Exhibit 10(au)
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OVERALL AGREEMENT
dated as of February 15, 1997
among
SIX FLAGS FUND, LTD. (L.P.)
▇▇▇▇▇▇ 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.
SIX FLAGS THEME PARKS INC.
and
SIX FLAGS ENTERTAINMENT CORPORATION
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TABLE OF CONTENTS
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RECITALS......................................................................................1
ARTICLE I CERTAIN DEFINITIONS.................................................................6
ARTICLE II TENDER OFFER......................................................................18
2.1 Tender Offer......................................................................18
2.2 Tender Offer Price and Mandatory Adjustment Amount; Changes in the
Tender Offer Price; Payment of the Tender Offer Price.............................18
2.3 The Tender Offer Expiration Date..................................................20
2.4 Tender Offer Materials............................................................20
2.5 Compliance with Tender Offer Rules................................................21
2.6 No General Partner's Right of First Refusal with Respect to the Tender Offer......21
ARTICLE III LIQUIDITY PUT....................................................................21
3.1 Liquidity Put.....................................................................21
3.2 Put Price.........................................................................21
3.3 Liquidity Put Number; Proration...................................................22
3.4 General Partner's Right of First Refusal with Respect to Liquidity Put............23
3.5 Liquidity Notice Provisions.......................................................24
3.6 Exchange Act......................................................................25
3.7 Put for 2026......................................................................25
3.8 Adjustments.......................................................................26
ARTICLE IV SF AGREEMENT LAND AND BATMAN the RIDE.............................................26
4.1 Purchase of SF Agreement Land.....................................................26
4.2 Title to SF Agreement Land........................................................26
4.3 Batman the Ride and Other Capital Improvements in Progress........................27
ARTICLE V FLAGS RULPA ELECTION AND LIMITED LIABILITY
COMPANY CONVERSION..............................................................27
5.1 RULPA Election....................................................................27
5.2 Limited Liability Company Conversion..............................................27
5.3 SFOG No Longer Manager of Flags; SFG-I, LLC as Member/Manager.....................27
5.4 Flags Limited Liability Company Operating Agreement...............................28
5.5 Section ▇▇-▇▇-▇▇▇ Certificate.....................................................28
ARTICLE VI FLAGS II..........................................................................28
6.1 The Flags II Limited Partnership Agreement........................................28
6.2 Contribution by Flags of Assets, Including the Rides and the Other
Improvements, to Flags II; Sale by Flags of the Designated Assets to
Flags II; Assumption of Liabilities; Certain Expenses.............................28
ARTICLE VII THE LEASE........................................................................29
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ARTICLE VIII END-OF-TERM OPTION; ALTERNATIVES IF OPTION NOT
EXERCISED; SFOG II CEASING TO BE THE GENERAL
PARTNER OF FLAGS II..........................................................30
8.1 End-of-Term Option................................................................30
8.2 End-of-Term Option Price; Acquisition of General Partnership Interests
in Fund and Flags II and Manager Member's Interest in Flags.......................31
8.3 Notice of Exercise of End-of-Term Option..........................................31
8.4 Payment of End-of-Term Option Price...............................................31
8.5 Alternatives if Option Not Exercised or if SFOG II Ceases to be the
General Partner of Flags II.......................................................32
8.6 Acceleration of End-of-Term Option in the Event of Total
Condemnation or Equivalent Casualty...............................................33
ARTICLE IX REPRESENTATIONS AND WARRANTIES....................................................34
9.1 Representations and Warranties of the SFEC Entities...............................34
9.2 Representations and Warranties of Fund and Related Entities.......................36
ARTICLE X STANDSTILL.........................................................................38
10.1 Certain Rights and Obligations of Units Acquired by SFOG
Acquisition A and SFOG Acquisition B Pursuant to this Agreement...................38
10.2 Standstill........................................................................38
10.3 No Permitted Transfers............................................................39
10.4 Limited Partners' Rights Plan.....................................................39
ARTICLE XI OBLIGATIONS ABSOLUTE..............................................................39
ARTICLE XII CERTAIN AGREEMENTS..............................................................40
12.1 Changes in the Number of Outstanding Units........................................40
12.2 Prepaid Amount; No Fund Liabilities at Tender Offer Settlement Date...............40
12.3 The Claims Trust..................................................................41
12.4 Nature of SFOG II, SFOG II Employee, SFOG Acquisition A and
SFOG Acquisition B................................................................42
12.5 Non-Competition...................................................................43
12.6 Certain Real Property and Other Matters...........................................43
12.7 Affiliate and Certain Other Transactions..........................................44
12.8 Information Obligations...........................................................51
12.9 No Liability of Fund Partners or, After SFG-I, LLC Becomes the
Manager of Flags, the Manager of Flags; Additional Limitation on
Liability.........................................................................56
12.10 Indemnification...................................................................57
12.11 Expenses..........................................................................58
12.12 Six Flags Over Georgia Name.......................................................58
12.13 SF Agreement......................................................................59
12.14 Section 754 Elections; Publicly Traded Partnership................................59
12.15 SFOG's Interest in Flags..........................................................59
12.16 Certain Flags Distributions in 1997...............................................59
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12.17 Initial Limited Partner's Fractional Unit.........................................59
12.18 EBITDA Arbitration Matters........................................................60
12.19 EBITDA Adjustment for Personal Injury Claims......................................63
12.20 Other SFEC Entities that May Own Units............................................64
12.21 Negative Pledge Covenants.........................................................64
12.22 List of Fund Limited Partners.....................................................64
ARTICLE XIII EMPLOYEE AND RELATED MATTERS....................................................65
13.1 Continuation of Employment........................................................65
13.2 Benefit Responsibilities..........................................................66
13.3 Continuation of Health Coverage Through Closing Date..............................66
13.4 Modifications.....................................................................66
13.5 Park Employees....................................................................66
13.6 End of Term.......................................................................66
13.7 Sale at End-of-Term...............................................................66
13.8 ERISA67
13.9 No Termination; No Third Party Rights.............................................67
ARTICLE XIV EXECUTION OF THIS AGREEMENT; THE CLOSING
AND CLOSING DELIVERIES.......................................................67
14.1 Execution and Delivery of This Agreement..........................................67
14.2 The Closing.......................................................................67
14.3 Conditions to the Obligations of the Parties......................................67
14.4 Effective Date Deliveries.........................................................68
14.5 Fund Limited Partners' Approval...................................................69
ARTICLE XV GENERAL PROVISIONS................................................................69
15.1 Applicable Law....................................................................69
15.2 Forum69
15.3 Injunction........................................................................69
15.4 Notices...........................................................................70
15.5 Counterparts......................................................................71
15.6 Entire Agreement..................................................................71
15.7 Modifications, Amendments and Waivers.............................................71
15.8 Interpretation....................................................................72
15.9 Severability; Invalidity of Particular Provisions.................................72
15.10 Waiver72
15.11 Third-Party Beneficiaries.........................................................72
15.12 Successors........................................................................72
15.13 No Offset; Interest...............................................................72
15.14 Further Assurances................................................................72
15.15 Non-Binding Effect of Recitals....................................................73
15.16 Payments..........................................................................73
15.17 Factors to be Considered in Determining Reasonableness of Withheld Consent........73
SIGNATURES...................................................................................74
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EXHIBITS
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Designation Description
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A Schematic of Relationships at the Date of the
Agreement
B Schematic of Relationships Giving Effect to the
Agreement and the Related Agreements
1.1(oo) Flags Limited Partnership Agreement
II Computation of Amounts Payable in the Tender Offer
3.2(a)(1) Computation of the Formula Amount
3.2(a)(2) Computation of Put Price for 2003
3.3(a) Computation of Liquidity Put Number
3.5(b) Notice of Election to Exercise Liquidity Put
4.1 SF Agreement
5.1 Certificate of Limited Partnership of Flags
5.4 Flags Limited Liability Company Operating Agreement
6.1.1 Flags II Limited Partnership Agreement
6.1.2 Certificate of Limited Partnership of Flags II
VII Lease
8.2 Illustration of End-of-Term Option Transaction
9.2(e) Fund Limited Partnership Agreement
12.8(a)(i)(C) Agreed-Upon Procedures Report Procedures and Items
12.8(a)(iii) Form of Monthly Financial Statements
12.8(g) Certain Information
14.1(a) TWE and TWX Guarantee
14.3(c) Opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
14.3(d) Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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Designation Description
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14.4(a)(i) Second Amended and Restated Fund Limited
Partnership Agreement
14.4(a)(ii) SFOG Acquisition A and SFOG Acquisition B Guarantee
and Pledge Agreement
14.4(a)(iii) SFTP and SFEC Guarantee
v
OVERALL AGREEMENT
This Overall Agreement (this "Agreement") is entered into as of
February 15, 1997 by and among Six Flags Fund, Ltd. (L.P.), a Georgia limited
partnership ("Fund"), the ▇▇▇▇▇▇ Family Trust (created by Declaration of Trust
dated May 15, 1980, as amended) ("▇▇▇▇▇▇"), SFG, Inc., a California corporation
("SFG, Inc."), SFG-I, LLC, a Georgia limited liability company ("SFG-I, LLC"),
SFG-II, LLC, a Georgia limited liability company ("SFG-II, LLC"), Six Flags Over
Georgia, Ltd., a Georgia limited partnership ("Flags"), SFOG II, Inc., a
Delaware corporation ("SFOG II"), SFOG II Employee, Inc., a Delaware corporation
("SFOG II Employee"), SFOG Acquisition A, Inc., a Delaware corporation ("SFOG
Acquisition A"), SFOG Acquisition B, L.L.C., a Delaware limited liability
company ("SFOG Acquisition B"), Six Flags Over Georgia, Inc., a Delaware
corporation ("SFOG"), Six Flags Services of Georgia, Inc., a Georgia corporation
("SFOGS"), Six Flags Theme Parks Inc., a Delaware corporation ("SFTP"), and Six
Flags Entertainment Corporation, a Delaware corporation ("SFEC"). SFOG II, SFOG
II Employee, SFOG Acquisition A, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ and SFEC
are sometimes referred to in this Agreement individually as an "SFEC Entity" and
collectively as the "SFEC Entities".
RECITALS
For the convenience of readers of this Agreement, Exhibit A to
this Agreement is a schematic representation of certain elements of the
relationships of the parties at the date of this Agreement and Exhibit B to this
Agreement is a schematic representation of certain elements of the transactions
provided for in this Agreement and the Related Agreements and the resultant
relationships of the parties.
THE PARTIES; CERTAIN OTHER MATTERS
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▇. ▇▇▇▇▇▇ is the managing general partner of Fund. SFG, Inc. is
the co-general partner of Fund.
B. Fund is the sole limited partner of Flags. SFOG is the sole
general partner of Flags.
C. Flags is the owner of the Six Flags Over Georgia Amusement Park
in Atlanta, Georgia (the "Amusement Park").
D. Fund, SFOG, SFTP and SFEC entered into a Letter Agreement,
dated August 1, 1996 (the "SF Agreement"), a copy of which is Exhibit 4.1 to
this Agreement, relating to, among other things, the purchase by Flags and
installation in the Amusement Park of a ride ("Batman the Ride") described in
the SF Agreement and an option in favor of Fund to purchase certain real
property adjacent to the Amusement Park (the "SF Agreement Land").
E. The Restated Limited Partnership Certificate and Agreement of
Flags, as amended to date (the "Flags Limited Partnership Agreement"), states
that Flags "shall dissolve . . . on December 31, 1997, unless [Fund] shall have
delivered to [SFOG] prior thereto a written
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notice to the effect that dissolution shall not occur on such date" and further
states that, if Flags is dissolved:
"[Fund] may either (i) appoint a trustee to wind up and
terminate the business and affairs of [Flags] or (ii)
appoint another General Partner (who must be a person
having the capacity to serve as such) and continue the
business and affairs of [Flags] in accordance with the
provisions [of the Flags Limited Partnership Agreement]. If
[Fund] appoints another General Partner, the person so
appointed and [Fund] shall execute, acknowledge, swear to
and file a Certificate and Agreement of Limited Partnership
containing substantially the same provisions as those
contained [in the Flags Limited Partnership Agreement]."
The Flags Limited Partnership Agreement further provides that, if Flags is
dissolved, then:
"The trustee shall liquidate all assets of [Flags]
necessary to discharge such liabilities to creditors and,
in addition thereto, shall liquidate all remaining
intangible personal property of [Flags]. After all of such
liabilities have been discharged, the trustee shall . . .
(b) distribute to [Fund] 30% of all
remaining cash of [Flags] and distribute to [SFOG]
70% of such remaining cash; and
(c) make, execute and deliver to [Fund] such
assignments and other conveyances as may be necessary
or appropriate to vest in [Fund] all remaining
property of [Flags].
Notwithstanding any provision hereof, [SFOG] shall
not be entitled to receive by reason of the dissolution or
liquidation of [Flags] any interest in the Amusement Park
or any part of the proceeds resulting from any sale of the
Amusement Park or any interest therein in connection with
the liquidation of [Flags]."
F. SFOG II is a single-purpose corporation, wholly owned by SFEC,
formed for the purpose of being the sole managing general partner of Six Flags
Over ▇▇▇▇▇▇▇ ▇▇, L.P., a Delaware limited partnership to be formed pursuant to
this Agreement ("Flags II"). Flags will be the sole limited partner of Flags II.
SFG-II, LLC will be the sole co-general partner of, and will initially have (and
is expected to continue to have) a nominal interest in, Flags II. SFOG II
Employee is a single-purpose corporation, wholly owned by SFOG II, formed for
the purpose of employing the employees of the Amusement Park.
G. SFOG Acquisition A is a single-purpose corporation, wholly
owned by SFTP, formed for the purpose of entering into this Agreement and the
Related Agreements and performing its obligations and exercising its rights
hereunder and thereunder. SFOG Acquisition B is a single-purpose limited
liability company, formed for the purpose of entering into this Agreement and
the Related Agreements and performing its obligations and exercising its
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rights hereunder and thereunder, which is wholly owned by one or more of (i)
Time Warner Entertainment Company, L.P., a Delaware limited partnership ("TWE"),
and (ii) Boston Ventures Limited Partnership IV, Boston Ventures Limited
Partnership IVA and certain other investors (together, the "BV Investors").
H. SFEC is also wholly-owned by TWE, the BV Investors and certain
SFEC officers.
I. SFOG is a wholly-owned subsidiary of SFTP. SFTP is an indirect
wholly owned subsidiary of SFEC.
J. Time Warner Inc., a Delaware corporation ("TWX"), indirectly
owns approximately 74.5% of the residual equity of TWE.
K. SFEC directly or indirectly owns and operates, or otherwise
operates, in addition to the Amusement Park, seven amusement parks -- Six Flags
Great Adventure, Six Flags Magic Mountain, Six Flags Great America, Six Flags
Over Texas, Six Flags Astroworld, Six Flags St. Louis and Six Flags Fiesta Texas
(collectively, including any additional parks owned or operated from time to
time by SFEC, or any controlled affiliate of SFEC, but not including the
Amusement Park, the "SFEC Parks").
THIS AGREEMENT AND CERTAIN RELATED MATTERS
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L. Pursuant to this Agreement, the parties have agreed, among
other things and as is more fully set forth in, and qualified by, this Agreement
and the Related Agreements, that:
() On the Effective Date, Flags, which is now governed by the
Georgia Uniform Limited Partnership Act, will elect to be
governed by the Georgia Revised Uniform Limited
Partnership Act, change its name to Six Flags Over
Georgia, Ltd. (L.P.) and file a Certificate of Limited
Partnership with the Georgia Secretary of State.
() Immediately after the filing of the Certificate of Limited
Partnership of Flags with the Georgia Secretary of State,
without thereby changing the economic interests or any
other rights of SFOG or Fund in Flags, Flags will convert
from a Georgia limited partnership of which SFOG is the
sole general partner and Fund is the sole limited partner
to a Georgia limited liability company of which SFOG will
be one of the two members and the sole manager and Fund
will be the other member. The name of Flags will thereupon
be changed to Six Flags Over Georgia, LLC.
() Effective immediately after the conversion of Flags from a
Georgia limited partnership to a Georgia limited liability
company: (i) SFOG shall cease to be the manager of Flags,
but shall continue to be a member of Flags with a nominal
interest in Flags (provided that SFOG's interest in tax
--------
allocations will be as set forth in the Flags Limited
Liability Company Operating Agreement) and (ii) SFG-I, LLC
shall become the sole manager and one of the three
3
members of Flags. Fund shall remain the other member of
Flags. Subject to the nominal interest of SFOG, Fund will
have a 99% interest and SFG-I, LLC will have a 1% interest
in Flags, as more fully set forth in the Flags Limited
Liability Company Operating Agreement.
() Immediately thereafter on the Effective Date, Flags shall
acquire the SF Agreement Land and title to the SF
Agreement Land shall become vested in Flags.
() Immediately thereafter on the Effective Date, (i) Flags
(as limited partner), SFOG II (as sole managing general
partner) and SFG-II, LLC (as sole co-general partner)
shall enter into the Flags II Limited Partnership
Agreement.
() As is provided for in the Flags II Limited Partnership
Agreement, (i) Flags shall contribute to Flags II, in
exchange for its interest in Flags II, all of its property
and assets, including the Amusement Park rides and other
Amusement Park improvements located on the land owned by
Flags immediately prior to the Effective Date, but
excluding the Reserved Assets, and (ii) Flags will sell
the Designated Assets to Flags II in exchange for the
assumption by Flags II of certain liabilities of Flags.
SFOG II will not make any contribution to Flags II for its
interest in Flags II. SFG-II, LLC will make a contribution
of $100 to Flags II for its interest in Flags II.
() The Flags II Limited Partnership Agreement will provide
for (i) Minimum Amount distributions to Flags of $17.5
million per year, commencing with 1997 and increasing each
year in proportion to increases in the cost of living and
(ii) in 1997 only, the Additional First Year Minimum
Amount distribution. After this distribution, for each
year, SFOG II will receive, in recognition of its
management services and subject to Available Cash, a
distribution equal to 3% of the gross revenues of Flags II
for the prior year (of Flags for 1996). If not paid in any
year, the amount so distributable to SFOG II will be
carried forward to future years with interest at Prime.
Any additional distributions by Flags II will be made 95%
to SFOG II and 5% to Flags.
() At the time the Flags II Limited Partnership Agreement is
entered into, Flags will lease the land owned by it
immediately prior thereto (including the SF Agreement
Land) to Flags II for a Base Rent of $1 million per year,
commencing with 1997 and increasing each year in
proportion to increases in the cost of living.
() On or before ten Business Days after the Effective Date,
SFOG Acquisition A and SFOG Acquisition B will commence an
all-cash Tender Offer for all Units in Fund at a price,
assuming all of Fund were purchased, of $250 million.
() The Tender Offer amount will be subject to adjustment
downward for the Prepaid Amount (being prepayments of
one-half of the Minimum Amount
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distributions and Base Rent for 1997) and required
withholding taxes. If eight times the EBITDA of Flags II
for 1997 exceeds $250 million, each limited partner of
Fund whose Units were sold in the Tender Offer will
receive a supplemental payment equal to a pro rata portion
of the overage. Neither SFOG Acquisition A nor SFOG
Acquisition B will acquire certain claims in the Tender
Offer. Instead, these claims will be transferred by Fund
to a trust for the benefit of Fund partners before the
closing of the Tender Offer.
() SFOG Acquisition A and SFOG Acquisition B will provide to
the limited partners of Fund an annual Liquidity Put.
Pursuant to the Liquidity Put, but subject to limitations
on the number of Units that SFOG Acquisition A and SFOG
Acquisition B are obligated to purchase in any year and
related proration standards, Fund limited partners will
have an annual right to cause SFOG Acquisition A or SFOG
Acquisition B, as applicable, to purchase their Units. The
price at which Units are to be purchased pursuant to the
Liquidity Put will be based upon the greater of the Tender
Offer price or a formula amount based upon eight times the
weighted annual EBITDA of Flags II over the then prior
four years.
() Certain standstill arrangements will be applicable with
respect to Units acquired by SFOG Acquisition A and SFOG
Acquisition B pursuant to the Tender Offer and Liquidity
Put.
() TWX, TWE, SFEC, SFTP, SFOG Acquisition A and SFOG
Acquisition B will each unconditionally, absolutely and
irrevocably guarantee certain of the obligations of Flags
II, SFOG II, SFOG Acquisition A, SFOG Acquisition B and
SFOG II Employee under this Agreement and the Related
Agreements, provided, that the guarantee of TWE will be
--------
terminable under certain circumstances. Each of TWX, TWE,
SFEC, SFTP, SFOG Acquisition A, SFOG Acquisition B and
SFOG II will also agree to certain limited non-competition
provisions with respect to Flags II. The obligations of
SFOG Acquisition A and SFOG Acquisition B under this
Agreement (including with respect to the Liquidity Put)
and under their respective Guarantee will also be secured
by a pledge to Fund of the interests SFOG Acquisition B
holds in Fund from time to time and, as soon as such a
pledge is no longer prohibited by the terms of SFTP's bank
credit facility and the indenture governing SFTP's
publicly held debt, by a pledge of the interests SFOG
Acquisition A holds in Fund from time to time.
() SFOG Acquisition A and SFOG Acquisition B will have the
option, exercisable effective December 31, 2026, to
acquire all of the interests in Fund, Flags and Flags II
not then owned by either SFOG Acquisition A, SFOG
Acquisition B or SFOG II. The amount to be received by
the limited partners of Fund, other than SFOG
Acquisition A and SFOG Acquisition B, if this option is
exercised will be based upon the Tender Offer price
increased by increases in the cost of living from
December 31, 1996 to December 31, 2026.
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M. The parties acknowledge and agree that the Guarantees,
including especially the TWE and TWX Guarantee, (i) are a material part of the
consideration to Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and SFG-II, LLC in inducing
each of them to enter into this Agreement and the Related Agreements and to
consummate the transactions provided for herein and therein and (ii) are being
relied upon to a material degree by each of them in doing so and were relied
upon by the limited partners of Fund in giving the Fund Limited Partners'
Approval. TWE and TWX each have their executive offices in the State of New York
and the TWE and TWX Guarantee is governed by the internal law (and not the law
pertaining to choice or conflict of laws) of the State of New York. Accordingly,
the parties have elected that this Agreement be governed by the internal law
(and not the law pertaining to choice or conflict of laws) of the State of New
York.
N. The parties have determined that it is in their respective best
interests to, and they desire to, among other things, enter into and engage in
the transactions contemplated by this Agreement and the agreements provided for
in this Agreement, including the Flags Limited Liability Company Operating
Agreement, the Second Amended and Restated Fund Limited Partnership Agreement,
the Flags II Limited Partnership Agreement, the Lease and the other Related
Agreements.
* * *
The parties agree as set forth below.
ARTICLE I
CERTAIN DEFINITIONS
In addition to the other terms defined elsewhere in this
Agreement, the definitions set forth below are used in this Agreement:
(a) "Accounting Arbitrator" is defined in Section 12.18.
(b) "Affiliate Loans" has the meaning given to that term in the
Flags II Limited Partnership Agreement.
(c) "Aggregate Tender Offer Amount" means "X" divided by .99, where
"X" equals the Per Unit Tender Offer Price multiplied by the Number of Units on
the Tender Offer Settlement Date. An example of the computation of the Aggregate
Tender Offer Amount is set forth in Exhibit II to this Agreement.
(d) "Agreement" is defined in the first paragraph of this
Agreement.
(e) "Amusement Park" is defined in paragraph C of the Recitals.
(f) "Arbitrable Judgment" is defined in Section 12.18.
(g) "Available Cash" has the meaning given to that term in the
Flags II Limited Partnership Agreement.
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(h) "Bank Credit Agreement" has the meaning given to that term in
the SFOG Acquisition A and SFOG Acquisition B Guarantee and Pledge Agreement.
(i) "Bank Credit Agreement Negative Pledge Covenant" has the
meaning given to that term in the SFOG Acquisition A and SFOG Acquisition B
Guarantee and Pledge Agreement.
(j) "Base Rent" has the meaning given to that term in the Lease.
(k) "Batman the Ride" is defined in Paragraph D of the Recitals.
(l) "Beneficial Ownership" has the meaning given to that term in
Section 1(d) of Exhibit D to the Second Amended and Restated Fund Limited
Partnership Agreement.
(m) "Big Six independent accounting firm" means one of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, Coopers & ▇▇▇▇▇▇▇ L.L.P., Deloitte & Touche LLP, Ernst & Young
LLP, KPMG Peat Marwick LLP, and Price Waterhouse LLP or, if applicable, their
respective successors.
(n) "Business Day" means any day other than a Saturday, Sunday or
day when banks in any one of the State of California, Georgia or New York are
closed.
(o) "BV Investors" is defined in Paragraph G of the Recitals.
(p) "Capital Lease" means any lease that is treated as a capital
lease under GAAP.
(q) "Claims Trust" is defined in Section 12.3.
(r) "Closing" is defined in Section 14.2.
(s) "Controlled SFEC Affiliate" means (i) SFEC or any of its
successors from time to time with respect to the ownership and management of the
domestic theme park business of SFEC, (ii) each parent of any Person described
in clause (i) unless the theme park business of such parent represents less than
50% of the consolidated gross assets of such parent, (iii) any Person that at
the time directly or indirectly owns 50% or more of SFOG II and each parent of
such Person unless the theme park business of such Person or parent represents
less than 50% of its consolidated gross assets and (iv) any Person that is
directly or indirectly 50%-owned or otherwise controlled by a Person described
in any of clauses (i) through (iii).
(t) "CPI Adjustment" for any year means a fraction, the numerator
of which is the Minimum Amount for the year and the denominator of which is
$17.5 million.
(u) "Deemed Insurance Amount" is defined in Section 12.19.
(v) "Default" means an "Overall Agreement Payment Default," a
"Partnership Minimum Amount Payment Default," a "Lease Payment Default" or
"Another Material Default," as those terms are defined in the Flags II Limited
Partnership Agreement.
(w) "Default Interest" has the meaning given to that term in the
Flags II Limited Partnership Agreement.
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(x) "Default Rate" means the lesser of (i) five percentage points
above Prime and (ii) the maximum interest rate permitted by applicable law.
(y) "Designated Assets" means all current assets, construction in
progress and all rights under contracts therefor and all prepaid expenses of
Flags as of the Effective Date.
(z) "Directly Compete" is defined in Section 12.5.
(aa) "Distributions" is defined in Section 2.2(d).
(bb) "Distributions to Partners" means Additional First Year Minimum
Amount distributions (as defined in the Flags II Limited Partnership Agreement),
Minimum Amount distributions, Priority Management Fee Distributions and
Percentage Distributions.
(cc) "EBITDA" for any year means net income or loss (without giving
effect to extraordinary, non-recurring gains or losses) of Flags II for that
year determined on an accrual basis in accordance with, except as provided or
referred to below, GAAP,
PLUS
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(A) without duplication, to the extent deducted in
calculating net income or loss, (i) interest expense
(including, for this purpose, (a) interest and Default
Interest in respect of Distributions to Partners and
Base Rent and (b) the interest component of payments or
accruals on Capital Leases), (ii) income taxes and
franchise taxes, (iii) Distributions to Partners, (iv)
Base Rent, (v) payments by Flags II to any SFEC Entity
or SFEC Affiliate to the extent Section 12.7 provides
such payments are not to reduce EBITDA, (vi)
depreciation, (vii) amortization, (viii) capital
expenditures (including (a) all other payments on and
accruals in respect of Capital Leases and (b) all
payments on and accruals in respect of Operating
Capital Asset Leases), provided that 50% of the cost of
--------
any performance or completion bond required to be
obtained pursuant to Paragraph 2(b) of Part A of
Article XVII of the Flags II Limited Partnership
Agreement shall be deemed to be a capital expenditure
and 50% thereof shall be deemed to be an expense that
is deductible in determining net income for the purpose
of calculating EBITDA, (ix) expenditures for purchases
of land (including for the payment of any deferred
portion of the purchase price thereof), (x) payments
and reserves with respect to personal injuries that
occurred after December 31, 1996 and claims for such
personal injuries, except as provided in Section 12.19,
(xi) Excluded Inventory Writedowns, (xii) reserves or
other non-cash charges on or in respect of (a) any
Capital Lease, any Operating Capital Asset Lease or any
property or assets subject to a Capital Lease or an
Operating Capital Asset Lease, (b) any other property
or asset contributed or sold by Flags to Flags II, (c)
the Lease, (d) the Land (as defined in the Lease) or
(e) the lease by Flags II of the right to use the name
"Six Flags Over Georgia" or that name and (xiii)
write-offs, reserves and allowances for
8
receivables existing at January 1, 1997 to the extent,
if at all, such receivables would have been written off
or reserved against or allowances made in respect
thereof in 1996 had the policies applied for 1997
either by Flags (to the Effective Date) or by Flags II
(on or after the Effective Date) for write-offs,
reserves and allowances for receivables been in effect
prior to January 1, 1997;
MINUS
-----
(B) without duplication, to the extent included (or not
otherwise deducted, as applicable) in calculating net
income or loss, (i) net income or loss to the extent
attributable to Excluded Revenues, (ii) interest
income, (iii) the Deemed Insurance Amount, (iv) the
reserve for Uninsured Major Injury Claims, as provided
in Section 12.19(b), (v) an amount equal to the
"Management Fee" (as defined in the Flags II Limited
Partnership Agreement) for that year, whether or not
distributions are made to SFOG II in respect of the
Management Fee in that or any other year, (vi) an
amount equal to the out-of-pocket expenses of SFOG II
Employee related to the employment of the park
personnel, including the Park Employees, that are not
in excess of the expenses that would have been incurred
by Flags II if the park personnel, including the Park
Employees, had been employed directly by Flags II
(giving effect to any cost savings realized or expenses
avoided by Flags II because of SFOG II Employee being
the employer of the park personnel, including the Park
Employees) and (vii) expenses incurred by Flags II in
complying with Section 6.2(c).
For the purpose of this definition, EBITDA for 1997 shall mean EBITDA of Flags
for the period January 1, 1997 to the Effective Date and of Flags II from and
including the Effective Date through December 31, 1997. EBITDA for all other
years shall be EBITDA for the calendar year in question. EBITDA shall not be
affected by any expenses of Flags or Flags II in connection with the negotiation
and documentation, execution and delivery by Flags or Flags II of this Agreement
or the Related Agreements, the formation of Flags II or SFOG II Employee and,
except as specifically provided above in this definition of EBITDA, the
transactions to occur on or before the Effective Date. In calculating EBITDA for
any year, EBITDA shall be reduced to the extent that any income in such year is
directly attributable to a non-cash charge specified in paragraph (A) of this
definition of EBITDA taken in any prior year. (By way of example, and without
limitation, if in the year following the year in which an Excluded Inventory
Writedown occurs, the inventory affected by such Excluded Inventory Writedown is
sold, then in such subsequent year the income resulting from such sale of
inventory shall be reduced to the extent of such Excluded Inventory Writedown.)
If any asset of Flags II acquired originally or constructed by Flags II with
capital expenditures is sold by Flags II, the asset is leased back by Flags II
(except under a Capital Lease) and the proceeds of sale, net of the costs of
sale, are required to be added to required capital expenditures under Paragraph
1 of Part C of Article XVII of the Flags II Limited Partnership Agreement, then,
in calculating EBITDA: (i) payments or accruals for payments under the lease
will not be an expense until such proceeds are used for capital expenditures and
(ii) thereafter, payments or accruals for payments under the lease will be
9
expenses, provided that it shall be assumed that the payments due under the
--------
lease are level monthly payments throughout the term of the lease.
Notwithstanding anything to the contrary in this definition of EBITDA above,
EBITDA shall be subject to review and adjustment as provided in Sections 12.7
and 12.18 (without duplication of any adjustments provided for in this
definition of EBITDA).
(dd) "Effective Date" means seven Business Days, or such earlier
date as Fund and SFEC may agree, after the date on which Fund notifies the SFEC
Entities that the Fund Limited Partners' Approval has been obtained.
(ee) "End-of-Term Option" is defined in Section 8.1.
(ff) "End-of-Term Option Date" is defined in Section 8.1.
(gg) "End-of-Term Option Price" is defined in Section 8.2.
(hh) "Estate" means the successor in interest to or surviving spouse
of an individual (i) who died within 24 months prior to the April 30 at which a
Liquidity Put is exercisable and (ii) whose Units (or fractions thereof) are
included in such individual's estate for federal estate tax purposes.
(ii) "Exchange Act" is defined in Section 2.5.
(jj) "Excluded Inventory Writedowns" means after December 31, 1996:
(i) all reserves, writedowns, allowances or other charges and all losses on or
in respect of any inventory sold to Flags prior to January 1, 1997 by (x) a
Controlled SFEC Affiliate, to the extent of the excess, if any, of the carrying
value of the inventory on the books of Flags at January 1, 1997 over the lesser
of (A) the depreciated or amortized cost, after reserves, writedowns, allowances
and other charges, of the selling Controlled SFEC Affiliate in such inventory
and (B) the fair market value of such inventory at the date of sale to Flags, or
(y) an SFEC Affiliate (other than a Controlled SFEC Affiliate), to the extent of
the excess, if any, of the carrying value of such inventory on the books of
Flags at January 1, 1997 over the price for such inventory that is no less
favorable than the price that would have been obtained in an arms length
transaction with an unaffiliated third party; and (ii) all reserves, writedowns,
allowances or other charges on or in respect of any inventory existing at
January 1, 1997 to the extent of such reserves, writedowns, allowances or other
charges would have reduced the income of Flags in 1996, had the "reserve,
writedown, allowance or charge policy" (or other like-purpose policy) applied by
Flags II in 1997 been applied to such inventory in 1996.
(kk) "Excluded Revenues" has the meaning given to that term in the
Flags II Limited Partnership Agreement.
(ll) "fair and consistent method of allocation" is defined in
Section 12.7(b).
(mm) "Flags" is defined in the first paragraph of this Agreement.
10
(nn) "Flags Limited Liability Company Operating Agreement" means the
Limited Liability Company Operating Agreement of Flags in the form of Exhibit
5.4 to this Agreement.
(oo) "Flags Limited Partnership Agreement" means the Restated
Agreement of Limited Partnership, as amended, of Flags as in effect at the date
of this Agreement, a copy of which is Exhibit 1.1(oo) to this Agreement.
(pp) "Flags II" is defined in paragraph F of the Recitals.
(qq) "Flags II Limited Partnership Agreement" means the Limited
Partnership Agreement of Flags II, in the form of Exhibit 6.1.1 to this
Agreement, to be entered into by and between Flags, as sole limited partner,
SFOG II, as sole managing general partner, and SFG-II, LLC, as sole co-general
partner.
(rr) "Formula Amount" means 8/10 of "A", where "A" is the sum of (W)
4 multiplied by EBITDA for the year then last ended, plus (X) 3 multiplied by
EBITDA for the year immediately preceding the year in clause (W), plus (Y) 2
multiplied by EBITDA for the year immediately preceding the year in clause (X),
plus (Z) EBITDA for the year immediately preceding the year in clause (Y);
provided, however, that, for purposes of the Formula Amount, if any year in
-------- -------
clause (X), (Y) or (Z) would, but for this proviso, be a year prior to 1997,
1997 shall be used for each such year. The Formula Amount may be illustrated by
the following formula, where "E" equals EBITDA and "Y" equals the year in which
the Liquidity Put is exercised:
8x((4xEY-1)+(3xEY-2)+(2xEY-3)+EY-4)
-----------------------------------
10
An example of the computation of the Formula Amount is set forth in Exhibit
3.2(a)(1) to this Agreement.
(ss) "Fund Limited Partners' Approval" means the approval, prior to
the date hereof, of this Agreement, the Related Agreements and the transactions
provided for herein and therein by the holders of not less than 66-2/3% of the
Units and the additional approval of this Agreement, the Related Agreements and
the transactions provided for herein and therein as modified since the date of
such initial approval, after the date of this Agreement, by the holders of not
less than 66-2/3% of the Units.
(tt) "Fund Limited Partnership Agreement" means the Amended and
Restated Agreement of Limited Partnership of Fund as in effect at the date of
this Agreement, a copy of which is Exhibit 9.2(e) to this Agreement.
(uu) "Fund" is defined in the first paragraph of this Agreement.
(vv) "GAAP" means generally accepted accounting principles, as in
effect in the United States from time to time, consistently applied. For
purposes of the calculation of EBITDA only, GAAP as applied to Flags II for 1997
shall be consistently applied only if it is consistent with
11
GAAP as applied to Flags for the year ended on or about December 31, 1995 and
prior years, as reflected in the audited financial statements of Flags for those
years.
(ww) "General Partner's Right of First Refusal" is defined in
Section 2.6.
(xx) "▇▇▇▇▇▇▇, ▇▇▇▇▇" means ▇▇▇▇▇▇▇, Sachs & Co., financial advisor
to Fund with respect to this Agreement, the agreements provided for herein and
the transactions provided for herein and therein.
(yy) "GP Amount" is defined in Section 8.2(b).
(zz) "Gross Revenues" has the meaning given to that term in the
Flags II Limited Partnership Agreement.
(aaa) "Guarantees" means the SFOG Acquisition A and SFOG Acquisition
B Guarantee and Pledge Agreement, the SFTP and SFEC Guarantee and the TWE and
TWX Guarantee.
(bbb) "Hazardous Materials" has the meaning given to that term in the
Flags II Limited Partnership Agreement.
(ccc) "Indebtedness" of any Person at any date means, without
duplication, (i) all indebtedness of such Person for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments (or
reimbursement obligations with respect thereto), other than standby letters of
credit incurred by such Person in the ordinary course of business, (iv) all
obligations of such Person with respect to hedging obligations (other than those
that fix the interest rate on indebtedness or other obligations or that fix the
exchange rate in connection with indebtedness or other obligations denominated
in a foreign currency), (v) all obligations of such Person to pay the deferred
and unpaid purchase price of property or services, except trade payables and
accrued expenses incurred in the ordinary course of business, (vi) all Capital
Lease obligations of such Person, (vii) all Indebtedness of others secured by a
lien on any asset of such Person, whether or not such Indebtedness is assumed by
such Person, and (viii) all Indebtedness of others guaranteed (whether by a
guarantee or an income maintenance, net worth maintenance, contribution or,
without limitation, other arrangement, the effect of which is to directly or
indirectly assume payment by such Person), to the extent of such guarantee.
(ddd) "Indenture" has the meaning given to that term in the SFOG
Acquisition A and SFOG Acquisition B Guarantee and Pledge Agreement.
(eee) "Indenture Negative Pledge Covenant" has the meaning given to
that term in the SFOG Acquisition A and SFOG Acquisition B Guarantee and Pledge
Agreement.
(fff) "Lease" means the Amusement Park Ground Lease to be entered
into by Flags, as Landlord, and Flags II, as Tenant, in the form of Exhibit VII
to this Agreement.
12
(ggg) "Liquidity Put" is defined in Section 3.1.
(hhh) "Liquidity Put Election Date" is defined in Section 3.5(b).
(iii) "Liquidity Put Number" is defined in Section 3.3(a).
(jjj) "Liquidity Put Settlement Date" is defined in Section 3.1.
(kkk) "Minimum Amount" has the meaning given to that term in the
Flags II Limited Partnership Agreement.
(lll) "Net Worth" of any Person means, as of the date of
determination, the amount shown on the most recent accrual-basis balance sheet
or consolidated balance sheet, as the case may be, of such Person, prepared in
accordance with GAAP, as the stockholders' equity, consolidated stockholders'
equity or equivalent of such Person, but not in excess of the comparable amount
shown on the then most recent balance sheet or consolidated balance sheet, as
the case may be, of such Person that has been audited by such Person's
independent certified accountants, which shall be a firm of independent
certified public accountants of national repute, and is accompanied by an
opinion of such accountants that does not contain a so-called emphasis paragraph
with respect to stockholders' equity, consolidated stockholders' equity or the
equivalent and is not otherwise subject to qualification with respect to
stockholders' equity, consolidated stockholders' equity or the equivalent;
provided that in calculating the Net Worth of any Guarantor as of any date, 50%
--------
of the "normal" depreciation of intangible assets and amortization of intangible
assets reflected on the income statement of such Guarantor for periods beginning
after December 31, 1996 shall be deemed not to have been charged; provided,
--------
further, that if any intangible asset is reserved against or "written down"
-------
(other than by such "normal" depreciation or amortization), then such Net Worth
shall be calculated using the carrying value of such asset as so reserved
against or written down; provided, further, that if any intangible asset is sold
-------- -------
or otherwise disposed of (whether at a gain or loss), then such Net Worth shall
be calculated using the carrying value of the proceeds (whether cash, securities
or other assets) received by such Guarantor in such sale or disposition. By way
of illustration, if such "normal" depreciation and amortization on an intangible
asset carried at "40x" is "2x" per year, (i) in determining Net Worth, "1x"
shall be deemed not to have been charged (i.e., in four years, such "normal"
depreciation and amortization would be "8x" and "4x" will not be charged in
determining Net Worth), but (ii) if that intangible asset is, in the first
quarter of the fifth year, reserved against or written down so that its carrying
value is "20x," then in computing Net Worth, "20x" shall thereafter be used for
such intangible asset in determining Net Worth and (iii) in future periods,
assuming no further such reserves or writedowns, one-half of such then-normal
depreciation and amortization on the "20x" shall be deemed not to have been
charged.
(mmm) "Net Worth Standard" has the meaning given to that term in the
Flags II Limited Partnership Agreement.
(nnn) "Notice of Election to Exercise" means the Notice of Election
to Exercise Liquidity Put, substantially in the form of Exhibit 3.5(b) to this
Agreement.
13
(ooo) "Number of Units" initially means the number of Units
outstanding on the date of this Agreement through the Tender Offer Settlement
Date, which number is 100-1/31.71 (one hundred plus one divided by thirty-one
and seventy-one hundredths) and thereafter means that number as it may be (i)
reduced from time to time, if at all, by virtue of purchases by Fund of Units
pursuant to Article XXI of the Second Amended and Restated Fund Limited
Partnership Agreement (which Units so purchased shall, upon purchase, no longer
be deemed outstanding for the purpose of calculating the Number of Units) or
pursuant to Section 12.17 of this Agreement or (ii) increased, if at all,
pursuant to Article IX, paragraph 10, of the Second Amended and Restated Fund
Limited Partnership Agreement.
