, any other Person with the prior written consent (such consent not to be unreasonably withheld or delayed) of the Borrowers and Parent, and (c) with respect to any outstanding Loans, any other Person.
“ Escrow Amounts Determination Date ”: as defined in the Subordinated Indemnity Escrow Agreement.
“ Event of Default ”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“ Excess Proceeds ”: in any calendar year, any and all proceeds received by the Borrowers (a) in respect of the Units held by them or (b) from any other sources, less (i) amounts necessary to pay for the expenses of the Borrowers in an amount not to exceed $50,000 in the aggregate per annum, (ii) the amount of any interest paid or payable in accordance with Section 3.4 hereof, and (iii) amounts necessary to pay any and all Expenses due and owing from time to time after the Closing Date under Section 9.5.
“ Exchange Act ”: the Securities and Exchange Act of 1934, as amended.
“ Existing Time Warner Facility ”: the loan facility provided by the Lender to the Borrowers (and guaranteed by SFTP, Holdings and Parent) as evidenced by (i) that certain Promissory Note, dated as of May 15, 2009, by and among the Lender and the Borrowers, in the
original principal amount of $52,507,000, and each other loan document entered into in connection therewith and (ii) that certain Guarantee Agreement, dated as of May 15, 2009, made by Parent, Holdings and SFTP in favor of the Lender.
“ Expenses ”: as defined in Section 9.5.
“ Facility ”: the Commitments and the Loans made hereunder.
“ Fee Letter ”: the Fee Letter dated as of November 30, 2009 by and among the Borrowers, Parent, Holdings, SFTP and the Lender, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“ GA Fund ”: as defined in the recitals hereto.
“ GA Overall Agreement ”: as defined in the recitals hereto.
“ GAAP ”: generally accepted accounting principles in the United States of America as in effect from time to time.
“ Georgia Park ”: has the meaning set forth in the Subordinated Indemnity Agreement.
“ Governmental Authority ”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners) having jurisdiction over the Business or the Property of Parent and its Subsidiaries.
“ Great Escape Agreements ”: collectively, (a) that certain Second Amended and Restated Operating Agreement of HWP, dated as of October 29, 2007 among HWP Management, Inc., HWP Development Holdings LLC, BBL HWP LLC, DACWP LLC and Leisure Water LLC, as members, and the following as guarantors or pledgors with respect to certain obligations: Parent, Donald R. Led Duke, DACWP, LLC and Leisure Water, LLC (as the same may be amended, amended and restated, supplemented or otherwise modified from time to time), (b) any and all agreements delivered pursuant thereto or in connection therewith or with the development and operation of the Property described therein, including the financing and refinancing thereof and (c) any and all agreements, documents or instruments entered into in connection with any expansion or development of the Great Escape’s lodge or any hotel or timeshare arrangements located on or adjacent to it.
“ Guarantee ”: a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor’s obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms “Guarantee”, “Guarantees” and “Guaranteed” used as verbs have the correlative meanings.
“ Guarantee Agreement ”: the Guarantee Agreement to be executed and delivered by Parent, Holdings, SFTP and each Subsidiary Guarantor in favor of the Lender, substantially in the form of Exhibit B , as the same may be amended, amended and restated, supplemented or otherwise modified from time to time .
“ Guarantors ”: the collective reference to Parent, Holdings, SFTP and the Subsidiary Guarantors and any other Person that Guarantees the obligations under the Six Flags First Lien Credit Agreement or the Six Flags Second Lien Credit Agreement.
“ Holdings ”: as defined in the recitals hereto.
“ HWP ”: HWP Development LLC, a New York limited liability company.
“ Inactive Subsidiary ”: any Subsidiary of Parent that (a) has aggregate assets with a value not in excess of $100,000, (b) conducts no Business and (c) does not Guarantee any Indebtedness of Parent or any of its Subsidiaries.
“ Indebtedness ”: for any Person, without duplication: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than (i) trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 180 days (365 days in the case of payables arising out of the purchase of inventory or Capital Expenditures determined without regard to the exclusion contained in the definition of Capital Expenditures in this Section 1.1) of the date the respective goods are delivered or the respective services are rendered and (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and is not paid after becoming due and payable; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments (including negotiable instruments) issued or accepted by banks and other financial institutions for account of such Person; (e) Capital Lease Obligations of such Person; (f) the liquidation value of all redeemable preferred Capital Stock of such Person to the extent redeemable prior to the date which is 91 days after the latest Maturity Date, and (g) Indebtedness of others Guaranteed by such Person; provided , however , that the provision by Parent or any of its Subsidiaries of covenants, Guarantees and indemnities that are customary for non-recourse financings (as determined by Parent in good faith) with respect to Indebtedness incurred by a Person that is not a Subsidiary of Parent and that is otherwise non-recourse to Parent and its Subsidiaries shall not be deemed to be Indebtedness. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner to the extent such Indebtedness is recourse, provided that if such Person’s liability for such Indebtedness is contractually limited, only such Person’s share thereof shall be so included. The amount of Indebtedness for any Person for purposes of clause (c) above shall be deemed equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness, and (ii) the fair market value of the Property encumbered thereby as determined in good faith by such Person. Anything herein to the contrary notwithstanding, the following shall not constitute Indebtedness: (i) obligations under Hedging Agreements, (ii) obligations in respect of any Indebtedness that has been defeased (either covenant or legal) pursuant to the terms of the instrument creating or governing such Indebtedness and
(iii) obligations under the Partnership Parks Agreements; provided , that obligations described in the foregoing clause (iii) shall constitute Indebtedness for purposes of Section 8(j).
“ Indemnified Parties ”: as defined in Section 9.5(b).
“ Indentures ”: collectively, any indenture or other agreement pursuant to which Indebtedness of Parent, Holdings or SFTP may be outstanding at any time, in each case as amended as permitted by the Guarantee Agreement.
“ Initial Escrow Replenishment Date ”: the first Escrow Amounts Determination Date occurring after the end of the Availability Period.
“ Interest Payment Date : as defined in Section 3.4(c).
“ Intercompany Subordinated Note ”: as defined in Section 7.1.
“ Lender ”: as defined in the preamble hereto.
“ Liabilities ”: has the meaning set forth in Section 4.4 hereto.
“ License Agreements ”: collectively, the Retail License (#8898-TOON), dated as of January 1, 1998, by and between Warner Bros. Consumer Products Inc. (as successor to Warner Bros. Consumer Products Division, a division of Time Warner Entertainment Company, L.P.) and SFTP, and the Amended and Restated License Agreement #5854-WB/DC, dated as of April 1, 1998, by and among Warner Bros. Consumer Products Inc. (as successor to Warner Bros. Consumer Products Division, a division of Time Warner Entertainment Company, L.P.), DC Comics, Parent (as successor to Premier Parks Inc.) and SFTP, in each case, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“ Lien ”: with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance having the effect of security in respect of such Property. For purposes of this Agreement and the other Loan Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property.
“ Liquidity Put ”: has the meaning as set forth in the GA Overall Agreement and the TX Overall Agreement, respectively, and as applicable.
“ Liquidity Put Funded Amount ”: an amount equal to the excess, if any, of (a) the aggregate obligations (excluding any costs or expenses) of the Borrowers to purchase Units in any fiscal year pursuant to a Liquidity Put, over (b) the amount of the Liquidity Put Threshold Amount for such fiscal year.
“ Liquidity Put Threshold Amount ”: an amount equal to (a) for the fiscal year ending December 31, 2010, the first $10,000,000 required to satisfy Liquidity Puts in such fiscal year, (b) for the fiscal year ending December 31, 2011, the first $12,500,000 required to satisfy Liquidity Puts in such fiscal year, and (c) for each fiscal year thereafter, the first $15,000,000 required to satisfy Liquidity Puts in such fiscal year, which in the case of each of the foregoing amounts shall exclude costs or expenses incurred in connection with such Liquidity Puts.
“ Loan ”: as defined in Section 2.1.
“ Loan Documents ”: this Agreement, the Guarantee Agreement and the Notes.
“ Loan Parties ”: Parent, Holdings, SFTP, each Subsidiary of SFTP that is a party to a Loan Document and the Borrowers.
“ Losses ”: as defined in Section 9.5(b).
“ Material Adverse Effect ”: a material adverse effect on (a) the Loans, (b) the Business, Property or financial condition of Parent and its Subsidiaries taken as a whole, or (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Lender hereunder or thereunder.
“ Maturity Date ”: as defined in Section 2.3.
“ Maximum Commitment Amount ”: $150,000,000; provided , that such amount shall be permanently reduced on a dollar-for-dollar basis in the amount of each Loan made pursuant to Section 2.1.
“ Net Cash Proceeds ”: in connection with any Asset Sale or any Recovery Event, the proceeds thereof received by Parent or any Subsidiary in the form of cash and Permitted Investments (as defined under the Six Flags First Lien Credit Agreement and which shall include any such proceeds received in such form by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such Asset Sale or Recovery Event, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness and other obligations secured by a Lien expressly permitted hereunder on, or amount required to be paid under Capital Lease Obligations relating to, any asset which is the subject of such Asset Sale or Recovery Event and other customary fees and expenses actually incurred in connection therewith and net of (i) taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements applicable to the transactions) and (ii) any reserve for adjustment in respect of (A) the sale price of such asset or assets established in accordance with GAAP and (B) any liabilities associated with such asset or assets retained by Parent or any of its Subsidiaries after such sale or other disposition thereof and (b) in connection with any issuance or sale of debt securities or instruments or the incurrence of loans or other Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.
“ Note ”: a promissory note evidencing any Loan which shall substantially be in the form of Exhibit D .
“ Obligations ”: the unpaid principal of and interest on (including, without limitation, all Expenses and interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans, and all other obligations and liabilities of any Borrower to the Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document or any other document made, delivered or given by any Loan Party in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, any commitment fee and all fees, charges and disbursements of counsel to the Lender that are required to be paid by the Borrowers pursuant hereto) or otherwise.
“ Parent ”: Six Flags Entertainment Corporation (formerly known as Six Flags, Inc.), a Delaware corporation.
“ Parent Backstop Group ”: as defined in Section 5.1(1).
“ Partnership Distributions ”: as defined in Section 3.4(c).
“ Partnership Parks Agreements ”: the GA Overall Agreement, the TX Overall Agreement, the Related Agreements (as such term is defined in the GA Overall Agreement and the TX Overall Agreement, respectively), the Subordinated Indemnity Agreement and each related agreement entered into in connection therewith (including, without limitation, the Related Indemnity Agreements).
“ Partnership Parks Entities ”: (i) Six Flags Over Georgia II, L.P., a Delaware limited partnership, Texas Flags, Ltd., a Texas limited partnership, GP Holdings Inc., a Delaware corporation, SFOT Acquisition I Holdings, Inc., a Delaware corporation, SFOT Acquisition II Holdings, Inc., a Delaware corporation, SFOG Acquisition A Holdings, Inc., a Delaware corporation, SFOG Acquisition B Holdings, Inc., a Delaware corporation, Six Flags Over Georgia, Inc., a Delaware corporation, and the Borrowers and (ii) any of their respective Subsidiaries.
“ Payment Office ”: the office specified from time to time by the Lender as its payment office by notice to the Borrowers.
“ Permitted Holders ”: any fund affiliated with Stark Investments, CQS, Tricadia Capital Management, LLC, 1798 Global Partners, Capital Ventures International, Altai Capital Management, H Partners Management LLC, Bay Harbour Management, Pentwater Capital Management LP, Fortelus Capital Management LLP, Credit Suisse Securities (USA) LLC and Candlewood Special Situations Master Fund Ltd.
“ Person ”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“ Plan of Reorganization ”: the Debtors’ Modified Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated April 1, 2010, as in effect on the date of confirmation thereof and as thereafter may be amended.
“ Property ”: any right or interest in or to property of any kind whatsoever, whether Real Property, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.
“ Real Properties ”: all real property, including the improvements thereon, owned by, or leased by, the Borrowers.
“ Recovery Event ”: any settlement of or payment in excess of $2,500,000 in respect of any Property or casualty insurance claim or any condemnation proceeding relating to any Property of SFTP or any of its Subsidiaries.
“ Related Indemnity Agreements ”: the Subordinated Indemnity Escrow Agreement, the Beneficial Share Assignment Agreement and the Acquisition Company Liquidity Agreement.
“ Repricing Transaction Prepayment Date ”: as defined in Section 3.4(a).
“ Requirement of Law ”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.
“ Responsible Officer ”: as to any Person, the chief executive officer, president, chief financial officer, senior vice president or treasurer of such Person, but in any event, with respect to financial matters, the chief financial officer, senior vice president-finance or treasurer of such Person.
“ SEC ”: the Securities and Exchange Commission (or successors thereto or an analogous federal Governmental Authority).
“ Six Flags First Lien Credit Agreement ”: the First Lien Credit Agreement, dated as of April 30, 2010, among Parent, Holdings and SFTP, as borrower, certain of its subsidiaries named therein, the several banks and other financial institutions or entities from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, in the original principal amount of $890,000,000, as the same may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, and including any agreement, instrument or other document extending the maturity of, refinancing, replacing, renewing, refunding or otherwise restructuring all or a portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders, in each case, in accordance with the Loan Documents .
“ Six Flags First Lien Guarantee and Collateral Agreement ”: the First Lien Guarantee and Collateral Agreement, dated as of the date hereof, by and among Parent, Holdings, SFTP and each subsidiary guarantor party thereto in favor of JPMorgan Chase Bank, N.A., as administrative agent, as the same may be amended (including any amendment and restatement or any assumption thereof), supplemented or otherwise modified from time to time, and including any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders which grants a Lien on any Property of any Person to secure the obligations and liabilities of any Guarantor, in each case, in accordance with the Loan Documents.
“ Six Flags Guarantees ”: collectively, the General and Continuing Guarantee of SFTP and Holdings (as successor to Six Flags Entertainment Corporation), dated as of March 18, 1997, in respect of the Georgia Park, and the General and Continuing Guarantee of SFTP and Holdings (as successor to Six Flags Entertainment Corporation), dated as of January 6, 1998, in respect of the Texas Park.
“ Six Flags Second Lien Credit Agreement ”: the Second Lien Credit Agreement, dated as of April 30, 2010, among Parent, Holdings and SFTP, as borrower, certain of its subsidiaries
named therein, the several banks and other financial institutions or entities from time to time party thereto, and Goldman Sachs Lending Partners LLC , as administrative agent, in the original principal amount of $250,000,000, as the same may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, and including any agreement, instrument or other document extending the maturity of, refinancing, replacing, renewing, refunding or otherwise restructuring all or a portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders, in each case, in accordance with the Loan Documents .
“ Six Flags Second Lien Guarantee and Collateral Agreement ”: the Second Lien Guarantee and Collateral Agreement, dated as of the date hereof, by and among Parent, Holdings, SFTP and each subsidiary guarantor party thereto in favor of Goldman Sachs Lending Partners LLC , as administrative agent, as the same may be amended (including any amendment and restatement or any assumption thereof), supplemented or otherwise modified from time to time, and including any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders which grants a Lien on any Property of any Person to secure the obligations and liabilities of any Guarantor, in each case, in accordance with the Loan Documents.
“ SFO Notes ”: as defined in Section 5.1(1).
“ SFOG A ”: as defined in the preamble hereto.
“ SFOG B ”: as defined in the preamble hereto.
“ SFOT I ”: as defined in the preamble hereto.
“ SFOT II ”: as defined in the preamble hereto.
“ SFTP ”: as defined in the recitals hereto.
“ Standard Rate ”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the greater of (a) the rate for deposits in Dollars for a one month interest period beginning on such day (or if such day is not a Business Day, the immediately preceding Business Day) appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at approximately 11:00 a.m. London time on such day, and (b) the greater of (i) 2.50% per annum and (ii) the rate floor set forth in the definition of “Eurocurrency Base Rate”, or any substantially similar term, in the Six Flags First Lien Credit Agreement. Any change in the Standard Rate due to a change in the rate set forth in clause (b)(ii) of the immediately preceding sentence shall be effective as of the opening of business on the effective day of such change. In the event that the rate described in clause (a) does not appear on such page, such rate shall be determined by reference to such other comparable publicly available service for displaying eurocurrency rates as may be selected by the Lender.
“ Subordinated Indemnity Agreement ”: that certain Subordinated Indemnity Agreement, dated as of April 1, 1998, by and among Parent (as successor to Premier Parks Inc.), Holdings (as successor to Six Flags Entertainment Corporation), SFTP, SFOG II, Inc., SFT Holdings, Inc., Historic TW Inc. (formerly known as Time Warner Inc.), Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.), TW-SPV Co. and GP Holdings Inc., as the same may be amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“ Subordinated Indemnity Escrow Agreement ”: that certain Subordinated Indemnity Escrow Agreement, dated as of September 28, 2006, by and among Parent, Historic TW Inc. (formerly known as Time Warner Inc.), Warner Bros. Entertainment Inc. (as successor to Time Warner Entertainment Company, L.P.) and the Bank of New York Mellon, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“ Successor Six Flags First Lien Facility ”: any loan facility that amends, restates, amends and restates, refinances, modifies or extends all of the Tranche B Term Loan Facility under the Six Flags First Lien Credit Agreement.
“ Subsidiary ”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person; provided that, notwithstanding the foregoing, each of the Partnership Parks Entities will be deemed to be a Subsidiary of Parent for all purposes under this Agreement, provided further that none of the joint ventures established pursuant to the Great Escape Agreements, any Inactive Subsidiary, TX Fund or GA Fund will be deemed to be a Subsidiary of Parent for any purpose under this Agreement. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Parent.
“ Subsidiary Guarantor ”: each Subsidiary of SFTP that is a “Subsidiary Guarantor” under the Six Flags First Lien Credit Agreement or the Six Flags Second Lien Credit Agreement.
“ Texas Park ”: has the meaning set forth in the Subordinated Indemnity Agreement.
“ Time Warner ”: Time Warner Inc. and/or its affiliates.
“ Tranche B Term Loan Facility ”: the “Tranche B Term Loan Facility” or any substantially similar defined term under and as defined in the Six Flags First Lien Credit Agreement.
“ Tranche B Term Loans ”: the “Tranche B Term Loans” or any substantially similar defined term under and as defined in the Six Flags First Lien Credit Agreement.
“ Transactions ”: the execution, delivery and performance by each Loan Party of the Loan Documents to which it is or is to be a party, the borrowing of Loans, the use of the proceeds thereof to purchase Units pursuant to Liquidity Puts and the transactions consummated in connection with the Plan of Reorganization.
“ Triggering Default ”: has the meaning set forth in the Subordinated Indemnity Agreement.
“ TX Fund ”: as defined in the recitals hereto.
“ TX Overall Agreement ”: as defined in the recitals hereto.
“ Units ”: as defined in the recitals hereto.
“ U.S.A. PATRIOT Act ”: (a) the Trading with the Enemy Act, as amended, and each of the foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as amended or modified from time to time.
“ Wholly Owned Subsidiary ”: with respect to any Person, any corporation, partnership, limited liability company or other entity of which all of the equity securities or other ownership interests (other than, in the case of a corporation, directors’ qualifying shares or equity interests held by foreign nationals, in each case to the extent mandated by applicable law) are directly or indirectly owned or controlled by such Person or one or more Wholly Owned Subsidiaries of such Person.
1.2 Other Definitional Provisions . (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms relating to Parent, Holdings and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP; provided that to the extent any Person does not constitute a Subsidiary of the Parent and the Parent and its Subsidiaries do not own more than a majority of the Capital Stock of such Person, such Person shall not be required to be consolidated with the Parent or any of its Subsidiaries for any purposes of the Loan Documents regardless of the requirements of GAAP.
(c) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.
(d) Except as specifically provided herein, the meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. Furthermore, the words “include”, “includes”, and “including” shall be deemed to be followed by the phrase “without limitation”.
(e) Each reference to the “Multiple Draw Term Credit Agreement” in any Loan Document shall be deemed to be a reference to this Agreement, as amended, amended and restated, supplemented or otherwise modified from time to time after the date hereof.
(f) When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in the definition of Interest Period) or performance shall extend to the immediately succeeding Business Day (except where otherwise noted).
(g) Notwithstanding any other provision contained herein, all computations of amounts and ratios referred to in this Agreement shall be made without giving effect to any election under FASB ASC Topic 825 “Financial Instruments” (or any other financial accounting standard having a similar
result or effect) to value any Indebtedness or other liabilities of the Borrowers at “fair value” as defined therein.
SECTION 2. AMOUNT
AND TERMS OF
COMMITMENT
2.1 Commitment . During the Availability Period, s ubject to the terms and conditions hereof, the Lender agrees to make term loans denominated in Dollars (each, a “ Loan ”) to the Borrowers on each Borrowing Date in a principal amount not to exceed for each Loan, the lesser of (a) the Liquidity Put Funded Amount as of such date, and (b) the Commitment. Amounts borrowed under this Section 2.1 and subsequently repaid or prepaid may not be reborrowed.
2.2 Procedure for Borrowing . The Borrowers shall deliver to the Lender an irrevocable notice substantially in the form of Exhibit C (which notice must be received by the Lender prior to 12:00 Noon, New York City time, at least three Business Days prior (and no more than 5 Business Days prior) to the anticipated Borrowing Date), signed by a Responsible Officer of each Borrower and requesting that the Lender make a Loan on the Borrowing Date. Such Borrowing Notice shall (i) specify the amount to be borrowed, (ii) the allocation of the Loans among the Borrowers, if any (it being understood that the Lender shall only make one wire of the aggregate Loan amount to the Borrowers), (iii) the bank account and other pertinent wire transfer instructions of the Borrowers to which such Loan is to be deposited by the Lender, and (iv) contain a certification that all applicable conditions to such borrowing hereunder have been satisfied . Subject to the satisfaction of all applicable closing conditions to each borrowing, n ot later than 3:00 P.M., New York City time, on the applicable Borrowing Date the Lender shall make available to the Borrowers in accordance with the Borrowing Notice an amount in immediately available funds equal to the applicable Loan to be made by the Lender on such date.
2.3 Repayment of Loans . Each Loan shall mature on the fifth (5th) anniversary of the Borrowing Date on which it was made (each, a “ Maturity Date ”). The Obligations of the Borrowers with respect to each Loan shall be joint and several. The Borrowers may, at their discretion and as necessary, allocate the proceeds of each Loan among themselves to meet their respective Liquidity Put obligations.
SECTION 3. CERTAIN
PROVISIONS APPLICABLE TO
THE LOANS
3.1 Repayment of Loans; Evidence of Debt . (a) The Borrowers hereby unconditionally agree, jointly and severally, to pay to the Lender the remaining outstanding principal balance of the Loan made by the Lender to the Borrowers on the applicable Maturity Date (or on such earlier date on which the Loans become due and payable pursuant to Section 8). The Borrowers hereby further agree to pay interest on the unpaid principal amount of the outstanding Loans from the Borrowing Date of each such Loan until payment in full thereof at the rates per annum, and on the dates, set forth in Section 3.4.
(b) The Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrowers to the Lender resulting from each Loan of the Lender
to the Borrowers from time to time, including the amounts of principal and interest payable and paid to the Lender from time to time under this Agreement.
(c) The entries made pursuant to Section 3.1(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrowers therein recorded and shall be conclusive, in the absence of manifest error ; provided , however , that the failure of the Lender to maintain such account, or any error therein, shall not in any manner affect the obligation of the Borrowers to repay (with applicable interest) the Loans made to the Borrowers by the Lender in accordance with the terms of this Agreement.
