STOCK PURCHASE AGREEMENT
BY AND AMONG
SIX FLAGS, INC.,
EPI REALTY HOLDINGS, INC.,
ENCHANTED PARKS INC.
AND
XXXXXXX XXXXX
DECEMBER 6, 2000
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement"), dated as of December 6, 2000, by
and among Six Flags, Inc., a Delaware corporation ("Buyer"), EPI Realty
Holdings, Inc., a Washington corporation ("Shareholder"), Enchanted Parks, Inc,
a Washington corporation (the "Company"), and Xxxxxxx Xxxxx ("Stock" and,
together with the Shareholder, the "Sellers").
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The Shareholder owns (beneficially and of record) all of the outstanding
shares of capital stock of the Company (the "Shares"), and Stock owns
(beneficially and of record) all of the outstanding shares of capital stock of
the Shareholder (the "Shareholder Shares" and, together with the Shares, the
"Securities"), in each case, as indicated on Schedule 2.1.
The Shareholder desires to sell, and Buyer desires to purchase, all of the
Shares on the terms and conditions set forth herein.
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NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
SALE AND PURCHASE; CLOSING
SECTION 1.1. Purchase and Sale of the Shares. Subject to the terms and
conditions set forth herein, at the Closing, the Shareholder shall (and Stock
shall cause the Shareholder to) sell, transfer and deliver to Buyer, and Buyer
shall purchase and accept from the Shareholder, all of the Shares, free and
clear of all Liens.
SECTION 1.2. Purchase Price. (a) Subject to any adjustment provided for
herein, the aggregate purchase price for the Shares (as so adjusted, the
"Purchase Price") shall equal (i) Nineteen Million, Two Hundred Fifty Five
Thousand Dollars ($19,255,000) (the "Closing Payment") and (ii) if the Net
Working Capital Amount is a positive number, plus the amount thereof or if the
Net Working Capital Amount is a negative number, minus the amount thereof.
(b) The Purchase Price is payable as follows:
(i) at the Closing, Buyer will pay an amount in immediately
available funds (the "Debt Payment") necessary to satisfy and discharge in full
the outstanding Debt of the Company that is not released by each obligee thereof
on or prior to the Closing and as listed on Schedule 1.2(a) (the "Retired Debt")
which Debt Payment will not exceed Two Million Dollars ($2,000,000);
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(ii) at the Closing, Buyer shall deliver to the Sellers that
number of shares of Six Flags Common Stock (the "Closing Shares") with a value
(based on the Average Closing Price as of the Closing Date) equal to the sum of
(i) the Closing Payment less the Debt Payment plus (ii) an amount equal to .06
multiplied by the number of Closing Shares issuable under clause (i) above
(rounded to the nearest whole share of Six Flags Common Stock). At the Closing,
Buyer and Sellers shall execute and deliver a registration rights agreement in
the form annexed as Exhibit 1.2A (the "Registration Rights Agreement") pursuant
to which Buyer will file a registration statement (the "Registration Statement")
with respect to the resale of the Closing Shares with the Securities and
Exchange Commission ("SEC") within five business days following the Closing. On
the one hundred eightieth day following the effective date of the Registration
Statement (excluding for purposes of calculating such period any day during such
period on which the effectiveness of the Registration Statement has been
suspended or the Sellers are not otherwise permitted to sell the Closing Shares
pursuant to Section 3.4 of the Registration Rights Agreement), Buyer will
deliver to Sellers an amount, if any, at Buyer's election as described below, in
cash or additional shares of Six Flags Common Stock, valued at the Average
Closing Price as of the date of delivery, (the "Additional Shares" and together
with the Closing Shares, the "Transaction Shares") equal to (x) the product
obtained by multiplying the number of Closing Shares sold by or on behalf of
Sellers during such 180-day period by the Average Closing Price as of the
Closing Date less (y) the total proceeds received by Sellers from all such sales
of the Closing Shares (which total proceeds received will not be reduced by
selling or brokerage commissions paid by Sellers in effecting such sales). The
number of Additional Shares shall equal the sum of the number of shares
calculated as provided in the preceding sentence plus a number of shares equal
to .06 multiplied by such number of shares, provided that the number of
Additional Shares shall not exceed the number of shares of Six Flags Common
Stock with an aggregate value, based on the Average Closing Price as of the date
of delivery, of $1,000,000. The balance, if any, of Buyer's obligation to
Sellers with respect to the sale of Closing Shares described above shall be paid
in immediately available funds. In the event Buyer shall deliver Additional
Shares pursuant to the third preceding sentence, the Registration Rights
Agreement will provide that, within two business days following the delivery of
the Additional Shares, Buyer will file a registration statement with the SEC
with respect to the resale of such Additional Shares. On the thirtieth day
following the effectiveness of such second registration statement (excluding for
purposes of calculating such period any day during such period on which the
effectiveness of such second registration statement has been suspended or the
Sellers are not otherwise permitted to sell the Additional Shares pursuant to
Section 3.4 of the Registration Rights Agreement) Buyer will deliver to Sellers
an amount, if any, in cash equal to (x) the product obtained by multiplying the
number of Additional Shares sold by or on behalf of Sellers during such 30-day
period multiplied by the Average Closing Price as of the date of delivery of the
Additional Shares less (y) the total proceeds received by Sellers from all sales
of Additional Shares (which total proceeds received will not be reduced by
selling or brokerage commissions as provided above with respect to the Closing
Shares). During the period in which the foregoing price guarantee is in effect,
the Sellers (i) will give prior notice to Buyer (by phone or other reasonable
means to the Chief Financial Officer or General Counsel of Buyer) of their
intent to sell more than 75,000 Transaction Shares during any Trading Day, and
will not, without the prior consent of Buyer, sell more than 125,000 Transaction
Shares during any Trading Day, (ii) will provide Buyer reasonable evidence of
their sales of Transaction Shares and their proceeds therefrom and (iii) without
the prior written consent of Buyer, will not sell any
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Transaction Share during the applicable periods set forth above at a price less
than the then applicable bid price per share of Six Flags Common Stock on the
New York Stock Exchange ("NYSE"). Sellers acknowledge that all Transaction
Shares will be issued to Sellers pursuant to the exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and Sellers may not transfer the Transaction Shares except in compliance with
the Securities Act and the applicable rules and regulations promulgated by the
SEC thereunder. The certificates evidencing the Transaction Shares issued to the
Sellers will bear a legend to such effect.
(c) (i) if the Closing shall occur prior to December 31, 2000, on
the twentieth business day after such date, the Buyer will deliver to the
Shareholder an amount in immediately available funds equal to the Net Working
Capital Amount (if a positive number) or Shareholder will deliver to Buyer an
amount in immediately available funds equal to the Net Working Capital Amount
(if a negative number). In any event the party operating the Park on December
31, 2000 shall deliver to the other party within fifteen business days following
such date an itemized statement (the "Net Working Capital Statement"), setting
forth such operating party's good faith calculation of the Net Working Capital
as of December 31, 2000 (the "Net Working Capital Amount"). Net Working Capital
shall be calculated including the provisions of Section 4.14.
(ii) Either party by written notice to the other party within
(30) business days after December 31, 2000 may propose an adjustment or
adjustments (each, a "Proposed Adjustment") to the Net Working Capital Amount
used under Section 1.2(c)(i) above. In such event, the parties will negotiate in
good faith to resolve each such Proposed Adjustment. If any such Proposed
Adjustment cannot be so resolved within 60 days following December 31, 2000,
either the Shareholder or Buyer by written notice to the other party delivered
prior to the end of such 60-day period may elect to refer any such disputed
Proposed Adjustment to the Seattle office of Deloitte & Touche (the "Nominated
Accounting Firm"). The Shareholder and Buyer shall deliver to each other and the
Nominated Accounting Firm in writing such party's disputed Proposed Adjustments
within ten (10) days after the engagement of the Nominated Accounting Firm,
which shall report in writing its determination to the Shareholder and Buyer
within 30 days after such engagement. The amount of the adjustment to the
Purchase Price determined by the Nominated Accounting Firm shall in no event be
less than the lower of the disputed Proposed Adjustments, nor greater than the
higher of the disputed Proposed Adjustments. The conclusions of the Nominated
Accounting Firm shall be final and binding on the parties. The appropriate party
shall pay to the other party in cash the amount of any further adjustment
pursuant to this Section 1.2(c)(ii) within 10 days following the parties'
agreement as to such adjustment or following receipt of the Nominated Accounting
Firm's notice of its conclusions, as the case may be. The fees of the Nominated
Accounting Firm shall be split equally between the parties. Until the adjustment
to the Net Working Capital Amount made pursuant to this Section 1.2(c)(ii) shall
have been finally determined, the Shareholder and Buyer shall afford the
Nominated Accounting Firm reasonable access during business hours to all
relevant books and records for the purpose of calculating or confirming the
correct Net Working Capital Amount.
(iii) Any adjustment to the Net Working Capital Amount made
pursuant to Section 1.2(c)(ii) shall be paid to the party or parties entitled to
the same with interest
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for the period commencing on the twentieth business day after December 31, 2000
and ending on the date of payment. Interest shall be calculated at the "prime"
interest rate as announced by Citibank, N.A., New York City, from time to time
during such period.
SECTION 1.3. Closing. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Shares contemplated hereby (the
"Closing") shall take place at 10:00 a.m., local time, at the offices of Xxxx
Xxxxxx Xxxxxx Lubersky LLP, on the later of (a) December 6, 2000 or (b) on a
date selected by Buyer and the Shareholder not more than five (5) business days
following the satisfaction or waiver of the conditions specified in Article V
(other than conditions requiring the delivery of Purchase Price, certificates
representing the Shares or closing certificates and other instruments and
documents referred to in Section 5.2(f) or 5.3(k)), (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SELLERS
Each Seller and the Company, jointly and severally, represent and warrant
to Buyer that:
SECTION 2.1. Status of the Securities. (a) The authorized and outstanding
shares of each class of capital stock of the Company are as set forth on
Schedule 2.1. Other than the Shares, at the Closing, the Company will not have
outstanding any rights, warrants or options to acquire securities of the Company
or any convertible or exchangeable securities of the Company and, other than
pursuant to this Agreement, no person will have any right to acquire any
securities of the Company. All of the Shares have been duly authorized and duly
and validly issued and are fully paid and non-assessable, and none were issued
in violation of any preemptive rights, rights of first refusal or other
contractual or legal restrictions of any kind.
(b) The outstanding shares of each class of capital stock of the
Shareholder are as set forth on Schedule 2.1 and are owned (beneficially and of
record) by Stock.
SECTION 2.2. Title to the Shares. The Shareholder owns and holds
(beneficially and of record) good and marketable title to all of the Shares free
and clear of any Lien of any kind. Upon consummation of the Contemplated
Transactions (as hereinafter defined) in accordance herewith, Buyer will own all
of the issued and outstanding shares of capital stock of the Company, free and
clear of any Lien.
SECTION 2.3. Authority Relative to this Agreement. The Company and each
Seller has full power, capacity and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party and to
consummate the transactions contemplated hereby and thereby (the "Contemplated
Transactions"). The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions to which the
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Company and each Seller is a party have been duly and validly authorized by the
Company or such Seller and no other proceedings on the part of the Company or
such Seller (or any other person) are necessary to authorize the execution and
delivery by the Company or such Seller of this Agreement or to authorize the
consummation of the Contemplated Transactions to which the Company or such
Seller is a party. This Agreement has been, and at the Closing, the other
Transaction Documents to which the Company and each Seller is a party will have
been, duly and validly executed and delivered by the Company or such Seller, and
(assuming the valid execution and delivery thereof by Buyer) constitutes, or
will at the Closing constitute, the legal, valid and binding agreements of the
Company or such Seller enforceable against the Company or such Seller in
accordance with their respective terms except as such obligations and their
enforceability may be limited by applicable bankruptcy and other similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought (whether at law or in
equity).
SECTION 2.4. No Conflicts; Consents. The execution, delivery and
performance by the Company and each Seller of this Agreement and each other
Transaction Document to which any thereof is a party, the consummation of the
Contemplated Transactions to which the Company and each Seller is a party or the
contemplated change of control of the stock ownership of the Company, will not
(i) violate any provision of the certificate of incorporation or by-laws (or
comparable instruments) of the Company or the Shareholder (ii) require either
Seller or the Company to obtain any consent, approval or action of or waiver
from, or make any filing with, or give any notice to, any Governmental Body or
any other person, except for filings required under the HSR Act and except as
set forth on Schedule 2.4 (the "Sellers Required Consents"); (iii) if the
Sellers Required Consents are obtained prior to Closing, violate, conflict with
or result in a breach or default under (after the giving of notice or the
passage of time or both), or permit the termination of, any Contract of a type
required to be listed on Schedule 2.13 to which any Seller or the Company is a
party or by which any of them or any of their assets may be bound or subject, or
result in the creation of any Lien upon the Shares or upon any of the Assets of
the Company pursuant to the terms of any such Contract; (iv) if the Sellers
Required Consents are obtained prior to Closing, violate any Law or Order of any
Governmental Body against, or binding upon or affecting, any Seller, the
Company, the Shares, the Assets or the Business; or (v) if the Sellers Required
Consents are obtained prior to Closing, violate or result in the revocation or
suspension of any Permit.
SECTION 2.5. Corporate Existence and Power. Each of the Shareholder and
the Company is a corporation, duly organized, validly existing under the laws of
its jurisdiction of organization, and the Company has all requisite powers and
all material Permits required to carry on the Business as now conducted. The
Company is not required to be qualified to do business in any jurisdiction,
other than the State of Washington. The Company does not, directly or
indirectly, own any interest or investment in any other person.
SECTION 2.6. Charter Documents and Corporate Records. The Company and the
Sellers have heretofore made available to Buyer true and complete copies of the
articles of incorporation, by-laws and minute books, or comparable instruments,
of the Company as in effect on the date hereof. The stock and stock transfer
books (or comparable instruments) of the Company have been made available to
Buyer for its inspection and are true and complete.
SECTION 2.7. Financial Information. (a) The Company and the Sellers have
previously furnished to Buyer true and complete copies of (i) the reviewed
financial statements
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of the Shareholder at and for the twelve-month period ended October 31, 1997,
the two month period ended December 31, 1997 and the twelve-month periods ended
December 31, 1998 and 1999 (collectively, the "Annual Statements"), (ii) the
unreviewed financial statements of the Shareholder at and for each calendar
month of 1999 and unreviewed consolidated financial statements of the
Shareholder and the Company at and for each calendar month of 2000 through
October 31, 2000 collectively, the "Interim Statements"), and (iii) all
management letters, management representation letters and attorney audit
response letters issued in connection with the Annual Statements. Other than
rent under the Lease and interest expense related to certain Debt, all items of
revenue and expenses included in the Interim Statements relate to the Company.