(ppp) "Operating Capital Asset Lease" means (i) a lease (other than a
Capital Lease) of property or assets that are contributed by Flags to Flags II
and that were constructed or acquired by Flags with capital expenditures, or
(ii) a lease (other than a Capital Lease) contributed to Flags II by Flags that
(A) is of property or assets (other than office equipment or similar property or
assets) that were constructed or acquired by Flags with capital expenditures and
(B) was not in effect at September 30, 1996.
(qqq) "Park Employees" is defined in Section 13.1(a).
(rrr) "Past Accounting Practice" is defined in Section 12.18(a).
(sss) "Per Unit Liabilities Amount" means the amount obtained by (A)
multiplying by .99 the number, if greater than zero, obtained by subtracting
$100,000 (increased each year commencing with 1998 to $100,000 multiplied by the
CPI Adjustment for such year), provided that there shall be no such subtraction
in determining the Per Unit Liabilities Amount on the Business Day before the
Tender Offer Settlement Date or the End-of-Term Option Settlement Date, from,
without duplication, the sum of (w) all liabilities of Fund (other than
liabilities of Flags or Flags II that would otherwise be treated as liabilities
of Fund but which Fund as a separate legal entity has no legal obligation to
discharge) that are outstanding as of the close of business (Los Angeles time)
on the Business Day prior to the Tender Offer Settlement Date, the Liquidity Put
Settlement Date or the End-of-Term Option Date, as applicable, (x) all
liabilities of Flags created on or after the date Flags II assumes the
liabilities of Flags pursuant to Section 6.2(b) and the Flags II Limited
Partnership Agreement (excluding liabilities of Flags II that would otherwise be
treated as liabilities of Flags but which Flags as a separate legal entity has
no legal obligation to discharge and further excluding all liabilities of Flags
that are required by this Agreement and the Flags II Limited Partnership
Agreement to be assumed by Flags II), that are outstanding as of the close of
business (Los Angeles time) on the day prior to the Tender Offer Settlement
Date, the Liquidity Put Settlement Date or the End-of-Term Option Date, as
applicable, (y) any amounts owed by Fund to limited partners (or former limited
partners) of Fund as of the close of business (Los Angeles time) on the day
prior to the Tender Offer Settlement Date, the Liquidity Put Settlement Date or
the End-of-Term Option Date, as applicable, in respect of Units acquired by Fund
pursuant to Article XXI of the Second Amended and Restated Fund Limited
Partnership Agreement plus (z) with respect to the Tender Offer Settlement Date
only, .99 multiplied by the Prepaid Amount and (B) dividing the number so
obtained by the Number of Units. The Per Unit Liabilities Amount shall not
include any claims that the SFEC Entities may have as of the Effective Date
against Flags or Fund.
14
(ttt) "Per Unit Mandatory Adjustment Amount" is defined in Section
2.2(b).
(uuu) "Per Unit Tender Offer Price" means (i) $250 million multiplied
by (ii) .99, divided by (iii) the Number of Units, as such price may be
increased pursuant to Section 2.2(c). On and after the payment of the Per Unit
Mandatory Adjustment Amount, if any, pursuant to Section 2.2(b) -- but if there
is a Per Unit Mandatory Adjustment Amount, not later than the earlier to occur
of March 30, 1998 or the day before SFOG Acquisition A or SFOG Acquisition B, as
applicable, gives written notice of the Put Price for 1998 pursuant to and as is
required by Section 3.5(a) -- the Per Unit Tender Offer Price shall mean the sum
of the amount determined in accordance with the preceding sentence plus the Per
Unit Mandatory Adjustment Amount, if any. The Per Unit Tender Offer Price shall
be rounded to the nearest whole dollar.
(vvv) "Percentage Distribution" has the meaning given to that term in
the Flags II Limited Partnership Agreement.
(www) "Person" means an individual, a trust, a partnership (including
a general partnership, limited liability partnership, limited partnership or
limited liability limited partnership), an unincorporated association, a
corporation, a limited liability company or any other entity or organization,
including a government or any agency or political subdivision thereof.
(xxx) "Prepaid Amount" is defined in Section 12.2(a).
(yyy) "Prime" means the average prime rate announced by SFTP's
principal bank lender as its prime rate for December of the then prior year or,
if Prime cannot be determined from the foregoing or for any other reason
(including, without limitation, SFTP having no borrowings or no principal bank
lender), then the average prime rate for such December of Bank of America
National Trust & Savings Association or, if Bank of America National Trust &
Savings Association does not then exist or have a prime rate, then of the three
largest domestic United States banks (measured by total assets) then announcing
a prime rate for such December.
(zzz) "Priority Management Fee Distributions" has the meaning given
to that term in the Flags II Limited Partnership Agreement.
(aaaa) "Put Price" is defined in Section 3.2(a). An example of the
computation of the Put Price is set forth in Exhibit 3.2(a)(2) to this
Agreement.
(bbbb) "Procedure Period" is defined in Section 12.18(e).
(cccc) "Related Agreements" means the Lease, the Second Amended and
Restated Fund Limited Partnership Agreement, the Flags Limited Liability Company
Operating Agreement, the Flags II Limited Partnership Agreement, the SFOG
Acquisition A and SFOG Acquisition B Guarantee and Pledge Agreement, the SFTP
and SFEC Guarantee, and the TWE and TWX Guarantee.
(dddd) "Reserved Assets" means (i) the land owned by Flags at August
1, 1996 plus any of the SF Agreement Land as has been or will be acquired by
Flags, (ii) any rights or claims that Flags may have against any SFEC Entity or
SFEC Affiliate (provided that nothing in this clause
15
(ii) shall constitute an admission that there are any such rights or claims or a
waiver or release of any such rights or claims as may exist), and (iii) the
Designated Assets.
(eeee) "Retained Liabilities" has the meaning given to that term in
the Flags II Limited Partnership Agreement.
(ffff) "▇▇▇▇▇▇" is defined in the first paragraph of this Agreement.
(gggg) "Second Amended and Restated Fund Limited Partnership
Agreement" means the Second Amended and Restated Limited Partnership Agreement
of Fund, in the form of Exhibit 14.3(a)(i) to this Agreement.
(hhhh) "SF Agreement" is defined in paragraph D of the Recitals.
(iiii) "SF Agreement Land" is defined in paragraph D of the Recitals.
(jjjj) "SFEC" is defined in the first paragraph of this Agreement.
(kkkk) "SFEC Affiliate" means a Person that, by virtue of security
ownership or otherwise, controls, has the power to control, is controlled by or
is under common control with an SFEC Entity or that an SFEC Entity has the power
to control; provided that (A) neither Fund, Flags II nor, upon SFG-I, LLC
becoming the sole manager of Flags, Flags shall for any purpose be deemed to be
SFEC Affiliates and (B) without limitation, under the facts and circumstances
existing on the date of this Agreement, (i) SFOG II, SFOG II Employee, SFOG
Acquisition A, SFOG Acquisition B, SFOG, SFTP, TWE, TWX and all affiliates of
TWE and/or TWX shall, for all purposes, be deemed to be SFEC Affiliates and (ii)
the BV Investors and their affiliates shall not, by virtue of the BV Investors'
ownership interest in SFEC, for any purpose, be deemed to be SFEC Affiliates.
(llll) "SFEC Entities" and "SFEC Entity" are defined in the first
paragraph of this Agreement.
(mmmm) "SFEC Parks" is defined in paragraph K of the Recitals.
(nnnn) "SFG, Inc." is defined in the first paragraph of this
Agreement.
(oooo) "SFG-I, LLC" is defined in the first paragraph of this
Agreement.
(pppp) "SFG-II, LLC" is defined in the first paragraph of this
Agreement.
(qqqq) "SFOG" is defined in the first paragraph of this Agreement.
(rrrr) "SFOG Acquisition A" is defined in the first paragraph of this
Agreement.
(ssss) "SFOG Acquisition A and SFOG Acquisition B Guarantee and
Pledge Agreement" means the Secured General Continuing Guarantee and Pledge
Agreement of SFOG Acquisition A and SFOG Acquisition B in the form of Exhibit
14.4(a)(ii) to this Agreement.
16
(tttt) "SFOG Acquisition B" is defined in the first paragraph of the
Agreement.
(uuuu) "SFOG Requirement" is defined in Section 12.15.
(vvvv) "SFOG II" is defined in the first paragraph of this Agreement.
(wwww) "SFOG II Employee" is defined in the first paragraph of this
Agreement.
(xxxx) "SFTP" is defined in the first paragraph of this Agreement.
(yyyy) "SFTP and SFEC Guarantee" means the General Continuing
Guarantee of SFTP and SFEC, in the form of Exhibit 14.4(a)(iii) to this
Agreement.
(zzzz) "Solicitation Agent" is defined in Section 2.4.
(aaaaa) "Tax" has the meaning given to that term in the Flags II
Limited Partnership Agreement.
(bbbbb) "Tender Offer" is defined in Section 2.1.
(ccccc) "Tender Offer Date" means the date on which the Tender Offer
is commenced, which date shall not be later than ten Business Days following the
Effective Date.
(ddddd) "Tender Offer Expiration Date" is defined in Section 2.3(a).
(eeeee) "Tender Offer Price" is defined in Section 2.2(b).
(fffff) "Tender Offer Settlement Date" is defined in Section 2.2(a).
(ggggg) "Texas Park" means the Six Flags Over Texas amusement park in
Arlington, Texas.
(hhhhh) "Texas Partners" means the partners of Six Flags Over Texas
Fund, Ltd.
(iiiii) "Transaction-Related Expenses" is defined in Section 12.2(b).
(jjjjj) "TWE" is defined in Paragraph G of the Recitals.
(kkkkk) "TWE and TWX Guarantee" means the General Continuing
Guarantee and Non-Competition Agreement of TWE and TWX in the form of Exhibit
14.1(a) to this Agreement.
(lllll) "TWX" is defined in Paragraph J of the Recitals.
(mmmmm) Uninsured Major Injury Claim" is defined in Section 12.19(b).
(nnnnn) "Unitholders" means the Persons holding Units of Fund at the
date of this Agreement and their transferees, successors and assigns, but
excluding any SFEC Affiliate.
17
(ooooo) "Units" means the limited partnership interests in Fund, of
which there are 100-1/31.71 outstanding as of the date of this Agreement, which
Units represent 99% of the partnership interests in Fund.
ARTICLE II
TENDER OFFER
2.1 Tender Offer. On the Tender Offer Date, SFOG Acquisition A and
------------
SFOG Acquisition B jointly shall make an absolute, irrevocable and unconditional
(except as specifically provided below) tender offer (the "Tender Offer"), on
and subject to the terms set forth in this Article II, to purchase all of the
Units at a price (payable in cash), and on such other terms, described in this
Article II.
2.2 Tender Offer Price and Mandatory Adjustment Amount; Changes in
--------------------------------------------------------------
the Tender Offer Price; Payment of the Tender Offer Price.
---------------------------------------------------------
(a) Acceptance; Payment at the Tender Offer Settlement Date. On
----------------------------------------------------------
the date that is the later of April 2, 1997 or five Business Days after the
Tender Offer Expiration Date (the "Tender Offer Settlement Date"), SFOG
Acquisition A and/or SFOG Acquisition B, as applicable (as provided in Section
10.2(a)), shall purchase and indefeasibly pay for each Unit (or fraction
thereof) properly tendered together with a duly completed and executed letter of
transmittal (which shall be in form and substance reasonably satisfactory to
SFOG Acquisition A and SFOG Acquisition B and, in any event, shall include a
representation and warranty by the tendering Unitholder that such Unitholder has
full power and authority to tender, sell, assign and transfer the Units being
tendered and, when the same are accepted for payment by SFOG Acquisition A
and/or SFOG Acquisition B, as applicable, SFOG Acquisition A or SFOG Acquisition
B, as the case may be, will acquire good title thereto, free and clear of all
liens, restrictions, claims and encumbrances) and a duly completed and executed
substitute Form W-9 (or successor form). The amount in cash to be paid to a
Unitholder in respect of each whole Unit accepted for tender shall be equal to
(A) the Per Unit Tender Offer Price less (B) the Per Unit Liabilities Amount
less (C) any taxes required to be withheld by SFOG Acquisition A or SFOG
Acquisition B, as applicable, under applicable law. A pro rata portion of the
foregoing amount will be paid in respect of each fraction of a Unit properly
tendered to SFOG Acquisition A and/or SFOG Acquisition B in the Tender Offer.
The amount so determined shall be paid to each Unitholder of Units accepted for
purchase pursuant to the Tender Offer, without any other deduction, on the
Tender Offer Settlement Date, at the election of the Unitholder and at the
expense of SFOG Acquisition A or SFOG Acquisition B, as applicable, by cashier's
or certified check or by wire transfer to an account specified by the Unitholder
in the letter of transmittal submitted by such Unitholder (which letter of
transmittal shall provide space identified for such account number, with the
availability of wire transfer being set forth in accompanying instructions). If
the payment is made by cashier's or certified check, such check shall be sent by
overnight courier for delivery by not later than 10:30 a.m. local time at the
address of the payee specified by the Unitholder in the letter of transmittal on
the Tender Offer Settlement Date and insured for the full amount of the check.
Payments not made when required shall thereafter bear interest at the Default
Rate. The obligations of SFOG Acquisition A and SFOG Acquisition B shall be
subject to receipt of a certificate
18
of Fund, executed by a general partner of Fund, by which Fund represents and
warrants that the Persons named in a list accompanying such certificate are the
record holders of the number of Units indicated on such list and, to the
knowledge of Fund, except as otherwise indicated on such list, the beneficial
owners of such Units. SFOG Acquisition A and SFOG Acquisition B shall not be
required to accept for purchase any Units tendered by any Person, unless such
Person agrees, in an agreement reasonably satisfactory to SFOG Acquisition A and
SFOG Acquisition B, to indemnify SFOG Acquisition A and SFOG Acquisition B
against any losses, liabilities or expenses arising out of such Person's failure
to own beneficially or of record such Units.
(b) Payment of Mandatory Adjustment Amount. If (i) (A) 8
-------------------------------------------
multiplied by (B) EBITDA for the year ended December 31, 1997, multiplied by (C)
.99, divided by (D) the Number of Units outstanding as of the Tender Offer
Settlement Date, exceeds (ii) what would otherwise be the Per Unit Tender Offer
Price (such excess, if any, being referred to as the "Per Unit Mandatory
Adjustment Amount"), then SFOG Acquisition A or SFOG Acquisition B, as
applicable, shall pay to each Unitholder of Units accepted for purchase pursuant
to the Tender Offer an amount in cash in respect of each whole Unit so accepted
for purchase equal to (x) the Per Unit Mandatory Adjustment Amount, less (y) any
taxes required under applicable law to be withheld by SFOG Acquisition A or SFOG
Acquisition B, as the case may be, with respect to such amount. A pro rata
portion of the foregoing amount will be paid in respect of each fraction of a
Unit purchased pursuant to the Tender Offer. The amounts required to be paid
pursuant to this Section 2.2(b) shall be payable on the day that is 10 days
after the financial statements for Flags II for the year ended December 31, 1997
are made available to Flags or Fund (but in any event, not later than April 10,
1998), at the election of the Unitholder and at the expense of SFOG Acquisition
A or SFOG Acquisition B, as applicable, by cashier's or certified check or by
wire transfer to an account specified by the Unitholder in the letter of
transmittal. If the payment is made by cashier's or certified check, such check
shall be sent by overnight courier for delivery by not later than 10:30 a.m.
local time at the address of the Unitholder specified by the Unitholder in the
letter of transmittal on such date and insured for the full amount of the check.
(c) Changes in the Tender Offer Price. At any time and from time
----------------------------------
to time prior to the Tender Offer Expiration Date, SFOG Acquisition A and SFOG
Acquisition B jointly may increase the Per Unit Tender Offer Price; provided
--------
that the amount of each such increase shall be payable only in cash and shall
not be less than 2.5% of the then immediately previous Per Unit Tender Offer
Price. From and after the date of any such increase, the "Per Unit Tender Offer
Price" shall for all purposes be the Per Unit Tender Offer Price as so
increased. Neither SFOG Acquisition A nor SFOG Acquisition B may at any time
decrease the then Per Unit Tender Offer Price.
(d) Pre-Tender Offer Settlement Date Distributions By Fund. Prior
-------------------------------------------------------
to the Tender Offer Settlement Date, Fund will distribute (the "Distributions")
to (i) the Claims Trust, all claims and litigation rights it may have against
the SFEC Entities and SFEC Affiliates and will contribute to the Claims Trust
such portion of the Prepaid Amount as is determined by Fund or ▇▇▇▇▇▇ and (ii)
its then partners cash equal to all of the remaining Prepaid Amount not used by
Fund to pay its Transaction-Related Expenses or other expenses and any other
cash Fund then has as a result of cash distributions from Flags and earnings on
those distributions. The Tender Offer will be for Units after the Distributions
and neither SFOG Acquisition A nor SFOG Acquisition B will, by virtue of the
purchase of Units in the Tender Offer, acquire any interest in the Distributions
or the
19
Claims Trust, provided that the Per Unit Liabilities Amount at the Tender Offer
--------
Settlement Date will be increased by "x" multiplied by "y" divided by "z", where
"x" is the Prepaid Amount, "y" is .9801 and "z" is the Number of Units (thereby
effectively giving SFOG Acquisition A and SFOG Acquisition B, as applicable,
credit, against the amount they are otherwise paying in the Tender Offer, for
that portion of the Prepaid Amount that they would have received had the Prepaid
Amount been paid after the Tender Offer Settlement Date).
2.3 The Tender Offer Expiration Date.
--------------------------------
(a) The Tender Offer Expiration Date. Subject to Section 2.3(b),
---------------------------------
the Tender Offer shall expire at 12:00 midnight (Los Angeles time) on the date
(the "Tender Offer Expiration Date") that is 20 Business Days (or, if greater,
the minimum period required under applicable law) after the Tender Offer Date,
provided that if the Prepaid Amount is not paid on or before ten Business Days
--------
after the Tender Offer Date then, if applicable, the Tender Offer Expiration
Date will be extended, if applicable, until ten Business Days after the Prepaid
Amount is paid and, for the period of the extension, interest at the Default
Rate will be paid on the amount that would have been paid on the Tender Offer
Settlement Date had there been no such extension.
(b) Changes in the Tender Offer Expiration Date. SFOG Acquisition
--------------------------------------------
A and SFOG Acquisition B jointly shall extend the Tender Offer Expiration Date
for, but only for, the minimum period required under applicable law or ten
Business Days, whichever is more, following notice to the Unitholders of any
increase in the Per Unit Tender Offer Price pursuant to Section 2.2(c). From and
after the date of any such extension, the "Tender Offer Expiration Date" shall
be, for all purposes, the Tender Offer Expiration Date as so extended.
2.4 Tender Offer Materials. If SFOG Acquisition A and SFOG
------------------------
Acquisition B elect to use a Solicitation Agent in connection with the Tender
Offer, then no later than four Business Days prior to the Tender Offer Date,
SFOG Acquisition A and SFOG Acquisition B jointly shall designate a reputable
proxy solicitation, trust company or similar firm reasonably acceptable to
▇▇▇▇▇▇ to act as solicitation agent (the "Solicitation Agent") in connection
with the Tender Offer. SFOG Acquisition A and SFOG Acquisition B jointly shall,
or shall instruct the Solicitation Agent to, mail to each Unitholder at the
address or addresses of each such Unitholder provided to SFEC by Fund, (a) an
offer to purchase, setting forth the terms and conditions of the Tender Offer
and such additional disclosures, if any, as SFOG Acquisition A and SFOG
Acquisition B jointly shall elect to include, (b) a letter of transmittal to be
used in tendering Units and appropriate instructions with respect thereto and
(c) any other offering materials specified by SFOG Acquisition A and SFOG
Acquisition B, all of which, to the extent applicable, shall be furnished to the
Solicitation Agent by SFOG Acquisition A and SFOG Acquisition B. In connection
with the foregoing, Fund will cooperate with SFOG Acquisition A, SFOG
Acquisition B and the Solicitation Agent, if any, and no later than ten days
prior to the Tender Offer Date shall furnish SFEC with the name, number of Units
held of record and address of each Unitholder as set forth in the partnership
records of Fund and any additional address or addresses of any Unitholder
furnished to Fund by such Unitholder in writing and shall advise SFEC in writing
of any changes in the list so provided to SFEC prior to the Tender Offer
Settlement Date. Any offering materials mailed to any Unitholder in the manner
provided in this Section 2.4 shall, for the purposes of this Article II, be
conclusively deemed to have been delivered, whether or not such Unitholder
actually
20
receives such offering materials. Offering materials and other documents so
mailed by the Solicitation Agent, if any, will, for the purposes of this Article
II, be deemed mailed by SFOG Acquisition A and SFOG Acquisition B on the date
mailed by the Solicitation Agent.
2.5 Compliance with Tender Offer Rules. The Tender Offer shall in
----------------------------------
all respects comply with the applicable provisions of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), including, without limitation,
Section 14(e) thereof, and the regulations promulgated thereunder, including
Regulation 14E promulgated thereunder (and to the extent, but only to the
extent, if at all, that the provisions hereof are not permitted under the
applicable provisions of the Exchange Act and the regulations thereunder, the
requirements of the Exchange Act and regulations shall prevail).
2.6 No General Partner's Right of First Refusal with Respect to
--------------------------------------------------------------
the Tender Offer. The obligation of SFOG Acquisition A and/or SFOG Acquisition B
----------------
to purchase Units tendered pursuant to the Tender Offer shall not be subject to
▇▇▇▇▇▇'▇ right to purchase Units pursuant to Article IX, Section 2, of the Fund
Limited Partnership Agreement or the Second Amended and Restated Fund Limited
Partnership Agreement (the "General Partner's Right of First Refusal").
ARTICLE III
LIQUIDITY PUT
3.1 Liquidity Put. Upon the terms and subject to the conditions
--------------
set forth in this Article III, Unitholders holding Units that were not purchased
pursuant to the Tender Offer shall have a right (the "Liquidity Put"), on May
15, 1998 and on May 15 of each subsequent year through 2026 or, if earlier, the
date the End-of-Term Option Price is paid as referred to in Section 8.6 (each, a
"Liquidity Put Settlement Date") to require SFOG Acquisition A and/or SFOG
Acquisition B, as applicable (as provided in Section 10.2(a)), to purchase all
or a fraction of such Units, subject to and as determined pursuant to Section
3.3, for cash in an amount equal to the then Put Price.
3.2 Put Price.
---------
(a) Put Price. The price for each Unit purchased pursuant to the
---------
Liquidity Put (the "Put Price") shall not be less than the greatest of (i) the
Per Unit Tender Offer Price, (ii) the highest price per Unit paid by either SFOG
Acquisition A, SFOG Acquisition B or any SFEC Entity or SFEC Affiliate for any
Unit purchased by SFOG Acquisition A, SFOG Acquisition B or such SFEC Entity or
SFEC Affiliate (other than any Unit purchased (x) from an SFEC Entity or SFEC
Affiliate or (y) pursuant to the rights of SFOG Acquisition A and SFOG
Acquisition B, contained in Article IX, paragraph 2, of the Second Amended and
Restated Fund Limited Partnership Agreement, to purchase a portion of the Units,
if any, purchased pursuant to the General Partner's Right of First Refusal),
whether pursuant to the Tender Offer, the Liquidity Put or otherwise, but only
if such price was greater than the price that SFOG Acquisition A and/or SFOG
Acquisition B, as applicable, was otherwise obligated to pay (including, without
limitation, in connection with the Accelerated Put provided for in the SFOG
Acquisition A and SFOG
21
Acquisition B Guarantee and Pledge Agreement) at the time of such purchase or
(iii) the Formula Amount divided by the Number of Units and multiplied by .99.
(b) Payment of the Put Price. The amount in cash payable to a
-------------------------
Unitholder in respect of each whole Unit purchased pursuant to the Liquidity Put
shall be equal to the (i) Put Price less (ii) the Per Unit Liabilities Amount
less (iii) any taxes required to be withheld under applicable law. A pro rata
portion of the foregoing amount will be paid in respect of each fraction of a
Unit purchased pursuant to the Liquidity Put. Such amount shall be paid to each
Unitholder of Units purchased pursuant to the Liquidity Put on the applicable
Liquidity Put Settlement Date, at the election of the Unitholder and at the
expense of SFOG Acquisition A or SFOG Acquisition B, by cashier's or certified
check or by wire transfer to an account specified by the Unitholder in the
Notice of Election to Exercise submitted by such Unitholder. If payment is made
by cashier's or certified check, such check shall be sent by overnight courier
for delivery by not later than 10:30 a.m. local time at the address of the payee
specified by the Unitholder in the Notice of Election to Exercise on the
applicable Liquidity Put Settlement Date and insured for the full amount of the
check. The Liquidity Put paying agent, if one is used, shall be a bank or trust
company or other responsible agent specified by SFOG Acquisition A or SFOG
Acquisition B. In addition, if by May 1 of a year in which a Liquidity Put
Settlement Date occurs, Flags has not been paid in full any of the Minimum
Amount, any Percentage Distribution or Base Rent (and any interest or Default
Interest) that is payable in respect of the prior year, then: (i) there shall be
added to the Put Price and paid by SFOG Acquisition A and/or SFOG Acquisition B,
as applicable, for each Unit or a fraction thereof then being purchased pursuant
to the Liquidity Put, the amount, if any (the "Additional Amount"), that the
Unitholder thereof would have, but has not, received prior to the Liquidity Put
Settlement Date if, prior to the Liquidity Put Settlement Date, the Minimum
Amount, Percentage Distribution, Base Rent, interest and/or Default Interest to
the Liquidity Put Settlement Date, as applicable, for the prior year had been
(x) paid in full to Flags, (y) distributed by Flags to its partners in
accordance with the Flags Limited Liability Company Operating Agreement and (z)
distributed by Fund to its partners in accordance with the Second Amended and
Restated Fund Limited Partnership Agreement; and (ii) the Additional Amount,
when actually distributed by Fund, will be paid to SFOG Acquisition A and/or
SFOG Acquisition B, as applicable. Payments not made when required shall
thereafter bear interest at the Default Rate.
3.3 Liquidity Put Number; Proration.
-------------------------------
(a) Liquidity Put Number. The number of Units or fractions thereof
--------------------
that SFOG Acquisition A and/or SFOG Acquisition B, as applicable, shall be
obligated to purchase in any year (the "Liquidity Put Number") shall be equal to
the greater of (i) 5 Units or (ii) "A" plus "B" less "C", where "A" equals the
greater of (x) 20 Units less the number of Units purchased pursuant to the
Tender Offer and (y) zero, "B" equals 5 Units multiplied by the number of full
calendar years elapsed since December 31, 1996 and, subject to the proviso in
the next sentence, "C" equals the number of Units purchased by SFOG Acquisition
A and/or SFOG Acquisition B pursuant to the Liquidity Put (but not by ▇▇▇▇▇▇
pursuant to the General Partner's Right of First Refusal) in all prior years;
provided, however, that the Liquidity Put Number shall never be greater than the
-------- -------
number of Units not previously purchased by SFOG Acquisition A or SFOG
Acquisition B. In any year or years SFOG Acquisition A and/or SFOG Acquisition
B, as applicable, may (subject to Section 10.2(a)), but are not obligated to,
purchase pursuant to the
22
Liquidity Put a number of Units that is greater than the Liquidity Put Number
for that year, provided that the additional number of Units so purchased will
--------
not reduce the Liquidity Put Number for any subsequent year. An example of the
computation of the Liquidity Put Number is set forth in Exhibit 3.3(a).
(b) Proration.
---------
(i) If, on any Liquidity Put Election Date, the number of
Units offered for purchase pursuant to the Liquidity Put exceeds the Liquidity
Put Number (or, if greater, the number of Units SFOG Acquisition A and/or SFOG
Acquisition B, as applicable, then elects to purchase pursuant to the Liquidity
Put), SFOG Acquisition A and/or SFOG Acquisition B, as applicable, shall: (A)
(x) as the first priority, purchase "Estate Priority Units" (defined in Section
3.3(b)(ii) below) with respect to which a properly completed Notice of Election
to Exercise was timely submitted ("put") by Estates in the prior year and not
purchased (or, if there is not sufficient availability to purchase all such
Units, given the number of Units then being purchased pursuant to the Liquidity
Put ("availability"), prorate among such Units in proportion to the number
thereof put), and (y) then, as to any remaining availability and as the second
priority, purchase Estate Priority Units (other than Estate Priority Units
covered by clause (x)) put by Estates (or, if there is not sufficient
availability to do so, prorate among such Estate Priority Units in proportion to
the number thereof put); and (B) to the extent that the number of Units
purchased pursuant to clause (A) is less than the Liquidity Put Number or such
greater number of Units SFOG Acquisition A and/or SFOG Acquisition B, as
applicable, otherwise elects to purchase pursuant to the Liquidity Put, as the
case may be, as the third priority, from the remaining Units put, select the
Units to be purchased on a pro rata basis (based on the number of such Units put
by each Unitholder). Except as provided in clause (A) of the immediately
preceding sentence, the fact that a Unit is put and not purchased in a year
shall not entitle the Unitholder to any Liquidity Put priority in any subsequent
year.
(ii) For the purposes of section 3.3(b)(i), "Estate Priority
Units" means one-half of the sum of (A) the Units included in an individual's
estate for federal estate tax purposes and (B) the Units owned by the surviving
spouse of the individual as of the date of the individual's death and not
included in the individual's estate for federal estate tax purposes.
(iii) Subject to Section 3.7, if applicable, on or before
April 22 of each year, SFOG Acquisition A and SFOG Acquisition B shall deliver
to Fund a copy of all Notices of Election to Exercise and accompanying documents
received by it for the year. If the proration provisions of this Section 3.3(b)
will be applicable, Fund shall, prior to May 15 of each year, instruct SFOG
Acquisition A and/or SFOG Acquisition B, as applicable, as to those Units that
are to be purchased pursuant to the proration provisions of this Section 3.3(b)
and SFOG Acquisition A and SFOG Acquisition B shall be protected in relying on
such instructions.
3.4 General Partner's Right of First Refusal with Respect to
Liquidity Put. The obligation of SFOG Acquisition A and SFOG Acquisition B to
purchase any Units pursuant to the Liquidity Put shall be subject to the General
Partner's Right of First Refusal with respect to one-half of the Units that
would, but for exercise of the General Partner's Right of First Refusal, be
purchased pursuant to the Liquidity Put.
23
3.5 Liquidity Notice Provisions.
---------------------------
(a) Put Price Notice. SFOG Acquisition A and SFOG Acquisition B
----------------
jointly shall give Fund and the Unitholders, in accordance with Section 15.4(b)
of this Agreement, written notice of the Put Price (subject to Section 3.7, if
applicable), the Liquidity Put Number and, if different than the number required
to be purchased, the number of Units SFOG Acquisition A and/or SFOG Acquisition
B, as applicable, elects to purchase pursuant to the Liquidity Put (such
election being revocable only for the purpose and to the extent of increasing
the number of Units to be purchased by SFOG Acquisition A and/or SFOG
Acquisition B) for each year on or before, subject to Section 3.7, if
applicable, March 31 of such year. Such notice shall be accompanied by (i) a
form of Notice of Election to Exercise and Form W-9 (or successor form), (ii)
subject to Section 3.7, if applicable, a copy of the financial statements and
related information required to be delivered pursuant to Section 12.8(a)(i)(A)
and (B) of this Agreement for the then last year) and (iii) such additional
disclosures, if any, as SFOG Acquisition A and SFOG Acquisition B shall elect to
include.
(b) Liquidity Put Exercise Notice. Each Unitholder electing to
------------------------------
exercise the Liquidity Put in any year with respect to any or all of his, her or
its Units shall, on the form of Notice of Election to Exercise, give to Fund and
to one of the Liquidity Put paying agent, if any, specified in the notice given
pursuant to Section 3.5(a) or SFOG Acquisition A or SFOG Acquisition B, as
applicable, irrevocable notice, to be received on or before, subject to Section
3.7, if applicable, April 15 of such year (a "Liquidity Put Election Date"), of
such election to exercise.
(c) General Partner's Right of First Refusal Exercise Notice.
-------------------------------------------------------------
Subject to Section 3.7, if applicable, on or before May 1 of each year, ▇▇▇▇▇▇
(or, if applicable, the successor to ▇▇▇▇▇▇ having a General Partner's Right of
First Refusal) shall give to Fund, SFOG Acquisition A and/or SFOG Acquisition B,
as applicable, and any Unitholder that has submitted a Notice of Election to
Exercise, notice of election to exercise the General Partner's Right of First
Refusal for up to one-half of the Units with respect to which Liquidity Puts
have been exercised in that year, specifying the number of Units with respect to
which the General Partner's Right of First Refusal is being exercised.
(d) Fund Liquidity Put Notices.
---------------------------
(i) Per Unit Liabilities Amount Estimate. Subject to Section
------------------------------------
3.7, if applicable, on or before March 15 of each year commencing in 1998, Fund
shall provide SFOG Acquisition A and SFOG Acquisition B with its good faith
estimate of the Per Unit Liabilities Amount as of the applicable Liquidity Put
Settlement Date and SFOG Acquisition A and SFOG Acquisition B shall include such
estimate in the written notice that they deliver to Fund and the Unitholders
pursuant to Section 3.5(a).
(ii) Fund Representation Notice. On the Business Day
-----------------------------
immediately prior to the Liquidity Put Settlement Date in each year, Fund shall
deliver to SFOG Acquisition A and SFOG Acquisition B a written notice pursuant
to which Fund shall represent and warrant that as of the close of business on
the date of such notice (x) the notice contains a correct list of the record
owners of the number of Units indicated on such list and, to the knowledge of
Fund, except as
24
indicated in such notice, the beneficial owners of such Units, and (y) the Per
Unit Liabilities Amount is as specified in such notice. The obligations of SFOG
Acquisition A and SFOG Acquisition B shall be conditioned upon their receipt of
such notice, and if any representation or warranty contained in the notice
delivered pursuant to this Section 3.5(d)(ii) is incorrect, Fund will indemnify
SFOG Acquisition A and/or SFOG Acquisition B, as applicable, out of amounts
otherwise payable to its partners other than SFOG Acquisition A and SFOG
Acquisition B. SFOG Acquisition A and SFOG Acquisition B shall not be required
to accept for purchase any Units put by any Person, unless such Person agrees,
in an agreement reasonably satisfactory to SFOG Acquisition A and SFOG
Acquisition B, to indemnify SFOG Acquisition A and SFOG Acquisition B against
any losses, liabilities or expenses arising out of such Person's failure to own
beneficially or of record such Units. SFOG Acquisition A and SFOG Acquisition B,
on the one hand, and Fund, on the other hand, shall negotiate in good faith
appropriate escrow or similar arrangements if Flags or Fund has outstanding any
contingent liabilities that would increase the Per Unit Liabilities Amount as of
the applicable Liquidity Put Settlement Date. If the Per Unit Liabilities Amount
disclosed in the notice delivered pursuant to this Section 3.5(d)(ii) is greater
than that disclosed in the estimate delivered pursuant to Section 3.5(d)(i) and
the difference is material in relation to the applicable Put Price, then SFOG
Acquisition A and SFOG Acquisition B may in their exclusive judgment circulate
such revised information to the Unitholders, in which case the timing of the
Liquidity Put Settlement Date may be delayed for a reasonable period of time
(which in no event shall be shorter than the period of time required by
applicable law, if any) so that such Unitholders may review such revised
information.
3.6 Exchange Act. To the extent required by the Exchange Act and
-------------
the regulations thereunder, (i) the Liquidity Put will be conducted in
compliance with the applicable provisions of the Exchange Act and the
regulations thereunder and (ii) the foregoing provisions of Article III will be
modified to the extent necessary, and without changing in any material respect
the economic effect to Fund limited partners (other than SFOG Acquisition A and
SFOG Acquisition B), so that the Liquidity Put can be so conducted. To the
extent they may lawfully so agree, SFOG Acquisition A and SFOG Acquisition B
agree to (x) not tender any Units they own from time to time in any Liquidity
Puts or (y) adjust the proration provisions of Section 3.3(b) so that Fund
limited partners (other than SFOG Acquisition A and SFOG Acquisition B) have the
same rights to have their Units purchased as they would have had were SFOG
Acquisition A and SFOG Acquisition B lawfully permitted to so agree.
3.7 Put for 2026. If the End-of-Term Option is not exercised and
------------
if, on October 31, 2025, SFOG Acquisition A and SFOG Acquisition B together do
not own at least 50% of the Units, the following provisions will be applicable
to the Liquidity Put for 2026: (i) the notice required to be given by Fund
pursuant to Section 3.5(d)(i) will be given on or before November 1, 2025, (ii)
the notice required to be given by Section 3.5(a) for the year ended December
31, 2025 will be given on or before November 15, 2025, which notice shall
contain, in lieu of the Put Price, the good faith estimate of SFOG Acquisition A
and SFOG Acquisition B of the Put Price for 2026, based on the facts then known,
and be accompanied by the financial statements with respect to the quarter and
nine-month period ended September 30, 2025 required by Section 12.8(a)(ii) and
an estimate of the statement required by Section 12.8(a)(i)(B) (with the final
of such statement being provided with the audited financial statements for 2025
required by Section 12.8(a)(i)(A)), (iii) each Unitholder electing to exercise
the Liquidity Put for 2026 must
25
give the notice required by Section 3.5(b) so that it is received on or before
December 15, 2025 and such notice must be irrevocable; (iv) the notice to be
given by ▇▇▇▇▇▇ (or, if applicable, the successor to ▇▇▇▇▇▇ having the General
Partner's Right of First Refusal) pursuant to Section 3.5(c) must be given on or
before December 31, 2025; and (v) the Put Price for Units to be purchased
pursuant to the Liquidity Put for 2026 will be determined when such Put Price
would otherwise have been determined, had the dates otherwise applicable not
been accelerated as provided in this Section 3.7, and the Liquidity Put
Settlement Date for Units purchased pursuant to that Liquidity Put shall be May
15, 2026.
3.8 Adjustments. If there are increases in any Put Price and/or
-----------
required additional puts pursuant to Section 12.7, the increased Put Price and
additional puts shall be deemed to be pursuant to this Article III for purposes
of the Guarantees.
ARTICLE IV
SF AGREEMENT LAND AND BATMAN THE RIDE
4.1 Purchase of SF Agreement Land. Immediately following the
-------------------------------
completion of the transactions referred to in Sections 5.4 and 5.5, Flags shall
purchase and pay in full for the SF Agreement Land. At the time of transfer,
SFEC shall cause the SF Agreement Land to not be subject to any lien for
indebtedness. Flags shall be entitled (but shall not be required) to pay the
purchase price of all or any portion of the SF Agreement Land by a promissory
note to each SFEC Entity that owns any SF Agreement Land or with the proceeds of
a loan made by any other SFEC Entity or SFEC Affiliate; provided that (i) such
note or loan shall have the same terms as Affiliate Loans are required to have
under the Flags II Limited Partnership Agreement and, unless such loans are
designated as Retained Liabilities, be assumed by Flags II and (ii) neither
principal nor the interest paid with respect to such note or loan shall be taken
into account in determining EBITDA. If any such notes are to be executed by
Flags after SFG-I, LLC becomes the manager of Flags, then one or more of the
SFEC Entities shall instruct Flags to execute and deliver one or more promissory
notes related to or given as all or a portion of the purchase price for the SF
Agreement Land. Nothing in this Agreement, including Section 12.10 hereof, shall
obligate Flags to indemnify any SFEC Entity against any losses, claims, damages,
liabilities or expenses any of them may incur or become subject to as a result
of Flags' compliance with such instructions or the required assumption by Flags
II of the obligations of Flags under such note or notes. Copies of the deeds
that are recorded to transfer the ownership of and title to the SF Agreement
Land will be provided to Fund on or before the date they are recorded and copies
of the deeds as recorded will be provided to Fund, with the originals being
retained by Flags, when those copies can be obtained.
4.2 Title to SF Agreement Land. The SFEC Entities jointly and
----------------------------
severally represent and warrant to Fund and Flags that, after giving effect to
the transactions described in Section 4.1, Flags will succeed to all of the
right, title and interest held by any SFEC Entity or any Person controlled by
the SFEC Entities, in each case at any time on or after August 1, 1996 to and
including the Effective Date, in any real property located within one mile of
the boundary of the Amusement Park in any direction.
26
4.3 Batman the Ride and Other Capital Improvements in Progress.
-------------------------------------------------------------
The SFEC Entities jointly and severally represent and warrant to Fund that the
contract for the purchase and installation of Batman the Ride, all related work
in progress and all other capital improvements in progress at the Amusement Park
have been assigned to and/or have become the sole property of Flags.
ARTICLE V
FLAGS RULPA ELECTION AND LIMITED
LIABILITY COMPANY CONVERSION
5.1 RULPA Election. SFOG and Fund hereby determine that Flags
---------------
shall, and Flags hereby does, elect to be governed by the Georgia Revised
Uniform Limited Partnership Act ("RULPA") effective on the Effective Date. The
sole purpose of Flags making this election is so that, as soon as legally
permissible after the election, Flags may, pursuant to Section 212 of the
Georgia Limited Liability Company Act, convert to a limited liability company
governed by the Georgia Limited Liability Company Act. Notwithstanding this
election, with respect to all matters governing the relationships, rights and
claims of Fund and SFOG vis-a-vis each other and their respective affiliates
(including, as affiliates of SFOG, the other SFEC Entities and the SFEC
Affiliates), the parties agree that all of the rights, duties, liabilities and
obligations arising under or in respect of the Flags Limited Partnership
Agreement, whether prior to or after the date hereof until the conversion of
Flags into a limited liability company and SFG-I, LLC becoming the sole manager
of Flags, shall be governed and defined by the provisions of the Georgia Uniform
Limited Partnership Act, to which Flags is subject immediately prior to the
Effective Date. Upon Flags electing to be governed by RULPA, the name of Flags
shall become, and for so long as Flags is subject to RULPA, the name of Flags
shall be, Six Flags Over Georgia, Ltd. (L.P.). To effect the election to be
governed by RULPA, on the Effective Date, SFOG will sign and file the
Certificate of Limited Partnership in the form of Exhibit 5.1 hereto, provided
that the second sentence in paragraph 5(c) thereof shall, without changing the
agreement of the parties to this Agreement, not be included if so including it
precludes the election to be governed by RULPA from being effective.