(d) The Borrowers agree that, upon the request by the Lender, the Borrowers will execute and deliver to the Lender a Note evidencing any Loan or Loans made by the Lender, with appropriate insertions as to date and principal amount.
3.2 Optional Prepayments . The Borrowers may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Lender at least one Business Day prior thereto, which notice shall specify the date and amount of prepayment. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments of Loans shall be in an aggregate principal amount of at least $1,000,000.
3.3 Mandatory Prepayments . (a) If any Borrower receives Excess Proceeds in excess of $20,000 in the aggregate, the Loans shall be prepaid as soon as practicable and in no event later than two (2) Business Days following the date of receipt of such Excess Proceeds, by an amount equal to 100% of such Excess Proceeds.
(b) The Borrowers shall prepay the Loans (i) within three (3) Business Days of the Initial Escrow Replenishment Date, in an amount equal to the Aggregate Escrow Amount as of the Initial Escrow Replenishment Date, and (ii) within three (3) Business Days of each subsequent Escrow Amounts Determination Date until the first Escrow Amounts Determination Date occurring after all of the Loans have been paid in full and this Agreement is terminated, in an amount equal to the excess of (x) the Aggregate Escrow Amount as of such Escrow Amounts Determination Date over (y) the amounts prepaid pursuant to this Section 3.4(b); provided, however, that if the Aggregate Escrow Amount for any Escrow Amounts Determination Date is less than the amounts prepaid pursuant to this Section 3.4(b), the Borrowers shall not be required to make any prepayments on such Escrow Amounts Determination Date.
(c) Amounts to be applied in connection with prepayments made pursuant to this Section 3.3 shall be applied, first , to accrued and unpaid Expenses payable under Section 9.5, second , to accrued and unpaid interest on the Loans that has not been capitalized, and last , to the outstanding principal amount of the Loans in direct order of maturity.
3.4 Interest Rates and Payment Dates . (a) Each Loan shall bear interest on the unpaid principal amount thereof on each day from the applicable Borrowing Date until payment in full in cash at a rate per annum equal to (i) 1.00%, plus (ii) the Standard Rate on such day plus (iii) the Applicable Margin on such day. If any Tranche B Term Loans are prepaid at a premium as a result of a “Repricing Transaction” under Section 5.4 of the Six Flags First Lien Credit Agreement, the same proportion of any Loans outstanding on the date of such prepayment (a “ Repricing Transaction Prepayment Date ”) shall bear additional interest on the unpaid principal amount thereof at a rate per annum equal to 1% for a period beginning on such Repricing Transaction Prepayment Date through the first anniversary of such Repricing Transaction Prepayment Date. Such additional interest described in
the immediately preceding sentence shall be in addition to the rate that is otherwise applicable pursuant to the first sentence of this clause (a).
(b) Upon the occurrence and during the continuance of any Event of Default, all outstanding Loans shall bear interest, payable on demand, at a rate per annum that is equal to the rate that would otherwise be applicable thereto pursuant to clause (a) of this Section 3.4 plus 2%, from the date of the occurrence of such Event of Default until such Event of Default is cured or waived or such amount is paid in full.
(c) All accrued and unpaid interest on all outstanding Loans shall be paid in arrears out of, and within two (2) Business Days (such date of payment, an “ Interest Payment Date ”) following receipt by the Borrowers of, any cash distributions on Units held by the Borrowers in the GA Fund and the TX Fund, as applicable (the “ Partnership Distributions ”); provided that if on any Interest Payment Date, Partnership Distributions have not been sufficient to pay all amounts owing under this Section 3.4(c), all of the accrued and unpaid interest on each Loan (after application of cash from the Partnership Distributions) on such Interest Payment Date shall be paid in kind by capitalizing such interest and adding it to the principal amount of the applicable Loan.
3.5 Computation of Interest and Fees . (a) Interest, fees and commissions payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed. Any change in the interest rate on a Loan resulting from a change in the Applicable Margin or Standard Rate shall become effective as of the opening of business on the day on which such change becomes effective.
(b) Each determination of an interest rate by the Lender pursuant to any provision of this Agreement shall be conclusive and binding on the Borrowers in the absence of manifest error. The Lender shall, at the request of the Borrowers, deliver to the Borrowers a statement showing the quotations used by the Lender in determining any interest rate pursuant to Section 3.4(a).
3.6 Payments . (a) Each payment (including each prepayment) of the Loans shall be applied to the Loans in direct order of maturity.
(b) All payments (including prepayments) to be made by the Borrowers hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Lender, at the Payment Office, in Dollars and in immediately available funds. Any payment made by the Borrowers after 12:00 Noon, New York City time, on any Business Day shall be deemed to have been made on the next following Business Day. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. In the case of any extension of any payment of principal pursuant to the preceding sentence, interest thereon shall be payable at the then applicable rate during such extension.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loans, the Borrowers hereby jointly and severally represent and warrant to the Lender that:
4.1 Existence; Compliance with Law . Each of the Borrowers (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate (or equivalent) power and authority, and the legal right, to own and operate its Property, to lease
the Property it operates as lessee and to conduct the Business in which it is currently engaged, (iii) is duly qualified in all material respects as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its Business requires such qualification and (iv) is in compliance in all material respects with all Requirements of Law.
4.2 Power; Authorization; Enforceable Obligations . Each Borrower has the corporate (or equivalent) power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and to consummate the Transactions. Each Borrower has taken all necessary corporate (or equivalent) action to authorize the execution, delivery and performance of the Loan Documents to which it is a party on the terms and conditions herein. No consent or authorization of, or filing with, any Person is required in connection with the execution, delivery and performance by each Borrower of the Loan Documents to which it is a party, except for those that have been obtained and are in full force and effect. Each Loan Document to which it is a party has been duly executed and delivered on behalf of each Borrower. Each Loan Document to which it is a party constitutes a legal, valid and binding obligation of each Borrower, enforceable against each such Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
4.3 No Legal Bar or Conflicts; No Default . The execution, delivery and performance of the Loan Documents by the Borrowers, the payments hereunder and thereunder, and the performance of the Transactions do not and will not, in any material respects, conflict with, result in any violation or breach of, constitute (with or without notice or lapse of time, or both) a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any material benefit) under, require a consent or waiver under, or result in the imposition of any Lien on any Borrower’s assets pursuant to, any Requirement of Law or any Contractual Obligation of any of the Borrowers. No event has occurred that with the lapse of time or the giving of notice or both would constitute a default by any Borrower under, or a termination or acceleration event under, in any material respect, any Contractual Obligation. No Event of Default has occurred or is continuing (without giving effect to any cure period).
4.4 No Liabilities . The Borrowers do not have any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, known or unknown, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise, whether or not of a kind required by GAAP to be set forth on a financial statement or in the notes thereto (“ Liabilities ”) other than pursuant to the Partnership Parks Agreements, or as otherwise permitted hereunder. None of the Borrowers has any knowledge of any circumstance, condition, event or arrangement that may hereafter give rise to such Liabilities of the Borrowers other than as set forth under the documents specified in the prior sentence or as set forth herein.
4.5 Litigation . No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority (i) in which any Borrower is named as a primary defendant or (ii) in which any Borrower is named as a co-defendant (A) with respect to any of the Loan Documents or any of the Transactions or (B) that if adversely determined, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect, is pending or, to the knowledge of any Borrower, threatened by or against any of the Borrowers or against any of their respective Properties or revenues.
4.6 Subordinated Indemnity Agreement . Since July 1, 2009, except as otherwise disclosed to the Lender in writing, each of the Borrowers has complied in all material respects with the terms and provisions of (a) the Subordinated Indemnity Agreement, (b) the GA Overall Agreement and (c) the TX Overall Agreement.
4.7 Ownership of Property . Each of the Borrowers has good and valid title to the Units held by them.
4.8 Taxes . Each of the Borrowers has (a) filed or caused to be filed all Federal, state and other material tax returns that are required to be filed, (b) paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its Property, and (c) paid all other material taxes, fees or other charges imposed on it or any of its Property by any Governmental Authority (in each case other than any taxes, fees or charges the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves (to the extent required by GAAP)) have been provided on the books of the Borrowers. No material tax Lien has been filed, and, to the knowledge of the Borrowers, no claim is being asserted with respect to any such tax, fee or other charge.
4.9 Accuracy of Information . No financial statement or written information (other than pro forma financial information and projections, estimates, forecasts and other forward looking information, including budgets or information of a general industry or economic nature) contained in the Loan Documents or contained in any other document, certificate or statement furnished by or on behalf of any Borrower to the Lender for use in connection with the Transactions, considered as a whole as of the date such statement, information, document or certificate was so furnished, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made not misleading. The projections and pro forma financial information contained in the materials referenced above were based upon good faith estimates and assumptions believed by the management of such Borrower to be reasonable at the time made, it being recognized by the Lender that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected or pro forma results set forth therein by a material amount.
4.10 Use of Proceeds; Funding of Liquidity Puts . The proceeds of each Loan shall be used solely to purchase Units pursuant to the Liquidity Puts. With respect to each Loan, 100% of the Liquidity Put Threshold Amount for the fiscal year such Loan was made shall have been used to purchase Units pursuant to the Liquidity Put for such fiscal year.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent to Closing . The effectiveness of this Agreement is subject to the satisfaction, prior to or concurrently with the Closing Date, of the following conditions precedent:
(a) Loan Documents . The Lender shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Borrowers, (ii) the Guarantee Agreement, executed and delivered by a duly authorized officer of Parent, Holdings, SFTP and each Subsidiary Guarantor and (iii) a Note, for the account of the Lender and executed and delivered by a duly authorized officer of the Borrowers.
(b) Confirmation Order . The Bankruptcy Court shall have entered an order confirming the Plan of Reorganization, in form and substance satisfactory to the Lender, which order (including the Plan of Reorganization) shall be in full force and effect and shall not have been reversed or modified and shall not be stayed or subject to a motion to stay or subject to appeal or petition for review, rehearing or certiorari. The effective date under the Plan of Reorganization shall have occurred (and all conditions
precedent thereto as set forth therein shall have been satisfied (or shall be concurrently satisfied) or waived).
(c) Assumption of Certain Agreements . The applicable Guarantors shall have assumed their obligations under the License Agreements and the Partnership Parks Agreements to which any Guarantor is a party, upon confirmation of the Plan of Reorganization, or shall have entered into a new such agreement, in form and substance satisfactory to the Lender, effective as of the effectiveness of the Plan of Reorganization.
(d) Amendments to the Subordinated Indemnity Agreement and the Subordinated Indemnity Escrow Agreement . The Borrowers, each Guarantor and each of their Subsidiaries party thereto shall have executed and delivered to the Lender (i) an amendment to the Subordinated Indemnity Agreement substantially in the form attached hereto as Exhibit E , and (ii) a waiver of the Subordinated Indemnity Escrow Agreement substantially in the form attached hereto as Exhibit F .
(e) Approvals . All material Governmental Authority and third party approvals necessary or, in the reasonable discretion of the Lender, advisable to be obtained by Parent or any of its Subsidiaries in connection with the transactions contemplated hereby shall have been obtained and be in full force and effect.
(f) Six Flags First Lien Credit Agreement and Six Flags Second Lien Credit Agreement . The Lender shall have received a true and correct copy, certified as to authenticity by Parent or Holdings, of the Six Flags First Lien Credit Agreement, the Six Flags First Lien Guarantee and Collateral Agreement, the Six Flags Second Lien Credit Agreement and the Six Flags Second Lien Guarantee and Collateral Agreement, each in a form reasonably satisfactory to the Lender, which in each case (i) provides a first lien term loan facility and a first lien revolving credit facility with an aggregate committed principal amount as of the Closing Date of not less than $890,000,000, and a second lien term loan facility with an aggregate committed principal amount as of the Closing Date of not less than $250,000,000 (in each case, subject to adjustments for funding a portion of such term facility at original issue discount), (ii) contains terms and conditions that, in the sole discretion of the Lender, are consistent with the Plan of Reorganization and are not in conflict with the terms of this Agreement and do not directly or indirectly restrict the ability of the Loan Parties to perform their obligations hereunder, under the Partnership Parks Agreements or the License Agreements and (iii) with respect to the Six Flags First Lien Credit Agreement and the Six Flags Second Lien Credit Agreement, contain terms and conditions that are no more onerous to the Loan Parties than those set forth in the draft Credit Agreement among Parent, Holdings, SFTP, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, filed with the Bankruptcy Court on April 12, 2010.
(g) Payment of Indebtedness under the Existing Time Warner Facility . The Lender shall have received on or prior to the Closing Date a fully executed payoff letter or other evidence of payment in full in cash of all principal, interest and other amounts due under the Existing Time Warner Facility and all commitments thereunder relating to the foregoing shall have been terminated, in each case, in form and substance satisfactory to the Lender.
(h) Fees . The Lender shall have received all fees required to be paid under the Fee Letter, and all expenses for which invoices have been presented (including reasonable fees, disbursements and other charges of counsel to the Lender), on or before the Closing Date.
(i) Management . The senior management of the Loan Parties as of November 30, 2009 shall continue to be senior management of Parent upon confirmation of the Plan of Reorganization and no change of such senior management shall have been publicly announced.
(j) Management Plan . The management plan for Parent, Holdings and SFTP on the Closing Date shall be consistent with that described in the Plan of Reorganization.
(k) Legal Opinion . The Lender shall have received (i) the legal opinion of Paul, Hastings, Janofsky & Walker LLP, special counsel to Parent, Holdings and its Subsidiaries and the Borrowers, substantially in the form of Exhibit G and (ii) the legal opinions of local counsel to certain Subsidiaries incorporated and otherwise organized in Texas, Ohio, Massachusetts, Maryland, New Jersey, Missouri and such other applicable jurisdictions as requested by the Lender and, in each case, dated the Closing Date, addressed to the Lender and in form and substance satisfactory to the Lender.
(l) Equity Proceeds . Parent shall have received (i) net proceeds in a minimum amount of $650,000,000 from the sale of new Parent common stock (comprised of at least (A) $505,500,000 from the sale of Parent common stock pursuant to a rights offering to Parent noteholders that is fully backstopped by a group of Parent noteholders (the “ Parent Backstop Group ”), (B) $75,000,000 from a direct discounted purchase of Parent common stock by the Parent Backstop Group, (C) $50,000,000 from a direct undiscounted purchase of Parent common stock by the Parent Backstop Group and (D) $19,500,000 from the conversion of claims in respect of the 12 ¼% Notes due 2016 of Holdings (the “ SFO Notes ”)) and (ii) additional equity capital of at least (A) $25,000,000 from the sale of additional common stock pursuant to the Delayed Draw Equity Commitment (as defined in the Six Flags First Lien Credit Agreement) under which at least $25,000,000 can be raised from the sale of additional common stock if the board of directors of Parent determines that such additional equity contribution is necessary between the date on which the Confirmation Order becomes effective and June 1, 2011, and (B) $50,000,000 from the conversion of claims in respect of the SFO Notes to fund the payment of post-petition interest in respect of the SFO Notes if the Bankruptcy Court allows such claims; provided , however , that in the case of clause (i)(D) and (ii)(B) above, Parent may receive cash in such amounts from such holders of claims (as opposed to and in lieu of a conversion of claims).
(m) Closing Certificate . The Lender shall have received a certificate of each Loan Party, dated as of the Closing Date, substantially in the form of Exhibit H with appropriate insertions and attachments.
5.2 Conditions to Each Extension of Credit . The agreement of the Lender to make any Loan requested to be made by it hereunder on any Borrowing Date is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties . Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects (except for the representation and warranty set forth in Section 4.10, which shall be true and correct in all respects) on and as of such Borrowing Date as if made on and as of such Borrowing Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date, provided , that, to the extent any such representation and warranty is already qualified by materiality or by reference to material adverse effect, such representation shall be true and correct in all respects.
(b) No Default . No Default or Event of Default shall have occurred and be continuing on such Borrowing Date or after giving effect to the extensions of credit requested to be made on such Borrowing Date.
Each borrowing by any Borrower of a Loan hereunder shall constitute a representation and warranty by such Borrower as of the Borrowing Date of such Loan that the conditions contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrowers hereby jointly and severally agree that, so long as the Commitment remains in effect or any Loan or other amount is owing to the Lender hereunder, each Borrower jointly and severally shall:
6.1 Financial Statements and Other Information . Deliver to the Lender the following financial statements, reports, notices and other information:
(a) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of each Borrower, interim condensed consolidated statements of operations, shareholders’ equity and cash flows of such Borrower for such period, and the related consolidated balance sheets of such Borrower;
(b) as soon as available and in any event no later than 75 days after the end of each fiscal year of each Borrower, an annual budget projection of such Borrower broken down on a month-by-month basis;
(c) as soon as available and in any event no later than 90 days after the end of each fiscal year of each Borrower, the information required by clause (a) on a year-end basis;
(d) to the extent requested by the Lender, any updated budgets or any internal updates of the information required by clauses (a) - (c) hereof promptly after such updates are produced in their final form; and
(e) any other documents or information as may be reasonably requested by the Lender from time to time.
6.2 Financial Statement and Other Information of the Georgia Park and Texas Park . Use commercially reasonable efforts to cause Parent to deliver the following financial statements, reports, notices and other information:
(a) as soon as available and in any event within 90 days after the end of each fiscal year of each of the Texas Park and the Georgia Park, consolidated statements of operations, partners’ equity and cash flows of each of the Texas Park and the Georgia Park and its Subsidiaries for such fiscal year and the related consolidated balance sheets of each of the Texas Park and the Georgia Park and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated figures for the preceding fiscal year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such consolidated financial statements present fairly in all material respects the consolidated financial condition and results of operations of each of the Texas Park and the Georgia Park and its Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP;
(b) as soon as available, and in any event no later than 75 days after the end of each fiscal year of Parent, a detailed annual budget projection of each of the Georgia Park and the Texas Park broken down on a month-by-month basis;
(c) as soon as available and in any event within five (5) Business Days after the end of each monthly fiscal period of Parent, the daily operating report of each of the Georgia Park and the Texas Park for the last day of such monthly fiscal period; and
(d) as soon as available and in any event within 30 days after the end of each monthly fiscal period of each fiscal year of Parent, management reports and interim statements of operations, shareholders’ equity and cash flows of each of the Georgia Park and the Texas Park for such period, and the related balance sheets of each of the Georgia Park and the Texas Park;
6.3 Notices of Material Events . Furnish the following to the Lender in writing:
(a) promptly after any officer of a Borrower has actual knowledge of facts that would give him or her reason to believe that any Default or Event of Default has occurred, notice of such Default or Event of Default; and
(b) as soon as any officer of a Borrower has actual knowledge of the facts that would give him or her reason to know of the occurrence thereof, prompt notice of (i) all legal or arbitral proceedings in which any Borrower is named as a primary defendant, and of all proceedings by or before any governmental or regulatory authority or agency, and of any material development in respect of such legal or other proceedings, affecting a Borrower that, if adversely determined, could reasonably be expected to result in aggregate liabilities of or damages to the Borrowers in excess of $100,000 over available insurance or indemnification by creditworthy third parties and (ii) all legal or arbitral proceedings in which any Borrower is named as a co-defendant, and of any material development in respect of such legal or other proceedings, affecting a Borrower that, if adversely determined, could reasonably be expected to result in aggregate liabilities of or damages to the Borrowers in excess of $1,000,000 over available insurance or indemnification by creditworthy third parties;
Each notice delivered under this Section 6.3 shall be accompanied by a statement of a Responsible Officer of the applicable Borrower setting forth in reasonable detail the facts and circumstances of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto;
6.4 Existence, Etc.
(a) (i) Preserve, renew and maintain in full force and effect its legal existence under the laws of the jurisdiction of its organization and (ii) take all reasonable action to maintain all material rights, privileges (including its good standing), permits, licenses and franchises necessary or desirable in the normal conduct of its business;
(b) Pay and discharge all Federal income taxes and all other material taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such obligation, tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained to the extent required by GAAP;
(c) Maintain and preserve all of its Properties material to the conduct of the Business of such Borrower in good working order and condition ;
(d) Keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied; and
(e) Permit representatives of the Lender, upon reasonable notice and during normal business hours (and, except if an Event of Default shall have occurred and be continuing, not more frequently than once each calendar quarter), to examine, copy and make extracts from its books and
records and to discuss its business, finances, condition and affairs with its officers, all to the extent reasonably requested by the Lender. Notwithstanding anything to the contrary in this Section 6.4(e), none of the Borrowers or any Subsidiary thereof will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information or (ii) in respect of which disclosure to the Lender (or their respective representatives or contractors) is prohibited by law or any binding agreement.
6.5 Compliance with Contractual Obligations and Requirements of Law . Comply with Contractual Obligations and Requirements of Laws in all material respects.
6.6 Further Assurances . From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Lender may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the Guarantee Agreement. Upon the exercise by the Lender of any power, right, privilege or remedy pursuant to this Agreement which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, each Borrower will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Lender may be required to obtain from such Borrower for such governmental consent, approval, recording, qualification or authorization.
SECTION 7. NEGATIVE COVENANTS
Without limiting, modifying or abrogating the Borrowers’ rights, obligations and restrictions under the Partnership Parks Agreements, the Borrowers hereby jointly and severally agree that, so long as the Commitment remains in effect or any Loan or other obligation is owing to the Lender hereunder, the Borrowers shall not, directly or indirectly:
7.1 Indebtedness . Create, incur, assume or suffer to exist any Indebtedness or any other Liabilities, except (a) Indebtedness outstanding and other obligations owing under the Loan Documents and any Indebtedness of such Person incurred to refinance, refund, replace, renew, extend or otherwise restructure any such outstanding Indebtedness, provided that such refinanced, refunded, replaced, renewed, extended or restructured Indebtedness shall not exceed the principal amount of such outstanding Indebtedness being so refinanced, refunded, replaced, renewed, extended or restructured plus all interest capitalized in connection therewith, plus accrued and unpaid interest (or dividends) and premium thereon, plus any other amounts paid and fees, costs and expenses incurred in connection therewith, (b) Liabilities for which not more than $50,000 per annum is required to be expended in any year, in the aggregate among all of the Borrowers, (c) Indebtedness (x) owing to any of the Guarantors as a result of the funding by such Guarantor of amounts owing under Section 9.5, and (y) Indebtedness to Parent or any of its Subsidiaries for amounts used to pay for Units required to be purchased pursuant to Liquidity Puts, provided that any such intercompany Indebtedness described in the foregoing clauses (x) and (y) shall in each case be subordinated to the Obligations pursuant to an intercompany subordinated note substantially in the form attached hereto as Exhibit I (“ Intercompany Subordinated Note ”).
7.2 Liens . Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except (a) Liens not prohibited by the Acquisition Company Guarantees, and (b) Liens pursuant to the Acquisition Company Guarantees.
7.3 Prohibition of Fundamental Changes . (i) Enter into any merger, consolidation, amalgamation or any other transaction fundamentally changing the organization or structure of the Borrowers or (ii) engage in any type of business other than as set forth in such Borrower’s organizational documents effective as of the date hereof.
7.4 Prohibition on Sale of Assets; Issuance of Equity . Convey, sell, lease, assign, transfer or otherwise dispose of any assets or Property (including the Units), or issue any shares of Capital Stock of such Borrower, except as otherwise permitted by this Section 7.
7.5 Limitation on Investments, Loans and Advances . Make any advance, investment, loan, extension of credit or capital contribution to, in or for the benefit of any Person, except (a) deposit accounts with one or more third-party financial institutions, and (b) investments in Units purchased pursuant to Liquidity Puts.