Other than the Land and approximately $21,000 of reorganization costs, all
assets and liabilities (other than certain Debt and the Skycoaster Lease) shown
on Interim Statements relate to the Company. Except as provided in Schedule 2.7
the Annual Statements have been prepared in accordance with GAAP consistently
applied as set forth in the notes thereto and were reviewed by Xxxxxxxxx, Xxxxxx
& Associates, P.S. (without "going concern" or other material qualification in
the report thereof). To the knowledge of the Sellers and the Company, except as
provided in Schedule 2.7 each delivered financial statement presents fairly the
financial position of the Company as of its date, and its earnings, changes in
stockholder's equity and cash flows for the period then ended. Each delivered
balance sheet fully sets forth all Assets and Liabilities of the Company
existing as of its date which, under GAAP, should be set forth therein, and each
delivered statement of earnings sets forth the items of income and expense of
the Company which should appear therein under GAAP.
(b) Schedule 2.7 accurately sets forth the attendance (by month) at
the Park during 1998, 1999 and 2000 (through October 31, 2000).
(c) All financial, business and accounting books, ledgers, accounts
and official and other records relating to the Company have been properly and
accurately kept and completed in all material respects, and there are no
material inaccuracies or discrepancies contained or reflected therein.
SECTION 2.8. Liabilities. Except as and to the extent reflected in the
balance sheet at December 31, 1999 (the "Latest Balance Sheet Date") referred to
in Section 2.7, the Company did not have, as of the Latest Balance Sheet Date,
any Liabilities or obligations that are, individually or in the aggregate,
material to the Business (other than obligations of continued performance under
Contracts and other commitments and arrangements entered into in the ordinary
course of the Business which are either disclosed on Schedule 2.13 or are of a
type not required by the provisions of Section 2.13 to be disclosed on Schedule
2.13); and except as described in Schedule 2.8 hereto, the Company has not
incurred any Liabilities or obligations since the Latest Balance Sheet Date
except (i) Liabilities reflected on any balance sheet included in the Interim
Statements, (ii) Liabilities or obligations of continued performance under
Contracts and other commitments entered into in the ordinary course of the
Business, in accordance with past practice, which are either disclosed on
Schedule 2.13 or are of a type not required by the provisions of Section 2.13 to
be disclosed on Schedule 2.13, and (iii) current Liabilities incurred since the
date of the most recent Interim Statement in the ordinary course of the Business
and consistent with past practice, which are not, individually or in the
aggregate, material to the Business. As of the Closing Date and after giving
effect to the Closing, there will
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exist no Debt of the Company, and no Debt of any other person secured by a Lien
on any of the Assets or the Shares.
SECTION 2.9. Loans; Receivables. Except for Receivables or as set forth in
Schedule 2.9, the Company has not made any loan or advance to any person. Except
to the extent of the amount of the reserve for doubtful accounts reflected in
the balance sheet contained in the most recent Interim Statement or as set forth
in Schedule 2.9, all the Receivables of the Company reflected thereon, and all
Receivables that have arisen since the date of such balance sheet (except
Receivables that have been collected since such date) are valid and enforceable
claims (except as the same may be limited by applicable bankruptcy and other
similar laws), and constitute bona fide Receivables resulting from the sale of
goods and services in the ordinary course of the Business. Other than returns of
unused admission tickets for credit to customer accounts, the Receivables are
subject to no known defense, offsets, returns, allowances or credits of any
kind.
SECTION 2.10. Inventories. Schedule 2.10 sets forth a true and complete
list of Inventory by category at October 31, 2000. The Inventory consists of
items which are, to the knowledge of the Sellers and the Company, good and
merchantable and of a kind and quantity consistent with levels maintained at
comparable periods of prior years and of a quality usable and saleable in the
ordinary course of the Business consistent with past practice.
SECTION 2.11. Absence of Certain Changes. (a) Since the Latest Balance
Sheet Date, except as explicitly set forth in this Agreement or disclosed in
Schedule 2.11 or reflected in the Interim Statements, the Company has conducted
the Business in the ordinary course consistent with past practice and there has
not been:
(i) Any material adverse change in the Condition of the
Business or, to the knowledge of the Sellers or the Company, any event,
occurrence or circumstance that could reasonably be expected to cause such a
material adverse change except any change or event, occurrence or circumstance
(x) relating to or arising from the state of the economy generally, (y) relating
to or arising from the negotiation, execution or announcement of this Agreement
or the performance of any obligation hereunder or (z) affecting generally all
companies operating in businesses similar to that operated by the Company;
(ii) Any transaction or Contract with respect to the purchase,
acquisition, lease, disposition or transfer of any Assets or with respect to any
capital expenditure (in each case, other than in the ordinary course of the
Business in accordance with past practice);
(iii) Any declaration, setting aside or payment of any
dividend or other distribution with respect to any Shares;
(iv) Any damage, destruction or other casualty loss (whether
or not covered by insurance), condemnation or other taking affecting the Assets
of the Company to the extent material to the Business;
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(v) Any material change known to the Sellers or the Company in
any method of accounting or accounting practice used by the Company;
(vi) Any material increase in the compensation payable or to
become payable to any officer, director, consultant, agent or full-time employee
of the Company, or any alteration in the benefits payable to any thereof;
(vii) Any material adverse change in the relationships of the
Company with its employees, customers, suppliers and vendors;
(viii) Except in the ordinary course of the Business,
consistent with past practice, any payment, directly or indirectly, of any
Liability of the Company before the same became due in accordance with its
terms;
(ix) Any payment, satisfaction or discharge of any material
Claim or Liability relating to the Business, other than the payment, discharge
or satisfaction in the ordinary course of the Business of Claims or Liabilities
incurred in the ordinary course of the Business, consistent with past practice,
or any waiver or amendment of any warranty, Claim, cause of action, guaranty or
similar right of the Company pertaining to the Business or any of the Assets; or
(x) Except for any changes made in the ordinary course of the
Business, any material change in any of the Company's business policies relating
to the Business, including pricing, purchasing, personnel, returns or budget
policies, to the extent material to the Business.
(b) Except as set forth on Schedule 2.11, the Company does not have
any Liabilities that are, individually or in the aggregate, material to the
Business and that are past due.
SECTION 2.12. Properties. (a) Schedule 2.12(a) sets forth an accurate and
complete list and description (by owner) of all real property leased by the
Company (the "Land"). No real property is owned by the Company. The Company has
a valid leasehold interest in and to the Land pursuant to the Lease, and good,
marketable and insurable title to the building, fixtures and improvements
thereon ("Improvements" and, together with the Land, the "Real Property"), in
each case, free and clear of all Liens of any nature whatsoever, except (i) real
estate Taxes (general and specific) not yet due and payable, (ii) easements,
covenants, restrictions and other similar encumbrances of record listed on
Schedule 2.12(a) which do not currently in the aggregate interfere in any
material respect with the use of the Real Property or impair in any material
respect the conduct of the Business, and which, in the case of utility
easements, are not located under any Improvement or amusement ride nor
materially impair the use of any Improvement or amusement ride or (iii) on the
date hereof (but not on the Closing Date), Liens with respect to the Retired
Debt and the Released Debt (collectively, the "Permitted Liens"). Schedule
2.12(a) also sets forth with respect to such Real Property a list of all
appraisal reports (if any), surveys and environmental reports held or controlled
by the Sellers or the Company, copies of which have been provided to Buyer.
Except as set forth in Schedule 2.12(a), all
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Improvements are in good operating condition (subject to normal wear and tear)
with no structural or other defects known to the Sellers or the Company that
could interfere in any material respect with the operation of the Business, are
located within applicable boundary lines and are suitable for the purposes for
which they are currently used. The Business is not in violation in any material
respect of any building, zoning, anti-pollution, health, occupational safety or
other Law or any Order or Permit in respect of the Real Property. Except as
disclosed on Schedule 2.12(a), no person, other than the Company, has any right
to occupy or possess any of the Real Property. Schedule 2.12(a) also includes a
description of all water, electrical and other utilities used in the conduct of
the Business which are available to the Real Property and which, as of the
Closing Date, will be sufficient to permit the continued conduct of the Business
substantially as it has been conducted since January 1, 1999. No portion of the
Real Property lies within a wetlands area or a flood plain, and the Real
Property has access to publicly dedicated roads. Except as described on Schedule
2.12(a), all of the Real Property is available for immediate use in the conduct
and operations of the Business. There is no pending or, to the knowledge of
Sellers or the Company, threatened condemnation or eminent domain proceedings
that would adversely affect the Real Property, or any part thereof. The Company
and Sellers have furnished to Buyer copies of any and all notices or reports
received by any of them during the prior five years from any insurance company,
engineer, or any Governmental Body with respect to any material violations (or
potential material violations) of any applicable Law affecting the Real Property
or otherwise requiring or recommending work be performed on or at any portion of
the Real Property, and all of such violations and requirements set forth in such
notices and reports have been cured or fulfilled to the satisfaction of those
entities or will be cured or fulfilled as of the Closing Date or at such later
date as may be agreed upon by the parties hereto at Seller's sole expense. No
person has any right to purchase (including right of first refusal right of
first offer) any of the Assets (other than Inventory in the ordinary course of
the Business). Sellers have heretofore delivered to Buyer a true and correct
copy of the Concomitant Development Agreement, dated January 30, 1998, between
the Company and the City of Federal Way (the "City") as amended on June 30, 2000
(as amended, the "Development Agreement"). The Development Agreement is a valid
and binding agreement of the Company and, to the knowledge of Sellers' and the
Company, the City, enforceable in accordance with its terms. The Company is not
in default (or alleged default) under the Development Agreement, nor, to the
knowledge of the Sellers or the Company, is the City in default thereunder, nor
does any condition exist that with notice or the lapse of time or both would
constitute a material default (or give rise to a termination right) thereunder.
The annexation of the Real Property and the grant by the City to the Company of
zoning and developmental rights described in the Development Agreement have been
duly implemented, and the Company is not in violation of any zoning or
development right or regulation provided for (or annexed to) the Development
Agreement. Schedule 2.12(a) includes a description of all actions that are
required to be taken by the Company under the Development Agreement as of the
date hereof, the required timing thereof and an estimate of the costs of each
thereof. Prior to the Closing, Buyer will receive a letter from the City,
reasonably acceptable to it, confirming the accuracy of the foregoing
representations relating to the Development Agreement as they relate to the City
and confirming the existence of the zoning and developmental rights described
therein and the Company's compliance therewith.
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(b) The Company has good title to (or valid leasehold interest in)
all personal property used in the Business, free and clear of all Liens except
as disclosed in Schedule 2.12(b). The machinery, equipment and other tangible
personal property constituting a part of the Assets (whether owned or leased),
to the knowledge of the Sellers and the Company, have been well-maintained, are,
in the aggregate, in good condition and repair (subject to normal wear and tear)
and are adequate in quantity and quality for the operation of the Business as
presently conducted. To the knowledge of the Sellers and the Company, the Assets
that are amusement rides have been operated and maintained in accordance in all
material respects with the standards promulgated by the American Society of
Testing Materials. Schedule 2.12(b) contains a list and description (by owner)
of all equipment and other tangible personal property owned or leased by the
Company as of October 31, 2000 with a book value (before depreciation) of
$10,000 or more. Prior to the Closing Date, the Company shall acquire good title
to all personal property used in the Business that, on the date hereof, is
leased by the Company from any Seller or any Affiliate of the Company or any
Seller. The Assets shall exclude those listed on Schedule 2.12(b) which will be
transferred without warranty to Seller at the Closing.
(c) Schedule 2.12(c) includes a true and correct description of all
capital expenditures and other similar obligations required to be funded by the
Company or from the revenues or Assets of the Business on or after the Closing
pursuant to any current Contract, Law or Order.
SECTION 2.13. Contracts. (a) Schedule 2.13 sets forth an accurate and
complete list of all Contracts to which the Company is a party or by which it,
the Business or any Assets are bound, subject or affected, except for any such
Contract with persons who are not Sellers or Affiliates of the Company or the
Sellers that relate to the purchase or sale of property or services by the
Company in the ordinary course of the Business which (i) requires the Company to
make or receive payments not in excess of $10,000 and (ii) has a remaining term
(including renewal periods) of less than twelve (12) months on the date of this
Agreement or is terminable by the Company without penalty during such period.
True and correct copies of all written Contracts listed on such Schedule and
true and complete summaries of the material provisions of all oral Contracts so
listed have been delivered to Buyer.
(b) All Contracts listed on Schedule 2.13 are valid, subsisting, in
full force and effect and binding upon the Company and, to the knowledge of the
Sellers and the Company, binding upon the other parties thereto in accordance
with their terms. Except as set forth in Schedule 2.13, the Company is not in
default (or alleged default) under any such Contract in any material respect,
nor, to the knowledge of the Sellers or the Company, is any other party thereto
in default thereunder in any material respect, nor does any condition exist that
with notice or the lapse of time or both would constitute a material default (or
give rise to a termination right) thereunder. To the knowledge of the Sellers
and the Company, none of the other parties to any such Contract intends to
terminate or materially alter the provisions thereof by reason of any knowledge
of the Contemplated Transactions or otherwise. Since the Latest Balance Sheet
Date, except as disclosed on Schedule 2.13, as of the date of this Agreement,
the Company has not waived any material right under any such Contract,
materially amended or extended any such Contract or terminated or failed to
renew (or received notice of termination or failure to renew with respect to)
any such Contract.
11
(c) Prior to the Closing Date, all Contracts (other than the Lease)
between any Seller (or any Affiliate thereof or of the Company) on the one hand,
and the Company, on the other, shall have been terminated in form and substance
acceptable to Buyer and all Liabilities and obligations under all such Contracts
shall have been discharged in full.
SECTION 2.14. Intangible Property. Schedule 2.14 sets forth by owner all
trademarks, copyrights, service marks and trade names, including, without
limitation, the name "Enchanted Village" owned or used by the Company, all
applications for any of the foregoing, and all permits, grants and licenses or
other rights running to or from any party relating to any of the foregoing (the
"Intellectual Property Rights"), and there are no other Intellectual Property
Rights that are material to the Business. The Contemplated Transactions will not
adversely affect the right, title and interest of the Company in and to the
Intellectual Property Rights. To the Sellers' and the Company's knowledge, the
Intellectual Property Rights do not infringe on or conflict with the
Intellectual Property Rights of any third party.