5.2 Limited Liability Company Conversion. Effective immediately
-------------------------------------
after the filing of the Certificate of Limited Partnership of Flags as provided
in Section 5.1, without thereby changing the economic interests or any other
rights of SFOG or Fund in Flags, Flags will convert from a Georgia limited
partnership of which SFOG is the sole general partner and Fund is the sole
limited partner to a Georgia limited liability company of which SFOG will be one
of the two members and the sole manager and Fund will be the other member. The
name of Flags will thereupon be changed to Six Flags Over Georgia, LLC.
5.3 SFOG No Longer Manager of Flags; SFG-I, LLC as Member/Manager.
-------------------------------------------------------------
As is more fully set forth in the Flags Limited Liability Company Operating
Agreement, effective immediately after the effectiveness of the events described
in Section 5.2, (i) SFOG shall cease to be the manager of Flags, but shall
continue to be a member of Flags with a nominal interest in Flags, and (ii)
SFG-I, LLC shall become the sole manager and one of the two other members of
Flags. Fund shall remain the other member of Flags. Subject to the nominal
interest of SFOG,
27
Fund will have a 99% interest and SFG-I, LLC will have a 1% interest in Flags,
as more fully set forth in the Flags Limited Liability Company Operating
Agreement.
5.4 Flags Limited Liability Company Operating Agreement. Effective
---------------------------------------------------
immediately after the filing of the Certificate of Limited Partnership of Flags
as provided in Section 5.1, Fund, SFOG and SFG-I, LLC shall execute and deliver
the Flags Limited Liability Company Operating Agreement.
5.5 Section ▇▇-▇▇-▇▇▇ Certificate. Effective immediately after the
-----------------------------
filing of the Certificate of Limited Partnership of Flags as provided in Section
5.1, SFOG, SFG-I, LLC and, if required, Flags will execute and file with the
Georgia Secretary of State the certificate required by Section ▇▇-▇▇-▇▇▇ of the
Georgia Limited Liability Company Act, which will be in substantially the form
attached as an exhibit to the Flags Limited Liability Company Operating
Agreement.
ARTICLE VI
FLAGS II
6.1 The Flags II Limited Partnership Agreement. Effective as soon
------------------------------------------
as possible on the Effective Date after the effectiveness of the events
described in Article V, Flags, as limited partner, SFOG II, as sole managing
general partner, and SFG-II, LLC, as sole co-general partner, shall enter into
the Flags II Limited Partnership Agreement in the form of Exhibit 6.1.1. SFOG II
shall timely make all filings and give all notices required to effectuate the
creation of Flags II including filing a Certificate of Limited Partnership with
the Delaware Secretary of State in substantially the form of Exhibit 6.1.2 and
all necessary documents with governmental agencies in Georgia for Flags II to be
qualified as a foreign limited partnership in Georgia.
6.2 Contribution by Flags of Assets, Including the Rides and the
-------------------------------------------------------------
Other Improvements, to Flags II; Sale by Flags of the Designated Assets to Flags
--------------------------------------------------------------------------------
II; Assumption of Liabilities; Certain Expenses.
-----------------------------------------------
(a) Contribution. Effective immediately after the formation of
------------
Flags II, Flags shall contribute to Flags II, in exchange for its interest in
Flags II, all of its property and assets, except the Reserved Assets, as more
fully provided in the Flags II Limited Partnership Agreement. SFOG II will not
make any contribution to Flags II for its interests in Flags II. SFG-II, LLC
will contribute $100 to Flags II for its interest in Flags II.
(b) Sale of Designated Assets and Assumption of Liabilities.
-------------------------------------------------------------
Immediately upon the contribution by Flags to Flags II pursuant to Section
6.2(a) and as more fully provided in the Flags II Limited Partnership Agreement,
Flags will sell to Flags II all of the Designated Assets, in exchange for the
assumption by Flags II of all then-existing Indebtedness, liabilities (except
(i) any liabilities Flags may have to Fund or Fund's partners, (ii) any income
tax liabilities of Flags and its members arising out of the transactions
contemplated by this Agreement and the Flags II Limited Partnership Agreement
and (iii) any Retained Liabilities) and contractual obligations of Flags
(including without limitation the obligations of Flags under the contract for
Batman the Ride and, unless they are designated as Retained Liabilities, Flags'
obligations under any notes given or
28
loans made to Flags in consideration or partial consideration of, or for use in
the purchase by Flags of, the SF Agreement Land, as permitted by Section 4.1).
(c) Certain Expenses. Since Flags II will be continuing the
-----------------
business of Flags, Flags II will pay the expenses of the audit of Flags relating
to 1996, the costs of Flags for preparation of tax returns relating to 1996 and
the period January 1, 1997 to the Effective Date, any expenses of Flags for
making reports to governments or governmental agencies in respect of 1996, prior
periods and 1997 through the Effective Date and similar expenses of Flags, in
each case that are incurred after the transactions provided for in Sections
6.2(a) and (b). These expenses will be expenses of Flags II in determining
EBITDA.
(d) Savings Clause. If the valid, complete and perfected
---------------
assignment or transfer to Flags II of any of the assets to be transferred by
Flags to Flags II pursuant to Section 6.2(a) or 6.2(b), or if the valid and
complete assumption by Flags II of any of the liabilities of Flags to be assumed
by Flags II pursuant to Section 6.2(b), requires the consent, agreement or
approval of or any filing or registration with any Person, and, as a result of
the failure to obtain or make any such consent, agreement, approval, filing or
registration, such assignment, transfer or assumption, as the case may be, is
not effected as contemplated hereby despite the provisions hereof purporting to
effect such assignment, transfer or assumption, as the case may be, then, and
until such time as any impediment to the validity, completeness or perfection of
such assignment, transfer or assumption, as the case may be, shall have been
removed, nullified or waived, (i) all the benefits and burdens relating to such
assets (including, without limitation, possession, use, risk of loss, potential
for gain and dominion, control and command over such assets) are to inure from
and after the Effective Date to Flags II and (ii) all of the burdens relating to
such liabilities are to inure from and after the Effective Date to Flags II. The
parties hereto undertake and agree to use their reasonable best efforts to
obtain any consent, agreement or approval of and to make any filing or
registration with any Person that may be required or necessary for the
assignment, transfer or assumption of any of such assets and/or such
liabilities, as the case may be, to or by Flags II to be valid complete or
perfected and to promptly complete any transfer, assignment or assumption. All
expenses of Flags and Flags II incurred in complying with the preceding sentence
will be paid by Flags II and shall reduce EBITDA to the extent such expenses
would have reduced EBITDA if they had been incurred by Flags II.
ARTICLE VII
THE LEASE
Immediately after the Flags II Limited Partnership Agreement is
entered into as provided in Article VI, Flags, as landlord, and Flags II, as
tenant, shall enter into the Lease in the form of Exhibit VII, pursuant to
which, among other things, (a) Flags will lease to Flags II all of the land,
including the SF Agreement Land, then owned by it and, among other things, (b)
Flags II will pay Base Rent to Flags. Flags may cause the Lease or, at the
election of Flags, an appropriate memorandum of lease to be recorded in the land
records of the County of ▇▇▇▇▇▇, State of Georgia.
29
ARTICLE VIII
END-OF-TERM OPTION; ALTERNATIVES IF OPTION NOT EXERCISED;
SFOG II CEASING TO BE THE GENERAL PARTNER OF FLAGS II
8.1 End-of-Term Option. On a day that is between the third and
-------------------
eighth Business Days of 2027 designated by SFOG Acquisition B (the "End-of-Term
Option Date"), on not less than two Business Days prior notice delivered to
Fund, provided no Default (other than "Another Material Default" (as defined in
--------
the Flags II Limited Partnership Agreement)) has occurred and is then continuing
or that SFOG II has not then been removed as the General Partner of Flags II
after a Default, and on the terms provided in this Article VIII, SFOG
Acquisition B shall have the option (the "End-of-Term Option") to (i) require
Fund to redeem, for an amount in cash for each whole Unit equal to the
End-of-Term Option Price, all of the Units in Fund not then owned by SFOG
Acquisition A or SFOG Acquisition B (with each fraction of a Unit not owned by
SFOG Acquisition A and SFOG Acquisition B being redeemed for the End-of-Term
Option Price times the fraction in question) and (ii) acquire the general
partnership interests in Fund, the managing member's interest Flags and the
co-general partnership interest in Flags II. SFOG Acquisition B may assign its
rights under this Article VIII (and upon such assignment such assignee shall
have all of the rights of SFOG Acquisition B under this Article VIII) to any
Person, but without reducing its obligations under this Article VIII, provided
--------
that (i) if the Net Worth Standard is not then met, the assignee thereby agrees,
in a writing reasonably acceptable in form and substance to Fund, to become
jointly and severally liable with SFOG Acquisition B for its obligations under
this Article VIII, (ii) the assignee takes such rights subject to the provisions
of this Agreement and the Related Agreements and (iii) the Guarantors agree, in
a writing reasonably acceptable in form and substance to Fund, that their
obligations under their respective Guarantees are not diminished by the
assignment and continue undiminished with respect to the End-of-Term Option.
8.2 End-of-Term Option Price; Acquisition of General Partnership
--------------------------------------------------------------
Interests in Fund and Flags II and Managing Member's Interest in Flags.
----------------------------------------------------------------------
(a) End-of-Term Option Price. The End-of-Term Option price for
-------------------------
each whole Unit (the "End-of-Term Option Price") is "A" minus "B", where "A" is
(i) the greater of (x) the Aggregate Tender Offer Amount or (y) the Aggregate
Tender Offer Amount multiplied by the CPI Adjustment for the Lease were it to
continue, without other change in its terms, for the year 2027 (or, if the
End-of-Term Option is accelerated, the then next year) multiplied by (ii) .99
and divided by (iii) the Number of Units and "B" is the Per Unit Liabilities
Amount. The amount in cash to be paid to a Unitholder in respect of each Unit
redeemed pursuant to the End-of-Term Option is the End-of-Term Option Price less
any taxes required to be withheld under applicable law.
(b) Acquisition of Fund General Partnership Interest. Concurrently
------------------------------------------------
with the payment of the End-of-Term Option Price by Fund to each Unitholder
whose Units are being redeemed, SFOG Acquisition B shall acquire the general
partnership interests in Fund for an aggregate amount in cash (less any taxes
required to be withheld) equal to the product of (i) .01 multiplied by (ii) the
End-of-Term Option Price multiplied by (iii) the Number of Units and divided by
(iv) .99 (such amount, before taxes required to be withheld, is referred to in
Section 8.2(c) as the
▇▇
"▇▇ ▇▇▇▇▇▇"). The allocation of this cash between ▇▇▇▇▇▇ and SFG, Inc. shall be
in proportion to their interest as general partners.
(c) Acquisition of Flags Managing Member's Interest. Concurrently
-----------------------------------------------
with the payment of the End-of-Term Option Price by Fund to each Unitholder
whose Units are being redeemed, SFOG Acquisition B shall acquire the interest of
SFG-I, LLC (or, if applicable, a successor to SFG-I, LLC) in Flags for an
aggregate amount in cash equal to 1.0101 multiplied by the GP Amount (less any
taxes required to be withheld).
(d) Acquisition of Co-General Partnership Interest in Flags II.
------------------------------------------------------------
Concurrently with the payment of the End-of-Term Option Price by Fund to each
Unitholder whose Units are being redeemed, SFOG Acquisition B shall acquire the
co-general partnership interest of SFG-II, LLC (or, if applicable, a successor
to SFG-II, LLC) in Flags II for $100.
(e) Illustration of End-of-Term Option Transactions. An
------------------------------------------------------
illustration of a calculation of the End-of-Term Option Price and the amounts
for which the general partnership interests in Fund and the managing member's
interest in Flags will be redeemed or acquired is set forth in Exhibit 8.2 to
this Agreement.
8.3 Notice of Exercise of End-of-Term Option. As a condition of
------------------------------------------
its right to exercise the End-of-Term Option (except as otherwise provided by
Section 8.6), SFOG Acquisition B must give Fund and, pursuant to Section 15.4,
its limited partners and Flags irrevocable written notice of its exercise of the
End-of-Term Option not later than December 31, 2024, provided that SFOG
--------
Acquisition B will lose its right to exercise the End-of-Term Option if it has
not given such notice within 30 days, time being of the essence, after notice
from Fund that it must so exercise or lose its End-of-Term Option, which notice
by Fund may be given at any time on or after December 1, 2024 (including at any
time on or after December 31, 2024).
8.4 Payment of End-of-Term Option Price.
-----------------------------------
(a) Payment of End-of-Term Option Price. On the End-of-Term Option
-----------------------------------
Date, SFOG Acquisition B shall pay to Fund as a capital contribution and in
immediately available funds the full amount of the aggregate End-of-Term Option
Price for all Units not owned by SFOG Acquisition A or SFOG Acquisition B or any
other SFEC Entity or SFEC Affiliate, which amount shall be used by Fund to
forthwith redeem and pay in full for the Units to be redeemed pursuant to the
End-of-Term Option on the End-of-Term Option Date.
(b) Percentage Distribution Adjustment. In addition to the amounts
----------------------------------
provided for above in this Article VIII, if the End-of-Term Option is exercised,
SFOG II shall cause Flags II to, and Flags II shall, pay in cash, concurrently
with the payment of the End-of-Term Option Price, to the managing member of
Flags (to be SFG-I, LLC immediately after the Effective Date), the general
partners of Fund and the limited partners of Fund other than SFOG Acquisition A
and SFOG Acquisition B or any other SFEC Entity or SFEC Affiliate, in each case
as of the close of business on December 31, 2026, the amount they would have
received, but have not then received, had the Percentage Distribution for 2026
been paid in full to Flags prior to December 15, 2026, distributed by Flags to
its partners in accordance with the Flags Limited
31
Liability Company Operating Agreement and distributed by Fund to its partners in
accordance with the Second Amended and Restated Fund Limited Partnership
Agreement.
8.5 Alternatives if Option Not Exercised or if SFOG II Ceases to
-------------------------------------------------------------
be the General Partner of Flags II.
----------------------------------
(a) No Indebtedness, Capital Leases, Operating Capital Asset
--------------------------------------------------------------
Leases or Liabilities. If the End-of-Term Option is not exercised, or if SFOG II
---------------------
ceases to be the General Partner of Flags II by resignation or removal under
circumstances where Flags (as the limited partner of Flags II) was entitled to
remove the General Partner of Flags II because there was a "Default" (as defined
in the Flags II Limited Partnership Agreement), the SFEC Entities will, without
thereby causing any non-compliance with this Agreement or any Related Agreement,
jointly and severally cause Flags II to have no (i) Indebtedness (including
Capital Leases), (ii) current liabilities (excluding the current portion of any
such Indebtedness) at December 31, 2026 in excess of its current assets at
December 31, 2026 (or, in each case, such earlier date as is applicable), in
each case as determined in accordance with GAAP, or (iii) except to the extent
Fund requests to the contrary, Operating Capital Asset Leases. Excluded Revenues
may not be utilized to comply with the foregoing sentence and, in complying with
the foregoing sentence, Capital Leases shall be paid off, with Flags II
retaining the property or asset leased.
(b) Extension of Flags II Limited Partnership Agreement. If SFOG
----------------------------------------------------
Acquisition B does not timely exercise the End-of-Term Option, the parties
thereto may, but are not obligated to, extend the Flags II Limited Partnership
Agreement, renew the Lease and extend the arrangements with SFOG II Employee on
mutually agreed terms.
(c) SFOG Acquisition A and SFOG Acquisition B Own More Than 50% of
--------------------------------------------------------------
the Units. If the End-of-Term Option is not exercised and, after giving effect
---------
to the purchase of the Units required to be purchased by SFOG Acquisition A
and/or SFOG Acquisition B (exclusive of the Units as to which the General
Partner's Right of First Refusal has been exercised) pursuant to the Liquidity
Put for the year ended December 31, 2025, as provided in Section 3.7, SFEC
Entities and SFEC Affiliates permitted to do so own more than 50% of the Units,
(i) the Amusement Park as it then exists (including the "Land" (as defined in
the Lease) and improvements thereon) will be sold (and may, at the election of
Flags, be sold by a Person (e.g., a broker or agent) designated by Flags), (ii)
effective immediately prior to the sale, without any payment or other
consideration, SFOG II will no longer be a general partner of Flags II or have
any interest, including not having any interest in distributions (whether in
respect of Priority Management Fee Distributions or Percentage Distributions or
otherwise), including having no interest in distributions on any liquidation or
dissolution, in Flags II (except in respect of tax allocations to the time it
ceases to be a general partner), (iii) Flags II will wind up and dissolve,
distributing all of its assets in accordance with the Flags II Limited
Partnership Agreement, (iv) 100% of the proceeds of the sale of the Amusement
Park and the Land will be paid to Flags, (v) Flags will wind up and dissolve,
distributing all of its assets (including such proceeds paid to it) in
accordance with the Flags Limited Liability Company Operating Agreement, and
(vi) Fund will wind up and dissolve, distributing all of its assets (including
its 99% share of such proceeds) in accordance with the Second Amended and
Restated Fund Limited Partnership Agreement. If the Amusement Park is to be
disposed of pursuant to this Section 8.5(c), then (A) SFOG Acquisition A, SFOG
32
Acquisition B and any other SFEC Entity or SFEC Affiliate shall be permitted to
bid for the Amusement Park, (B) such bid will be considered in good faith by
Flags and (C) such disposition shall be on terms (including price) no less
favorable to Fund than would be obtainable in an arms length transaction with an
unaffiliated third party.
(d) SFOG Acquisition A and SFOG Acquisition B Own Less Than 50% of
--------------------------------------------------------------
the Units. If the End-of-Term Option is not exercised and, after giving effect
---------
to the purchase of the Units required to be purchased by SFOG Acquisition A
and/or SFOG Acquisition B (exclusive of Units as to which the General Partner's
Right of First Refusal has been exercised) pursuant to the Liquidity Put for the
year ended December 31, 2025, as provided in Section 3.7, SFEC Entities and SFEC
Affiliates permitted to do so own 50% or less of the Units, then, upon notice by
Flags, given effective at any time on or after the close of business December
31, 2026, without any payment or other consideration, (i) SFOG II will no longer
be a general partner of Flags II or have any interest in Flags II, including
SFOG II not having any interest in distributions as provided in Section 8.5(c)
(except in respect of tax allocations to the time it ceases to be a general
partner) and (ii) Flags may, without consultation with SFOG II or any other SFEC
Entity or SFEC Affiliate, determine the manner in which the Amusement Park shall
be managed or disposed of (and if the Amusement Park is disposed of in
accordance with this Section 8.5(d), the provisions of Section 8.5(c)(i) through
(vi) shall apply). If the Amusement Park is to be disposed of pursuant to this
Section 8.5(d), then (A) SFOG Acquisition A, SFOG Acquisition B and any other
SFEC Entity or SFEC Affiliate shall be permitted to bid for the Amusement Park,
(B) such bid will be considered in good faith by Flags and (C) such disposition
shall be on terms (including price) no less favorable to Fund and its partner
than would be obtainable in an arms length transaction with an unaffiliated
third party.
(e) Purchase by SFEC Entity or SFEC Affiliate. If pursuant to
--------------------------------------------
Section 8.5(c) or 8.5(d) the Amusement Park is to be sold to any SFEC Entity or
SFEC Affiliate, then in lieu of purchasing the Amusement Park, such SFEC Entity
or SFEC Affiliate may (i) require Fund to redeem all of the Units not then owned
by SFOG Acquisition A or SFOG Acquisition B (with the aggregate redemption price
for such Units being paid by such SFEC Entity or SFEC Affiliate) and (ii)
acquire the general partner's interests in Fund, the managing member's interest
in Flags and the co-general partner's interest in Flags II, in each case at the
price such Persons would have received had such SFEC Entity or SFEC Affiliate
purchased the Amusement Park as provided in Section 8.5(c) or 8.5(d).
8.6 Acceleration of End-of-Term Option in the Event of Total
-------------------------------------------------------------
Condemnation or Equivalent Casualty. As is more fully provided in the Flags II
------------------------------------
Limited Partnership Agreement and the Lease, in the event of a (i) total
condemnation or condemnation(s) that renders it economically impracticable to
operate an amusement park on the land leased to Flags II under the Lease, Flags
shall be entitled to retain all condemnation or other proceeds in respect of
such condemnation and the End-of-Term Option shall be accelerated and exercised
or (ii) casualty such that it is economically impracticable to repair and
operate an amusement park on the land leased to Flags II under the Lease (such
as contamination of the land by Hazardous Materials so that it may not be safely
occupied and a clean-up or remediation is economically impossible), Flags shall
be entitled to retain all insurance proceeds with respect thereto, if any, and
at the option of either Flags or Flags II, exercised by notice to the other, the
End-of-Term Option shall be accelerated and
33
exercised. SFOG Acquisition A and SFOG Acquisition B agree to be bound by the
preceding sentence. Flags shall not distribute to its partners, dispose of or
otherwise use any condemnation proceeds or insurance proceeds to which it shall
be entitled pursuant to this paragraph.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties of the SFEC Entities. In
--------------------------------------------------------
addition to other representations and warranties of the SFEC Entities contained
elsewhere in this Agreement, SFEC (as to all of the SFEC Entities and Flags),
SFTP (as to itself, SFOG, SFOGS and Flags), SFOG (as to itself and Flags), SFOGS
(as to itself), SFOG II (as to itself), SFOG II Employee (as to itself), SFOG
Acquisition A (as to itself) and SFOG Acquisition B (as to itself) further
represent and warrant to Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and SFG-II, LLC
that the following statements are true.
(a) Organization and Authority. Each of the SFEC Entities is a
----------------------------
corporation (other than SFOG Acquisition B, which is a limited liability
company) duly formed, validly existing and in good standing under the laws of
its respective state of incorporation or organization, as applicable. Flags is a
limited partnership duly formed and validly existing under the laws of the State
of Georgia. Each of the SFEC Entities has all requisite corporate or limited
liability company power and authority to execute and deliver this Agreement and
the Related Agreements to which it is a party and to perform its obligations
hereunder and thereunder. SFOG II is duly qualified and in good standing to
conduct business under the laws of the State of Georgia and has all requisite
corporate power and authority and all licenses, permits and approvals necessary
to enable it to perform its obligations under this Agreement and as the general
partner of Flags II. Flags has all requisite partnership power and authority to
execute and deliver this Agreement.
(b) Authority with Respect to this Agreement and the Related
-------------------------------------------------------------
Agreements; Enforceability. All necessary corporate or limited liability company
--------------------------
action required to have been taken by or on behalf of any of the SFEC Entities
by applicable law or its respective charter documents has been taken to
authorize the execution and delivery by each SFEC Entity of, and performance by
each SFEC Entity of its obligations under, this Agreement and the Related
Agreements to which it is to be a party. This Agreement constitutes the legal,
valid and binding agreement of each of the SFEC Entities and Flags, and each of
the Related Agreements, when executed and delivered, will constitute the legal,
valid and binding agreement of each of the SFEC Entities party thereto,
enforceable against each of them in accordance with its terms, except insofar as
such enforceability may be limited by bankruptcy, insolvency, moratorium and
similar laws of general application relating to or affecting creditors' rights
generally and except for the limitations imposed by general principles of
equity.
(c) Consents and Approvals. No consent, approval or authorization
----------------------
of, or declaration, filing or registration with, any governmental or regulatory
authority or any other Person (either governmental or private) is required in
connection with the execution and delivery of this Agreement by any of the SFEC
Entities and Flags or the execution and delivery of the
34
Related Agreements by each of the SFEC Entities to be party thereto or the
consummation by each of them of the transactions provided for herein or therein.
(d) No Breach. The execution and delivery of this Agreement by the
---------
SFEC Entities and Flags, the execution and delivery of the Related Agreements to
which it is a party by each of the SFEC Entities and the performance by each of
them of their obligations hereunder and thereunder does not and will not
violate, result in a breach of any of the terms or provisions of, constitute a
default under or conflict with any agreement to which any of the SFEC Entities
or Flags is a party, the certificate or articles of incorporation or bylaws of
any of the SFEC Entities, any law, rule or regulation applicable to any of the
SFEC Entities or Flags or any judgment, decree, order or award of any court,
governmental body or arbitrator applicable to any of the SFEC Entities or Flags
or the assets of any of them (other than any violation, breach, default or
conflict that would not have a material adverse effect on any of the SFEC
Entities or Flags or any adverse effect on the transactions contemplated by this
Agreement and the Related Agreements).
(e) Agreements Related to Texas Park. As of the opening of
------------------------------------
business on December 22, 1996, there were no agreements or understandings
between any SFEC Entity or SFEC Affiliate, on the one hand, and the Texas Park,
any limited partnership that directly or indirectly owns an interest in the
Texas Park or any of the Texas Partners that provides for any transfer of
ownership of the Texas Park or the partnership interests in Six Flags Over Texas
Fund, Ltd. or the management, beyond December 31, 1997, of the Texas Park, other
than as provided in the Amended and Restated Limited Partnership Certificate and
Agreement dated as of June 30, 1969, as amended through April 14, 1988.
(f) No Material Undisclosed Tangible Assets of Flags. To the
-----------------------------------------------------
knowledge of the SFEC Entities, there are no tangible assets of Flags that (i)
are not directly related to the operations of the Amusement Park and (ii) have a
value that is material in relation to the value of the Amusement Park.
(g) Broker's Fees. No broker, finder or investment banker is
--------------
entitled to any brokerage, finder's or other fee or commission, payable by Fund,
Flags or Flags II, in connection with the transactions contemplated by this
Agreement and the Related Agreements, based upon arrangements or agreements made
by or on behalf of any of the SFEC Entities or Flags.
(h) 1996 Distributions by and Taxable Income of Flags. During and
-------------------------------------------------
in respect of 1996, Flags made only the following distributions: $2.1 million to
Fund during and in respect of 1996 and $259,127 to Fund during 1996 in respect
of 1995 and $4,397,000 to SFOG during and in respect of 1996 and $605,466 during
1996 in respect of 1995. Flags has not made or declared any distributions in
1997. The SFEC Entities currently believe the taxable income of Flags for 1996
is approximately $5.4 million.
(i) Indenture Termination Date. The termination date of the
----------------------------
Indenture was at its initial date and is as of the date of this Agreement during
the year 2005.
(j) Inventory and Receivables at December 31, 1996; Inventory
-------------------------------------------------------------
Purchased from Affiliates. At December 31, 1996, the inventory and receivables
--------------------------
of Flags, after giving effect to
35
reserves, writedowns, allowances and charges, were approximately $2.3 million
and $400,000, respectively. Any inventory sold to Flags by a Controlled SFEC
Affiliate or an SFEC Affiliate on or after January 1, 1997 to the Effective Date
will be on the terms provided for such transactions set forth in Section
12.7(a), as if such terms applied to the sales.
(k) Good Faith. The SFEC Entities have negotiated in good faith
----------
with Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and SFG-II, LLC with respect to this
Agreement, the Related Agreements and the transactions contemplated hereby and
thereby.
9.2 Representations and Warranties of Fund and Related Entities.
------------------------------------------------------------
Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and SFG-II, LLC (each as to itself)
represents and warrants to each of the SFEC Entities that the following
statements are true.
(a) Organization and Authority. Fund is a limited partnership duly
--------------------------
organized and validly existing under the laws of the State of Georgia. SFG, Inc.
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California. SFG-I, LLC and SFG-II, LLC is each a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Georgia. Fund has all requisite partnership power and
authority to execute and deliver this Agreement and the Related Agreements to
which it is to be a party and to perform its obligations hereunder and
thereunder. SFG, Inc. has all requisite corporate power and authority to execute
and deliver this Agreement, the Second Amended and Restated Fund Limited
Partnership Agreement and any other Related Agreements to which it is to be a
party and to consummate the transactions contemplated hereby and thereby. SFG-I,
LLC and SFG-II, LLC each has all requisite limited liability company power and
authority to execute and deliver this Agreement, the Flags Limited Liability
Company Operating Agreement, the Flags II Limited Partnership Agreement and any
other Related Agreements to which it is to be a party and to perform its
obligations hereunder and thereunder.
(b) Authority with Respect to this Agreement and the Related
-------------------------------------------------------------
Agreements; Enforceability. All necessary partnership action, required to have
---------------------------
been taken by or on behalf of Fund by applicable law, the certificate of limited
partnership of Fund or the Fund Limited Partnership Agreement (subject to
receipt of the Fund Limited Partners' Approval) has been taken to authorize the
execution and delivery by Fund of, and the performance by Fund of its
obligations under this Agreement and the Related Agreements to which it is to be
a party. All necessary corporate action, required to have been taken by or on
behalf of SFG, Inc. by applicable law, its articles of incorporation or its
bylaws has been taken to authorize the execution and delivery by SFG, Inc. of,
and the performance by SFG, Inc. of its obligations under, this Agreement and
the Related Agreements to which it is to be a party. All necessary limited
liability company action, required to have been taken by or on behalf of each of
SFG-I, LLC and SFG-II, LLC by applicable law, the articles of organization of
each of SFG-I, LLC and SFG-II, LLC or the operating agreements of SFG-I, LLC and
SFG-II, LLC has been taken to authorize the execution and delivery by each of
SFG-I, LLC and SFG-II, LLC of, and the performance by each of SFG-I, LLC and
SFG-II, LLC of its obligations under, this Agreement and the Related Agreements
to which it is to be a party. Each of this Agreement and the Related Agreements
to which it is or is to be a party constitutes, or when executed and delivered
will constitute, the legal, valid and binding agreement of Fund, ▇▇▇▇▇▇, SFG,
Inc., SFG-I, LLC and SFG-II, LLC, enforceable against
36
each of them in accordance with its terms, except insofar as such enforceability
may be limited by bankruptcy, insolvency, moratorium and similar laws of general
application relating to or affecting creditors' rights generally and except for
the limitations imposed by general principles of equity.
(c) Consents and Approvals. No consent, approval or authorization
----------------------
of, or declaration, filing or registration with, any governmental or regulatory
authority or any other Person (either governmental or private) is required in
connection with the execution and delivery of this Agreement and the Related
Agreements by Fund, ▇▇▇▇▇▇, SFG, Inc. SFG-I, LLC or SFG-II, LLC or, subject to
receipt of the Fund Limited Partners' Approval, the consummation by each of them
of the transactions provided for herein and therein.
(d) No Breach. The execution and delivery of this Agreement by
---------
each of Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and SFG-II, LLC, the execution and
delivery of the Related Agreements to which it is a party by Fund, ▇▇▇▇▇▇, SFG,
Inc., SFG-I, LLC and SFG-II, LLC and, subject to receipt of the Fund Limited
Partners' Approval, the performance by each of them of their respective
obligations hereunder and thereunder does not and will not violate, result in a
breach of any of the terms or provisions of, constitute a default under or
conflict with any agreement to which Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC or
SFG-II, LLC is a party, the certificate of limited partnership of Fund, the Fund
Limited Partnership Agreement, the Second Amended and Restated Fund Limited
Partnership Agreement, the articles of incorporation or bylaws of SFG, Inc., the
articles of organization of SFG-I, LLC or of SFG-II, LLC, the operating
agreement of SFG-I, LLC or of SFG-II, LLC, any law, rule or regulation
applicable to Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC or SFG-II, LLC or any
judgment, decree, order or award of any court, governmental body or arbitrator
applicable to Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC or SFG-II, LLC or the assets
of any of them (other than any violation, breach, default or conflict that would
not have a material adverse effect on any of Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC
or SFG-II, LLC or any adverse effect on the transactions contemplated by this
Agreement and the Related Agreements).
(e) Fund Limited Partnership Agreement. Exhibit 9.2(e) to this
------------------------------------
Agreement is a true and complete copy of the Fund Limited Partnership Agreement,
including the exhibits thereto, except exhibit "A" thereto (which is a list of
the limited partners of Fund and their interests in Fund, which list shall be
delivered to SFEC in accordance with Section 12.22).
(f) Units and Unitholders. As of the date hereof, there are
-----------------------
100-1/31.71 Units outstanding that are held of record by approximately 122
limited partners of Fund. The Units held by the limited partners of Fund
represent, in the aggregate, a 99% interest in Fund (including in its
distributions, after a management fee to an affiliate of the general partner of
Fund equal to one-half of one percent of the distributions to Fund limited
partners).
(g) Liabilities. Fund has no liabilities other than (i) current
-----------
liabilities incurred in the ordinary course of business consistent with past
practice relating to its interest in Flags and (ii) Transaction-Related Expenses
(which amounts in clauses (i) and (ii) Fund will, prior to the Tender Offer
Settlement Date, pay or cause to be assumed and discharged by the Claims Trust
or, if not, cause to be included in the Per Unit Liabilities Amount).
37
(h) Broker's Fees. Except for (i) amounts already paid by Fund,
--------------
(ii) the payment by Fund to ▇▇▇▇▇▇▇, Sachs of $1.5 million (which amount will be
paid before the Tender Offer Settlement Date or included in the Per Unit
Liabilities Amount), and (iii) the reimbursement of expenses of ▇▇▇▇▇▇▇, ▇▇▇▇▇
by Fund (which reimbursement obligation Fund will, prior to the Tender Offer
Settlement Date, pay or cause to be assumed and discharged by the Claims Trust
or, if not, cause to be included in the Per Unit Liabilities Amount), no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission payable by Fund, Flags, Flags II or any SFEC Entity in connection
with the transactions contemplated by this Agreement and the Related Agreements,
based upon any arrangement or agreements made by or on behalf of Fund, ▇▇▇▇▇▇,
SFG, Inc., SFG-I, LLC or SFG-II, LLC.
(i) FIRPTA. Fund is not a foreign person as such term is defined
------
in Section 1445 of the Internal Revenue Code of 1986, as amended.
(j) Good Faith. Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and SFG-II,
----------
LLC have negotiated in good faith with the SFEC Entities with respect to this
Agreement, the Related Agreements and the transactions contemplated hereby and
thereby.
ARTICLE X
STANDSTILL
10.1 Certain Rights And Obligations of Units Acquired by SFOG
------------------------------------------------------------
Acquisition A and SFOG Acquisition B Pursuant to this Agreement. Each of SFOG
-----------------------------------------------------------------
Acquisition A and SFOG Acquisition B will be admitted as a substitute special
limited partner of Fund with respect to all Units (including fractions of Units)
acquired by it in compliance with Articles II and III of this Agreement or
paragraph 2 of Article IX of the Second Amended and Restated Fund Limited
Partnership Agreement.
10.2 Standstill.
----------
(a) SFOG Acquisition A and SFOG Acquisition B. Prior to the
----------------------------------------------
End-of-Term Option Date, not more than $50 million of Units acquired by SFOG
Acquisition A and SFOG Acquisition B pursuant to the Tender Offer, the Liquidity
Put or otherwise pursuant to this Agreement or the Second Amended and Restated
Fund Limited Partnership Agreement, based on the price paid for such Units, will
be acquired by SFOG Acquisition A. All other Units required or permitted to be
acquired by SFOG Acquisition A or SFOG Acquisition B pursuant to the Tender
Offer, the Liquidity Put or otherwise pursuant to this Agreement or the Second
Amended and Restated Fund Limited Partnership Agreement will be acquired by SFOG
Acquisition B.
(b) Standstill. Prior to the End-of-Term Option Date, the SFEC
----------
Entities will not, and the SFEC Entities will cause each SFEC Affiliate to not,
do any of the following: (i) acquire Beneficial Ownership of any Units or other
limited partnership interests in Fund, other than (A) those acquired by either
SFOG Acquisition A or SFOG Acquisition B (or any other Person pursuant to
Section 12.20) pursuant to this Agreement or paragraph 2 of Article IX of the
Second Amended and Restated Fund Limited Partnership Agreement, (B) those
acquired by either SFOG
38
Acquisition A or SFOG Acquisition B other than pursuant to this Agreement or
paragraph 2 of Article IX of the Second Amended and Restated Fund Limited
Partnership Agreement if the purchase price per Unit is not less than the
highest amount theretofore paid with respect to any Units pursuant to Articles
II or III, and (C) any other Units or limited partnership interests in Fund
acquired by any SFEC Entity or any SFEC Affiliate with the prior approval of
662/3% of the limited partnership interests in Fund that are not Beneficially
Owned by any SFEC Entity or SFEC Affiliate; (ii) except as permitted by the
Second Amended and Restated Fund Limited Partnership Agreement, take any action
to directly or indirectly control or exercise any control over Fund or any of
its general partners; (iii) sell, transfer or assign record or Beneficial
Ownership of any Units or rights to acquire any Units without the prior written
consent of Fund, other than sales, transfers or assignments from SFOG
Acquisition B to SFOG Acquisition A, provided the initial cost of Units held by
--------
SFOG Acquisition A, whether initially acquired by it or SFOG Acquisition B, does
not exceed $50 million; or (iv) acquire, directly or indirectly, any interest in
the Claims Trust or in the claims distributed by Fund to the Claims Trust,
without the prior written permission of the Claims Trust, which permission may
be withheld in the sole discretion of the Claims Trust.
10.3 No Permitted Transfers. Only SFOG Acquisition A and SFOG
------------------------
Acquisition B (or any other Person pursuant to Section 12.20 or Section
10.2(b)(i)(C)), and not any other SFEC Entity or SFEC Affiliate, shall own any
Units and SFOG Acquisition A and SFOG Acquisition B (and each such other Person)
shall each at all times have Beneficial Ownership of all Units it owns.
10.4 Limited Partners' Rights Plan. Without limiting the other
-------------------------------
provisions of this Agreement, each SFEC Entity is aware of and, if the Closing
occurs, agrees to the enforceability in accordance with its terms against it of
the Limited Partners' Rights Plan that is Article XIX and Exhibits D and E to
the Fund Limited Partnership Agreement and the Second Amended and Restated Fund
Limited Partnership Agreement, provided that the Limited Partners' Rights Plan
--------
and other anti-takeover provisions of the Fund Limited Partnership Agreement and
the Second Amended and Restated Fund Limited Partnership Agreement shall not
apply to any purchases of Units or other partnership interests in Fund in
compliance with this Agreement or the Second Amended and Restated Fund Limited
Partnership Agreement and any such purchase shall be deemed to have been
approved by 66-2/3% of the limited partnership interests in Fund (other than
those held by SFOG Acquisition A, SFOG Acquisition B and any other Person that
acquires Units pursuant to Section 12.20).
ARTICLE XI
OBLIGATIONS ABSOLUTE
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE RELATED
AGREEMENTS, THE OBLIGATIONS OF THE SFEC ENTITIES, TWX AND TWE UNDER THIS
AGREEMENT AND THE RELATED AGREEMENTS TO WHICH EACH OF THEM IS A PARTY ARE
UNCONDITIONAL, ABSOLUTE AND IRREVOCABLE, IRRESPECTIVE OF ANY IMPRACTICABILITY,
IMPOSSIBILITY OR OTHER DEFENSE TO PERFORMANCE UNDER THIS AGREEMENT OR THE
RELATED AGREEMENTS AND REGARDLESS OF THE CONTINUED EXISTENCE
39
OF THE AMUSEMENT PARK, THE LAND LEASED PURSUANT TO THE LEASE, THE UNITED STATES
OF AMERICA, "FORCE MAJEURE" (AS DEFINED IN THE FLAGS II LIMITED PARTNERSHIP
AGREEMENT), OR, WITHOUT LIMITATION, ANYTHING ELSE WHATSOEVER, ALL OF WHICH SHALL
BE IRRELEVANT TO SUCH OBLIGATIONS. FOR THE AVOIDANCE OF DOUBT, EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE RELATED AGREEMENTS, THE OBLIGATION
OF THE SFEC ENTITIES, TWX AND TWE UNDER THIS AGREEMENT AND THE RELATED
AGREEMENTS TO WHICH EACH OF THEM IS A PARTY ARE INTENDED AS NO EXCUSES, "HELL OR
HIGH WATER" OBLIGATIONS, WITH NO DEFENSES TO PERFORMANCE OR PAYMENT OF ANY TYPE
OR DESCRIPTION WHATSOEVER.
ARTICLE XII
CERTAIN AGREEMENTS
12.1 Changes in the Number of Outstanding Units. Fund will not
--------------------------------------------
increase or decrease the Number of Units other than (a) pursuant to Article XXI
of the Fund Limited Partnership Agreement and Article XXI of the Second Amended
and Restated Fund Limited Partnership Agreement (the estate liquidity put
provisions), in which case the Number of Units shall be reduced by the number of
Units acquired by Fund and the interests of the limited partners of Fund will be
adjusted proportionately, (b) pursuant to Article XIX of the Fund Limited
Partnership Agreement and Exhibits D and E thereto or Article XIX of the Second
Amended and Restated Fund Limited Partnership Agreement and Exhibits D and E
thereto (the Limited Partners' Rights Plan), (c) as provided in Article IX,
paragraph 10, of the Fund Limited Partnership Agreement and Article IX,
paragraph 10, in the Second Amended and Restated Fund Limited Partnership
Agreement, or (d) as provided in Section 12.17.
12.2 Prepaid Amount; No Fund Liabilities at Tender Offer
------------------------------------------------------------
Settlement Date.
---------------
(a) Payment of Prepaid Amount. No later than the date(s) specified
-------------------------
in the Flags II Limited Partnership Agreement and the Lease, Flags II shall
prepay to Flags (i) 50% of the Minimum Amount distributable to Flags for 1997
pursuant to the Flags II Limited Partnership Agreement plus (ii) 50% of the Base
Rent payable to Flags for 1997 pursuant to the Lease (together, the "Prepaid
Amount"). After payment of the Prepaid Amount, the Minimum Amount and the Base
Rent payable in July 1997 shall be zero.