7.6 Transactions with Affiliates . Enter into any transaction, including any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate, except (a) as permitted by Section 7.1, (b) as otherwise not prohibited by the Guarantee Agreement, or (c) to purchase Units pursuant to Liquidity Puts.
7.7 Dividends . Make dividends (in cash, Property or obligations) on, or other payments or distributions on account of, or set apart of money for a sinking or other analogous fund for, or purchase, redeem, retire or otherwise acquire any shares of Capital Stock of such Borrower or of any warrants, options or other rights to acquire the same (or to make any payments to any Person such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market or equity value of such Borrower). So long as there are no amounts outstanding, whether for principal, interest or other amounts, under (i) this Agreement or (ii) any Intercompany Subordinated Note, payments or distributions may be made by the Partnership Parks Entities to GP Holdings Inc. under and in accordance with the Beneficial Share Assignment Agreement, notwithstanding the provisions of this Section 7.7.
7.8 Negative Pledge . Enter into, after the date hereof, any indenture, agreement, instrument or other arrangement that, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the granting of Liens, the declaration or payment of dividends, the making of loans, advances or Investments or the sale, assignment, transfer or other disposition of Property, other than any such prohibition or restraint set forth in (a) any Partnership Park Agreement, (b) any Loan Document or (c) any agreement refinancing or replacing obligations under clause (b) provided that the terms of such indenture, agreement, instrument or other arrangement are no more adverse to the Borrowers than the terms contained in the Loan Documents.
Notwithstanding the foregoing, nothing contained herein shall limit the Borrowers’ obligations to make payments in respect of the Loans.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrowers shall default in the payment when due in accordance with the terms hereof of any principal of, or interest on, any Loan and any fee payable by it hereunder or under
any other Loan Document or shall default in the payment when due for five or more Business Days of any other amount hereunder or under any other Loan Document;
(b) (i) any representation, warranty or certification made or deemed made herein or in any other Loan Document (or in any modification or supplement hereto or thereto) by a Loan Party, or any certificate furnished to the Lender pursuant to the provisions hereof or thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect, in any such case that could reasonably be expected to (either individually or in the aggregate) materially adversely affect the operations of any the Georgia Park or the Texas Park or have a Material Adverse Effect or (ii) the Borrowers shall be in breach of the representation or warranty under Section 4.10;
(c) (i) the Borrowers shall be in material breach of any covenant, provision or agreement, under Sections 6.3(a), 6.4(a)(i) or 7 hereof, or (ii) the Guarantors shall be in material breach of any covenant, provision or agreement under Sections 11(c)(i) or 12 of the Guarantee Agreement;
(d) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (c) of this Section 8) or any other Loan Document and such failure shall continue unremedied for a period of 30 days after notice thereof to the Borrowers for any such failure;
(e) the occurrence of any one or more of the following:
(i) a proceeding or case shall be commenced, without the application or consent of any Borrower, Parent, Holdings, SFTP or any of their respective Subsidiaries, in any court of competent jurisdiction, seeking (A) its reorganization, liquidation, dissolution, arrangement or winding up, or the composition or readjustment of its debts, (B) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of such Borrower, Parent, Holdings, SFTP or any of their respective Subsidiaries or of all or any substantial part of such Borrower’s, Parent’s, Holdings’, SFTP’s or any of their respective Subsidiaries’ Property, or (C) similar relief in respect of such Borrower, Parent, Holdings, SFTP or any of their respective Subsidiaries under any law relating to bankruptcy, insolvency, reorganization, winding up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against such Borrower, Parent, Holding, SFTP or any of their respective Subsidiaries shall be entered in an involuntary case under the Bankruptcy Code or any other applicable bankruptcy, insolvency or similar laws;
(ii) such Borrower, Parent, Holdings, SFTP or any of their respective Subsidiaries shall (A) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of itself or of all or a substantial part of its Property, (B) make a general assignment for the benefit of its creditors, (C) commence a voluntary case under the Bankruptcy Code or any other applicable bankruptcy, insolvency or similar laws, (D) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding up, or composition or readjustment of debts, or (E) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or any
other applicable bankruptcy, insolvency or similar laws or take any corporate action for the purpose of effecting any of the foregoing; or
(iii) such Borrower, Parent, Holdings, SFTP or Subsidiary shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due;
(f) judgments against, or with respect to the Property of, any of the Borrowers in excess of $100,000 in the aggregate (exclusive or in excess of judgment amounts to the extent covered by insurance or indemnification of creditworthy third parties) shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction, and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof, and the relevant Borrower shall not, within such period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal;
(g) a final judgment or judgments for the payment of money of $28,750,000 or more in the aggregate (exclusive of judgment amounts to the extent covered by insurance or indemnification of creditworthy third parties) shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against any Guarantor and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof, and such Guarantor shall not, within such period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal;
(h) defaults by any Borrower under Contractual Obligations to which such Borrower is bound and under which it could reasonably be expected to incur liabilities as a result of such default in excess of $100,000;
(i) the occurrence of a Triggering Default under the Subordinated Indemnity Agreement, subject to the expiration of any applicable cure periods therein;
(j) any Guarantor fails to pay any principal or interest due on any Indebtedness of $25,000,000 or more after the final maturity date thereof or the acceleration of the final maturity date of any Indebtedness of $25,000,000 or more;
(k) the failure of Parent or any of its Subsidiaries to (i) pay any amount due under the License Agreements, and such failure shall continue unremedied for a period of 10 Business Days after the occurrence thereof, or (ii) perform any of their material obligations under the License Agreements, and such failure shall continue unremedied for a period of 10 Business Days after receiving notice from the Lender;
(l) a Change of Control shall occur; or
(m) the Guarantee Agreement shall cease, for any reason, to be in full force and effect or any Guarantor shall so assert;
then, and in any such event, (A) upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrowers under the Bankruptcy Code, automatically the Commitment shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents shall immediately become due and payable, and (B) if such event is any other Event of Default, then, any or all of the following actions may be taken: (i) the Lender may, by notice to the Borrowers, declare the Commitment to be terminated forthwith, whereupon the Commitment shall immediately terminate; and (ii) the Lender may, by notice to the Borrowers, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers . Neither this Agreement or any other Loan Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 9.1. The Lender and each Loan Party party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents (including amendments and restatements hereof or thereof) for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (ii) waive, on such terms and conditions as may be specified in the instrument of waiver, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences .
Any such waiver and any such amendment, supplement or modification effected pursuant to the foregoing shall apply equally to the Lender and shall be binding upon the Loan Parties, the Lender and all future holders of the Loans. In the case of any waiver, the Loan Parties and the Lender shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Any such waiver, amendment, supplement or modification shall be effected by a written instrument signed by the parties required to sign pursuant to the foregoing provisions of this Section; provided , that delivery of an executed signature page of any such instrument by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.
9.2 Notices . Unless otherwise expressly provided herein, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by (including by telecopy or electronic mail pursuant to procedures approved by the Lender), and shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy or electronic mail notice, when received, addressed (i) in the case of Parent, Holdings, the Borrowers and the Lender as set forth below, or (ii) in the case of any party, to such other address as such party may hereafter notify to the other parties hereto:
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The Borrowers: |
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SFOG Acquisition A, Inc.
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with a copy to: |
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c/o
Six Flags Entertainment Corporation (formerly known as Six Flags, Inc.)
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Parent or Holdings |
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c/o
Six Flags Operations Inc.
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with a copy to: |
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Six
Flags Operations Inc.
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The Lender: |
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TW-SF
LLC
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with a copy to: |
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TW-SF
LLC
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TW-SF
LLC
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Paul,
Weiss, Rifkind, Wharton & Garrison LLP
Ariel J. Deckelbaum, Esq. Facsimile: (212) 757-3990 |
provided that any notice, request or demand to or upon the Lender shall not be effective until received. The attorneys for any party may, but shall not be required to, give any notice on behalf of their respective client.
9.3 No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties . All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.
9.5 Payment of Expenses; Indemnification .
(a) Each of the Borrowers agrees, jointly and severally, (i) on the Closing Date, to pay and reimburse the Lender for reasonable out-of-pocket costs and expenses (including, without limitation, fees and disbursements of counsel (including reasonable fees and disbursements of Paul, Weiss, Rifkind, Wharton & Garrison LLP) and accountants, costs and expenses of due diligence, duplication and messenger costs and expenses) of the Lender in connection with the Transactions and (ii) from time to time after the Closing Date, to pay and reimburse the Lender for reasonable out-of-pocket costs and expenses (including reasonable fees and disbursements of counsel) in connection with any subsequent waiver, amendment or modification of the Loan Documents and/or the Subordinated Indemnity Agreement and Related Indemnity Agreements necessary in connection therewith and (iii) all fees and expenses of the Lender (including fees and disbursements of counsel (including Paul, Weiss, Rifkind, Wharton & Garrison LLP)) incurred in connection with the enforcement of any of its rights and remedies under the Loan Documents (including in connection with any workout, restructuring or negotiations in respect thereof) (collectively, “ Expenses ”). All Expenses shall be paid within three (3) Business Days following demand by the Lender and (except for Expenses incurred on or prior to the Closing Date which shall be paid on the Closing Date) made together with the delivery by the Lender of a reasonable invoice therefor, in immediately available funds. Once paid, none of the Expenses shall be refundable under any circumstances. The Expenses shall not be creditable against any other amount payable in connection with the Loan Documents or otherwise.
(b) Each of the Borrowers agrees to pay, indemnify, and hold harmless the Lender and its affiliates and their officers, directors, employees, agents and advisors (together the “ Indemnified Parties ”) from and against any and all losses, damages, deficiencies, awards, assessments, amounts paid in good faith settlement, judgments, fines, penalties, actions, suits, interests, costs and expenses (including reasonable legal and other advisory fees, costs and expenses) or disbursements of any kind or nature whatsoever (“ Losses ”) arising out of, relating to or otherwise in connection with (i) the enforcement of any rights of the Lender under this Agreement or any other Loan Document in accordance with this Agreement or such other Loan Document, (ii) any claim (whether or not asserted in any legal proceeding), litigation, investigation, arbitration or proceeding arising out of, relating to or otherwise in connection with this Agreement or any other Loan Document, and (iii) the use of the proceeds of the Loans; provided that the Indemnified Parties shall not be indemnified for any Losses suffered or incurred by the Indemnified Parties that are found in a non-appealable judgment by a court of competent jurisdiction to have resulted primarily from such Indemnified Party’s (or such Indemnified Party’s affiliates’, officers’, directors’, employees’, agents’ or advisors’) gross negligence, willful misconduct or
fraud. This Section 9.5(b) shall survive the termination of this Agreement for the benefit of the Indemnified Parties.
9.6 Successors and Assigns; Participations and Assignments .
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lender (and any attempted assignment or transfer by any Borrower without such consent shall be null and void) and (ii) the Lender may not assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, the Lender may assign to one or more Eligible Assignees, upon 10 days prior written notice to the Borrowers (unless to an Eligible Assignee described in clause (a) of the definition thereof), all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it).
(ii) From and after the effective date specified in each Assignment and Acceptance the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of such Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 9.5). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations.
(c) The Borrowers, upon receipt of written notice from any Lender, agree to issue a Note to any Eligible Assignee requiring a Note to facilitate transactions of the type described in paragraph (b) above.
(d) The Lender may participate to one or more Person(s), upon 10 days prior written notice to the Borrowers, all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), provided that (i) the Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers shall continue to deal solely and directly with the Lender in connection with the Lender’s rights and obligations under this Agreement. The prior written consent of the Borrowers (not to be unreasonably withheld or delayed) shall be required for any participation in respect of any unfunded commitment in which the Lender transfers any voting rights to such participant.
(e) Each of the Borrowers hereby covenants and agrees that, at any time after the Closing Date at the request of any Lender, each Borrower shall promptly execute and deliver any amendment or other modification to this Agreement or any other Loan Documents (each an “ Assignment Amendment ”), in each case, as necessary or appropriate in the opinion of such Lender, to incorporate such additional provisions to allow, or otherwise provide, for any assignment or participation of the Loans (including, without limitation, amendments providing for the appointment of an administrative agent, voting rights amongst the Lenders, participations, tax gross-up, increased costs indemnity or any other lender indemnities or other customary lender protections), provided that such Assignment Amendment shall not
contain terms and conditions more adverse to the Loan Parties than the terms and conditions set forth in the Six Flags First Lien Credit Agreement.
9.7 U.S.A. Patriot Act . The Lender hereby notifies the Borrowers that pursuant to the requirements of the U.S.A. Patriot Act, it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow the Lender to identify the Borrowers in accordance with the U.S.A. Patriot Act.
9.8 Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrowers and the Lender.
9.9 Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
9.10 GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.11 Submission To Jurisdiction; Waivers . Each of the Lender and the Borrowers hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Lender or the Borrowers, as the case may be, at its address set forth in Section 9.2 or at such other address of which the Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.
9.12 Acknowledgments . Each of the Borrowers hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;
(b) the Lender has no fiduciary relationship with or duty to the Borrowers arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Lender, on one hand, and the Borrowers, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Borrowers and the Lender.
9.13 Confidentiality . The Lender agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent the Lender from disclosing any such information (a) to any affiliate of the Lender (b) to any Eligible Assignee or prospective Eligible Assignee that agrees to comply with the provisions of this Section, (c) to any of its employees, directors, agents, attorneys, accountants and other professional advisors, (d) upon the request or demand of any Governmental Authority having jurisdiction over it, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) in connection with any litigation or similar proceeding, (g) that has been publicly disclosed other than in breach of this Section 9.13, or (h) in connection with the exercise of any remedy hereunder or under any other Loan Document.
9.14 Release of Guarantee Obligations . Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations have been paid in full in cash and the Commitment has terminated or expired, upon request of the Borrowers, the Lender shall take such actions as shall be required to release all guarantee obligations under any Loan Document. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrowers or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrowers or any Guarantor or any substantial part of its Property, or otherwise, all as though such payment had not been made. Notwithstanding anything to the contrary contained herein or any other Loan Document, when any Subsidiary Guarantor has been released as a guarantor under (a) the Six Flags First Lien Guarantee and Collateral Agreement and (b) the Six Flags Second Lien Guarantee and Collateral Agreement, the Lender shall take such actions to release such Subsidiary Guarantor under the Guarantee for so long as (i) the release under the foregoing clauses (a) and (b) is not in connection with a transaction (or series of transactions) that would cause or otherwise result in (without giving effect to any applicable cure periods) a Default or Event of Default under the Loan Documents and (ii) such Subsidiary Guarantor remains so released under the Six Flags First Lien Guarantee and Collateral Agreement and the Six Flags Second Lien Guarantee and Collateral Agreement.
9.15 Accounting Changes . In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrowers and the Lender agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the financial condition of Parent and the Borrowers shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrowers and the Lender, all financial covenants, standards and terms in the Loan Documents shall continue to be calculated or construed as if such Accounting Changes had not occurred. “ Accounting Changes ” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.
9.16 Releases .
(a) Each of the Borrowers, on behalf of themselves and their respective affiliates, and each of their respective successors in title or interest, past, present, and future officers, directors, employees, limited partners, general partners, members, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals, hereby waives, releases, remises and forever discharges Time Warner, the Lender, and their respective affiliates, and each of their respective successors in title or interest, past, present, and future officers, directors, employees, limited partners, general partners, members, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals (collectively, the “ TW Releasees ”), from any and all claims, suits, liens, lawsuits, adverse consequences, amounts paid in settlement, debts, deficiencies, diminution in value, disbursements, demands, obligations, liabilities, causes of action, damages, losses, costs and expenses of any kind or character whatsoever, whether in law, equity or otherwise (collectively, the “ TW Claims ”), whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or unasserted, matured or unmatured, foreseen or unforeseen, liquidated or unliquidated, suspected or unsuspected, both at law or in equity, which any Borrower ever had, now has, or might hereafter have against such TW Releasee, arising or in existence on, or at any and all times prior to the Closing Date but in any case to the extent relating to Time Warner’s relationship to the Parent and its Subsidiaries , other than the Existing Time Warner Facility and TW Claims arising from or with respect to ordinary course business arrangements among Parent and its Affiliates, on the one hand, and any TW Releasee, on the other hand, including, without limitation, advertising, marketing or similar commercial arrangements and any trade payables with respect thereto.
(b) Each of Time Warner and the Lender, on behalf of themselves and their respective affiliates, and each of their respective successors in title or interest, past, present, and future officers, directors, employees, limited partners, general partners, members, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals, hereby waives, releases, remises and forever discharges each Borrower and their respective affiliates, and each of their respective successors in title or interest, past, present, and future officers, directors, employees, limited partners, general partners, members, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals (collectively, the “ Borrower Releasees ”), from any and all claims, suits, liens, lawsuits, adverse consequences, amounts paid in settlement, debts, deficiencies, diminution in value, disbursements, demands, obligations, liabilities, causes of action, damages, losses, costs and expenses of any kind or character whatsoever, whether in law, equity or otherwise (collectively, the “ Borrower Claims ”), whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or unasserted, matured or unmatured, foreseen or unforeseen, liquidated or unliquidated, suspected or unsuspected, both at law or in equity, which the Lender or Time Warner ever had, now has, or might hereafter have against such Borrower Releasee, arising or in existence on, or at any and all times prior to the Closing Date but in any case to the extent relating to Time Warner’s relationship to the Parent and its Subsidiaries, other than the Borrower Claims arising from or with respect to: (i) (A) the agreements governing the sale of certain
Spanish and German parks to Parent, (B) the Existing Time Warner Facility, (C) the License Agreements, (D) other licensing agreements relating to Europe and Latin America, (E) the Subordinated Indemnity Agreement, (F) the Subordinated Indemnity Escrow Agreement, (G) the Beneficial Share Assignment Agreement, (H) the Acquisition Company Liquidity Agreement, (I) any Partnership Parks Agreement, (J) this Agreement and the Guarantee Agreement, (K) any other agreement or instrument relating to the documents identified in clauses (A) to (J), and (L) any Borrower claims that are not being released by the express provisions of the Plan or (ii) ordinary course business arrangements among Parent, its Subsidiaries or its Affiliates, on the one hand, and Time Warner, the Lender or any of their respective affiliates, on the other hand, including, without limitation, advertising, marketing or similar commercial arrangements and any trade payables with respect thereto.
9.17 Non-Recourse . No affiliate (other than the Loan Parties), equity holder, member, officer, employee or director of the Loan Parties shall have any liability in respect of any of the Obligations, and the Lender shall have no recourse against any of them in respect of any of the Obligations (other than the Loan Parties).
9.18 WAIVERS OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Remainder of the page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
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President and Chief Executive |
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SFOG ACQUISITION B, L.L.C. |
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SFOT ACQUISITION I, INC. |
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SFOT ACQUISITION II, INC. |
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TW-SF LLC, as Lender |
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For purposes of Section 9.16(b): |
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TIME WARNER INC. |
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Senior Vice President & Treasurer |
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TW-SF LLC |
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Exhibit 10.6
EXECUTION VERSION
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT, dated as of April 30, 2010 (this “ Agreement ”), made by SIX FLAGS ENTERTAINMENT CORPORATION (formerly known as SIX FLAGS, INC.), a Delaware corporation (“ Parent ”), SIX FLAGS OPERATIONS INC., a Delaware corporation (“ Holdings ”), SIX FLAGS THEME PARKS INC., a Delaware corporation (“ SFTP ”) and each of the other signatories hereto (together with any other entity that may become a party hereto as provided herein, each, a “ Guarantor ”, and collectively, the “ Guarantors ”), in favor of TW-SF LLC, a Delaware limited liability company, and its successors and assigns, as lender (the “ Lender ”), the Multiple Draw Term Credit Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among the Lender, SFOG ACQUISITION A, INC., a Delaware corporation, SFOG ACQUISITION B, L.L.C., a Delaware limited liability company, SFOT ACQUISITION I, INC., a Delaware corporation, and SFOT ACQUISITION II, INC., a Delaware corporation (each, a “ Borrower ” and together, the “ Borrowers ”).
WITNESSETH:
WHEREAS, the Lender has agreed to make the Loans to the Borrowers upon the terms and subject to the conditions set forth in the Credit Agreement;
WHEREAS, the Borrowers and the other Guarantors are engaged in related businesses, and each Guarantor will derive substantial direct and indirect benefits from the making of the extensions of credit under the Credit Agreement;
WHEREAS, it is a condition precedent to the obligation of the Lender to make the Loans to the Borrowers that the Guarantors shall have executed and delivered this Agreement in favor of the Lender; and
NOW, THEREFORE, in consideration of the premises and to induce the Lender to enter into the Credit Agreement and to make the Loans to the Borrowers on the terms and conditions set forth in the Credit Agreement, each Guarantor hereby agrees with the Lender, as follows:
SECTION 1. Definitions .
(a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
“ Cap Amount ”: $1.03 billion in the aggregate less all mandatory payments of the principal of the Tranche B Term Loans and any permanent reductions of the First Lien Revolving Credit Commitments (specifically excluding, however, any such repayments and commitment reductions occurring solely as a result of any Permitted First Lien Refinancing Indebtedness permitted hereunder).
“ Cases ”: the cases of the Debtors before the Bankruptcy Court.
“ Code ”: the Internal Revenue Code of 1986, as amended from time to time.
“ Confidential Information Memorandum ”: the Confidential Information Memorandum dated January, 2010, as supplemented by the Lenders Update Materials, dated April 8, 2010 and furnished to the Lender prior to the Closing Date.
“ Confirmation Order ”: subject to waiver by mutual agreement of the parties hereto, an order entered by the Bankruptcy Court confirming the Debtors’ Modified Fourth Amended Joint Plan of Reorganization, which order (including the Plan of Reorganization) shall be in full force and effect and shall not have been reversed or modified and shall not be stayed or subject to a motion to stay or subject to appeal or petition for review, rehearing or certiorari, and the period for appealing the confirmation order shall have elapsed.
“ Consolidated Interest Coverage Ratio ”: as at any date, the ratio of (a) Parent Consolidated Adjusted EBITDA for such Measurement Period to (b) Consolidated Interest Expense for such Measurement Period.
“ Consolidated Interest Expense ”: for any Measurement Period, total interest expense that has been paid in cash during such period (including that attributable to Capital Lease Obligations) of Parent and its Subsidiaries for such period with respect to all outstanding Indebtedness of Parent and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Hedging Agreements in respect of interest rates to the extent such net costs have been or are required to be paid in cash during such period), minus cash interest income for such Measurement Period.
“ Consolidated Leverage Ratio ”: as at any date, the ratio of (a) Consolidated Total Debt as at such date to (b) Parent Consolidated Adjusted EBITDA for such Measurement Period.
“ Consolidated Net Income ”: of any Person for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided , that in calculating Consolidated Net Income for any period, there shall be excluded (i) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of Parent or is merged into or consolidated with Parent or any of its Subsidiaries, (ii) the income (or deficit) of any Person (other than a Subsidiary of Parent) in which Parent or any of its Subsidiaries has an ownership interest accounted for under the equity method, (iii) the cumulative effect of a change in accounting principle and changes as a result of the adoption or modification of accounting policies during such period, (iv) any effect of income (loss) from the early extinguishment of (A) Indebtedness and (B) obligations under any Hedging Agreement or other derivative instruments, (v) the effects of non-cash acquisition accounting adjustments and non-cash adjustments from the application of fresh start reporting, (vi) any net gains, losses, income or expense attributable to non-controlling interests and (vii) the undistributed earnings of any Subsidiary of Parent to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.