SECTION 2.15. Claims and Proceedings. To the knowledge of the Sellers or
the Company, except as set forth on Schedule 2.15, there are no outstanding
Orders as of the date of this Agreement of any Governmental Body against or
involving any of the Company, the Assets or the Business. During the period from
the date hereof through the Closing Date, no such Orders will be entered which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the condition of the Business. Except as set forth on
Schedule 2.15 or as reflected in the most recent loss runs provided to Buyer
under Section 2.19, there are no actions, suits, claims or counterclaims or
legal, administrative or arbitral proceedings or investigations (collectively,
"Claims") (whether or not the defense thereof or Liabilities in respect thereof
are covered by insurance), pending or threatened on the date hereof, by, against
or otherwise involving the Company, the Assets or the Business. Schedule 2.15
also indicates those Claims the defense thereof or Liabilities in respect
thereof are covered by insurance. At the Closing there will be no such Claims
pending or, to the knowledge of the Sellers or the Company, threatened, other
than Claims that, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the Condition of the Business.
Except as set forth on Schedule 2.15, to the knowledge of the Sellers and the
Company, on the date hereof, there is no fact, event or circumstance that could
give rise to any uninsured Claim. As of the Closing, there will exist no such
fact, event or circumstance known to the Sellers or the Company that could give
rise to any Claim that, if pending or threatened on the Closing Date, could,
individually or in the aggregate with all pending or threatened Claims and all
such other potential Claims, reasonably be expected to have a material adverse
effect on the Condition of the Business. All notices required to have been given
to any insurance company listed as insuring against any Claim set forth on
Schedule 2.15 have been timely and duly given and, except as set forth on
Schedule 2.15 or the most recent loss runs referred to above, no insurance
company has asserted that any such Claim is not covered by the applicable policy
relating to such Claim.
SECTION 2.16. Taxes.
(a) Except as set forth in Schedule 2.16, on the Closing Date:
12
(i) The Company has timely filed or, if not yet due, will
timely file all Tax Returns that are required to be filed on or before the
Closing Date, taking into account all extensions that are properly obtained, and
all such Tax Returns are or will be true, correct and complete;
(ii) The Company has timely paid in full or, if not yet due,
will timely pay in full all Taxes that are required to be paid on or before the
Closing Date;
(iii) Buyer has received signed copies of all Tax Returns
filed by the Company relating to taxable years of the Company ending on or
before the Closing Date;
(iv) No extension of time has been requested by, or granted
to, the Company to file any Tax Return that has not yet been filed or to pay any
Tax that has not yet been paid;
(v) The Company has not granted any power of attorney that
remains outstanding with regard to any Tax Matter;
(vi) There is no pending or, to the knowledge of the Company
or the Sellers, threatened examination, investigation, audit, suit, action,
claim or proceeding relating to Taxes (a "Tax Audit") of Shareholder or the
Company;
(vii) Buyer has received copies of all audit reports and
correspondence between Shareholder or the Company, on the one hand, and any Tax
Authority, on the other hand, and a complete summary of all oral communications
between Shareholder or the Company, on the one hand, and any Tax Authority, on
the other hand, relating to any Tax Audits of Shareholder or the Company for any
taxable year, including without limitation any Tax Audit that is in progress or
for which a still effective extension of the statute of limitations was granted;
(viii) Except to the extent described in Section 2.16(a)(ix),
no notice has been given of a determination by a Tax Authority that Taxes are
owed by Shareholder or the Company (such determination a "Tax Deficiency") and,
to the knowledge of the Company and Sellers, no such Tax Deficiency is proposed
or threatened;
(ix) All Tax Deficiencies have been paid in full or finally
settled, and all amounts determined by settlement to be owed have been paid;
(x) There are no Liens arising from or relating to Taxes on or
pending or threatened against the Company, the Assets or the Business other than
statutory liens for personal property taxes that are not yet due and payable;
(xi) There are no presently outstanding waivers or extensions,
or requests for waiver or extension, of the time within which a Tax Deficiency
may be asserted or assessed against Shareholder or the Company;
13
(xii) No issue has been raised in any Tax Audit of Shareholder
or the Company which, by application of similar principles to any past, present
or future period, could reasonably be expected to result in a Tax Deficiency for
any period;
(xiii) Neither Shareholder nor the Company has changed any
accounting method during any of the seven most recent taxable years ending on or
before the Closing Date;
(xiv) Neither Shareholder nor the Company has been required to
take into account any adjustment pursuant to Section 481 of the Internal Revenue
Code of 1986, as amended (the "Code") or pursuant to a closing agreement as
defined in Section 7121 of the Code, and no Tax Authority has ever made or
proposed any such adjustment during any of the seven most recent taxable years;
(xv) The Company does not own any property that is tax exempt
use property with the meaning of Section 168(h)(1) of the Code or that is
described in Section 168(f)(8) of the Internal Revenue Code as in effect prior
to its amendment by the Tax Reform Act of 1986;
(xvi) The Company is not a party to any arrangement to which
Section 280G of the Code could under any circumstances apply;
(xvii) The Company has not filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) apply to the disposition
of any asset;
(xviii) Neither Shareholder nor the Company has taken a
position on a Tax Return with respect to which disclosure was required to be
made to the Internal Revenue Service (the "IRS") in order to avoid the
imposition of a penalty, whether or not any such disclosure was made;
(xix) Neither Shareholder nor the Company has participated,
directly or indirectly, in a transaction which is described in the first
sentence of Treasury Regulation ("Reg.") Section 1.6011-4T(b)(2) or in Reg.
Section 1.6011-4T(b)(3) nor has it ever held "an interest" in a "tax shelter,"
as those terms are defined in Reg. Section 301.6112-1T;
(xx) Shareholder and the Company have retained or will obtain
from their tax advisors and provide to the Company all existing taxable years
supporting and backup papers, workpapers, receipts, spreadsheets and other
information that was used in the preparation of Tax Returns or that may become
necessary for the preparation of Tax Returns for the seven most recent taxable
years that have not yet been filed or for the defense of Tax Audits ("Tax
Information"), including Tax Information relating to tax attributes that are
carried forward or back to a taxable year for which the statute of limitations
remains open;
(xxi) The Company is not now and has never been (a) an
includible member of an "affiliated group" within the meaning of Section 1504(a)
of the Code, (b) a member of a consolidated, combined or unitary Tax Return
filing group, (c) a party to an agreement that could obligate it to make a
payment that is computed by reference to the Taxes,
14
taxable income or Tax losses of any other individual, entity or other person,
(d) a personal holding company as defined in Section 542 of the Code, (e) the
owner of stock in an entity that is, or is treated for any Tax purpose as, a
corporation, (f) the owner of an interest in an entity that is, or is treated
for any tax purpose as, a partnership, trust, regulated investment company as
defined in Section 851 of the Code, real estate investment trust as defined in
Section 856 of the Code or foreign personal holding company as defined in
Section 552(a) of the Code, (g) a United States shareholder as defined in
Section 951(b) of the Code, (h) a United States real property holding company
within the meaning of Section 897(c)(2) of the Code or (i) a shareholder of a
passive foreign investment company, as defined in Section 1287 of the Code;
(xxii) Shareholder and the Company have collected, or will, on
or before the Closing Date, collect, all sales, amusement, employment and other
Taxes that are required to be collected on or prior to the Closing Date and the
Company has remitted, or will, on or before the Closing Date or as soon as
practicable thereafter, but in no event after the date such Taxes are required
to be remitted, remit, to the appropriate Tax Authority all sales, amusement,
employment and other Taxes that are collected on or before the Closing Date or
that are required to be remitted on or prior to the Closing Date;
(xxiii) Shareholder and the Company have been furnished and,
if required, have filed, the appropriate exemption certificates for all
transactions for which an exemption was claimed and have maintained in their
possession the records, supporting documents and exemption certificates required
by applicable sales, use, amusement and other Tax Laws to establish entitlement
to exemptions which were claimed;
(xxiv) Other than the Washington State Excise Tax on the Sale
of Real Property, no Transfer Taxes or other Taxes (other than income Taxes) are
or will be imposed on Buyer, Sellers, the Company, the Assets or the Business by
virtue of the Contemplated Transactions;
(xxv) No claim has ever been made by a Tax Authority of a
jurisdiction in which either Shareholder or the Company does not file Tax
Returns, that Shareholder, the Company or both are or may be required to file
Tax Returns in such jurisdiction, or that Shareholder, the Company or both are
or may be subject to Tax in such jurisdiction;
(xxvi) Neither Shareholder nor the Company has requested a
private ruling from a Tax Authority on any matter;
(xxvii) The Company has been a C corporation continuously
since its inception;
(xxviii) No Seller is a foreign person within the meaning of
Section 1445(f)(3) of the Code and the Treasury Regulations thereunder; and
(xxix) All representations and warranties contained in this
Section 2.16 apply for all federal, state, local and foreign Tax purposes and
each reference to a provision of
15
the Code in this Section 2.16 shall be treated for state, local and foreign Tax
purposes as a reference to analogous and similar provisions of state, local and
foreign law.
(b) Schedule 2.16(b) contains:
(i) A schedule of the filing dates of all Tax Returns required
to be filed by the Company;
(ii) A description of all past Tax Audits involving
Shareholder or the Company;
(iii) A list of all elections made by the Company relating to
Taxes;
(iv) A description of the accounting methods employed by each
of Shareholder and the Company and any changes in such accounting methods;
(v) A schedule of the Company's Tax basis in each of its
depreciable assets as of the Closing Date, and the recovery period and annual
depreciation deduction for each such asset for each year of its remaining tax
recovery period;
(vi) A schedule of the Company's Tax basis in each of its
amortizable assets as of the Closing Date, and the amortization period and
annual amortization deduction for each such asset for each year of its remaining
amortization period, as well as a description of the asset or other item that is
subject to amortization (e.g., loan issuance costs); and
(vii) A schedule of the Tax attributes of the Company
(including, but not limited to, net operating losses, capital losses, investment
credits, foreign tax credits and alternative minimum tax credits), together with
a description of all limitations to which such Tax attributes are subject (e.g,
limitations under Section 382 of the Code).
Notwithstanding the foregoing, Sellers shall within ten (10) days following the
Closing Date supplement and amend Schedules 2.16 and 2.16(b) with respect to
sections 2.16(a)(vi), (vii), (viii), (xi), (xii), (xiii), (xiv), (xviii), (xix),
(xx), (xxii), (xxiii), (xxv), (xxvi) and Sections 2.16(b)(ii), (iv), (v) and
(vi) for exceptions and disclosures related to the Shareholders and for the
Company's Tax basis for its depreciable and amortizable assets; and such
Schedules as supplemented and amended shall constitute such Schedules for all
purposes of this Agreement.
SECTION 2.17. Employee Benefits Plans. (a) Except as set forth on Schedule
2.17, none of the Sellers, the Company, any Affiliate thereof, the Business, nor
any portion of the Business (all of the above hereinafter individually and
collectively called the "Entity"), nor any other company or entity which
together with the Entity constitutes a member of the Entity's "controlled group"
or "affiliated service group" (within the meaning of Sections 4001(a)(14) and/or
(b) of ERISA and/or Sections 414(b), (c), (m) or (o) of the Code (such group or
groups hereinafter referred to individually and collectively as the "Group")),
has at any time adopted or maintained, or has any present or future obligation
to contribute to or make payment under (i) any employee benefit plan (as defined
in Section 3(3) of ERISA), or (ii) any other benefit
16
plan, program, Contract or arrangement of any kind whatsoever (whether for the
benefit of present, former, retired or future employees, officers, directors or
consultants of the Entity or the Group, or for the benefit of any other person
or persons), including, without limitation, arrangements providing for
contributions, benefits or payments in the event of a change of ownership or
control in whole or in part of the Entity or the Group, or with respect to
disability, relocation, child care, educational assistance, deferred
compensation, pension, retirement, profit sharing, thrift, savings, stock
ownership, stock bonus, restricted stock, health, dental, medical, life,
hospitalization, stock purchase, stock option, incentive, bonus, sabbatical
leave, vacation, severance or other contribution, benefit or payment of any
kind, or (iii) any employment, consulting, service or comparable Contract of any
kind whatsoever (all such employee benefit plans, other benefit plans, programs,
Contracts or arrangements and employment, consulting, service or comparable
Contracts hereinafter individually and collectively called the "Employee Benefit
Plan(s)"). No Entity and no member of the Group is or has at any time been
obligated to contribute to any Employee Benefit Plan subject to Title IV of
ERISA. No Entity and no member of the Group has completely or partially
withdrawn from any "multiemployer plan" within the meaning of Section 3(37) of
ERISA.
(b) Except as set forth in Schedule 2.17 hereof, (i) there have been
no "prohibited transactions" within the meaning of Section 406 of ERISA or
Section 4975 of the Code with respect to any of the Employee Benefit Plans; (ii)
no Liability has been or is expected to be incurred by the Entity or any member
of the Group under Title IV of ERISA with respect to any Employee Benefit Plan
currently or formerly maintained by any of them; (iii) any and all amounts which
the Entity or any member of the Group are required to pay as contributions or
otherwise to, or with respect to the Employee Benefit Plans have been timely
made; (iv) no Employee Benefit Plan has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, and neither Entity nor any member of the Group has
provided, or is required to provide, security to any Employee Benefit Plan which
is subject to Title IV of ERISA or otherwise; (v) the current value of all
"benefit liabilities" within the meaning of Section 4001(a)(16) of ERISA under
each Employee Benefit Plan which is subject to Title IV of ERISA or otherwise,
does not exceed the current value of the assets of such Employee Benefit Plan
allocable to such benefit liabilities; (vi) each of the Employee Benefit Plans
has been operated and administered in accordance with all applicable Laws; (vii)
each of the Employee Benefit Plans which is intended to be "qualified" within
the meaning of Sections 401(a) and 501(a) of the Code has been determined by the
IRS to be so qualified and continues to be so qualified; (viii) there are no
pending or, to the knowledge of the Company or the Sellers, threatened or
anticipated Claims involving any of the Employee Benefit Plans; (ix) the Entity
and the Group have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under Subtitle E of Title IV of
ERISA; (x) no notice of a "reportable event" within the meaning of Section 4043
of ERISA has been required to be filed with respect to any Employee Benefit
Plan; (xi) neither the Entity nor any member of the Group is a party to, or
participates in, or has any Liability with respect to any multiemployer plan;
(xii) neither the execution and delivery of this Agreement nor the consummation
of the Contemplated Transactions will accelerate benefits or any payments under
any Employee Benefit Plan; and (xiii) neither the Entity nor any member of the
Group has any commitment to create any additional Employee Benefit Plan, or to
amend any Employee Benefit Plan so as to increase benefits thereunder.