(b) Use of Proceeds. The Prepaid Amount may be used only to: (i)
---------------
distribute to Fund partners, (ii) pay costs, fees and bonuses incurred in
connection with the solicitation, negotiation and documentation of the
transactions contemplated by this Agreement and the Related Agreements
(including expenses incurred in exploring alternatives and negotiating with
others) ("Transaction-Related Expenses") and other liabilities of Fund and (iii)
provide funds to the Claims Trust, without obligation to repay such funds by the
Claims Trust.
(c) No Fund Liabilities at the Tender Offer Settlement Date. Fund
--------------------------------------------------------
represents, warrants and covenants that it will have no Indebtedness or other
liabilities at the Tender Offer
40
Settlement Date, except liabilities that have been assigned to and assumed by
the Claims Trust and that will be discharged by the Claims Trust and liabilities
of Flags or Flags II that would otherwise be treated as liabilities of Fund but
which Fund as a separate legal entity has no legal obligation to discharge. If
this representation and warranty is incorrect or this covenant is not complied
with, Fund will indemnify SFOG Acquisition A and SFOG Acquisition B for any such
Indebtedness or liabilities out of amounts otherwise payable to its partners
other than SFOG Acquisition A and SFOG Acquisition B.
12.3 The Claims Trust.
----------------
(a) Transfer of Claims to Claims Trust. The parties agree that,
-----------------------------------
without diminution of any defense existing as a result of such transfer, any
claims that Fund may have against SFOG, any other SFEC Entity or any SFEC
Affiliates (including, without limitation, TWE, TWX and their affiliates) prior
to the Tender Offer Settlement Date shall be transferred by Fund prior to the
Tender Offer Settlement Date to a trust for the benefit of the Fund partners as
of the Effective Date (the "Claims Trust"). Notwithstanding anything herein to
the contrary, neither SFOG Acquisition A nor SFOG Acquisition B shall directly
or indirectly succeed to any rights or obligations with respect to such claims
as a result of the purchase of Units pursuant to Article II or III, the exercise
of the End-of-Term Option pursuant to Article VIII or otherwise. Neither
anything in this Section 12.3 or in any other provision of this Agreement or the
Related Agreements (including the language used herein or therein), nor the
transactions provided for herein or therein, shall constitute a waiver of, or
shall in any way diminish, offset or satisfy, any claims or any other rights
with respect to any claims as may exist against SFOG, any of the other SFEC
Entities, any of the SFEC Affiliates, Fund, the partners of Fund, the Claims
Trust, SFG-I, LLC or SFG-II, LLC or any other Person.
(b) No Waiver or Admission; Waiver of Certain Claims Against
--------------------------------------------------------------
Flags. Neither anything contained in this Section 12.3 or in any other provision
-----
of this Agreement or the Related Agreements (including the language used herein
or therein), nor the transactions provided for herein or therein, shall
constitute an admission of, or a waiver of any defenses against or any other
rights with respect to, any claims that may be asserted against SFOG, any of the
other SFEC Entities or any of the SFEC Affiliates or Fund, the partners of Fund,
the Claims Trust, SFG-I, LLC or SFG-II, LLC or any other Person. No SFEC Entity
may, nor shall any SFEC Entity permit any SFEC Affiliate to, seek contribution,
reimbursement, indemnification or the like from Flags in respect of any
obligation that such SFEC Entity or such SFEC Affiliate may have to Fund or its
limited partners in respect of matters arising prior to the Effective Date.
Effective on the date Flags converts to a limited liability company and SFG-I,
LLC becomes the manager of Flags, Fund, on the one hand, and each of the SFEC
Entities, on the other, waives all rights and claims it may have against Flags,
provided that (i) this release and waiver does not (and will not be effective to
--------
the extent it would otherwise) diminish in any respect any rights, claims or
defenses of or against any SFEC Entity, SFEC Affiliate, Fund, the partners of
Fund or any other Person as may exist or (ii) constitute an admission by any
SFEC Entity, any SFEC Affiliate, Fund or any other Person that there are any
such rights, claims or defenses.
(c) Savings Clause. Notwithstanding the foregoing, to the extent
--------------
applicable law would prohibit the assignment of any claim or result in otherwise
unavailable defenses being
41
available, (i) the claim will not be assigned and the claim shall be pursued by
Fund as the agent of the Claims Trust, (ii) the costs of pursuing the claim will
be borne solely by the Claims Trust, (iii) any recovery on the claim will be
paid to the Claims Trust or the beneficiaries thereof and (iv) all Taxes arising
out of the pursuit of such claims and any recovery resulting therefrom shall be
borne by the Claims Trust or its beneficiaries to the same extent as if such
claims had been assigned to, and pursued by, the Claims Trust as contemplated by
the first sentence of this Section 12.3.
(d) Conflict Waiver. Each SFEC Entity consents and will cause each
---------------
SFEC Affiliate to consent to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇
representing the Claims Trust in any proceeding involving any SFEC Entity or
SFEC Affiliate regardless of, without limitation, their representing Fund or,
after the Effective Date, Flags. Fund consents and will cause the Claims Trust
to consent to ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ representing any SFEC
Entities and SFEC Affiliates in any proceeding involving the Claims Trust
regardless of, without limitation, their representing Flags and, after the
Effective Date, Flags II.
(e) Joint and Several Liability of Claims Trust. The Claims Trust
--------------------------------------------
shall be jointly and severally liable for any liabilities that Fund may have to
any SFEC Entity or SFEC Affiliate, if any, for matters arising prior to the
Effective Date; provided that the trustees of the Claims Trust from time to time
--------
shall have no liability with respect to any such liability; and provided,
--------
further, that the Claims Trust may, notwithstanding any such liability, use or
-------
distribute the Prepaid Amount and any other cash of Fund distributed to it as
contemplated by this Agreement to its beneficiaries without any obligation of
the Claims Trust with respect to such use or distribution of such funds or any
obligation of the recipients of any such funds to return any such funds received
by them.
12.4 Nature of SFOG II, SFOG II Employee, SFOG Acquisition A and
-------------------------------------------------------------
SFOG Acquisition B.
------------------
(a) SFOG II. SFOG II shall, at all times from the date of this
-------
Agreement through the expiration of the Flags II Limited Partnership Agreement,
be a single-purpose entity that conducts no business other than the performance
of its obligations as a general partner of Flags II and under this Agreement and
the Related Agreements and the ownership of SFOG II Employee and take all
reasonable action so as not to incur any liabilities (other than Tax and similar
obligations imposed by law or under this Agreement or the Related Agreements).
(b) SFOG II Employee. SFOG II Employee shall, at all times from
----------------
the date of this Agreement through the expiration of the Flags II Limited
Partnership Agreement, be a single-purpose entity that conducts no business
other than performance of its obligations as the employer of the park personnel,
including the Park Employees, and under this Agreement and the Related
Agreements and take all reasonable action so as not to incur any liabilities
(other than obligations related to the employment of the park personnel,
including the Park Employees, or imposed by law or under this Agreement or the
Related Agreements).
(c) SFOG Acquisition A and SFOG Acquisition B. Each of SFOG
----------------------------------------------
Acquisition A and SFOG Acquisition B shall, at all times from the date of this
Agreement through the expiration of the Flags II Limited Partnership Agreement,
be a single-purpose entity that conducts no business other than the performance
of its obligations under this Agreement and the Related Agreements
42
and take all reasonable action so as not to incur any liabilities (other than
Tax and similar obligations imposed by law or under this Agreement or the
Related Agreements).
12.5 Non-Competition.
---------------
(a) Agreement Not to Compete. If the Closing occurs and thereafter
------------------------
until December 31, 2026 or the earlier termination of the Flags II Limited
Partnership Agreement or the Lease (provided that if such earlier termination
--------
shall be as a result of a Default, until one year after the date of such earlier
termination), neither any of the SFEC Entities nor any other SFEC Affiliate
shall, and the SFEC Entities shall cause the SFEC Affiliates to not, Directly
Compete with the Amusement Park. For purposes of this Section 12.5, "Directly
Compete" shall mean (i) owning, having an interest in, operating or managing, or
having any ownership interest in any Person owning, having an interest in,
operating or managing any other amusement park or theme park of over 10 acres
(excluding parking) and containing two or more thrill rides that cost (when new)
in excess of $4 million in the aggregate and located in the State of Georgia or
(ii) a water park within 25 miles of the boundary of the Amusement Park in any
direction. For purposes of this Agreement, the term "thrill ride" means a
mechanical ride such as Viper, Batman the Ride, Dahlonega Mine Train, Mine
▇▇▇▇▇▇, Georgia Cyclone, Great American Scream Machine (each of which is a ride
at or, with respect to Batman the Ride, a ride being constructed at, the
Amusement Park at the date of this Agreement) or similar rides, which provides
to the rider a thrill experience from a substantial physical structure rather
than a simulated experience.
(b) De Minimus Exception. Section 12.5(a) shall not prohibit any
---------------------
SFEC Affiliate from making a passive investment that is (i) a direct or indirect
interest in an entity that, as less than 5% of its business, has facilities that
Directly Compete with the Amusement Park, (ii) a 5% or less interest in any
entity that has a cost basis of less than $250,000 or (iii) a non-controlling
interest that represents less than 5% of any publicly traded entity.
(c) Savings Clause. It is the intention of the parties that this
---------------
Section 12.5 be given the broadest interpretation permissible under applicable
law and that the unenforceability or invalidity of any term or provision of
Section 12.5 shall not render any other term or provision contained herein
unenforceable or invalid. If the activities described in Section 12.5(a) or the
period of time or the geographical areas covered by Section 12.5(a) should be
deemed too extensive, then the parties intend that this Section 12.5 be
construed to cover the maximum scope of business activities, period of time and
geographical areas (not exceeding those specifically set forth herein) as may be
permissible under applicable law.
12.6 Certain Real Property and Other Matters.
---------------------------------------
(a) Certain Real Property. If the Closing occurs and thereafter
----------------------
for as long as the Lease shall not have expired or been terminated, no SFEC
Entity will, and each SFEC Entity shall cause each SFEC Affiliate to not,
without the prior written consent of Fund (which may be withheld by Fund in its
sole discretion), own or acquire any interest in or lease (except pursuant to
the Lease) any real property located within one mile of the then boundary of the
Amusement Park in any direction, if such real property is used in connection
with the Amusement Park, and otherwise within 500 yards of the boundary of the
Amusement Park in any direction.
43
(b) SFEC Park Passes. For so long as SFEC or SFTP issue such
------------------
passes or similar passes, other than solely to full time employees, SFEC and
SFTP shall provide, at their sole cost and expense, a pass (known at the date of
this Agreement as a "Gold Card") providing unlimited admission (or, if unlimited
admission passes are not then being so provided, the maximum use pass then being
so provided) to all SFEC Parks and to any other amusement park any SFEC Entities
owns or manages, to all water parks owned or operated, directly or indirectly,
by SFEC and to the Amusement Park (or to such lesser number of attractions for
which such passes are then being so provided) to Fund for (i) each then
Unitholder of Fund (for Unitholders who are not individuals, for one individual
who is an owner, trustee or beneficiary of the Unitholder as designated by Fund)
and (ii) each of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
White. Fund will, by November 30 of each year (provided that the notice for 1997
--------
shall be given as soon as reasonable after the date of this Agreement), give
notice to SFEC and SFTP of the number of such passes required for the next year
and the names in which they are to be issued. SFEC and SFTP will deliver such
passes (or, if applicable for any year, the then most comparable passes) to Fund
when they are made available to others whom such passes are sold or otherwise
issued. Any such passes will be subject to the restrictions applicable to such
passes generally.
12.7 Affiliate and Certain Other Transactions.
----------------------------------------
(a) Affiliate Transactions.
----------------------
(i) Neither EBITDA (to the extent it would otherwise be
reduced thereby) nor cash flow of Flags II will be reduced for purposes of
determining the obligations of SFOG Acquisition A, SFOG Acquisition B or Flags
II under this Agreement or the Flags II Limited Partnership Agreement by any
charges, payments or accruals for (A) services provided through SFEC or any
Controlled SFEC Affiliate to Flags II or SFOG II Employee to the extent of the
portion of the charges therefor, if any, in excess of the out-of-pocket cost
paid by SFEC or such Controlled SFEC Affiliate to a Third Party in connection
with the provision of such services, (B) any interest on loans by SFEC or any
Controlled SFEC Affiliate to Flags II to the extent of the portion of such
interest, if any, in excess of Prime, (C) any tangible or intangible items sold
or licensed by SFEC or any Controlled SFEC Affiliate to Flags II to the extent
of the portion of the charges therefor, if any, in excess of the lesser of the
depreciated or amortized cost or the fair market value of such tangible or
intangible items or (D) any payments by Flags II to SFOG II Employee that are in
excess of the lesser of (x) the out-of-pocket costs of SFOG II Employee related
to the employment of the park personnel (to the extent they work at or for the
Amusement Park and including the Park Employees) or (y) the expenses that would
have been properly incurred by Flags II if the Park Employees had been employed
directly by Flags II, giving effect to any cost savings realized or expenses
avoided by Flags II because of SFOG II Employee being the employer of the park
personnel, including the Park Employees. EBITDA and cash flow of Flags II will
be increased for purposes of determining the obligations of SFOG Acquisition A,
SFOG Acquisition B and Flags II under this Agreement and the Flags II Limited
Partnership Agreement by the amount, if any, by which any revenue attributable
to tangible or intangible items sold or licensed by Flags II to SFEC or any
Controlled SFEC Affiliate is less than the greater of the depreciated cost to
Flags II or the fair market value of such tangible or intangible items. For
purposes of this Section 12.7(a)(i), "Third Party" means any Person other than
SFEC or any
44
Controlled SFEC Affiliate; provided that, with respect to the provision of
--------
sponsorship sales, national or regional marketing services (but not actual
advertising), engineering, human resources, benefits management, ride and
theming design, risk management, property tax services, public relations,
government relations, accounting, audit, legal or financial services, "Third
Party" means any Person other than any SFEC Entity or any SFEC Affiliate. Flags
II will not, and SFOG II will cause Flags II to not, directly or indirectly,
guarantee any obligations of any SFEC Entity or SFEC Affiliate (including as a
guarantee, for this purpose, income maintenance, net worth maintenance or,
without limitation, any other arrangements the effect of which is in substance a
guarantee or assurance of payment or performance), other than a Person that is
wholly owned by Flags II. Notwithstanding anything to the contrary in this
Section 12.7(a)(i), there shall be no adjustment to EBITDA or cash flow of Flags
II for any payments received from and/or paid to a Controlled SFEC Affiliate in
respect of a loan or exchange, for a very limited period of time, on a fair
basis and consistent with past practice, of personnel and/or specialized
equipment (other than rides) among the SFEC Parks. Neither EBITDA nor cash flow
of Flags II will be reduced for compensation and related expenses associated
with persons (x) who are officers or employees of any SFEC Entity or SFEC
Affiliate (in addition to, if applicable, SFOG II Employee) and (y) whose
primary responsibilities relate to the business of one or more of the SFEC
Entities (other than SFOG II Employee) or SFEC Affiliates, rather than primarily
to SFOG II Employee or Flags II; and for the purposes of determining EBITDA and
whether cash flow of Flags II is reduced, compensation and related expenses of
personnel whose primary responsibilities relate to SFOG II Employee or Flags II
(but who also have non-SFOG II Employee or non-Flags II responsibilities) will
be apportioned on a fair and consistent basis, provided that no apportionment
will be required if the non-SFOG II Employee and non-Flags II responsibilities
are immaterial.
(ii) Neither EBITDA (to the extent it would otherwise be
reduced thereby) nor cash flow of Flags II will be reduced for purposes of
determining the obligations of SFOG Acquisition A, SFOG Acquisition B or Flags
II under this Agreement or the Flags II Limited Partnership Agreement by any
charges, payments or accruals for (A) tangible or intangible items directly or
indirectly sold or licensed or services directly or indirectly provided by any
SFEC Affiliate (other than any Controlled SFEC Affiliate) to Flags II to the
extent of the portion of the price therefor, if any, that is (in light of the
other terms of such transaction) in excess of the lesser of (1) the price that
is no less favorable to Flags II (in light of such other terms) than the price
that would have been obtainable in an arms length transaction with an
unaffiliated third party and (2) the price at which comparable tangible or
intangible items are sold or licensed or services are provided by any SFEC
Entity or SFEC Affiliate to any SFEC Park or (B) any interest on loans by any
SFEC Affiliate (other than any Controlled SFEC Affiliate) to Flags II to the
extent of the portion of such interest, if any, in excess of Prime. For purposes
of the foregoing, the license of the Warner Bros. characters on the terms set
forth in the License Agreement, dated as of June 23, 1995, shall be deemed to
comply with the requirements of clause (A) of this Section 12.7(a)(ii). EBITDA
and cash flow of Flags II will be increased for purposes of determining the
obligations of SFOG Acquisition A, SFOG Acquisition B or Flags II under this
Agreement and the Flags II Limited Partnership Agreement by any revenue for
tangible or intangible items sold or licensed or services provided by Flags II
to any SFEC Affiliate (other than a Controlled SFEC Affiliate) to the extent of
the amount, if any, by which such revenue is less than the revenue that could
have been obtained by Flags II in an arms length transaction with an
unaffiliated third party.
45
(b) third-party Transaction Allocations.
-----------------------------------
(i) Neither EBITDA (to the extent it would otherwise be
reduced thereby) nor cash flow of Flags II will be reduced for purposes of
determining any obligation of SFOG Acquisition A, SFOG Acquisition B or Flags II
under this Agreement or the Flags II Limited Partnership Agreement for the
portion, if any, of any charges, payments or accruals for the following that is
in excess of the amounts that would have been charged to Flags II using a fair
and consistent method of allocation: (A) the provision to Flags II, in common
with other SFEC Parks, of property, casualty and liability insurance under
third-party policies of insurance, from unaffiliated third-party insurance
companies, permitted by the Flags II Limited Partnership Agreement or by the
Lease and unaffiliated third-party administration of employee benefits for
employees of the Amusement Park (of SFOG II Employee with respect to Park
Employees), in common with other SFEC Parks, or (B) the purchase or lease by or
licensing to Flags II, in common with other SFEC Parks, of advertising and
advertising services, rides, merchandise, intellectual property, other tangible
or intangible items or other services from or by non-affiliated third parties.
(ii) Revenues generated by the sale to third parties of any
intangible rights of Flags II, in common with other SFEC Parks, including,
without limitation, sponsorships, cross-promotions or cooperative advertising
(net of charges not otherwise precluded from being applied to reduce EBITDA)
shall be allocated to Flags II using a fair and consistent method of allocation.
(iii) The term "fair and consistent method of allocation"
means that (A) to the extent any expenses or revenues are reasonably
attributable directly to the Amusement Park or to any SFEC Park, such expenses
or revenues are charged or credited only to the Amusement Park or such SFEC Park
in question and (B) any other expenses or revenues that are not reasonably
attributable directly to the Amusement Park or any SFEC Park are allocated among
the Amusement Park and the SFEC Parks on the basis of a rational and reasonable
criterion, such as, by way of example only, the number of SFEC Parks or the
attendance, employees, revenues, net income or EBITDA of each park; provided
--------
that, if a criterion is used after December 31, 1996 for purposes of allocating
any item of expense or revenue, that same criterion shall at all times
thereafter be used for purposes of allocating the same and all similar items of
expense or revenue.
(c) EBITDA and Cash Flow Adjustments.
--------------------------------
(i) If at any time during the Procedure Period for any year
there shall be discovered or disclosed any understatement of EBITDA with respect
to such year (and, if the understatement is discovered by Fund or Flags (or
their agents or representatives), notice thereof was given by Flags to SFOG II
prior to the end of such Procedure Period) and such understatement is a result
of any transaction that failed in whole or in part to comply with Section
12.7(a)(i) or, unless the procedures set forth in Section 12.7(d) and the
agreement of the parties or the decision of the Expert referred to therein has
been complied with, Section 12.7(a)(ii), then SFEC, SFTP, SFOG Acquisition A,
SFOG Acquisition B and SFOG II shall, jointly and severally and within 30 days
after final determination of the amount involved, pay or cause to be paid to any
Unitholder whose Units or fractions thereof have previously been purchased
pursuant to the Tender Offer or any Liquidity Put and who would have received a
46
greater amount had EBITDA not been so understated, an amount equal to (A) the
difference between (x) the amount which would have been received had EBITDA been
calculated as provided in Section 12.7(a)(i) and Section 12.7(a)(ii) (unless the
procedures set forth in Section 12.7(d) and the agreement of the parties or the
decision of the Expert referred to therein have been complied with) and (y) the
amount actually received plus (B) interest on such difference from the
applicable Tender Offer Settlement Date or Liquidity Put Settlement Date, as the
case may be, to the date of payment at the Default Rate.
(ii) If at any time during the Procedure Period for any year
there shall be discovered or disclosed any understatement of EBITDA for such
year (and, if the understatement is discovered by Fund or Flags (or their agents
or representatives), notice thereof is given by Flags to SFOG II prior to the
end of such Procedure Period) -- if (w) such understatement was a result of any
transaction that failed to comply with Section 12.7(a)(ii), provided that the
--------
procedure set forth in Section 12.7(d) and the agreement of the parties or the
decision of the Expert referred to therein has been complied with, (x) such
understatement was determined by agreement pursuant to Section 12.18(e), (y)
such understatement was determined by a decision of the Accounting Arbitrator
with respect to an Arbitrable Judgment pursuant to Section 12.18(g), or (z) to
the extent the understatement is not due to a matter otherwise provided for in
clauses (i) or (iii) of this Section 12.7(c) -- SFEC, SFTP, SFOG Acquisition A,
SFOG Acquisition B and SFOG II shall, jointly and severally and within 30 days
after final determination of the amount involved, pay or cause to be paid to any
Unitholder whose Units or fractions thereof have previously been purchased
pursuant to the Tender Offer or any Liquidity Put and who would have received a
greater amount had EBITDA not been so understated, an amount equal to (A) the
difference between such greater amount and the amount received plus (B) interest
on such difference from the applicable Tender Offer Settlement Date or Liquidity
Put Settlement Date, as the case may be, to the date of payment at Prime.
(iii) If at any time during the Procedure Period for any year
there shall be discovered or disclosed any understatement of EBITDA for such
year (and, if the understatement is discovered by Fund or Flags (or their agents
or representatives), notice thereof is given by Flags to SFOG II prior to the
end of such Procedure Period) and to the extent such understatement was a result
of any transaction that, to the knowledge of any SFEC Entity, any Controlled
SFEC Affiliate or SFOG II, failed to comply with Section 12.7(a) and, if
applicable, the procedures set forth in Section 12.7(d) have not been complied
with or have been complied with but the decision of the Expert or, if
applicable, the agreement of the parties referred to therein has not been
complied with, then (A) SFEC, SFTP, SFOG Acquisition A, SFOG Acquisition B and
SFOG II shall, jointly and severally and within 30 days after final
determination of the amount involved, pay or cause to be paid to any Unitholder
whose Units or fractions thereof have previously been purchased pursuant to the
Tender Offer or any Liquidity Put and who would have received a greater amount
had EBITDA not been so understated, an amount equal to (x) the difference
between such greater amount and the amount received plus (y) interest on such
difference from the applicable Tender Offer Settlement Date or Liquidity Put
Settlement Date, as the case may be, to the date of payment at the Default Rate
and (B) as liquidated damages for the EBITDA understatement (but not for any
other breach as may be involved therein or related thereto) and in recognition
of the possibility that, if one or more EBITDA understatements becomes known to
the parties, other EBITDA understatements may not have
47
been discovered (with the result that EBITDA damages may be difficult or
impossible to calculate), the parties agree that EBITDA for the year in which
discovery or disclosure occurred or, if later, the year in which the amount
involved was finally determined (but not later than 2025), shall be increased by
two times the amount of the understatement(s). For the purposes of this Section
12.7(c)(iii) knowledge means "actual knowledge" of the failure to act in a
manner consistent with the standard set forth in Section 12.7, whether or not
the Person knew of that standard or its being applicable.
(iv) If there is an EBITDA understatement for 1997, then the
Per Unit Mandatory Adjustment Amount (and, if applicable, the Per Unit Tender
Offer Price) shall be adjusted using the correct EBITDA.
(v) If during the Procedure Period for any year there has been
discovered or disclosed one or more understatements of EBITDA for such year (and
if the understatement is discovered by Fund or Flags (or their agents or
representatives) notice thereof is given by Flags to SFOG II prior to the end of
such Procedure Period) (it being recognized that Procedure Periods overlap so,
in any given Procedure Period, understatements for more than one year may be
discovered or disclosed), with respect to Unitholders all of whose Units or
fractions thereof have not then been purchased pursuant to the Tender Offer or a
Liquidity Put, in addition to the adjustments provided for in Sections
12.7(c)(iii) and (iv) (but without duplication of any adjustments provided for
in Section 12.7(c)(iii)), if any, SFOG Acquisition A and/or SFOG Acquisition B,
as applicable, will (subject to the alternative set forth in the following
sentence) provide to all such Unitholders the opportunity to put such Units,
without proration, in the Liquidity Put next following the final determination
of such understatement, at a Put Price equal to the highest value for "A" minus
"B", where "A" is the Put Price at which the Units could have been put, in the
years in which the Formula Amount is affected by the EBITDA understatements, had
EBITDA not been understated, plus interest thereon at Prime (compounded
semi-annually) from the applicable Liquidity Put Settlement Date(s), and "B" is
the distributions received by the Unitholder from Fund in respect of such Units
after each such Liquidity Put Settlement Date in question, plus interest on each
such distribution at Prime (compounded semi-annually) from each such date of
distribution. Alternatively, SFOG Acquisition B may, by notice to Fund by the
then next March 15, elect to add to the EBITDA for the then immediately
preceding year, for the purpose of calculating the Formula Amount for the
Liquidity Put to be made available in the year in which such notice is given and
subsequent years, to the extent applicable for purposes of calculating the
Formula Amount in those years, an amount equal to the EBITDA understatements for
each such year, plus interest at Prime from the end of each such year, but
without duplication of adjustments then made pursuant to Section 12.7(c)(iii).
The special Liquidity Put that may be made available pursuant to the first two
sentences this Section 12.7(c)(v) ("Special Liquidity Put") shall be in addition
to the Liquidity Put otherwise to then be made available (the "Regular Liquidity
Put"), provided that (x) such Regular Liquidity Put need not be made available
--------
if the Put Price in the Special Liquidity Put is higher than the Put Price in
the Regular Liquidity Put or (y) if there is then no proration for Regular
Liquidity Puts or SFOG Acquisition A and/or SFOG Acquisition B, as applicable,
elects to purchase all Units put in the Regular Liquidity Put, in which event
only the Liquidity Put (whether Special or Regular) that yields the highest Put
Price shall be made so available.
48
(vi) To the extent cash flow of Flags II is reduced, but
should not have been reduced pursuant to Sections 12.7(a)(i) or (ii) or 12.7(b),
the SFEC Entities shall, jointly and severally and within 30 days after final
determination of the amount(s) in question, pay to Flags II the amount by which
its cash flow was so reduced plus interest (A) at the Default Rate, to the
extent, if at all, interest with respect to the corresponding EBITDA
understatement is payable at the Default Rate, or (B) otherwise at Prime.
(d) Designated Affiliate Transactions. If SFOG II determines that
---------------------------------
it would be advisable for Flags II to enter into a transaction with an SFEC
Affiliate (other than a Controlled SFEC Affiliate) under Section 12.7(a)(ii),
then SFOG II may give Flags at least ten Business Days prior written notice of
its intention to enter into such transaction (a "Designated Affiliate
Transaction"), which notice shall reasonably describe the details of the
Designated Affiliate Transaction. If within ten Business Days after receipt of
such notice, Flags fails to notify SFOG II in writing that it has approved the
Designated Affiliate Transaction, then, at the request of SFOG II, the parties
will negotiate to determine the terms for such Designated Affiliate Transaction
that would comply with Section 12.7(a)(ii) and, if they are unable to reach
agreement within a 20-day period, an independent expert knowledgeable in the
relevant business (an "Expert"), designated jointly by SFOG II and Flags, shall
determine whether such Designated Affiliate Transaction complies with Section
12.7(a)(ii). If SFOG II and Flags are unable to agree upon an Expert, then such
Expert shall be selected by two other experts, one selected by SFOG II and one
selected by Flags. All such selections of the Expert shall be effected as
promptly as reasonably practicable and all fees and expenses of Expert shall be
borne by SFOG II and shall not be charged to Flags II. In making his or her
determination, the Expert will be provided solely with the written information
presented by SFOG II to Flags and, after a reasonable time after Flags receives
such information, any statement by Flags of its opposition and any information
it desires to present. If Flags II enters into a Designated Affiliate
Transaction after an Expert determination has been made that the Designated
Affiliate Transaction does not comply with Section 12.7(a)(ii), without the
terms of the transaction being changed to terms the Expert determines comply
with Section 12.7(a)(ii), the determination that the Designated Affiliate
Transaction does not meet 12.7(a)(ii) and, if applicable, the amount determined
by the Expert shall be conclusive against SFOG II, SFOG Acquisition A and SFOG
Acquisition B, EBITDA shall be adjusted as provided in Section 12.7(c) and cash
flow shall not be reduced as provided in Sections 12.7(a)(ii) and 12.7(c)(vi).
If the Expert determines that the Designated Affiliate Transaction complies with
Section 12.7(a)(ii) or that it does not comply, specifying the amount by which
it does not so comply, and the transaction is completed on the terms that the
Expert determines comply with Section 12.7(a)(ii), Flags may, in the next
arbitration after the Designated Affiliate Transaction (but not more than two
years after the Designated Affiliate Transaction), challenge whether, based on
all relevant facts with respect to the circumstances existing at the time of the
transaction, there was such compliance with Section 12.7(a)(ii) and, if Flags
prevails, there shall be an adjustment to EBITDA as provided in Section 12.7(c)
and to cash flow as provided in Section 12.7(c)(vi). Flags shall have no
obligation to, and shall have no liability with respect to any failure(s) by it
to, approve any proposed Designated Affiliate Transaction.
(e) Employee Notification. SFEC shall notify relevant SFEC and
----------------------
SFOG II Employee personnel of the existence of this Section 12.7 and shall
instruct such personnel to act in a manner
49
consistent with this Section 12.7 with respect to those transactions subject to
the terms of this Section 12.7 for which such personnel has decision making
responsibility.
(f) Alternative Dispute Resolution.
------------------------------
(i) If any dispute regarding the calculation of EBITDA or
cash flow as a result of any transaction that failed or allegedly failed to
comply with Section 12.7(a) (including whether an understatement of EBITDA was
knowing and intentional), including any dispute arising or continuing after the
procedure set forth in Section 12.7(d) has been complied with, such dispute
shall be referred to the Los Angeles, California office of the American
Arbitration Association ("AAA") for confidential, binding arbitration
administered by the AAA pursuant to its Commercial Rules and Supplementary
Procedures for Large, Complex Disputes then in effect. If the parties mutually
agree in writing, the AAA Arbitration Rules and Procedures may be modified or
supplemented. The arbitrator shall be a single neutral who shall, if such a
Person is available, be a retired or former judge selected from the AAA
Commercial Large Complex Case Panel of Neutrals or, if the AAA no longer
maintains such a Panel, from the Panel that succeeds to such Panel. The
arbitrator shall be entitled, in his or her discretion, to retain an independent
accountant or accounting firm (provided such accountant or firm could serve as
--------
Accounting Arbitrator) and one or more experts qualified to act as, but who did
not act as, an Expert under Section 12.7(d). In the arbitration, the parties
shall be entitled to discovery as if the matter were pending in the California
Superior Court or the Federal District Court for the Central District of
California, as determined by the arbitrator.
(ii) With respect to the dollar amount of any alleged EBITDA
understatement only (but not any other issues, including, without limitation,
whether any understatement of EBITDA was knowing or intentional), Flags and SFOG
II shall, on the date specified by the arbitrator, present to the arbitrator
sealed contentions of the amount which should have been charged to EBITDA in
respect of the transaction(s) in question, which the arbitrator shall open. If
the higher amount is within 5% of the lower amount, the two amounts shall be
averaged and become the decision of the arbitrator on the issue in question.
Otherwise, to decide that issue, the arbitrator shall pick one of the amounts
proposed by SFOG II or Flags, but not any other amount.
(iii) The costs of the arbitration, the arbitrator and any
accounting firm, accountant or expert retained by the arbitrator, shall be borne
by SFOG II and Flags (but not by Flags II) in such proportions as the arbitrator
determines. The costs of the arbitration and of the parties to this Agreement in
connection with the arbitration will not reduce EBITDA or the cash flow of Flags
II.
(iv) The decision of the arbitrator, who shall decide the
enforceability of this Section 12.7(f), shall be final and unappealable and
judgment thereon may be entered in any court of competent jurisdiction.
50
12.8 Information Obligations.
-----------------------
(a) Financial Statements, Tax Information and Related Deliveries.
-------------------------------------------------------------
SFEC and SFOG II shall deliver or cause to be delivered to Flags the financial
statements, reports, tax information and related documents set forth below in
this Section 12.8.
(i) Annual Financial Statements, Tax Information and Related
--------------------------------------------------------
Deliveries.
----------
(A) Audited Financial Statements. As soon as
-------------------------------- practicable and
in any event not later than 90 days after the end
of each year of Flags II (for 1997, not later
than 90 days after the end of the period from the
formation of Flags II through December 31, 1997
(for convenience, referred to below in this
Section 12.8 as the "Short Year")), the audited
balance sheet of Flags II and notes thereto
required by GAAP as of the end of such year (or,
if applicable, the Short Year) and the related
audited statements of operations, partners'
capital and cash flows of Flags II and the notes
thereto for such year (or, if applicable, the
Short Year, provided that, if permissible under
--------
GAAP, such related financial statements shall be
combined statements of Flags for the period
January 1, 1997 to the Effective Date and of
Flags II for the period beginning on the
Effective Date through December 31, 1997),
prepared on an accrual basis in accordance with
GAAP, which financial statements shall present
fairly, in all material respects, Flag II's
financial position and the results of its
operations and cash flows as of the date thereof
and for the period covered thereby.
(B) EBITDA Calculation. Concurrently with the
--------------------
delivery of the financial statements delivered
pursuant to Section 12.8(a)(i)(A), a statement
showing the calculation of EBITDA in accordance
with the definition of EBITDA contained in this
Agreement and the notification of initial
judgments provided for in Section 12.18(c).
(C) Auditor's Report. The financial statements and
-----------------
calculation delivered pursuant to Section
12.8(a)(i)(A) and (B) shall be accompanied by a
report thereon of an independent certified public
accountant of recognized national standing (x)
confirming that the financial statements
delivered pursuant to Section 12.8(a)(i)(A) have
been prepared as described in that Section, (y)
to the extent not precluded under the rules of
the American Institute of Certified Public
Accountants or equivalent guidelines (in the
reasonable judgment of such independent certified
public accountant), confirming that the EBITDA
statement delivered pursuant to Section
12.8(a)(i)(B) and the notification of initial
judgments have been prepared as described in that
Section and (z) to the extent not precluded under
the rules of the American Institute of Certified
Public Accountants or equivalent guidelines (in
the reasonable judgment of such independent
certified
51
public accountant), an agreed-upon procedures
report in substantially the form of Exhibit
12.8(a)(i)(c). The fees and expenses of the
independent certified public accountant will be
paid by Flags II and will be an expense in
determining EBITDA.
(D) Certificate of Chief Financial Officer. The
------------------------------------------
financial statements and calculation delivered
pursuant to Sections 12.8(a)(i)(A) and (B) shall
be accompanied by a certificate of the chief
financial officer of SFOG II (w) confirming that
the financial statements delivered pursuant to
Section 12.8(a)(i)(A) have been prepared as
described in such Section, (x) confirming that
the EBITDA statement delivered pursuant to
Section 12.8(a)(i)(B) has been prepared as
described in that Section, and (y) to the effect
that he or she has reviewed the terms of this
Agreement, the Flags II Limited Partnership
Agreement and the Lease and made a review in
reasonable detail of the transactions and
condition of Flags II during the year covered by
such financial statements and that the review has
not disclosed, nor is such Person otherwise aware
of, the existence of any Default under or
noncompliance with this Agreement, the Flags II
Limited Partnership Agreement or the Lease during
or at the end of such year or, if there has been
or is such a Default or noncompliance, specifying
the nature, amount and period of existence
thereof and the action SFOG II has taken, is
taking or proposes to take with respect thereto.
(E) Tax Information. As soon as practicable but in no
---------------
event later than March 15 of each year,
commencing March 15, 1998, all information
concerning Flags II necessary for the preparation
by Flags and Fund of their returns for Tax
purposes for the prior year.
(F) EBITDA Understatement. If any SFEC Entity or SFEC
---------------------
Affiliate (or their agents or representatives)
discovers an understatement of EBITDA for any
year during the Procedure Period for such year,
the SFEC Entities shall, within ten Business Days
and in any event prior to the end of such
Procedure Period, provide to Flags notice and a
description of the nature of such understatement.
Any such notice given or required to be given
shall substitute for the notices to be given by
Flags under Section 12.7(c).
(ii) Quarterly Financial Statements and Related Deliveries.
------------------------------------------------------
As soon as practicable and in any event not later than 45 days after the end of
the first three quarters of Flags II in each year (within 45 days of the end of
the period from the date of formation of Flags II through March 31, 1998 (the
"Short Quarter")), the unaudited balance sheet of Flags II as of the end of such
quarter (or, if applicable, the Short Quarter) and the related unaudited
statements of operations, partners' capital, and cash flows of Flags II for such
quarter (or, if applicable,
52
the Short Quarter, combined with such related unaudited financial statements of
Flags for the period January 1, 1997 to the beginning of the Short Quarter) and
for the year to date (or, if applicable, the Short Year, combined with such
related unaudited financial statements of Flags for the period January 1, 1997
to the beginning of the Short Year), prepared on an accrual basis in accordance
with GAAP, which financial statements shall present fairly, in all material
respects, Flags II's financial position and the results of its operations and
cash flows as of the date thereof and for the periods covered thereby (subject,
in each case, to normal year-end adjustments).
(iii) Monthly Statements. As soon as practicable and in any
-------------------
event not later than 30 days after the end of each month (or, if applicable, the
partial month period from the date of formation of Flags II, if not the first
day of a month, to the end of the month of such formation), the unaudited
balance sheet of Flags II as of the end of such month and unaudited statements
of operations and cash flows of Flags II for such month and year-to-date,
substantially in the form attached as Exhibit 12.8(a)(iii) to this Agreement.
(iv) Certain Working Papers. As soon as practicable after
------------------------
written request therefor by Flags and in any event not later than 15 days after
the latter of delivery of the financial statements delivered pursuant to Section
12.8(a)(i)(A) and the making of such request, SFEC, SFOG II and SFOG II Employee
shall make available to Flags, in Los Angeles, California, complete copies of
(A) all working papers of the independent accountants for SFOG II, Flags II,
SFOG II Employee and any Controlled SFEC Affiliates (subject to the internal
policies of such independent certified public accountants, it being agreed that
SFEC, SFOG II and SFOG II Employee shall use and cause the other SFEC Entities
and the Controlled SFEC Affiliates to use their reasonable best efforts to cause
such accountants to, including directing such accountants to, make such working
papers available) created in connection with the preparation of the financial
statements delivered pursuant to Section 12.8(a)(i)(A) or Section 12.8(a)(ii),
as applicable, (B) the general ledger of Flags II and (C) the working papers of
Flags II summarizing the calculations made in determining EBITDA.
(b) Manager Meetings. At the request of Flags, the president
-----------------
and/or general manager and chief financial officer of the Amusement Park or
Flags II and, upon the request of Flags to the president, general manager or, in
the absence of either of them, the senior-most executive at the Amusement Park,
such other Flags II, Amusement Park and SFOG II Employee management and
employees as Flags II may request will, at a mutually convenient time, meet with
Flags or its representatives at the Amusement Park to discuss matters relating
to the Amusement Park and Flags II specified by Flags or its representatives.
SFEC, SFOG II and SFOG II Employee will, and will cause Flags II to, use their
respective best efforts to cause Amusement Park management and employees to
comply with the foregoing.
(c) Other Reports. SFEC, SFOG II and SFOG II Employee shall
--------------
deliver or cause to be delivered to Flags as soon as practicable after
preparation thereof and upon the written request therefor by Flags, the final
versions (provided that any version that is provided to the board of directors
--------
(or similar body) of SFEC, SFTP or SFOG II or to any lenders to Flags II or any
SFEC Entity will be deemed final versions for this purpose) of the following:
any current year financial projections or similar studies (provided that, except
--------
as provided in Section 12.8(e), projections or similar studies for the then
current year shall be delivered only after the Liquidity Put Settlement Date for
that year), material visitor surveys, strategic plans, capital expenditure
forecasts, material industry reports and material safety reports, in each case
prepared in whole or in part by or for
53
SFOG II, Flags II, SFOG II Employee or any SFEC Entity or SFEC Affiliate, but
only to the extent such information relates to Flags II or the Amusement Park
and only if it is practicable to excerpt such information from any such report.
SFEC and SFOG II will provide to Flags, with the quarterly financial statements
provided for in Section 12.8(a)(ii), a list of all documents of the type
described in this Section 12.8(c) that have been provided to the board of
directors (or similar body) of SFEC, SFTP or SFOG II or to any lenders to Flags
II or any SFEC Entity during the quarter or that have not been previously listed
and which SFEC or SFOG II believes are materially related to the Amusement Park,
plus any other category of reports that is specified by Flags (in each case of
which Flags can request a copy pursuant to this Section 12.8(c)), together with
a brief description of each of them.