“ Consolidated Total Debt ”: as at the last day of any fiscal quarter, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than Revolver Indebtedness and the undrawn portion of any outstanding letters of credit) of Parent and its Subsidiaries that would, in conformity with GAAP, be set forth on the balance sheet of Parent and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amounts of Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the Revolver Indebtedness as of each of September 30, 2009, December 31, 2009 and March 31, 2010 was $0.
“ Covenant Loan Parties ”: Parent, Holdings, SFTP and each Subsidiary of SFTP that is a party to a “loan document” as specified under the Six Flags First Lien Credit Agreement and the Six Flags Second Lien Credit Agreement.
“ Credit Agreement ”: has the meaning set forth in the preamble hereto.
“ Dick Clark ”: dick clark productions, inc., a Delaware corporation.
“ Disqualified Capital Stock ”: shall mean any Capital Stock of Parent that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is putable or exchangeable) or upon the happening of any event or condition, (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock of Parent), pursuant to a sinking fund or otherwise, (b) is redeemable or exchangeable, in whole or in part, at the option of the holder thereof (other than solely for Qualified Capital Stock of Parent), or (c) provides for the scheduled payment of dividends in cash, in each case prior to the date that is one year after the final maturity date of the Tranche B Term Loans; provided that (i) if such Capital Stock is issued pursuant to any plan for the benefit of employees of Parent or any of its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by Parent or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations and (ii) any Capital Stock that would not constitute Disqualified Capital Stock but for the provisions thereof giving holders thereof the right to require Parent to purchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” prior to the date that is one year after the final maturity date of the Tranche B Term Loans shall not constitute Disqualified Capital Stock so long as the terms of such Capital Stock provide that the Loans and all other Obligations are repaid in full prior to such purchase or redemption and the Commitment is terminated.
“ First Lien Debt ”: as at the last day of any Measurement Period, the sum of (a) the aggregate outstanding principal amount of all Indebtedness (other than Revolver Indebtedness and the undrawn portion of any outstanding letters of credit), including, without limitation, Capital Lease Obligations, of SFTP and its Subsidiaries that is secured on a first lien basis by Property or assets of SFTP and its Subsidiaries and that would, in conformity with GAAP, be set forth on the balance sheet of SFTP and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (b) the average of the amount of Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the Revolver Indebtedness as of each of September 30, 2009, December 31, 2009 and March 31, 2010 was $0.
“ First Lien Leverage Ratio ”: as at any date, the ratio of (i) First Lien Debt as at such date to (ii) SFTP Consolidated Adjusted EBITDA for the Measurement Period most recently ended prior to such date.
“ First Lien Revolving Credit Commitments ”: the “Revolving Credit Commitments” or any substantially similar defined term under and as defined in the Six Flags First Lien Credit Agreement.
“ Foreign Subsidiary ”: any Subsidiary of Parent that is not a Domestic Subsidiary.
“ Guarantee ”: a guarantee, an indorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor’s obligations or an agreement to assure a creditor against loss, and including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms “Guarantee” and “Guaranteed” used as verbs have the correlative meanings.
“ Hedging Agreement ”: all interest rate or currency swaps, caps or collar agreements, foreign exchange agreements, commodity contracts or similar arrangements entered into by Parent or any of its Subsidiaries providing for protection against fluctuations in interest rates, currency exchange rates, commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies. For avoidance of doubt, Hedging Agreements shall include any interest rate swap or similar agreement that provides for the payment by Parent or any of its Subsidiaries of amounts based upon a floating rate in exchange for receipt by Parent or such Subsidiary of amounts based upon a fixed rate.
“ Intellectual Property ”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, copyrights and copyrightable works, copyright licenses, patents, inventions, discoveries and developments, patent licenses, trademarks, service marks, trade names, brand names, corporate names, domain names, logos, trade dress and other source indicators and the goodwill of any business symbolized thereby, trademark licenses, technology, know-how, processes, trade secrets and confidential or proprietary business information, all registrations and applications related thereto, the right to obtain renewals, extensions, substitutions, continuations, continuations-in-part, divisions, reissues, re-examinations or similar legal protections related thereto, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.
“ Investment ”: for any Person: (i) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (ii) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit having a stated term not exceeding 360 days arising in connection with the sale of inventory, supplies or patron services by such Person in the ordinary course of business, and excluding also any deposit made by such Person in the ordinary course of business of such Person or as an advance payment in respect of a Capital Expenditure; (iii) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person, other than any Guarantee under the Partnership Parks Agreements; provided , however , that the provision by Parent or any of its Subsidiaries of covenants, Guarantees and indemnities that are customary for non-recourse financings (as determined by Parent in good faith) with respect to Indebtedness incurred by a Person that is not a Subsidiary of Parent and that is otherwise non-recourse to Parent and its Subsidiaries shall not be deemed an Investment; or (iv) the entering into of any Hedging Agreement. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment and shall include any and all fees, expenses, commission costs and charges related to such Investment.
“ Investment Grade Rating ”: a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.
“ Liquidity ”: the sum of (a) Unrestricted Cash and Permitted Investments held by the Loan Parties and their consolidated subsidiaries, (b) the Available Revolving Commitments (as defined in the Six Flags First Lien Credit Agreement) on such date (with satisfaction of the applicable conditions precedent to Revolving Extensions of Credit (as defined in the Six Flags First Lien Credit Agreement) to
be tested as of such date) and (c) cash proceeds available to be received by the Loan Parties in exchange for the issuance of shares of Parent common stock pursuant to the commitment of Pentwater Capital Management LP or its Affiliates [(or any assignee or transferee thereof or successor thereto)] to Parent to purchase additional shares of common stock of Parent after the Closing Date pursuant to Section 5.2 of the Plan of Reorganization.
“ Measurement Period ”: for any determination under this Agreement, the four consecutive fiscal quarters of Parent or SFTP, as applicable, then last ended for which financial statements are required to be delivered pursuant to Section 11(a)(i) or (a)(iii).
“ Moody’s ”: Moody’s Investors Service, Inc. and any successor thereto.
“ Non-Guarantor Subsidiary ”: any Subsidiary of SFTP that is not a Guarantor.
“ Parent Consolidated Adjusted EBITDA ”: for any period, the sum, for Parent and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following:
(i) Consolidated Net Income of Parent and its Subsidiaries for such period excluding those amounts which, in the determination of Consolidated Net Income for such period, have been added or deducted for (A) total interest expense and, to the extent not reflected in such total interest expense, any losses on hedging or other derivative instruments, net of interest income and gains on such hedging obligations, (B) provisions for federal, state, local and foreign income tax, franchise taxes and similar taxes imposed in lieu of income tax, (C) depreciation and amortization expense (including, without limitation, amortization of goodwill and other intangible assets) and any impairment of property, equipment, goodwill or other intangible assets, (D) any effect of extraordinary, non-recurring or unusual gains or losses or expenses and curtailments or modifications to pension and post-retirement employee benefit plans, provided that the amount of cash expenditures added back as a result of this clause (D) shall not exceed $15,000,000 in any twelve-month period, (E) any net gains or losses of disposed, abandoned or discontinued assets or operations except for income and expenses prior to disposition, (F) any fees, expenses, commissions, costs or other charges related to (I) any securities offering, Investment, acquisition, disposition or other similar transaction permitted hereunder or the incurrence of Indebtedness permitted to be incurred hereunder (including any extension, renewal, refinancing or replacement thereof), in each case whether or not successful and whether or not consummated prior to, on, or after the Closing Date, (II) the Cases, the Plan of Reorganization and the transactions contemplated by the Cases and the Plan of Reorganization, and (III) emergence compensation, the termination or settlement of leases and executory contracts, litigation costs and settlements, asset write-ups or write-downs, income and gains recorded in connection with the corporate reorganization effected in connection with the administration of the Debtors’ Cases, (G)(I) any net unrealized gain or loss (after any offset) resulting in such period from obligations under any hedging obligations or other derivative instruments and the application of Statement of Financial Accounting Standards No. 133 and (II) any net unrealized gain or loss (after any offset) resulting in such period from currency translation, in each case to the extent not incurred in cash and (H) the Consolidated Net Income of any Person (adjusted for items (A) through (G) of this paragraph (i)) to the extent (I) attributable to interests held by third parties in Subsidiaries of Parent that are not wholly-owned by Parent or (II) attributable to interests in Persons accounted for under the equity method except to the extent of the cash received by Parent or any of its Subsidiaries from such Person, net of the Investments therein, in respect of such period, plus
(ii) any non-cash or stock-based compensation costs or expenses incurred by Parent or any of its Subsidiaries pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, less any cash costs of such plans or agreements incurred during such period.
Calculations of Parent Consolidated Adjusted EBITDA shall be as set forth on Exhibit A attached hereto.
Notwithstanding the foregoing if, during any period for which Parent Consolidated Adjusted EBITDA is being determined, Parent or any of its Subsidiaries shall have consummated any Acquisition or Disposition then, for all purposes of this Agreement, Parent Consolidated Adjusted EBITDA shall be determined on a pro forma basis as if such Acquisition or Disposition had been made or consummated on the first day of such period. The parties hereby agree that Parent Consolidated Adjusted EBITDA for the fiscal quarter ending (i) June 30, 2009 was $53,241,000, (ii) September 30, 2009 was $205,755,000 and (iii) December 31, 2009 was ($16,926,000).
“ Parks ”: collectively, the Existing Parks (as defined in the Six Flags First Lien Credit Agreement) and any other amusement or attraction park acquired by any of Parent and its Subsidiaries after the date hereof.
“ Permitted Acquisition ”: has the meaning set forth in Section 12(e)(iv)(A) hereto.
“ Permitted First Lien Refinancing Indebtedness ”: has the meaning set forth in Section 12(c)(iii) hereto.
“ Permitted Investments ”: (i) Dollars; (ii)(A) Pounds Sterling or Euros or (B) in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business; (iii) securities issued or directly and fully and unconditionally guaranteed or insured by the United States government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition; (iv) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $500,000,000 in the case of U.S. banks and $100,000,000 (or the Dollar equivalent as of the date of determination) in the case of non-U.S. banks; (v) repurchase obligations for underlying securities of the types described in clauses (iii), (iv) and (viii) entered into with any financial institution meeting the qualifications specified in clause (iv) above; (vi) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case maturing within 24 months after the date of creation thereof and Indebtedness or preferred stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with maturities of 24 months or less from the date of acquisition; (vii) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by SFTP) and in each case maturing within 24 months after the date of creation or acquisition thereof; (viii) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition; (ix) readily marketable direct obligations issued by any foreign government or any political subdivision or public instrumentality thereof, in each case having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition; (x) Investments with average maturities of 12 months or less from the date of acquisition in money market funds; (xi) investment funds investing 90% of their assets in securities of the types described in clauses (i) through (x) above; and (xii) in the case of Foreign Subsidiaries, substantially similar investments to those set forth in clauses (i) through (xi) above denominated in foreign currencies, provided that references to the United States of America (or any agency or instrumentality thereof) shall be deemed to mean foreign countries having a sovereign rating of “A” or better from either S&P or
Moody’s (or another nationally recognized statistical rating agency selected by SFTP and reasonably acceptable to the Lender).
“ Permitted Liens ”: has the meaning set forth in Section 12(d) hereto.
“ Permitted Second Lien Refinancing Indebtedness ”: has the meaning set forth in Section 12(c)(ix) hereto.
“ Property ”: any right or interest in or to property of any kind whatsoever, whether Real Property, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock.
“ Purchase Money Indebtedness ”: (i) Indebtedness consisting of the deferred purchase price of Property, conditional sale or other obligations under any title retention agreement, installment sales and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the Property being financed, and (ii) Indebtedness incurred to finance the acquisition of Property (including Acquisitions), including additions and improvements; provided , however , that any Lien arising in connection with any such Indebtedness shall be limited to the specified asset being financed (or replacement items) or, in the case of Real Property, the Real Property on which such asset is attached; and provided further , that such Indebtedness is incurred within 180 days after such acquisition, addition or improvement by SFTP or a Subsidiary of such asset.
“ Purchase Price ”: with respect to any Acquisition, the sum (without duplication) of (i) the amount of cash paid by Parent and its Subsidiaries in connection with such Acquisition, (ii) the value (as determined for purposes of such Acquisition in accordance with the applicable acquisition agreement) of all Capital Stock of Parent or any of its Subsidiaries issued or given as consideration in connection with such Acquisition (other than Qualified Net Cash Equity Proceeds applied to finance such Acquisition within 180 days of such Acquisition or Capital Stock of Parent that is issued in connection with and as consideration for an Acquisition), (iii) the principal amount (or, if less, the accreted value) at the time of such Acquisition of all Indebtedness incurred, assumed or acquired by Parent and its Subsidiaries in connection with such Acquisition, (iv) all additional purchase price amounts in connection with such Acquisition in the form of earnouts, deferred purchase price and other contingent obligations that are required to be recorded as a liability on the balance sheet of Parent and its Subsidiaries in accordance with GAAP, Regulation S-X under the Securities Act of 1933, as amended, or any other rule or regulation of the SEC, (v) all amounts paid by Parent and its Subsidiaries in respect of covenants not to compete, consulting agreements and other affiliated contracts in connection with such Acquisition, and (vi) the aggregate fair market value of all other consideration given by Parent and its Subsidiaries in connection with such Acquisition.
“ Qualified Capital Stock ”: any Capital Stock that is not Disqualified Capital Stock.
“ Qualified Net Cash Equity Proceeds ”: the Net Cash Proceeds of any offering of Capital Stock of Parent so long as (i) such offering was made in express contemplation of an Acquisition or an Investment, as the case may be, (ii) such Capital Stock is not mandatorily redeemable prior to the date that is one year after the final maturity date of the Tranche B Term Loans and (iii) such Acquisition or Investment, as the case may be, is consummated within 180 days after receipt by Parent of such Net Cash Proceeds.
“ Real Properties ”: all real property, including the improvements thereon, owned by, or leased by, any Guarantor or its Subsidiaries.
“ Refinancing Expenses ”: with respect to any refinancing, refunding, replacement or renewal of any Indebtedness, accrued and unpaid interest (or dividends) and premium thereon plus other reasonable amounts paid and fees and expenses incurred in connection therewith.
“ Restricted Payment ”: dividends (in cash, Property or obligations) on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of, any shares of any Capital Stock of Parent, Holdings or SFTP or of any warrants, options or other rights to acquire the same (or to make any payments to any Person (except “earn-out” payments or similar payments in connection with an Acquisition or pursuant to any agreement entered into in connection therewith, in each case where such obligation does not constitute Indebtedness) such as “phantom stock” payments, where the amount thereof is calculated with reference to the fair market or equity value of Parent, Holdings or SFTP), but excluding dividends payable solely in shares of common stock of Parent, Holdings or SFTP.
“ Revolver Indebtedness ”: Indebtedness of SFTP in respect of Revolving Credit Loans and Swing Line Loans (each as defined in the Six Flags First Lien Credit Agreement).
“ RP Eligible Proceeds ”: Net Cash Proceeds from Dispositions permitted under Sections 12(e)(iii)(B), 12(e)(iii)(F), 12(e)(iii)(G), 12(e)(iii)(H) and 12(e)(iii)(M).
“ S&P ”: Standard & Poor’s Ratings Services, a subsidiary of The McGraw-Hill Companies, Inc., and any successor thereto.
“ Second Lien Cap Amount ”: $275,000,000 at any time outstanding, in the aggregate, less all payments of principal under the Six Flags Second Lien Credit Documents.
“ Senior Secured Debt ”: as at the last day of any Measurement Period, the sum of (i) the aggregate outstanding principal amount of all Indebtedness (other than Revolver Indebtedness and the undrawn portion of any outstanding letters of credit) of SFTP and its Subsidiaries under the Six Flags First Lien Credit Agreement and under the Six Flags Second Lien Credit Agreement or that otherwise is secured by property or assets of SFTP and its Subsidiaries and that would, in conformity with GAAP, be set forth on the balance sheet of SFTP and its Subsidiaries on such date (determined on a consolidated basis without duplication in accordance with GAAP), plus (ii) the average of the amount of Revolver Indebtedness outstanding on such last day and on the last day of each of the three immediately preceding fiscal quarters. For purposes of computing clause (b) above, the parties agree that the Revolver Indebtedness as of each of September 30, 2009, December 31, 2009 and March 31, 2010 was $0.
“ Senior Secured Leverage Ratio ”: as at any date, the ratio of (i) Senior Secured Debt as at such date to (i) SFTP Consolidated Adjusted EBITDA for the Measurement Period most recently ended prior to such date.
“ SFTP Consolidated Adjusted EBITDA ”: for any period, for SFTP and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) means Parent Consolidated Adjusted EBITDA plus (i) administrative and other corporate charges of Parent that are not allocated to or paid by SFTP or its Subsidiaries and excluding (ii) any portion of Parent Consolidated Adjusted EBITDA (calculated on a net basis, taking into account positive and negative items) attributable to any Person (other than SFTP or its Subsidiaries) to the extent that SFTP or any of its Subsidiaries is not the owner of the interests in, or recipients of the cash received from, such Person. The parties hereby agree that SFTP Consolidated Adjusted EBITDA for the fiscal quarter ending (i) June 30, 2009 was $47,603,000, (ii) September 30, 2009 was $190,348,000 and (iii) December 31, 2009 was ($15,780,000).
“ Shared Services Agreement ”: the Amended and Restated Shared Services Agreement, dated as of January 1, 2006, among Parent, Holdings, SFTP and PP Data Services Inc., a Subsidiary of Holdings, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“ Six Flags First Lien Credit Documents ”: the Six Flags First Lien Credit Agreement and all agreements, instruments and documents executed and delivered pursuant to or in connection with any of the foregoing (including indentures, notes, guarantees, security agreements, mortgages and other collateral documents), in each case, as such agreements, instruments or other documents may be amended, amended and restated, supplemented, modified, refunded, renewed or extended, refinanced, replaced or otherwise restructured as permitted under this Agreement, in whole or in part from time to time with respect to all or any portion of the Indebtedness under such agreement or agreements or any successor replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.
“ Six Flags Second Lien Credit Documents ”: the Six Flags Second Lien Credit Agreement and all agreements, instruments and documents executed and delivered pursuant to or in connection with any of the foregoing (including indentures, notes, guarantees, security agreements, mortgages and other collateral documents), in each case, as such agreements, instruments or other documents may be amended, amended and restated, supplemented, modified, refunded, renewed or extended, refinanced, replaced or otherwise restructured as permitted under this Agreement, in whole or in part from time to time with respect to all or any portion of the Indebtedness under such agreement or agreements or any successor replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.
“ Six Flags Second Lien Obligations ”: the “Obligations” under and as defined in the Six Flags Second Lien Credit Agreement (and the corresponding term in any Permitted Second Lien Refinancing Indebtedness).
“ Tax Sharing Agreement ”: that certain Tax Sharing Agreement, effective as of January 1, 1999 and as amended on or prior to the Closing Date, among Parent, Holdings, and those Subsidiaries which are parties thereto, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“ Unrestricted Cash ”: all cash that is not restricted cash, as determined in accordance with GAAP.
“ Wholly Owned Non-Guarantor Foreign Subsidiary ”: has the meaning set forth in Section 12(c)(vi) hereto.
(a) Unless the context requires otherwise, (i) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and (ii) all Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.
(b) Except as specifically provided herein, the meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words, “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.”
(c) When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment or performance shall extend to the immediately succeeding Business Day.
(d) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms relating to Parent, Holdings and its Subsidiaries not defined in the Credit Agreement or Section 1(b) and accounting terms partly defined in the Credit Agreement or in Section 1(b), to the extent not defined, shall have the respective meanings given to them under GAAP; provided that to the extent any Person does not constitute a Subsidiary of the Parent and the Parent and its Subsidiaries do not own more than a majority of the Capital Stock of such Person, such Person shall not be required to be consolidated with the Parent or any of its Subsidiaries for any purposes of the Loan Documents regardless of the requirements of GAAP .
(e) Notwithstanding any other provision contained herein, all computations of amounts and ratios referred to in this Agreement shall be made without giving effect to any election under FASB ASC Topic 825 “Instruments” (or any other financial accounting standard having a similar result or effect) to value any Indebtedness or other liabilities of SFTP at “fair value” as defined therein .
SECTION 2. Guarantee .
(a) Each Guarantor, jointly and severally, hereby unconditionally and irrevocably guarantees to the Lender and its successors, endorsees, transferees and assigns, the prompt and complete payment by the Borrowers as and when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. All Obligations shall be conclusively presumed to have been created in reliance on this Agreement.
(b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by such Guarantor, or secured by assets of such Guarantor, under applicable federal and state laws relating to the insolvency of debtors.
(c) If any of the Obligations, or any part thereof, are not paid when due, either by its terms or as the result of exercise of any power to accelerate, each Guarantor shall, on demand therefor by the Lender, pay the amount due thereon to the Lender, and it shall not be necessary for the Lender (and each Guarantor expressly waives any rights it might otherwise have to require the Lender) to proceed against any Borrower, any other Guarantor or any other Person; provided, however, that no demand shall be required if such demand is impracticable or otherwise prohibited by a Requirement of Law (including upon the occurrence of an Event of Default under Section 8(e) of the Credit Agreement).
(d) The guarantee contained in this Section 2 shall remain in full force and effect until all of the Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full in cash and the Commitment shall be terminated, notwithstanding that from time to time the Borrowers may be free from any Obligations.
(e) Each Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to the Lender, on account of its liability hereunder, it will notify the Lender in writing that such payment is made under this Agreement for such purpose.
(f) No payment or payments made by the Borrowers, any Guarantor or any other Person or received or collected by the Lender from the Borrowers, any Guarantor or any other Person by virtue of any action or proceeding or any setoff or appropriation or payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any other Guarantor hereunder who
shall, notwithstanding any such payment or payments (other than payments made by any Borrower, such Guarantor or any other Guarantor in respect of the Obligations or any payment in cash received or collected from any Borrower, such Guarantor or any other Guarantor in respect of the Obligations), remain liable for the Obligations, up to the maximum liability of such Guarantor hereunder until the Obligations are paid in full in cash and the Commitment is terminated.
SECTION 3. No Subrogation . Notwithstanding any payment or payments made by any Guarantor hereunder, or any setoff or application of funds of any Guarantor by the Lender, no Guarantor shall be entitled to be subrogated to any of the rights of the Lender against the Borrowers or any other Guarantor or against any guarantee or right of setoff held by the Lender for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrowers or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Lender by the Borrowers on account of the Obligations are paid in full in cash and the Commitment is terminated . Without limiting the foregoing, if any amount shall be paid to any Guarantor on account of such subrogation rights or otherwise at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Lender, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Lender in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Lender, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Lender may determine.
SECTION 4. Amendments, etc. with Respect to the Obligations; Waiver of Rights . Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor, and without notice to or further assent by any Guarantor, (a) any demand for payment of any of the Obligations made by the Lender may be rescinded by the Lender, and any of the Obligations continued, (b) the Obligations, or the liability of any other Person upon or for any part thereof, or any guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Lender, (c) the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, and (d) any guarantee or right of offset at any time held by the Lender for the payment of the Obligations may be sold, exchanged, waived, surrendered or released .
SECTION 5. Guarantee Absolute and Unconditional . Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Lender upon the guarantee contained in Section 2 or acceptance of the guarantee contained in Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contain in Section 2; and all dealings between the Borrowers or any Guarantor, on the one hand, and the Lender, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in Section 2. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrowers or any Guarantor with respect to the Obligations. The guarantee contained in Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity, regularity or enforceability of the Credit Agreement or any other Loan Document, any of the Obligations or any guarantee or right of offset with respect thereto at any time or from time to time held by the Lender, (b) any defense, setoff or counterclaim (other than a defense of payment) which may at any time be available to or be asserted by the Borrowers or any other Person against the Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrowers or the Guarantors) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrowers from the Obligations, or of any or all of the Guarantors under the guarantee contained in Section 2, in bankruptcy or in any other instance.