17
(c) Schedule 2.17 identifies all Employee Benefit Plans covering
current, former or retired employees, officers, directors and consultants of the
Entity and the Group (the "Entity Plans"). All Entity Plans have at all times
been established and maintained in accordance with their terms. Each Entity Plan
can be unilaterally terminated without penalty by the Company on no more than
sixty (60) days' notice. In the case of any Entity Plan which is not in written
form, an accurate description of such Entity Plan has been provided to Buyer. A
true and correct copy of the most recent annual report, actuarial report,
summary plan description, and IRS determination letter and/or ruling with
respect to each such Entity Plan, and a current schedule of assets (and the fair
market value thereof assuming liquidation of any asset which is not readily
tradable) held with respect to any funded Entity Plan has been provided to
Buyer, and there have been no material changes in the financial condition of the
respective Entity Plans (or other information provided hereunder) from that
stated in such annual report, actuarial report or schedule of assets.
SECTION 2.18. Employee-Related Matters. (a) Schedule 2.18 contains a true
and correct list of all employees and consultants of the Business, including any
Contract relating thereto, a description of the position of, and the rate and
nature of all compensation payable to, each such person. Schedule 2.18 also
contains a description of all existing severance, accrued vacation policies or
retiree benefits of any current or former employee or consultant (to the extent
not included on Schedule 2.17) of the Company. Except as set forth on such
Schedule, the employment or consulting arrangement of all such persons and all
part-time employees of the Company is terminable at will.
(b) Except as set forth in Schedule 2.18, (i) neither Seller nor the
Company is a party to any Contract with any labor organization or other
representative of the employees of the Business; (ii) there is no unfair labor
practice charge or complaint pending or, to the knowledge of Sellers or the
Company, threatened against Sellers or the Company relating to the Business;
(iii) the Company has not experienced any labor strike, slowdown, work stoppage
or similar labor controversy within the past three years; (iv) no representation
question has been raised respecting any of the employees of the Business working
within the past three years, nor, to the knowledge of Sellers or the Company,
are there any campaigns being conducted to solicit authorization from the
employees of the Business to be represented by any labor organization; (v) no
Claim before any Governmental Body brought by or on behalf of any employee,
prospective employee, former employee, retiree, labor organization or other
representative of the employees of the Business, is pending or, to the knowledge
of Sellers or the Company, threatened; (vi) neither Sellers nor the Company is a
party to, or otherwise bound by, any Order relating to the employees of the
Business or the Company's employment practices; and (vii) except with respect to
ongoing disputes of a routine nature involving immaterial amounts, the Company
has paid in full to all of the employees of the Business all wages, salaries,
commissions, bonuses, benefits and other compensation due and payable to such
employees.
SECTION 2.19. Insurance. Schedule 2.19 sets forth a true and complete list
of all insurance policies, fidelity and surety bonds and fiduciary liability
policies (the "Insurance Policies") covering the Assets, the Business or the
operations, employees, officers or directors of the Company, and true and
complete copies of all such Insurance Policies have been delivered to
18
Buyer. Schedule 2.19 also sets forth as of the date hereof (a) with respect to
each Insurance Policy, the applicable deductible amounts (including the amount
of all aggregate deductibles thereunder (either on a per year or per policy term
basis) that have not been exceeded) and any material limitations on coverage,
(b) any letter of credit relating to any such Insurance Policy and all
inspections and reports delivered to the Company or the Shareholder by any
insurer with respect to such Insurance Policies, copies of which have been
delivered to Buyer and (c) a true and complete list of Claims made in respect of
Insurance Policies during the three years prior to the date hereof. True and
correct copies of all loss runs with respect to such period have been delivered
to Buyer. At the Closing Sellers shall deliver to Buyer a revised Scheduled 2.19
as of the Closing Date. Except as set forth in Schedule 2.19, there is no Claim
by the Company or the Shareholder pending under any Insurance Policy as to which
coverage has been questioned, denied or disputed by the underwriters of such
Insurance Policies or requirement by any insurer thereunder for the Company or
the Shareholder to perform work which has not been satisfied. No premiums
payable under the Insurance Policies are overdue and the Company and the
Shareholder is otherwise in compliance in all material respects with the terms
and conditions of all such Insurance Policies. All Insurance Policies are in
full force and effect and are in compliance with all material requirements of
applicable Law and Contracts. None of the Sellers or the Company knows of any
threatened termination of, premium increase with respect to, or uncompleted
requirements under any Insurance Policy. Prior to the Closing Date, the Company
will have paid all premiums under all such Insurance Policies in respect of
insurance provided for periods prior to the Closing Date. Claims under all
Insurance Policies are payable on an "occurrence basis" such that a claim of any
type covered thereunder that arises after the Closing Date for an event that
occurred prior thereto would be covered by such Insurance Policies.
SECTION 2.20. Compliance with Laws. Except as set forth on Schedule 2.20,
none of the Sellers or the Company is in violation in any material respect of
any order, judgment, injunction, award, citation, decree, consent decree or writ
(collectively, "Orders"), or any law, statute, code, ordinance, rule, regulation
or other requirement, including Environmental Laws (collectively, "Laws"), of
any government or political subdivision thereof, whether federal, state or
local, or any agency or instrumentality of any such government or political
subdivision, or any court or arbitrator (collectively, "Governmental Bodies")
affecting or relating to the Assets or the Business.
SECTION 2.21. Permits. The Shareholder and the Company have obtained all
licenses, permits, certificates, certificates of occupancy, orders,
authorizations and approvals (collectively, "Permits") of, and have made all
required registrations and filings with, any Governmental Body required in
connection with the ownership or use of the Assets or to the conduct of the
Business. All material Permits are listed on Schedule 2.21 and are in full force
and effect; no material violations are or have been recorded in respect of any
Permit within the three years prior to the Closing Date; and no proceeding is
pending or, to the knowledge of the Sellers or the Company, threatened to revoke
or limit any Permit. Except as listed on Schedule 2.21, no Permit will terminate
by reason of the Contemplated Transactions.
SECTION 2.22. Environmental Matters. (a) Except as disclosed in Schedule
2.22(a), there has been, directly or indirectly, no use, manufacture,
generation, refining, storage, transport, disposal or treatment of Hazardous
Substances by or on behalf of any Seller, the
19
Company (or, to the knowledge of the Sellers or the Company, any predecessor in
interest), or any Release at, on or under any Real Property by or on behalf of
any Seller, the Company, or, to the knowledge of Sellers or the Company, by any
other person, which could represent a material violation of any Environmental
Law or which would require remedial action under any Environmental Law; to the
Sellers' and the Company's knowledge, none of the Company nor the Sellers has
contaminated the soil, ground water or surface water of such Real Property, and
to the knowledge of the Sellers and the Company, none of the soil, ground water
or surface water of such Real Property is or has been contaminated by any
Release.
(b) Except as disclosed in Schedule 2.22(b), no portion of the Real
Property has ever been used as a petroleum storage, refining or distribution
facility or terminal, or a gasoline station by any Seller, the Company, or any
tenant or licensee of any thereof.
(c) To the Sellers' and the Company's knowledge, as to the ownership
or operation of the Assets or the Business, none of the Company nor the Sellers
has created, suffered or permitted to exist, or has received any written notice
of (i) any alleged violation with respect to any Environmental Law; or (ii) any
prior, pending or threatened Regulatory Action or other Claim involving any such
party or any present or former owner, lessee or operator of the Real Property.
(d)(i) Except as disclosed in Schedule 2.22(d), or except in
conjunction with any "Special Exceptions" as shown on Schedule B of that certain
Preliminary Commitment for Title Insurance from Chicago Title Insurance Company
(Order No. 581789) dated November 22, 2000 (a copy of which has been received by
Buyer), to the Sellers' and the Company's knowledge, there are no incinerators,
septic tanks, underground or aboveground tanks or cesspools, pipes or pipelines
for the storage or transportation of Hazardous Materials, including without
limitation, heating oil, fuel oil, gasoline and/or other petroleum products,
whether such tanks, pipelines or pipes are in operation, closed or abandoned
(the "Tanks") located, or to the knowledge of the Sellers or the Company, which
have been located, on, at or under the Real Property, (ii) all sewage from the
Real Property is discharged into treatment plants and reused for non-portable
purposes or into a public sanitary sewer system, and (iii) there has been no
Release by or on behalf of the Company or the Sellers, or to the Sellers' and
the Company's knowledge, by any other party, into the atmosphere, any adjoining
or adjacent body of water, or adjoining or adjacent property would could
represent a material violation of Environmental Law. The Company has delivered
to Buyer copies of all environmental reports and all other comparable materials
held or controlled by or on behalf of it or any of the Sellers regarding the
environmental matters set forth in this Section 2.22.
SECTION 2.23. Finders; Fees. There is no investment banker, broker,
advisor, counsel, finder or other intermediary which has been retained by or is
authorized to act on behalf of any Seller or the Company who might be entitled
to any fee or commission from any such person upon consummation of the
Contemplated Transactions.
SECTION 2.24. Depositaries; Powers of Attorney, etc. Schedule 2.24 sets
forth (i) the name of each bank or similar entity in which the Company has an
account, lock box or safe deposit box and the names of all persons authorized to
draw thereon or to have access thereto;
20
and (ii) the name of each person holding a general or special power of attorney
from the Company and a description of the terms thereof.
SECTION 2.25. Ability to Conduct Business. As of the Closing Date, the
Assets will be sufficient and adequate to permit the continued conduct of the
Business substantially as it has been conducted since January 1, 1999 and,
assuming all the Sellers Required Consents are obtained, the consummation of the
Contemplated Transactions will enable Buyer to conduct the Business
substantially as it has been conducted since that date.
SECTION 2.26. Transaction Shares. The Transaction Shares are being
acquired by the Shareholder for its own account and not with a view to the
distribution, resale or other transfer thereof, except in compliance with the
Securities Act and other applicable securities Laws. The Shareholder is an
"accredited investor" as such term is defined in Regulation D promulgated under
the Securities Act and has (i) reviewed carefully the Buyer Reports, (ii) such
knowledge and experience in financial, tax and business matters so as to enable
it to make an informed investment decision with respect to the Transaction
Shares and (iii) overall commitments to investments which are not readily
marketable as are reasonable in relation to the Shareholder's net worth.
SECTION 2.27. Disclosure. Neither this Agreement, the Schedules hereto,
nor any audited or unaudited financial statements, documents or certificates
furnished or to be furnished to Buyer or any of its Representatives or
Affiliates by or on behalf of the Sellers or the Company pursuant to this
Agreement or in connection with the Contemplated Transactions contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There are no facts known to the Sellers or the Company
and not disclosed herein or on the Schedules hereto, which might reasonably be
expected to directly and materially adversely affect the value of the Assets or
the Condition of the Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers that:
SECTION 3.1. Authority Relative to this Agreement. Buyer has full power
and authority to execute and deliver this Agreement and each other Transaction
Document to which it is or, at the Closing, will be a party and to consummate
the Contemplated Transactions. The execution and delivery of this Agreement and
the consummation of the Contemplated Transactions to which Buyer is or, at the
Closing, will be a party have been duly and validly authorized and approved by
the Buyer and no other corporate proceedings on the part of Buyer are necessary
to authorize the execution and delivery by Buyer of this Agreement or to
authorize the consummation of the Contemplated Transactions to which it is or,
at the Closing, will be a party. This Agreement has been and, at the Closing,
the other Transaction Documents to which Buyer will be a party will have been
duly and validly executed and delivered by Buyer and (assuming the valid
execution and delivery thereof by the other parties thereto) constitutes or will
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at the Closing constitute the legal, valid and binding agreement of Buyer,
enforceable against Buyer in accordance with their respective terms, except as
such obligations and their enforceability may be limited by applicable
bankruptcy and other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding therefor may be brought
(whether at law or in equity).
SECTION 3.2. No Conflicts; Consents. The execution, delivery and
performance by Buyer of this Agreement and each other Transaction Document to
which it is or, at the Closing, will be a party and the consummation of the
Contemplated Transactions to which it is or, at the Closing, will be a party do
not and will not (i) violate any provision of the certificate of incorporation
or by-laws of Buyer; (ii) require Buyer to obtain any consent, approval or
action of or waiver from, or make any filing with, or give any notice to, any
Governmental Body or any other person, except for filing, pursuant to the HSR
Act ("Buyer Required Consents"); (iii) if Buyer Required Consents are obtained
prior to the Closing, violate, conflict with or result in the breach or default
under (after the giving of notice or the passage of time); or permit the
termination of, any material Contract to which Buyer is a party or by which
Buyer or its assets may be bound or subject; or (iv) if Buyer Required Consents
are obtained prior to the Closing, violate any Law or Order of any Governmental
Body against, or binding upon or affecting, Buyer or its assets or business.
SECTION 3.3. Corporate Existence and Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. No vote or consent of the stockholders of
Buyer, which has not been obtained, is required under applicable Law or under
the rules of the NYSE to approve the Contemplated Transactions.
SECTION 3.4. Finders; Fees. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of Buyer who might be entitled to any fee or commission from Buyer upon
consummation of the Contemplated Transactions.
SECTION 3.5. Buyer Reports. Buyer has delivered to the Sellers true and
correct copies of (a) Buyer's Annual Report on Form 10-K for the year ended
December 31, 1999, (b) Buyer's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2000 and (c) Buyer's Proxy Statement relating to its 2000
Annual Meeting of stockholders (collectively, together with the Buyer Filings
and disclosure statement, if any, provided to Sellers pursuant to Section 4.16,
the "Buyer Reports"). At the Closing Date, the Buyer Reports, taken as a whole,
will not contain any untrue statement of a material fact, nor omit to state a
material fact necessary in order to make the statements made therein not
misleading. Buyer is not in default in any material respect under any lending
arrangement or under any indenture or other material payment obligation with
regard to any institutional debt obligation, and is also in compliance with all
of its reporting obligations under applicable securities laws.
22
SECTION 3.6. Transaction Shares. The Transaction Shares have been duly
authorized by Buyer and, when issued in accordance with the terms hereof, will
have been duly authorized and issued, will be fully paid and non-assessable
shares of Six Flags Common Stock and will be listed on the NYSE. Such shares
will be issued without any violation of preemptive rights.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1. Conduct of the Business of the Company. (a) From the date
hereof through the Closing Date, the Company agrees, and the Sellers agree to
cause the Company:
(i) To conduct its operations according to the ordinary and
usual course of the Business consistent with past practice; to preserve intact
its present business organization and structure; to use reasonable efforts to
keep available the services of its present officers, agents and full-time
employees; to preserve and maintain its Assets and the good will of the Business
and to use reasonable efforts to preserve its relationships with customers and
suppliers, and others having business dealings with it.
(ii) To maintain in the ordinary course of the Business,
consistent with past practice and in accordance with all Contracts, the Real
Property and all Assets (other than Inventory sold in the ordinary course of the
Business) in their present repair, order and condition, subject only to ordinary
wear and tear.