(d) Information Regarding Affiliate Transactions. Without limiting
--------------------------------------------
the other information rights of Flags set forth herein, the SFEC Entities shall
make available to Flags or its representative(s), in Los Angeles, California, or
Atlanta, Georgia, at the election of Flags, within 20 Business Days after a
request by Flags therefor to SFOG II, information and complete copies of
supporting documents, including all accountants' working papers (subject to the
internal policies of such independent certified public accountant, it being
agreed that SFEC Entities shall use their reasonable best efforts to cause such
accountants to, including in each case directing such accountants to, make such
working papers available), as to all transactions, charges, payments and
accruals involving any SFEC Entity or SFEC Affiliate, on the one hand, and Flags
II or SFOG II Employee, on the other, or that are necessary or appropriate to
verify compliance with Section 12.7.
(e) Information Rights at End-of-Term. If the End-of-Term Option
----------------------------------
is not exercised, Flags and Fund shall be entitled to receive, not later than 30
days (time being of the essence) after the demand therefor, all information and
reports described in Section 12.8 and all financial projections and similar
studies for all then prospective years and, without limitation, to make such
information available to others to which the Amusement Park may be sold or with
which a transaction of the type referred to in Section 8.5(d) may be effected.
(f) Information Rights in General. Notwithstanding anything to the
-----------------------------
contrary or any words of limitation contained in this Section 12.8, Flags shall
have all rights to information related to Flags II and SFOG II Employee (as if
it were part of Flags II and not a separate entity) that are afforded to general
partners of limited partnerships under the Georgia Uniform Limited Partnership
Act (as if, for this purpose, Flags II were formed under the Georgia Uniform
Limited Partnership Act (as opposed to the Georgia Revised Uniform Limited
Partnership Act or the Delaware Revised Uniform Limited Partnership Act)).
(g) Confidentiality. Flags may provide any information relating to
---------------
the business of Flags II received by it to Fund. Except with respect to
information that Flags and Fund have the right to disseminate under Section
12.8(e), Fund and Flags shall, and shall use their reasonable best efforts to
cause their affiliates (including the limited partners of Fund) and its and
their respective agents or representatives to, keep secret and hold in
confidence any and all confidential information received pursuant to Section
12.7(d), this Section 12.8 and Section 12.18 relating to the business of Flags
II or SFOG II Employee and reasonably identified as confidential by Flags II,
other than: (i) information that has become generally available to the public
other than as a
54
result of a disclosure in violation of this Agreement; (ii) information that
becomes available to them on a non-confidential basis from a third party that,
insofar as they have actual knowledge, has no obligation of confidentiality to a
party to this Agreement with respect to such information and has not itself
received such information directly or indirectly in breach of any such
obligation of confidentiality; (iii) information that is required to be
disclosed by applicable law or judicial order (provided in the case of clause
--------
(iii) that the party making such disclosure or whose affiliates, agents or
representatives are making such disclosure shall notify Flags II as promptly as
practicable (and, if possible, prior to making such disclosure) and shall, at
the expense of Flags II, use its reasonable best efforts to limit the scope of
such disclosure and seek confidential treatment of the information to be
disclosed); and (iv) financial statements, tax information and EBITDA
calculations referred to in Sections 12.8(a)(i), (ii) and (iii). Nothing in this
Section 12.8(g) shall require Fund or Flags to fail to comply with any
obligations imposed by law to disclose documents or information to its partners.
The parties agree that no disclosure of (i) information by Fund to its partners,
SFG, Inc., the directors of SFG, Inc., in connection with the Consent
Solicitation Statement, dated December 10, 1996, or in connection with the
solicitation of the Fund Limited Partners' Approval or of alternative
transactions to the transactions contemplated by this Agreement and the Related
Agreements or (ii) information specified on Exhibit 12.8(g) and received from
Flags to third parties in connection with the solicitation of alternative
transactions to the transactions contemplated by this Agreement and the Related
Agreements violated this Section 12.8(g), the Flags Limited Partnership
Agreement or any other obligation of Fund to any SFEC Entity.
(h) Information Relating to Guarantors.
----------------------------------
(i) Each of the Guarantors whose Net Worth is being
considered in determining whether the Net Worth Standard is satisfied shall
deliver to Flags the unaudited quarterly financial statements and audited annual
financial statements of such Guarantor promptly following the date such
financial statements are filed with the Securities and Exchange Commission or
otherwise become generally available and, in any event, within 50 days after the
end of each such quarter and 105 days after the end of each such year.
(ii) Concurrently with the delivery of any financial
statements pursuant to Section 12.8(h)(i), if such financial statements reflect
that the Net Worth Standard would not be met without giving effect to the
provisos set forth in the definition of Net Worth, then each Guarantor shall
deliver to Flags a certificate (A) setting forth the calculation of such
Guarantor's Net Worth in accordance with the definition thereof, (B) reconciling
such calculation with the audited financial statements of such Guarantor and (C)
setting forth any "writedown" of, reserve against or sale at a loss of any
intangible asset or any group of related intangible assets (other than normal
depreciation or amortization) of $50 million or more, or with respect to an
intangible asset or group of related intangible assets that have been
depreciated or amortized by $100 million or more since January 1, 1997; provided
--------
that TWX may deliver one certificate on behalf of and covering all such
Guarantors; and provided, further, that with respect to any "writedowns" of or
-------- -------
reserves against intangible assets that are not required to be set forth in such
certificate, such certificate may contain a single entry reflecting the
Guarantor's best estimate of the aggregate of all such "writedowns" or reserves.
55
(iii) With the certificate referred to in Section
12.8(h)(ii), to the extent not prohibited by the rules of the American Institute
of Certified Public Accountants or equivalent guidelines (in the reasonable
judgment of such independent certified public accountants), each Guarantor shall
deliver a certificate of its independent accountants stating that they have
reviewed (A) the financial statements referred to in Section 12.8(h)(i) and (B)
the certificate referred to in Section 12.8(h)(ii) and that such certificate
presents fairly in all material respects the Guarantor's Net Worth as defined
herein giving effect to the last proviso of Section 12.8(h)(ii).
(i) Preparation of Financial Statements Generally. The financial
----------------------------------------------
statements of Flags II described in Sections 12.8(a)(i)(A), 12.8(a)(ii) and
12.8(a)(iii) shall be prepared by management of Flags II in accordance with GAAP
and neither such financial statements nor any financial statements of any SFEC
Entity or SFEC Affiliate shall be required, by the provisions of this Agreement
relating to the calculation of EBITDA, to be prepared in the manner in which
EBITDA is calculated.
12.9 No Liability of Fund Partners or, After SFG-I, LLC Becomes
-------------------------------------------------------------
the Manager of Flags, the Manager of Flags; Additional Limitation on Liability.
------------------------------------------------------------------------------
(a) Generally. Each of the SFEC Entities agrees that none of
---------
▇▇▇▇▇▇, any of its trustees or beneficiaries, SFG, Inc., any of its directors,
officers, employees or shareholders, SFG-I, LLC and SFG-II, LLC, any of their
managers, members, officers or employees or any of the limited partners of Fund
(except SFOG Acquisition A and SFOG Acquisition B) nor, upon and after SFG-I,
LLC becomes the manager of Flags, the members or manager of Flags, has or will
have any personal liability to any SFEC Entity or any SFEC Affiliate for the
obligations of Fund, Flags or Flags II, including, without limitation, under
this Agreement, the Flags II Limited Partnership Agreement or the Lease. All
liabilities of Fund and, with respect to transactions occurring after the
Effective Date, Flags, in each case under this Agreement and the Related
Agreements, shall be satisfied solely out of the assets of Fund or Flags, as the
case may be, as an entity separate and apart from its partners. With respect to
such liabilities, Fund will indemnify SFOG Acquisition A and SFOG Acquisition B
out of amounts otherwise payable to its partners other than SFOG Acquisition A
and SFOG Acquisition B (but only if the liability was owed to SFOG Acquisition A
and/or SFOG Acquisition B in their capacity as Special Limited Partners or
limited partners of Fund).
(b) First Exception. Notwithstanding Section 12.9(a), SFG, Inc.,
---------------
SFG-I, LLC and SFG-II LLC shall, after the Effective Date, each be liable to the
SFEC Entities for any losses, liabilities or expenses incurred by such SFEC
Entities arising out of the negligence or wrongful conduct of SFG, Inc., SFG-I,
LLC or SFG-II, LLC, as applicable, provided that none of SFG, Inc., SFG-I, LLC
--------
and SFG-II, LLC shall have any greater liability to any SFEC Entity in its
capacity as a limited partner of Fund than it has to any other limited partner
of Fund; and provided, further, that no shareholder, officer or director of SFG,
-------- -------
Inc. or any member or manager of SFG-I, LLC or SFG-II, LLC as such will under
any circumstances have any responsibility for any obligation or liability of
SFG, Inc., SFG-I, LLC or SFG-II, LLC under this Agreement or any Related
Agreement, any such liability being limited to the assets of SFG, Inc., SFG-I,
LLC or SFG-II, LLC as separate entities, even if the assets in question are
nominal.
56
(c) Second Exception. Nothing in Section 12.9(a) or 12.9(b) shall
----------------
operate to insulate any Person from any obligation such Person may otherwise
have to return any money, together with any interest as provided by law, that,
under this Agreement or the Related Agreements, is wrongfully paid or
distributed to such Person. Any Person, including without limitation the SFEC
Entities, may pursue legal remedies to effectuate this Section 12.9(c).
12.10 Indemnification.
---------------
(a) Indemnification by the SFEC Entities. Each of the SFEC
---------------------------------------
Entities will jointly and severally indemnify and hold harmless (i) Fund and its
general and limited partners (except SFOG Acquisition A and SFOG Acquisition B)
and any directors, officers, employees and trustees of any of them, (ii) upon
SFG-I, LLC becoming the manager of Flags after the conversion of Flags to a
limited liability company, Flags and its members (other than SFOG) and managers,
(iii) SFG, Inc. and its directors, officers and shareholders, (iv) SFG-I, LLC
and its members and managers, (v) SFG-II, LLC and its members and managers and
(vi) ▇▇▇▇▇▇ and its trustees and beneficiaries against any claims, damages,
liabilities and expenses (including actual attorneys' fees, costs and charges)
that any of them may incur or become subject to as a result of any inaccuracies
in the representations and warranties of any of the SFEC Entities contained in
this Agreement, the Flags II Limited Partnership Agreement, the Lease or any
other Related Agreement or any failure by any of the SFEC Entities to comply
with any of its covenants or other obligations contained in this Agreement, the
Flags II Limited Partnership Agreement, the Lease or any other Related
Agreement.
(b) Indemnification by Fund and Flags. Fund and Flags will
------------------------------------
indemnify and hold harmless each of the SFEC Entities and, without duplication,
the SFEC Affiliates, and the general and limited partners, members, managers,
directors, officers and employees of each of them against any losses, claims,
damages, liabilities and expenses (including actual attorneys' fees, costs and
charges) that any of them may incur or become subject to as a result of any
inaccuracies in the representations and warranties of Fund, ▇▇▇▇▇▇, SFG, Inc.,
SFG-I, LLC or SFG-II, LLC contained in this Agreement, any failure by Fund or,
after SFG-I becomes the manager of Flags after the conversion of Flags to a
limited liability company, by Flags to comply with its respective covenants or
other obligations contained in this Agreement, the Flags II Limited Partnership
Agreement, the Lease or any other Related Agreement to which it is a party or
any misstatement of material fact or omission to state a material fact required
or necessary to be stated in the Consent Solicitation Statement of Fund, dated
December 10, 1996, or in the materials to be sent to Fund limited partners after
the date of this Agreement in connection with the Fund Limited Partners'
Approval (in each case other than any such material misstatements or omissions
based on materials provided to Fund or its representatives or agents in writing
by any SFEC Entity or SFEC Affiliate or any representative or agent of any of
them), provided that nothing herein will obligate Flags to indemnify or hold
harmless any SFEC Entity with respect to the matters set forth in the
penultimate sentence of Section 4.1.
(c) Indemnification Procedures.
--------------------------
(i) With respect to claims against a Person entitled to
indemnification under any provision of this Agreement (for purposes of this
Section 12.10(c), each, an "Indemnified Party"),
57
the Indemnified Party will give prompt written notice to the party or parties to
this Agreement obligated to provide such indemnification (for purposes of this
Section 12.10(c), each, an "Indemnifying Party") of any claim for which such
Indemnified Party seeks indemnification hereunder, but the failure to so notify
the Indemnifying Party will not relieve the Indemnifying Party from any
indemnification obligation that it may have under any provision of this
Agreement or any Related Agreement, except to the extent that it is damaged or
prejudiced by such omission or delay, or from any other obligation it may have
under this Agreement or any Related Agreement. The Indemnifying Party shall
assume the defense of any claim, lawsuit or action (collectively an "action")
for which the Indemnified Party seeks such indemnification hereunder, subject to
the provisions stated herein, with counsel of national repute reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party that it has so assumed the defense thereof is received
by the Indemnified Party in question, and so long as the Indemnifying Party
performs its indemnification obligations, the Indemnifying Party will not be
liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense of the action.
The Indemnified Party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof at such Indemnified
Party's expense; provided, that the actual fees and expenses of such separate
--------
counsel shall be at the expense of the Indemnifying Party if (x) the named
parties to any such action (including any impleaded parties) include both the
Indemnified Party and any Indemnifying Party and (y) the Indemnified Party has
reasonably concluded, based on advice of its counsel, that there may be one or
more legal defenses available to the Indemnified Party which are different from,
or in conflict with, any legal defenses which may be available to the
Indemnifying Party (in which event the Indemnifying Party shall not have the
right to assume or, if applicable, continue the defense of such action on behalf
of the Indemnified Party), it being understood, however, that the Indemnifying
Party shall not be liable for the fees and expenses of more than one separate
firm of attorneys for all Indemnified Parties in each jurisdiction in which
counsel is necessary or appropriate (plus, as applicable, local counsel). In
addition to, and without limitation of, the Indemnifying Party's other
indemnification obligations, the Indemnifying Party will pay monthly, upon
receipt of itemized statements therefor, all actual fees, costs and charges of
counsel and any experts incurred by an Indemnified Party which the Indemnified
Party is entitled to have paid or reimbursed under this Section 12.10.
(ii) No Indemnified Party shall settle any matter for which
indemnification is being provided under Section 12.10 without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
12.11 Expenses. Whether or not the Closing occurs, and except as
--------
otherwise provided herein, each of the parties hereto shall bear and pay all
expenses incurred by it in connection with the negotiation, execution and
delivery of this Agreement and the Related Agreements and the transactions to
occur on the Effective Date, provided that no such expenses shall be charged to
Flags II or, if EBITDA would be affected thereby, Flags.
12.12 Six Flags Over Georgia Name. SFOG, as the successor by
-----------------------------
merger to the corporation formerly known as Great Southwest Atlanta Corp., and
Fund (to the extent its consent is required) each consents to the license by
Flags to Flags II of its rights, including the rights to use the name "Six Flags
Over Georgia", under the License Agreement, dated the 31st
58
day of December 1968, by and among Great Southwest Atlanta Corp. and Fund,
subject to the reservation by Flags of the right to use the words "Six Flags
Over Georgia" in its name.
12.13 SF Agreement. Paragraphs 1, 2, 3, 5, 7 and 8 of the SF
-------------
Agreement are hereby deleted. Except as specifically modified in this Agreement,
Paragraphs 4, 6 and 9 of the SF Agreement are not amended and remain in full
force and effect.
12.14 Section 754 Elections; Publicly Traded Partnership.
--------------------------------------------------
(a) Fund. Fund has in effect an election under Section 754 of the
----
Internal Revenue Code of 1986, as amended (a "Section 754 Election"). Fund will
not revoke or apply to revoke its Section 754 Election at any time during the
term of the Flags II Limited Partnership Agreement without the written consent
of SFOG Acquisition B. Fund agrees that the basis and depreciation adjustments
required pursuant to its Section 754 Election will be provided by Flags II.
(b) Flags. Flags has in effect a Section 754 Election. Flags will
-----
not revoke or apply to revoke its Section 754 Election at any time during the
term of the Flags II Limited Partnership Agreement without the written consent
of SFOG Acquisition B. Flags agrees that the basis and depreciation adjustments
required pursuant to its Section 754 Election will be provided by Flags II.
(c) Publicly Traded Partnership. The parties to this Agreement
-----------------------------
will use their reasonable best efforts to avoid any action that would cause
Fund, Flags or Flags II to be a "publicly traded partnership" within the meaning
of the Internal Revenue Code of 1986, as amended (or successor statute).
12.15 SFOG's Interest in Flags. If at any time there is any
---------------------------
requirement (the "SFOG Requirement") that there be returned to SFOG any of its
interest in Flags that is reduced or diminished as a result of the transactions
contemplated this Agreement and the Flags Limited Liability Company Operating
Agreement (or any money in respect of that reduction or diminution), other than
as a result of fraud or willful misconduct on the part of Fund or its general
partners, the SFEC Entities (other than SFOG) will, without any right of
subrogation or similar right against Flags, SFG-I, LLC, Fund or any partners of
Fund, fully discharge such requirement without the essentially 100% combined
interest of Fund and SFG-I, LLC in Flags being affected.
12.16 Certain Flags Distributions in 1997. From and after January
------------------------------------
1, 1997 and until Flags converts to a limited liability company and SFG-I, LLC
becomes the sole manager of Flags, no distributions will be made or declared by
Flags.
12.17 Initial Limited Partner's Fractional Unit. If SFOG
------------------------------------------------
Acquisition A or SFOG Acquisition B purchases, pursuant to the Tender Offer or
Liquidity Put, the 1/31.71th (one divided by thirty-one and seventy-one
hundredths) of a Unit issued to the initial limited partner of Fund (owned of
record as of the date of this Agreement by ▇▇▇ ▇▇▇▇▇▇▇), SFOG Acquisition A and
SFOG Acquisition B, as the case may be, shall sell to Fund such fractional Unit
and Fund shall purchase such fractional Unit, at a price equal to the price paid
therefor pursuant to the
59
Tender Offer or Liquidity Put, ten Business Days after Flags receives from Flags
II its next distribution of the Minimum Amount, after such purchase by SFOG
Acquisition A or SFOG Acquisition B, in an amount sufficient to pay the amount
to be paid under this Section 12.17. Upon such purchase by Fund, such fractional
Unit will no longer be deemed outstanding for purposes of calculating the Number
of Units.
12.18 EBITDA Arbitration Matters.
--------------------------
(a) Matters Subject to Arbitration.
------------------------------
(i) Except to the extent provided in Section 12.18(a)(iii),
to the extent GAAP or the definition of EBITDA permits different judgments to be
made in determining the amount of any item to be taken into account in the
determination of EBITDA, the judgment will be made in accordance with past
practice with respect to the Amusement Park prior to 1996 as reflected by a
"consistent pattern of material judgments" ("Past Accounting Practice") or, if
there is no relevant Past Accounting Practice, relevant Past Accounting Practice
is not determinable or GAAP as then in effect precludes the continued
utilization of Past Accounting Practice, then such judgment will be made and
finally determined for the purposes of calculating EBITDA as set forth below in
this Section 12.18. As used in the phrase "consistent pattern of material
judgments," the term "material" is intended to refer to judgments with respect
to items that either (i) were of such size that their treatment would ordinarily
be given significant consideration by financial management or independent
accountants or (ii) even if not of such size, were given significant
consideration by financial management or independent accountants.
Notwithstanding the foregoing, Past Accounting Practices with respect to
reserves, write-offs or other charges for inventory and receivables shall be the
practices applied to such items by Flags II for 1997.
(ii) Determinations as to (A) whether there is a Past
Accounting Practice with respect to a particular item, (B) if so, what that Past
Accounting Practice is, (C) whether GAAP precludes the continued utilization of
such Past Accounting Practice and (D) all judgments referred to in Section
12.18(a)(i) are referred to in this Section 12.18 as "Arbitrable Judgments." By
way of example, the types of judgments with respect to which this Section 12.18
shall apply include, without limitation, judgments with respect to recognition
of revenue or income or otherwise in respect of revenue or income, including the
amount of reserves (whether in respect of new reserves, adding to existing
reserves or reducing previously incurred reserves) and whether any expenditures
are for maintenance or are capital expenditures.
(iii) Without regard to Past Accounting Practice, (x)
expenditures that satisfy the requirement for minimum capital expenditures under
the Flags II Limited Partnership Agreement or that are financed with "Capital
Improvement Loans" (as defined in the Flags II Limited Partnership Agreement)
will be deemed capital expenditures; and (y) expenditures for the purchase and
installation of Batman the Ride or for the purchase of land will be deemed
capital expenditures.
(b) Initial Judgments. Flags II, at the reasonable direction of
------------------
SFOG II, will make the initial determinations with respect to the Arbitrable
Judgments and, for the purpose of calculating
60
EBITDA, such initial determinations shall be used, subject to the arbitration
and other procedures provided for in this Section 12.18.
(c) Notification. Concurrently with the delivery of the annual
------------
financial statements delivered pursuant to Section 12.8(a)(i)(A), SFOG II will
provide to Flags written notice (x) stating that in determining EBITDA all
judgments made as to whether an expenditure was for maintenance or a capital
expenditure (except as otherwise required by Section 12.18(a)(iii)) have been
made in accordance with Past Accounting Practice or, if they have not,
identifying with reasonable specificity which judgments have not so been made
and the amount involved in each such judgment, (y) identifying non-cash
writedowns and charges and (z) identifying new reserves and additions to and
subtractions from existing reserves.
(d) Initial Flags Investigation. Within 15 days after the
-----------------------------
notification referred to in Section 12.18(c) is given or, if earlier, required
to be given, Flags II and SFOG II will provide copies to Flags in Los Angeles,
California, of all documents required to be provided pursuant to Section
12.8(a)(iv). Flags II and SFOG II will also give Flags full and prompt access to
any other documents requested by it reflecting or relating to the Arbitrable
Judgments. The inspection and information access rights provided for in this
Section 12.18 are in addition to any other inspection or access rights provided
for in this Agreement or the Related Agreements or by applicable law. Flags II,
SFOG II, SFOG II Employee and/or their respective representatives will, upon
request by Flags and at a mutually convenient time during or after this initial
inspection period, meet with Flags or its representative to explain and answer
questions about the Arbitrable Judgments.
(e) Initial Dispute Notification and Resolution Discussions. If
---------------------------------------------------------
Flags disputes any one or more Arbitrable Judgments (including as to whether
such Arbitrable Judgment was made in accordance with Past Accounting Practice),
it will give written notice of such dispute to SFOG II by June 30 of each year
(provided that the failure to give this notice timely shall not give rise to any
--------
remedy). Flags and SFOG II, or their representatives, will meet, in Los Angeles,
California, and at a mutually convenient time within 15 Business Days thereafter
and attempt to resolve the Arbitrable Judgments that are disputed by Flags. If
Flags does not give notice that it challenges any Arbitrable Judgment made with
respect to a year and reflected in the financial statements for such year
provided pursuant to Section 12.8(a)(i)(A), in the next year or the following
year then -- unless (i) Flags has not been provided with the documents required
to be provided pursuant to Section 12.18(d) within ten Business Days following
written notice by Flags to SFOG II, Flags II and SFEC or SFTP from Flags that
such documents have not been received by it within the time period provided in
Section 12.18(d), (ii) Flags has neither been provided with originals or copies
of other documents requested by it reflecting or relating to the Arbitrable
Judgment nor been given full and prompt access to such other documents, (iii)
the Arbitrable Judgment was required by clauses (y) or (z) of Section 12.18(c)
to be but was not reflected in the notice given pursuant to Section 12.18(c),
(iv) the Arbitrable Judgment was concealed, (v) Flags has not been timely
provided with the financial statements, other information and notice required by
Section 12.8(a)(i)(A)-(F), or (vi) the financial statements referred to in
Section 12.18(a)(i)(A) do not fairly present the information set forth therein
in accordance with GAAP, in the case of each of clauses (i) through (vi) to the
extent such documents or financial statements are relevant to the determination
-- Flags will lose its right to thereafter challenge the Arbitrable Judgment.
61
The time period in which a challenge must be made with respect to the EBITDA
calculation for any year is called the "Procedure Period" for such year.
(f) Selection of Independent Accountant for Arbitration. If any
-----------------------------------------------------
Arbitrable Judgment items have not been resolved pursuant to Section 12.18(e)
within the time frame referred to therein (as it may be extended by mutual
agreement of Flags and SFOG II), at the request of either Flags or SFOG II the
matter will be finally resolved by (i) a Big Six independent accounting firm,
that does not perform services for Flags, Fund, Flags II, any SFEC Entity or any
SFEC Affiliate, mutually selected by Flags and SFOG II or (ii) if there is no
such Big Six independent accounting firm or no such selection is made within ten
Business Days of a request by Flags or SFOG II, by such a Big Six independent
accounting firm, if any, or, if none, an independent certified public accounting
firm of national repute that does not perform services for Flags, Fund, Flags
II, any SFEC Entity or any SFEC Affiliate that is selected jointly by the then
principal independent accountants for Flags and SFOG II. The independent
accounting firm so selected is referred to below as the "Accounting Arbitrator."
(g) Arbitration. As to each Arbitrable Judgment that has not been
-----------
resolved pursuant to Section 12.18(e) and in recognition of the fact that
different determinations and judgments are appropriate under GAAP and that SFOG
II and its affiliates, on the one hand, and Fund (which will at the time be the
99% owner of Flags) and Fund's limited partners (other than SFOG Acquisition A
and SFOG Acquisition B), on the other, may have different interests because of
the impact of such determinations and judgments on EBITDA (and, therefore, on
the Per Unit Tender Offer Price and the Put Price), (x) the Accounting
Arbitrator will decide whether the initial determination referred to in Section
12.18(b) with respect to such Arbitrable Judgment was made consistent with Past
Accounting Practice and, if not, will make the current determination using Past
Accounting Practice or (y) if there is no Past Accounting Practice, if Past
Accounting Practice is not determinable or if GAAP as then in effect precludes
the continued utilization of Past Accounting Practice, the Accounting Arbitrator
will make the determination or judgment (including, if applicable, the amount to
be used) using solely its own judgment (based on the relevant facts and
circumstances known or that should have been known existing on the date of the
report of the independent auditors on the audited financial statements for the
year in which such Arbitrable Judgment was made), in each such case even if such
initial determination was permissible under GAAP, provided that the Accounting
--------
Arbitrator is to make a determination that is permissible under GAAP. Flags and
SFOG II shall be entitled to provide whatever written documentation they desire
to the Accounting Arbitrator (but, as to documentation used in making such
initial determination or existing at the end of the year in which the judgment
was made, only if such documentation was provided or made available by SFOG II
or SFOG II Employee to Flags not later than 15 Business Days prior to
commencement of the arbitration and by Flags to SFOG II not later than 15
Business Days prior to commencement of the arbitration). Fund, Flags, Flags II,
SFOG II and SFOG II Employee will provide to the Accounting Arbitrator any other
information the Accounting Arbitrator may reasonably request; and, if requested
by the Accounting Arbitrator, Fund, Flags, Flags II, SFOG II, SFOG II Employee
and their representatives will make oral presentations and/or make their
employees and the employees of Flags II and SFOG II Employee available to be
interviewed by the Accounting Arbitrator, in such manner as it may determine.
The decision of the Accounting Arbitrator, including as to the meaning and
enforceability of this Section 12.18, will be communicated by the Accounting
62
Arbitrator to Flags and SFOG II in writing and will be final and unappealable,
and judgment thereon may be entered by any court of competent jurisdiction.
Provisions for the adjustment of EBITDA based on the decision of the Accounting
Arbitrator are contained in Section 12.7(c).
(h) Fees and Expenses. Flags and Flags II will each pay its own
------------------
costs in connection with the notification, investigation and initial dispute
notification and resolution procedures set forth in this Section 12.18 and any
costs and expenses of Flags II will be deemed expenses for the purposes of
determining EBITDA. After such time as any party initiates an arbitration
procedure under Section 12.18(g), each party will pay its own costs in
connection with such arbitration procedure, including without limitation, the
fees and expenses of the Accounting Arbitrator, provided that any costs that
would be expenses of Flags II shall be borne entirely by SFOG II and will not be
expenses for the purpose of determining, and will not reduce, EBITDA or cash
flow of Flags II in any period.
(i) Management Fee Adjustment. To the extent that Flags II engages
-------------------------
in a very high volume/low margin or very high margin/low volume activity
(compared to an amusement park), which is not typical for amusement park
operations at the Amusement Park at the date of this Agreement (such as, by way
of illustration of a high volume/low margin activity, but not of limitation,
gaming or supermarket operations), then either SFOG II or Flags may demand that
the deduction from net income or loss set forth in clause (v) of paragraph (B)
of the definition of "EBITDA" in respect of the Management Fee (the "Management
Fee EBITDA Deduction") be adjusted so that the Management Fee EBITDA Deduction
will not unfairly overstate or unfairly understate the Management Fees to be
used in calculating EBITDA. If SFOG II and Flags cannot agree on such
adjustment, then the adjustment shall be determined by the Accounting Arbitrator
using its own judgment in accordance with Section 12.18(g). This Section
12.18(i) deals only with the Management Fee EBITDA Deduction as it relates to
the calculation of EBITDA and shall not affect the actual Management Fee or
Priority Management Fee Distributions to which SFOG II is entitled under the
Flags II Limited Partnership Agreement.
(j) Affiliate Transactions. Whether there has been compliance with
----------------------
the requirements of Section 12.7(a) is not an Arbitrable Judgment.
12.19 EBITDA Adjustment for Personal Injury Claims.
--------------------------------------------
(a) Generally. In calculating EBITDA for each year there will be
---------
deducted in that year an amount (the "Deemed Insurance Amount") equal to the
average of the amounts paid by Flags (for periods prior to the Effective Date)
and by Flags II and, with respect to park personnel, including Park Employees,
SFOG II Employee (for periods on and after the Effective Date) in the then prior
three years to third parties for the investigation, defense and settlement of
personal injury claims and workers' compensation claims (in each case other than
Uninsured Major Injury Claims) and payment of damages and other amounts for
personal injury claims and workers' compensation claims (in each case other than
Uninsured Major Injury Claims). In determining such average, (i) if any of the
three years is (x) 1996 or previous years, the amounts so paid in such year are
those paid by Flags, (y) 1997, the amounts so paid in such year are those paid
by Flags for the period January 1, 1997 to the Effective Date and by Flags II
and, with respect to park personnel, including Park Employees, SFOG II Employee
for the period from and including
63
the Effective Date through December 31, 1997, and (z) 1998 or any subsequent
year, the amounts so paid in such year are (without duplication) those paid by
Flags II and, with respect to park personnel, including Park Employees, SFOG II
Employee and (ii) amounts paid for self insurance shall not be averaged or
otherwise considered, but amounts paid by any self-insurance "pool" to
unaffiliated third parties on behalf of Flags, Flags II or SFOG II Employee, as
the case may be, shall be included in such average. As used in this Agreement,
the term "park personnel" means individuals who work at or for the Amusement
Park, to the extent they work at or for the Amusement Park.
(b) Uninsured Major Injury Claims. With respect to Uninsured Major
-----------------------------
Injury Claims occurring on or after January 1, 1997, EBITDA shall be adjusted by
a reserve, which reserve (and additions to and reductions from such reserve)
shall be determined, in the first instance, by Flags II, subject to adjustment
as provided in Section 12.18.
(c) Definition. "Uninsured Major Injury Claims" means the
----------
uninsured (except by self insurance) portion of claims (including the portion
for which third-party insurance is provided, but for which an SFEC Entity
indemnifies such insurer against loss) or, based on actual occurrences,
anticipated claims for personal injuries (including workers' compensation
claims) that are major, unusual and/or extraordinary. Examples of such major,
unusual and/or extraordinary matters are death, injury resulting in significant
paralysis or similar massive physical injury (such as the injury in 1994 to an
employee that resulted in a reserve and/or payment, by an SFEC Entity under an
indemnified workers' compensation claim, of approximately $1 million) or
injuries to numerous people resulting from a significant ride accident or a
fire.
12.20 Other SFEC Entities That May Own Units. At the written
-----------------------------------------
request of SFEC, other Persons affiliated with SFEC will, subject to the prior
written consent of Fund, which consent will not be unreasonably withheld, be
permitted to acquire Units that SFOG Acquisition B owns or could acquire under
this Agreement and the Related Agreements, in which case appropriate amendments
shall be made to this Agreement and the Related Agreements.
12.21 Negative Pledge Covenants. The SFEC Entities will not take,
-------------------------
and will use their best efforts to cause the SFEC Affiliates not to take, any
action the result of which would be to (a) cause the term of the Bank Credit
Agreement Negative Pledge Covenant to continue after the expiration of the term
or earlier termination of the Indenture Negative Pledge Covenant, (b) to cause
the term of the Indenture to be extended beyond the termination date of the
Indenture as in effect on the date the Indenture was initially entered into
without the Indenture Negative Pledge Covenant being released with respect to
Units held from time to time by SFOG Acquisition A or (c) permit to exist any
other agreement covenant that would preclude the granting, attachment,
perfection or first priority of the security interests in such Units provided
for in the SFOG Acquisition A and SFOG Acquisition B Guarantee and Pledge
Agreement (other than such a covenant contained in SFTP's senior credit facility
from time to time, provided that such covenant is not more restrictive than the
--------
Bank Negative Pledge Covenant and does not extend beyond the term of the
Indenture).
12.22 List of Fund Limited Partners. Fund shall, within five
-------------------------------
Business Days after the Effective Date, provide to SFEC a list of the names,
addresses and Unitholdings of the limited
64
partners of Fund, which list shall not, without the prior written consent of
Fund, be used by any SFEC Entity for any purpose other than to make the Tender
Offer and the Liquidity Puts.
ARTICLE XIII
EMPLOYEE AND RELATED MATTERS
13.1 Continuation of Employment.
--------------------------
(a) Offers of Employment. The SFEC Entities shall cause SFOG II
---------------------
Employee to, and SFOG II Employee shall, offer employment to all individuals
located in Georgia who are employed at the Amusement Park as permanent,
full-time employees at the date Flags II is formed, on substantially the same
terms and conditions to which such employees were subject immediately prior to
that date, subject to the provisions of this Article XIII. All such employees
who accept such offer or who are later employed by SFOG II Employee and whose
work for SFOG II Employee is, except as permitted by the last sentence of
Section 12.7(a)(i), solely work at or for the Amusement Park are referred to in
the Agreement as "Park Employees." SFOG II Employee may transfer employees to
the employ of another SFEC Park or any SFEC Affiliate, effective at any time
prior to December 31, 2023 and, if the Net Worth Standard is then met and the
End-of-Term Option has then been exercised, at any time thereafter, provided
that the president or general manager, the chief financial officer and chief
maintenance officer of the Amusement Park or, if applicable, Flags II or SFOG II
Employee shall not be so transferred, at any time after December 31, 2021,
unless the End-of-Term Option has then been exercised and the Net Worth Standard
is then met. No individual whose employment could not then be transferred to
another SFEC Park or any SFEC Affiliate pursuant to this Section 13.1(a) shall,
if that individual ceases for any reason to be employed by SFOG II Employee or
Flags II (or, after December 31, 2026, then remains employed by SFOG II Employee
or Flags II), be employed by an SFEC Entity, SFEC Affiliate or SFEC Park for the
two years, or such shorter period as may be required by applicable law, after
such employment ceases (or, if applicable, for two years or such shorter period
as may be required by applicable law after December 31, 2026), unless the
End-of-Term Option has then been exercised and the Net Worth Standard is then
met. Nothing in this Agreement shall limit the right of SFOG II Employee to
terminate the employment of any individual in its sole discretion. Effective
immediately prior to the Effective Date, all employees of Flags who do not
accept such employment (and thereby terminate their employment with Flags) shall
be terminated by Flags and, without limiting its other obligations under this
Agreement and the Related Agreements, SFOG II shall cause Flags II to assume on
the Effective Date and to thereafter discharge in full all liability, if any,
Flags may have to all Persons who are employees of Flags at any time prior to
Effective Date, including any liability that may exist by virtue of such
termination.
(b) WARN Act and Other Matters. While the parties do not believe
---------------------------
the Worker Adjustment and Retraining Notification Act ("WARN Act") applies, if
it does, SFOG II Employee (but not Flags II) shall be fully responsible for any
liability arising under the WARN Act in connection with the transactions
provided for in this Agreement, the Flags II Limited Partnership Agreement and
the Lease.
65
13.2 Benefit Responsibilities. During the term of the Flags II
-------------------------
Limited Partnership Agreement, SFOG II Employee shall cause to be provided
benefits to Park Employees which are substantially comparable in the aggregate
to the benefits provided to similarly situated employees of SFEC Parks.
Notwithstanding any provision herein to the contrary, nothing in this Agreement
shall be construed to limit the right of any SFEC Entity or SFEC Affiliate to
amend or terminate any employee benefit plan, practice or arrangement covering
Park Employees at any time after the date Flags II is formed. In connection with
such benefits, SFOG II Employee shall cause to be recognized all service
performed by Park Employees under the existing welfare and benefit plans prior
to the date Flags II is formed for all purposes under such plans including, but
not limited to, eligibility, vesting, benefit accrual, retirement subsidies,
benefit commencement, and shall waive all preexisting condition exclusions not
applicable prior to the date Flags II is formed under any health insurance
plans. For purposes of this Article XIII, "comparable" shall mean benefits that
are substantially similar in type, scope, eligibility requirements and employee
cost sharing.
13.3 Continuation of Health Coverage Through Closing Date. SFOG II
----------------------------------------------------
Employee will cause to be continued the coverage of Park Employees under
existing group health benefit plans or plans which are substantially comparable
in the aggregate to the group health benefit plans provided to similarly
situated employees of Flags up to the date Flags II is formed and to cause to be
reimbursed covered Park Employees for eligible health care and other eligible
welfare expenses and services incurred up to the date Flags II is formed in
accordance with the terms of such plans. For purposes of the foregoing, an
expense or service is deemed to be incurred when the medical services are
performed or, with respect to welfare benefits other than medical or dental
benefits, when the event giving rise to such expense or service occurs.
13.4 Modifications. The employment status of each person currently
-------------
employed by Flags shall not be changed prior to the date Flags II is formed in a
manner that would promise employment for any specified term of employment.
13.5 Park Employees. The Park Employees will work at the Amusement
--------------
Park as if they were employed by the Amusement Park and Flags II will reimburse
SFOG II Employee for the cost thereof to the extent permitted by Section
12.7(a)(i).
13.6 End of Term. If SFOG Acquisition B does not exercise the
-----------
End-of-Term Option, SFOG II Employee shall use its best efforts to cause the
employment of all Park Employees involved in the day-to-day management and
operation of the Amusement Park (i) to be continued if the alternative set forth
in Section 8.5(b) is elected or (ii) at the election of Flags, to be transferred
to Flags II or to any purchaser or manager of the Amusement Park selected
pursuant to Section 8.5(c) or (d) upon completion of the sale of the Amusement
Park or effectiveness of a management agreement contemplated by such Section
8.5(c) and (d). In any event, SFOG II Employee will cooperate fully to ensure an
orderly transition.
13.7 Sale at End-of-Term. If the End-of-Term Option is not
---------------------
exercised or SFOG II is removed as the general manager of Flags II, at the
option of Flags, SFOG II will sell to Flags II, for cash in the amount of $100,
all of the then-outstanding capital stock of SFOG II Employee.
66
13.8 ERISA. If there is a continuation or transfer of employment
-----
pursuant to Section 13.6 or a transfer of the stock of SFOG II Employee pursuant
to Section 13.7, the SFEC Entities will jointly and severally indemnify and hold
harmless the employer or purchaser of the stock against all liabilities, costs
and expenses imposed on or incurred by the employer or purchaser, under the
Employee Retirement Income Security Act of 1974, as amended (or successor
statute), arising at any time by reason of such continuation or transfer of
employment or transfer of stock, as the case may be, by reason of SFOG II
Employee's membership in a controlled group of employers, but not including any
such liabilities, costs or expenses directly attributable to SFOG II Employee.
13.9 No Termination; No Third Party Rights. The parties hereto
---------------------------------------
agree that, subject to the effect of Section 13.1(a), none of the transactions
contemplated by this Agreement, the Flags II Limited Partnership Agreement, the
Lease or any of the other Related Agreements shall be construed to constitute a
termination of employment of any Person employed by Flags including, without
limitation, any Park Employee. Nothing herein express or implied shall confer
upon any employee or former employee of Flags, or the beneficiary or legal
representative thereof, any right whatsoever under this Agreement, the Flags II
Limited Partnership Agreement, the Lease or any of the other Related Agreements,
including, without limitation, any right to continued employment or benefits.
ARTICLE XIV
EXECUTION OF THIS AGREEMENT;
THE CLOSING AND CLOSING DELIVERIES
14.1 Execution and Delivery of this Agreement. Concurrently with
----------------------------------------
the execution and delivery of this Agreement, the following documents shall be
executed by and delivered to the party or parties indicated:
(a) TWE and TWX Guarantee. The TWE and TWX Guarantee will be
-----------------------
executed and delivered by TWE, TWX and Fund, but its effectiveness shall be
conditioned upon the Effective Date having occurred.
(b) Fairness Opinion. Fund shall receive from ▇▇▇▇▇▇▇, ▇▇▇▇▇ its
----------------
opinion to the effect that, as of the date of such opinion, the aggregate
financial consideration to be received by Fund and its limited partners pursuant
to this Agreement and the Related Agreements, taken as a whole, is fair to the
limited partners of Fund.
14.2 The Closing. The closing under this Agreement and the Related
-----------
Agreements (the "Closing") will occur on the Effective Date.
14.3 Conditions to the Obligations of the Parties.
--------------------------------------------
(a) Fund Limited Partners' Approval. The obligations of each of
---------------------------------
the parties and TWE and TWX under the TWE and TWX Guarantee are subject to the
condition that the Fund Limited Partners' Approval shall have been obtained not
later than April 15, 1997.
67
(b) No Prohibition. The obligations of each of the parties shall
---------------
be subject to the condition that no federal, state or foreign governmental
authority or other agency or commission or court of competent jurisdiction shall
have enacted, issued or promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary or
permanent) which remains in effect and which has the effect of making illegal or
otherwise prohibiting the consummation of the transactions provided for in this
Agreement or the Related Agreements.