When making a demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Lender may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrowers, any other Guarantor or any other Person or against any guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Lender to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrowers or any such other Person or to realize upon any or guarantee or to exercise any such right of offset, or any release of the Borrowers or any such other Person or of any guarantee or right of offset, shall not relieve any Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Lender against any Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.
SECTION 6. Bankruptcy No Discharge; Duty of Inquiry.
(a) This Agreement shall not be discharged or otherwise affected, with respect to any Guarantor, by any bankruptcy, reorganization or similar proceeding commenced by or against any Borrower or any Guarantor, including (i) any discharge of, or bar or stay against collecting, all or any part of the Obligations in or as a result of any such proceeding, whether or not assented to by the Lender, or (ii) any disallowance of all or any portion of the Lender’s claim for repayment of the Obligations. If acceleration of the time for payment of any Obligations is stayed or delayed as a result of any such proceeding, all such amounts shall nonetheless be payable by such Guarantor on demand by the Lender.
(b) If a payment by any Borrower or any other Guarantor is made and is later determined not to have been indefeasibly made in whole or in part, such payment by any Borrower or Guarantor to the Lender shall not constitute a release of any other Guarantor from any liability hereunder and (i) this Agreement shall continue to be effective or shall be reinstated notwithstanding any prior release, surrender or discharge by the Lender, of this Agreement and/or of the Guarantors, and (ii) this Agreement shall apply to, any and all amounts so refunded by the Lender or paid by the Lender to another Person (including any interest included in such amount), all as though such payment had not been made or such proceeds had not been received.
(c) Each Guarantor assumes the responsibility for being and keeping itself informed of the financial condition of each Borrower and each other Guarantor and of all other circumstances bearing upon the risk of nonpayment of the Obligations that diligent inquiry would reveal, and agrees that the Lender shall have no duty to advise the Guarantor of information regarding such condition or any such circumstances.
SECTION 7. Payments . Each Guarantor hereby agrees that payments hereunder will be paid to the Lender, without setoff or counterclaim by wire transfer of immediately available funds to an account or by such other reasonable means as the Lender may specify.
SECTION 8. Authorization . Each Guarantor authorizes the Lender, without notice to or further assent by such Guarantor and without affecting such Guarantor’s liability hereunder (regardless of whether any subrogation or similar right that such Guarantor may have or any other right or remedy of such Guarantor is extinguished or impaired), from time to time to:
(a) terminate, release, compromise, subordinate, extend, accelerate or otherwise change the amount or time, manner or place of payment of, or rescind any demand for payment or acceleration of, the Obligations or any part thereof, or otherwise amend or waive the terms and conditions of the Credit Agreement, or any provision thereof;
(b) exercise, fail to exercise, waive, suspend, terminate or suffer expiration of any of the remedies or rights of the Lender against any Borrower or any other Guarantor in respect of any Obligations, as the Lender may elect in its discretion;
(c) release, partially release, add or settle with any Borrower or any Guarantor, whether expressly, by operation of law or without limitation otherwise;
(d) accept partial payments on the Obligations and apply any and all payments or recoveries from any Borrower or any Guarantor to such of the Obligations as the Lender may elect in its discretion;
(e) refund at any time, at the discretion of the Lender, any payments or recoveries received by the Lender in question as the case may be, in respect of any Obligations; and
(f) otherwise deal with any Borrower and any Guarantor as the Lender may elect in its discretion.
SECTION 9. Certain Agreements and Waivers by the Guarantors . Each Guarantor hereby agrees that neither the Lender’s rights or remedies nor such Guarantor’s obligations under this Agreement shall be released, diminished, impaired, reduced or affected by any one or more of the following events, actions, facts or circumstances, and the liability of such Guarantor under this Agreement shall, be absolute, unconditional and irrevocable irrespective of:
(a) the insolvency, bankruptcy, dissolution, liquidation, termination, receivership, reorganization, merger, consolidation, change of form, structure or ownership, sale of all assets, or lack of corporate, partnership, limited partnership, limited liability company or other power of any Borrower, any Guarantor or any other Person at any time liable for the payment of any or all of the Obligations;
(b) all rights and benefits under applicable law purporting to reduce a Guarantor’s obligations in proportion to the obligation of the principal or providing that the obligation of a surety or guarantor must neither be larger nor in other respects more burdensome than that of the principal;
(c) except as otherwise specifically provided in this Agreement, any requirement of marshaling or any other principle of election of remedies and all rights and defenses arising out of an election of remedies by the Lender, even though that election of remedies has destroyed a Guarantor’s rights of subrogation and reimbursement against any Borrower or any other Guarantor;
(d) any right to assert against the Lender any defense (legal or equitable), set off, counterclaim and other right that such Guarantor may now or any time hereafter have against any Borrower or any other Guarantor;
(e) presentment, diligence in making demands hereunder, notice of dishonor or nonperformance, protest, acceptance and notice of acceptance of this Agreement; or
(f) any order, ruling or plan of reorganization emanating from any proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), or any successor statute, in each case as amended from time to time with respect to any Borrower or any other Person, including any extension, reduction, composition, or other alteration of the Obligations, whether or not consented to by the Lender.
SECTION 10. Representations and Warranties .
(a) To induce the Lender to enter into the Credit Agreement and to induce the Lender to make the Loans to the Borrowers, each Guarantor hereby jointly and severally represents and warrants to the Lender on the Closing Date that:
(i) Financial Condition .
(A) The unaudited pro forma consolidated balance sheet of Parent and its consolidated Subsidiaries as at December 31, 2009 (the “ Pro Forma Balance Sheet ”), copies of which have heretofore been furnished to the Lender, has been prepared in good faith based on assumptions believed by Parent to be reasonable and as of the date of delivery thereof, and presents fairly in all material respects on a pro forma basis the estimated financial position of Parent and its consolidated Subsidiaries as at December 31, 2009, assuming that the events contemplated under the Six Flags First Lien Credit Agreement, the Six Flags Second Lien Credit Agreement and the Credit Agreement (including, in each case, the use of proceeds thereunder) had actually occurred at such date and giving effect to the other assumptions set forth therein.
(B) The audited consolidated balance sheets of Parent as at December 31, 2009 and December 31, 2008, and the related consolidated statements of income and of cash flows for the fiscal years ended on December 31, 2009, December 31, 2008 and December 31, 2007, reported on by and accompanied by a report from KPMG LLP, present fairly in all material respects the consolidated financial condition of Parent as at such dates, and the consolidated results of its operations and its consolidated cash flows for the respective fiscal years then ended.
(C) The audited consolidated balance sheets of each of the Georgia Park and the Texas Park as at December 31, 2009 and the related consolidated statements of income and of cash flows for the fiscal year end on such date, reported on by and accompanied by an unqualified report from KPMG LLP, present fairly in all material respects the consolidated financial condition of each of the Georgia Park and the Texas Park as at such date, and the consolidated results of its operations and its consolidated cash flows for the fiscal year then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). The Georgia Park, the Texas Park and their respective Subsidiaries do not have any material guarantee, contingent liabilities and liabilities for taxes, or any material long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected or disclosed in the notes in the most recent financial statements of the Georgia Park and the Texas Park referred to in this paragraph or otherwise permitted under this Agreement. During the period from December 31, 2009 to and including the date hereof there has been no sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof by the Georgia Park, the Texas Park or any of their respective Subsidiaries of any material part of its Business or Property or any agreement or commitment (whether written or otherwise) to take any of the foregoing actions.
(D) Parent and its Subsidiaries do not have any material Guarantee, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected or disclosed in the notes in the most recent financial statements of Parent referred to in this paragraph or otherwise permitted by this Agreement and disclosed to the Lender in writing. During the period from December 18,
2009 to and including the date hereof there has been no Disposition by Parent or any of its Subsidiaries of any material part of its Business or Property.
(ii) No Change . Since December 31, 2009, except as otherwise described in the Confidential Information Memorandum and the Plan of Reorganization, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.
(iii) Existence; Compliance with Law . Each of Parent, Holdings and its Subsidiaries (other than the Inactive Subsidiaries) (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate (or equivalent) power and authority, and the legal right, to own and operate its Property, to lease the Property it operates as lessee and to conduct the Business in which it is currently engaged, (iii) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its Business requires such qualification and (iv) is in compliance with all Requirements of Law except in each case referred to in clauses, (ii), (iii) or (iv), to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
(iv) Corporate Power; Authorization; Enforceable Obligations . Upon entry by the Bankruptcy Court of the Confirmation Order, each Guarantor has the corporate (or equivalent) power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and to consummate the Transactions. Each Guarantor has taken all necessary corporate (or equivalent) action to authorize the execution, delivery and performance of this Agreement and the consummation of the Transactions. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required to be obtained by any Guarantor in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except (i) consents, authorizations, filings and notices described in Schedule 10(d) which consents, authorizations, filings and notices have been obtained or made and are in full force and effect and (ii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect. This Agreement has been duly executed and delivered on behalf of each Guarantor. This Agreement constitutes a legal, valid and binding obligation of each Guarantor, enforceable against each such Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
(v) No Legal Bar . The execution, delivery and performance of this Agreement by the Guarantors, and the consummation of the Transactions will not violate any Requirement of Law applicable to, or any Contractual Obligation of, Parent, Holdings or any of its Subsidiaries except to the extent such violation could not reasonably be expected to have a Material Adverse Effect and will not result in, or require, the creation or imposition of any Lien on any of their respective Properties or revenues pursuant to any such Requirement of Law or any such Contractual Obligation (other than the Liens created under the Six Flags First Lien Credit Documents and/or the Six Flags Second Lien Credit Documents).
(vi) Litigation . No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of any Guarantor, threatened by or against any Guarantor or any of its Subsidiaries or against any of their respective Properties or revenues (i) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (ii) that if adversely determined, could reasonably be expected to have a Material Adverse Effect.
(vii) No Default . No Guarantor nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
(viii) Ownership of Property; Liens . Each of Holdings and its Subsidiaries has title in fee simple to, or a valid leasehold interest in, all its material Real Property, and good title to, or a valid leasehold interest in, all its other material Property, and none of such Property (including the Real Property) is subject to any Lien except a Permitted Lien.
(ix) Subsidiaries . Schedule 10(i), as of the Closing Date, sets forth the name and jurisdiction of formation of each Subsidiary (other than Inactive Subsidiaries but including all Subsidiary Guarantors) of Parent and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party, and, except as so disclosed, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than directors’ qualifying shares) of any nature relating to any Capital Stock of Holdings, SFTP or any such Subsidiary, except as created by the Six Flags First Lien Credit Documents and the Six Flags Second Lien Credit Documents.
(x) Accuracy of Information, Etc. No financial statement or written information (other than projections, estimates, forward-looking information and information of a general industry or economic nature) contained in this Agreement, or contained in any other document, certificate or financial statement furnished by or on behalf of any Guarantor to the Lender, the Bankruptcy Court or any of them, for use in connection with the transactions contemplated by this Agreement and the Credit Agreement, when considered as a whole, contained as of the date such financial statement, written information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made not materially misleading. The projections, estimates and forward-looking information contained in the materials referenced above were based upon good faith estimates and assumptions believed by the management of Holdings to be reasonable at the time made, it being recognized by the Lender that such projections, estimates and forward-looking information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such projections, estimates and forward-looking information may differ from the projected results set forth therein, and such differences may be material. There is no fact known to any Guarantor that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the Credit Agreement or in any other documents, certificates and written financial statements furnished to the Lender for use in connection with the transactions contemplated hereby and by the Credit Agreement.
(xi) Intellectual Property . No action or proceeding is pending by any Person or, to the knowledge of Holdings or SFTP, threatened, or imminent, on the date hereof, and no holding, decision or judgment has been rendered by any Governmental Authority or arbitrator which may limit, cancel or challenge the validity, enforceability, ownership or use of, any intellectual property owned or licensed by Holdings or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect, nor does any Guarantor know of any valid basis for any such claim except for claims, actions, proceedings, holdings, decisions or judgments which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Each Guarantor, and any of their respective Subsidiaries, has complied in all material respects with the terms and provisions of each License Agreement to which it is a party. To the knowledge of each Guarantor and any of their respective Subsidiaries, no Person is infringing, impairing, misappropriating or otherwise violating any intellectual property subject to any License Agreement. To the knowledge of each Guarantor and any of their respective Subsidiaries, no event has occurred which permits, or after notice or lapse of time or both
would permit, the revocation or termination of the rights of any Guarantor or any of their Subsidiaries under any License Agreement to which it is a party.
(xii) Additional Representations and Warranties . The representations and warranties set forth in Sections 6.10, 6.12, 6.13, 6.14, 6.17, 6.20 and 6.22 of the Six Flags First Lien Credit Agreement (as in effect on the Closing Date) as they relate to such Guarantor, each of which is hereby incorporated herein by reference to the benefit of the Lender and the Lender shall be entitled to rely on each of them as if they were fully set forth herein.
(b) Representations and Warranties on each Borrowing Date . Each of the representations and warranties made by any Guarantor in or pursuant to this Agreement shall be true and correct in all material respects on and as of each Borrowing Date as if made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date.
SECTION 11. Affirmative Covenants .
So long as this Agreement remains in effect and the principal of and interest on the Loans and all Expenses have not been paid in full in cash or the Commitment has not been terminated, each Guarantor hereby jointly and severally shall, and shall cause each of their respective Subsidiaries to:
(a) Financial Statements and Other Information . Deliver the following financial statements, reports, notices and other information:
(i) as soon as available and in any event within 90 days after the end of each fiscal year of Parent, consolidated statements of operations, shareholders’ equity and cash flows of Parent and its Subsidiaries for such fiscal year and the related consolidated balance sheets of Parent and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated figures for the preceding fiscal year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such consolidated financial statements present fairly in all material respects the consolidated financial condition and results of operations of Parent and its Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP (it being agreed that such financial statements will be accompanied by a reconciliation statement to the operations of SFTP and its Subsidiaries);
(ii) the financial statements and other information set forth in Section 6.1(a) of the Credit Agreement;
(iii) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of Parent, interim condensed consolidated statements of operations, shareholders’ equity and cash flows of Parent and its Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated balance sheets of Parent and its Subsidiaries, as at the end of such period, setting forth in each case in comparative form the corresponding consolidated figures for the corresponding periods in the preceding fiscal year (except that, in the case of balance sheets, such comparison shall be to the last day of the prior fiscal year), accompanied by a reconciliation statement to the operations of SFTP and its Subsidiaries and a certificate of a Responsible Officer of Parent, which certificate shall state that such consolidated financial statements present fairly in all material respects the interim condensed consolidated financial condition and results of operations of Parent and its Subsidiaries, in each case in
accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments);
(iv) concurrently with any delivery of financial statements under clauses (i), (ii) or (iii) of this Section 11(a), a certificate of a Responsible Officer of Parent, (A) to the effect that no Default or Event of Default has occurred and is continuing (or, if any Default or Event of Default has occurred and is continuing, describing the same in reasonable detail and describing the action that being taken or proposed to be taken with respect thereto), (B) setting forth in reasonable detail the computations necessary to determine whether the Guarantors were in compliance with Sections 12(a), 12(b), 12(c)(xiii) and 12(g)(xxii) as of the end of the respective quarterly fiscal period or fiscal year, (C) setting forth the aggregate Restricted Payments made pursuant to Section 12(f)(vi)(A) and Section 12(f)(viii) and (D) including a description of such Restricted Payment or Investment by category and aggregate Investments made pursuant to Section 12(g)(vii) during the applicable quarterly fiscal period or fiscal year;
(v) as soon as available, and in any event no later than 75 days after the end of each fiscal year of Parent, a detailed consolidated budget for the following fiscal year;
(vi) within 45 days after the end of each of the first three fiscal quarters of Parent and within 90 days after each fiscal year of Parent, a narrative discussion and analysis of the financial condition and results of operations of Parent and its Subsidiaries for such fiscal period and, if applicable, for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, as compared to the comparable periods of the previous year;
(vii) promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, that Parent, Holdings or SFTP shall have filed with the Securities and Exchange Commission (or any governmental agency substituted therefor) or any national securities exchange (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered), exhibits to any registration statement and, if applicable, any registration statement on Form S-8);
(viii) promptly upon receipt thereof, copies of any final management letters (other than special letters) prepared by Parent’s independent public accountants with respect to the audit of the financial statements of Parent and its Subsidiaries;
(ix) within 15 Business Days after the end of each of the calendar months of June, July, August, September and October, a performance report in respect of the Georgia Park and the Texas Park detailing on a park-by-park basis attendance and revenue for the preceding calendar month and showing a comparison to budget, to the same period in the prior year and year-to-date in the prior year; and
(x) from time to time such other information regarding the financial condition, operations, business or prospects of Parent or any of its Subsidiaries, or compliance with the terms of this Agreement, as the Lender may reasonably request.
Notwithstanding the foregoing, the obligations in clauses (i), (iii) and (vi) of this Section 11(a) may be satisfied with respect to the financial information of Parent and its Subsidiaries by furnishing Parent’s Form 10-K or 10-Q, as applicable, to the extent filed with the SEC.
Documents required to be delivered pursuant to clauses (i), (iii), (v), (vi) and (vii) of this Section 11(a) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Parent posts such documents, or provides a link to the Lender thereto on Parent’s
website on the Internet; or (ii) on which such documents are posted on Intralinks, SyndTrak, DataSite or a substantially similar electronic transmission, in each case, providing access thereto for the Lender (each a “ Platform ”); provided that (A) upon written request by the Lender, Parent or SFTP shall deliver paper copies of such documents to the Lender until a written request to cease delivering paper copies is given by the Lender and (B) Parent or SFTP shall notify (which may be by facsimile or electronic mail) the Lender of the posting of any such documents and provide to the Lender by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance SFTP shall be required to provide paper copies of the certificate required by Section 11(a)(iv) to the Lender.
(b) Notices of Material Events . Furnish the following to the Lender in writing:
(i) promptly after any Responsible Officer of Parent, Holdings or SFTP has actual knowledge of facts that would give him or her reason to believe that any Default or Event of Default has occurred, notice of such Default or Event of Default;
(ii) promptly after receipt or delivery thereof, a copy of any notice of (x) of any Event of Default (as defined in the Six Flags First Lien Credit Agreement), any Event of Default (as defined in the Six Flags Second Lien Credit Agreement) or acceleration thereunder, (y) any notice of any amendment of the definitions of “Applicable Margin” or “Eurocurrency Base Rate” under the Six Flags First Lien Credit Agreement or any substantially similar terms under any Successor Six Flags First Lien Facility; and (z) any notice delivered pursuant to Sections 8.2(c) and 8.2(e) of the Six Flags First Lien Credit Agreement and any notice delivered pursuant to Sections 6.2(c) and 6.2(e) of the Six Flags Second Lien Credit Agreement;
(iii) as soon as any executive officer of Parent, Holdings or SFTP has actual knowledge of the facts that would give him or her reason to know of the occurrence thereof, prompt notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and of any material development in respect of such legal or other proceedings, affecting Parent or any of its Subsidiaries that, if adversely determined, could reasonably be expected to result in aggregate liabilities or damages in excess of $5,000,000 over available insurance or indemnification by creditworthy third parties ;
(iv) as soon as possible, and in any event within five days prior to the incurrence by Parent of Indebtedness pursuant to any Indenture, notice of such incurrence; and
(v) prompt notice of any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect .
Each notice delivered under this Section 11(b) shall be accompanied by a statement of a Responsible Officer of the applicable Guarantor setting forth in reasonable detail the facts and circumstances of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
(c) Existence, Etc .
(i) (A) Preserve, renew and maintain in full force and effect its legal existence under the laws of the jurisdiction of its organization (other than with respect to Inactive Subsidiaries) and (B) take all reasonable action to maintain all rights, privileges (including its good standing), permits, licenses and franchises necessary or desirable in the normal conduct of its business, except (x) in the case of clause (B) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect or (y) in the case of clause (A) or (B) above, pursuant to a transaction permitted by Section 12(e);
(ii) pay and discharge all Federal income taxes and all other material taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such obligation, tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained to the extent required by GAAP; provided that, with respect to taxes assessed against Real Properties, such taxes can be contested without payment under applicable law;
(iii) maintain and preserve all of its Properties material to the conduct of the Business of Parent, Holdings and its Subsidiaries (taken as a whole) in good working order and condition, except for failures that could not reasonably be expected to result in a Material Adverse Effect;
(iv) keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied; and
(v) permit representatives of the Lender, upon reasonable notice and during normal business hours (and, except if a Default shall have occurred and be continuing, not more frequently than once each calendar quarter), to examine, copy and make extracts from its books and records, to visit and inspect any of its Properties, and to discuss its business, finances, condition and affairs with its officers and independent public accountants and the park presidents of the Georgia Park and the Texas Park, all to the extent reasonably requested by the Lender. The Lender shall give Parent the opportunity to participate in any such discussion with the park presidents of the Georgia Park and the Texas Park and Parent’s independent public accountants. Notwithstanding anything to the contrary in this Section 11(c)(v), none of Parent or any Subsidiary will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (A) constitutes non-financial trade secrets or non-financial proprietary information or (B) in respect of which disclosure to the Lender (or its representatives or contractors) is prohibited by law or any binding agreement.
(d) Insurance . Maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as Holdings and its Subsidiaries) as are customarily carried under similar circumstances by such other Persons.
(e) Compliance with Contractual Obligations and Requirements of Law . (i) Comply in all material respects with the License Agreements and (ii) comply with all other Contractual Obligations and Requirements of Law unless failure to comply with such other Contractual Obligations or Requirements of Law, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
(f) Additional Guarantors . With respect to any new Subsidiary of SFI or any of its Wholly Owned Subsidiaries created or acquired after the Closing Date which becomes a guarantor under the Six Flags First Lien Credit Agreement or the Six Flags Second Lien Credit Agreement, promptly, and in any event concurrently with such Subsidiary becoming a guarantor under the Six Flags First Lien Credit Agreement or Six Flags Second Lien Credit Agreement (or such longer period as the Lender may agree in its reasonable discretion) (i) cause such new Subsidiary to become a party to this Agreement pursuant to a joinder in the form of Exhibit B attached hereto and (ii) if reasonably requested by the
Lender legal opinions relating to the guarantee by such Subsidiary of the Obligations, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Lender.
(g) Further Assurances . From time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates or documents, and take all such actions, as the Lender may reasonably request for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents. Upon the exercise by the Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, Parent will, or will cause the relevant Subsidiary to, execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Lender may be required to obtain from Parent or any of its Subsidiaries for such governmental consent, approval, recording, qualification or authorization.
SECTION 12. Negative Covenants . To induce the Lender to enter into the Credit Agreement and to make the Loans to the Borrowers, so long as this Agreement remains in effect and the principal of and interest on the Loans and all Expenses have not been paid in full in cash or the Commitment has not been terminated, each of Parent, Holdings and SFTP shall not and shall not permit any of its Subsidiaries to, directly or indirectly:
(a) Leverage Ratios .