(iii) Not to incur any Liability (other than Liabilities
incurred in the ordinary course of the Business, consistent with past practice,
which are not in the aggregate material thereto or other than any Liability
under that certain lease to be executed between the Company and the City of
Federal Way, Washington, pertaining to a strip of real property adjacent to real
property demised under the Lease), nor enter into any Contract of a type
required to be included in any Schedule hereto.
(iv) Not to incur any Debt.
(v) Not to undertake (nor permit to be undertaken) any of the
actions specified in Section 2.11.
(vi) Not to pay, discharge or satisfy any material Claim or
Liability, other than the payment, discharge or satisfaction when due and in the
ordinary course of the Business of Claims or Liabilities incurred in the
ordinary course of Business, consistent with past practice.
(vii) Not to increase the compensation payable or to become
payable to any officer, stockholder, director, consultant, agent or employee of
the Company, or make any alteration in the benefits payable to any thereof.
23
(b) From the date hereof through the Closing Date, the Company and
the Sellers agree to use their best efforts to conduct the affairs of the
Company in such a manner so that the representations and warranties of the
Company and the Sellers contained herein shall continue to be true and correct
on and as of the Closing Date as if made on and as of the Closing Date.
(c) From the date hereof through the Closing Date, the Company and
the Sellers agree that the Company will consult with Buyer prior to any renewal,
amendment, extension or termination of, waiver of any material right under, or
any failure to renew, any Contract and will not take any such action if Buyer
objects thereto in writing.
SECTION 4.2. Corporate Examinations and Investigations. Prior to the
Closing Date, the Company and the Sellers agree that Buyer shall be entitled,
through its directors, officers, Affiliates, employees, attorneys, accountants
and consultants (collectively, "Representatives") to make such investigation of
the Assets, the Business and operations of the Company, and such examination of
the books, records and financial condition of the Company, as Buyer reasonably
deems necessary. Any such investigation and examination shall be conducted in a
manner designed to preserve the confidentiality of the Contemplated
Transactions, at reasonable times, under reasonable circumstances and upon
reasonable notice, and the Company and the Sellers shall cooperate fully
therein. In that connection, the Company and the Sellers shall make available to
the Representatives of Buyer during such period, without however causing any
unreasonable disclosure of the Contemplated Transactions or unreasonable
interruption in the operations of the Company, access to the Assets and all such
information and copies of such documents and records concerning the affairs of
the Company as such Representatives may reasonably request, and with the prior
consent of Stock, which will not be unreasonably withheld, shall permit the
Representatives of Buyer access to the Company's employees, customers,
suppliers, Contractors and others. The Sellers shall cause the Company's
Representatives to cooperate fully in connection with such review and
examination. No investigation by Buyer shall diminish or obviate any of the
representations, warranties, covenants or agreements of the Company or the
Sellers contained in this Agreement.
SECTION 4.3. Additional Financial Statements. Prior to the Closing Date,
as soon as available and in any event within fifteen (15) calendar days after
the end of each monthly accounting period of the Company ending after the date
of the most recent Interim Statement, the Company and the Sellers shall furnish
Buyer with an unaudited financial statement of the Company for such month in
form and substance comparable to the Interim Statements and with such other
financial or other information routinely prepared by the Company.
SECTION 4.4. Filings and Authorizations. Prior to or as soon as
practicable following the date hereof, the Company and the Sellers, on the one
hand, and Buyer, on the other, have filed or supplied or will file or supply,
all notifications, reports and other information required to be filed with or
supplied in connection with the Contemplated Transactions and which are required
by Law (including, without limitation, the HSR Act) to effectuate the
consummation of the Contemplated Transactions. The Company and the Sellers, on
the one hand, and Buyer, on the other, shall cooperate with each other in
connection with such filings, shall furnish copies thereof to each other party
prior to such filing, shall not make any such filing or submission to
24
which Buyer or Stock, as the case may be, reasonably objects in writing and
shall furnish to each other party any correspondence received from any
Governmental Body in connection therewith. All such filings shall comply in form
and content in all material respects with applicable Law.
SECTION 4.5. Efforts to Consummate. Subject to the terms and conditions
herein, each party hereto, without payment or further consideration, shall use
its good faith efforts to take or cause to be taken all action and to do or
cause to be done all things necessary, proper or advisable to consummate and
make effective, as soon as reasonably practicable, the Contemplated
Transactions, including, but not limited to, the obtaining of all the Sellers
Required Consents, Buyer Required Consents, Permits or consents of any third
party, whether private or governmental, required in connection with such party's
performance of such transactions and each party hereto shall cooperate with the
others in all of the foregoing.
SECTION 4.6. Negotiations With Others. From and after the date hereof
unless and until this Agreement shall have terminated in accordance with its
terms, the Company and the Sellers agree that none of them, nor any Affiliate of
the foregoing, will directly or indirectly (i) solicit, engage in discussions or
engage in negotiations with any person (other than Buyer or any of its
Affiliates) with respect to an Acquisition Proposal; (ii) provide information to
any person (other than Buyer or any of its Representatives) in connection with
an Acquisition Proposal; or (iii) enter into any transaction with any person
(other than Buyer or any of its Affiliates) with respect to an Acquisition
Proposal. If any Seller, the Company or any Representative thereof receives any
offer or proposal to enter into discussions or negotiations relating to any of
the above, the Company and the Sellers will immediately notify Buyer in writing
as to the identity of the offeror or the party making any such proposal and the
specific terms of such offer or proposal.
SECTION 4.7. Notices of Certain Events. Prior to the Closing Date, the
Company and the Sellers, on the one hand, and Buyer, on the other, shall
promptly notify the other of:
(a) any notice or other communication delivered or received by such
party (or its Representatives) to or from any other person (other than notices
or other communications solely between the parties hereto) with respect to the
Contemplated Transactions (including, without limitation, any notice or other
communication to or from any person objecting to, or alleging that the consent
of any person is or may be required in connection with, the Contemplated
Transactions);
(b) any notice or other communication from any Governmental Body in
connection with the Contemplated Transactions or the operation of the Business
or the ownership of the Assets;
(c) any notice or other communication of a material nature from any
holder of any Debt of Sellers, the Company or other lender to the Business; and
(d) any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a material violation or
breach of any representation or warranty herein, whether made as of the date
hereof or as of the Closing Date,
25
or that would constitute a material violation or breach of any covenant of any
party contained in this Agreement. The delivery of any notice under this Section
4.7 shall not be deemed to cure any such violation or breach of any
representation or warranty hereunder.
SECTION 4.8. Public Announcements. Prior to the Closing Date, the Company
and the Sellers, on the one hand, and Buyer, on the other, will consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Contemplated Transactions, and will not issue any
such press release or make any such public statement without the prior approval
of Buyer or the Shareholder, as the case may be, except as may be required by
applicable Law in which event the other party shall have the right to review and
comment upon (but not approve) any such press release or public statement prior
to its issuance.
SECTION 4.9. Expenses. Except as otherwise specifically provided in this
Agreement, Buyer and the Sellers shall bear their respective expenses, and the
Sellers will bear the expenses of the Company, in each respective case, incurred
in connection with the preparation, execution and performance of this Agreement
and the Contemplated Transaction, including, without limitation, all Transfer
Taxes and all fees and expenses of their respective Representatives. Sellers
shall be entitled to, and the Company hereby assigns to Sellers all of its right
to receive, all refunds relating to Insurance Policies existing on the date
hereof.
SECTION 4.10. Tax.
(a) Tax Returns. Sellers shall cause the Company to prepare and
timely file with the appropriate Tax Authority (i) the Form 1120 (US Corporation
Income Tax Return ) due with respect to the Company's Pre-Closing Short Year
(defined below) (such Form 1120 is referred to herein as the "Pre-Closing Short
Year Return") and (ii) all Company Tax Returns whose due date is on or before
the Closing Date, taking into account all extensions that are properly obtained.
At least ten business days prior to filing the Pre-Closing Short Year Return,
Sellers shall provide Buyer with a copy thereof and shall not file such Tax
Return if Buyer objects in writing, at any time within such ten day period, to
the filing of such Tax Return. Buyer shall cause the Company to prepare and
timely file with the appropriate Tax Authority all Company Tax Returns, except
the Pre-Closing Short Year Return, which relate to taxable periods beginning on
or before December 31, 2000 and whose due date is after the Closing Date, taking
into account all extensions that are properly obtained. Buyer shall prepare the
Interim Period Tax Return, defined below.
(b) Liability for Taxes. Sellers shall be liable for (i) all Taxes
which are owed for any taxable period ending on or before December 31, 2000
(except for federal income Taxes for the period covered by the Interim Period
Tax Return), (ii) all Taxes (other than federal income Taxes) which are
allocable to the portion of a Straddle Period up to and including December 31,
2000, and (iii) all Taxes shown on the Interim Period Tax Return (defined below)
prepared in accordance with Section 4.10(c)(i)(B).
(c) Allocation of Taxes.
(i) Federal Income Taxes.
26
(A) As required by Reg. Section 1.1502-
76(b)(1)(ii)(A)(1), Sellers and Buyer agree to cause the Company to file
its federal income Tax Returns on the basis that the Company has (I) a
short taxable year which ends on the Closing Date (the "Pre-Closing Short
Year"), during which the Company will be taxed as a corporation under
Subchapter C of the Code and (II) a second short taxable year which begins
on the day after the Closing Date and ends on December 31, 2000, during
which the Company will be taxed as a corporation under Subchapter C of the
Code which is a member of Buyer's affiliated group (the "Post-Closing
Short Year"). To the extent the Company is required to end a taxable
period because of the Closing, it shall, whenever permitted or elective,
end the taxable period on the Closing Date and begin a new taxable period
on the day after the Closing Date, so as to conform with the treatment
prescribed by this paragraph.
(B) The Company's items of income, gain, loss, deduction
and credit shall be allocated between the Company's Pre-Closing Short Year
and its Post-Closing Short Year on the basis of a closing of the books.
The Company's federal income Tax for the Pre-Closing Short Year shall be
calculated based on this allocation. Buyer shall cause the Company to
prepare a hypothetical tax return for the Company's Post-Closing Short
Year (the "Interim Period Tax Return"). The Interim Period Tax Return
shall be based on the allocation prescribed by this paragraph and shall be
prepared as though the Company were not a member of an affiliated group
(as defined in Section 1504 of the Code). The tax shown on the Interim
Period Tax Return shall be calculated using a flat fifteen percent (15%)
tax rate.
(ii) Other Taxes. Except as provided above, any Taxes owed by
the Company for a taxable period that begins on or before and ends after
December 31, 2000 (a "Straddle Period"), shall be allocated between the portion
of the Straddle Period up to and including December 31, 2000 and the portion of
the Straddle Period after December 31, 2000, on the basis of a "closing of the
books" by allocating to each such portion of the Straddle Period: (A) sales
Taxes in proportion to the Taxable sales which take place in each portion of the
Straddle Period, (B) use Taxes in proportion to the Taxable purchases which take
place in each portion of the Straddle Period, (C) the Washington State Business
and Occupation Tax and other Taxes based on gross receipts in proportion to the
gross receipts accrued in each portion of the Straddle Period, (D) Taxes which
accrue over time (including without limitation, property Taxes) in proportion to
the number of days in each portion of the Straddle Period and (E) in the case of
all other Taxes, on a reasonable basis that gives effect to a "closing of the
books."
(d) Payment of Tax for Which Sellers Are Liable. With respect to
Taxes for which Sellers are liable under Section 4.10(b), which are not paid in
cash by Sellers or the Company on or before December 31, 2000, and which are not
subtracted in calculating Net Working Capital:
(i) In the case of the Interim Period Tax Return, Buyer shall
deliver to Sellers a completed copy of the Interim Period Tax Return no later
than August 15, 2001. Sellers shall have ten calendar days from the date they
receive such Tax Return to deliver to
27
Buyer any written objections to such Tax Return. If the Sellers do not deliver
any such written objections, the Sellers immediately shall pay Buyer the amount
of Tax shown on the Interim Period Tax Return, in immediately available funds.
If the Sellers deliver written objections to Buyer by the end of the tenth
calendar day following the date on which they received the Interim Period Tax
Return, the Sellers and Buyer shall have five calendar days to negotiate in good
faith to resolve the written objections. If any written objections cannot be
resolved by the end of the fifth day, such written objections shall be referred
to the Nominated Accounting Firm for resolution. The Sellers and Buyer shall
deliver to each other and to the Nominated Accounting Firm, in writing, such
parties' positions as to the correct resolution of the written objections. The
Nominated Accounting Firm shall report in writing its determination to the
Sellers and Buyer no later than September 14, 2001. The Nominated Accounting
Firm's conclusions shall be final and binding. Immediately after the Nominated
Accounting Firm's decision is rendered, Buyer shall complete the Interim Period
Tax Return in accordance with the conclusions of the Nominated Accounting Firm
and immediately following delivery of such Tax Return to the Sellers, the
Sellers shall pay Buyer the amount of Tax shown on such Tax Return, in
immediately available funds. The fees of the Nominated Accounting Firm shall be
split equally between the parties. Until the Nominated Accounting Firm shall
have reached a final conclusion regarding any disputed written objections, the
Sellers and Buyer shall afford the Nominated Accounting Firm reasonable access
during business hours to all relevant books and records for the purpose of
determining the correct disposition of the disputed written objections.
(ii) In the case of Taxes other than federal income Taxes,
Sellers shall pay Buyer the amount of such Taxes, immediately following Buyer's
demand therefor, in immediately available funds, except to the extent the
following clause (iii) applies;
(iii) In the case of a Tax Return that is prepared in a manner
inconsistent with its preparation in past periods, Buyer shall deliver to
Sellers a completed copy of such Tax Return no later than thirty (30) calendar
days before the due date of such Tax Return, taking into account all extensions
that are properly obtained. In the event that the Sellers object to such Tax
Return, the Buyer and the Sellers shall resolve any disputes utilizing the
procedures described in Section 4.10(d)(i), except that, if a written objection
to such Tax Return has been referred to the Nominated Accounting Firm, such Firm
shall report in writing its determination to the Sellers and the Buyer no later
than three (3) calendar days before the due date of such Tax Return, taking into
account all extensions that were properly obtained and the relevant Tax Return
shall be filed in accordance with the conclusions of the Nominated Accounting
Firm.
(iv) In the event any Taxes for which the Sellers are liable
under Section 4.10(b) or any Tax Return preparation expenses which the Sellers
caused the Company to incur pursuant to Section 4.10(a), are not paid by the
Company on or before December 31, 2000 and are not subtracted in determining Net
Working Capital, Sellers shall pay Buyer, immediately upon Buyer's demand, the
amount of such Taxes and expenses, in immediately available funds.
(e) Cooperation. With respect to all Tax Returns, Taxes, Tax Audits
and Tax Deficiencies for any taxable period, Sellers, the Company and Buyer
shall reasonably cooperate,
28
and shall cause their Representatives and agents reasonably to cooperate, in the
preparation of Tax Returns, the payment of Taxes and the resolution of Tax
Audits and Tax Deficiencies, including maintaining and making available to each
other all records necessary in connection therewith.
(f) Withholding Certificates. Sellers shall provide Buyer with all
clearance certificates and similar documents that are required by any
jurisdiction in order to relieve Buyer of any obligation to withhold any portion
of the Purchase Price.
(g) FIRPTA Clearance. At the Closing, each Seller shall deliver to
Buyer an affidavit certifying that such Seller is not a foreign person within
the meaning of Section 1445(f)(3) of the Code and the Treasury Regulations
thereunder, failing which, Buyer shall withhold such sums from the Purchase
Price, and pay over such sums to the IRS, as are required by Law. Sellers hereby
indemnify and hold harmless Buyer from and against all Losses arising from such
withholding or from the falsity of any certification or other documentation
delivered to Buyer pursuant to this Section 4.10(g). Such indemnity shall
survive the Closing Date.
SECTION 4.11. Confidentiality. Prior to the Closing Date, Buyer shall hold
in strict confidence, and shall cause all its Representatives to agree in
writing to hold in strict confidence, unless compelled to disclose by judicial
or administrative process, or by other requirements of Law, all information
concerning the Sellers and the Company which it has obtained from the Company,
the Sellers or their Representatives prior to, on or after the date hereof in
connection with the Contemplated Transactions, and, prior thereto, Buyer shall
not use or disclose to others, or permit the use or disclosure of, any such
information so obtained, except to its Representatives who need to know such
information in connection with this Agreement and who shall be advised of the
provisions of this Section 4.11. The foregoing provision shall not apply to any
such information to the extent (i) known by Buyer prior to the date such
information was provided to such party in connection with the Contemplated
Transactions, (ii) made known to Buyer from a third party not known by Buyer to
be in breach of any confidentiality requirement or (iii) made public through no
fault of Buyer or any of its Representatives.
SECTION 4.12. Certain Renewals. With respect to each Permit which may
expire prior to the Closing Date or within sixty (60) days thereafter, the
Company shall (i) timely file with the appropriate Governmental Bodies
applications for renewal of each such Permit (the "Applications"), (ii) deliver
to Buyer true and complete copies of such Applications, (iii) diligently
prosecute such Applications to conclusion and (iv) cooperate fully with all
Governmental Bodies in the processing of such Applications.
SECTION 4.13. Covenant Not-to-Compete. (a) In consideration of $50,000
being paid to Sellers by Buyer included as part of the Purchase Price, during
the period commencing on the Closing Date and ending five (5) years thereafter
(the "Term"):
(i) In order to preserve the Business and goodwill of the
Company, Stock agrees that he will not, directly or indirectly, as a partner,
officer, employee, director, stockholder, proprietor, consultant,
representative, agent or otherwise become or be interested in, or associate with
or render assistance to, any person engaged in the ownership, operation and/or
29
management of any recreational park, amusement park, theme park or water park
located within the Territory. The foregoing provisions shall not, however,
prohibit the ownership by any Seller of not more than five percent (5%) of any
class of outstanding equity securities listed for trading on a national
securities exchange or publicly traded in the over-the-counter market which
engages in any of such businesses. For the purposes of this Agreement,
"Territory" shall mean the area within a 150 mile radius of the Park.
(ii) Each Seller agrees that he will not, directly or
indirectly, during the Term, for his own benefit or for the benefit of any other
person, solicit the professional services of any Representative, employee, agent
or consultant of the Company or otherwise interfere with the relationship
between the Company and any of such persons.
(b) After the date hereof, the Sellers will not directly or
indirectly, use, disclose or make available to anyone (other than Buyer) any
confidential information concerning the ownership and/or operation of the Park
(the "Confidential Information"). The Confidential Information includes, without
limitation, the business practices, financial information, customer and
prospective customers' names, leads and account information, suppliers and
prospective suppliers' names, leads and account information, mailing lists,
computer programs, advertising campaigns (including, without limitation,
displays, drawings, memoranda, designs, styles or devices), employee names,
compensation and benefit information pertaining to the Park and the Business.
(c) The parties agree that a violation of the foregoing agreements
not to compete or disclose, or any provision thereof, will cause irreparable
damage to Buyer, and Buyer shall be entitled (without any requirement of posting
a bond or other security), in addition to any other rights and remedies which it
may have, at law or in equity, to an injunction enjoining and restraining the
Sellers from doing or continuing to do any such act or any other violations or
threatened violations of this Section 4.13.
(d) If one or more of the provisions contained in this Section 4.13
(or any portion of any such provision) shall for any reason be finally held by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Section 4.13 (or any portion of any such provision), but
this Section shall be construed as if such invalid, illegal or unenforceable
provision (or portion thereof) had not been contained in this Agreement. If, for
any reason, any of the restrictions or covenants contained in this Section 4.13
is finally held by such a court to cover a geographic area or to be for a length
of time that is not permitted by applicable Law, or in any way construed to be
too broad or to any extent invalid, such provision shall not be determined to be
null, void or of no effect, but to the extent it is or would be valid or
enforceable under applicable Law, it shall be construed and interpreted to
provide for a covenant having the maximum enforceable geographic area, time
period and other provisions (not greater than those contained in this Section)
as shall be valid and enforceable under such applicable Law.
(e) Sellers and Buyer agree to allocate $50,000 of the Purchase
Price to the agreements of Sellers set forth in this Section 4.13 and will not
file any Tax return or make any other filing inconsistent therewith.
30
SECTION 4.14. Operation of Business. If the Closing occurs prior to
December 31, 2000, during the period commencing with the Closing and ending on
such date, the Buyer will cause the Company not to make any distribution of Cash
or Receivables to Buyer and to operate the Business in the ordinary course,
consistent with past practice. If during such period, the Company incurs
operating expenses in excess of $415,220, the Net Working Capital Amount shall
be calculated for all purposes as if such excess expenses had not been incurred.
SECTION 4.15. Discharge of Potential Liabilities. Sellers agree to pay and
discharge when due all claims of creditors of the Business or relating to the
Assets with respect to periods prior to the Closing that may be asserted against
Buyer, except to the extent the same were deducted in the calculation of Net
Working Capital. Buyer will pay and discharge when due all such claims that were
so deducted.
SECTION 4.16. Buyer Filings. During the period prior to the Closing, Buyer
shall deliver to Sellers a true and correct copy of each report, information
statement and other document ("Buyer Filings") filed by Buyer with the SEC under
the Securities Exchange Act of 1934, as amended. Prior to the Closing Date,
Buyer (i) will provide Sellers' with a reasonable opportunity to ask questions
and receive answers from Representatives of Buyer concerning Sellers' purchase
of Transaction Shares, and (ii) may, in its discretion, provide to each Seller a
disclosure statement containing such information as Buyer shall deem necessary
to comply with the representation and warranty contained in the last sentence of
Section 3.5.
SECTION 4.17. Mortgage. During the term of the Lease (as amended and
restated as contemplated by Section 5.3(h) hereof) Sellers will not permit to
exist Debt (other than Debt in the aggregate principal amount of $15,815,000
held by U.S. Bank National Association (the "Mortgage Debt") to the extent
provided in the subordination, attornment and nondisturbance agreement annexed
as Exhibit 5.3.A), that is secured by a Lien on the Sellers' ownership interest
in the Real Property unless such Debt is expressly subordinated to the Lease on
terms reasonably acceptable to Buyer. The Sellers' acknowledge that the
provisions of this Section 4.17 are intended to bind all successors and assigns
of Sellers' or other subsequent owners of the Real Property, and Sellers' will
execute and deliver at Closing any document reasonably required to be recorded
in order to effect the foregoing.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1. Conditions to the Obligations of the Parties. The obligations
of the Sellers, on the one hand, and Buyer, on the other, to consummate the
Contemplated Transactions are subject to the satisfaction of the following
conditions, which in the case of the condition specified in Section 5.1(c) may
be waived by Buyer and Stock:
(a) HSR Act. Any applicable waiting period under the HSR Act
relating to the Contemplated Transactions shall have expired.
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(b) No Injunction. No provision of any applicable Law and no Order
shall prohibit the consummation of the Contemplated Transactions.
(c) No Proceeding or Litigation. No Claim instituted by any person
(other than Buyer, Company, Sellers or their respective Affiliates) shall have
been commenced or be pending against Buyer, Company, Sellers or any of their
respective Affiliates, officers or directors, which Claim seeks to restrain,
prevent, change or delay in any material respect the Contemplated Transactions
or seeks to challenge any of the material terms or provisions of this Agreement
or seeks material damages in connection with any of such transactions.
SECTION 5.2. Conditions to the Obligations of the Sellers. The obligations
of the Sellers hereunder to consummate the Contemplated Transactions are
subject, at the option of the Shareholder, to the fulfillment prior to or at the
Closing of each of the following further conditions:
(a) Performance. Buyer shall have performed and complied with all
agreements, obligations and covenants required by this Agreement to be performed
or complied with by it at or prior to the Closing Date.
(b) Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement and in any certificate or other
writing delivered by Buyer pursuant hereto shall be true at and as of the
Closing Date as if made at and as of such time.
(c) Purchase Price. The Purchase Price (or, if the Closing occurs
prior to December 31, 2000, the Closing Payment) shall have been delivered in
accordance with Section 1.2(b)(ii), including delivery of certificates
representing the Closing Shares, registered in the name of the Shareholder.
(d) Debt Payment. Buyer shall have made or provided for the Debt
Payment as contemplated by Section 1.2(b)(i).
(e) Buyer Required Consents. All Buyer Required Consents shall have
been obtained.
(f) Documentation. There shall have been delivered to the
Shareholder the following:
(i) A certificate, dated the Closing Date, of the Chairman of
the Board, the President, Chief Financial Officer or General Counsel and Vice
President of Buyer confirming the matters set forth in Sections 5.2(a) and (b)
hereof.
(ii) A certificate, dated the Closing Date, of the Secretary
or Assistant Secretary of Buyer certifying, among other things, that attached or
appended to such certificate (A) is a true and correct copy of its certificate
of incorporation and all amendments if any thereto as of the date thereof; (B)
is a true and correct copy of its by-laws as of the date thereof; (C) is a true
copy of all corporate actions taken by it, including resolutions of its board of
directors (or
32
the executive committee thereof) authorizing the execution, delivery and
performance of this Agreement, and each other Transaction Document to be
delivered by Buyer pursuant hereto; and (D) are the names and signatures of its
duly elected or appointed officers who are authorized to execute and deliver
this Agreement and any certificate, document or other instrument in connection
herewith.
(iii) Evidence of the good standing and corporate existence of
Buyer in its state of organization.
(iv) A signed opinion of Buyer's general counsel (who may rely
upon Xxxxxx, Pepper & Shefelman PLLC as to matters of Washington law), dated the
Closing Date and addressed to the Sellers, substantially in the form annexed
hereto as Exhibit 5.2A.
(v) An executed copy of the Registration Rights Agreement.
(vi) Copies of all Buyer Required Consents.
SECTION 5.3. Conditions to the Obligations of Buyer. All obligations of
Buyer to consummate the Contemplated Transactions hereunder are subject, at the
option of Buyer, to the fulfillment prior to or at the Closing of each of the
following further conditions:
(a) Performance. Each of the Company and the Sellers shall have
performed and complied with all agreements, obligations and covenants required
by this Agreement to be performed or complied with by it at or prior to the
Closing Date.
(b) Representations and Warranties. The representations and
warranties of each of the Company and each Seller contained in this Agreement
and in any certificate or other writing delivered by the Company or any Seller
pursuant hereto shall be true at and as of the Closing Date as if made at and as
of such time.
(c) Sellers Required Consents. All Sellers Required Consents shall
have been obtained and copies thereof delivered to Buyer.
(d) Debt. Buyer shall have received a release reasonably
satisfactory to it in favor of the Company from all obligees in respect of the
Released Debt, together with evidence reasonably satisfactory to Buyer of the
discharge of all Liens on the Shares and/or the Assets in respect of the
Released Debt. At the Closing, Buyer shall have received an executed
subordination, attornment and nondisturbance agreement in the form annexed
hereto as Exhibit 5.3A from the holder of the Mortgage Debt.
(e) Liens. All Liens on the Shares and the Assets (other than
Permitted Liens on the Assets) shall have been released and discharged in form
and substance acceptable to Buyer.
33
(f) Releases. The Sellers and all Affiliates of the Sellers shall
have delivered to Buyer executed copies of releases in favor of the Company,
substantially in the form of Exhibit 5.3B hereto.
(g) Shares. Buyer shall have received certificates representing the
Shares, duly endorsed to Buyer or its designee and in suitable form for transfer
by delivery.
(h) Amended Lease. Buyer shall have received an Amended and Restated
Lease, executed by the Shareholder, in the form annexed hereto as Exhibit 5.3C.
(i) Title Insurance. Buyer shall have procured at Buyer's expenses a
lessee's or owner's title insurance insuring Buyer's interest (acquired
hereunder) in and to the Real Property, which insurance shall be in form
reasonably acceptable to Buyer and shall be subject only to Permitted Liens and
with all other standard printed exceptions deleted on the title insurance
policy, from a nationally recognized title insurance company qualified to do
business in the State of Washington reasonably satisfactory to Buyer.
(j) Environmental Matters. Buyer shall have received from Buyer's
environmental consultant environmental reports on the Real Property reasonably
acceptable to Buyer.
(k) Documentation. There shall have been delivered to Buyer the
following:
(i) A certificate, dated the Closing Date, of the Company and
each Seller, confirming the matters set forth in Sections 5.3(a) and (b).
(ii) A certificate, dated the Closing Date, of the Secretary
or Assistant Secretary of the Shareholder certifying, among other things, that
attached or appended to such certificate (A) is a true and correct copy of its
articles of incorporation and by-laws (or comparable instruments) and all
amendments if any thereto as of the date thereof; and (B) is a true copy of all
actions (if any) taken by it, including resolutions of its board of directors
(or comparable governing body) authorizing the execution, delivery and
performance of this Agreement and each other Transaction Document to be
delivered by such Shareholder pursuant hereto.
(iii) A certificate, dated the Closing Date, of the Secretary
or Assistant Secretary of the Company certifying, among other things, that
attached or appended to such certificate (A) is a true and correct copy of the
certificate of incorporation and by-laws (or comparable instruments) of the
Company and all amendments, if any, thereto as of the date thereof; (B) is a
true copy of all corporate actions taken by the board of directors of the
Company authorizing the execution, delivery and performance of this Agreement
and each other Transaction Document to be delivered by the Company pursuant
hereto; and (C) are the names and signatures of its duly elected or appointed
officers who are authorized to execute and deliver this Agreement and any
certificate, document or other instrument in connection herewith.
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(iv) Resignations of each director of the Company and evidence
of the due election of the directors thereof designated by Buyer.
(v) A signed opinion of the Company's and the Sellers' counsel
(which may be more than one firm), dated the Closing Date, addressed to Buyer,
substantially in the form annexed as Exhibit 5.3D.
(vi) Evidence, reasonably satisfactory to Buyer, of the
payment by Sellers in full of the real estate transfer tax imposed on the
Contemplated Transactions by the State of Washington.
(vii) An executed copy of the Registration Rights Agreement.
(viii) Possession and control of the Assets of the Company
(including all books, seals, bank accounts, records and documents).
ARTICLE VI
INDEMNIFICATION
SECTION 6.1. Survival of Representations and Warranties. (a)
Notwithstanding any right of Buyer fully to investigate the affairs of the
Company and notwithstanding any knowledge of facts determined or determinable by
Buyer pursuant to such investigation or right of investigation or pursuant to
any notice delivered to Buyer under Section 4.7 or otherwise, Buyer has the
right to rely fully upon the representations, warranties, covenants and
agreements of the Company and the Sellers contained in this Agreement, or listed
or disclosed on any Schedule hereto or in any instrument delivered in connection
with or pursuant to any of the foregoing. All such representations, warranties,
covenants and agreements shall survive the execution and delivery of this
Agreement and the Closing hereunder. Notwithstanding the foregoing, all
representations and warranties of the Company and the Sellers contained in this
Agreement, on any Schedule hereto or in any instrument delivered in connection
with or pursuant to this Agreement shall terminate and expire twenty-four (24)
months after the Closing Date, except that the representations and warranties in
Sections 2.1, 2.2, the third sentence of Section 2.12(a) and the first sentence
of Section 2.12(b) shall survive indefinitely and the representations and
warranties contained in Sections 2.16 and 2.22, the indemnification obligations
under Section 6.2(iii) with respect to any Retained Tax Liabilities and the
indemnification obligations under Section 6.2(ii) with respect to breaches of
covenants and agreements of the Company or the Sellers shall survive until the
expiration of all applicable statutes of limitation with respect thereto,
including extensions; provided, however, that the liability of the Sellers shall
not terminate as to any specific claim, whether or not fixed as to liability or
liquidated as to amount, with respect to which the Sellers have been given
specific notice in accordance with Section 6.4 on or prior to the date on which
such liabilities would otherwise terminate pursuant to the terms of this Section
6.1(a). In addition, Buyer shall not be entitled to deliver any Claims Notice
under Section 6.4 seeking indemnification under Section 6.2(iv) with respect to
any Retained Litigation Claim for which indemnification had not previously been
sought under Section 6.4 at any time after December 31, 2003. The termination
35
of the ability of Buyer to seek indemnification under any of clauses (i)-(iv),
inclusive, of Section 6.2 shall not affect the ability of Buyer to seek
indemnification under any other clause of Section 6.2 with respect to which
Buyer's ability to indemnification has not been terminated.
(b) All representations and warranties of Buyer shall terminate and
expire twenty-four (24) months after the Closing Date; provided, however, that
the liability of Buyer shall not terminate as to any specific claim or claims of
the type referred to in Section 6.3 hereof, whether or not fixed as to liability
or liquidated as to amount, with respect to which Buyer has been given specific
notice on or prior to the date on which such liability would otherwise terminate
pursuant to the terms of this Section 6.1(b).
SECTION 6.2. Obligation of the Sellers to Indemnify. The Sellers jointly
and severally agree to indemnify, defend and hold harmless Buyer (and its
respective directors, officers, employees, Affiliates, successors and assigns)
from and against all Claims, losses, Liabilities, damages, deficiencies,
judgments, settlements, costs of investigation or other expenses (including
interest, penalties and reasonable attorneys' fees and disbursements and
expenses incurred in connection therewith or in enforcing this indemnification)
(collectively, the "Losses") suffered or incurred by Buyer, the Company or any
of the foregoing persons arising out of (i) any breach of the representations
and warranties of the Company or the Sellers contained in this Agreement or in
the Schedules or any Transaction Document; (ii) any breach of the covenants and
agreements of the Company or the Sellers contained in this Agreement or in the
Schedules or any Transaction Document; (iii) any Retained Tax Liabilities or
(iv) any Retained Litigation Claims, provided, that with respect to any
representation or warranty or covenant that is limited by material, materiality,
knowledge, known (or similar terms), or material adverse change in the Condition
of the Business, the amount of the Loss arising out of a misrepresentation or
breach of representation, warranty or covenant (but not the existence of a
misrepresentation or breach of representation, warranty or covenant) for
purposes of this Section 6.2 shall be determined as if "material,"
"materiality," "knowledge," "known" (or similar terms) or material adverse
change in the Condition of the Business were not included therein.
SECTION 6.3. Obligation of Buyer to Indemnify. Buyer agrees to indemnify,
defend and hold harmless each Seller (and any director, officer, employee,
Affiliate or successors and assigns of any thereof) from and against any Losses
suffered or incurred by such Seller or any of the foregoing persons arising out
of any breach of the representations and warranties of Buyer or of the covenants
and agreements of Buyer contained in this Agreement or in the Schedules or any
Transaction Document.
SECTION 6.4. Notice and Opportunity to Defend Third Party Claims. (a)
Promptly after receipt by any party hereto (the "Indemnitee") of notice of any
demand, claim or circumstance from any third party or parties which would or
might give rise to a claim or the commencement (or threatened commencement) of
any action, proceeding or investigation (an "Asserted Liability") that may
result in a Loss, the Indemnitee shall give notice thereof (the "Claims Notice")
to the party or parties obligated to provide indemnification pursuant to Section
6.2 or 6.3 (collectively, the "Indemnifying Party") no later than five (5)
business days after an executive officer of the Indemnitee became aware of such
Asserted Liability, it being agreed that the failure to give such notice on a
timely basis shall affect the obligations of the Indemnifying
36
Party hereunder only to the extent it is actually prejudiced thereby. The Claims
Notice shall describe the Asserted Liability in reasonable detail and shall
indicate the amount (estimated, if necessary, and to the extent feasible) of the
Loss that has been or may be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend, at its own expense
and with counsel reasonably acceptable to the Indemnitee, any Asserted
Liability. Notwithstanding the foregoing, if (i) the Asserted Liability seeks an
Order, injunction or other equitable or declaratory relief against the
Indemnitee (or, if the Indemnity is the Buyer, the Company) or (ii) the
Indemnitee shall have reasonably concluded that (x) there is actual conflict of
interest between the Indemnitee and the Indemnifying Party in the conduct of
such defense or (y) the Indemnitee shall have one or more defenses not available
to the Indemnifying Party, the Indemnitee may elect to defend such Asserted
Liability, at the Indemnifying Party's expense and with counsel reasonably
acceptable to the Indemnifying Party. If the Indemnifying Party elects to defend
such Asserted Liability, it shall within thirty (30) days (or sooner, if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so with counsel reasonably acceptable to the Indemnifying Party,
and the Indemnitee shall cooperate, at the expense of the Indemnifying Party, in
the defense of such Asserted Liability. If the Indemnifying Party elects not to
defend the Asserted Liability, is not permitted to defend the Asserted Liability
by reason of the second sentence of this Section 6.4(b), fails to notify the
Indemnitee of its election as herein provided or contests its obligation to
indemnify under this Agreement with respect to such Asserted Liability, the
Indemnitee may pay, compromise or defend such Asserted Liability at the sole
cost and expense of the Indemnifying Party. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the reasonable written objection of the other; provided that the
Indemnitee may settle or compromise any claim as to which the Indemnifying Party
has failed to notify the Indemnitee of its election under this Section 6.4(b) or
as to which the Indemnifying Party is contesting its indemnification obligations
hereunder. In any event, the Indemnitee and the Indemnifying Party may
participate, at their own expense, in the defense of any Asserted Liability.
Each party shall make available to the other party any books, records or other
documents within its control that are necessary or appropriate for such defense.
Any Losses of any Indemnitee for which indemnification is available hereunder
shall be paid upon written demand therefor. The Sellers acknowledge and agree
that Stock shall have full power and authority to take, in the name and on
behalf of the Sellers, any and all actions required or permitted to be taken by
the Sellers under this Section 6.4.
SECTION 6.5. Limits on Indemnification. (a) Notwithstanding anything to
the contrary herein, the Sellers shall not be liable to indemnify Buyer (or its
respective directors, officers, employers, Affiliates, successors and assigns)
pursuant to Section 6.2(i) or (iv) hereof with respect to any Losses specified
therein unless and until Buyer and the Company shall have incurred aggregate
Losses under such Sections in an amount in excess of $250,000 in which event
Buyer shall be entitled to be indemnified for all Losses under such Sections in
excess of $250,000. Except for claims based on fraud or intentional
misrepresentation, Sellers' liability under Article VI or otherwise under this
Agreement shall not exceed the Purchase Price in the aggregate.
37
(b) In computing the amount of any Losses as to which any
Indemnified Party shall be entitled to indemnification hereunder, the following
shall apply:
(i) the Indemnifying Party shall not be required to indemnify
the Indemnitee for consequential or incidental damages suffered by the
Indemnitee, but shall be obligated to indemnify to the extent provided herein
the Indemnitee for consequential or incidental damages of any third party
asserted against the Indemnitee;
(ii) the Indemnitee shall cooperate, at the Indemnifying
Party's expense, in the investigation and defense of any Claim and shall use
reasonable efforts to mitigate Losses.
(iii) If the Indemnitee shall be entitled to seek payment in
respect of any Loss from any person in addition to the Indemnifying Party, the
Indemnitee shall not be entitled to receive an aggregate amount in excess of
such Loss from all such persons and the Indemnifying Party.
SECTION 6.6. Adjustment. It is the intent of the parties that any amounts
paid under Section 6.2 or 6.3 shall represent an adjustment of the Purchase
Price and the parties will report such payments consistent with such intent.
SECTION 6.7. Exclusive Remedy. Except as otherwise explicitly provided in
Section 4.13(c) and Section 7.1 this Agreement or any other Transaction
Document, the parties agree that the indemnification provisions of this Article
VI shall constitute the parties' sole and exclusive remedies in respect of this
Agreement and the Contemplated Transactions (other than Claims in the nature of
fraud).
ARTICLE VII
SPECIFIC PERFORMANCE; TERMINATION
SECTION 7.1. Specific Performance; Liquidated Damages. The parties
acknowledge and agree that, if either the Buyer or the Sellers fail to proceed
with the Closing in any circumstance other than those described in clauses (a),
(b), (d) or (e) of Section 7.2 below, the nondefaulting party will not have
adequate remedies at Law with respect to such breach and that, in such event,
the nondefaulting party shall be entitled, without the necessity or obligation
of posting a bond or other security, to commence a proceeding to obtain specific
performance of the defaulting party's obligations under this Agreement.
SECTION 7.2. Termination. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) By mutual written consent of Shareholder and Buyer;
(b) By Shareholder if (i) there has been a material
misrepresentation or breach of warranty on the part of Buyer in the
representations and warranties contained herein and such
38
material misrepresentation or breach of warranty, if curable, is not cured
within thirty (30) days after written notice thereof from Shareholder; (ii)
Buyer has committed a material breach of any covenant imposed upon it hereunder
and fails to cure such breach within thirty (30) days after written notice
thereof from the Agents; or (iii) any condition to the Sellers' obligations
hereunder becomes incapable of fulfillment through no fault of the Sellers and
is not waived by Shareholder; provided that, on the date of termination, all
conditions to Buyer's obligations specified in Section 5.3 shall have been
satisfied (other than those specified in clauses (d), (e) and (k) thereof,
subject in the case of clauses (d) and (e), to Buyer's receipt of written notice
from the obligees of the Debt and the holders of the Liens referred to therein
indicating their willingness to then consummate in accordance with the terms of
such clauses the transactions contemplated thereby), and the Sellers shall then
be otherwise ready, willing and able to proceed with the Closing hereunder;
(c) By Buyer, if (i) there has been a material misrepresentation or
breach of warranty on the part of the Company or the Sellers in the
representations and warranties contained herein and such material
misrepresentation or breach of warranty, if curable, is not cured within thirty
(30) days after written notice thereof from Buyer; (ii) the Company or any
Seller has committed a material breach of any covenant imposed upon it hereunder
and fails to cure such breach within thirty (30) days after written notice
thereof from Buyer; or (iii) any condition to Buyer's obligations hereunder
becomes incapable of fulfillment through no fault of Buyer and is not waived by
Buyer; provided that, on the date of termination, all conditions to the Sellers'
obligations hereunder specified in Sections 5.2(a), (b) and (e) shall have been
satisfied and Buyer shall then be otherwise ready, willing and able to proceed
with the Closing hereunder;
(d) By Shareholder or by Buyer, if there shall be any Law that makes
consummation of the Contemplated Transactions illegal or otherwise prohibited,
or if any Order enjoining the Company, any Seller or Buyer from consummating the
Contemplated Transactions is entered and such Order shall have become final and
nonappealable; and
(e) By either the Shareholder or Buyer if the Closing shall not have
occurred on or prior to December 31, 2000; provided that (i) if so terminated by
the Shareholder, the conditions specified in the proviso of Section 7.2(b) shall
have been satisfied on the date of termination and the Sellers shall be then
otherwise ready, willing and able to proceed with the Closing, or (ii) if so
terminated by Buyer, the conditions specified in the proviso of Section 7.2(c)
shall have been satisfied on the date of termination and Buyer shall be then
otherwise ready, willing and able to proceed with the Closing.
SECTION 7.3. Effect of Termination; Right to Proceed. Subject to the
provisions of Section 7.1 hereof, in the event that this Agreement shall be
terminated pursuant to Section 7.2, all further obligations of the parties under
the Agreement shall terminate without further liability of any party hereunder
except (i) to the extent that a party has made a material misrepresentation
hereunder or committed a breach of any material covenant and agreement imposed
upon it hereunder; (ii) to the extent that any condition to a party's
obligations hereunder became incapable of fulfillment because of the breach by a
party of its obligations hereunder; and (iii) that the agreements contained in
Sections 4.8, 4.9, and 4.11, Article VI and this Section 7.3 shall survive the
termination hereof. In the event that a condition precedent to its obligation is
39
not met, nothing contained herein shall be deemed to require any party to
terminate this Agreement, rather than to waive such condition precedent and
proceed with the Contemplated Transactions.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Notices. (a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, telecopied or mailed (by registered or
certified mail, postage prepaid) as follows:
(vii) If to Buyer, one copy to:
Six Flags, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Chairman and CEO and
Xxxxx X. Xxxxxxxx, General Counsel
with a copy to:
Xxxxxx Pepper & Shefelman PLLC
0000 Xxxxx Xxxxxx, #0000
Xxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
(viii) If to the Company or either Seller, one copy to:
EPI Realty Holdings, Inc.
00000 Xxxxxxxxx Xxxxxxx X.
Xxxxxxx Xxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxxxxx X. Stock, President
with a copy to:
Xxxx Xxxxxx Spears Lubersky LLP
0000 0xx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx
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(b) Each such notice or other communication shall be effective (i)
if given by telecopier, when such telecopy is transmitted to the telecopier
number specified in Section 8.1(a) (with confirmation of transmission); or (ii)
if given by any other means, when delivered at the address specified in Section
8.1(a). Any party by notice given in accordance with this Section 8.1 to the
other parties may designate another address (or telecopier number) or person for
receipt of notices hereunder. Notices by a party may be given by counsel to such
party.
SECTION 8.2. Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the other Transaction Documents executed in connection with
the consummation of the Contemplated Transactions contain the final and entire
agreement among the parties with respect to the subject matter hereof and the
Contemplated Transactions and supersede all prior agreements, written or oral,
with respect thereto.
SECTION 8.3. Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, cancelled,
renewed or extended only by a written instrument signed by Stock and Buyer. The
provisions hereof may be waived in writing by Stock and Buyer. No delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. Except as otherwise
provided herein, the rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies that any party may otherwise have at law
or in equity.
SECTION 8.4. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Washington without
regard to the conflict of laws provisions thereof.
SECTION 8.5. Binding Effect; No Assignment. This Agreement and all of its
provisions, rights and obligations shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs and legal
representatives. This Agreement may not be assigned (including by operation of
Law) by any party hereto without the express written consent of Buyer (in the
case of assignment by the Company or any Seller) or the Shareholder (in the case
of assignment by Buyer) and any purported assignment, unless so consented to,
shall be void and without effect; provided, however, without obtaining such
consent, Buyer may assign its rights hereunder (but not its obligations) to any
of its Affiliates.
SECTION 8.6. Exhibits. All Exhibits and Schedules attached hereto are
hereby incorporated by reference into, and made a part of, this Agreement.
SECTION 8.7. Severability. If any provision of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such illegal, invalid or unenforceable provision had never
been included herein.
41
SECTION 8.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
SECTION 8.9. Third Parties. Except as specifically set forth or referred
to herein, nothing herein express or implied is intended or shall be construed
to confer upon or give to any person other than the parties hereto and their
permitted successors or assigns, any rights or remedies under or by reason of
this Agreement or the Contemplated Transactions.
SECTION 8.10. Further Assurances. At any time and from time to time after
the Closing Date, upon the request of Buyer, the Sellers will do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged or
delivered, all such further documents, instruments or assurances, as may be
necessary, desirable or proper to carry out the intent and accomplish the
purposes of this Agreement. The Sellers and Buyer will each, respectively, bear
their or its own costs and expenses incurred in compliance with the first
sentence of this Section 8.10. In addition, at the cost of Buyer, the Sellers
will, at any time and from time to time after the Closing Date, cooperate with
Buyer in obtaining all financial information regarding the Company for periods
prior to the Closing Date required to be filed or made publicly available by
Buyer under federal securities laws.
ARTICLE IX
DEFINITIONS
SECTION 9.1. Definitions. The following terms, as used herein, have the
following meanings:
"Acquisition Proposal" shall mean any proposal involving, directly or
indirectly, (i) the acquisition of, or merger or other business combination
involving the Company, (ii) the sale or other transfer of any capital stock (or
other equity interests) of the Company, (iii) the sale, lease, transfer or
management of the Business, (iv) the sale, lease or other transfer of any Assets
(except in the ordinary course) and (v) any other transaction inconsistent with
the Contemplated Transaction or which would render any of them impossible or
impracticable to consummate.
"Affiliate" of any person means any other person directly or indirectly
through one or more intermediary persons, controlling, controlled by or under
common control with such person.
"Agreement" or "this Agreement" shall mean, and the words "herein,"
"hereof" and "hereunder" and words of similar import shall refer to, this
agreement as it from time to time may be amended.
"Assets" shall mean all properties, rights, interests and assets of every
kind, real, personal or mixed, tangible and intangible, used or useful in the
Business.
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"Average Closing Price" shall mean the numerical average of the closing
sales price (regular way) per share of Six Flags Common Stock (or, in case no
such reported sale takes place on any applicable day the average of the closing
bid and asked prices) on the NYSE for each of the five consecutive Trading Days
ending two Trading Days prior to the date of determination thereof.
"Business" shall mean the ownership and operation of the Assets comprising
the business operations of Enchanted Village (the "Park").
"Business Day" shall mean any day other than a Saturday, Sunday or any day
on which banks in the State of Washington are not required to conduct business.
"Cash" shall mean cash and cash equivalents (including short term
investment grade investments with initial maturities of less than thirty (30)
days) of the Company.
"Condition of Business" shall mean the condition (financial or otherwise),
prospects or the results of operations of the Park.
"Contract" shall mean any contract, agreement, indenture, note, bond,
lease, conditional sale contract, mortgage, license, franchise, instrument,
commitment or other binding arrangement, whether written or oral.
The term "control," with respect to any person, shall mean the power to
direct the management and policies of such person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Debt" of any person shall mean (i) money borrowed by such person from any
other person; (ii) any indebtedness of such person arising under leases required
to be capitalized under GAAP or evidenced by a note, bond, debenture or similar
instrument; (iii) any indebtedness of such person arising under purchase money
obligations or representing the deferred purchase price of property and services
(other than current trade payables incurred in the ordinary course of the
Business); (iv) any indebtedness of any other person secured by a Lien on any
asset of such person; (v) all obligations of such person under leases of
personal property which are not required to be capitalized under GAAP; and (vi)
any Liability of such person under any guaranty, letter of credit, performance
credit or other agreement having the effect of assuring a creditor against loss.
"Environmental Laws" shall mean any and all Laws (including common law),
Orders, Permits, Contracts or any other requirement or restriction promulgated,
imposed, enacted or issued by any federal, state, local and foreign Governmental
Bodies relating to human health or the environment, including the emission,
discharge or Release of pollutants, contaminants,
43
Hazardous Substances or wastes into the environment (which includes, without
limitation, ambient air, surface water, ground water, or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" shall mean generally accepted accounting principles in effect on
the date hereof in the United States as set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such entities as may
be approved by a significant segment of the accounting profession of the United
States.
"Hazardous Substances" shall mean any dangerous, toxic, radioactive,
caustic or otherwise hazardous material, pollutant, contaminant, chemical, waste
or substance defined, listed or described as any of such in or governed by any
Environmental Law, including but not limited to urea-formaldehyde,
polychlorinated biphenyls, asbestos or asbestos-containing materials, radon,
explosives, known carcinogens, petroleum and its derivatives, petroleum
products, or any substance which might cause any injury to human health or
safety or to the environment or might subject the owner or operator of the Real
Property to any Regulatory Actions or Claims.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Inventory" shall mean, as of any date, collectively, all inventories of
prize materials, food, beverages (alcoholic and nonalcoholic), merchandise, and
other products owned by the Company and held for resale or for distribution,
together with packaging and samples thereof, operating supplies and spare or
maintenance parts owned by the Company as of such date.
The term "knowledge" with respect to (a) any individual shall mean actual
knowledge after due inquiry and (b) any corporation shall mean the actual
knowledge of the directors and the executive officers of such corporation; and
"knows" has a correlative meaning.
"Lease" shall mean the Ground Lease by and between Shareholder, as lessor,
and the Company, as lessee, dated January 1, 2000, as amended and restated at
Closing as provided herein.
"Liability" shall mean any direct or indirect indebtedness, liability,
assessment, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential, contingent or otherwise
(including any liability under any guaranties, letters of credit, performance
credits or with respect to insurance loss accruals).
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"Lien" shall mean, with respect to any asset or Shares, any mortgage, lien
(including mechanics, warehousemen, laborers and landlords liens), claim,
pledge, charge, security interest, preemptive right, right of first refusal,
option, judgment, title defect, or encumbrance of any kind in respect of or
affecting such asset or Shares, and in the case of Shares, shall also include
any restriction on the right to vote, sell or otherwise dispose of such
securities or any ownership interest therein.
The term "person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity,
including a government or political subdivision or an agency or instrumentality
thereof.
"Net Working Capital" shall mean an amount determined in accordance with
GAAP except to the extent otherwise explicitly provided in this Agreement equal
to (a) the sum of (i) Cash of the Company as of the close of business on
December 31, 2000 (ii) prepaid expenses of the Company as of the close of
business on such date (other than any such expenses relating to insurance or any
such expenses not usable or useful in the operation of the Business after
December 31, 2000) and (iii) the book value of the Receivables (after deduction
of a reserve for doubtful account consistent with the reserve reflected in the
most recent Interim Statement) as of the close of business on such date (other
than any Receivables generated in respect of the 2001 or subsequent operating
season of the Park) less (b) the sum of (i) all liabilities of the Company that
would be required to be included on a balance sheet prepared in accordance with
GAAP (other than Debt, Taxes, accrued vacation and the items set forth on
Schedule 2.7 as being exceptions to GAAP) incurred in respect of the 2000
operating season of the Park (or any previous season) and outstanding as of the
close of business on December 31, 2000 (whether classified as a liability, an
accrual, a provision or a reserve), including without limitation, all payables,
all utilities and similar charges, all bonuses, other compensation or benefits
payable (ii) all Taxes for which the Sellers are liable under Section 4.10(b),
which were not paid in cash by the Sellers or the Company on or before December
31, 2000 and which are ascertainable by the date on which the Net Working
Capital Statement is delivered, determined in accordance with the relevant Tax
Laws (rather than in accordance with GAAP) and (iii) the Prepaid Deposits as of
the close of business on such date. Net Working Capital shall be calculated
including the provisions in Sections 4.14.
"Prepaid Deposits" shall mean all proceeds from the sale of season passes,
any other pre-sold tickets and any sponsorship or promotional payments received,
in each case, with respect to the 2001 season of the Park or any subsequent
season thereof.
"Receivables" shall mean as of any date any trade accounts receivable,
notes receivable, sales representative advances and other miscellaneous
receivables of any Company arising in the ordinary course of the Business.
"Regulatory Actions" shall mean any Claim, demand, action, suit, summons,
citation, directive, investigation, litigation, inquiry, enforcement action,
Lien, encumbrance, restriction, settlement, remediation, response, clean-up or
closure arrangement or other remedial obligation or proceeding brought or
instigated by any Governmental Body in connection with any Environmental Law,
including, without limitation, the listing of the Real Property on any list of
45
contaminated or potentially contaminated sites or potential or verified
Hazardous Waste sites under any Environmental Law, or any civil, criminal and/or
administrative proceedings, whether or not seeking costs, damages, penalties or
expenses.
"Release" shall mean the intentional or unintentional, spilling, leaking,
disposing, discharging or disturbance of, or emitting, depositing, injecting,
leaching, escaping, or any other release or threatened release to or from,
however defined, any Hazardous Substance in violation of any Environmental Law.
"Released Debt" shall mean all Debt of the Company and all Debt of any
other person secured by any Lien on the Shares and/or the Assets (other than the
Retired Debt).
"Retained Tax Liabilities" shall mean any and all Liabilities for Taxes
(other than income Tax Liabilities arising out of the Contemplated Transactions
that are payable by Buyer) that are payable by any Seller or the Company
pursuant to the terms of this Agreement or pursuant to Law arising out of
events, transactions, facts or circumstances occurring or existing on or prior
to the Closing Date.
"Retained Litigation Claims" shall mean any and all Claims against or
affecting the Company, the Assets or the Business (other than Claims asserting
the breach or default by the Company under any Contract listed on Schedule
2.13), whether asserted prior to or after the Closing Date, arising out of
events, transactions, facts or circumstances occurring on or prior to the
Closing Date.
"Six Flags Common Stock" means the shares of Common Stock, par value $.025
per share, of Six Flags, Inc. as the same exist on the date hereof.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall mean (i)(A) any net income, gross income, business and
occupation, admissions, gross receipts, sales, use, value added, ad valorem,
transfer, transfer gains, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, rent, recording, occupation, premium, real
or personal property, intangibles, environmental or windfall profits tax,
alternative or add-on minimum tax, customs duty or other tax, fee, duty, levy,
impost, assessment or charge of any kind whatsoever (including but not limited
to taxes assessed to or on real property and water and sewer rents relating
thereto), together with (B) any interest and any penalty, addition to tax or
additional amount imposed by any Governmental Body (domestic or foreign) (a "Tax
Authority") responsible for the imposition of any such tax, with respect to the
Company, the Business or the Assets (or the transfer thereof); (ii) any
liability for the payment of any amount of the type described in the immediately
preceding clause (i) as a result of the Company being a member of an affiliated,
unitary or combined group with any other corporation at any time prior to the
Closing Date; and (iii) any liability of the Company for the payment of any
amount of the type described in the immediately preceding clause (i) as a result
of any transferee or similar liability or as a result of a contractual
obligation to any other person.
46
"Tax Return" shall mean any return or report (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to or filed with any Tax Authority.
"Trading Day" means any day on which the NYSE is open.
"Transaction Documents" shall mean, collectively, this Agreement, and each
of the other agreements and instruments to be executed and delivered by all or
some of the parties hereto in connection with the consummation of the
Contemplated Transactions.
"Transfer Taxes" means all excise, sales, value added, use, registration,
stamp, transfer and similar taxes (including without limitation, any real estate
transfer taxes relating to the Real Property or any personal property transfer
or sales Taxes relating to the Assets), incurred in connection with the transfer
of the Shares to Buyer, or otherwise in connection with the Contemplated
Transactions.
SECTION 9.2. Interpretation. Unless the context otherwise requires, the
terms defined in Section 9.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in Section 9.1,
and those accounting terms used in this Agreement not defined in Section 9.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a reference is made in
this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
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IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement as of the date set forth above.
SIX FLAGS, INC.
By:
---------------------------------------
EPI REALTY HOLDINGS, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Stock
Title: President
ENCHANTED PARKS, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Stock
Title: President
By:
---------------------------------------
XXXXXXX XXXXX
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