(c) Conditions to Obligations of Fund. The obligations of Fund,
-----------------------------------
▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and SFG-II, LLC on the Effective Date shall be
subject to the (i) delivery to Fund of the opinion of ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ substantially in the form of Exhibit 14.3(c), (ii) the
representations and warranties made by the SFEC Entities being true and correct
as of the Effective Date, as if made on and as of the Effective Date (except to
the extent specifically made as of an earlier date), each of the covenants of
the SFEC Entities to be complied with prior to the Effective Date having been
complied with, and the SFEC Entities having delivered a certificate signed by an
officer of each of them confirming the foregoing and (iii) the delivery to Fund,
within five days after the date of this Agreement, of the tax opinion of ▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
(d) Conditions to the Obligations of the SFEC Entities. The
-------------------------------------------------------
obligations of the SFEC Entities and the obligations of TWE and TWX under the
TWE and TWX Guarantee on the Effective Date shall be subject to (i) delivery to
the SFEC Entities of the opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP in the form of
Exhibit 14.3(d), (ii) delivery to the SFEC Entities of a certificate of Fund to
the effect that the Fund Limited Partners' Approval has been obtained and (iii)
the representations and warranties made by Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC
and SFG-II, LLC being true and correct as of the Effective Date, as if made on
and as of the Effective Date (except to the extent specifically made as of an
earlier date), each of the covenants of Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and
SFG-II, LLC to be complied with prior to the Effective Date having been complied
with, and Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC and SFG-II, LLC having delivered a
certificate signed by a general partner, trustee, officer or managing member of
each of them confirming the foregoing.
14.4 Effective Date Deliveries. The following additional documents
shall be executed by and delivered to the party or parties indicated on the
Effective Date:
(a) Related Agreements. The following Related Agreements shall be
executed by and delivered to each of the parties thereto:
(i) the Second Amended and Restated Fund Limited Partnership
Agreement;
(ii) the SFOG Acquisition A and SFOG Acquisition B Guarantee
and Pledge Agreement;
(iii) the SFTP and SFEC Guarantee;
(iv) the Flags Limited Liability Company Operating
Agreement;
68
(v) the Flags II Limited Partnership Agreement; and
(vi) the Lease.
(b) TWE and TWX Guarantee. The TWE and TWX Guarantee shall be
----------------------
executed and delivered by Flags.
14.5 Fund Limited Partners' Approval. As soon as practicable after
-------------------------------
the date of this Agreement, Fund shall solicit from its limited partners the
Fund Limited Partners' Approval. ▇▇▇▇▇▇ and the Board of Directors of SFG, Inc.
shall recommend that the limited partners of Fund approve this Agreement and,
subject to their fiduciary duties, will not withdraw such recommendation prior
to the completion of the vote of the limited partners of Fund.
ARTICLE XV
GENERAL PROVISIONS
15.1 Applicable Law. This Agreement shall be governed by and
---------------
construed under the internal laws of the State of New York in accordance with
and as is specifically provided for in Section 5-1401 of the General Obligations
Law of New York, and not the laws otherwise pertaining to choice or conflict of
law of the State of New York.
15.2 Forum. Except as otherwise provided in Sections 12.7(d),
-----
12.7(f) and 12.18(g), unless jurisdiction or venue is not available in one of
the forums specified below, the sole forums for resolving disputes under this
Agreement, the Flags II Limited Partnership Agreement, the Second Amended and
Restated Fund Limited Partnership Agreement, the Flags Limited Liability Company
Operating Agreement and the Lease will be trial level federal, California and
New York state courts located in Los Angeles, California, or New York, New York
and relevant appellate courts, Delaware State Courts or, at the election of
Fund, trial level federal or Georgia state courts located in Atlanta, Georgia,
and relevant appellate courts. Each of the parties agrees to the jurisdiction of
and venue in such courts and not to assert forum non conveniens or a similar
----- --- ----------
doctrine in opposition to the forum selection made in this Section 15.2. Service
may be made at the addresses to which notices are to be given, as provided in
Section 15.4.
15.3 Injunction. In addition to any remedies at law that may be
----------
available, the parties shall be entitled to equitable remedies, including
injunction and specific performance, for breaches or prospective breaches of
this Agreement, the Flags II Limited Partnership Agreement the Lease and the
other Related Agreements. Each of the parties hereby waives any right that it
may have to request or require that any other party post any bond with respect
to any injunctive action, provided that this sentence will not apply to any
action brought to enjoin (i) a payment or distribution to Flags, Fund or the
limited partners of Fund of or in respect of Minimum Amount or Base Rent or (ii)
the pledgeholder under the SFOG Acquisition A and SFOG Acquisition B Guarantee
and Pledge Agreement from delivering the Units it holds and the "stock powers"
held by it to or as directed by Fund, provided that if the party seeking the
--------
injunction prevails on the merits, so that the payment, distribution or delivery
should not have been made, Fund will reimburse such party for the cost of the
bond.
69
15.4 Notices.
-------
(a) Notices in General. All notices, requests, demands and other
------------------
communications under or pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or, if mailed, two days after being
mailed by certified or registered mail, postage pre-paid, return receipt
requested (if given both to the party listed below and to its counsel by such
mail and, in addition, also by facsimile transmission), or, if by facsimile,
upon receipt of a transmittal confirmation, to the parties at the following
addresses or facsimile numbers, or such other address or facsimile number as a
party may designate for itself by written notice to the other parties:
If to Fund, ▇▇▇▇▇▇, SFG, Inc., SFG-I, LLC or SFG-II,
LLC or, on and after the date SFG-I, LLC becomes the
manager of Flags, to Flags, to it:
c/o ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇.
If to SFOG II, SFOG II Employee, SFOG Acquisition A,
SFOG Acquisition B, SFOG, SFOGS, SFTP or SFEC or,
before the date SFG-I, LLC becomes the manager of
Flags, to Flags, to it:
c/o Six Flags Entertainment Corporation
400 Interpace Parkway
Bldg. C - Third Floor
Parsippany, New Jersey 07054
Attention: Chief Executive Officer
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
70
with copies to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Boston Ventures Management, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Warner Bros.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇.
(b) Notices to Unitholders. Whenever notice, request, demand or
----------------------
other communication is required to be given by any of the SFEC Entities to the
Unitholders under this Agreement or any Related Agreement, such notice shall be
in writing and shall be deemed given if delivered personally or, if mailed, two
days after being mailed by certified or registered mail, postage pre-paid,
return receipt requested or, if by facsimile, upon receipt of transmittal
confirmation, to each Unitholder at the address of such Unitholder set forth in
Fund's records, and, in addition, at any other address specified in writing to
Fund by any Unitholder for himself, herself or itself, in each case as from time
to time provided to SFOG II by Fund.
15.5 Counterparts. This Agreement and the Related Agreements may
------------
be executed in two or more counterparts, each of which shall be deemed an
original, but all of which will constitute one and the same document. Faxed
signatures of this Agreement or the Related Agreements shall be binding for all
purposes.
15.6 Entire Agreement. This Agreement, the Exhibits hereto and the
----------------
Related Agreements contain the entire agreement between the parties hereto with
respect to the transactions provided for herein and therein and supersede all
prior oral and written and all contemporaneous oral negotiations, commitments
and understandings relating thereto.
15.7 Modifications, Amendments and Waivers. At any time prior to
--------------------------------------
the Closing the parties may, but only in writing, amend, supplement or waive any
of the provisions of this Agreement and any such amendment, supplement or waiver
shall be effective against any party hereto that has executed such document.
71
15.8 Interpretation. The headings contained in this Agreement and
--------------
the Related Agreements are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement or the Related
Agreements. The parties agree that each party and its counsel have reviewed and
revised this Agreement and the Related Agreements.
15.9 Severability; Invalidity of Particular Provisions. If any
---------------------------------------------------
term of this Agreement or the Related Agreements or the application thereof to
any Person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement or the Related Agreements, or the application of
such term or provision to Persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby and each other
term and provision of this Agreement and the Related Agreements shall be valid
and enforceable to the fullest extent permitted by law.
15.10 Waiver. No party will be deemed to have waived any covenant,
------
obligation or performance of any other party or any condition under this
Agreement or the Related Agreements except to the extent (if any) such waiver is
expressly set out in a writing signed by such party and addressed to the other
party. One or more waivers of any matter by any party shall not be construed as
a waiver of any subsequent breach or default of the same or any other matter.
The consent or approval by any party of any act by any other party shall not be
construed to waive or render unnecessary the first party's consent or approval
of any future similar act, whether or not similar.
15.11 Third-Party Beneficiaries. The Limited Partners of Fund from
-------------------------
time to time, other than SFOG Acquisition A and SFOG Acquisition B, and the
Persons entitled to indemnification pursuant to Section 12.10 are third-party
beneficiaries of this Agreement. There are no other third-party beneficiaries of
this Agreement.
15.12 Successors. This Agreement shall be binding upon and inure
----------
to the benefit of permitted successors and assignees and be binding upon all
successor and assignees (in each case however such succession or assignment is
accomplished, including, without limitation, by assignment, merger, reverse
merger, consolidation, sale of securities or assets, conversion, bequeath,
operation of law or, without limitation, otherwise) of the parties hereto and
third-party beneficiaries hereof.
15.13 No Offset; Interest. Except as otherwise specifically
---------------------
provided in this Agreement, the Second Amended and Restated Fund Limited
Partnership Agreement or the Flags Limited Partnership Agreement, no party to
this Agreement may offset against amounts it is to pay to any other party under
this Agreement, the Flags II Limited Partnership Agreement, the Lease or any
other Related Agreement any amounts such party claims are owed to it. If any
amount is not paid when due under this Agreement, the Flags II Limited
Partnership Agreement, the Lease or any other Related Agreement, such amount
will bear interest at Prime or at the Default Rate, as provided herein or in the
Related Agreements.
15.14 Further Assurances. Each of the parties hereto will, upon
-------------------
receipt of a reasonable request that it do so, execute and deliver such further
documents as are reasonably
72
necessary to effect the transactions contemplated by this Agreement, the Flags
II Limited Partnership Agreement and the Lease.
15.15 Non-Binding Effect of Recitals. The parties agree that,
--------------------------------
except for the terms defined therein and the description of the general
ownership relationship of the parties to each other, the Recitals set forth in
this Agreement are for reference purposes only and, except with respect to those
defined terms and descriptions, shall not have any binding effect or affect in
any way the meaning or interpretation of this Agreement or the Related
Agreements.
15.16 Payments. Payments required by this Agreement and the
--------
Related Agreements shall be made in the lawful currency of the United States of
America.
15.17 Factors to be Considered in Determining Reasonableness of
------------------------------------------------------------
Withheld Consent. A party being asked to give consent will not be deemed to have
----------------
unreasonably withheld consent by virtue of that party requiring any one or more
of the following as a condition of giving its consent: (i) the rights of such
party and any of its owners not being subject to material reduction, or to any
reduction (whether or not material) for which such party is not fully
reimbursed, including, without limitation, by virtue of a new or extended
preference or fraudulent conveyance period under any applicable bankruptcy,
insolvency, moratorium or similar law, (ii) each Guarantor under each Guarantee
consenting to the matter and agreeing, in a writing reasonably satisfactory in
form and substance to the consenting party, that its Guarantee is not affected
thereby and (iii) the reasonable out-of-pocket costs of the consenting party
incurred with prior notice in connection with the request to give consent being
paid by the party(ies) requesting consent, whether or not consent is given.
73
Each of the parties has signed this Overall Agreement as of the
date first written above, thereby becoming a party to and bound by this Overall
Agreement.
SIX FLAGS FUND, LTD. (L.P.) SIX FLAGS OVER GEORGIA, LTD.
By: ▇▇▇▇▇▇ Family Trust By: Six Flags Over Georgia, Inc.
General Partner General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. Bouts
----------------------------- -----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Co-Trustee ▇▇▇▇▇ ▇. Bouts,
Cheif Executive Officer
▇▇▇▇▇▇ FAMILY TRUST SFOG II, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. Bouts
--------------------------------- -----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Co-Trustee ▇▇▇▇▇ ▇. Bouts,
Chief Executive Officer
SFG, INC. SFOG II EMPLOYEE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. Bouts
--------------------------------- ----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, President ▇▇▇▇▇ ▇. Bouts,
Chief Executive Officer
SFG-I, LLC SFOG ACQUISITION A, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. Bouts
--------------------------------- ----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Manager ▇▇▇▇▇ ▇. Bouts,
Chief Executive Officer
SFG-II, LLC SFOG ACQUISITION B, L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇, Manager By: Time Warner
--------------------------------- Entertainment Company, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇, Manager Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
SIX FLAGS SERVICES OF GEORGIA, INC. SIX FLAGS OVER GEORGIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- By: /s/ ▇▇▇▇▇ ▇. Bouts
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ -----------------------------------
Senior Vice President ▇▇▇▇▇ ▇. Bouts,
Chief Executive Officer
SIX FLAGS THEME PARKS INC. SIX FLAGS ENTERTAINMENT CORPORATION
By: /s/ ▇▇▇▇▇ ▇. Bouts By: /s/ ▇▇▇▇▇ ▇. Bouts
---------------------------------- ----------------------------------
▇▇▇▇▇ ▇. Bouts, ▇▇▇▇▇ ▇. Bouts,
Chief Executive Officer Chief Executive Officer
74
LIMITED PARTNERSHIP AGREEMENT
OF
SIX FLAGS OVER ▇▇▇▇▇▇▇ ▇▇, L.P.
This Limited Partnership Agreement (this "Agreement") is
entered into effective as of March 18, 1997 by and among SFOG II,
Inc., a Delaware corporation (the "General Partner"), SFG-II,
LLC, a Georgia limited liability company (the "Co-General
Partner"), and Six Flags Over Georgia, LLC, a Georgia limited
liability company (the "Limited Partner"). The General Partner,
the Co-General Partner and the Limited Partner hereby form Six
Flags Over ▇▇▇▇▇▇▇ ▇▇, L.P., a Delaware limited partnership (the
"limited partnership"), under the Delaware Revised Uniform
Limited Partnership Act and further agree as set forth below.
ARTICLE I
CERTAIN DEFINITIONS
In addition to the other terms defined elsewhere in this
Agreement, the definitions set forth below are used in this
Agreement:
(a) "Accelerated Put" has the meaning given to that
term in the SFOG Acquisition A and SFOG Acquisition B Guarantee
and Pledge Agreement.
(b) "Additional First Year Minimum Amount" is defined
in Article VI.
(c) "Affiliate Loans" means loans made to the limited
partnership by any SFEC Entity or any SFEC Affiliate that meet
the criteria set forth in this definition. To be an Affiliate
Loan, the Indebtedness must: (i) bear interest at a rate per
annum not more than Prime; (ii) be payable by its terms only to
the extent of Available Cash and, unless the Net Worth Standard
is met, only after payment of then required Minimum Amount
distributions, Base Rent, interest and Default Interest under
this Agreement and the Lease; (iii) be unsecured; (iv) be
prepayable without penalty at any time; (v) provide by its terms
that, at the earliest to occur of the dissolution of the limited
partnership, the removal of the General Partner or the General
Partner being adjudicated insolvent or bankrupt or being
dissolved or, if the End-of-Term Option is not exercised,
December 31, 2026, any then unpaid portion thereof (including any
then accrued interest thereon) will, without any further action
or any payment, be thereupon contributed to the capital of the
limited partnership and will no longer be due; and (vi) be
represented by a note, consistent with the provisions of this
definition, a copy of which is sent to the Co-General Partner
within three Business Days after having been executed, which note
contains the following provisions:
"THIS NOTE IS SUBJECT TO, AND MAY NOT BE DUE OR OWING AS PROVIDED
IN, THE LIMITED PARTNERSHIP AGREEMENT OF SIX FLAGS OVER ▇▇▇▇▇▇▇
▇▇, L.P., A COPY OF WHICH MAY BE OBTAINED FROM SFG-II, LLC, A
GEORGIA LIMITED LIABILITY COMPANY."
(d) "Alterations" is defined in Article XVII.
------------------------------
The Effective Date will be filled in here.
(e) "Amusement Park" has the meaning given to that
term in the Overall Agreement and, in addition, in this Agreement
also includes any second gate attractions, hotel(s) and other
improvements as may in the future exist on the Land.
(f) "Another Material Default" is defined in Article
VIII.
(g) "Available Cash" means cash and cash equivalents
of the limited partnership generated by the Amusement Park and
Amusement Park assets, other than Excluded Revenues, that, in the
reasonable judgment of the General Partner (in light of
available, permitted financing), are not necessary for the
limited partnership to retain for working capital, capital
expenditures, capital improvements, debt service, maintenance,
repairs or other limited partnership business purposes or as
reserves.
(h) "Bankruptcy Code" means Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.) (as amended from time
to time or any successor statute).
(i) "Base Rent" is defined in the Lease.
(j) "Base Index" is defined in Article VI.
(k) "Batman the Ride" has the meaning given to that
term in the Overall Agreement.
(l) "Business Day" has the meaning given to that term
in the Overall Agreement.
(m) "Capital Improvement Loans" means any loans to the
limited partnership or Capital Leases that: (i) are used to fund
or, within 90 days of acquisition or completion of construction,
to replace funds used for capital expenditures; (ii) have a
principal amount not greater than the capital expenditure
(including the cost of any performance or completion bond
required in connection with such capital expenditure); (iii) are
not made by an SFEC Entity or SFEC Affiliate; (iv) are due and
payable in full within ten years, but in any event no later than
December 31, 2024; (v) have level amortizing payments -- subject
to having a balloon payment of no more than the percentage of the
initial principal amount of the Capital Improvement Loan equal to
a fraction, expressed as a percentage, derived by dividing one by
the number of years over which the Capital Improvement Loan is so
amortized in full -- sufficient to pay the Capital Improvement
Loan and any interest thereon in full by the due date; (vi) are
prepayable at any time (although a commercially reasonable
prepayment penalty may be required for prepayment); (vii) bear a
commercially reasonable rate of interest; and (viii) are
unsecured, provided that any Capital Improvement Loan may be
secured by the capital improvement (and the proceeds thereof)
financed by the Capital Improvement Loan. If then existing
Capital Improvement Loans are repaid because the Net Worth
Standard is not met, as provided in clause (c) of Part B of
Article VIII, then at any time thereafter that the Net Worth
Standard is met, new Capital Improvement Loans may be incurred,
provided that such new Capital Improvement Loans are otherwise
permitted under the facts existing at the time they are incurred.
(n) "Capital Lease" has the meaning given to that term
in the Overall Agreement.
(o) "Code" means the Internal Revenue Code of 1986, as
amended.
(p) "Co-General Partner" is defined in the first
paragraph of this Agreement.
(q) "Comparable Park" means Six Flags Great Adventure,
Six Flags Magic Mountain, Six Flags Great America, Six Flags Over
Texas, Six Flags Astroworld, Six Flags St. Louis and Six Flags
Fiesta Texas (in each case only so long as directly or indirectly
owned or managed by SFEC or an affiliate of SFEC or the General
Partner) and any other amusement parks that are directly or
indirectly owned or managed by SFEC or an entity affiliated with
SFEC or the General Partner by 100% common ownership, located in
the United States, in each case of a similar type and stage of
2
development to the Amusement Park and comparable in size,
attendance and number and quality of rides and attractions to the
Amusement Park.
(r) "Comparison Index" is defined in Article VI.
(s) "CPI" means the United States Department of Labor,
Bureau of Labor Statistics Consumer Price Index for the United
States City Average (All Urban Consumers, All Items) (1982-
1984=100), as in effect from time to time. If the CPI shall be
discontinued, there shall be substituted for the CPI a reasonably
reliable and comparable index or other information furnished by
the government or independent third party source, in either case
as mutually selected by the General Partner and Co-General
Partner or, in the absence of agreement between the General
Partner and the Co-General Partner, by a third party mutually
selected by the General Partner and the Co-General Partner (or,
in the absence of a mutual selection of such a Person, by
arbitration as provided in Part O, Paragraph 2, of Article XVII),
evaluating changes in the cost of living or purchasing power of
the consumer dollar in the cities of the United States.
(t) "Default" is defined in Article VIII.
(u) "Default Interest" is defined in Article VI.
(v) "Default Rate" means the lesser of (i) five
percent over Prime or (ii) the maximum interest rate permitted by
law.
(w) "Designated Assets" has the meaning given to that
term in the Overall Agreement.
(x) "EBITDA" has the meaning given to that term in the
Overall Agreement.
(y) "Effective Date" is defined in the Overall
Agreement.
(z) "End-of-Term Option" has the meaning given to that
term in the Overall Agreement.
(aa) "Environmental Laws" is defined in Article XVII.
(bb) "Equity Market Capitalization" means, with respect
to any Guarantor, without duplication, as of the date of
determination, the average of the closing price of the shares or
other units of each class of publicly traded equity securities
(excluding any such securities that are, prior to January 15,
2027, mandatorily redeemable or redeemable at the option of the
holder(s)) of such Guarantor on the national securities exchange
on which such securities are listed or, if not so listed, the
average bid and asked price of such securities reported on any
over-the-counter quotation system on which prices for such
securities are quoted, in each case for a period of 20 trading
days prior to the date of determination, multiplied by the number
of shares or units of each such class of equity securities in
question outstanding on the date of determination.
(cc) "Excluded Revenues" means revenues in respect of:
(A) receipts which are voluntary gratuities for the account of
and paid over to employees; (B) insurance, self-insurance or
condemnation proceeds; and (C) sales of property or assets,
except sales of food, beverages, goods, inventory and other items
typically held for resale to park customers in the ordinary
course of business;
(dd) "Flags Limited Liability Company Operating
Agreement" has the meaning given to that term in the Overall
Agreement.
(ee) "Force Majeure" is defined in Article XVII.
(ff) "Full Payment Date" means, with respect to any
year, the date on which the Minimum Amount for such year and all
prior years has been distributed in full, the Base Rent for such
year and all prior years has been paid in full and any interest
or Default Interest on the Minimum Amount and Base Rent for all
3
such years has been distributed or paid in full, provided that
there shall be no Full Payment Date if (i) there is then any
Default (or any event which, with notice or lapse of time or both
would be a Default), (ii) there is then outstanding any
Indebtedness of this limited partnership not permitted to be
outstanding by this Agreement or (iii) there is then any default
(or the General Partner has knowledge of an event which with
notice or lapse of time or both would be a default) which is a
failure to pay any Indebtedness of this limited partnership or
another default that would entitle the lender to accelerate under
any Indebtedness of this limited partnership.
(gg) "Fund" means Six Flags Fund, Ltd. (L.P.)
(hh) "GAAP" is defined in the Overall Agreement.
(ii) "General Partner" is defined in the first
paragraph of this Agreement.
(jj) "Gross Revenues" in respect of any year means all
revenues, computed on an accrual basis in accordance with GAAP,
of the limited partnership (for 1996, of the Limited Partner)
from the occupation or operation of the Amusement Park and the
Amusement Park assets. Notwithstanding the foregoing, Gross
Revenues shall not include: (A) any refunds, discounts or the
like made to, or in respect of, customers, guests or patrons of
the Amusement Park; (B) sales, admissions or other gross receipts
taxes paid on such revenues; and (C) Excluded Revenues. With
respect to concessions (including for this purpose licenses),
Gross Revenues shall include only the net amount received or
retained by the limited partnership from or in respect of the
concessionaire (or licensee). For 1997, Gross Revenues shall
mean, without duplication, Gross Revenues of the Limited Partner
for the period January 1, 1997 to the Effective Date and of the
limited partnership from and including the Effective Date through
December 31, 1997.
(kk) "Guarantees" has the meaning given to that term in
the Overall Agreement.
(ll) "Guarantor" means a Guarantor under one of the
Guarantees. As of the date hereof, the Guarantors are TWX, Time
Warner Entertainment Company, L.P., SFEC, SFTP, SFOG Acquisition
A and SFOG Acquisition B.
(mm) "Hazardous Materials" is defined in Article XVII.
(nn) "Impositions" is defined in Article XVII.
(oo) "Improvements" means any and all buildings,
structures and other improvements that may at any time be erected
or located on the Land during the term of this Agreement,
together with all rides, machinery, equipment and fixtures
attached to or located on the Land or any such buildings and
structures, regardless of whether or not such items constitute
real property, personal property or fixtures. The term
"Improvements" includes, but is not limited to: all buildings and
rides now or hereafter erected on the Land; all footings,
foundations, piping, sewers, retaining walls, landscaping,
streets and infrastructure, which are now or hereafter located
upon the Land or are a part of the buildings or rides now or
hereafter constructed thereon; all fixtures, appliances,
machinery, equipment and apparatus now or hereafter affixed or
attached to any of such buildings; and all components of the
heating, ventilating, air conditioning, plumbing, lighting,
refrigeration, cleaning, security and electrical systems of such
buildings. For purposes of this Agreement, Improvements means
any Improvements existing at the time of determination.
(pp) "indefeasibly pay", "indefeasibly make" or
"indefeasibly distribute" means a payment or distribution where
the recipient of the payment or distribution cannot be required
to return the payment or distribution in whole or in part, by
virtue of any provision of the Bankruptcy Code or any federal or
state bankruptcy, insolvency, moratorium or similar law affecting
creditors rights generally, if the recipient would not otherwise
4
have been required to return the payment or distribution (or
portion thereof).
(qq) "Indebtedness" has the meaning given to that term
in the Overall Agreement and includes Working Capital Loans,
Capital Improvement Loans (including Capital Leases) and
Affiliate Loans.
(rr) "Insurance Requirements" means all present or
future requirements of any insurer of the Amusement Park or any
part thereof pursuant to insurance policies that the limited
partnership is required to maintain under this Agreement, and the
rules, orders, regulations or requirements of the national and
local Board of Fire Underwriters or any other similar body having
jurisdiction over the Amusement Park and those of any appropriate
agency, office, department, board or commission thereof.
(ss) "Land" means the land owned by the Limited Partner
at August 1, 1996 plus the SF Agreement Land.
(tt) "Lease" has the meaning given to that term in the
Overall Agreement;
(uu) "Lease Payment Default" has the meaning given to
that term in the Lease.
(vv) "Legal Requirements" means all laws, statutes,
ordinances, regulations, building codes, zoning codes and
regulations and the orders, judgments, rules, standards,
policies, regulations and requirements formally adopted by any
federal, state, local or municipal government, and the
appropriate agencies, officers, departments, boards, commissions
and courts thereof, whether now or hereafter in effect, which are
or become applicable to the Amusement Park or any part thereof or
to the use or manner of use of all or any part of the Amusement
Park or the sidewalks and curbs adjacent thereto. Without
limitation, Legal Requirements include Environmental Laws.
(ww) "Limitations" is defined in Article VIII.
(xx) "Limited Partner" is defined in the first
paragraph of this Agreement.
(yy) "limited partnership" is defined in the first
paragraph of this Agreement.
(zz) "Liquidity Put" has the meaning given to that term
in the Overall Agreement.
(aaa) "Management Fee" is defined in Article VI.
(bbb) "Measuring Period" is defined in Article
XVII.
(ccc) "Minimum Amount" is defined in Article VI.
(ddd) "Net Worth" has the meaning given to that
term in the Overall Agreement.
(eee) "Net Worth Standard" means that, at the time
of determination, either (i) the aggregate Net Worth (without
duplication) of all Guarantors who have not in any way sought to
disaffirm or to contend that they have no liability under, or
less limited liability than is provided by the terms of, their
respective Guarantee is not less than $5 billion multiplied by
the Applicable Percentage and the aggregate Equity Market
Capitalization (without duplication) of all such Guarantors is
not less than $5 billion multiplied by the Applicable Percentage
or (ii) the aggregate Net Worth (without duplication) of all
Guarantors who have not in any way sought to disaffirm or contend
that they have no liability under, or less liability than is
provided for by the terms of, their respective Guarantee is not
less than $3.5 billion multiplied by the Applicable Percentage
and the aggregate Equity Market Capitalization (without
duplication) of all such Guarantors is not less than $10 billion
multiplied by the Applicable Percentage; provided
--------
that if TWX shall cease to have outstanding publicly traded
equity securities by virtue of a "going private" or similar
5
transaction, then the Net Worth Standard shall be met if the Net
Worth (without duplication) of all Guarantors is not less than $5
billion multiplied by the Applicable Percentage. For the
purposes of this definition, "Applicable Percentage" means (w) if
as of the date of determination the SFEC Entities and SFEC
Affiliates permitted to do so collectively own 25% or less of the
Number of Units (as defined in the Overall Agreement), 100%, (x)
if as of the date of determination the SFEC Entities and SFEC
Affiliates permitted to do so collectively own more than 25% but
not more than 50% of the Number of Units, 80%, (y) if as of the
date of determination the SFEC Entities and SFEC Affiliates
permitted to do so collectively own more than 50% but not more
than 75% of the Number of Units, 66-2/3%, and (z) if as of the
date of determination the SFEC Entities and SFEC Affiliates
permitted to do so collectively own more than 75% of the Number
of Units, 50%.
(fff) "Operating Leases" is defined in Part Q of
Article XVII.
(ggg) "Overall Agreement" means the Overall
Agreement, dated as of February 15, 1997, among Fund, ▇▇▇▇▇▇,
SFG, Inc., the Limited Partner, the General Partner, the Co-
General Partner, SFG-I, LLC, Six Flags Over Georgia, Inc., SFTP,
SFEC, SFOG Acquisition A, SFOG Acquisition B, Six Flags Services
of Georgia, Inc. and SFOG II Employee, Inc.
(hhh) "Overall Agreement Payment Default" is
defined in Article VIII.
(iii) "partners" and "parties" means the General
Partner, the Co-General Partner and the Limited Partner (or, if
applicable, any substitute General Partner or Co-General Partner
elected upon removal of the then General Partner or Co-General
Partner).
(jjj) "Partnership Minimum Amount Distribution
Default" is defined in Article VIII.
(kkk) "Payment Prohibiting Law" means any federal
or state law that makes illegal the payment or action in
question, provided such law (i) is not of a type in existence at
--------
the Effective Date, (ii) is not similar to the Bankruptcy Code or
any other federal or state reorganization, rehabilitation,
arrangement, composition, moratorium or extension law, (iii) is
not a law passed as a result, in whole or in part, of lobbying by
any SFEC Entity or SFEC Affiliate, (iv) is a law of general
application (i.e., a law that applies to others generally in
addition to the limited partnership, the General Partner and the
Guarantors) and (v) makes illegal the payment or action in
question by each of the limited partnership, the General Partner
and each Guarantor. A law that permits non-payment of an
obligation, but does not make such payment or action illegal, is
not a Payment Prohibiting Law.
(lll) "Percentage Distribution" is defined in
Article VI.
(mmm) "Person" has the meaning given to that term
in the Overall Agreement.
(nnn) "Prepaid Amount" means the one-half of the
Minimum Amount for 1997 plus the one-half of the Base Rent for
1997 that are payable on the fifth Business Day after the date of
this Agreement (i.e., $9.25 million).
(ooo) "Prime" has the meaning given to that term in
the Overall Agreement.
(ppp) "Priority Management Fee Distribution" is
defined in Article VI.
(qqq) "Related Agreements" has the meaning given to
that term in the Overall Agreement.
(rrr) "Retained Liabilities" is defined in Article
X.
(sss) "▇▇▇▇▇▇" means the ▇▇▇▇▇▇ Family Trust
(formed by Declaration of Trust dated May 15, 1980, as amended).
6
(ttt) "Second Amended and Restated Fund Limited
Partnership Agreement" has the meaning given to that term in the
Overall Agreement.
(uuu) "Service Standard" means the standards of an
amusement park equivalent to the average standards in the
Comparable Parks at the date of this Agreement or at the later
date in question, whichever is higher.
(vvv) "SF Agreement" has the meaning given to that
term in the Overall Agreement.
(www) "SF Agreement Land" means the land acquired
by the Limited Partner pursuant to the SF Agreement.
(xxx) "SFEC" means Six Flags Entertainment
Corporation.
(yyy) "SFEC Affiliates" has the meaning given to
that term in the Overall Agreement.
(zzz) "SFEC Entity" has the meaning given to that
term in the Overall Agreement.
(aaaa) "SFEC Park" has the meaning given that term
in the Overall Agreement.
(bbbb) "SFOG Acquisition A" means SFOG Acquisition
A, Inc.
(cccc) "SFOG Acquisition B" means SFOG Acquisition
B, L.L.C.
(dddd) "SFOG Acquisition A and SFOG Acquisition B
Guarantee and Pledge Agreement" has the meaning given to that in
the Overall Agreement.
(eeee) "SFOG Requirement" has the meaning given to
that term in the Overall Agreement.
(ffff) "SFTP" means Six Flags Theme Parks Inc.
(gggg) "Tax" is defined in Article VII.
(hhhh) "Tender Offer" has the meaning given to that
term in the Overall Agreement.
(iiii) "Treasury Regulations" means the regulations
promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of
succeeding regulations).
(jjjj) "TWX" means Time Warner Inc.
(kkkk) "Working Capital Loans" means short-term
borrowings by the limited partnership (or a wholly-owned
subsidiary of the limited partnership) which borrowings are made
after October 1 of a given year (including, with respect to
borrowings in 1997, October 1, 1996) or at any time thereafter
until there is regular positive cash flow in the next season and
are repaid from the first positive cash flow available for debt
repayment in the next season (after payment of Minimum Amount
distributions to the extent permitted by this Agreement), the use
of which loans is for working capital purposes (including payment
of Minimum Amount distributions as permitted hereby).
ARTICLE II
NAME AND PLACE OF BUSINESS
1. Name. The name of this limited partnership is: "Six
Flags Over ▇▇▇▇▇▇▇ ▇▇, L.P."
2. Place of Business. The principal place of business of
this limited partnership shall be ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. This limited partnership may also have
such other places of business within or without the State of
Georgia as the General Partner may deem appropriate.
7
3. Registered Office or Agent. This limited partnership
shall, to the extent required by applicable law, continuously
maintain in the States of Georgia and Delaware a registered
office and a registered agent for service of process, in each
case as selected by the General Partner.
ARTICLE III
PURPOSES OF THE LIMITED PARTNERSHIP
The purposes of the limited partnership are to:
(a) Own the Amusement Park (excluding the Land) and operate
the Amusement Park and the Amusement Park assets;
(b) Execute, deliver and perform its obligations and
exercise its rights under the Lease;
(c) Borrow funds for limited partnership purposes, as
permitted by this Agreement;
(d) Comply with the Overall Agreement, as if it were party
thereto, and enforce its rights under the Overall Agreement; and
(e) Without limitation, to do all other acts, not
prohibited by this Agreement, the Lease or the Overall Agreement,
in connection with or incidental to the accomplishment of the
foregoing purposes of the limited partnership (including, without
limitation, to maintain and improve the Amusement Park and to
develop second gated attractions).
ARTICLE IV
NAMES AND ADDRESSES OF PARTNERS
1. General Partner. The name of the General Partner is
SFOG II, Inc. The address of the General Partner is ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other address as
the General Partner may, by notice to the Co-General Partner and
the Limited Partner, specify from time to time.
2. Limited Partner. The name of the Limited Partner is Six
Flags Over Georgia, LLC. The address of the Limited Partner is
c/o National Registered Agents, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, or such other address as the Limited Partner may, by
notice to the General Partner and the Co-General Partner, specify
from time to time.
3. Co-General Partner. The name and address of the Co-
General Partner is SFG-II, LLC. The address of the Co-General
Partner is c/o National Registered Agents, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, or such other address as the Co-General
Partner may, by notice to the General Partner and the Limited
Partner, specify from time to time.
ARTICLE V
CAPITAL CONTRIBUTIONS
1. General Partner. Except as provided below in this
paragraph, the General Partner has not and shall not be obligated
to contribute to the limited partnership, including to its
capital, any cash or other property. The General Partner shall
contribute to the limited partnership cash in such amounts as are
necessary, after the incurrence of permissible Affiliate Loans,
Capital Improvement Loans and Working Capital Loans, to (i) make
distributions to the Limited Partner of the Minimum Amount, to
pay Base Rent under the Lease and make distributions of or pay
any interest or Default Interest due to the Limited Partner under
this Agreement or the Lease and (ii) for the limited partnership
to perform those acts to be performed by it under this Agreement,
the Lease and the Overall Agreement (including, without
limitation, Section 8.5(a) of the Overall Agreement).
8
2. Limited Partner.
(a) Effective immediately after the conversion of the
Limited Partner to a limited liability company and SFG-I, LLC
becoming the sole manager and a member of the Limited Partner, in
accordance with the Overall Agreement and the Flags Limited
Liability Company Operating Agreement, the Limited Partner hereby
contributes to the capital of the limited partnership all of the
Limited Partner's then existing property and assets (including,
without limitation, all buildings, rides, all of its real
property, other than the Land, if any (for example, any rides
that may be deemed real property), all of its books and records,
its right and claims against third parties and, subject to the
next sentence, all of its goodwill), except (i) the Designated
Assets, (ii) any rights, claims or defenses the Limited Partner
may have against any SFEC Entity or SFEC Affiliate (provided that
--------
nothing in this clause (ii) is an admission that there are any
such rights or claims or a waiver or release of any such rights,
claims or defenses as may exist) and (iii) the Land. The Limited
Partner hereby licenses to the limited partnership, without
representation or warranty, its rights under the License
Agreement, dated December 31, 1968, between Great Southwest
Atlanta Corp. (now Six Flags Over Georgia, Inc.) and Fund, which
License Agreement was assigned to the Limited Partner, to use the
name "Six Flags Over Georgia", provided that (x) this license
--------
shall cease to exist and revert to the Limited Partner at the
election of the Limited Partner (i) after the occurrence of a
Default and upon notice to the limited partnership or the General
Partner or (ii) upon dissolution of the limited partnership if
the End-of-Term Option is not exercised, (y) this license, as
long as it is in effect, shall be royalty free and (z) the
Limited Partner retains the right to use the name "Six Flags Over
Georgia" in its name.
(b) The property and assets contributed by the Limited
Partner to the limited partnership pursuant to this Paragraph 2
of Article V has an agreed value of $235 million.
(c) The Limited Partner was, until the time of
contribution pursuant to Paragraph 2(a) of this Article V,
controlled by an affiliate of the General Partner, not by SFG-I,
LLC or Fund. Accordingly, notwithstanding the agreed upon value
provided for above, no representation or warranty is made by the
Limited Partner or SFG-I, LLC as to the title to or the condition
of the property or assets contributed by the Limited Partner to
the limited partnership or the liabilities of the Limited
Partners to be assumed by the limited partnership, and all such
property and assets are contributed AS IS, WHERE IS and WITH ALL
--------------- --------
FAULTS.
------
(e) The Limited Partner shall not, other than the
contribution provided for in this Article V, paragraph 2, be
obligated to contribute any cash or other property to the limited
partnership or its capital.
3. Co-General Partner. The Co-General Partner shall
contribute $100 to the capital of the limited partnership. The
Co-General Partner shall not under any circumstances be obligated
to contribute any other cash or other property to the limited
partnership or its capital.
4. Non-Interest Bearing. Contributions to the
capital of the limited partnership shall not bear interest.
ARTICLE VI
DISTRIBUTIONS
A. Order of Distributions
----------------------
Distributions by the limited partnership in each year shall
be made as set forth below; provided that no distributions,
except liquidating distributions pursuant to Article XIV of this
Agreement, shall be made after the earlier to occur of December
31, 2026 or the date to which the End-of-Term Option is
accelerated pursuant to Section 8.6 of the Overall Agreement.
9
1. Minimum Amount Distributions. First, in each year
commencing with 1997, the limited partnership shall distribute to
the Limited Partner cash in the amount equal to the Minimum
Amount for that year. One-half of the Minimum Amount for 1997
shall be distributed to the Limited Partner on the fifth Business
Day after the date of this Agreement and the balance of the
Minimum Amount for 1997 shall be distributed to the Limited
Partner no later than November 17, 1997. For each year after
1997, not less than one-half of the Minimum Amount for such year
shall be distributed to the Limited Partner no later than July 15
of that year and the balance of the Minimum Amount for such year
shall be distributed to the Limited Partner no later than
November 15 of that year; provided that, if such July 15 or
--------
November 15 is not a Business Day, the amount due on such July 15
or November 15 shall be paid on or before the next Business Day
after such July 15 or November 15, as the case may be. If any of
the property or assets contributed to the limited partnership by
the Limited Partner are sold, cash in an amount equal to the
sales proceeds shall be (i) distributed to the Limited Partner,
(ii) credited against the Minimum Amount distribution for the
year of such distribution and, if necessary, (iii) credited
against the Minimum Amount distribution for the succeeding years,
with the result that the aggregate amount of the Minimum Amount
distribution for such years will not change.
2. Priority Management Fee Distribution. Second, in each
year commencing with 1997 and after, but only after, the Minimum
Amount for all years, to and including such year, Base Rent for
all years to and including such year and interest or Default
Interest, if any, on the Minimum Amount and Base Rent have each
been distributed or paid to the Limited Partner, and subject to
Part D of this Article VI, in recognition of the management
services provided by the General Partner and to the extent of
Available Cash, the limited partnership shall distribute to the
General Partner cash equal to the Priority Management Fee
Distribution.
3. Co-General Partner Distribution. Third, after, but
only after, all distributions provided for in Paragraphs 1 and 2
of this Part A of Article VI have been made in full, the limited
partnership shall, to the extent of Available Cash, distribute to
the Co-General Partner $100 per year, commencing with 1997,
cumulative but without interest to the extent not paid in then
prior years.
4. Percentage Distributions. Fourth, in each year, after,
but only after, the distributions provided for in Paragraphs 1, 2
and 3 of this Part A of Article VI have been made in full, the
limited partnership shall distribute the remaining Available
Cash, with such distributions ("Percentage Distributions") to be
made 5% to the Limited Partner and 95% to the General Partner;
provided that any Percentage Distribution due in respect of the
-------
year ended December 31, 2026 shall, if the End-of-Term Option is
exercised, be made no later than December 15, 2026.
5. Additional First Year Minimum Amount Distributions. In
1997 only, in addition to the other distributions provided for
herein, the limited partnership shall distribute to the Limited
Partner cash in an amount equal the Additional First Year Minimum
Amount. Such amount shall be distributed to the Limited Partner
no later than November 17, 1997, provided that such amount shall
--------
be distributed, to the extent the Limited Partner is required to
repay Retained Liabilities prior to November 17, 1997, on or
immediately prior to the date repayment is required.