(i) First Lien Leverage Ratio . Permit the First Lien Leverage Ratio as at the last day of any Measurement Period of SFTP ending on or closest to the applicable date set forth below to exceed the ratio set forth opposite such date:
|
Date |
|
First Lien Leverage Ratio |
|
September 30, 2010 |
|
5.75 to 1.00 |
|
December 31, 2010 |
|
5.75 to 1.00 |
|
March 31, 2011 |
|
5.50 to 1.00 |
|
June 30, 2011 |
|
5.50 to 1.00 |
|
September 30, 2011 |
|
5.50 to 1.00 |
|
December 31, 2011 |
|
5.00 to 1.00 |
|
March 31, 2012 |
|
5.00 to 1.00 |
|
June 30, 2012 |
|
5.00 to 1.00 |
|
September 30, 2012 |
|
5.00 to 1.00 |
|
December 31, 2012 |
|
4.50 to 1.00 |
|
March 31, 2013 |
|
4.50 to 1.00 |
|
June 30, 2013 |
|
4.50 to 1.00 |
|
Date |
|
First Lien Leverage Ratio |
|
September 30, 2013 |
|
4.50 to 1.00 |
|
December 31, 2013 and thereafter |
|
4.25 to 1.00 |
(ii) Senior Secured Leverage Ratio . Permit the Senior Secured Leverage Ratio as at the last day of any Measurement Period of SFTP ending on or closest to the applicable date set forth below to exceed the ratio set forth opposite such date:
(b) Consolidated Interest Coverage Ratio . Permit the Consolidated Interest Coverage Ratio as at the last day of any Measurement Period of SFTP ending on or closest to the applicable date set forth below to be less than the ratio set forth opposite such date:
|
Date |
|
Consolidated Interest Coverage
|
|
September 30, 2010 |
|
1.75 to 1.00 |
|
December 31, 2010 |
|
1.75 to 1.00 |
provided that for the purpose of determining Consolidated Interest Coverage Ratio for the fiscal quarters ending September 30, 2010, December 31, 2010 and March 31, 2011, Consolidated Interest Expense for the relevant period shall be deemed to equal Consolidated Interest Expense for each such fiscal quarter (and, in the case of September 30, 2010, December 31, 2010 and March 31, 2011, each previous fiscal quarter commencing after the Closing Date) multiplied by 2 and 4/3, respectively.
(c) Indebtedness . Create, incur or suffer to exist any Indebtedness except:
(i) Indebtedness of any Covenant Loan Party pursuant to any Loan Document and any Indebtedness of such Covenant Loan Party incurred to refinance, refund, replace or renew any such Indebtedness;
(ii) Indebtedness of any Person outstanding on the date hereof and listed on Schedule 10(c)(ii), and any Indebtedness of such Person incurred to refinance, refund, replace or renew any such outstanding Indebtedness, provided that the principal amount (or accreted value, if applicable) of such refinancing, refunding, replacement or renewal of Indebtedness does not exceed the principal amount of Indebtedness (or accreted value, if applicable) being so refinanced, refunded, replaced or renewed plus all interest capitalized in connection therewith, plus the Refinancing Expenses and any costs and premiums associated with such refinancing, refunding, replacement or renewal;
(iii) Indebtedness under the Six Flags First Lien Credit Documents in an aggregate principal amount not to exceed the Cap Amount and any Indebtedness incurred to
refinance, refund, replace, renew, amend, amend and restate, supplement, modify, extend, replace or otherwise restructure the Six Flags First Lien Credit Agreement (any such Indebtedness, “ Permitted First Lien Refinancing Indebtedness ”); provided that the terms and conditions thereof do not (A) restrict the ability of the Guarantors to pay and perform the Obligations in accordance with the terms hereof, (B) restrict the ability of the Borrowers to pay the Lender under the Credit Agreement in accordance with the terms thereof (to a greater extent than it is restricted on the date hereof), (C) restrict the ability of the Loan Parties and their Subsidiaries to make restricted payments to, make loans to, or other investments (to a greater extent than it is restricted on the date hereof) in, the Borrowers, or (D) restrict the ability of the Loan Parties and their Subsidiaries to perform their obligations under the License Agreements and the Partnership Parks Agreements in accordance with the terms thereof;
(iv) (A) Indebtedness of any Covenant Loan Party to any other Covenant Loan Party and (B) Guarantees by any Covenant Loan Party of obligations of any other Covenant Loan Party; provided , that the Indebtedness of Parent to Holdings, SFTP or any Subsidiary of SFTP shall only be permitted to the extent such funds may be distributed to Parent in compliance with Section 12(f);
(v) Indebtedness of any Non-Guarantor Subsidiary to Holdings or to any other Subsidiary of Holdings, and Guarantees by Holdings or any Subsidiary of Indebtedness of any such Non-Guarantor Subsidiary, in an aggregate amount outstanding for all such Indebtedness and Guarantees (without duplication), together with the aggregate outstanding amount of Investments in such Non-Guarantor Subsidiaries made as permitted by Section 12(g)(xxii), not exceeding $57,500,000 at any one time outstanding; provided that the aggregate amount of such Indebtedness of, and such Guarantees of Indebtedness of, and Investments made as permitted by Section 12(g)(xxii) in, Foreign Subsidiaries shall not exceed $57,500,000 at any one time outstanding;
(vi) Indebtedness of any Non-Guarantor Subsidiary which is both a Wholly Owned Subsidiary and a Foreign Subsidiary (a “ Wholly Owned Non-Guarantor Foreign Subsidiary ”) to any other Wholly Owned Non-Guarantor Foreign Subsidiary, and Guarantees by any Wholly Owned Non-Guarantor Foreign Subsidiary of obligations of any other Wholly Owned Non-Guarantor Foreign Subsidiary;
(vii) (A) Indebtedness consisting of Purchase Money Indebtedness (including, for the avoidance of doubt, Indebtedness financing Investments permitted under Section 12(g) in connection with Permitted Acquisitions) and Capital Lease Obligations incurred after the date hereof in an aggregate principal amount not in excess of $115,000,000 at any one time outstanding and (B) any Indebtedness incurred to refinance, refund, replace or renew the Indebtedness described in the foregoing clause (A), provided that the principal amount (or accreted value, if applicable) of such refinancing, refunding, replacement or renewal of Indebtedness does not exceed the principal amount of the Indebtedness (or accreted value, if applicable) being so refinanced, refunded, replaced or renewed plus all interest capitalized in connection therewith and the Refinancing Expenses;
(viii) (A) Indebtedness of any Person outstanding on the date on which such Person becomes a Subsidiary of SFTP or is merged into or consolidated with or into SFTP or any of its Subsidiaries in an aggregate principal amount not in excess of $57,500,000 at any one time outstanding; provided , that (x) such Indebtedness was not created in connection with, or in anticipation of, such acquisition and (y) the amount of such Indebtedness is not increased thereafter unless solely as a result of capitalization of interest or otherwise incurred under another
subsection of this Section 12(c) substantially contemporaneously with such merger or consolidation, and (B) any Indebtedness incurred to refinance the Indebtedness described in the foregoing clause (A), provided that the principal amount (or accreted value, if applicable) of such refinancing Indebtedness does not exceed the principal amount of the Indebtedness being so refinanced plus capitalized interest and any Refinancing Expenses associated therewith;
(ix) Indebtedness under the Six Flags Second Lien Credit Documents in an aggregate principal amount not to exceed the Second Lien Cap Amount and any Indebtedness incurred to refinance, refund, replace or renew such Indebtedness (or previous refinancing, refunding, replacement or renewal thereof) (any such Indebtedness, “ Permitted Second Lien Refinancing Indebtedness ”); provided that (A) there are no direct or contingent obligors with respect to such Indebtedness other than Persons that are obligors under the Loan Documents, (B) such Indebtedness shall have a final maturity date equal to or later than the final maturity date of the refinanced, refunded, replaced or renewed Indebtedness and a weighted average life to maturity equal to or longer than that of the refinanced Indebtedness, and (C) the terms and conditions of any such Indebtedness, taken as a whole, are not materially less favorable to the Lender than the terms and conditions of the refinanced, refunded, replaced or renewed Indebtedness and would be permitted for an amendment of the Six Flags Second Lien Credit Agreement under Section 12(i);
(x) Indebtedness representing deferred compensation to employees of Parent and its Subsidiaries incurred in the ordinary course of business;
(xi) Indebtedness incurred by Parent and its Subsidiaries in a Permitted Acquisition, any other Investment expressly permitted hereunder or any Disposition, in each case to the extent constituting (A) contingent liabilities in respect of any indemnification, adjustment of purchase price, earn-out, non-compete, consulting, deferred compensation and similar obligations of Parent and its Subsidiaries incurred in connection therewith and (B) obligations in respect of purchase price adjustments or similar adjustments incurred by Parent or its Subsidiaries under agreements governing Permitted Acquisitions, Investments permitted hereunder or Dispositions;
(xii) Indebtedness consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(xiii) obligations in respect of performance, bid, appeal, stay, customs and surety bonds, performance and completion guarantees, bank guarantees, bankers’ acceptances, including in respect of self-insurance, workers compensation claims or other Indebtedness with respect to reimbursement type obligations regarding workers compensation claims, deferred compensation, severance, pension and health and welfare retirement benefits or the equivalent thereof to current and former employees of Parent and its Subsidiaries and similar obligations provided by Parent or any of its Subsidiaries or obligations in respect of letters of credit related thereto, in each case, in the ordinary course of business, existing on the Closing Date or consistent with past practice;
(xiv) unsecured Indebtedness of Parent or Holdings so long as after giving pro forma effect to the incurrence of such Indebtedness and the use of the Net Cash Proceeds thereof the Consolidated Leverage Ratio would not exceed 5.25 to 1.00; provided that, in the case of such Indebtedness, (x) after giving effect to such Indebtedness and the use of the Net Cash Proceeds thereof, the Loan Parties shall be in compliance on a pro forma basis with Sections 12(a) and (b), and (y) the terms and conditions of such Indebtedness (excluding rate, fees and yield), taken as a
whole, shall not be materially more restrictive on the Loan Parties than the terms and conditions contained herein;
(xv) other Indebtedness incurred by Parent or any of its Subsidiaries in an amount not to exceed $23,000,000 outstanding at any time;
(xvi) cash management obligations and other Indebtedness in respect of netting services, automatic clearinghouse arrangements, employees credit or purchase cards, overdraft protections and similar arrangements, in each case, in connection with deposit accounts;
(xvii) Indebtedness of GP Holdings, Inc., SFT Holdings, Inc., Six Flags Over Texas, Inc., SFOG II, Inc. and/or the Partnership Parks Entities owed to Parent or to any other Subsidiary of Parent that constitute “affiliate loans” for purposes of the Partnership Parks Agreements;
(xviii) other Indebtedness of the Partnership Parks Entities and any Guarantees of the obligations thereunder to the extent such Guarantees are not provided by or recourse to a Covenant Loan Party; and
(xix) Guarantees incurred in the ordinary course of business in respect of obligations to suppliers, advertisers, licensees or similar Persons that are not for borrowed money.
For purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased.
(d) Liens . Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except the following (“ Permitted Liens ”):
(i) Liens created pursuant to the Six Flags First Lien Credit Documents;
(ii) Liens in existence on the date hereof and listed on Schedule 12(d)(ii) and any extension, modification, renewal or replacement thereof; provided that such extension, modification, renewal or replacement does not increase the outstanding principal amount of the Indebtedness secured thereby except by the amount of the Refinancing Expenses associated therewith or, to cover Indebtedness not otherwise prohibited under Section 12(c) and, provided further that any such Lien does not extend to any additional Property other than after-acquired Property that is affixed or incorporated into the Property covered by such Lien or financed by Indebtedness permitted under Section 12(c);
(iii) Liens imposed by any Governmental Authority for taxes, assessments and other charges or levies that are (A) not yet due, (B) being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of
Parent or the affected Subsidiaries, as the case may be, to the extent required by GAAP or, in the case of any Foreign Subsidiary, generally accepted accounting principles in effect from time to time in the jurisdiction of organization of such Foreign Subsidiary or (C) not otherwise required to be paid under Section 11(c)(ii);
(iv) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, suppliers’, landlords’, brokers’ or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days (or if more than 30 days overdue, are unfiled and no other action has been taken to enforce such Lien) or that are being contested in good faith and by appropriate proceedings, and Liens securing judgments but only to the extent for an amount and for a period not resulting in an Event of Default under Sections 8(f) or (g) of the Credit Agreement;
(v) Liens not securing Indebtedness or hedging obligations incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security legislation and other similar obligations incurred in the ordinary course of business;
(vi) Liens securing obligations in respect of the performance of bids, trade contracts, governmental contracts and leases (other than for Indebtedness for borrowed money including any precautionary Uniform Commercial Code financing statements filed by a lessor with respect to any equipment lease), statutory obligations, surety, stay, customs and appeal bonds, performance bonds and other obligations of a like nature (including those to secure health, safety and environmental obligations) incurred in the ordinary course of business;
(vii) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of Property or minor imperfections in title thereto that, in the aggregate that do not interfere in any material respect with the ordinary conduct of the business of Parent or any of its Subsidiaries;
(viii) Liens securing Purchase Money Indebtedness or Capital Lease Obligations to the extent such Indebtedness is permitted to be incurred under Section 12(c)(vii); provided , that such Liens shall encumber only the Property that is the subject of such Purchase Money Indebtedness or Capital Lease Obligations; provided that individual financings of equipment provided by one lender may be cross-collateralized to other financings of equipment by such lender;
(ix) Liens securing Indebtedness to the extent such Indebtedness is permitted under Section 12(c)(viii); provided , that such Liens shall encumber only the Property that is the subject of such Indebtedness;
(x) Liens pursuant to the Great Escape Agreements or pursuant to leases, concessions and similar arrangements, or other arrangements entered into in the ordinary course of business by Holdings and its Subsidiaries, that could not reasonably be expected to have a Material Adverse Effect;
(xi) Liens securing any Indebtedness permitted by Section 12(c)(ix);
(xii) Liens on any asset of a Person existing at the time such Person becomes a Subsidiary of SFTP or is merged into or consolidated with or into SFTP or any of its Subsidiaries and not created in contemplation of such event;
(xiii) leases, licenses, subleases or sublicenses (including the provision of software under an open source license) granted to others in the ordinary course of business which do not (A) interfere in any material respect with the business of Holdings or any material Subsidiary, taken as a whole, or (B) secure any Indebtedness;
(xiv) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;
(xv) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code on the items in the course of collection, (B) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business and (C) in favor of a banking or other financial institution arising as a matter of law encumbering deposits or other funds maintained with a financial institution (including the right of set off) and which are within the general parameters customary in the banking industry;
(xvi) Liens (A) on cash advances in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 12(g) to be applied against the purchase price for such Investment, (B) consisting of an agreement to Dispose of any property in a Disposition permitted under Section 12(e), in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien, and (C) on securities that are the subject of repurchase agreements constituting Permitted Investments;
(xvii) (A) any interest or title of a lessor under leases entered into by Holdings or any of its Subsidiaries in the ordinary course of business and (B) ground leases in respect of Real Property on which facilities owned or leased by the Covenant Loan Parties are located;
(xviii) Liens that are contractual rights of set-off (A) relating to the establishment of depository relations with banks or other financial institutions not given in connection with the issuance of Indebtedness, (B) relating to pooled deposit or sweep accounts of Parent or any of its Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Parent and its Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of Parent or any of its Subsidiaries in the ordinary course of business;
(xix) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by SFTP or any of the Subsidiaries in the ordinary course of business;
(xx) Liens solely on any cash earnest money deposits made by Holdings or any of the Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;
(xxi) Liens arising from precautionary Uniform Commercial Code financing statement filings;
(xxii) other Liens securing Indebtedness or other obligations in an aggregate principal amount at any time outstanding not to exceed $11,500,000;
(xxiii) Liens securing Indebtedness to the extent such Indebtedness is permitted under Sections 12(c)(xii) and (xvi);
(xxiv) pledges and deposits in the ordinary course of business securing deductibles, self-insurance, co-payments (or insurance of similar obligations) or liabilities for reimbursement obligations of (including in respect of letters of credit or bank guarantees for the benefit of), insurance carriers providing property, casualty or liability insurance to any Covenant Loan Party;
(xxv) Liens securing Indebtedness permitted by Section 12(c)(xviii); provided that such Lien shall not encumber Property of any Covenant Loan Party; and
(xxvi) Liens pursuant to the Partnership Parks Agreements or on limited partnership units owned by any of the Partnership Parks Entities.
(e) Prohibition of Fundamental Changes .
(i) Mergers . Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that:
(A) Holdings or any Subsidiary of SFTP may merge with (I) SFTP (including a merger, the purpose of which is to reorganize SFTP into a new jurisdiction), provided that (x) SFTP shall be the continuing or surviving Person and (y) such merger does not result in SFTP ceasing to be incorporated under the laws of the United States, any state thereof or the District of Columbia or (II) any one or more other Subsidiaries of SFTP, provided that when any Subsidiary that is a Covenant Loan Party is merging with another Subsidiary of SFTP, a Covenant Loan Party shall be the continuing or surviving Person;
(B) (I) any Subsidiary of Parent that is not a Covenant Loan Party may merge or consolidate with or into any other Subsidiary of Parent, provided that if such Subsidiary is a Covenant Loan Party, the Covenant Loan Party shall be the continuing or surviving Person and (II) any Subsidiary of Parent may liquidate or dissolve or change its legal form if Parent determines in good faith that such action is in the best interests of Parent and its Subsidiaries and is not materially disadvantageous to the Lender;
(C) any Subsidiary of SFTP may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to SFTP or another Subsidiary of SFTP; provided that if the transferor in such a transaction is a Covenant Loan Party, then (I) the transferee must be a Covenant Loan Party or (II) to the extent constituting an Investment, such Investment must be permitted Indebtedness or a permitted Investment of a Subsidiary which is not a Covenant Loan Party in accordance with Sections 12(c) and (g), respectively;
(D) so long as no Default exists or would result therefrom, any Subsidiary of Parent may merge with any other Person in order to effect an Investment permitted pursuant to Section 12(e)(iv) or (g); and
(E) so long as no Default exists or would result therefrom, a merger, dissolution, liquidation, consolidation or Disposition, the purpose of which is to effect a Disposition permitted pursuant to Section 12(e)(iii) shall be permitted.
(ii) Restrictions on Acquisitions . Acquire all or substantially all of the business or Property from, or all or substantially all of Capital Stock of, any Person except for (A) purchases of inventory and other Property to be sold or used in the ordinary course of business, (B) Investments permitted under Sections 12(e)(iv) and (g) and Dispositions permitted under Section 12(e)(iii)(C), (C) Capital Expenditures and (D) acquisitions made with Qualified Net Cash Equity Proceeds and/or with Qualified Capital Stock of Parent.
(iii) Restrictions on Dispositions . Consummate any Disposition other than (A) any Disposition of any inventory or other Property Disposed of in the ordinary course of business (including allowing any registrations or any applications for registration of any immaterial intellectual property rights to lapse or go abandoned in the ordinary course of business), (B) sales of used, obsolete or worn out equipment or other Property not used in the business of Parent and its Subsidiaries; provided that in the judgment of Parent, the sale of such equipment or other Property will not result in more than a nominal reduction in the SFTP Consolidated Adjusted EBITDA for the four fiscal quarters following such sale from what it would otherwise have been, (C) any Disposition of any Property to SFTP or one of its respective Wholly Owned Subsidiaries which is a Subsidiary Guarantor, (D) any Disposition of any Property to a Non-Guarantor Subsidiary of SFTP, provided that the book value of the Property so Disposed of shall be deemed to constitute an Investment under Section 12(g), (E) the sale (whether through a sale, swap or exchange) of any timeshare in any of the campground parks or pursuant to the Great Escape Agreements permitted under Section 12(e)(iv)(B), (F) the sale of other Property having a fair market value not to exceed $28,750,000 in the aggregate for any fiscal year of Parent, (G) the sale of other Property having a fair market value not to exceed $287,500,000 in the aggregate, provided that with respect to all Dispositions permitted by this clause (G), (i) such Dispositions shall be made for at least fair market value, as determined in good faith by the board of directors of Parent or SFTP, and for at least 75% cash or cash equivalent consideration and (ii) in connection with any such Disposition as to which the fair market value of the related Property is in excess of $17,250,000, SFTP shall be in pro forma compliance with Sections 12(a) and 12(b) ( provided that in determining such compliance, the First Lien Leverage Ratio shall be deemed to be 0.25 to 1.00 lower than the otherwise applicable First Lien Leverage Ratio), (H) the sale of unused Real Property that is unimproved (except for parking lots) and that is adjacent to a Park, provided that with respect to all Dispositions permitted by this clause (H) such Dispositions shall be made for at least fair market value as determined in good faith by the board of directors of Parent or SFTP, and for at least 75% cash or cash equivalent consideration, (I) Dispositions permitted by Sections 12(c)(vii), 12(d), 12(e)(i), 12(f) and 12(g), (J) Dispositions in the ordinary course of business of Permitted Investments, (K) leases, subleases, licenses or sublicenses (including the provision of software under an open source license), in each case in the ordinary course of business, which do not materially interfere with the business of Parent and its Subsidiaries, taken as a whole, (L) Dispositions related to Recovery Events, (M) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements, (N) Dispositions of Property (other than Capital Stock of the Partnership Parks Entities) to the extent that (I) such Property is exchanged for credit against the purchase price of similar replacement Property or (II) the proceeds of such Disposition are promptly applied to the purchase price of such replacement property, and the fair market value of all Property disposed of pursuant to this clause (N) does not exceed $11,500,000, (O) Dispositions of accounts receivables in connection with the collection or compromise thereof, (P) Dispositions in the ordinary course of business consisting of the abandonment of Intellectual Property rights, which in the reasonable good faith determination of Parent or any of its Subsidiaries, are uneconomical, negligible, obsolete or otherwise not material
in the conduct of its business, and (Q) Dispositions of all or any portion of the Capital Stock or the Property of KKI, LLC.
(iv) Certain Permitted Transactions . Notwithstanding the foregoing provisions of this Section 12(e):
(A) Permitted Acquisitions . SFTP, any Subsidiary of SFTP that is a Guarantor or any Foreign Subsidiary may acquire all or substantially all of the assets or business of, any Person, or of assets constituting a business unit, a line of business or a division of, such Person (whether by way of purchase of assets or stock, by merger or consolidation or otherwise) after the date hereof (each, a “ Permitted Acquisition ”) so long as:
(I) the Covenant Loan Parties shall be in pro forma compliance with Sections 12(a) and (b) after giving effect to such Permitted Acquisition (as if such Permitted Acquisition had been consummated on the first day of such period), with the First Lien Leverage Ratio being deemed, for this purpose, to be 0.25 to 1.00 times lower than that required under Section 12(a); provided , however , that (x) any Indebtedness incurred or repaid in connection with such Permitted Acquisition shall be deemed to have be incurred or repaid, as the case may be, on such first day, and (y) Parent shall have delivered to the Lender at least five Business Days prior to the date of any such Permitted Acquisition, a certificate of a Responsible Officer of Parent setting forth computations in reasonable detail demonstrating satisfaction of the foregoing conditions as at the date of such certificate reflecting the terms of the transaction as of such date; provided, further that if prior to consummation of such Permitted Acquisition changes are made to the terms that would alter the computations previously delivered, Parent shall deliver a revised certificate demonstrating satisfaction of the foregoing conditions on the date of the consummation of such Permitted Acquisition;
(II) such Permitted Acquisition (if by purchase of assets, merger or consolidation) shall be effected in such manner so that the acquired business, and the related assets, are owned either by SFTP, a Subsidiary Guarantor or a Foreign Subsidiary and, if effected by merger or consolidation involving SFTP, a Subsidiary Guarantor or a Foreign Subsidiary, then SFTP, such Subsidiary Guarantor or such Foreign Subsidiary shall be the continuing or surviving entity and, if effected by merger or consolidation involving a Wholly Owned Subsidiary of SFTP, a Wholly Owned Subsidiary shall be the continuing or surviving entity; provided , however , that with respect to any Permitted Acquisition effected in such manner so that the acquired business, and the related assets, are owned by a Foreign Subsidiary, such acquired business, and the related assets, shall be located outside of the United States of America;
(III) SFTP shall deliver to the Lender (i) as soon as possible and in any event no later than five days prior to the consummation of each such Permitted Acquisition (or, if executed, such earlier date as shall be five Business Days after the execution and delivery thereof), the most recent drafts of the respective agreements or instruments pursuant to which such Permitted Acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements or instruments and all other material ancillary documents to be executed or delivered in connection therewith and (ii) promptly following request therefor (but in any event within three Business Days following such request), copies of such other information or documents
(including, without limitation, environmental risk assessments) relating to such Permitted Acquisition as the Lender shall have reasonably requested (and which is available, or obtainable within such period by Parent with reasonable efforts);
(IV) to the extent applicable, SFTP shall have complied with the provisions of Section 11(f);
(V) the aggregate Purchase Price for each such Permitted Acquisition shall not exceed $287,500,000 or, at any time the First Lien Leverage Ratio is less than 3.50 to 1.00 after giving effect to such Permitted Acquisition and the incurrence of any related Indebtedness, $402,500,000, plus, in each case, the Net Cash Proceeds received from the issuance of Capital Stock of Parent and from the related contribution of cash to Holdings from Parent, in each case as contributed to SFTP, that are not otherwise expended pursuant to Section 12(g)(ix), plus the portion of any consideration paid with Qualified Net Cash Equity Proceeds and/or in Qualified Capital Stock of Parent; and
(VI) immediately prior to such Permitted Acquisition and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing.
(B) Other Dispositions . SFTP or any of its Subsidiaries may Dispose of (whether through a sale, swap or exchange) any timeshare or fractional interest in any of the campground parks or any assets or interests pursuant to the Great Escape Agreements.
(f) Restricted Payments . Declare or make any Restricted Payment, except that:
(i) each Subsidiary of Parent may make Restricted Payments to, or on behalf of or for the benefit of, Parent to enable Parent to pay out-of-pocket accounting fees, legal fees and other amounts incurred or owing by Parent in the ordinary course of business pursuant to the Shared Services Agreement;
(ii) each Subsidiary of Parent may make Restricted Payments to, or on behalf of or for the benefit of, Parent in respect of (i) income tax liabilities of Parent and its Subsidiaries in accordance with the Tax Sharing Agreement and (ii) value added tax, franchise taxes and similar taxes to enable Parent to pay any such taxes imposed on Parent on behalf or on account of its Subsidiaries;
(iii) each of Holdings and SFTP may make Restricted Payments in cash to enable Parent and its Subsidiaries:
(A) to pay obligations of Parent or any of its Subsidiaries under the Partnership Parks Agreements to the extent such obligations cannot be met with cash flow available to Parent from the Partnership Parks Entities and other payment obligations of Parent or any of its Subsidiaries thereunder and to pay any principal and interest under the Credit Agreement to the extent such payment obligations or such principal and interest amounts cannot be met with cash flow available to Parent from the Partnership Park Entities and cannot be funded under the Credit Agreement; provided that nothing set forth in this Section 12(f) shall be construed so as to prohibit the payment by Parent or any of its Subsidiaries of any amounts due under the Loan Documents; and
(B) to purchase Units under the Partnership Parks Agreements;
(C) to make Capital Expenditures for the Partnership Parks Entities;
(D) so long as at the time thereof and after giving effect thereto no Default or Event of Default shall have occurred and be continuing, to finance any Investment permitted to be made pursuant to Section 12(g); provided that (i) such Restricted Payment shall be made substantially concurrently with the closing or consummation of such Investment and (ii) Parent shall, immediately following the closing or consummation thereof, cause (1) all property acquired (whether assets or equity interests) to be contributed to SFTP or a Loan Party (or a Person that will become a Loan Party upon receipt of such contribution) or (2) the merger (to the extent permitted in Section 12(e)(i)) of the Person formed or acquired into SFTP or a Loan Party in order to consummate such Permitted Acquisition;
(E) so long as at the time thereof and after giving effect thereto no Default or Event of Default shall have occurred and be continuing, make cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for equity interests of Parent; provided that any such cash payment shall not be for the purpose of evading the limitations set forth in this Section 12(f) (as determined in good faith by the board of directors or the managing board, as the case may be, of Parent (or any authorized committee thereof));
(F) so long as at the time thereof and after giving effect thereto no Default or Event of Default shall have occurred and be continuing, to pay fees and expenses (other than to Affiliates) related to any unsuccessful equity or debt offering permitted by this Agreement not in excess of $2,300,000 in the aggregate; and
(G) to pay fees, costs and expenses related to the Transactions on the Closing Date;
(iv) to the extent constituting Restricted Payments, Parent and its Subsidiaries may enter into and consummate transactions expressly permitted by any provision of Section 12(e), 12(g) or 12(k);
(v) each of SFTP and Holdings may make other Restricted Payments (including (i) to enable Parent or Holdings to pay principal payments permitted to be due, and interest due, on Indebtedness of Parent or Holdings and (ii) to enable Parent to redeem warrants that may be issued as part of the Plan of Reorganization); provided that for purposes of distributions under this clause (v), (x) after giving effect to any such Restricted Payment and its use no Default or Event of Default shall exist and the Guarantors shall be in pro forma compliance with Sections 12(a) and 12(b) and (y) the amount of all such other Restricted Payments in any fiscal year shall not exceed (A) for the fiscal year ended December 31, 2010, $11,500,000, (B) for the fiscal year ended December 31, 2011, $23,000,000 (C) for the fiscal year ended December 31, 2012, $34,500,000 and (D) for any subsequent fiscal year, $46,000,000;
(vi) Parent and its Subsidiaries may make Restricted Payments in the form of noncash repurchases of Capital Stock of Parent deemed to occur upon the exercise of stock options or warrants if such repurchased Capital Stock represents all or a portion of the exercise price of such options or warrants and cash payments in lieu of the issuance of fractional shares in connection with the exercise of such stock options or warrants;
(vii) Parent may (A) redeem warrants that may be issued as part of the Plan of Reorganization to the extent it receives a related Restricted Payment under clause (v) of this Section 12(f) and (B) make any other Restricted Payments required to be made in connection with the Transactions;
(viii) Each of Holdings and SFTP may make Restricted Payments in cash to enable Parent, and Parent may make Restricted Payments in an aggregate amount not to exceed $300,000,000 from RP Eligible Proceeds; provided that after giving pro forma effect to (A) each Disposition which is the source of such RP Eligible Proceeds and (B) the corresponding Restricted Payment, (x) the First Lien Leverage Ratio shall not exceed 3.25 to 1.00 (or in the case of RP Eligible Proceeds in respect of a Disposition under 12(e)(iii)(G), 2.75 to 1.00) and (y) SFTP shall have minimum Liquidity of at least $150,000,000;
(ix) Each of Holdings and SFTP may make Restricted Payments in cash in an aggregate amount not to exceed $2,875,000 to enable Parent to repurchase, retire or acquire for value equity interests of Parent from any future, present or former employee or director of Parent or any of its Subsidiaries pursuant to any employee or director equity plan, employee or director stock option plan or any other employee or director benefit plan or any agreement (including any stock subscription or shareholder agreement) with any employee or director of Parent or any of its Subsidiaries; and
(x) Each of Holdings and SFTP may make Restricted Payments in cash to executives of Parent when restricted Capital Stock of Parent vests (in lieu of payment of income tax by such executives).
Nothing herein shall be deemed to prohibit the payment of Restricted Payments by (i) any Subsidiary of Holdings to Holdings or SFTP or to any other Wholly Owned Subsidiary of Holdings which is a Subsidiary Guarantor, or by an Excluded Foreign Subsidiary to any other Subsidiary of Holdings or (ii) any Subsidiary of Parent (other than Holdings or any of its Subsidiaries) to Parent or to any other Subsidiary of Parent or to prohibit any dividend payments or other distributions payable solely in Capital Stock of such Person.
(g) Investments . Make or permit to remain outstanding any Investments except:
(i) Investments outstanding on the date hereof and identified on Schedule 12(g)(i);
(ii) operating deposit accounts with banks;
(iii) Permitted Investments;
(iv) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;
(v) Investments consisting of (A) Indebtedness, Liens, fundamental changes and Restricted Payments permitted under Sections 12(c) (other than Section 12(c)(iv) with respect to Parent), 12(d), 12(e) and 12(f), respectively and (B) Investments by SFTP or any of its Subsidiaries in rides, Intellectual Property assets and related assets so long as the fair market value of the Property that is invested does not exceed $115,000,000 in the aggregate;
(vi) (A) Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of any Person or in settlement of delinquent obligations of, or other disputes with, any Person arising in the ordinary course of business or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment, (B) the non-cash proceeds of any Disposition permitted by Section 12(e)(iii), and (C) limited partnership units purchased pursuant to the Partnership Parks Agreements;
(vii) (A) loans and advances to Holdings, Parent or any Partnership Park Entity (or any direct or indirect parent thereof) and (B) Investments by Parent or any other Subsidiary of Parent in GP Holdings, Inc., SFT Holdings, Inc., Six Flags Over Texas, Inc., SFOG II, Inc. and/or the Partnership Parks Entities that will be used to make or constitute “affiliate loans” for purposes of the Partnership Parks Agreements;
(viii) advances of payroll payments to employees in the ordinary course of business;
(ix) Investments to the extent that payment for such Investments is made with Qualified Net Cash Equity Proceeds or with the Net Cash Proceeds received (without duplication) from the issuance of Capital Stock of Parent and from the contribution of cash to Holdings from Parent, in each case as contributed to SFTP and not otherwise expended pursuant to Section 12(e)(iv) and/or Qualified Capital Stock of Parent;
(x) Investments held by a Subsidiary acquired after the Closing Date or of a corporation merged into SFTP or merged or consolidated with a Subsidiary of SFTP in accordance with Section 12(e) after the Closing Date to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
(xi) Investments by Parent or any of its Subsidiaries in assets that were Permitted Investments when such Investment was made;
(xii) asset purchases (including purchases of inventory, supplies and materials) and the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons, in each case in the ordinary course of business;
(xiii) Guarantees by Parent or any of its Subsidiaries of leases (other than capitalized leases) or of other obligations of Subsidiaries that do not constitute Indebtedness, in each case entered into in the ordinary course of business;
(xiv) Investments in joint ventures pursuant to which, among other things, Parent or any of its Subsidiaries is granted intellectual property rights for its Parks;
(xv) Investments constituting (A) contributions to the equity of HWP whether directly or through the joint venture contemplated by the Great Escape Agreements, (B) contributions to such joint venture as contemplated by the Great Escape Agreements and additional Investments therein and (C) Investments in a joint venture formed for the lease of property and construction of a time share hotel to be located in Lake George, New York; provided that the aggregate outstanding amount of all such Investments permitted by this clause (xv) shall not exceed $11,500,000;
(xvi) Investments by Parent and its Subsidiaries in Holdings and any Subsidiary of Holdings including Guarantees by Parent or any of its Subsidiaries of obligations of Parent, Holdings, SFTP or any other Guarantor; provided that with respect to Non-Guarantor Subsidiaries, such Investments (together with Indebtedness of any Non-Guarantor Subsidiaries permitted under Section 12(c)(v)) may not be in excess of the amount permitted under Section 12(c)(v);
(xvii) Investments by Foreign Subsidiaries in Wholly Owned Subsidiaries which are Foreign Subsidiaries, including Guarantees by Foreign Subsidiaries of obligations of other Wholly Owned Subsidiaries which are Foreign Subsidiaries;
(xviii) Hedging Agreements entered into in the normal course of business and consistent with industry practice and not for speculative purposes;
(xix) Investments received in connection with any Disposition permitted under Section 12(e) or any Disposition to which the Lender shall have consented;
(xx) any Acquisition permitted by Sections 12(e)(ii) or 12(e)(iv);
(xxi) Investments in an aggregate amount of up to but not exceeding $100,000 during any fiscal year in 229 East 79th Street Associates L.P.;
(xxii) additional Investments (including Investments in any Non-Guarantor Subsidiaries of SFTP and in Dick Clark) up to but not exceeding the sum of (i) $86,250,000 and (ii) the aggregate amount of Excess Cash Flow (as defined in the Six Flags Credit First Lien Agreement) for completed fiscal years of SFTP since the Closing Date not applied or to be applied pursuant to Section 5.5(c) of the Six Flags First Lien Credit Agreement; minus the amount of Restricted Payments made pursuant to Sections 9.6(c) and 9.6(e) of the Six Flags First Lien Credit Agreement, provided , that the aggregate amount of Investments permitted by this Section 9(g)(xxii) shall not exceed $115,000,000 at any time outstanding; provided , further , that the aggregate amount of Investments in Foreign Subsidiaries, together with the aggregate amount of outstanding Indebtedness of and Guarantees of Indebtedness of Foreign Subsidiaries permitted by Section 12(c)(v) shall not exceed $57,500,000 at any time outstanding; provided , further that notwithstanding the foregoing, additional Investments under this clause (xxii) may be made with amounts available under Section 12(g)(ix); and
(xxiii) loans or advances to officers, directors, members of management, employees consultants and independent contractors of Parent or any of its Subsidiaries (i) in an aggregate amount (as to all such officers, directors, members of management, employees, consultants and independent contractors) up to $1,150,000 at any one time outstanding and (ii) in connection with such Person’s purchase of equity interests of Parent in an aggregate amount not to exceed $1,150,000 at any time outstanding, determined without regard to any write-downs or write-offs of such loans or advances.
(h) Changes in Fiscal Periods . Permit the fiscal year of Parent, Holdings or SFTP to end on a day other than December 31 or change Parent’s, Holdings’ or SFTP’s method of determining fiscal quarters.
(i) Certain Restrictions .
(i) The Guarantors shall not (i) amend, supplement, restate or otherwise modify the Six Flags First Lien Credit Agreement, the Six Flags Second Lien Credit Agreement
or any Indenture in any manner or (ii) enter into any agreement, instrument or other arrangement that, in either case, directly or indirectly (A) restricts the ability of the Guarantors to pay the Lender and perform under this Agreement in accordance with the terms hereof, (B) restricts the ability of the Borrowers to pay the Lender under the Credit Agreement in accordance with the terms thereof, (C) restricts the ability of the Loan Parties and their Subsidiaries to make loans to, or other investments (to a greater extent than it is restricted on the date hereof) in, the Borrowers or (D) restricts the ability of the Loan Parties and their Subsidiaries to perform their obligations under the License Agreements or the Partnership Parks Agreements in accordance with the terms thereof;
(ii) The Guarantors shall not amend, supplement, restate or otherwise modify any provision of the Six Flags Second Lien Credit Agreement or any Permitted Second Lien Refinancing Indebtedness (i) to increase any applicable margin thereunder (or impose a fee in lieu thereof) by more than 2.0% per annum or (ii) to extend the scheduled maturity of the Six Flags Second Lien Obligations or any Permitted Second Lien Refinancing Indebtedness beyond the latest Maturity Date; and
(iii) The Guarantors shall not amend, restate or otherwise modify their respective certificates of incorporation or bylaws in any manner in any manner that directly or indirectly (A) restricts the ability of the Guarantors to pay the Lender under this Agreement in accordance with the terms hereof, (B) restricts the ability of the Borrowers to pay the Lender under the Credit Agreement in accordance with the terms thereof, (C) restricts the ability of the Loan Parties and their Subsidiaries to make loans to, or other investments in, the Borrowers or (D) restricts the ability of the Loan Parties and their Subsidiaries to perform their obligations under the License Agreements in accordance with the terms thereof.
(j) Lines of Business . Engage to any substantial extent in any line or lines of business activity other than the business of owning and operating amusement and attraction parks, and businesses related, ancillary or complementary thereto and the businesses and activities related thereto more fully described on Schedule 12(j) attached hereto.
(k) Transactions with Affiliates . Enter into any transaction with any Affiliate unless such transaction is upon fair and reasonable terms no less favorable to Parent, Holdings, SFTP or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, (i) any Affiliate who is an individual may serve as a director, officer or employee of Parent or any of its Subsidiaries and such Person may receive, and Parent and its Subsidiaries may engage in any transaction or series of transactions related to, reasonable compensation, severance, indemnities and reimbursement of reasonable expenses, including stock incentive and option plans and agreements relating thereto, (ii) Parent and its Subsidiaries may enter into transactions (other than extensions of credit by Parent or any of its Subsidiaries to an Affiliate) providing for the leasing of Property, the rendering or receipt of services or the purchase or sale of inventory and other Property in the ordinary course of business if the monetary or business consideration arising therefrom would be substantially as advantageous to Parent and its Subsidiaries as the monetary or business consideration that would obtain in a comparable transaction with a Person not an Affiliate, (iii) SFTP or any of its Subsidiaries may make an Acquisition of assets of any Person which is an Affiliate solely by reason of such Person being controlled by Parent or any of its Subsidiaries and may make Investments in such Person, provided that such Acquisitions and Investments are (A) permitted under Section 12(e)(i) or 12(g) and (B) made upon fair and reasonable terms no less favorable to Parent or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate, (iv) Parent or any of its Subsidiaries may enter into any transaction required of it pursuant to (A) Section 12(g), (B) its agreement with Dick Clark, or (C) the Great Escape
Agreements, (v) Parent and its Subsidiaries may be parties to and may perform their respective obligations under the Shared Services Agreement and the Tax Sharing Agreement, (vi) Parent or any of its Subsidiaries may perform their duties and obligations under the Partnership Parks Agreements and (vii) Parent or any of its Subsidiaries may enter into or consummate any transaction permitted for it by Sections 12(c)(ii), 12(c)(iii), 12(c)(iv), 12(c)(v), 12(c)(vi), 12(c)(ix), 12(c)(x), 12(c)(xi), 12(c)(xiv), 12(c)(xv), 12(c)(xvii), 12(c)(xviii), 12(d)(x), 12(d)(xi), 12(d)(xii), 12(d)(xxii), 12(e)(i), 12(e)(iii)(C), 12(e)(iii)(D), 12(e)(iii)(E), 12(e)(iii)(I), 12(e)(iii)(K), 12(e)(iii)(N), 12(e)(iv)(B), 12(f), 12(g)(i), any of 12(g)(v) through (xvii), or any of 12(g)(xix) through 12(g)(xxiii).
(l) Negative Pledge . Amend, amend and restate, supplement or otherwise modify Section 8.6 of the Six Flags First Lien Credit Agreement or Section 6.6 of the Six Flags Second Lien Credit Agreement, either directly or through the addition or amendment of other terms and provisions in the Six Flags First Lien Credit Agreement, the Six Flags Second Lien Credit Agreement or the entering into of any other Contractual Obligation, that would remove or alter the protections afforded to the Partnership Parks Entities and their Property on the Closing Date or any substantially similar provisions in any successor or replacement agreement or agreements pursuant to which the Six Flags First Lien Credit Agreement or the Six Flags Second Lien Credit Agreement is refunded, renewed or extended, refinanced, replaced or otherwise restructured.
SECTION 13. Notices . All notices, requests and demands to or upon the Lender or any Guarantor shall be effected in the manner provided in Section 9.2 of the Credit Agreement; any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1 hereto.
SECTION 14. Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 15. Section Headings . The section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
SECTION 16. No Offset; Interest . No Guarantor may offset against amounts it is to pay to the Lender under this Agreement any amounts it claims are owed to it by the Lender or any other Person.
SECTION 17. Enforcement Expenses . Each Guarantor agrees, jointly and severally, to pay or reimburse the Lender for all its costs and expenses incurred in collecting against such Guarantor under this Agreement or otherwise enforcing or protecting any rights under the Loan Documents, the Subordinated Indemnity Agreement and the Related Indemnity Agreements, to which such Guarantor is a party and applicable law, including the fees and disbursements of counsel to the Lender.
SECTION 18. Acknowledgements .
Each Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement;
(b) the Lender has no fiduciary relationship with or fiduciary duty to such Guarantor arising out of or in connection with this Agreement or the Credit Agreement, and the relationship between
any or all of the Guarantors, on the one hand, and the Lender, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the Credit Agreement or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors and the Lender.
SECTION 19. No Waiver . The Lender shall not by any act (except by a written instrument signed by the Lender), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. A waiver by the Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Lender would otherwise have hereunder on any future occasion.
SECTION 20. Assignment, Etc . This Agreement shall be binding upon the Guarantors and shall inure to the benefit of the Lender and its successors and permitted assigns; provided , however , no Guarantor may assign this Agreement or otherwise transfer any rights or obligations hereunder, and the Lender may assign its benefits hereunder in accordance with Section 9.6 of the Credit Agreement.
SECTION 21. Entire Agreement . This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior letters and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof; provided , however, that nothing contained herein shall limit, affect, alter, amend or otherwise modify the rights and obligations of the parties hereto and their respective Affiliates under the License Agreements, the Acquisition Company Liquidity Agreement or the Partnership Parks Agreements.
SECTION 22. GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK .
SECTION 23. Submission To Jurisdiction; Waivers . Each of the Lender and the Guarantors hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same.
(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Lender or the Borrowers, as the case may be, at its address set forth in Section 9.2 of the Credit Agreement or at such other address of which the Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.
SECTION 24. Releases .
(a) Each of the Guarantors, on behalf of themselves and their respective affiliates, and each of their respective successors in title or interest, past, present, and future officers, directors, employees, limited partners, general partners, members, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals, hereby waives, releases, remises and forever discharges Time Warner, the Lender, and their respective affiliates, and each of their respective successors in title or interest, past, present, and future officers, directors, employees, limited partners, general partners, members, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals (collectively, the “ TW Releasees ”), from any and all claims, suits, liens, lawsuits, adverse consequences, amounts paid in settlement, debts, deficiencies, diminution in value, disbursements, demands, obligations, liabilities, causes of action, damages, losses, costs and expenses of any kind or character whatsoever, whether in law, equity or otherwise (collectively, the “ TW Claims ”), whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or unasserted, matured or unmatured, foreseen or unforeseen, liquidated or unliquidated, suspected or unsuspected, both at law or in equity, which any Guarantor ever had, now has, or might hereafter have against such TW Releasee, arising or in existence on, or at any and all times prior to the Closing Date but in any case to the extent relating to Time Warner’s relationship to the Parent and its Subsidiaries, other than the Existing Time Warner Facility and TW Claims arising from or with respect to ordinary course business arrangements among Parent and its Affiliates, on the one hand, and any TW Releasee, on the other hand, including, without limitation, advertising, marketing or similar commercial arrangements and any trade payables with respect thereto.
(b) Each of Time Warner and the Lender, on behalf of themselves and their respective affiliates, and each of their respective successors in title or interest, past, present, and future officers, directors, employees, limited partners, general partners, members, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals, hereby waives, releases, remises and forever discharges each Guarantor and their respective affiliates, and each of their respective successors in title or interest, past, present, and future officers, directors, employees, limited partners, general partners, members, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals (collectively, the “ Guarantor Releasees ”), from any and all claims, suits, liens, lawsuits, adverse consequences, amounts paid in settlement, debts, deficiencies, diminution in value, disbursements, demands, obligations, liabilities, causes of action, damages, losses, costs and expenses of any kind or character whatsoever, whether in law, equity or otherwise (collectively, the “ Guarantor Claims ”), whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or unasserted, matured or unmatured, foreseen or unforeseen, liquidated or unliquidated, suspected or unsuspected, both at law or in equity, which the Lender or Time Warner ever had, now has, or might hereafter have against such Guarantor Releasee, arising or in existence on, or at any and all times prior to the Closing Date but in any case to the extent relating to Time Warner’s relationship to the Parent and its Subsidiaries , other than the Guarantor Claims arising from or with respect to: (i) (A) the agreements governing the sale of certain Spanish and German parks to Parent, (B) the Existing Time Warner Facility, (C) the License Agreements, (D) other licensing agreements relating to Europe and Latin America, (E) the Subordinated Indemnity Agreement, (F) the Subordinated Indemnity Escrow Agreement, (G) the Beneficial Share Assignment Agreement, (H) the Acquisition Company Liquidity Agreement, (I) any
other Partnership Parks Agreement, (J) this Agreement and the Guarantee Agreement, (K) any other agreement or instrument relating to the documents identified in clauses (A) to (J), and (L) any Borrower claims that are not being released by the express provisions of the Plan or (ii) ordinary course business arrangements among Parent, its Subsidiaries or its Affiliates, on the one hand, and Time Warner, the Lender or any of their respective affiliates, on the other hand, including, without limitation, advertising, marketing or similar commercial arrangements and any trade payables with respect thereto.
SECTION 25. Waivers of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 26. Confidentiality . The Lender agrees to keep confidential all non-public information provided to it by any Guarantor pursuant to this Agreement that is designated by such Guarantor as confidential; provided , that nothing herein shall prevent the Lender from disclosing any such information in accordance with Section 9.13 of the Credit Agreement.
SECTION 27. Release of Guarantee Obligations . Notwithstanding anything to the contrary contained herein or any other Loan Document, when all Obligations have been paid in full in cash and the Commitment has terminated or expired, upon request of the Borrowers, the Lender shall take such actions as shall be required to release all guarantee obligations under any Loan Document. Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrowers or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrowers or any Guarantor or any substantial part of its Property, or otherwise, all as though such payment had not been made. Notwithstanding anything to the contrary contained herein or any other Loan Document, when any Subsidiary Guarantor has been released as a guarantor under (a) the Six Flags First Lien Guarantee and Collateral Agreement and (b) the Six Flags Second Lien Guarantee and Collateral Agreement, the Lender shall take such actions to release such Subsidiary Guarantor under the Guarantee for so long as (i) the release under the foregoing clauses (a) and (b) is not in connection with a transaction (or series of transactions) that would cause or otherwise result in (without giving effect to any applicable cure periods) a Default or Event of Default under the Loan Documents and (ii) such Subsidiary Guarantor remains so released under the Six Flags First Lien Guarantee and Collateral Agreement and the Six Flags Second Lien Guarantee and Collateral Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered by its duly authorized officer as of the day and year first above written.
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SIX FLAGS ENTERTAINMENT CORPORATION |
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By: |
/s/ Mark Shapiro |
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Name: Mark Shapiro |
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Title: President and Chief Executive Officer |
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SIX FLAGS OPERATIONS INC. |
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By: |
/s/ Mark Shapiro |
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Name: Mark Shapiro |
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Title: President and Chief Executive Officer |
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SIX FLAGS THEME PARKS INC. |
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By: |
/s/ Mark Shapiro |
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Name: Mark Shapiro |
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Title: President and Chief Executive Officer |
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FIESTA TEXAS, INC. |
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FUNTIME, INC. |
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FUNTIME PARKS, INC. |
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GREAT AMERICA LLC |
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GREAT ESCAPE HOLDING INC. |
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HURRICANE HARBOR GP LLC |
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HURRICANE HARBOR LP LLC |
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KKI, LLC |
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MAGIC MOUNTAIN LLC |
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PARK MANAGEMENT CORP. |
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PREMIER INTERNATIONAL HOLDINGS INC. |
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PREMIER PARKS HOLDINGS INC. |
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PREMIER PARKS OF COLORADO INC. |
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RIVERSIDE PARK ENTERPRISES, INC. |
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SF HWP MANAGEMENT LLC |
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SFJ MANAGEMENT INC. |
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SIX FLAGS AMERICA PROPERTY CORPORATION |
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SIX FLAGS GREAT ADVENTURE LLC |
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SIX FLAGS SERVICES, INC. |
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SIX FLAGS SERVICES OF ILLINOIS, INC. |
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SIX FLAGS ST. LOUIS LLC |
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SOUTH STREET HOLDINGS LLC |
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STUART AMUSEMENT COMPANY |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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HURRICANE HARBOR LP |
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HURRICANE HARBOR GP LLC, |
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its General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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SIX FLAGS AMERICA LP |
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FUNTIME, INC., |
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its General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Assistant Vice President |
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SIX FLAGS GREAT ESCAPE L.P. |
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GREAT ESCAPE THEME PARK L.P. |
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GREAT ESCAPE RIDES L.P. |
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GREAT ESCAPE HOLDING INC., |
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their General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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ACCEPTED AND AGREED TO: |
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TW-SF LLC |
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By: |
/s/ Edward B. Ruggiero |
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Name: Edward B. Ruggiero |
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Title: Senior Vice President & Treasurer |
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With respect to Section 24 only: |
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TIME WARNER INC. |
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By: |
/s/ Edward B. Ruggiero |
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Name: Edward B. Ruggiero |
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Title: Senior Vice President & Treasurer |
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Exhibit 10.7
EXECUTION VERSION
Amendment No. 7
to
Subordinated Indemnity Agreement
This Amendment No. 7 to the Subordinated Indemnity Agreement (this “ Amendment ”) is entered into as of April 30, 2010 by and among Six Flags Operations Inc. (as successor to Six Flags Entertainment Corporation) (“ SFEC ”), Six Flags Theme Parks Inc., SFOG II, Inc., SFT Holdings, Inc., Historic TW Inc. (formerly known as Time Warner Inc.) (“ TWX ”), Warner Bros. Entertainment Inc. (as assignee of Time Warner Entertainment Company, L.P.), TW-SPV Co., Six Flags Entertainment Corporation (formerly known as Six Flags, Inc.) (as successor to Premier Parks Inc.) (“ Holdco ”), the other subsidiaries of SFEC listed on the signature pages hereto (collectively, the “ Subsequently Joined Subsidiaries ”) and GP Holdings Inc., and amends in certain respects the Subordinated Indemnity Agreement, dated as of April 1, 1998, by and among the parties (or their predecessors in interest), as amended by Amendment No. 1 to Subordinated Indemnity Agreement, dated as of November 5, 1999, Amendment No. 2 to the Subordinated Indemnity Agreement, dated as of June 12, 2002, Amendment No. 3 to the Subordinated Indemnity Agreement, dated as of April 13, 2004, Amendment No. 4 to the Subordinated Indemnity Agreement, dated as of December 8, 2006, Amendment No. 5 to the Subordinated Indemnity Agreement, dated as of April 2, 2007, and Amendment No. 6 to the Subordinated Indemnity Agreement, dated as of May 15, 2009 (as so amended, the “ Original Agreement ”). Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings ascribed to them in the Original Agreement.
WHEREAS, on May 15, 2009, TW-SF LLC, a Delaware limited liability company and wholly owned subsidiary of TWX (“ TW-SF LLC ”), made a loan (the “ 2009 Loan ”) to the Acquisition Subsidiaries in the original aggregate principal amount of $52,507,000 to enable the Acquisition Subsidiaries to satisfy their obligations with respect to the Liquidity Put for the year 2009;
WHEREAS, on June 13, 2009, Holdco and its affiliated debtors (the “ SF Debtors ”) filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code (the “ SF Bankruptcy Case ”), and subsequently filed a joint plan of reorganization with the United States Bankruptcy Court for the District of Delaware (as amended, supplemented or otherwise modified in accordance with the terms thereof, the “ Plan ”);
WHEREAS, in connection with, and concurrently with the effectiveness of, the Plan, (i) TW-SF LLC will enter into a credit agreement (the “ Acquisition Company Credit Agreement ”) with the Acquisition Subsidiaries under which it will agree to loan the Acquisition Subsidiaries up to $150,000,000 in connection with the Acquisition Subsidiaries’ obligations with respect to certain future Liquidity Puts, (ii) TW-SF LLC will enter into a guarantee agreement (the “ Guarantee Agreement ”) with certain of the Holdco Parties pursuant to which such Holdco Parties will guarantee the obligations of the Acquisition Subsidiaries under the Acquisition Company Credit Agreement, and (iii) TW-SF LLC will receive payment in full in
cash of all principal, interest and other amounts outstanding under the 2009 Loan and the Guarantee will be terminated simultaneously therewith;
WHEREAS, it is a requirement of the Plan that the SF Debtors party to the Original Agreement ratify and confirm their obligations under the Original Agreement, as amended hereby;
WHEREAS, in connection with the foregoing, and as an accommodation to certain other financing sources of the Holdco Parties, the TW Parties have agreed to suspend temporarily certain obligations of the Holdco Escrow Parties under the Original Agreement and the Subordinated Indemnity Escrow Agreement pursuant to that certain Escrow Waiver Agreement, substantially in the form attached hereto as Exhibit A ; and
WHEREAS, in connection with the foregoing transactions, the parties hereto wish to amend the terms of the Original Agreement effective upon the effective date of the Plan as set forth herein.
NOW THEREFORE, the parties agree as follows:
1.1.51 “ Required Obligations ” shall mean, collectively, (i) the Georgia Agreements Obligations, (ii) the Texas Agreements Obligations, (iii) the Zero Coupon Notes Obligations, (iv) the obligations to pay any amounts required to be paid and to comply with any obligations required to be complied with by SFTP and its affiliates (determined after giving effect to the Merger) under the KO Agreements (as such term is defined in the Letter Agreement, dated as of February 9, 1997, among TWE, Boston Ventures Limited Partnership IV, and Premier Parks Inc. relating to the KO Agreements) and (v) each covenant, agreement and obligation to be performed or observed by any of Six Flags Entertainment Corporation, Six Flags Operations Inc., Six Flags Theme Parks Inc. or the Acquisition Subsidiaries under the Acquisition Company Credit Agreement and the Acquisition Company Credit Agreement Guarantee; provided that the Required Obligations shall not include (i) any obligations of the Georgia Acquisition Subsidiaries or the Texas Acquisition Subsidiaries to purchase any
Units pursuant to the Accelerated Put provisions under the Texas Agreements and the Georgia Agreements, except as specifically provided in Section 4.2 hereunder; or (ii) the Excluded Obligations.
1.1.68 “ Triggering Default ” shall mean (i) a “Default” as such term is defined in the Georgia Agreements (other than a Default that results from the failure of the TW Parties to perform their obligations with respect to an Accelerated Put as described in Section 4.3 hereof), (ii) a “Default” as such term is defined in the Texas Agreements (other than a Default that results from the failure of the TW Parties to perform their obligations with respect to an Accelerated Put as described in Section 4.3 hereof), (iii) [reserved], (iv) a default by any of the Holdco Parties of their covenants, agreements or obligations hereunder (other than an immaterial default that can be cured upon notice), (v) a failure by the Holdco Parties to pay any amounts owed to the TW Parties hereunder or to otherwise reimburse the TW Parties for any amounts paid by either of such parties under the Georgia Guarantees or the Texas Guarantees, (vi) a default by any of the Holdco Parties (or their successors in interest) in the observance or performance of any covenant, agreement or obligation on its part to be performed or observed under that certain Acquisition Company Liquidity Agreement, dated as of December 8, 2006, by and among the Holdco Parties (or their successors in interest), the TW Parties and the Acquisition Companies, (vii) if Holdco, SFEC, SFTP or any Subsidiary of SFEC that owns or operates a park (each, a “ Specified Holdco Party ”) becomes subject to a chapter 7 bankruptcy case or any other proceeding providing for its liquidation, dissolution or winding up, (viii) the appointment of a trustee, examiner, liquidator or the like with respect to any Specified Holdco Party or all or any substantial part of a Specified Holdco Party’s property, (ix) an “Event of Default” as such term is defined in the Acquisition Company Credit Agreement, or (x) a default by any of the Holdco Escrow Parties in the observance or performance of any covenant, agreement or obligation to be performed or observed by them under that certain Escrow Waiver Agreement, dated as of April 30, 2010, by and among the parties hereto and the Acquisition Subsidiaries (as the same may be amended, amended and restated, modified or otherwise supplemented from time to time); provided , however , that (A) for purposes of the definition of “Triggering Default” and notwithstanding any provision to the contrary, a Triggering Default (other than due to a Specified Default), shall be deemed to continue in perpetuity from the date of its occurrence and the Holdco Parties shall not have the right to cure such Triggering Default unless such Triggering Default is cured within the shorter of (x) 90 days of the occurrence of such Triggering Default or (y) 45 days from the date on which the TW Parties exercise their right to appoint directors to the board of directors of GP Holdings in accordance with the Organizational Documents of GP Holdings, in which case such Triggering Default shall be deemed to have continued until so cured, and (B) in no event shall the Holdco Parties be permitted to cure a
Triggering Default due to a Specified Default without the prior written consent of the TW Parties (which consent may be withheld in the TW Parties’ sole discretion) and no such Triggering Default shall be deemed to be cured without such prior written consent of the TW Parties; provided , further , that nothing in the foregoing provisos shall impair or otherwise modify any of the rights or remedies of the TW Parties and/or any of their respective affiliates pursuant to any agreement or arrangement or otherwise (including, without limitation, pursuant to this Agreement, the Subordinated Indemnity Escrow Agreement, the Beneficial Share Assignment or the Organizational Documents of GP Holdings).
1.1.84 “ Acquisition Company Affiliate Loans ” shall mean any loans made by any of the SF Parties or any Subsidiary or affiliate thereof to any of the Acquisition Companies in accordance with Section 7.1 of the Acquisition Company Credit Agreement.
1.1.85 “ Acquisition Company Credit Agreement ” shall mean that certain Credit Agreement, dated as of April 30, 2010, by and among the Acquisition Subsidiaries and TW-SF LLC, as the same may be amended, amended and restated, modified or otherwise supplemented from time to time.
1.1.86 “ Acquisition Company Credit Agreement Guarantee ” shall mean that certain Guarantee Agreement, dated as of April 30, 2010, by and among Six Flags Operations Inc., SFTP, Six Flags Entertainment Corporation, each of the other subsidiaries of Six Flags Entertainment Corporation party thereto and TW-SF LLC, as the same may be amended, amended and restated, modified or otherwise supplemented from time to time.
1.1.87 “ Assets ” means any asset, property or right, wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person, and all right, title, interest and claims therein.
(a) Each reference to “Affiliate Loans” in subsections (b), (d)(i), and (d)(iii) is deemed to include a reference to “Acquisition Company Affiliate Loans”, in addition to Affiliate Loans.
(b) Subsection (f) shall become subsection (e).
(c) A new subsection (f) shall be added as follows:
(f) Notwithstanding anything contained in this Section 6.1.13 to the contrary, SFOT and SFOG II shall be permitted to enter into subordination agreements with respect to Affiliate Loans owed to either of them in connection with equipment leases, working capital credit facilities and other working capital financing accommodations made to the Georgia Partnership and/or the Texas Partnership so long as (i) the terms of any such subordination agreement are the same as those contained in the subordination agreements dated January 27, 2010, with JPMorgan Chase Bank, N.A. , as the same may thereafter be amended, supplemented or otherwise modified from time to time, in a manner that is not materially adverse to SFOT or SFOG II, as applicable, or the TW Parties and (ii) the principal amount of Indebtedness that the Affiliate Loans shall be subordinated to pursuant to such subordination agreements shall not exceed $22.5 million in the aggregate.
6.1.15 Bankruptcy Obligations . The Holdco Parties shall reaffirm, ratify and assume, as applicable, their respective obligations under each of this Agreement, the Warner Bros. License Agreements, the Acquisition Company Credit Agreement, the Acquisition Company Credit Agreement Guarantee, the SFTP/SFEC Georgia Guarantee and the SFTP/SFEC Texas Guarantee in connection with any bankruptcy plan of Holdco and its Subsidiaries or the assumption of the Beneficial Share Assignment Agreement.
6.1.17 Certain Consents . The Holdco Parties shall not, and shall cause each of their Subsidiaries not to, without the prior written consent of the
TW Parties, consent to the taking of any action pursuant to the terms of the Georgia Agreements or the Texas Agreements with respect to the Units, the Georgia Park or the Texas Park, in each case, that could reasonably be expected to have a material adverse effect on the rights of TW-SF LLC (or any successor lender) under the Acquisition Company Credit Agreement or Acquisition Company Credit Agreement Guarantee.
6.1.18 Negative Pledge Covenant . Except as otherwise provided in the Georgia Acquisition Subsidiaries Guarantee, the Texas Acquisition Subsidiaries Guarantee or any Capital Improvements Loan (as that term is defined in Article I of each of the Georgia Partnership Agreement and the Texas Partnership Agreement) made to either the Georgia Partnership or the Texas Partnership, the Holdco Parties shall not, and shall cause each of their Subsidiaries not to, without the prior written consent of the TW Parties, (a) create, incur, assume or suffer to exist any Lien on any of the Equity Interests or Assets (including, without limitation, any Units) of any of the Georgia Partnership, the Texas Partnership, the Acquisition Subsidiaries, GP Holdings, or any of their respective Subsidiaries that secures any indebtedness described in clause (i) of the definition of “Indebtedness” or (b) cause or permit any of the Georgia Partnership, the Texas Partnership, the Acquisition Subsidiaries, GP Holdings or any of their respective Subsidiaries to provide any guarantee with respect to, or assume, endorse or otherwise become responsible for Indebtedness or obligations of any other Person, other than pursuant to the Acquisition Company Credit Agreement; provided , however , that notwithstanding the foregoing, (x) the Subsidiaries of the Georgia Partnership and the Texas Partnership shall be permitted to guarantee Indebtedness of the Georgia Partnership or the Texas Partnership (as applicable) which the Georgia Partnership or the Texas Partnership (as applicable) are otherwise permitted to incur, and (y) the Georgia Partnership and the Texas Partnership shall be permitted to guarantee Indebtedness of the Subsidiaries of the Georgia Partnership or the Texas Partnership (as applicable) which the Subsidiaries of the Georgia Partnership or the Texas Partnership (as applicable) are otherwise permitted to incur.
EXECUTION VERSION
In Witness Whereof , the parties hereto have executed this Amendment as of the day and year first above written.
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Six Flags Entertainment Corporation (formerly known as Six Flags, Inc.), as successor in interest to Premier Parks Inc. |
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By: |
/s/ Jeffrey R. Speed |
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Name: |
Jeffrey R. Speed |
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Title: |
Executive Vice President and |
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Chief Financial Officer |
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GP Holdings Inc. |
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By: |
/s/ Mark Quenzel |
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Name: |
Mark Quenzel |
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Title: |
President |
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Historic TW Inc. |
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By: |
/s/ Edward B. Ruggiero |
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Name: |
Edward B. Ruggiero |
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Title: |
Senior Vice President & Treasurer |
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Warner Bros. Entertainment Inc., as assignee of Time Warner Entertainment Company, L.P. |
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By: |
/s/ Annaliese S. Kambour |
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Name: |
Annaliese S. Kambour |
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Title: |
Senior Vice President - Taxes |
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TW-SPV Co. |
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By: |
/s/ Edward B. Ruggiero |
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Name: |
Edward B. Ruggiero |
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Title: |
Senior Vice President & Treasurer |
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Six Flags Operations Inc. |
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By: |
/s/ Jeffrey R. Speed |
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Name: |
Jeffrey R. Speed |
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Title: |
Executive Vice President and |
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Chief Financial Officer |
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Six Flags Theme Parks Inc. |
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By: |
/s/ Jeffrey R. Speed |
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Name: |
Jeffrey R. Speed |
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Title: |
Executive Vice President and |
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Chief Financial Officer |
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SFOG II, Inc. |
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By: |
/s/ Andrew Schleimer |
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Name: |
Andrew Schleimer |
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Title: |
Executive Vice President |
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SFT Holdings, Inc. |
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By: |
/s/ Mark Shapiro |
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Name: |
Mark Shapiro |
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Title: |
President and Chief Executive Officer |
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Park Management Corp. |
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Funtime Parks, Inc. |
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Funtime, Inc. |
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Premier Parks Of Colorado Inc. |
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Great Escape Holding Inc. |
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Premier International Holdings Inc. |
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Premier Parks Holdings Inc. |
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Stuart Amusement Company |
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Riverside Park Enterprises, Inc. |
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KKI, LLC |
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Astroworld LP LLC |
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Astroworld GP LLC |
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Hurricane Harbor LP LLC |
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Hurricane Harbor GP LLC |
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Six Flags Services, Inc. |
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Six Flags Services of Illinois, Inc. |
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Six Flags America Property Corporation |
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Fiesta Texas, Inc. |
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SFJ Management Inc. |
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Great America LLC |
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Six Flags St. Louis LLC |
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Magic Mountain LLC |
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Six Flags Great Adventure LLC |
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South Street Holdings LLC |
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PP Data Services Inc. |
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HWP Development Holdings LLC |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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SFRCC Corp. |
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By: |
/s/ Andrew Schleimer |
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Name: |
Andrew Schleimer |
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Title: |
Executive Vice President |
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Astroworld LP |
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By: |
Astroworld GP LLC , |
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its General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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Hurricane Harbor LP |
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Hurricane Harbor GP LLC, |
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its General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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Six Flags America LP |
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By: |
Funtime, Inc., |
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its General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
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Six Flags Great Escape L.P. |
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Great Escape Theme Park L.P. |
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Great Escape Rides L.P. |
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By: |
Great Escape Holding Inc., |
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their General Partner |
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By: |
/s/ Danielle J. Bernthal |
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Name: |
Danielle J. Bernthal |
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Title: |
Assistant Vice President |
Exhibit 10.8
This Indemnity Agreement (“Agreement”) is made as of , 2010 by and between Six Flags Entertainment Corporation, a Delaware corporation (the “Company”), and (“Indemnitee”). This Agreement supersedes and replaces any and all previous Agreements between the Company and Indemnitee covering the subject matter of this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Six Flags Entertainment Corporation
1540 Broadway
New York, NY 10036
Attention: General Counsel
or to any other address as may have been furnished to Indemnitee in writing by the Company.
[Signature Page Follows]
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER,
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Alexander Weber, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Six Flags Entertainment Corporation ;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: May 17, 2010 |
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/s/ Alexander Weber, Jr. |
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Alexander Weber, Jr. |
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President and Interim Chief Executive Officer |
Exhibi 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER,
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeffrey R. Speed, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Six Flags Entertainment Corporation ;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: May 17, 2010 |
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/s/ Jeffrey R. Speed |
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Jeffrey R. Speed |
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Executive Vice President and Chief Financial Officer |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER,
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Alexander Weber, Jr., as Chief Executive Officer of Six Flags Entertainment Corporation (the “Company”) certify, pursuant to 18 U.S.C. § 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the accompanying quarterly report on Form 10-Q for the period ending March 31, 2010 as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: May 17, 2010 |
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/s/ Alexander Weber, Jr. |
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Alexander Weber, Jr. |
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President and Interim Chief Executive Officer |
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER,
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeffrey R. Speed, as Chief Financial Officer of Six Flags Entertainment Corporation (the “Company”) certify, pursuant to 18 U.S.C. § 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the accompanying quarterly report on Form 10-Q for the period ending March 31, 2010 as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: May 17, 2010 |
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/s/ Jeffrey R. Speed |
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Jeffrey R. Speed |
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Executive Vice President and Chief Financial Officer |