B. Minimum Amount Distributions
----------------------------
1. Date and Time. Distributions of the Minimum Amount and
the Additional First Year Minimum Amount shall be made by the
date required, set forth in Part A, Paragraphs 1 and 5,
respectively, of this Article VI. Such amounts shall be paid, if
requested by the Limited Partner, by wire transfer to the Limited
Partner at such account in a bank located in the United States as
the Limited Partner may from time to time designate by notice to
the General Partner no later than two Business Days prior to the
due date thereof (provided that no notice need be given, after
--------
the initial notice, unless such account is changed and that the
initial notice may be given one Business Day prior to the due
10
date), in immediately available funds and for wire delivery by 10
a.m. local time (and, if not received at the recipient bank by 1
p.m. local time, shall be deemed paid on the next Business Day
or, if later, the Business Day on which such payment is received
before 10:00 a.m. local time at the recipient bank). If no
notice is given as provided in the preceding sentence,
distributions of the Minimum Amount shall be paid by the date due
by delivery to the Limited Partner (at its address specified by
the Limited Partner by notice to the General Partner) prior to
noon local time of a cashier's check for the amount due.
2. Default Interest. If all or any portion of the
distribution of the Additional First Year Minimum Amount or any
Minimum Amount distribution is not distributed when required,
time being of the essence, the amount not so distributed shall be
distributed to the Limited Partner with interest thereon at the
Default Rate (at Prime to the extent provided in the last
sentence of Paragraph 4 of Part C of Article VIII) until the
distribution is made in full (such interest at the Default Rate
is referred to below as "Default Interest"). If all of the
Minimum Amount due has not then been distributed, all amounts
received by the Limited Partner in respect of the Minimum Amount,
interest or Default Interest shall, notwithstanding any legend or
endorsement on a check or similar matter, be credited first to
interest (other than Default Interest), second to Default
Interest and third to the undistributed "principal" of the
Minimum Amount(s) in question. No interest or Default Interest
paid or accrued shall reduce any Minimum Amount to be
distributed.
3. General Partner Obligations. The General Partner will
cause the limited partnership to timely make the Minimum Amount
distributions, payments of Base Rent and interest and Default
Interest distributions and payments.
C. Definitions
-----------
In addition to the other terms defined elsewhere in this
Agreement (including elsewhere in this Article VI), the
definitions set forth below are used in this Article VI.
1. Minimum Amount. The Minimum Amount for 1997 (i.e., the
period from the date of this Agreement through December 31, 1997)
is $17.5 million. For each year after 1997 the Minimum Amount
will be equal to the greater of (i) $17.5 million or (ii) if the
CPI published for the December immediately preceding the
beginning of such year (or, if no CPI is available for such
December, for the month closest to January 1 of such year) (the
"Comparison Index") exceeds the CPI published for December 1996
(the "Base Index"), an amount equal to $17.5 million multiplied
by a fraction of which the numerator is the Comparison Index for
such year and the denominator is the Base Index, provided that in
--------
no event shall the Minimum Amount for any year be less than the
Minimum Amount for the then immediately preceding year (for 1998,
not less than $17.5 million). Interest and Default Interest is
in addition to, but is not part of, any Minimum Amount.
2. Management Fee. The Management Fee for each year means
an amount equal to 3% of the Gross Revenues for the prior year.
3. Priority Management Fee Distribution. The Priority
Management Fee Distribution for each year is a distribution in an
amount equal to the Management Fee for that year plus interest
thereon at Prime from the Full Payment Date for that year until
paid; plus, to the extent a distribution of the Management Fee
was not made in any prior year, the portion of the amount equal
to the Management Fee(s) not so distributed in prior years plus
interest on the portion not so distributed at Prime (compounded
annually) from the Full Payment Date for the year in which such
Management Fee was otherwise payable but not paid.
4. Additional First Year Minimum Amount. The Additional
First Year Minimum Amount is an amount equal to the Retained
Liabilities, plus interest (and any other amounts) accruing on,
11
or due in respect of, such Retained Liabilities through the date
of distribution of the Additional First Year Minimum Amount.
D. Additional Limitation on Priority Management
Fee Distributions and Percentage Distributions
----------------------------------------------
No Priority Management Fee Distribution will be made in any
year if (i) the distributions of the Minimum Amount for that year
and all prior years have not been made in full, any Base Rent for
that and all prior years has not been paid in full and all
interest and Default Interest on or in respect of the Minimum
Amount and Base Rent has not been paid in full, (ii) this limited
partnership has outstanding any Indebtedness (other than Capital
Improvement Loans and Affiliate Loans), (iii) the Net Worth
Standard is not met, this limited partnership has outstanding any
Indebtedness other than Affiliate Loans or (iv) this limited
partnership would, but for Paragraph 2 of Part C of Article XVII,
not be in compliance with the requirements of Paragraph 1 of Part
C of Article XVII. No Percentage Distribution will be made as
long as this limited partnership has outstanding any Indebtedness
(other than Affiliate Loans and, so long as the Net Worth
Standard is met, Capital Improvement Loans). No Priority
Management Fee Distributions or Percentage Distributions will be
made if, at the time of distribution, there is (x) any Default
(or any event which, with notice, lapse of time or both would be
a Default), (y) outstanding any Indebtedness of this limited
partnership not permitted to be outstanding by this Agreement or
(z) any default (or the General Partner has knowledge of an event
which with notice or lapse of time or both would be a default)
which is a failure to pay or another default that would entitle
the lender to accelerate under any Indebtedness of this limited
partnership, any failure to make a payment due under an Operating
Lease if the failure is both adverse and material to the
Amusement Park or Flags II or, until cured (including by making
any capital expenditures, in addition to those otherwise
required, in any year subsequent to the year in which such
capital expenditure was required to have been made), any failure
to comply with Part C of Article XVII. Neither this Part D of
Article VI, nor anything else in this Agreement (except a Payment
Prohibiting Law), shall affect, restrict or otherwise limit the
making of Minimum Amount distributions, payments of Base Rent or
distributions or payments of interest or Default Interest on or
in respect of Minimum Amount distributions or Base Rent, when
this Agreement or the Lease provide that such Minimum Amount
distributions, Base Rent, interest or Default Interest are to be
made or paid.
E. Cash Distributions Only; Available Cash Limitation
--------------------------------------------------
Distributions pursuant to this Article VI shall be made only
in cash and, except for the distributions provided for in
Paragraphs 1 and 5 of Part A of Article VI (and any applicable
interest or Default Interest thereon or in respect thereof),
shall be made only from and to the extent of Available Cash.
F. No Offset to Distributions to the Limited Partner
-------------------------------------------------
Distributions to the Limited Partner (including distributions
provided for in Paragraph 1 of Part A of Article VI), payments of
Base Rent and distributions or payments of interest or Default
Interest on or in respect of the distribution of the Additional
First Year Minimum Amount, Minimum Amount distributions and Base
Rent, as well as the Limited Partner's 5% share of Percentage
Distributions, shall be made without any deduction or offset
whatsoever (other than taxes required to be withheld under
applicable law).
G. Distributions May Not Be Funded By Indebtedness
-----------------------------------------------
No distributions provided for in Paragraph 1 of Part A of
Article VI or payments of Base Rent or any interest or Default
Interest under this Agreement or the Lease may be funded with
Indebtedness other than Affiliate Loans, provided that, if the
--------
Net Worth Standard is met and there is not then in existence a
Default (or an event which, with notice or the passage of time or
12
both would be a Default), the Prepaid Amount and, and after 1997,
up to one-half of the Minimum Amount distribution and Base Rent
payment due on July 15 (or the next Business Day) may be funded
by a borrowing that is otherwise treated as a Working Capital
Loan, provided that (i) each such borrowing shall be repaid (x)
before any Affiliate Loans are repaid or any Priority Management
Fee Distributions or Percentage Distributions are made and (y) in
any event by August 31 of the year in which the borrowing is
made, time being of the essence, and (ii) the Full Payment Date
will not occur until such borrowing is repaid. This Part G of
Article VI does not modify in any manner the absolute and
unconditional obligations to make the distributions provided for
in Paragraph 1 of Part A of Article VI or to pay Base Rent (in
each case including any applicable interest or Default Interest
thereon or in respect thereof).
H. Application of Additional First Year Minimum Amount
---------------------------------------------------
Immediately upon receipt of payment of all or any portion of
the Additional First Year Minimum Amount distribution, the
Limited Partner shall pay the Retained Liabilities (plus interest
thereon and any amounts due in respect thereof to the creditor
accruing through the date of such receipt of all or such portion
of the Additional First Year Minimum Amount distribution) to the
extent of the amount so received. The General Partner shall
notify the Limited Partner three Business Days prior to each
distribution of all or any portion of the Additional First Year
Minimum Amount, specifying the amount thereof and the Retained
Liabilities to be repaid therefrom. In fulfilling its
obligations under this Part H of Article VI, the Limited Partner
shall rely upon the instructions provided by the General Partner
and have no liability for doing so.
ARTICLE VII
ALLOCATIONS OF INCOME AND LOSS FOR
TAX PURPOSES; CAPITAL ACCOUNTS
The parties intend that, for federal, state and local income
tax ("Tax") purposes, this limited partnership be treated as if
the property and assets contributed by the Limited Partner to
this limited partnership had been leased to the General Partner,
with (i) rent being payable to the Limited Partner in an amount
equal to the Additional First Year Minimum Amount (for 1997), the
Minimum Amount (plus any interest or Default Interest), the
Limited Partner's share of any Percentage Distributions and the
other distributions described in the first sentence of Paragraph
4 of Part A of this Article VII and (ii) the other terms hereof
being included in the lease. The remaining provisions of this
Article VII are intended to allocate items of income, gain,
deduction, credit and loss in a manner consistent with the
foregoing lease treatment.
A. Tax Allocations
---------------
For Tax purposes, income, gains, losses, deductions and
credits in each year shall be allocated as set forth below:
1. Depreciation. All depreciation from the depreciable
property contributed to the limited partnership by the Limited
Partner shall be allocated to the Limited Partner. All other
depreciation shall be allocated to the General Partner.
2. Credits. All investment tax, energy and other credits
shall be allocated to the General Partner.
3. Net Losses. Except as provided in Paragraph 5 of Part A
of this Article VII, any net losses and deductions of the limited
partnership (before taking depreciation and credits into account)
shall be allocated to the General Partner.
4. Gross Income. Except as provided in Paragraph 5 of
Part A of this Article VII, gross income of the limited
partnership shall be allocated first to the Limited Partner until
the aggregate allocation of such gross income to the Limited
Partner in all years commencing with 1997 equals in dollar amount
13
the aggregate amount of Additional First Year Minimum Amount
distributions, Minimum Amount distributions (including any
applicable distributions of interest or Default Interest) and
Percentage Distributions actually received by the Limited Partner
from the limited partnership in all such years (including any
amounts distributed by the limited partnership pursuant to
Section 8.4(b) of the Overall Agreement), distributions actually
received by the Limited Partner pursuant to the last sentence of
Paragraph 1 of Part A of Article VI and distributions actually
received by the Limited Partner pursuant to the last sentence of
Paragraph 1 of Part C of Article XVII less an amount equal to any
gain (other than any Special Gain), and plus an amount equal to
any loss (other than any Special Loss), allocated to the Limited
Partner pursuant to Paragraph 5 of Part A of this Article VII.
All other gross income of the limited partnership shall be
allocated (i) first, to the extent applicable, to the Co-General
Partner until the aggregate allocations of such gross income to
the Co-General Partner in all years commencing with 1997 equal
the aggregate cash distributions actually received by the Co-
General Partner from the limited partnership in all such years
and (ii) second, all such remaining gross income of the limited
partnership shall be allocated to the General Partner. "Special
Gain" or Special Loss" means gain or loss, as applicable,
resulting from (i) the receipt by the limited partnership of any
condemnation proceeds pursuant to the first sentence of Part P of
Article XVII, (ii) the receipt by the limited partnership of any
insurance proceeds from a casualty pursuant to the second
sentence of Part P of Article XVII or (iii) the sale of the
Amusement Park pursuant to Section 8.5 of the Overall Agreement
or following the removal of SFOG II, Inc. as General Partner.
5. Gain or Loss on Sale of Assets. Gain or loss on the
sale or other disposition of any property or asset contributed to
the limited partnership as well as any Special Gain or Special
Loss shall be allocated to the Limited Partner. Gain or loss on
the sale or other disposition of any other property or asset of
the limited partnership other than any Special Gain or Special
Loss shall be allocated to the General Partner.
6. Regulatory Allocations. Prior to any other allocations
under the foregoing provisions of this Part A of Article VII, the
following special allocations shall be made in the following
order:
(a) If there is a net decrease in Partnership Minimum
Gain during a taxable year, each Partner shall be allocated
items of limited partnership income and gain for such year
in accordance with Section 1.704-2(f) of the Treasury
Regulations.
(b) If there is a net decrease in Partner Nonrecourse
Debt Minimum Gain during a taxable year, each partner who
has a share of such Partner Nonrecourse Debt Minimum Gain,
determined in accordance with Section 1.704-2(i)(5) of the
Treasury Regulations, shall be specifically allocated items
of income and gain for such year (and, if necessary,
subsequent years) in accordance with Section 1.704-2(i)(4)
of the Treasury Regulations.
(c) For purposes of this Agreement (i) "Partner
Nonrecourse Debt Minimum Gain," (ii) "Nonrecourse
Deductions," (iii) "Partner Nonrecourse Deductions," (iv)
"Partner Nonrecourse Debt," and (v) "Partnership Minimum
Gain" shall have the respective meanings set forth in
Section 1.704-2 of the Treasury Regulations.
(d) In the event any partner unexpectedly receives any
adjustments, allocations or distributions described in
paragraphs (b)(2)(ii)(d)(4), (5), or (6) of Section 1.704-1
of the Treasury Regulations, there shall be specially
allocated to such partner such items of income (including
items of gross income) and gain, at such times and in such
amounts as will eliminate as quickly as possible that
portion of its deficit (if any) in its Capital Account (as
increased for this purpose by the amount which such partner
is obligated to restore (pursuant to the terms of this
Agreement or otherwise) or deemed obligated to restore
pursuant to Section 1.704-1(b)(2)(ii)(c) of the Treasury
14
Regulations and the penultimate sentences in Sections 1.704-
2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations)
caused or increased by such adjustments, allocations or
distributions.
(e) No allocation under this Part A of Article VII
shall be made to the Limited Partner which would cause or
increase a deficit balance in the Limited Partner's
"Projected Capital Account" (as defined below) which exceeds
the amount of the Limited Partner's Share of Partnership
Minimum Gain and Partner Nonrecourse Debt Minimum Gain. For
purposes of the foregoing, the determination as to whether
an allocation would create or increase a deficit balance in
a Limited Partner's Projected Capital Account shall be made
as of the end of the year to which such allocation relates.
As used herein, the term "Projected Capital Account" means,
with respect to the Limited Partner, the Limited Partner's
Adjusted Capital Account Balance as of the last day of any
applicable year but reduced by any applicable projected
adjustments, allocations or distributions in accordance with
the provisions of paragraphs (4), (5) and (6) of Regulation
Section 1.704-1(b)(2)(ii)(d). The foregoing definition of
Projected Capital Account is intended to comply with the
provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations and shall be interpreted and applied
consistently therewith.
(f) For each taxable year or other period of the
limited partnership for which allocations are made, all
Nonrecourse Deductions shall be allocated to the General
Partner.
(g) Any and all Partner Nonrecourse Deductions shall
be allocated to the partner who bears the economic risk of
loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable, as
determined in accordance with Section 1.704-2(i) of the
Treasury Regulations.
(h) For purposes of Section 752 of the Code and the
Treasury Regulations thereunder, excess nonrecourse
liabilities (within the meaning of Treasury Regulations
Section 1.752-3(a)(3)) shall be allocated to the General
Partner.
(i) The allocations set forth in this Paragraph 6 of
Part A of Article VIII (collectively, the "Regulatory
Allocations") are intended to comply with certain
requirements of the Treasury Regulations. It is the intent
of the partners that, to the extent possible, all Regulatory
Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of
income, gain, loss, or deduction pursuant to this
subparagraph (i). Therefore, notwithstanding any other
provision of this Part A of Article VII (other than the
Regulatory Allocations), offsetting special allocations of
income, gain, loss or deduction shall be made such that each
partner's Capital Account balance is, to the maximum extent
possible, equal to the Capital Account balance such partner
would have had if the Regulatory Allocations were not part
of this Agreement and all items were allocated pursuant to
this Part A of Article VII (other than this Paragraph 6).
7. Section 754 Election. The General Partner is
authorized to and shall cause the limited partnership to make the
election pursuant to Section 754 of the Code with the limited
partnership's federal income tax return for 1997. In addition,
the General Partner is authorized to and shall make any similar
elections under applicable state law, to the extent such
elections are available.
B. Capital Accounts
----------------
Effective as of the commencement of the limited partnership,
a Capital Account ("Capital Account") shall be established for
each partner and maintained for each such partner in accordance
with Treasury Regulations Section 1.704(b)(2)(iv) promulgated
under Section 704(b) of the Code. As of the date of this
Agreement, after the contributions provided for in Article V and
the assumption of liabilities provided for in Article X, the
Capital Account of the Limited Partner was $235 million, the
Capital Account of SFG-II, LLC was $100 and the Capital Account
of the General Partner was zero. Each partner's Capital Account
15
shall be increased by (i) the amount of any other cash and the
fair market value of any other assets contributed by the partner
to the limited partnership (net of any other liabilities
transferred to the partnership in connection with such
transaction) and (ii) the partner's allocable share of items of
income or gain for Tax purposes for each year and any gain exempt
from tax. The partner's Capital Account shall be decreased by
(i) the amount of cash and the fair market value of any assets
distributed to such partner (net of any liabilities transferred
in connection with such transaction), (ii) the partner's share of
items of deduction (including depreciation) or loss for Tax
purposes for each year, and (iii) allocations to a partner of
expenditures described in Section 705(a)(2)(B) of the Code.
Nothing in this Part B of Article VII shall affect the provisions
of Paragraph 2 of Article XIV.
C. No General Partner or Co-General Partner Remuneration
-----------------------------------------------------
The General Partner shall not receive for its services to the
limited partnership, nor shall the Co-General Partner receive
from the limited partnership, any remuneration other than the
distributions made and Tax allocations provided for in Articles
VI and VII, respectively.
D. No Withdrawals
--------------
No partner will be entitled, without the consent of the other
partners, to withdraw any part of its contribution to the capital
from or any part of its Capital Account in the limited
partnership or, to the extent permitted by law, to otherwise
withdraw, resign or disassociate from the limited partnership;
provided that nothing in this paragraph affects the right of the
Limited Partner to remove the General Partner as provided in Part
D of Article VIII or the right of the General Partner to resign
at any time after December 31, 2026.
ARTICLE VIII
MANAGEMENT
A. Management Generally
--------------------
1. General Partner. The General Partner shall, subject to
the limitations set forth in this Agreement (including without
limitation in Part B of this Article VIII) (the "Limitations"),
have the exclusive control of the management of the business and
affairs of the limited partnership, including the power and
authority to obligate and bind the limited partnership in all
matters involving the business of the limited partnership. The
General Partner shall cause the limited partnership to do those
acts it is to do under this Agreement. Subject to the
Limitations, the execution and delivery of any agreement or
instrument by the General Partner shall be sufficient to bind the
limited partnership. The General Partner shall execute and file
with the Delaware Secretary of State a Certificate of Limited
Partnership for the limited partnership, shall procure for the
limited partnership a certificate of authority to transact
business in Georgia and shall cause such other filings to be made
and such offices and agents for service of process to be
maintained in Delaware, Georgia and other jurisdictions where
required for the limited partnership to be registered or
qualified as such and to protect the limited liability of the
Limited Partner.
2. Time and Effort of General Partner. The General Partner
shall devote all of its time and effort to the business of the
limited partnership and shall not have any other business.
3. No Resignation; Effect of Removal. Without the prior
written consent of the Limited Partner, the General Partner may
not, prior to December 31, 2026, resign or withdraw as the
General Partner of the limited partnership, disassociate from the
limited partnership or, except for removal as provided in Part C
of this Article VIII, take any other action so that it is not the
General Partner of the limited partnership. If the General
Partner ceases to be the General Partner of the limited
partnership in a manner not permitted by this Agreement or by
removal, in addition to any other liability or damages for which
16
the General Partner or any other Person may be liable (none of
which are released or compromised hereby), (i) all amounts due
from this limited partnership to the General Partner and all
borrowings of this limited partnership from the General Partner,
any SFEC Entity or any SFEC Affiliate shall, without any further
action, be thereupon contributed to the capital of the limited
partnership and no longer be due and the General Partner and the
other SFEC Entities shall comply with Section 8.5(a) of the
Overall Agreement, (ii) the General Partner's right to
distributions, including distributions in liquidation, shall be
extinguished, (iii) the General Partner will have no rights with
respect to any positive balance in its Capital Account, and (iv)
allocations for Tax purposes shall be made to the General Partner
to the date it ceased to be the General Partner and for so long
thereafter as is necessary for Tax allocations attributable to
the transactions provided for in clauses (i) through (iii) of
this sentence to be made to the General Partner. The immediately
preceding sentence shall supersede any provisions of this
Agreement that are inconsistent therewith.
4. Limited Partner. The Limited Partner as such shall not
participate in the control of the business or affairs of the
limited partnership, transact any business on behalf or in the
name of the limited partnership or have any power or authority to
bind or obligate the limited partnership.
5. Tax Matters Partner. The General Partner shall be the
Tax Matters Partner of the limited partnership. However, the
General Partner shall not, without the prior written consent of
the Limited Partner: (i) take any action that would require the
payment of proposed tax deficiencies by the Limited Partner, Fund
or the limited partners of Fund prior to a judicial determination
that such taxes are owing, to the extent such a judicial
determination can be obtained prior to payment of such proposed
tax deficiencies, or (ii) initiate any judicial proceeding
relating to federal income tax in any court other than the United
States Tax Court if the outcome of such proceeding could (x)
increase, or affect the timing of, any tax payable by and (y) be
binding upon the Limited Partner, Fund or the limited partners of
Fund. The General Partner shall give notice to the Limited
Partner, within no less than ten Business Days, of all
proceedings as to which it is acting as the Tax Matters Partner
and shall afford the Limited Partner the right to participate in
such proceedings. The General Partner shall provide to the Co-
General Partner and the Limited Partner copies of any agreement
extending the statute of limitation for Tax purposes within ten
Business Days of each such agreement being entered into. Except
as required by applicable law, the General Partner shall take no
position for income tax purposes inconsistent with the treatment
of this limited partnership as a lease for income tax purposes
with respect to the property and assets contributed by the
Limited Partner. The General Partner may file an election or
protective election under Treasury Regulations section 301.7701-3
and applicable state law in the form attached as Exhibit A to
have the partnership classified as a partnership, which election
or form of election may be amended only in form and substance
reasonably satisfactory to the Limited Partner.
6. Co-General Partner; Certain Successor General Partner
Provisions. As long as SFOG II, Inc. is the General Partner, the
Co-General Partner shall not participate in the control of the
business or affairs of the limited partnership, transact any
business on behalf or in the name of the limited partnership or
have any power or authority to bind or obligate the limited
partnership. Upon SFOG II, Inc. ceasing for any reason to be the
General Partner without a substitute general partner being
selected, the Limited Partner shall have the exclusive right to
designate Fund or any entity 99% or more owned by the Limited
Partner or Fund or another Person permitted by the Second Amended
and Restated Fund Limited Partnership Agreement to act as the
general partner of the limited partnership and such substitute
general partner, upon execution of a counterpart of this
Agreement, will thereupon succeed to all of the rights (including
the right to distributions) and powers of the General Partner, be
admitted as a substitute General Partner and thereafter be the
General Partner. Until such designation is made, but for not in
excess of 90 days, the Co-General Partner will succeed to all
17
such rights and powers of the General Partner, but shall not have
any obligation to make any contribution to the limited
partnership or its capital.
B. Certain Limitations
-------------------
Without first obtaining the written consent of the Limited
Partner, neither the limited partnership nor the General Partner
shall take, or have any power to take, any of the following
actions on behalf or in the name of the limited partnership:
(a) Execute or deliver any assignment for the benefit
of the creditors of the limited partnership or file any petition
in bankruptcy or for reorganization, rehabilitation, arrangement,
composition or extension under the Bankruptcy Code or under any
other federal or state law or fail to use their best efforts to
cause to be dismissed within 45 days of the filing thereof
against the limited partnership any involuntary petition in
bankruptcy or for reorganization, rehabilitation, arrangement,
composition or extension under the Bankruptcy Code or under any
other federal or state law, or do any act similar to any of the
foregoing; or
(b) Sell or lease to another Person all, substantially
all or any substantial part of the assets of the limited
partnership (except sales of food, beverages, goods and inventory
in the ordinary course of business); sell any property or asset
of the limited partnership having a value in excess of 10% of the
then Minimum Amount and Base Rent without the prior written
consent of the Limited Partner, which consent will not be
unreasonably withheld; if the aggregate sales of properties and
assets of the limited partnership in any year (other than sales
of food, beverages, goods, inventory and other items typically
held for resale to park customers in the ordinary course of
business) exceed 15% of the Minimum Amount and Base Rent for that
year, make any further sales of such property or assets without
the prior written consent of the Limited Partner, which consent
will not be unreasonably withheld; issue or agree to issue to any
Person any limited partnership interests, general partnership
interest (except as provided in Part A, Paragraph 6, of this
Article VIII) or any other direct or indirect equity interest in
the limited partnership, merge with or into or consolidate with
or convert into any other entity or do any other act which would
have essentially the same effect as any of the foregoing; or
(c) Incur or permit to exist any Indebtedness
(including Capital Leases) of the limited partnership except:
(i) Working Capital Loans made to the limited partnership prior
to 2026; (ii) Capital Leases of the Limited Partner at December
31, 1995 that are contributed to the limited partnership by the
Limited Partner; (iii) so long as the Net Worth Standard is met,
Capital Improvement Loans (including Capital Leases); (iv)
Affiliate Loans; and (v) borrowings permitted by the proviso in
the first sentence of Part G of Article VI, but only for so long
as such borrowings are permitted to be outstanding.
Notwithstanding the foregoing, the limited partnership shall not,
without the prior written consent of the Limited Partner, incur
any Indebtedness (other than (x) interest on then existing
Indebtedness, (y) Affiliate Loans and (z) Working Capital Loans)
(A) if the Net Worth Standard is not then met or (B) whether or
not the Net Worth Standard is then met, if (I) there is any
Default (or any event which, with notice or lapse of time or both
would be a Default), (II) there is outstanding any Indebtedness
of this limited partnership not permitted to be outstanding by
this Agreement or (III) there is any default (or the General
Partner has knowledge of an event which with notice or lapse of
time or both would be a default) which is a failure to pay any
Indebtedness of this limited partnership or another default that
would entitle the lender to accelerate any Indebtedness of this
limited partnership. No later than ten Business Days after the
date on which the Net Worth Standard is not met, the General
Partner (i.e., SFOG II, Inc.) shall cause all outstanding Capital
---
Improvement Loans to be repaid out of funds that are the proceeds
of Affiliate Loans or capital contributions by the General
Partner; or
18
(d) Incur or permit to exist any mortgage, pledge or
security interest in or claim, lien, encumbrance or charge on any
of the assets of the limited partnership, except for Capital
Improvement Loans (including Capital Leases) that are secured to
the extent provided in the definition of Capital Improvement
Loans, Capital Leases permitted by clause (ii) of subparagraph
(c) of this part B of Article VII that are secured solely by the
assets leased, and liens for taxes and assessments not yet due;
provided, however, that the limited partnership may incur and
-------- -------
permit statutory liens and other non-consensual liens of an
immaterial nature to exist, provided that (and only for so long
--------
as) good faith efforts are being made to remove or cause the
removal of such statutory or other liens; or
(e) Loan to any Person (other than to an employee of
the limited partnership or of SFOG II Employee, Inc. in
circumstances that are ordinary course, consistent with past
practice and in an amount that is in the aggregate immaterial to
the limited partnership) any of the funds of the limited
partnership, or directly or indirectly guarantee any obligation
of any other Person (including as guarantees for this purpose any
income maintenance, net worth maintenance or, without limitation,
other arrangement the effect of which is in substance to
guarantee payment or performance), in each case other than a
Person that is wholly-owned by the limited partnership; or
(f) Acquire any real property (except the property
located at the intersection of Riverside Drive and South Service
Road that is occupied by a "Sam's Warehouse" at the date of this
Agreement, but only if a phase I environmental study indicating
no significant environmental issues with respect thereto is
received by the limited partnership), provided that this
--------
provision will not preclude the leasing of the Land by this
limited partnership under the Lease.
C. Removal of General the Partner
------------------------------
1. General Rule. The General Partner may be removed only
as provided in this Part C of Article VIII.
2. Removal. The General Partner may be removed by the
Limited Partner, upon notice being sent to the General Partner at
any time after an Overall Agreement Payment Default, a
Partnership Minimum Amount Distribution Default, a Lease Payment
Default or Another Material Default (each, a "Default"). Once
notice of removal is entitled to be and is sent after a Default,
there shall be no right to cure without the prior written consent
of the Limited Partner (which consent may be withheld in its sole
discretion and with or without reason) and the General Partner
shall be removed. Subject to Paragraph 7 of this Part C of
Article VIII, removal will not release any SFEC Entity or SFEC
Affiliate from any obligations they may have under this
Agreement, the Overall Agreement or any other Related Agreement.
3. Overall Agreement Payment Default. An "Overall
Agreement Payment Default" is any of (i) a failure by SFOG
Acquisition A and/or SFOG Acquisition B to (x) make the Tender
Offer when and as required (time being of the essence) or to pay
when due any amount to be paid by it pursuant to the Tender
Offer, (y) perform its obligations to make available the
Liquidity Put or Accelerated Put when and as required (time being
of the essence) or to pay when due the amounts to be paid by it
pursuant to the Liquidity Put (time being of the essence);
provided that for this purpose an amount that is disputed shall
--------
not be deemed to be due until such amount is determined pursuant
to the procedure set forth in Section 12.18 of the Overall
Agreement or (z) make all of the payments it is required to make
if the End-of-Term Option is exercised, or (ii) an SFOG
Requirement, but, in each case in clauses (i) and (ii), which
failure continues without being remedied by SFOG Acquisition A
and/or SFOG Acquisition B or a Guarantor or which SFOG
Requirement is not fully discharged by a Guarantor, without any
right of subrogation or similar right against the Limited
Partner, SFG-I, LLC, Fund or any partners of Fund, in each case
within ten Business Days (time being of the essence) after
19
written notice of such failure or requirement is given by any one
of Fund, ▇▇▇▇▇▇ or SFG, Inc. to SFOG Acquisition A and/or SFOG
Acquisition B and one of SFEC or SFTP. If a payment by SFOG
Acquisition A and/or SFOG Acquisition B pursuant to the Tender
Offer, the Liquidity Put or the End-of-Term Option is paid or
made and is later determined to not have been indefeasibly paid
or indefeasibly made in whole or in part, an Overall Agreement
Payment Default will exist if such payment, together with Default
Interest on the amount returned or required to be returned
(including any interest included in such amount) from the date
such amount is returned or required to be returned, is not made
by a Guarantor within ten Business Days (time being of the
essence) after written notice by one or more of the Limited
Partner, Fund, the Co-General Partner, ▇▇▇▇▇▇ or SFG, Inc. to one
or both of SFEC or SFTP that any recipient(s) under the Tender
Offer, Liquidity Put, Accelerated Put or End-of-Term Option has
been required to return all or any portion of such distribution
because it was not indefeasibly paid. Notwithstanding anything
in this Paragraph 3 to the contrary, an Overall Agreement Payment
Default will not result if making the Tender Offer or providing
the Liquidity Put or Accelerated Put or payment of the amount due
with respect to any of them is not permissible under a Payment
Prohibiting Law, provided the Tender Offer is commenced, the
Liquidity Put is made, the Accelerated Put is made or payment is
made, with interest at Prime from the original date due, within
ten Business Days after such action or payment is not prohibited
by a Payment Prohibiting Law.
4. Partnership Minimum Amount Distribution Default. A
Partnership Minimum Amount Distribution Default is (x) a failure
by the limited partnership to make the distribution of the
Additional First Year Minimum Amount or any Minimum Amount
distributions (including for this purpose any interest or Default
Interest) when due or to repay any borrowing made pursuant to the
proviso in the first sentence of Part G of Article VI, or (y) a
failure of the General Partner to cause all then outstanding
Capital Improvement Loans to be repaid as provided in Paragraph
(c) of Part B of Article VIII, if the Net Worth Standard is not
met, in each case if such failure continues without being
remedied by the limited partnership, the General Partner or any
Guarantor within ten Business Days (time being of the essence)
after written notice of such failure is given by any one or more
of the Limited Partner, the Co-General Partner, Fund, ▇▇▇▇▇▇ or
SFG, Inc. to the General Partner and one or both of SFEC or SFTP.
If the Additional First Year Minimum Amount distribution or any
Minimum Amount distribution is made or such borrowing is repaid
and is later determined to not have been indefeasibly made or
repaid in whole or in part, a Minimum Amount Payment Default will
exist if such distribution (including any interest included in
such amount), together with Default Interest from the date such
amount is returned or required to be returned, or such repayment
is not paid by a Guarantor within ten Business Days (time being
of the essence) after written notice by one or more of the
Limited Partner, Fund, the Co-General Partner, ▇▇▇▇▇▇ or SFG,
Inc. to one or both of SFEC or SFTP that any recipient(s) has
been required to return all or any portion of such distribution
or repayment because it was not indefeasibly made or paid.
Notwithstanding anything in this Paragraph 4 to the contrary, a
Partnership Minimum Amount Distribution Default will not result
if distribution or repayment of the amount due is not permissible
under a Payment Prohibiting Law, provided the distribution or
repayment is made, with interest at Prime from the original date
due, within ten Business Days after distribution is not
prohibited by a Payment Prohibiting Law.
5. Another Material Default. "Another Material Default"
means any other failure by any SFEC Entity or SFEC Affiliate or
this limited partnership to perform or comply in full with the
obligations (i) under Article X or (ii) referred to Paragraph 1
of Part O of Article XVII or to pay when due any Indebtedness of
the limited partnership or any amounts due under Operating
Leases, provided that, with respect to clause (i) of this
--------
sentence, such failure continues without being remedied by the
limited partnership or a Guarantor within 20 Business Days, time
being of the essence, after written notice thereof is given by
any one of Fund, ▇▇▇▇▇▇, the Limited Partner, the Co-General
Partner or SFG, Inc. to the General Partner and one of SFEC or
SFTP and, provided, further, that with respect to clause (ii) of
-------- -------
20
this sentence, such failure is not remedied in full within 30
Business Days (or such longer period as may be specified by the
arbitrator provided for therein), time being of the essence,
after the arbitrator referred to in Paragraph 1 of Part O of
Article XVII determines that the failure to perform or comply has
or will have an adverse effect on the benefits to be received by
the Limited Partner or the partners of Fund (other than SFOG
Acquisition A and SFOG Acquisition B) or on the Amusement Park,
in any such case that is material in relation to the value of the
Amusement Park.
6. Notices; No Waiver. Notices under this Agreement,
including this Part C of Article VIII, shall be given as provided
in Section 15.4 of the Overall Agreement and shall be deemed
given as provided therein. Neither the Co-General Partner nor
the Limited Partner shall have any obligation to remove the
General Partner if entitled to do so. No waiver of any right to,
or failure by the Co-General Partner or the Limited Partner
having such a right to, remove the General Partner will
constitute a waiver of any other right to remove the General
Partner, even if such other right or remedy arises from matters
similar or identical to those as to which a right to remove was
waived or otherwise not exercised.
7. Effect of Removal. The removal of the General Partner
upon a Default shall be without prejudice to the rights of the
Limited Partner to recover any damages it may incur from any such
Default and, without limitation, shall not release the General
Partner or the limited partnership from any obligations they may
have under this Agreement or the Lease with respect to the making
of Minimum Amount distributions, paying Base Rent and paying
interest or Default Interest on both), any Guarantors from their
respective obligations under the Guarantees or any of the other
obligations of the SFEC Entities under the Overall Agreement and
the other Related Agreements (including in each case obligations
with respect to the Liquidity Puts provided for in the Overall
Agreement), provided that any obligations to make then future
--------
required minimum capital expenditures will terminate effective
upon removal. If the General Partner is removed or resigns, the
Limited Partner may elect a substitute General Partner. Upon and
after the removal of the General Partner, the Limited Partner
shall (i) operate the Amusement Park in a commercially reasonable
manner, (ii) sell the Amusement Park on commercially reasonable
terms or (iii) enter into a commercially reasonable arrangement
with a third party to operate the Amusement Park and cause to be
distributed to the Limited Partner its share of all Available
Cash generated by such operations, and any Available Cash so
distributed to the Limited Partner (as well as, to the extent
applicable, any proceeds received by the Limited Partner or Fund
with respect of any sale or other disposition of the Amusement
Park or a substantial portion of the assets relating thereto)
shall, net of appropriate costs incurred in connection therewith,
offset the obligation of the limited partnership, the General
Partner and the Guarantors, after such removal, to pay or cause
to be paid, as applicable, then future Minimum Amount
distributions, then future Base Rent and interest or Default
Interest on both. In any dispute, in determining whether and the
extent to which such future Minimum Rent, Base Rent and interest
or Default Interest obligations are so offset, the General
Partner shall have the burden of proving by a preponderance of
the evidence that any operation of the Amusement Park by the
Limited Partner, the sale of the Amusement Park or any
arrangement with a third party to operate the Amusement Park is
not commercially reasonable. Following the removal of SFOG II,
Inc. (or its successor) as the General Partner, for purposes of
calculating the Put Price in accordance with Article III of the
Overall Agreement, EBITDA shall continue to be calculated in the
manner described in the Overall Agreement and the operator of the
Amusement Park shall be bound by the covenants and limitations
contained in this Agreement as they relate to the operation of
the Amusement Park to the same extent as SFOG II, Inc. and Flags
II were bound by such provisions prior to SFOG II, Inc. (or its
successor) ceasing to be the General Partner.
8. End-of-Term Option Not Exercised. The General Partner
will no longer be the General Partner to the extent it ceases to
be the General Partner pursuant to Section 8.5 of the Overall
21
Agreement. If the General Partner so ceases to be the General
Partner, the Limited Partner may elect a substitute General
Partner.
D. Removal of Co-General Partner
-----------------------------
The Co-General Partner may be removed at any time by the
Limited Partner and, upon such removal, the Limited Partner may
elect in its place any Person it could, under the Second Amended
and Restated Fund Limited Partnership Agreement, elect as Co-
General Partner.
ARTICLE IX
NO ASSIGNMENTS OR SUBSTITUTIONS
1. No Assignments. No partner shall sell, assign, pledge
or otherwise transfer to any Person its interest in the limited
partnership or any portion thereof.
2. No Substitutions. No Person shall be admitted to the
limited partnership as a substitute General Partner, Co-General
Partner or Limited Partner without the prior written consent of
all partners, which consent may be withheld by any partner in its
sole and absolute discretion and with or without reason; provided
--------
that a substitute General Partner selected upon removal of the
General Partner and a substitute Co-General Partner selected upon
removal of the Co-General Partner will be admitted as a
substitute General Partner or substitute Co-General Partner, as
the case may be. This Article IX does not restrict the issuance
or transfer of securities or membership interests issued by the
General Partner, Co-General Partner or Limited Partner or the
removal or election of directors, officers or managers of the
General Partner, the Co-General Partner or the Limited Partner.
ARTICLE X
SALE OF THE DESIGNATED ASSETS; ASSUMPTION
OF LIABILITIES OF THE LIMITED PARTNER
1. Sale of the Designated Assets. The Limited Partner
hereby sells, transfers, conveys and assigns to the limited
partnership the Designated Assets in exchange for the assumption
of Indebtedness, liabilities and obligations provided for in
Paragraph 2 of this Article X.
2. Assumption of the Liabilities of the Limited Partner.
As the purchase price for the Designated Assets, the limited
partnership hereby assumes and agrees to discharge in full when
due, and the General Partner will cause the limited partnership
to so assume, defend and hold the Limited Partner harmless
against and discharge in full when due, all Indebtedness,
liabilities and contractual obligations of the Limited Partner
existing at the date of this Agreement (including without
limitation the obligations of the Limited Partner under the
contract for Batman the Ride and the Limited Partner's
obligations under any notes given by the Limited Partner in
consideration or partial consideration of the purchase by the
Limited Partner of the SF Agreement Land or any borrowings made
by the Limited Partner to purchase the SF Agreement Land), except
only (a) those liabilities and obligations, if any, that were so
created by actions of SFG-I, LLC as the manager of the Limited
Partner and were not specifically permitted to be taken by the
Overall Agreement or the Related Agreements (provided that any
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and all borrowings made by the Limited Partner to purchase the SF
Agreement Land and notes given by the Limited Partner in
consideration or partial consideration of the purchase of the SF
Agreement Land, even if such borrowings were made or notes signed
by actions of SFG-I, LLC as the manager of the Limited Partner,
will be conclusively deemed to have been specifically permitted
to be made and given by the Overall Agreement and the Related
Agreements), (b) any income tax liabilities of the Limited
Partner and holders of interests therein arising out of the
transactions provided for by this Agreement and the Overall
Agreement, and (c) any Retained Liabilities. The Limited Partner
was, until date of this Agreement, controlled by an affiliate of
the General Partner, not by SFG-I, LLC or Fund. Accordingly, no
representation or warranty is made by the Limited Partner or SFG-
22
I, LLC as to the liabilities of the Limited Partner. As used
above in this Article X, the term "liabilities" includes all
liabilities and obligations of any kind or description (whether
in contract, tort, arising by operation of law or, without
limitation, otherwise), in each case whether absolute or
contingent, known, suspected, unsuspected, unknown or, without
limitation, otherwise; provided that notwithstanding anything to
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the contrary in this Article X, the limited partnership shall not
assume and shall not be liable for any claims that accrued prior
to the date of this Agreement that Fund or its partners may have
or purport to have against the Limited Partner. As used above in
this Article X, the term "Retained Liabilities" means
Indebtedness identified by the General Partner in a notice (in
the form of Exhibit B) given to the Limited Partner on the date
hereof having a principal amount equal to the lesser of (i) $8.7
million and (ii) the excess, if any, of all outstanding
liabilities of Flags as of the Effective Date (other than
contingent liabilities) over the tax basis of the Designated
Assets as of the Effective Date.
ARTICLE XI
OVERALL AGREEMENT
The limited partnership shall comply, and the General
Partner shall cause the limited partnership to comply, with the
provisions of the Overall Agreement to be complied with by the
limited partnership, as if it were a party thereto.
ARTICLE XII
BOOKS OF ACCOUNT, FINANCIAL
STATEMENTS AND FISCAL MATTERS
1. Books of Account. The General Partner shall keep
adequate books of account of the limited partnership. Such books
of account shall be kept at the principal place of business of
the limited partnership, and the Limited Partner and the Co-
General Partner and their respective authorized representatives
shall have, at all times, free access to and the right to inspect
and copy such books of account and all other records of the
limited partnership.
2. Financial Statements. The General Partner shall
deliver to the Limited Partner the financial statements and tax
and other information provided for in Section 12.8 of the Overall
Agreement, as and when required thereby.
3. Fiscal Year. The fiscal year of the limited
partnership shall be the calendar year.
4. Funds. The funds of the limited partnership shall be
deposited in such bank(s) or other financial institution(s) or
invested in obligations of United States government, United
States government agencies, States of the United States or
agencies thereof or in mutual fund(s) that invest substantially
all of their assets in one or more of such obligations and in
obligations of municipalities in any States, in each case as the
General Partner shall from time to time deem appropriate. Such
funds shall be withdrawn only by the General Partner or the
General Partner's duly authorized agents. The limited
partnership shall not commingle its funds with the funds of any
other Person.
ARTICLE XIII
DURATION AND COMMENCEMENT OF BUSINESS
The term of the limited partnership commenced, and the
limited partnership commenced business, on the date of this
Agreement. The term of the limited partnership shall end upon
the dissolution and winding up of the limited partnership as
provided in Article XIV.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
1. Dissolution. Subject to the last sentence of this
paragraph 1, the limited partnership shall dissolve upon the
23
earliest to occur of the following events:
(a) December 31, 2026 (January 15, 2027 if the End-of-Term
Option is exercised);
(b) the General Partner shall have been removed,
adjudicated insolvent or bankrupt or dissolved and no successor
general partner has been selected pursuant to Part A, Paragraph
6, of Article VIII within 90 days thereafter; or
(c) as provided in Section 8.5 of the Overall Agreement.
Notwithstanding clause (a) of this paragraph 1, by the written
consent of the General Partner, the Co-General Partner and the
Limited Partner, the date in clause (a) may be extended once
during any decade by up to an additional ten years.
2. Liquidation. Upon the dissolution of the limited
partnership by reason of Paragraphs 1(b) or 1(c) of this Article
XIV, the Limited Partner may appoint the Co-General Partner or a
trustee to wind up and terminate the business and affairs of the
limited partnership. The Co-General Partner or trustee, if
applicable, or otherwise the Limited Partner, shall promptly wind
up and terminate the business and affairs of the limited
partnership and cause it to discharge all of its liabilities to
its creditors. Upon the dissolution of the limited partnership
for any other reason, the General Partner shall, as trustee,
promptly wind up and terminate the business and affairs of the
limited partnership and discharge all of the liabilities of the
limited partnership to its creditors. The trustee, the Co-
General Partner or the Limited Partner, as applicable, shall,
subject to Paragraph 3 of Part A of Article VIII and Section
8.5(a) of the Overall Agreement, liquidate all assets of the
limited partnership necessary to discharge such liabilities to
creditors and, in addition, may liquidate all remaining
intangible personal property of the limited partnership. After
all of such liabilities have been discharged, the limited
partnership, the trustee or the Limited Partner, shall, subject
to Section 8.5 of the Overall Agreement, in the following order:
(a) distribute to the Limited Partner all remaining cash of
the limited partnership up to an amount equal to the amount, if
any, by which the cumulative Minimum Amounts, interest and
Default Interest exceeds the aggregate amount of Minimum Amounts,
interest and Default Interest distributions theretofore
distributed to the Limited Partner; and
(b) distribute to the Limited Partner all remaining
property and assets of the limited partnership.
The obligation of the General Partner and the other SFEC Entities
to comply with Section 8.5(a) of the Overall Agreement is not
diminished by the provisions of this Part 2 of Article XIV.
Notwithstanding any provision hereof or any positive balance in
the General Partner's Capital account at any time, the General
Partner shall not be entitled to receive, by reason of
dissolution or liquidation of the limited partnership, any
interest in the Amusement Park or any part of the proceeds
resulting from the sale of the Amusement Park or any of the other
assets of the Amusement Park or the limited partnership in
connection with the liquidation of the limited partnership.
ARTICLE XV
END-OF-TERM OPTION
As is set forth in Article VIII of the Overall Agreement and
subject to the conditions set forth therein, SFOG Acquisition B
shall have the right to acquire the interest of the Co-General
Partner (or any successor Co-General Partner) in the limited
partnership. SFOG Acquisition B is a third party beneficiary of
this Article XV. If the End-of-Term Option is not exercised by
SFOG Acquisition B, then Section 8.5 of this Overall Agreement
24
will be applicable as if set forth in full herein and, to the
extent inconsistent therewith, will supersede Article XIV of this
Agreement.
ARTICLE XVI
LITIGATION
The General Partner shall, in the name of the limited
partnership, prosecute and defend such actions at law or in
equity as may be necessary to enforce or protect the interests of
the limited partnership. The limited partnership and the General
Partner shall respond to any final decree, judgment or decision
of any court, board or authority having jurisdiction.
ARTICLE XVII
CERTAIN AGREEMENTS REGARDING
OPERATION OF THE AMUSEMENT PARK
The parties have structured certain of the transactions
contemplated by this Agreement as a limited partnership instead
of a lease; however the parties to this Agreement intend that,
for income tax purposes, this Agreement shall be treated as a
lease. In addition, the parties intend that the provisions of
this Agreement be those that would be included in a lease. In
addition to other provisions in this Agreement, the parties agree
to the terms set forth below in this Article XVII.
A. Improvements
------------
1. Permits. The limited partnership shall obtain and
maintain all permits, licenses and other governmental approvals
and authorizations ("Permits") which are required for the
construction, ownership, use, operation or occupancy of the
Amusement Park (including the Improvements) and the Land (except
any Permit the failure of which to be obtained or maintained
would not have an adverse effect on the Amusement Park or an
adverse effect on the General Partner's ability to satisfy and to
cause the limited partnership to satisfy their respective
obligations under this Agreement).
2. Demolition; Performance and Payment Bonds; Certain
Property or Asset Sales.
(a) Prior the demolition of any rides, the
amphitheater in the Amusement Park or any other Improvements with
a value or replacement cost in excess of 10% of the then Minimum
Amount, the limited partnership must secure the Co-General
Partner's prior written consent and, if requested by the Limited
Partner, the limited partnership shall at its expense retain a
consultant, reasonably satisfactory to the Co-General Partner,
which shall monitor and certify as to the desirability of and
proper demolition of such Improvements, provided that no such
--------
consent shall be required prior to December 31, 2021 if the Net
Worth Standard is met.
(b) If the Net Worth Standard is not met, before the
commencement of construction or installation of any building,
structure, ride or other Improvement in the Amusement Park with a
cost of construction and installation in excess of 50% of the
then Minimum Amount, if requested by the Limited Partner, the
limited partnership at its expense shall, if such bond or bonds
are available on commercially reasonable terms, deliver or cause
to be delivered to the Co-General Partner a performance bond and
labor and material payment bond issued by a surety authorized to
do business in the State of Georgia, guaranteeing full
performance of construction and/or installation of the
Improvements in accordance with the plans for the Improvements
and payment to all claimants for labor and materials used or
reasonably required for use in the performance of construction or
installation of the Improvements in accordance with the plans, in
the form satisfactory to the Co-General Partner and with a surety
approved by the Co-General Partner, which approvals shall not be
unreasonably withheld. Each such bond shall name the General
Partner and the Co-General Partner as a joint obligee with the
limited partnership. Each performance bond shall remain in
effect until the date on which the bonded obligations are
25
satisfied by the principal or by the surety's performance in
accordance with the terms of the bond. Each payment bond shall
remain in effect until the expiration of the period for filing a
claim of lien as provided by law, or if a claim of lien is filed,
the expiration of the period for filing an action to foreclose
such lien, or until the Amusement Park and, if applicable, the
Land is freed from the effect of such claim of lien and any
action brought to foreclose such lien or the lien is otherwise
discharged. For the purpose of calculating EBITDA and for the
purpose of determining compliance with Paragraph 1 of Part C of
this Article XVII, one-half of the cost of the bond or bonds
required by this Section 2(b) shall be deemed to be a capital
expenditure and one-half shall be deemed to be an expense.
3. Performance of Demolition, Construction and
Installation Work.
(a) Any and all demolition, construction and
installation work shall be done diligently, in conformity with
all Legal Requirements, including, without limitation, the
Building Code of the County of ▇▇▇▇▇▇, and all Insurance
Requirements, in a good and workmanlike manner (except where
failure to conform to Legal Requirements or Insurance
Requirements would not have an adverse effect on the General
Partner or on the Amusement Park or an adverse effect on the
General Partner's ability to satisfy and to cause the limited
partnership to satisfy its respective obligations under this
Agreement).
(b) Upon the completion of Improvements with a
replacement cost or value of 5% or more of the then Minimum
Amount, the General Partner shall promptly deliver to the Co-
General Partner as-built plans and specifications for such
Improvements.
B. Use and Occupancy
-----------------
1. Use and Occupancy. Subject to the occurrence of a
Force Majeure, at all times during the term of this Agreement,
the limited partnership shall operate an amusement park
comparable to the Amusement Park or a Comparable Park, with such
park operating for an average of ten hours per day and 150 days
per year (in each case, subject to local school calendar
changes).
2. Other Parks. Subject to the occurrence of a Force
Majeure, an entity that directly or indirectly owns at least a
majority of the equity securities of the General Partner shall,
at all times during the term of this Agreement, own and operate
or manage at least five Comparable Parks (including the Amusement
Park) in the United States.
3. No Ride Rotation. No rides will be rotated to other
amusement parks without the prior written consent of Co-General
Partner.
4. Licenses and Concessions. The limited partnership may
grant licenses and concessions, provided that such licenses and
concessions are granted in the ordinary course consistent with
past practice or practice in the Comparable Parks, are not of a
material part of the Amusement Park, are not made to SFEC
Entities or SFEC Affiliates and expire, unless the End-of-Term
Option is exercised, on or before December 31, 2026.
C. Minimum Capital Expenditures
----------------------------
1. Minimum Capital Expenditures. SUBJECT TO PARAGRAPH 2
OF THIS PART C OF ARTICLE XVII, THE LIMITED PARTNERSHIP SHALL
EXPEND A MINIMUM AMOUNT ON CAPITAL EXPENDITURES IN THE AMUSEMENT
PARK DURING EACH ROLLING PERIOD OF FIVE CONSECUTIVE YEARS
COMMENCING JANUARY 1, 1998 (EACH SUCH FIVE-YEAR PERIOD BEING A
"MEASURING PERIOD") IN AN AMOUNT EQUAL TO SIX PERCENT OF THE
AGGREGATE GROSS REVENUES DURING THE FIVE CONSECUTIVE YEAR PERIOD
ENDING TWO YEARS BEFORE THE EXPIRATION OF THE APPLICABLE
MEASURING PERIOD AND IN ANY EVENT CONSISTENT WITH THE AMOUNT
SPENT ON CAPITAL EXPENDITURES IN THE COMPARABLE PARKS DURING THE
MEASURING PERIOD. NO NEW RIDES OR OTHER ATTRACTIONS WILL BE
26
PURCHASED OR OTHER MAJOR CAPITAL EXPENDITURES MADE FOR RIDES OR
OTHER ATTRACTIONS UNLESS SUCH RIDES OR OTHER ATTRACTIONS OR RIDES
OR ATTRACTIONS COMPARABLE IN ALL MATERIAL RESPECTS THERETO HAVE
BEEN SUCCESSFULLY INTRODUCED AT A COMPARABLE PARK. PURCHASES OF
LAND AND EXPENDITURES MADE ON IMPROVEMENTS WHICH REPLACE
IMPROVEMENTS THAT ARE DAMAGED OR DESTROYED, IF THE DAMAGE OR
DESTRUCTION WAS REQUIRED TO BE INSURED AGAINST BY THIS AGREEMENT,
SHALL BE IN ADDITION TO THE CAPITAL EXPENDITURES REQUIRED
PURSUANT TO THIS PARAGRAPH 1 OF PART C OF ARTICLE XVII. IF ANY
IMPROVEMENTS ARE SOLD, AN AMOUNT EQUAL TO THE PROCEEDS OF SALE
(INCLUDING AS PROCEEDS THE AMOUNT REPRESENTED BY ANY NOTES), NET
OF THE COSTS OF SALE, SHALL BE ADDED TO THE REQUIRED CAPITAL
EXPENDITURES IN THE 12 MONTHS AFTER THE SALE TAKES PLACE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS PARAGRAPH 1 OF
PART C OF ARTICLE XVII, IF SFOG ACQUISITION B EXERCISES THE END-
OF-TERM OPTION PURSUANT TO ARTICLE VIII OF THE OVERALL AGREEMENT,
CAPITAL EXPENDITURES BY THE LIMITED PARTNERSHIP FROM AND AFTER
THE DATE OF EXERCISE OF THAT OPTION WILL NOT, WITHOUT THE LIMITED
PARTNER'S PRIOR WRITTEN CONSENT, EXCEED IN ANY YEAR 120% OF THE
YEARLY AVERAGE ANNUAL AMOUNT OF CAPITAL EXPENDITURES DURING THE
FOUR-YEAR PERIOD PRECEDING SUCH EXERCISE, UNLESS AN AMOUNT EQUAL
TO 5% OF SUCH EXCESS IS DISTRIBUTED TO THE LIMITED PARTNER.
2. Exception. The limited partnership shall not be
required to expend and shall not be deemed to be in Default
solely by reason of its failing to expend the amount on capital
expenditures required by Paragraph 1 of this Part C of Article
XVII if (i) the Net Worth Standard is not met; (ii) the limited
partnership has requested in writing that the Limited Partner
consent to the incurrence of additional Capital Improvement Loans
in order to permit the limited partnership to expend the amount
so required, specifying the type and terms of the Indebtedness it
proposes to incur and the lender(s), and (iii) the Limited
Partner has failed to consent to the incurrence of such
additional Indebtedness (it being understood that nothing in this
paragraph shall restrict the ability of the General Partner to
cause the limited partnership to make capital expenditures out of
the proceeds of Affiliate Loans).
D. Alterations
-----------
The limited partnership may (i) make alterations, additions
and renovations to the Improvements and (ii) replace any
destroyed Improvements (collectively, "Alterations"), but only in
compliance with all applicable Legal Requirements and Insurance
Requirements.
E. Repairs and Maintenance
-----------------------
1. Standards. Subject to the occurrence of a Force
Majeure, the limited partnership shall establish and maintain the
Amusement Park (including, without limitation, the Improvements)
in good repair and condition, and shall, at its sole cost and
expense, timely make all necessary structural and non-structural
repairs to the Amusement Park. All repairs of the Improvements
shall be made to the Service Standard.
2. Repairs and Maintenance. Subject to the occurrence of
a Force Majeure, the limited partnership shall at all times keep
the Amusement Park in a manner such that it otherwise meets the
Service Standard and shall keep all portions of the Amusement
Park in a safe, attractive and clean condition. The limited
partnership shall keep the parking areas, sidewalks and other
common areas abutting the Amusement Park clean.
F. Compliance with Legal Requirements
----------------------------------
1. Compliance with Legal Requirements. THE LIMITED
PARTNERSHIP SHALL, CONSISTENT WITH INDUSTRY STANDARDS FOR
COMPARABLE AMUSEMENT PARKS, COMPLY WITH ALL MATERIAL LEGAL
REQUIREMENTS ON OR WITH RESPECT TO OWNERSHIP, USE, OCCUPATION OR
OPERATION OF THE AMUSEMENT PARK, INCLUDING, WITHOUT LIMITATION,
THE LEGAL REQUIREMENTS RELATING TO PUBLIC SAFETY AND TO NON-
DISCRIMINATION, AND WITH ANY DIRECTION MADE PURSUANT TO LAW BY
ANY PUBLIC OFFICER OR OFFICERS REGARDING THE AMUSEMENT PARK, OR
THE OWNERSHIP, USE, CONDITION OR OCCUPATION THEREOF, WHETHER OR
NOT SUCH COMPLIANCE INVOLVES STRUCTURAL REPAIRS OR CHANGES OR
27
SHALL BE REQUIRED ON ACCOUNT OF ANY PARTICULAR USE TO WHICH THE
AMUSEMENT PARK OR ANY PART THEREOF MAY BE PUT AND WITHOUT REGARD
TO WHETHER ANY SUCH LEGAL REQUIREMENT OR ORDER BE OF A KIND NOW
WITHIN THE CONTEMPLATION OF THE PARTNERS.
2. Contest of Legal Requirements. The limited partnership
may in good faith contest any Legal Requirement, provided that
such contest does not result in a lien, charge, encumbrance or
liability against and that is material to the Amusement Park and
noncompliance therewith shall not constitute a crime or offense
punishable by fine or imprisonment. The limited partnership's
good faith noncompliance with such Legal Requirement during such
contest shall not be deemed a breach of this Agreement.
G. Insurance
---------
1. Compliance with Insurance Requirements. The limited
partnership shall not do or permit to be done any act or thing
upon the Amusement Park which will invalidate the terms of any
fire and casualty insurance policies covering the Amusement Park
and the fixtures and property therein. The limited partnership
shall comply with all present and future Insurance Requirements
and shall not do or permit to be done in or upon the Amusement
Park or the Land or bring or keep anything therein or thereon or
use the same in a manner which could result in the denial of such
fire and casualty insurance coverage.
2. Insurance Requirements. The limited partnership shall
throughout the term of this Agreement:
(a) Keep the Improvements, and fixtures and contents
on, in and appurtenant thereto insured against loss or damage by
fire, lightning and the additional perils included in the
standard extended coverage endorsement as well as those included
in the "all risk" policy and "difference in conditions" ("DIC")
endorsement, including but not limited to loss or damage caused
by windstorm (including hurricanes), hail, explosion, riot, riot
attending a strike, civil commotion, aircraft, vehicle, smoke,
vandalism, malicious mischief, collapse, earthquake, flood and
water damage other than by sprinkler leakage, in an amount (other
than for DIC perils) equal to 100% of the full replacement cost
thereof (as the same may from time to time increase) without
diminution of such replacement cost for depreciation or
obsolescence, and in an amount for DIC perils equal to $50
million, in each case by policies written with a "deductible" (or
self-insurance limits) not to exceed $750,000. The replacement
cost and total value of the Improvements, equipment, fixtures and
contents shall be determined from time to time (but not more
frequently than once in any calendar year (unless a major change
is made to or occurs at the Amusement Park) or less frequently
than once every three calendar years) by a manufacturer of
amusement park rides, contractor, appraiser or insurance company
generally used in the industry or acceptable to the insurers of
the Amusement Park. During periods of substantial construction
of the Improvements, including Alterations thereto, the limited
partnership shall keep in effect all-risk builder's risk
insurance, including coverage against collapse, written on a
completed value basis;
(b) Keep in effect comprehensive general liability
insurance against claims for bodily injury, personal injury, or
death and property damage occurring upon, in or about the
Amusement Park, and on, in or about the adjoining streets,
sidewalks and passageways, providing coverage in the sum of not
less than $10 million combined single limit per occurrence and
not less than $20 million aggregate liability coverage or cause
the Amusement Park to participate in a self-insurance program
with Comparable Parks providing comparable coverage. These
coverage limitations shall be increased from time to time
throughout the term of this Agreement to conform to the liability
coverage then customarily maintained for the Comparable Parks;
28
(c) Subject to the Net Worth Standard, keep in effect
use-and-occupancy insurance, rental interruption insurance and
business interruption insurance in an aggregate amount not less
than the total of two times the then Minimum Amount plus two
times the then Base Rent;
(d) To the extent applicable, keep in effect
appropriate amount elevator insurance, boiler and machinery
insurance, water damage insurance (direct and legal liability),
sprinkler leakage insurance (direct and legal liability) and, in
the event of war or threatened hostilities, appropriate forms of
war damage or war risk insurance if issued by the federal
government or any agency thereof;
(e) Keep in effect workers' compensation insurance as
required by state law, including employer's liability insurance
with a limit of not less than $2 million; and
(f) Keep in effect such other insurance in such
amounts as may from time to time be customary in the industry or
in effect at the Comparable Parks. Dollar amounts for insurance
provided in Paragraphs 2(a), (b) and (e) of this Part G of
Article XVII shall be increased or decreased every three years in
proportion to increases or decreases in the CPI, if any, during
that period, but shall not be decreased at any time from their
initial amounts set forth therein.
3. Insurance Carriers; Policies. All such insurance
required shall be under valid and enforceable policies issued by
(a) insurers providing such insurance with respect to Comparable
Parks at least 50% owned (directly or indirectly) by entities
under 50% or greater common ownership with the General Partner
(the "Comparably Insured Parks") or (b) insurers having a rating
in the current property-casualty edition of Best's Key Rating
Guide published by A.M. Best Company ("Best's Guide") of A or
better and being in a financial size category of V or greater in
Best's Guide (or a comparable rating and financial category in
Best's Guide if Best's rating system or financial classification
changes, or in any similar insurance guide selected if Best's
Guide is no longer published) and, to the extent required for
such insurance to be valid, licensed to do and doing business in
the State of Georgia. The limited partnership shall also furnish
to the Co-General Partner from time to time upon the Co-General
Partner's request, a certificate of insurance containing a
statement of insurance of the limited partnership pursuant to
this Agreement then in force and stating that the insurance then
in force complies with the provisions of this Agreement and that
the premiums thereon have been paid. The General Partner shall
promptly notify the Co-General Partner of the cancellation or
change of the terms of any such insurance policy.
4. Required Provisions. The limited partnership's
insurance policies shall be for a term of not less than one year
and, to the extent the following coverages are contained in the
insurance for the Comparably Insured Parks, shall provide:
(a) That the full amount of any losses sustained shall
be payable notwithstanding any act, omission or negligence
of the limited partnership which might otherwise result in
forfeiture of such insurance;
(b) For a waiver of all right of subrogation against
the partners;
(c) That such policies shall not be invalidated should
the insured waive, prior to a loss, any or all rights of
recovery against any party for losses covered by such
policies;
(d) Coverage on a "primary" basis with respect to the
Limited Partner and its manager(s) and members, and the
members, partners, officers, agents, employees and
volunteers of each of them, regardless of the requirement
that such Persons be named, for some purposes, as additional
insured on the insurance policies of the limited
partnership;
29
(e) That such policies shall not be suspended, voided,
canceled, reduced in coverage or in limits or materially
changed without at least ten days prior written notice to
each insured named therein, including, without limitation,
the Co-General Partner;
(f) That the insurance shall apply separately to each
insured against whom a claim is made or suit is brought,
except with respect to the limits of the insurer's
liability; and
(g) That with respect to all liability insurance
coverages, the partners shall be additional insured.
Such insurance policies shall contain no special limitations on
the scope of protection afforded to the partners. The references
to the partners and to the Limited Partner above include the
Limited Partner in its capacity as the landlord under the lease.
H. Force Majeure
-------------
"Force Majeure" means by events beyond the reasonable control
of the General Partner such as acts of God, acts of public enemy,
fire, earthquake, floods, explosion, actions of the elements,
war, invasion, insurrection, riot, mob violence, sabotage,
failure of transportation, total or partial condemnation,
requisition, or orders of government or civil or military
authorities, but excluding, however, the inability to obtain
monies, that may preclude or make impossible performance in whole
or in part.
I. No Abatement
------------
None of any Legal Requirements, Force Majeure or anything else
whatsoever is an excuse with respect to or will ▇▇▇▇▇ the
obligations, which are absolute and unconditional, to timely make
the Additional First Year Minimum Amount distribution, to make
Minimum Amount distributions and pay Base Rent (including in each
case any applicable interest and Default Interest), subject to
Paragraph 7 of Part C of Article VIII, or to timely discharge the
liabilities assumed under Article X, provided that the
--------
obligations to make then future Minimum Amount distributions and
then future Base Rent shall be extinguished upon the End-of-Term
Option having been accelerated and exercised, as provided in Part
P of this Article XVII, and the payments to be made pursuant to
the End-of-Term Option having been made.
J. Impositions
-----------
1. Payment of Impositions. The limited partnership shall
pay and discharge all Impositions at least ten days before the
first day on which a penalty or interest may accrue or be
assessed thereon for non-payment (or, if no penalty or interest
thereon may accrue or be assessed, then before such Impositions
become delinquent or past due).
2. Contest. The limited partnership shall have the right
to contest the amount or validity, in whole or in part, of any
Imposition by appropriate proceedings promptly initiated and
diligently conducted in good faith, but only after payment of
such Imposition, unless such payment would operate as a bar to
the contest or interfere materially with the prosecution thereof,
in which event, notwithstanding the provisions hereof, the
limited partnership may, upon giving written notice to the
Limited Partner (in its capacity as Landlord under the Lease),
postpone or defer payment of such Imposition, provided that none
of the Amusement Park or the Land, or any part of either of them,
would by reason of such postponement or deferment be in danger of
being forfeited, sold or foreclosed for nonpayment of such
Impositions. Upon the termination of any such proceedings, the
limited partnership shall pay the amount of such Imposition or
part thereof as shall be finally determined in such proceedings
to be payable (after exhaustion of any rights of appeal), the
payment of which may have been deferred during the prosecution of
such proceedings, together with any costs, fees, interest,
penalties or other liabilities in connection therewith.
30
3. Impositions. "Impositions" means real estate, ad
--
valorem and other taxes or assessments, possessory interest
-------
taxes, transient occupancy taxes, water and sewer charges,
license, permit and inspection fees, gross receipts and sales
taxes, and governmental impositions and charges of every kind or
nature whatsoever which may at any time be charged, assessed or
imposed upon, or becomes a lien upon, or arise in connection with
the ownership, operation, use, occupancy or possession of the
Amusement Park or the Land, regardless of whether assessed or
levied upon or payable by the Limited Partner (including its
capacity as Landlord under the Lease) or the limited partnership
(including in its capacity as Tenant under the Lease), provided,
--------
however, that Impositions shall not include any income, excess
-------
profits, franchise, transfer, inheritance, capital stock or other
similar tax imposed on the Limited Partner unless, due to a
future change in the method of taxation, an income, excess
profits, franchise, transfer, inheritance, capital stock or other
tax shall be levied against the Limited Partner which is clearly
and demonstrably in lieu of or in substitution for any tax or
increase therein which would otherwise constitute an Imposition,
in which event such income, excess profits, franchise, transfer,
inheritance, capital stock or other tax shall be deemed to be an
Imposition.
K. No Adverse Possession
---------------------
The limited partnership will not permit any portion of the
Amusement Park to be used in such a manner as might make possible
a claim of adverse use, adverse possession, prescription or other
similar claims.
L. Hazardous Material
------------------
1. General Provision. The limited partnership, including
in its capacity as Tenant under the Lease, will not cause any
Hazardous Material to be located, used or disposed of, on or at
the Amusement Park or on or under the Land, or disposed of or
discharged from the Amusement Park or the Land into or on any
land, the atmosphere or any watercourse, body of water or
wetlands and will use its best effort to not permit any of the
foregoing, in each case except to the extent placed or used on
the Land or at the Amusement Park in the manner permitted by
applicable Legal Requirements (including Environmental Laws).
2. Hazardous Material. "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or
becomes regulated by any local governmental authority, the State
of Georgia or the United States government, or any material or
substance defined as a hazardous, toxic or dangerous substance,
waste, or material in any federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or
material, as now or at any time in the future in effect
(collectively, "Environmental Laws").
M. Encroachments
-------------
If any building, structure or other improvement on or
constructed on the Land encroaches upon any property, street, or
right of-way adjoining or adjacent to Land, or violates the
agreements or conditions contained in any restrictive covenant
affecting the Land or any part thereof, or hinders or obstructs
any easement or right-of-way, then, (i) in the case of any
encroachment, promptly after written request of any Person
affected by such encroachment, or (ii) otherwise, promptly after
written request of the Limited Partner or of any person affected
by such violation, hindrance, obstruction or impairment, the
limited partnership shall, at is sole cost and expense, either
(A) obtain valid and effective waivers or settlements of all
claims, liabilities and damages resulting from each such
encroachment, violation, hindrance, obstruction or impairment, or
(B) make such changes to the Improvements and take such other
action as shall be necessary to remove such encroachments,
hindrances or obstructions and to end such violations or
impairments, including, if necessary, the alteration or removal
of any building, structure or other improvements.
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N. Remedies Cumulative
-------------------
Any right or remedy of the Limited Partner in the Overall
Agreement, this Agreement or any other Related Agreement and any
other right or remedy it may have at law or equity upon breach of
any covenant, agreement, term, provision or condition in the
Overall Agreement, this Agreement or any other Related Agreement
shall be distinct, separate and cumulative rights or remedies,
and no one of them, whether exercised by the Limited Partner or
not, shall be deemed to be in exclusion of any other.
O. Certain Matters; Arbitration; Another Material Default
------------------------------------------------------
1. Certain Matters. This Part O of Article XVII shall
apply to all Paragraphs of Parts B, C, E, F, G, J, K, L and Q of
this Article XVII and to Paragraphs 2 through 5 of Article V,
inclusive, of the Lease.
2. Arbitration. If the Limited Partner contends that this
limited partnership has failed to perform or comply with any of
the obligations specified in Paragraph 1 of this Part O of
Article XVII and that such failure has continued for a period of
30 days after notice of such failure from the Limited Partner to
the General Partner, the Limited Partner shall be entitled to
seek confidential, binding arbitration of the matter in
accordance with this Paragraph 2 of Part O of Article XVII. Any
such arbitration shall be conducted, at the option of the Limited
Partner, in the State of California, Georgia or New York. The
arbitration shall be conducted by a single arbitrator, selected
by the General Partner and the Limited Partner or, if they do not
so select an arbitrator within 20 Business Days after a request
to do so by either the General Partner or the Limited Partner,
by the president of the American Arbitration Association ("AAA")
(or, if applicable, a similar or successor entity of the AAA), or
his or her designee, upon application by the General Partner or
the Limited Partner. If the arbitration is in Los Angeles, or,
if elsewhere, to the extent provided in the location of the
arbitration, the arbitration shall be administered by the AAA
pursuant to its Commercial Rules and Supplementary Procedures for
Large, Complex Disputes, provided that the parties shall be
entitled to discovery as if the matter were being litigated in
federal court. The arbitrator shall be a single neutral who
shall be, if such an individual is available, a retired or former
judge selected from the AAA Commercial Large Complex Case Panel
of Neutrals or, if the AAA no longer maintains such a Panel, from
the Panel that succeeds to the responsibilities of such Panel.
The decision of the arbitrator, who shall determine the validity
of this arbitration provision if it is challenged, shall be final
and unappealable and judgment thereon may be entered in any court
of competent jurisdiction. The fees of the arbitrator shall be
borne by the General Partner, the limited partnership and/or the
Limited Partner in such proportions as are determined by the
arbitrator. The decision of the arbitrator shall be whether
there is Another Material Default, but shall be without prejudice
to any other rights the Limited Partner may have if there is a
failure to perform or comply that is not of sufficient
materiality to be Another Material Default, provided that the
--------
decisions of the arbitrator and its findings of fact shall be res
judicata in any other proceeding.
3. Another Material Default. As set forth in Paragraph 5
of Part C of Article VIII, if the arbitrator selected pursuant to
Paragraph 2 of this Part O determines that the failure of the
limited partnership to perform or comply with any of the
obligations specified in Paragraph 1 of this Part O will have an
adverse effect on the benefits to be received by the Limited
Partner, the limited partners of Fund or on the Amusement Park
that is in the aggregate material in relation to the value of the
Amusement Park and such failure to perform or comply continues
for a period of 30 Business Days (or such longer period as may be
specified by the arbitrator) after such determination by the
arbitrator, then such failure shall constitute Another Material
Default.
32
P. Total Condemnation/Equivalent Casualty
--------------------------------------
In the event of a total condemnation of the Land or a
condemnation of so much of the Land that it is economically
impractical to operate an amusement park thereon, with all
appeals of such condemnation decision having been finally
exhausted or the time for appeal having passed, the Limited
Partner shall be entitled to all condemnation proceeds, the End-
of-Term Option shall be accelerated (with the CPI Adjustment for
the End-of-Term Option Price, provided for in the Overall
Agreement, being based on the Minimum Amount for the then next
year) and shall be exercised or deemed exercised as of 30 days
after the date of the condemnation. In the event of a casualty
such that it is not possible to repair and operate an amusement
park thereon (such as contamination of the Land by Hazardous
Material so that it may not be safely occupied and a clean-up or
remediation is economically impossible), the Limited Partner
shall be entitled to all insurance proceeds, if any, resulting
from such casualty, and at the option of either the Limited
Partner or the General Partner, exercised by notice to the other,
the End-of-Term Option shall be accelerated (with the CPI
Adjustment for End-of-Term Option Price provided for in the
Overall Agreement, being based on the Minimum Amount for the then
next year) and so exercised or deemed exercised, at the End-of-
Term Option Price so determined, as of 30 days after the date of
casualty. The Limited Partner shall not, without the consent of
the General Partner, distribute to its partners, dispose of or
otherwise use any condemnation proceeds or insurance proceeds to
which it shall be entitled pursuant to this paragraph. In the
event of any condemnation of any portion of the Land and/or
Improvements not covered by the foregoing, the limited
partnership shall be entitled to all condemnation proceeds. In
the event of any casualty not covered by the foregoing, the
limited partnership shall be entitled to all insurance proceeds.
Notwithstanding anything to the contrary herein, the Minimum
Amount and Base Rent for the year in which the End-of Term
Option, as accelerated, is exercised shall be prorated through
the date on which the End-of-Term Option Price is paid. The End-
of-Term Option Price will be increased or decreased to reflect
any underpayment or overpayment the Minimum Amount or Base Rent
with respect to such year as calculated in accordance with the
immediately preceding sentence.
Q. Operating Lease Limitation
--------------------------
The limited partnership shall not enter into any lease
(other than a Capital Lease) (an "Operating Lease") if after
giving effect thereto the aggregate lease or rental payments that
the limited partnership would be required to make in any year
with respect to (a) Operating Leases of rides (including any
virtual reality or "simulator" - type rides) or other attractions
(including restaurants and stores) would exceed (i) for 1997, $6
million and (ii) for each year after 1997, the greater of $6
million or $6 million multiplied by the CPI Adjustment (as
defined in the Overall Agreement) or (b) all Operating Leases,
including the Operating Leases referred to in clause (a) of this
sentence, would exceed (i) for 1997, $8 million and (ii) for each
year after 1997, the greater of $8 million or $8 million
multiplied by the CPI Adjustment. The limited partnership shall
use commercially reasonable efforts to negotiate Operating Leases
that will not terminate on a change of control of the limited
partnership or of the General Partner or a change in the General
Partner (each a "change in control provision"), provided that, if
--------
such leases nevertheless cannot be obtained without a change in
control provision on commercially reasonable terms, the limited
partnership may enter Operating Leases that have a change in
control provision if the aggregate lease and rental payments on
all such leases does not exceed (i) for 1997, $2.5 million and
(ii) for each year after 1997, the greater of $2.5 million or
$2.5 million multiplied by the CPI Adjustment, provided, further,
-------- -------
that the fact that a lease without a change in control provision
has a higher but commercially reasonable lease or rental rate
than a lease with a change in control provision does not mean
that the lease without the change in control provision is not
obtainable on commercially reasonable terms.
33
ARTICLE XVIII
LIMITATION ON CERTAIN LIABILITIES
1. Co-General Partner. Neither the Co-General Partner
nor its member(s) or managers from time to time shall under any
circumstances have (i) any responsibility, whether to the Limited
Partner or the General Partner, for any obligation or liability
of the limited partnership or (ii) any obligation to contribute
to the General Partner for any contributions made from time to
time by the General Partner to the capital of the limited
partnership or otherwise to the limited partnership or for any
losses or expenses incurred by the General Partner from time to
time including, without limitation, in respect of the limited
partnership, any obligations or liabilities the limited
partnership or the General Partner may have under this Agreement
or, without limitation, otherwise. This limitation on liability
is in addition to any other limitation on liability in favor of
the Co-General Partner and its members and manager(s) as may
exist from time to time, whether at law or, without limitation,
otherwise. The General Partner will indemnify, hold harmless and
defend the Co-General Partner and its manager(s) and members from
time to time against all obligations and liabilities of the
limited partnership.
2. Manager of Limited Partner. Neither the manager(s) of
the Limited Partner from time to time (initially SFG-I, LLC), nor
the manager(s) or members from time to time of the manager(s) of
the Limited Partner (i.e., initially, the manager and members of
SFG-I, LLC) will under any circumstances have any responsibility
for any obligations or liabilities of the Limited Partner,
whether under this Agreement, the Lease or, without limitation,
otherwise, any such responsibility as may exist being limited to
the assets of the Limited Partner from time to time. This
limitation on liability in favor of the manager(s) of the Limited
Partner from time to time (and the manager(s) and member(s) from
time to time of the manager(s) of the Limited Partner) is in
addition to any other limitation on liability that may exist from
time to time in favor of any of them, whether at law or, without
limitation, otherwise.
ARTICLE XIX
GENERAL PROVISIONS
1. Delaware Law. This Agreement has been executed and made
in accordance with the Delaware Revised Uniform Limited
Partnership Act and is to be construed, enforced and governed in
accordance therewith.
2. Amendments. Except as otherwise specifically provided
herein, this Agreement may be amended only by the written
agreement of the General Partner and the Limited Partner;
provided that no amendment that increases the obligations of the
--------
Co-General Partner shall be effective without the prior written
consent of the Co-General Partner.
3. Binding. This Agreement shall be binding upon and inure
to the benefit of the limited partnership and the parties hereto
and, except to the extent limited herein, their legal
representatives, administrators, successors and assigns, whether
such succession or assignment is effected by a sale, transfer,
sale of securities or assets, merger, reverse merger,
consolidation, conversion, operation of law or, without
limitation, otherwise.
4. Severability. If any provision, or portion of a
provision, of this Agreement shall be unenforceable or not legal
in any circumstance, the balance of this Agreement and, to the
extent not unenforceable or not illegal, the balance of such
provision or portion thereof shall not be affected thereby.
5. No Certificate for Limited Partnership Interest. The
interest of the partners in this limited partnership are not
represented by certificates.
34
6. Notices; Waivers. Provisions for notices and for
waivers are contained in Paragraph 6 of Part C of Article VIII.
7. Overall Agreement. Certain provisions of Article XV of
the Overall Agreement are by their terms applicable to the
Agreement and are to that extent incorporated in this Agreement.
8. Savings Clause. If the valid, complete and perfected
assignment or transfer to the limited partnership of any of the
assets to be transferred by the Limited Partner to the limited
partnership pursuant to Article V or X, or if the valid and
complete express assumption by the limited partnership of any of
the liabilities of the Limited Partner to be assumed by the
limited partnership pursuant to Article X, requires the consent,
agreement or approval of or any filing or registration with any
Person, and as a result of the failure to obtain or make any such
consent, agreement, approval, filing or registration such
assignment, transfer or assumption, as the case may be, is not
effected as contemplated hereby despite the provisions hereof
purporting to effect such assignment, transfer or assumption, as
the case may be, then, and until such time as any impediment to
the validity, completeness or perfection of such assignment,
transfer or assumption, as the case may be, shall have been
removed, nullified or waived, (i) all the benefits and burdens
relating to such assets (including, without limitation,
possession, use, risk of loss, potential for gain and dominion,
control and command over such assets) are to inure from and after
the date hereof to the limited partnership and (ii) all of the
burdens relating to such liabilities are to inure from and after
the date hereof to the limited partnership. The parties hereto
undertake and agree to use their reasonable best efforts to
obtain any consent, agreement or approval of and to make any
filing or registration with any Person that may be required or
necessary for the assignment, transfer or assumption of any of
such assets and/or such liabilities, as the case may be, to or by
the limited partnership to be valid, complete or perfected and to
promptly complete any transfer, assignment or assumption.
35
This Limited Partnership Agreement of Six Flags Over ▇▇▇▇▇▇▇
▇▇, L.P. is executed and delivered as of the date first written
above.
SFOG II, INC., General Partner SIX FLAGS OVER GEORGIA, LLC
Limited Partner
By By SFG-I, LL
----------------------------- Manager of Six Flags Over Georgia,
Name: LLC
Title:
SFG-II, LLC, Co-General Partner By
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Manager of SFG-I,
By LLC
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Manager
36
EXHIBIT A GOES HERE
EXHIBIT B
NOTICE OF RETAINED LIABILITIES
------------------------------
To: Six Flags Over Georgia, LLC
In accordance with Paragraph 2 of Article X of the Limited
Partnership Agreement of Six Flags Over ▇▇▇▇▇▇▇ ▇▇, L.P., dated
as of the date hereof (the "Flags II LPA"), SFOG II, Inc. hereby
notifies Six Flags Over Georgia, LLC that the Retained
Liabilities (as defined in the Flags II LPA) shall consist of the
indebtedness described below.
[Describe Retained Liabilities]
Date: SFOG II, Inc.
----------------------------
By:
--------------------
Name:
Title: