EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND AMONG
PREMIER PARKS INC.,
PREMIER PARKS ACQUISITION CORP.
FRE, INC.
(FAMILY RECREATIONAL ENTERPRISES, INC.)
AND
THE SHAREHOLDERS OF FRE, INC.
OCTOBER 10, 1996
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I SALE AND PURCHASE............................................. 1
SECTION 1.1 Assets to be Sold and Purchased............................ 1
SECTION 1.2 Assumed Liabilities........................................ 3
SECTION 1.3 Purchase Price............................................. 5
SECTION 1.4 Allocation of the Purchase Price........................... 5
SECTION 1.5 Closing.................................................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDERS.................................. 6
SECTION 2.1 Authority Relative to this Agreement....................... 6
SECTION 2.2 No Conflicts; Consents..................................... 6
SECTION 2.3 Corporate Existence and Power.............................. 7
SECTION 2.4 Charter Documents and Corporate Records.................... 7
SECTION 2.5 Financial Information...................................... 7
SECTION 2.6 Liabilities................................................ 8
SECTION 2.7 Inventory.................................................. 8
SECTION 2.8 Absence of Certain Changes................................. 8
SECTION 2.9 The Assets................................................. 9
SECTION 2.10 Contracts................................................. 10
SECTION 2.11 Intangible Property....................................... 10
SECTION 2.12 Claims and Proceedings.................................... 11
SECTION 2.13 Tax Matters............................................... 11
SECTION 2.14 Employee Benefits Plans................................... 12
SECTION 2.15 Employee-Related Matters.................................. 13
SECTION 2.16 Insurance................................................. 14
SECTION 2.17 Compliance with Laws...................................... 14
SECTION 2.18 Permits................................................... 14
SECTION 2.19 Environmental Matters..................................... 15
SECTION 2.20 Finders; Fees............................................. 15
SECTION 2.21 Ability to Conduct Business............................... 16
SECTION 2.22 Lease..................................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF BUYER................................................... 17
SECTION 3.1 Authority Relative to This Agreement....................... 17
SECTION 3.2 No Conflicts; Consents..................................... 18
i
SECTION 3.3 Corporate Existence and Power.............................. 18
SECTION 3.4 Finders; Fees.............................................. 18
ARTICLE IV COVENANTS AND AGREEMENTS...................................... 18
SECTION 4.1 Conduct of Business of Seller.............................. 18
SECTION 4.2 Corporate Examinations and Investigations.................. 19
SECTION 4.3 Additional Financial Statements............................ 20
SECTION 4.4 Filings and Authorizations................................. 20
SECTION 4.5 Efforts to Consummate...................................... 20
SECTION 4.6 Negotiations With Others................................... 21
SECTION 4.7 Notices of Certain Events.................................. 21
SECTION 4.8 Public Announcements....................................... 21
SECTION 4.9 Covenant Not-to-Compete.................................... 22
SECTION 4.10 Expenses. ................................................ 23
SECTION 4.11 Tax Matters. ............................................. 23
SECTION 4.12 Employee Matters.......................................... 24
SECTION 4.13 Certain Renewals.......................................... 24
SECTION 4.14 Collection of Accounts Receivable........................ 25
SECTION 4.15 Transfer Taxes; Allocations.............................. 25
SECTION 4.16 Discharge of Potential Liabilities........................ 25
SECTION 4.17 Access.................................................... 25
SECTION 4.18 Structuring............................................... 26
ARTICLE V CONDITIONS TO CLOSING......................................... 26
SECTION 5.1 Conditions to the Obligations of the Parties............... 26
SECTION 5.2 Conditions to the Obligations of Seller.................... 26
SECTION 5.3 Conditions to the Obligations of Buyer..................... 28
ARTICLE VI INDEMNIFICATION............................................... 30
SECTION 6.1 Survival of Representations and Warranties................. 30
SECTION 6.2 Obligation of Seller and Shareholders
to Indemnify............................................ 30
SECTION 6.3 Obligation of Buyer and Parent to Indemnify................ 31
SECTION 6.4 Notice and Opportunity to Defend Third
Party Claims............................................ 31
SECTION 6.5 Limits on Indemnification.................................. 32
SECTION 6.6 Adjustment................................................. 33
SECTION 6.7 Exclusive Remedy........................................... 33
ARTICLE VII SPECIFIC PERFORMANCE; TERMINATION............................. 33
ii
SECTION 7.1 Specific Performance....................................... 33
SECTION 7.2 Termination................................................ 33
SECTION 7.3 Effect of Termination; Right to Proceed.................... 34
ARTICLE VIII MISCELLANEOUS................................................. 35
SECTION 8.1 Notices.................................................... 35
SECTION 8.2 Entire Agreement........................................... 36
SECTION 8.3 Waivers and Amendments; NonContractual
Remedies; Preservation of Remedies..................... 36
SECTION 8.4 Governing Law.............................................. 36
SECTION 8.5 Binding Effect; No Assignment.............................. 36
SECTION 8.6 Exhibits................................................... 37
SECTION 8.7 Severability............................................... 37
SECTION 8.8 Counterparts............................................... 37
SECTION 8.9 Third Parties.............................................. 37
SECTION 8.10 Further Assurances........................................ 37
SECTION 8.11 Title and Risk of Loss.................................... 37
ARTICLE IX DEFINITIONS................................................... 38
SECTION 9.1 Definitions................................................ 38
SECTION 9.2 Interpretation............................................. 43
iii
ASSET PURCHASE AGREEMENT, dated as of October 10, 1996, by and among
Premier Parks Acquisition Corp., a New York corporation ("BUYER"), Premier Parks
Inc., a Delaware corporation ("PARENT"), FRE, Inc. (Family Recreational
Enterprises, Inc.), a Missouri corporation ("SELLER") and, for the purposes of
Sections 2.1, 2.2, 4.6 and 4.9 and Article VI only, the shareholders of Seller
listed on the signature page hereof (the "SHAREHOLDERS").
WHEREAS, Seller owns and operates (i) Waterworld USA/Sacramento
("WATERWORLD") and (ii) Paradise Island/Sacramento ("PARADISE ISLAND" and
together with Waterworld, the "PARKS"), such ownership and operations being
referred to herein as the "BUSINESS;" and
WHEREAS, Seller desires to sell and assign, and Buyer desires to purchase
and assume, substantially all of the assets and certain liabilities relating to
the Business upon and subject to the terms and conditions hereinafter set forth;
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
SECTION 1.1 ASSETS TO BE SOLD AND PURCHASED.
(a) Subject to Section 1.1(b) and the other terms and conditions
hereof, Seller shall sell, assign, transfer, convey and deliver to Buyer free
and clear of all Liens (other than Permitted Liens), and Buyer shall purchase
from Seller, all of the property, assets and rights used or held for use in the
Business (collectively, the "ASSETS") including:
(i) all of Seller's rights, title and interest in and to the
real property leased by Seller and used in the Business (the "LAND"), and all of
Seller's rights, title and interest in and to all buildings, improvements and
fixtures constructed thereon (the "IMPROVEMENTS," and together with Land, the
"REAL PROPERTY");
(ii) all of Seller's rights, title and interest in and to the
rides, machinery, equipment, tools, supplies, spare parts, rolling stock,
furniture and other tangible personal property used or held for use in the
Business (the "EQUIPMENT"), on the Closing Date;
(iii) all proceeds from the sale of season passes and any other
pre-sold tickets ("PREPAID DEPOSITS") (A) in the case of Waterworld, with
respect to the 1997 season, and (B) in the case of Paradise Island, with respect
to the period commencing on the Closing Date;
(iv) all of Seller's rights, title and interest in, to and under
all patents, patent applications, trade names, trademarks, copyrights,
servicemarks, trademark and servicemark registrations and applications
(including, without limitation, all of Seller's right to use the names
"Waterworld USA" and "Paradise Island" and any derivation thereof), whether or
not used in the Business;
(v) all of Seller's rights in, to and under trade secrets,
formulae and specifications and technical know-how, whether currently being used
or under development, including engineering and other drawings, data, design and
specifications, product literature and related materials, in each case which are
owned or licensed by Seller as of the Closing Date (together with the
intellectual property described in Section 1.1(a)(iv), the "INTELLECTUAL
PROPERTY RIGHTS") and all of Seller's books, records and computer programs
relating thereto;
(vi) all of Seller's rights in, to and under the goodwill of the
Business;
(vii) Seller's rights under all Contracts listed on SCHEDULE
1.1(A)(VII), including, but not limited to, the Lease (the "TRANSFERRED
CONTRACTS") and all prepaid expenses, claims and other prepayments, including
security deposits and other retentions held by third parties, with respect to
the Transferred Contracts as of the Closing Date;
(viii) all of Seller's Inventory, wherever located, with respect to
the Business as such exists on the Closing Date;
(ix) all of Seller's rights under all governmental licenses,
certificates, permits and approvals relating to or necessary to the conduct of
the Business as of the Closing Date, to the extent such items are transferable
(the "PERMITS");
(x) all transferable warranties and guarantees pertaining to the
Assets; and
(xi) all books and records relating to the Business and the
Assets (whether kept or maintained by Seller or any third party) including,
without limitation, copies of lists of customers and suppliers; admission
tickets, season passes, records with respect to costs, Inventory and Equipment;
business development plans; advertising materials, catalogues, correspondence,
mailing lists, photographs, sales materials and records; purchasing materials
and records; personnel records with respect to employees of the Business; media
materials and plates; sales order files; ledgers and other books of account of
Seller; plans, specifications, surveys, reports and other materials relating to
the Real Property; other records required to continue the Business as heretofore
and now being conducted by Seller; and all software programs, computer
printouts, databases and related items used in the Business.
-2-
(b) The Assets shall exclude the following assets and property (the
"EXCLUDED ASSETS"):
(i) all of Seller's rights, title and interest in and to the
Transaction Documents;
(ii) cash on hand, cash equivalents, investments (including,
without limitation, stock, debt instruments, options and other instruments and
securities) and bank deposits of Seller as of the Closing Date;
(iii) all of the accounts receivable of Seller as of the Closing
Date;
(iv) Tax refunds and recoveries and similar benefits of Seller
which relate to any period prior to the Closing Date, and all of Seller's income
Tax Returns and records as of the Closing Date;
(v) all corporate records of Seller including, without
limitation, the stock ledger of Seller and the minute books regarding meetings
of the stockholders, directors and director committees of Seller;
(vi) Seller's rights under any Employee Benefit Plans;
(vii) all of Seller's rights under any Insurance Policies or other
Contracts, other than the Transferred Contracts;
(viii) all of the licenses issued by the California Alcohol and
Beverage Commission; and
(ix) all assets relating exclusively to any of Seller's
operations (including, without limitation, those of Concord Entertainment
Company), other than the Business.
SECTION 1.2 ASSUMED LIABILITIES.
(a) Subject to the provisions of Section 1.2(b), Buyer shall assume,
pay, fulfill, perform or otherwise discharge the liabilities and obligations of
Seller arising and to be performed after the Closing under the Transferred
Contracts (the "ASSUMED LIABILITIES").
(b) Buyer shall not assume or be bound by or otherwise be responsible
for any duties, responsibilities, obligations or Liabilities of Seller of any
kind or nature, known, unknown, contingent or otherwise, other than Liabilities
expressly assumed by it pursuant to Section 1.2(a). Without limiting the
generality of the foregoing, except as otherwise provided in this Agreement,
Buyer shall not assume, undertake or accept any
-3-
duties, responsibilities, obligations or Liabilities of Seller (whether existing
now or at the Closing or that may arise in the future) with respect to:
(i) any Liabilities of Seller or its Affiliates relating to the
ownership or operation of the Assets or the Business on or prior to the Closing
Date;
(ii) any Liabilities of Seller or its Affiliates relating to the
ownership or operation of the Excluded Assets and the operations of Seller and
Seller's Affiliates other than the Business;
(iii) all accounts payable relating to the Business incurred on or
prior to the Closing Date;
(iv) any Environmental Liabilities;
(v) Liabilities and obligations under Contracts that are not
Transferred Contracts;
(vi) Liabilities and obligations (A) arising or to be performed
at or prior to the Closing under the Transferred Contracts, (B) relating to any
rental or other payment under the Lease which is based on or related to the
revenues or other results of operations of the Business (A) in the case of
Waterworld, during its 1996 season, and (B) in the case of Paradise Island,
prior to the Closing Date ("PERCENTAGE RENT"), whether payable prior to, on or
after the Closing Date, (C) arising out of a breach or default by Seller at or
prior to the Closing (including any event occurring prior to the Closing that
with the passage of time or giving of notice, or both, would become a breach or
default under any Transferred Contract), or (D) of Contractor (as defined in the
Lease) to make additional capital improvements (1) in the amount of $100,000
pursuant to Section 8.4.4C of the Lease within 180 days following the date of
the Second Amendment thereto and (2) in an amount equal to $175,000 under
Section 8.4.4G of the Lease by virtue of the Contemplated Transactions
(collectively, the "Additional Capital Requirements").
(vii) Liabilities and obligations with respect to any Claims,
whether existing on the date hereof or arising hereafter, arising out of
ownership of the Assets or the operation of the Business on or prior to the
Closing;
(viii) except as otherwise provided in this Agreement, Liabilities
and obligations to persons employed by Seller at any time prior to the Closing
(or any of such employee's beneficiaries, heirs or assignees) arising out of
such employee's employment by Seller, including the 1996 Bonuses;
(ix) Liabilities and obligations with respect to any federal,
state, local or foreign income, profits, franchise, sales or similar Tax
relating to the ownership of the Assets or the conduct of the Business on or
prior to the Closing or arising out of the Contemplated Transactions; and
-4-
(x) any Liabilities in respect of any Debt of the Seller.
all such duties, responsibilities, obligations or liabilities described in this
Section 1.2(b) being referred to herein as "RETAINED LIABILITIES."
As used herein, "ENVIRONMENTAL LIABILITIES" means any Liabilities,
obligations, responsibilities, obligations to conduct remedial actions, losses,
damages, punitive damages, consequential damages, costs and other expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigations and
feasibility studies), fines, penalties, and monetary sanctions, interest, direct
or indirect, known or unknown, absolute or contingent, past, present, or future,
resulting from any claim or demand by any person, whether based in contract,
tort, implied or express warranty, strict liability, common law, criminal or
civil statute, including any Environmental Law, arising solely out of the
ownership or the operation by the Seller or its Affiliates of the Assets or the
Business, in connection with environmental conditions at the Parks or the
manufacture, refining, storage, disposal or treatment of Hazardous Substances by
Seller.
SECTION 1.3 PURCHASE PRICE.
(a) The purchase price for the Assets (including the Inventory) shall
be $9,070,000 (the "PURCHASE PRICE") payable as provided in Section 5.2(c).
(b) On or prior to the Closing Date, Buyer, Seller and an escrow
agent selected by Buyer and Seller ("ESCROW AGENT") will execute and deliver an
escrow agreement ("ESCROW AGREEMENT") substantially in the form of EXHIBIT 1.3
hereto pursuant to which Buyer will deliver to Escrow Agent an amount out of the
Purchase Price equal to $453,500 (the "ESCROW FUNDS"), which amount will provide
a non-exclusive fund for a period of 18 months following the Closing for the
payment of any Losses for which Buyer may be entitled to indemnification as and
to the extent provided in Article VI.
SECTION 1.4 ALLOCATION OF THE PURCHASE PRICE. The Purchase Price shall be
allocated among the Assets and the covenant contained in Section 4.9 hereof in
the manner set forth on SCHEDULE 1.4 for all purposes, and each of the parties
shall make all appropriate tax and other filings on a basis consistent with such
allocation. The parties shall exchange drafts of any information returns
required by Section 1060 of the Code, and all similar state statutes, ten days
prior to filing any such return.
SECTION 1.5 CLOSING. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Assets contemplated hereby (the
"CLOSING") shall take place at 10:00 a.m., local time, at the offices of Xxxx
Marks & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 no later than the
fifth business day (but not earlier than October 31, 1996) following the
satisfaction or waiver of the conditions specified in Article V (other than
conditions requiring the delivery of the Purchase Price,
-5-
the Assets, or certificates, instruments and documents referenced in Section
5.2(e) and Section 5.3(h), excluding the Lease Documents) (the "CLOSING DATE").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDERS
Seller represents and warrants to Buyer, and each Shareholder, severally,
represents and warrants to Buyer (but only with respect to matters set forth
below in Sections 2.1 and 2.2 relating to such Shareholder), that:
SECTION 2.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller and each
Shareholder have full power, capacity and authority to execute and deliver this
Agreement and each other Transaction Document to which each is or, at the
Closing, will be 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
Seller or such Shareholder is or, at the Closing, will be a party have been duly
and validly authorized by Seller and such Shareholder, and no other corporate
proceedings on the part of Seller or such Shareholder (or any other person) are
necessary to authorize the execution and delivery by Seller or such Shareholder
of this Agreement or the consummation of the Contemplated Transactions to which
Seller or such Shareholder is or, at the Closing, will be a party. This
Agreement has been and, at the Closing, the other Transaction Documents to which
Seller or any Shareholder is a party will have been, duly and validly executed
and delivered by Seller and such Shareholder, and (assuming the valid execution
and delivery thereof by the other parties thereto) constitute or will at the
Closing constitute, as the case may be, the legal, valid and binding agreements
of Seller and such Shareholder enforceable against Seller or such Shareholder 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 2.2 NO CONFLICTS; CONSENTS. The execution, delivery and
performance by Seller and each Shareholder of this Agreement and each other
Transaction Document to which each is or will be a party or the consummation of
the Contemplated Transactions does not and will not (i) violate any provision of
the Certificate of Incorporation or By-laws (or comparable instruments) of
Seller or any corporate Shareholder; (ii) require Seller, any Shareholder or any
other Affiliate of Seller 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 compliance with the HSR Act and except as set forth
on SCHEDULE 2.2 (the "SELLER REQUIRED CONSENTS"); (iii) if Seller Required
Consents are obtained prior to Closing, violate, conflict with or result in a
-6-
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 2.10 to which Seller or any Shareholder is a party or by
which it or any of their respective assets may be bound or subject, or result in
the creation of any Lien upon the Assets pursuant to the terms of any such
Contract; (iv) if Seller Required Consents are obtained prior to Closing,
violate any Law or Order of any Governmental Body against, or binding upon,
Seller, any Shareholder or upon the Assets or the Business; or (v) if Seller
Required Consents are obtained prior to Closing, violate or result in the
revocation or suspension of any Permit.
SECTION 2.3 CORPORATE EXISTENCE AND POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite powers and all material
Permits and non-transferable licenses required to carry on the Business as now
conducted. Seller is duly qualified to do business as a foreign corporation and
is in good standing in the State of California. Other than Concord
Entertainment Company ("CONCORD"), Seller does not have any Subsidiary or own
any equity interest or equity investment in any other person.
SECTION 2.4 CHARTER DOCUMENTS AND CORPORATE RECORDS. (a) Seller has
heretofore delivered to Buyer true and complete copies of the Certificate of
Incorporation and By-laws of Seller as in effect on the date hereof.
(b) All financial, business and accounting books, ledgers, accounts
and official and other records relating to Seller 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 2.5 FINANCIAL INFORMATION. (a) Seller has previously furnished to
Buyer true and complete copies of (i) Seller's audited financial statements at
and for the years ended December 31, 1995, 1994 and 1993 (the "ANNUAL
STATEMENTS"), (ii) Seller's unaudited financial statements at and for each
calendar month of 1996 and 1995 through August 31, 1996 (the "INTERIM
STATEMENTS"), and (iii) all management letters, audit letters and attorney audit
response letters issued in connection with Seller's audited financial statements
for each of the three years ended December 31, 1995. The Annual Statements have
been prepared in accordance with GAAP consistently applied as set forth in the
notes thereto and were audited by Xxxxxx & Company (without qualification in the
report thereof). Each delivered financial statement presents fairly the
financial position of Seller as of its date, and its earnings, changes in
stockholders' equity and cash flow for the periods then ended. Each delivered
balance sheet fully sets forth all assets and Liabilities of Seller 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 Seller which
should appear therein under GAAP.
(b) SCHEDULE 2.5 accurately sets forth the attendance (by month) at
each of the Parks included in the Business during 1993, 1994, 1995 and each
calendar
-7-
month of 1996 ending prior to the date hereof and by week for each full week
prior to the date hereof of the current calendar month.
SECTION 2.6 LIABILITIES. Except as and to the extent reflected in the
audited balance sheet of Seller ("the LATEST BALANCE SHEET") at December 31,
1995 ("the LATEST BALANCE SHEET DATE") referred to in Section 2.5, Seller did
not have, as of the Latest Balance Sheet Date, any Liabilities or obligations
(other than obligations of continued performance under Contracts and other
commitments and arrangements entered into in the ordinary course of business);
and except as described in SCHEDULE 2.6 hereto, Seller has not incurred any
Liabilities since the Latest Balance Sheet Date except (i) current Liabilities
for trade or business obligations incurred in connection with the purchase of
goods or services in the ordinary course of the Business and consistent with
past practice and (ii) Liabilities reflected on any balance sheet included in
the Interim Statements delivered to Buyer prior to the date hereof.
SECTION 2.7 INVENTORY. SCHEDULE 2.7 sets forth a true and complete list
of Inventory by category as of the date hereof (including an aging schedule
showing all items over 60 days old). All Inventory consists of items which are
good and merchantable and of a quantity and quality usable or saleable in the
ordinary course of the Business consistent with past practices.
SECTION 2.8 ABSENCE OF CERTAIN CHANGES. Since the Latest Balance Sheet
Date, except as disclosed in SCHEDULE 2.8, Seller has conducted the Business in
the ordinary course consistent with past practices and there has not been:
(a) Any material adverse change in the Assets or any material adverse
change in the condition (financial or otherwise), results of operations or
prospects of the Seller or the Business (collectively, the "CONDITION OF THE
BUSINESS") or any event, occurrence or circumstance that could reasonably be
expected to cause such a material adverse change.
(b) Any transaction or Contract with respect to the purchase,
acquisition, lease, disposition or transfer of all or any part of any Assets or
to any capital expenditure relating to the Business (in each case, other than as
disclosed in any Interim Statement delivered to Buyer prior to the date of this
Agreement or transactions or Contracts entered into in the ordinary course of
the Business in accordance with past practice).
(c) Any damage, destruction or other casualty loss (whether or not
covered by insurance), condemnation or other taking affecting the Business or
Seller, to the extent material to the Business;
(d) Any change in any method of accounting or accounting practice by
Seller;
-8-
(e) Except as set forth in SCHEDULE 2.14 OR 2.15, any increase in the
compensation payable or to become payable to any officer, stockholder, director,
consultant, agent or employee of Seller, or any alteration in the benefits
payable to any thereof;
(f) Any material adverse change in the relationships of Seller with
its customers, suppliers and vendors; or
(g) Except for any changes made in the ordinary course of Business,
any material change in any of Seller's business policies, including advertising,
marketing, pricing, purchasing, personnel, returns or budget policies.
SECTION 2.9 THE ASSETS. (a) SCHEDULE 2.9 sets forth a complete list and
description of the Real Property. Seller has a valid leasehold interest in and
to the Land and good, marketable and insurable title to the Improvements, in
each case, free and clear of all Liens of any nature whatsoever, other than (i)
Liens securing or relating to Assumed Liabilities, (ii) Liens for current Taxes
not yet due and payable, and (iii) in the case of the Land, easements,
covenants, restrictions and other similar encumbrances of record listed on
SCHEDULE 2.9, which do not relate to any Retained Liabilities and do not
materially interfere with the use of the Land or impair the conduct of the
Business (collectively, "PERMITTED LIENS"). SCHEDULE 2.9 sets forth with
respect to such Real Property a list of all title insurance policies, appraisal
reports, surveys and engineering and environmental reports (including, without
limitation, seismic and structural reports) held or controlled by Seller, copies
of which have been provided to Buyer. All Improvements located on the Real
Property are in good operating condition (subject to normal wear and tear) with
no structural or other defects known to Seller 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,
Order, Permit or non-transferable license in respect of the Real Property.
Except as disclosed on SCHEDULE 2.9, no person, other than Seller, has any right
to occupy or possess any of the Real Property. To Seller's best knowledge, the
Real Property complies with the California Subdivision Map Act and no portion of
the Real Property is located within a "Special Studies Zone" as designated under
the Xxxxxxx-Xxxxxx Special Studies Zone Act, Sections 2621-2630, inclusive, of
the California Public Resources Code. To Seller's best knowledge, no
Improvements are constructed of unreinforced masonry, and the Improvements
currently comply with all seismic upgrade, retrofit and condition requirements
of applicable laws and regulations. To Seller's best knowledge, there exist no
structural conditions with respect to the Improvements or the Equipment and no
soil or other conditions with respect to the Land that could increase the
probability of material damage to the Improvements or the Equipment as a result
of earthquake or other seismic activity.
(b) Seller has good and marketable title to (or valid leasehold
interest in) all Equipment used in the Business, free and clear of all Liens
except Permitted
-9-
Liens. The Equipment constituting a part of the Assets (whether owned or
leased) has been well-maintained in accordance with industry standards, is in
good condition and repair (subject to normal wear and tear) and is, in the
aggregate, adequate in quantity and quality for the operation of the Business as
presently conducted. The Assets that are amusement rides or other equipment
have, in the aggregate, been operated and maintained in accordance with industry
practice. SCHEDULE 2.9 contains a list and description of all Equipment with a
book value (before depreciation) of $50,000 or more and indicates the Equipment
listed thereon that is leased.
(c) Seller has good and marketable title to the Assets (other than
the Real Property and Equipment) free and clear of any Liens other than
Permitted Liens.
SECTION 2.10 CONTRACTS. (a) SCHEDULE 2.10 sets forth an accurate and
complete list of all Contracts to which Seller is a party or by which it or its
assets are bound or subject, relating to the Business, except for those
Contracts with persons who are not Affiliates of either the Seller or any
Shareholder relating solely to the purchase or sale of property (other than the
Real Property) or services by Seller in the ordinary course of the Business
which (i) require Seller to make or receive payments not in excess of $40,000
and (ii) have a remaining term of less than twelve months on the date of this
Agreement or are terminable by Seller without penalty during such period.
Schedule 2.10 also includes a brief description of the Lease and all other
Contracts relating to the Real Property. True and correct copies of all written
Contracts listed on such Schedule and summaries of the material provisions of
all oral Contracts so listed have been delivered to Buyer.
(b) All Contracts listed on SCHEDULE 2.10 are valid, subsisting, in
full force and effect and binding upon Seller, as the case may be, and, to the
knowledge of Seller, the other parties thereto in accordance with their terms.
Seller is not in default (or alleged default) under any such Contract in any
material respect, nor, to the knowledge of Seller, is any other party thereto in
default thereunder in any material respect, and, to Seller's knowledge, there is
no condition that with notice or the lapse of time or both would constitute a
material default (or give rise to a termination right) under any such Contract.
To the knowledge of Seller, none of the other parties to any Transferred
Contract intends to terminate or materially alter the provisions thereof by
reason of the Contemplated Transactions or otherwise. Since the Latest Balance
Sheet Date, Seller has not waived any material right under any Transferred
Contract, materially amended or extended beyond December 31, 1996 any such
Transferred Contract or terminated or failed to renew (or received notice of
termination or failure to renew with respect to) any such Transferred Contract.
SECTION 2.11 INTANGIBLE PROPERTY. SCHEDULE 2.11 sets forth all
Intellectual Property Rights, including a copy of all registrations and
applications with respect thereto filed with or issued by any Governmental Body.
The Contemplated Transactions will not have an adverse effect on the right,
title and interest of Buyer as of the Closing Date in and to the Intellectual
Property Rights. Except as set forth on SCHEDULE 2.11, (i) Seller has not
received any written notice of invalidity, infringement or misappropriation from
any third
-10-
party with respect to any Intellectual Property Rights; (ii) to the knowledge of
Seller, Seller has not interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property Rights of any third
parties; and (iii) to the knowledge of Seller, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property Rights of Seller.
SECTION 2.12 CLAIMS AND PROCEEDINGS. Except as set forth on SCHEDULE
2.12(a), there are no outstanding Orders of any Governmental Body against or
involving Seller, its assets or the Business. Except as set forth on SCHEDULE
2.12(b), there are no actions, suits, claims or counterclaims or legal,
administrative, governmental, arbitral or other proceedings or investigations
(collectively, "CLAIMS") (whether or not the defense thereof or Liabilities in
respect thereof are covered by insurance), pending or to the knowledge of Seller
threatened on the date hereof, against or involving Seller, the Assets or the
Business. Except as set forth on SCHEDULE 2.12(c), at the Closing there will be
no such Claims pending or, to the knowledge of Seller, 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 2.12(d), to the knowledge of Seller, on the date hereof,
there is no fact, event or circumstances that would give rise to any Claim. As
of the Closing, there will exist no such fact, event or circumstance known to
Seller that would give rise to any Claim that, if pending or to the knowledge of
Seller threatened on the Closing Date, could reasonably be expected to have a
material adverse effect on the Condition of the Business.
SECTION 2.13 TAX MATTERS. (a) Except as disclosed on SCHEDULE 2.13, all
Tax Returns required to be filed by Seller (or its predecessors) on or before
the Closing Date have been or shall be timely filed and all Taxes which are due
have been or shall be paid. All Taxes of Seller attributable to periods ending
on or before the Closing Date which are not yet due have been adequately
provided for. As of the time of filing, the Tax Returns correctly reflected
(and, as to any Tax Returns not filed as of the date thereof will correctly
reflect) the facts regarding the income, Business, assets, operations,
activities and status of Seller. There are no Tax Liens upon any assets of
Seller except for Liens for current Taxes not yet due and payable. All amounts
required to be withheld by Seller from employees for income Taxes, social
security and other payroll Taxes have been collected and withheld, and either
paid to the respective Governmental Bodies, set aside in accounts for such
purpose, or have been or will be accrued, reserved against and entered upon the
books and records of Seller. All Taxes which are due and payable by Seller
under the Lease for the period prior to and including the Closing Date have been
or shall be paid prior to Closing. Except for sales Taxes which result from the
consummation of the Contemplated Transactions, Seller has collected and remitted
to the appropriate Tax Authority all sales and use or similar Taxes required to
have been collected on or prior to the Closing Date and have been furnished
properly completed exemption certificates for all exempt transactions. Seller
has maintained and has in its possession all records, supporting documents and
exemption certificates required by applicable sales Tax statutes and regulations
to be retained in connection with the collection and remittance of sales and use
Taxes for all periods up to and including the Closing Date. Seller (or any of
its
-11-
predecessors) is not a party to nor has received any notice with respect to any
proposed or pending examination, investigation, audit, action or Claim by any
Tax Authority relating to Taxes, nor is party to any dispute or, to Seller's
knowledge, threatened dispute with respect thereto and no Claim for assessment
or collection of Taxes has been made upon Seller. SCHEDULE 2.13 includes a
description of all such past examinations, investigations, audits, actions or
Claims within the past three years. Seller is not a "foreign person" within the
meaning of section 1445 of the Code, and Seller will furnish Buyer with an
affidavit that satisfies the requirements of section 1445 (b) (2) of the Code.
Seller is not and has never been a member of or included in any consolidated,
combined or unitary group for purposes of filing Tax Returns or paying Taxes at
any time. Seller has no Liability for Taxes of any other person under Treasury
Regulation section 1.1502-6 (or any similar provision of state or foreign law),
or as a transferee of such person, or under any other provision of Law or Tax
sharing, Tax indemnity or similar Contract.
(b) Buyer shall deduct and withhold three and one-third percent
(3-1/3%) of the purchase price for the Real Property unless Seller provides
Buyer prior to closing with a duly-executed withholding exemption certificate
(California Department of Revenue Form 590-RE), or in the event that Seller is a
non-California resident, a certificate issued by the California Franchise Tax
Board pursuant to California Revenue and Taxation Code Sections 18662 and 18668
stating either the amount of withholding required from Seller's proceeds or that
Seller is exempt from such withholding requirement, in which case such other
stated amount shall be withheld.
SECTION 2.14 EMPLOYEE BENEFITS PLANS. (a) SCHEDULE 2.14 lists all bonus,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock and
stock option plans, all employment or severance contracts, health and medical
insurance plans, life insurance and disability insurance plans, other employee
benefit plans, contracts or arrangements including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of ERISA (the
"EMPLOYEE BENEFIT PLANS") which cover any current or former employee, officer,
director or consultant of Seller or any portion of the Business. SCHEDULE 2.14
separately identifies all Deferred Compensation Liabilities and all Employee
Benefit Plans providing retiree benefits and a calculation of the present value
of all retiree Liabilities. All Employee Benefit Plans have been established
and maintained in all material respects in accordance with their terms. No
Employee Benefit Plan is or was collectively bargained for. The Employee
Benefit Plans which are described in Section 3(3) of ERISA (the "ERISA PLANS")
are in compliance in all material respects with all provisions of ERISA, other
applicable Laws and, if intended to be tax qualified, Sections 401(a) and 501(a)
of the Code. All ERISA Plans which are intended to qualify under Section 401(a)
of the Code have been submitted to and approved under Section 401(a) of the Code
by the IRS and, to the best knowledge of Seller, nothing has occurred which
would cause the loss of such tax qualification. No Liability under ERISA has
been or is expected to be incurred by Seller or any Affiliate of Seller with
respect to any ongoing, frozen or terminated "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered
-12-
one employer with Seller under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA AFFILIATE"). Seller and its Affiliates have not incurred and do not
expect to incur any Liability with respect to a multi-employer plan under
Subtitle E of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate) and have not made or are obligated to make any contributions
to any multi-employer plan. All contributions required to be made under the
terms of any Employee Benefit Plan have been timely made or have been duly
provided for. No single-employer plan of Seller or any ERISA Affiliate of
Seller has any unfunded pension liability or any "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. No Reportable Event has occurred with respect to
any ERISA Plan. Neither Seller nor any of its Affiliates has provided, or is
required to provide, security to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a) of the Code. Seller and each ERISA Affiliate have
paid all premiums (together with any interest, charges or penalties for late
payment thereon) required to be paid to the Pension Benefit Guaranty Corporation
with respect to each ERISA plan for which such premiums are required. To the
best knowledge of Seller, no ERISA Plan has engaged in any transaction described
in Section 406 or 407 of ERISA or Section 4975 of the Code. Each ERISA Plan has
at all times complied with the bonding requirements of Section 412 of ERISA.
Each Employee Benefit Plan can be unilaterally terminated without penalty by
Seller on no more than sixty (60) days' notice. There are no pending or, to the
knowledge of Seller, threatened Claims relating to any Employee Benefit Plan,
other than routine Claims for benefits in the ordinary course, asserted against
(i) any Employee Benefit Plan or its assets, (ii) Seller or any ERISA Affiliate
or (iii) any fiduciary, for which Seller may be directly or indirectly liable,
through indemnification obligations or otherwise.
(b) With respect to each Employee Benefit Plan, Seller has made
available to Buyer a current, accurate and complete copy (or, to the extent no
such copy exists, an accurate and complete description) thereof (including all
amendments thereto which will become effective at a later date) and, to the
extent applicable, (i) any related trust agreement, annuity contract or other
funding instrument; (ii) the most recent summary plan description, (iii) the
most recent annual report form (FORM 5500 series), financial statement and
actuarial report and (iv) the most recent IRS determination letter.
SECTION 2.15 EMPLOYEE-RELATED MATTERS. (a) SCHEDULE 2.15 contains a true
and correct list of all officers, directors, full-time employees and consultants
of Seller, including any agreement relating thereto, and a description of the
rate and nature of all compensation payable by Seller to each such person.
SCHEDULE 2.15 also contains a description of all existing severance, accrued
vacation policies or retiree benefits of any current or former director,
officer, employee or consultant (to the extent not included on SCHEDULE 2.14).
Except as set forth on such Schedule, the employment or consulting arrangement
of all such persons and all part-time employees of Seller is terminable at will.
(b) Except as set forth in SCHEDULE 2.15, (a) Seller is not a party
to any Contract with any labor organization or other representative of its
employees; (b) there is no unfair labor practice charge or complaint pending or,
to the knowledge of
-13-
Seller, threatened against Seller; (c) Seller has not experienced any labor
strike, slowdown, work stoppage or similar material labor controversy within the
past three years; (d) no representation question has been raised respecting any
of Seller's employees working within the past three years, nor, to the knowledge
of Seller, are there any campaigns being conducted to solicit authorization from
Seller's employees to be represented by any labor organization; (e) no Claim
before any Governmental Body brought by or on behalf of any employee,
prospective employee, former employee, retiree, labor organization, other
representative of Seller's employees or any Governmental Body, is pending or, to
the knowledge of Seller, threatened against Seller; (f) Seller is not a party
to, or otherwise bound by, any Order relating to its employees or employment
practices; and (g) except with respect to ongoing disputes of a routine nature
involving immaterial amounts, Seller has paid in full to all of its employees
all wages, salaries, commissions, bonuses, benefits and other compensation due
and payable to such employees.
SECTION 2.16 INSURANCE. SCHEDULE 2.16 sets forth a list of all insurance
policies, fidelity and surety bonds and fiduciary liability policies ("the
INSURANCE POLICIES") covering the Assets, the Business, operations, employees,
officers and directors of Seller and true and complete copies of all such
Insurance Policies have been delivered to Buyer. SCHEDULE 2.16 also sets forth
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. There is no
Claim by Seller pending under any of such Insurance Policies, and the Lease with
respect thereto, as to which coverage has been questioned, denied or disputed by
the underwriters of such Insurance Policies or any requirement by any insurer to
perform work which has not been satisfied. All premiums payable on or before
the Closing Date under all Insurance Policies have been paid and Seller 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.
SECTION 2.17 COMPLIANCE WITH LAWS. Seller is not in violation in any
material respect of any order, judgment, injunction, award, citation, decree,
consent decree or writ (collectively, "ORDERS"), or any material law, statute,
code, ordinance, rule, regulation or other requirement, including any
Environmental Laws (collectively, "LAWS"), of any government or political
subdivision thereof, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any court or
arbitrator (collectively, "GOVERNMENTAL BODIES") affecting its assets or the
Business.
SECTION 2.18 PERMITS. Seller has obtained all Permits and
non-transferable licenses, and has made all required registrations and filings
with, any Governmental Body that are material to the use and occupancy of the
Real Property or the conduct of the Business. All material Permits and
non-transferable licenses are listed on SCHEDULE 2.18 and are in full force and
effect; no material violations are or have been recorded in respect of any
Permit or non-transferable license within the three years prior to the Closing
Date; and no proceeding is pending or, to the knowledge of Seller, threatened to
revoke or limit any
-14-
Permit or non-transferable license. Except as listed on SCHEDULE 2.18, no
Permit will terminate by reason of the Contemplated Transactions.
SECTION 2.19 ENVIRONMENTAL MATTERS. Except as referenced in SCHEDULE
2.19, (a) there has been, directly or indirectly, no use, manufacture,
generation, refining, storage, transport, disposal or treatment of Hazardous
Substances by Seller (or, to the knowledge of Seller, any predecessor in
interest), or any Release at, on or under any Real Property by Seller or, to the
knowledge of Seller, by any other person, in violation of any Environmental Law
or which would require remedial action under any Environmental Law; Seller has
not contaminated the soil, ground water or surface water, to the knowledge of
Seller, none of the soil, ground water or surface water of such Real Property is
or has been contaminated by any Release.
(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
Seller or any tenant or licensee of Seller thereat;
(c) As to the ownership or operation of the Assets or the Business,
Seller has not created, suffered or permitted, and has not 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) 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 Seller, which have been located, on, at or under the Real
Property, (ii) all sewage from the Real Property is discharged into a public
sanitary sewer system, and (iii) there has been no Release by Seller, or to
Seller's knowledge by any other party, into the atmosphere, any adjoining or
adjacent body of water, or adjoining or adjacent property in violation of
Environmental Law. Seller has delivered to Buyer copies of all environmental
reports and all other written materials held or controlled by Seller regarding
the environmental matters set forth in this Section 2.19. Notwithstanding the
foregoing, if the Real Property contains any such Tanks, Seller represents that
Seller is in compliance in all material respects with all registration and other
requirements of Environmental Law (including U.S.C. Section 6991, "Regulation of
Underground Storage Tanks") regulating the existence, usage and removal thereof.
SECTION 2.20 FINDERS; FEES. Except as set forth in SCHEDULE 2.20, there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Seller who might be entitled to
any fee or commission from Seller upon consummation of the Contemplated
Transactions. All fees and commissions described in SCHEDULE 2.20 will have
been paid in full by Seller prior to the Closing.
-15-
SECTION 2.21 ABILITY TO CONDUCT BUSINESS. As of the Closing, the Assets
will be sufficient and adequate to permit the continued conduct of the Business
substantially as it has been conducted since January 1, 1996 and, assuming all
Seller Required Consents are obtained, the consummation of the Contemplated
Transactions hereby will enable Buyer to conduct the Business substantially as
it has been conducted since that date.
SECTION 2.22 LEASE. Except as set forth in SCHEDULE 2.22:
(a) the Lease is in full force and effect with no default by Seller
or, to its knowledge, lessor existing beyond applicable notice and cure periods
or any event or condition which, with the giving of notice or passage of time
would constitute such a default, and neither Seller, nor to its knowledge,
lessor under the Lease has any existing rights of offset or abatement;
(b) all work, repairs and improvements (including capital
improvements) required to have been done on or prior to the Closing under the
Lease by Seller has been completed in accordance therewith, and Seller has
waived any and all rights to terminate the Lease with respect thereto;
(c) the Lease is superior to any and all mortgages now or hereafter
constituting a Lien on the Real Property and/or the interest of either party to
the Lease therein;
(d) there are no rights of first refusal, options to purchase,
"buy-out" rights, or other termination rights which have been exercised, or are
currently exercisable, by either party to the Lease;
(e) all rent and other amounts payable by Seller under the Lease have
been paid to the date hereof, and shall be paid to the date of Closing;
(f) any amounts payable to Seller under the Lease have been paid to
the date hereof, and shall be apportioned at Closing;
(g) during each applicable year of the Lease, Seller has expended
amounts on advertising and promotion at each of Waterworld and Paradise Island
at least equal to the amounts required by Sections 8.3.1 and 8.3.2 (without
regard to the final paragraph of either thereof), respectively, of the Lease.
Schedule 2.22 sets forth a calculation, in reasonable detail, on a per-year
basis demonstrating Seller's compliance on the date of this Agreement with such
Sections of the Lease;
(h) during each applicable year of the Lease, Seller has expended
amounts on capital improvements, which were, in each case, approved by the
lessor under the Lease in accordance with Section 8.4.2 thereof, at least equal
to the amounts required by Sections 8.4.4A thereof (without regard to clause (c)
or the final paragraph thereof) and
-16-
Section 8.4.4B (without regard to clause (b) thereof or the final paragraph
thereof, but including the minimum amount required to be expended prior to
December 31, 1994 with respect to Paradise Island as set forth in such Section).
Schedule 2.22 sets forth a calculation, in reasonable detail, on a per-year
basis demonstrating Seller's compliance on the date of this Agreement with such
Sections of the Lease;
(i) Subsequent to October 30, 1995 and prior to the date hereof,
Seller has expended $1,082,639 on capital improvements under Section 8.4.4C of
the Lease, which were, in each case, approved by the lessor under the Lease in
accordance with Section 8.4.2 thereof. Of such amount, nil was expended on
improvements which benefit both Seller and the State fairgrounds generally as
required under Section 8.4.4C of the Lease;
(j) prior to the Closing Date (i) Seller will update Schedule 2.22 to
include amounts expended prior to the Closing Date and (ii) without the prior
written consent of Buyer, Seller will not have agreed with the lessor under the
Lease for the grant of additional real property thereunder pursuant to Sections
8.4.4D or E thereof; and
(k) Seller has heretofore delivered to Buyer true and correct copies
of all plans, budgets and specifications relating to periods subsequent to the
Closing Date submitted to the lessor under the Lease under Sections 8 or 9
thereof and will not prior to the Closing Date submit any such document to such
lessor with respect to any such period without the prior written approval of
Buyer, which approval shall not be unreasonably withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF BUYER AND PARENT
Buyer and Parent represent and warrant to Seller that:
SECTION 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer and Parent have
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
or Parent is or, at the Closing, will be a party have been duly and validly
authorized and approved by the board of directors thereof and no other corporate
proceedings on the part of Buyer or Parent are necessary to authorize the
execution and delivery by Buyer or Parent of this Agreement or the consummation
of the Contemplated Transactions to which it is a party. This Agreement has
been and, at the Closing, the other Transaction Documents to which Buyer or
Parent is a party will have been duly and validly executed and delivered by
Buyer and Parent and (assuming the valid execution and delivery thereof by the
other parties thereto)
-17-
constitutes or will at the Closing constitute, as the case may be, the legal,
valid and binding agreement of Buyer and Parent, enforceable against Buyer or
Parent, as the case may be, 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 and Parent 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 or Parent; (ii) require Buyer or Parent 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 compliance with the HSR Act and except as set forth in SCHEDULE 3.2 (the
"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, Parent or
their 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, Buyer, the Parent or upon their assets or business.
SECTION 3.3 CORPORATE EXISTENCE AND POWER. Each of Buyer and Parent is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and each has all requisite corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and as it will be conducted
upon consummation of the Contemplated Transactions. At the Closing, Buyer (or
its assignee) will be qualified to do business in the State of California.
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 or Parent who might be entitled to any fee or commission from
Buyer or Parent upon consummation of the Contemplated Transactions.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 CONDUCT OF BUSINESS OF SELLER. (a) From the date hereof
through the Closing Date, Seller agrees:
-18-
(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 officers, agents and full-time employees, to
use reasonable efforts to preserve and maintain the 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 Seller.
(ii) To maintain in the ordinary course of the Business,
consistent with past practice and in accordance with all Contracts, the Real
Property, all Equipment, the Inventory and other tangible property in their
present repair, order and condition, subject to ordinary wear and tear and to
the requirements of such Contracts.
(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), nor enter into any Contract of a type
required to be included on any Schedule hereto.
(iv) Not to undertake (nor permit to be undertaken) any of the
actions specified in Section 2.8.
(v) Not to pay, discharge or satisfy any material Claim or
Liability, other than the payment, discharge or satisfaction in the ordinary
course of the Business of Claims or Liabilities incurred in the ordinary course
of Business, consistent with past practice.
(vi) to fully comply with the Lease and immediately deliver to
Buyer copies of all notices delivered or received thereunder or in connection
therewith.
(b) From the date hereof through the Closing Date, Seller agrees that
it will use reasonable efforts to conduct the Business in such a manner so that
the representations and warranties of Seller 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, Seller agrees that
it 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
Transferred Contract and will not take any such action if Buyer objects thereto
in writing.
SECTION 4.2 CORPORATE EXAMINATIONS AND INVESTIGATIONS. (a) Prior to the
Closing Date, Seller agrees that Buyer shall be entitled, through its directors,
officers, Affiliates, employees, attorneys, accountants, representatives,
lenders, consultants and other agents (collectively, "REPRESENTATIVES") to make
such investigation of the Assets, the Business and operations of Seller, and
such examination of the books, records and financial condition of Seller, as
Buyer reasonably deems necessary. Any such investigation and
-19-
examination shall be conducted at reasonable times, under reasonable
circumstances and upon reasonable notice, and Seller shall cooperate fully
therein. In that connection, Seller shall make available to the Representatives
of Buyer during such period, without however causing any unreasonable
interruption in the operations of Seller, all such information and copies of
such documents and records concerning the affairs of Seller as such
Representatives may reasonably request, shall permit the Representatives of
Buyer access to the Assets and all parts thereof and to Seller's employees,
customers, suppliers, contractors and others, and shall cause Seller'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 Seller contained in this
Agreement.
SECTION 4.3 ADDITIONAL FINANCIAL STATEMENTS. Prior to the Closing Date,
as soon as available and in any event within thirty (30) calendar days after the
end of each monthly accounting period of Seller ending after the date of the
most recent Interim Statement, Seller shall furnish Buyer with an unaudited
financial statements of Seller for such month in form and substance comparable
to the Interim Statements and with such other financial or other information
routinely prepared by Seller or reasonably requested by Buyer.
SECTION 4.4 FILINGS AND AUTHORIZATIONS. Seller and Buyer, before or
within two business days after the execution and delivery of this Agreement,
shall file or supply, or cause to be filed or supplied, all notifications,
reports and other information required to be filed or supplied pursuant to the
HSR Act in connection with the Contemplated Transactions and which are required
by Law to effectuate the consummation of the Contemplated Transactions. Seller
and Buyer shall cooperate with each other in connection with such filings and
furnish each other with copies of such filings and any correspondence received
from any Governmental Body in connection therewith. Seller and Buyer, as
promptly as practicable, shall make, or cause to be made, all filings and
submissions under such Laws as are applicable to them or to their respective
Affiliates, as may be required for them to consummate the Contemplated
Transactions in accordance with the terms of this Agreement and shall furnish
copies thereof to the other party prior to such filing and shall not make any
such filing or submission to which Buyer or Seller, as the case may be,
reasonably objects in writing. 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 of Seller and Buyer, 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 under
applicable Laws, Permits and Orders to consummate and make effective, as soon as
reasonably practicable, the Contemplated Transactions, including, but not
limited to, the obtaining of all Seller Required Consents and Buyer Required
Consents and 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 other in all of the
foregoing.
-20-
Without limiting the generality of the foregoing, Seller will, upon execution of
this Agreement, use reasonable best efforts to obtain, as soon as practicable
thereafter, execution of the Lease Documents by the landlord under the Lease,
and all costs and expenses incurred in connection therewith shall be borne
equally by Seller and Buyer.
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, Seller and each Shareholder agrees that neither Seller, nor any of its
Affiliates or any officer, director, employee, shareholder or other
Representative of Seller or its Affiliates, 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 Seller, any Affiliate or shareholder or
Representative thereof receives any offer or proposal to enter into discussions
or negotiations relating to any of the above, Seller 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, Seller
and Buyer shall promptly notify the other of:
(a) any notice or other communication from any person alleging that
the consent of such 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; and
(c) any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a violation or breach of
any representation or warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach of any covenant of
any party contained in this Agreement.
SECTION 4.8 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, Seller and
Buyer 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 Seller, 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.
-21-
SECTION 4.9 COVENANT NOT-TO-COMPETE. During the period commencing on the
Closing Date and ending on the earlier of (i) the date Buyer or its successors
or assigns shall cease operation of the Business or (ii) five years thereafter
(the "TERM"):
(a) In order to preserve the value of the Assets being sold to Buyer,
each of Seller and the Shareholders agrees that it 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 management of any (i) water park located within 100 miles of
either Park or (ii) amusement park, theme park, mini-theme park, or family
amusement or entertainment center located within 50 miles of either Park,
provided that Seller and the Shareholders may engage in the ownership, operation
and/or management of a family entertainment center within such 50 mile radius
provided that such center is within a one (1) mile radius of the locations
specified in SCHEDULE 4.9 hereto in the cities of San Xxxxxx, San Xxxxx, Union
City and San Xxxx. The foregoing provisions shall not, however, prohibit (x)
the ownership by any person 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, or (y) the employment of Xxxxxx Xxxxx by any person.
(b) Each of Seller and the Shareholders agrees that it will not,
directly or indirectly, during the Term, for its own benefit or for the benefit
of any other entity or person knowingly solicit the professional services of any
employee, agent or consultant of Buyer or any Affiliate of Buyer or otherwise
interfere with the relationship between Buyer or any Affiliate and any of such
persons.
(c) After the Closing, neither Seller nor any Shareholder nor any of
Seller's Representatives will, directly or indirectly, use, disclose or make
available to anyone (other than Buyer) any confidential information concerning
the ownership and/or operation of the Parks (the "CONFIDENTIAL INFORMATION"),
except to the extent that such Confidential Information has been made publicly
available by Buyer. The Confidential Information includes, without limitation,
the business practices, financial information, customer and prospective
customers names, 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 of Seller pertaining to the
Parks. In the event that Seller or any Shareholder is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, Seller or such Shareholder shall notify
Buyer promptly of the request or requirement so that Buyer may seek an
appropriate protective order or waive compliance with the provisions of this
Section 4.9(c). If, in the absence of a protective order or the receipt of a
waiver hereunder, Seller is, on the advice of counsel, compelled to disclose any
Confidential Information to the tribunal or else stand liable for contempt,
Seller or such Shareholder may disclose the Confidential Information to the
tribunal; provided that Seller or such
-22-
Shareholder shall use its best efforts to obtain, at the request of Buyer, an
order or other assurance that confidential treatment shall be accorded to such
portion of the Confidential Information required to be disclosed as Buyer shall
designate.
(d) 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
Seller, any Shareholder and/or Seller's Representatives from doing or continuing
to do any such act or any other violations or threatened violations of this
Section 4.9.
(e) The parties hereto agree that the covenant set forth in this
Section 4.9 (the "Covenant") is reasonable with respect to its duration,
geographical area and scope. The Covenant is expressly intended to conform with
Section 16601 of the California Business and Professional Code. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 4.9 is invalid or unenforceable, the parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
SECTION 4.10 EXPENSES. Buyer and Seller shall each pay 50% of the
expenses incurred in connection with any filing under the HSR Act and the title
insurance and survey referred to in Section 5.3(f). Except as otherwise
specifically provided in this Agreement, Buyer and Seller shall bear their
respective expenses, in each case, incurred in connection with the preparation,
execution and performance of this Agreement and the Contemplated Transactions,
including, without limitation, all fees and expenses of their respective
Representatives.
SECTION 4.11 TAX MATTERS. (a) Seller shall provide Buyer with a
clearance certificate or similar document(s) that may be required by the Tax
Authority of any jurisdiction in order to relieve Buyer of any obligation to
withhold any portion of the Purchase Price.
(b) Prior to Seller's filing of any Tax Return for its Taxable year
ended December 31, 1996, Seller shall provide Buyer with a copy of such Tax
Return at least ten business days prior to the date on which Seller gives notice
to Buyer that Seller will file such Return. Seller will prepare such Tax
Returns and compute the amount of its income and the Tax liability owed by it,
if any, in accordance and consistent with the past custom and practice of Seller
in filing its Tax Returns. Seller shall timely pay all Taxes
-23-
(including payments of estimated Taxes) that are shown as due and payable on
such Tax Returns.
SECTION 4.12 EMPLOYEE MATTERS.
(a) On the Closing Date, Buyer shall offer employment to such
employees of the Business as it shall determine in its sole discretion, which
offer will include employee benefits that are comparable to those offered by
Buyer or its Affiliates to their comparable employees as of the Closing Date,
PROVIDED, HOWEVER, that any offer of employment shall be contingent upon the
Closing actually occurring. All such employees who accept Buyer's offer of
employment will become employees of Buyer ("TRANSFERRED EMPLOYEES") as of the
Closing Date.
(b) Seller shall retain responsibility and complete liability for all
benefits earned by the Transferred Employees through the Closing Date under
Seller's Employee Benefit Plans and shall pay to each Transferred Employee the
accrued benefit of such Transferred Employee thereunder in accordance with the
terms of such Plans. No assets held in trust in respect of any Employee Benefit
Plan of Seller shall be transferred to Buyer or to any plan adopted or
maintained by Buyer.
(c) Seller shall bear the entire cost and expense of wages, salaries,
bonuses (including all bonuses based on or related to the results of operations
of the Business during its 1996 season, whether payable prior to, on or after
the Closing Date (the "1996 BONUSES"), severance obligations, worker's
compensation claims, and any other direct or indirect compensation or employee
benefits (whether arising under Seller's Employee Benefit Plans or otherwise) of
all employees of the Business for all periods ending on or prior to the Closing
Date, irrespective of time at which any claims therefor are made. For purposes
hereof, an expense will be deemed to be incurred when the services related
thereto have been rendered and a disability shall be deemed to have occurred on
the date of the applicable accident or trauma rather than the date upon which
any determination is made concerning the existence of the disability.
(d) Neither Buyer nor Seller intend this Section to create any rights
or interests, except as between Buyer and Seller, and no present or future
employees of either party (or any dependents of such employees) will be treated
or deemed as third party beneficiaries in or under this Agreement.
SECTION 4.13 CERTAIN RENEWALS. With respect to each Permit which may
expire prior to the Closing Date or within sixty days thereafter, Seller 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 prior to Closing, and (iv) cooperate fully with all Governmental
Bodies in the processing of such Applications.
-24-
SECTION 4.14 COLLECTION OF ACCOUNTS RECEIVABLE. From and after the
Closing Date, Buyer shall be solely responsible for collecting the accounts
receivable of Seller existing on the Closing Date (the "RECEIVABLES") and,
except as provided herein, Seller shall take no action to collect any such
Receivables. Buyer shall give prompt written notice to Seller of any amount
collected in respect of any Receivable and shall promptly remit such amount to
Seller. Any amount received without designation of the invoice to which it
should be applied shall first be applied to the Receivables due from such
account debtor. Any amount received by Buyer from any account debtor, which is
designated by such account debtor as applicable to a receivable other than a
Receivable, shall be the property of Buyer and shall be applied by Buyer to the
balance then due and owing by such account debtor to Buyer. With respect to any
Receivable that is not collected within 90 days following the Closing Date,
Buyer shall consent in writing to the commencement by Seller, at its expense, of
legal action to collect such Receivable.
SECTION 4.15 TRANSFER TAXES; ALLOCATIONS. (a) 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 the
Lease, any personal property transfer Taxes relating to the Assets, incurred in
connection with this Agreement and the Contemplated Transactions shall be borne
equally by Seller and Buyer. Buyer and Seller shall cooperate in providing each
other appropriate resale exemption certificates and other appropriate Tax
documentation and related information at or prior to Closing, as required by
law.
(b) Real estate taxes, personal property taxes, water and sewer
charges, general and special assessments and general and special utility charges
and other similar operating expenses relating to the Business shall be
apportioned at the Closing as of the Closing Date. At the Closing, Buyer and
Seller shall reimburse the other party, as appropriate, for amounts payable
pursuant to this Section 4.15(b).
SECTION 4.16 DISCHARGE OF POTENTIAL LIABILITIES. Seller agrees to pay and
discharge when due all claims of creditors of Seller that may be asserted
against Buyer or Parent except with respect to the Assumed Liabilities.
SECTION 4.17 ACCESS. After the Closing and from time to time, each party
hereto shall permit the other parties and their Representatives to have access
during regular business hours and upon reasonable notice, to inspect and copy
agreements, records, books and other documents that are included in or relate to
the Assets or the Business and identified with reasonable particularity,
wherever located, for the purposes of (i) preparing Tax Returns and financial
statements and responding to Tax audits, and (ii) prosecuting or defending any
Claim, which arises out of or relates to the Business or the Assets. Each party
shall cooperate fully with the other party in connection with the foregoing.
If, after the Closing, any party determines to destroy any agreements, records,
books or documents referred to above, it will give to the other party at least
two months' prior written notice thereof, and such other party shall have the
right during such two-month period upon
-25-
reasonable notice and during regular business hours to take possession of any
such agreements, records, books or documents.
SECTION 4.18 STRUCTURING. Seller acknowledges that Buyer may prior to
Closing propose an alternative structure for the Contemplated Transactions and
agrees that, unless in the reasonable opinion of Seller such alternative
adversely affects the rights and obligations of Seller or the Shareholders or
such alternative structure results in a net expense to Seller, the parties at or
prior to Closing shall enter into such amendments hereto or other instruments
and documents as shall be required to effect such alternative structure.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 5.1 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. The obligations
of Seller and Buyer to consummate the Contemplated Transactions are subject to
the satisfaction of the following conditions, which, in the case of Section
5.1(c), may be waived by Buyer and Seller:
(a) HSR ACT. Any applicable waiting period under the HSR Act
relating to the Contemplated Transactions shall have expired.
(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, Seller, the Shareholders or their respective Affiliates),
shall have been commenced or pending against Seller, Buyer 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 SELLER. All obligations of
Seller hereunder are subject, at the option of Seller, 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 and Parent contained in this Agreement and in any
certificate or other
-26-
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. Buyer shall have paid to Seller by wire transfer
of immediately available funds an amount equal the Purchase Price less the sum
of the Escrow Funds, the Prepaid Deposits and the Additional Capital
Requirements. Buyer shall have delivered to the Escrow Agent, in accordance
with the terms of the Escrow Agreement, the Escrow Funds.
(d) BUYER REQUIRED CONSENTS. All Buyer Required Consents shall have
been obtained.
(e) DOCUMENTATION. There shall have been delivered to Seller the
following:
(i) A certificate, dated the Closing Date, of the Chairman of
the Board, the President or Chief Financial Officer of Buyer and Parent
confirming the matters set forth in Section 5.2(a) and (b) hereof.
(ii) A certificate, dated the Closing Date, of the Secretary or
Assistant Secretary of each such party 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 authorizing the execution, delivery and performance of
this Agreement, and each other Transaction Document to be delivered by such
party 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 and Parent reasonably requested by Seller.
(iv) A signed opinion of Buyer's counsel, dated the Closing Date
and addressed to Seller, substantially in the form of opinion annexed as EXHIBIT
5.2B hereto.
(v) Copies of all Buyer Required Consents.
(vi) An executed copy of the Escrow Agreement.
(vii) An executed copy of an assumption agreement substantially in
the form annexed as EXHIBIT 5.2C (the "ASSUMPTION AGREEMENT").
-27-
SECTION 5.3 CONDITIONS TO THE OBLIGATIONS OF BUYER. All obligations of
Buyer 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. Seller shall have performed and complied with all
agreements, obligations and covenants required by this Agreement to be performed
or complied with by it or him at or prior to the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller and Shareholders contained in this Agreement and in any
certificate or other writing delivered by Seller pursuant hereto shall be true
at and as of the Closing Date as if made at and as of such time.
(c) ENVIRONMENTAL MATTERS. Buyer shall have received environmental
reports prepared by a licensed, qualified environmental engineer acceptable to
Buyer on the Real Property confirming the accuracy of the representations and
warranties in Article II with respect to environmental matters.
(d) SELLER REQUIRED CONSENTS. All Seller Required Consents shall
have been obtained.
(e) CONCORD AGREEMENT. The transactions contemplated by the
agreement (the "CONCORD AGREEMENT") between Buyer and Concord with respect to
the acquisition by Buyer of substantially all of the assets of Concord
comprising the business operations of Waterworld USA/Concord shall have been
consummated.
(f) SURVEY AND TITLE INSURANCE. Buyer shall have procured (i) title
insurance with respect to the Real Property (including easements, rights-of-way,
conditions and restrictions of record), which insurance shall be subject only to
Permitted Liens and such standard or other exceptions on the extended coverage
ALTA Form (1992) title insurance policy as are reasonably acceptable to Buyer,
from a nationally recognized title insurance company qualified to do business in
California reasonably satisfactory to Buyer and Seller in an amount reasonably
satisfactory to Buyer and (ii) a recent survey, by a licensed surveyor selected
by Buyer, of the Real Property, showing the boundaries, monuments, publicly
dedicated access, easements and rights-of-way of record, improvements (including
all Improvements) and encroachments, if any and otherwise complying with
ALTA-ASCM Land Title Survey requirements.
(g) DISCHARGE OF CERTAIN LIABILITY. Seller shall have delivered to
Buyer evidence, reasonably satisfactory to Buyer, of the payment and discharge
by Seller of the Percentage Rent, the 1996 Bonuses, the fees and commissions
described on Schedule 2.20, and all other amounts payable by Seller on or prior
to the Closing Date under Employee Benefit Plans.
-28-
(h) DOCUMENTATION. There shall have been delivered to Buyer the
following:
(i) A certificate dated the Closing Date, of the Chairman of the
Board or President of Seller, confirming the matters relating to it set forth in
Sections 5.3(a) and (b).
(ii) A certificate, dated the Closing Date, of the Secretary or
Assistant Secretary of such party 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 and shareholders authorizing the execution, delivery
and performance of this Agreement, and each other Transaction Document to be
delivered by such party 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
Seller reasonably requested by Buyer.
(iv) A signed opinion of Seller's counsel, dated the Closing
Date, addressed to Buyer, substantially in the form of opinion annexed as
EXHIBIT 5.3A hereto.
(v) Copies of all Seller Required Consents and all Permits.
(vi) (A) certified true and complete copies of the Lease and all
amendments and modifications thereof, and (B) an executed consent to the
assignment, lien and estoppel certificate from the lessor under the Lease,
substantially in the form of EXHIBIT 5.3B hereto (the "LEASE DOCUMENTS").
(vii) An executed copy of the Escrow Agreement.
(viii) Possession and control of the Assets.
(ix) An executed copy of a Xxxx of Sale and Assignment
substantially in a form annexed hereto as EXHIBIT 5.3C ("the XXXX OF SALE").
(x) An executed copy of the Assumption Agreement.
-29-
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a)
Notwithstanding any right of Buyer fully to investigate the affairs of Seller
and notwithstanding any knowledge of facts determined or determinable by Buyer
pursuant to such investigation or right of investigation, Buyer has the right to
rely fully upon the representations, warranties, covenants and agreements of
Seller 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
Seller or Shareholders contained in this Agreement, on any Schedule hereto or in
any instrument delivered in connection with or pursuant to this Agreement (other
than the representations and warranties as to title in Section 2.9 and the
representations and warranties in Sections 2.13, 2.14 and 2.19, which shall
terminate and expire upon expiration of the applicable statute of limitations)
shall terminate and expire 18 months after the Closing Date; PROVIDED, HOWEVER,
that the liability of Seller or any Shareholder shall not terminate as to any
specific claim or claims of the type referred to in Section 6.2 hereof, whether
or not fixed as to liability or liquidated as to amount, with respect to which
Seller or such Shareholder has been given specific notice on or prior to the
date on which such liabilities would otherwise terminate pursuant to the terms
of this Section 6.1(a) and PROVIDED, FURTHER, that the termination of any such
representation and warranty shall not affect the ability of Buyer to seek
indemnification under Sections 6.2(a)(iii) or 6.2(b)(iii) below.
(b) All representations and warranties of Buyer shall terminate and
expire 18 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 SELLER AND SHAREHOLDERS TO INDEMNIFY. Subject
to the provisions of Section 6.5:
(a) Seller agrees 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 enforcing this indemnification) (collectively, the
"LOSSES") suffered or incurred by Buyer or any of the foregoing persons arising
out of (i) any breach of the representations and warranties of Seller contained
in this Agreement or in the Schedules or any Transaction Document, (ii) any
breach of the covenants and
-30-
agreements of Seller contained in this Agreement or in the Schedules or any
Transaction Document or (iii) any Retained Liabilities.
(b) Each Shareholder agrees to indemnify, defend and hold harmless
Buyer (and its respective directors, officers, employees, Affiliates, successors
and assigns) from and against all Losses suffered or incurred by Buyer or any of
the foregoing persons arising out of (i) any breach of the representations and
warranties of such Shareholder contained in this Agreement, (ii) any breach of
the representations and warranties of Seller contained in this Agreement or in
the Schedules or any Transaction Document or (iii) any Retained Liabilities,
PROVIDED that the obligations of Shareholders to indemnify Buyer in respect of
the Losses specified in clauses (ii) and (iii) above shall be several and in
proportion to the Shareholders' respective distribution of proceeds from Seller
in connection with the Contemplated Transactions.
SECTION 6.3 OBLIGATION OF BUYER AND PARENT TO INDEMNIFY. Buyer and Parent
agree to indemnify, defend and hold harmless Seller (and any director, officer,
employee, Affiliate or successors and assigns of Seller) from and against any
Losses suffered or incurred by Seller or any of the foregoing persons arising
out of (i) any breach of the representations and warranties of Buyer and Parent
or of the covenants and agreements of Buyer and Parent contained in this
Agreement or in the Schedules or any Transaction Documents or (ii) any Assumed
Liabilities.
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 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 prompt 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"). 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 its own counsel, any Asserted Liability unless (i) the Asserted
Liability seeks an Order, injunction or other equitable or declaratory relief
against the Indemnitee or (ii) the Indemnitee shall have reasonably concluded
that (x) there is a 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. If the
Indemnifying Party elects to defend such Asserted Liability, it shall within
thirty days (or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the 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
first sentence of this Section 6.4(b), fails to notify the Indemnitee of its
election as
-31-
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. If the Indemnifying Party chooses to
defend any Asserted Liability, the Indemnitee shall make available to the
Indemnifying 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.
SECTION 6.5 LIMITS ON INDEMNIFICATION. (a) Buyer's remedies with respect
to Losses specified in Sections 6.2 shall be satisfied first by the assertion of
its rights under the Escrow Agreement in respect of the Escrow Funds; PROVIDED,
HOWEVER, that if the aggregate amount of such Losses shall be in excess of the
amount of the Escrow Funds or if such Losses shall arise after termination or
expiration of the Escrow Agreement, then the Seller and the Shareholders shall
be obligated to indemnify Buyer in respect of all Losses not satisfied by
delivery to Buyer of Escrow Funds to the extent provided in this Article VI.
(b) In the event that any Order of any Governmental Body shall have
been issued in favor of Buyer (or its assignees) against Seller and any
Shareholder with respect to the indemnification of Buyer's Losses hereunder,
Buyer shall enforce such Order first against Seller and then, to the extent
Buyer has not received payment for such Losses from Seller, any Shareholder;
PROVIDED, HOWEVER, that if Buyer shall not (after diligent efforts) be able to
enforce fully such Order against Seller within twelve months after the date of
such Order, Buyer shall be entitled to enforce such Order against any such
Shareholder. Notwithstanding anything to the contrary in this Agreement, the
Shareholders shall be primary obligors together with Seller and shall not be
deemed as sureties or guarantors of Seller's obligations pursuant to Article VI,
and in furtherance thereof, the Shareholders specifically acknowledge that they
are not entitled to exercise and do hereby waive any rights or defenses
available to a surety or guarantor by reason of Sections 2787-2855 (inclusive)
of the California Civil Code, and any rights or defenses arising out of an
election of remedies by Buyer.
(c) Seller and Shareholders shall not be liable to Buyer for any Loss
arising under Section 6.2 above (A) in respect of any individual Loss of less
than $5,000 and (B) unless the aggregate amount of all such Losses exceeds
$50,000 in the aggregate (the "Stipulated Amount"), in which case Seller shall
be liable for the full amount of such Losses in excess of the Stipulated Amount.
Notwithstanding the foregoing, any Buyer Losses in respect of the sales and use
tax dispute described on SCHEDULE 2.12 shall be
-32-
fully indemnifiable without regard to the provisions hereof relating to the
Stipulated Amount and, in the event Seller or Shareholders indemnify Buyer with
respect to such Losses, the amount of such Losses shall not be included in the
calculation of the Stipulated Amount. Notwithstanding any provision of this
Agreement, the Seller and Shareholders shall not be obligated to pay, in the
aggregate, an amount in excess of $2,267,500 pursuant to the provisions of this
Article VI.
SECTION 6.6 ADJUSTMENT. It is the intent of the parties that any amounts
paid under Sections 6.2 or 6.3 shall represent an adjustment of the Purchase
Price and the parties will report such payments consistent with such intent.
Nevertheless, if any payment pursuant to Section 6.2 or 6.3 hereof would be
treated by any Tax Authority as other than a Purchase Price adjustment and
would, on that basis, be includable in the gross income of the Indemnitee that
is reported to such Tax Authority, then such payment shall be increased by the
amount necessary so that the Indemnitee is fully and completely indemnified on
an after-Tax basis.
SECTION 6.7 EXCLUSIVE REMEDY. Except as otherwise explicitly provided in
this Agreement, 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. Seller acknowledges and agrees that, if
Seller fails to proceed with the Closing in any circumstance other than those
described in clauses (a), (b), (d) or (e) of Section 7.2 below, Buyer will not
have adequate remedies at law with respect to such breach and that, in such
event, Buyer shall be entitled, without the necessity or obligation of posting a
bond or other security, to commence a suit in equity to obtain specific
performance of Seller's obligations under this Agreement. Seller specifically
affirms the appropriateness of such injunctive or other equitable relief in any
such action.
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 Seller and Buyer;
(b) By Seller 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 material misrepresentation or breach of warranty, if
curable, is not cured within 30 days after written notice thereof from Seller;
(ii) Buyer has committed a material breach of any covenant imposed upon it
hereunder and fails to cure such breach within 30 days after written notice
thereof from Seller; or (iii) any condition to Seller's obligations
-33-
hereunder becomes incapable of fulfillment through no fault of Seller and is not
waived by Seller, PROVIDED that, on the date of termination, the conditions to
Buyer's obligations hereunder specified in Sections 5.3(a), (b), (c), (d), (g)
and (h)(vi) hereof shall have been satisfied, all of the comparable conditions
to the obligations of Buyer under the Concord Agreement shall have been
satisfied and the Seller and the seller under the Concord Agreement shall be
otherwise ready, willing and able to proceed with the Closing hereunder and the
closing under the Concord Agreement;
(c) By Buyer, if (i) there has been a material misrepresentation or
breach of warranty on the part of Seller or the Shareholders in the
representations and warranties contained herein and such material
misrepresentation or breach of warranty, if curable, is not cured within 30 days
after written notice thereof from Buyer; (ii) Seller has committed a material
breach of any covenant imposed upon it hereunder and fails to cure such breach
within 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, the conditions to Seller's obligations hereunder specified in
Sections 5.2(a), (b) and (d) hereof shall have been satisfied, all of the
comparable conditions to the obligations of seller under the Concord Agreement
shall have been satisfied and Buyer shall be otherwise ready, willing and able
to proceed with the Closing hereunder and the closing under the Concord
Agreement;
(d) By Seller 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 Seller or Buyer from consummating the Contemplated
Transactions is entered and such Order shall have become final and
nonappealable; and
(e) By either Seller or Buyer if the Closing shall not have occurred
on or prior to November 30, 1996, provided that (i) if so terminated by Seller,
the conditions specified in the proviso of Section 7.2(b) shall have been
satisfied on the date of termination and the Seller and the seller under the
Concord Agreement shall be then otherwise ready, willing and able to proceed
with the Closing and the closing under the Concord Agreement, 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 the Buyer shall be then
otherwise ready, willing and able to proceed with the Closing and the closing
under the Concord Agreement.
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
-34-
Sections 4.8 and 4.10 shall survive the termination hereof. In the event that a
condition precedent to its obligation is 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:
(i) If to Buyer or Parent, one copy to:
Premier Parks Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Chairman and CEO
with a copy to:
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
(ii) If to Seller or the Shareholders, one copy to:
FRE, Inc. (Family Recreational Enterprises, Inc.)
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attn: Xxxxx Xxxxx
-35-
with a copy to:
Ferrellgas
Xxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attn: Xxx Xxxxxxx
Xxxxx Xxxx LLP
000 Xxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attn: Xxxxxxxxx X. Xxxxxxxxx, Esq.
(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 party
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 collateral agreements executed in connection with the
consummation of the Contemplated Transactions contain the entire agreement among
the parties with respect to the subject matter hereof and related 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 Seller and Buyer, PROVIDED that
any amendment to the provisions of Article VI relating to the Shareholders shall
require the written consent of a majority in interest of the Shareholders. The
provisions hereof may be waived in writing by the party to be charged therewith.
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 governed and construed
in accordance with the laws of the State of California applicable to agreements
-36-
made and to be performed entirely within such State, without regard to the
conflict of laws rules 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 a party without the express written consent of Buyer (in the case of
assignment by Seller or Shareholder) or Seller (in the case of assignment by
Buyer) and any purported assignment, unless so consented to, shall be void and
without effect. Notwithstanding the foregoing, Buyer and Seller agree that
Buyer may cause one or more Affiliates, Subsidiaries or other entities
designated by it to carry out all or part of the Contemplated Transactions to be
carried out by Buyer. Nothing herein express or implied is intended or shall be
construed to confer upon or to give anyone other than the parties hereto and
their respective heirs, legal representatives and successors any rights or
benefits under or by reason of this Agreement and no other party shall have any
right to enforce any of the provisions of this Agreement.
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.
SECTION 8.8 COUNTERPARTS. The 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, Seller will do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged or
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney or assurances as may be reasonably required for the better
transferring, assigning, conveying, granting, assuring and confirming to Buyer,
or for aiding and assisting in the collection of or reducing to possession by
Buyer, any of the Assets to be transferred, conveyed and assigned hereunder
-37-
or to vest in Buyer all of Seller's right, title and interest in and to the
Assets being conveyed hereunder. Seller and Buyer will each, respectively, bear
their own costs and expenses incurred in compliance with its obligations under
this Section 8.10.
SECTION 8.11 TITLE AND RISK OF LOSS. Legal title, equitable title and
risk of loss with respect to the Assets and rights to be transferred hereunder
shall not pass to Buyer until the Assets or right is transferred at the Closing
hereunder.
ARTICLE IX
DEFINITIONS
SECTION 9.1 DEFINITIONS. (a) The following terms, as used herein, have
the following meanings:
"ACQUISITION PROPOSAL" shall mean any proposal for the acquisition of, or
merger or other business combination involving Seller or the sale of any equity
interest in, or the Business or any assets of, Seller (except in the ordinary
course), other than the transactions contemplated by this Agreement.
"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.
The term "AUDIT" or "AUDITED" when used in regard to financial statements
shall mean an examination of the financial statements by a firm of independent
certified public accountants in accordance with generally accepted auditing
standards for the purpose of expressing an opinion thereon.
"CERTIFICATE OF INCORPORATION" shall mean, in the case of any corporation,
the certificate of incorporation, articles of incorporation or charter of a
corporation, howsoever denominated under the laws of the jurisdiction of its
incorporation.
"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, and all
modifications and amendments thereto and substitutions thereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
-38-
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" shall mean (i) money borrowed by Seller from any person; (ii) any
indebtedness of Seller arising under leases required to be capitalized under
GAAP or evidenced by a note, bond, debenture or similar instrument; (iii) any
indebtedness of Seller 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) and (iv) any Liability
of Seller under any guaranty, letter of credit, performance credit or other
agreement having the effect of assuring a creditor against loss.
"DEFERRED COMPENSATION LIABILITIES" shall mean all payments required to be
made by Seller under any Employee Benefit Plan.
"ENVIRONMENTAL LAWS" shall mean any and all Laws (including common law),
Orders, Permits, agreements or any other requirement or restriction promulgated,
imposed, enacted or issued by any federal, state, local and foreign Governmental
Bodies relating to the environment, including the emission, discharge or Release
of pollutants, contaminants, 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" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" shall mean generally accepted accounting principles in effect on the
date hereof 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 other entity 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, flammable materials, radioactive materials, controlled or toxic
substances, any pollutant or contaminant, or any substance which might cause any
-39-
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" shall mean 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 Seller and held for resale or for distribution, together
with packaging and samples thereof, operating supplies and spare or maintenance
parts owned by Seller as of such date.
"IRS" shall mean the Internal Revenue Service.
"LEASE" shall mean Agreement between California Exposition and State Fair
and Seller, dated May 23, 1986, as amended by the First Amendment thereto, dated
November 25, 1992 and the Second Amendment thereto, dated July 19, 1996.
"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).
"LIEN" shall mean, with respect to any Asset, 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.
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.
"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
contaminated or potentially contaminated sites or potential or verified
Hazardous Waste sites under any Environmental Law, 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,
-40-
escaping, or any other release or threatened release to or from, however
defined, any Hazardous Substance in violation of any Environmental Law.
"REPORTABLE EVENT" shall mean any of the events described in Section
4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"SUBSIDIARY" of Seller or Buyer shall mean any person of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are owned
directly or indirectly through one or more intermediaries, or both, by Seller or
Buyer.
"TAX" (including, with correlative meaning, the terms "TAXES" and
"TAXABLE") shall mean (i) any net income, gross income, gross receipts, sales,
use, 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 real property and water and
sewer rents relating thereto), together with 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 Seller, 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 Seller being a member of an
affiliated or combined group with any other corporation at any time on or prior
to the Closing Date and (iii) any liability of Seller for the payment of any
amounts of the type described in the immediately preceding clause (i) as a
result of a contractual obligation to indemnify any other person.
"TAX RETURN" shall mean any return or report (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to any Tax Authority.
"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
transactions contemplated hereby.
-41-
(b) The following terms are defined in the following sections of
this Agreement:
TERM SECTION
---- -------
Additional Capital Requirement 1.2(b)
Annual Statements 2.5(a)
Applications 4.13
Asserted Liability 6.4(a)
Assets 1.1(a)
Assumed Liabilities 1.2(a)
Assumption Agreement 5.2(e)
Xxxx of Sale 5.3(l)
Business Recital
Buyer Recital
Buyer Required Consents 3.2
Claims 2.12
Claims Notice 6.4(a)
Closing 1.5
Closing Date 1.5
Concord 2.3
Concord Agreement 5.3(e)
Condition of the Business 2.8
Contemplated Transactions 2.1
Employee Benefit Plan 2.14(a)
Environmental Liabilities 1.2(b)
Equipment 1.1(a)
ERISA Affiliate 2.14(a)
ERISA Plan 2.14(a)
Escrow Agent 1.3(b)
Escrow Agreement 1.3(b)
Escrow Funds 1.3(b)
Excluded Assets .1(b)
Governmental Bodies 2.17
Improvements 1.1(a)
Indemnifying Party 6.4(a)
Indemnitee 6.4(a)
Insurance Policies 2.16
Intellectual Property Rights 1.1(a)
Interim Statements 2.5(a)
Land 1.1(a)
Latest Balance Sheet 2.6
Latest Balance Sheet Date 2.6
Laws 2.17
Lease Documents 5.3(h)(vi)
-42-
Losses 6.2
1996 Bonus 4.12(c)
Orders 2.17
Paradise Island Recital
Parks Recital
Percentage Rent 1.2(b)
Permits 1.1(a)
Permitted Liens 2.9(a)
Prepaid Deposits 1.1(a)
Purchase Price 1.3(a)
Real Property 1.1(a)
Receivables 4.14
Representatives 4.2
Retained Liabilities 1.2(b)
Seller Recital
Seller Required Consents 2.2
Shareholders Recital
Term 4.9
Territory 4.9(a)
Transferred Contracts 1.1(a)
Transferred Employees 4.12(a)
Waterworld Recital
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".
-43-
IN WITNESS WHEREOF, the undersigned have executed this Asset Purchase
Agreement as of the date set forth above.
PREMIER PARKS ACQUISITION CORP.
By:
-------------------------------------
Xxxxxx X. Xxxxx
Chairman of the Board and
Chief Executive Officer
PREMIER PARKS INC.
By:
-------------------------------------
Xxxxxx X. Xxxxx
Chairman of the Board and
Chief Executive Officer
FRE, INC. (FAMILY RECREATIONAL
ENTERPRISES, INC.)
By:
-------------------------------------
Name:
President
SHAREHOLDERS:
THE XXXXX X. XXXXXXX REVOCABLE
TRUST
By:
-------------------------------------
Xxxxx X. Xxxxxxx, Trustee
-44-
THE XXXXX AND XXXXX XXXXX TRUST
By:
-------------------------------------
Name:
Title: Trustee
----------------------------------------
Xxxxx X. Xxxxxxx
----------------------------------------
Xxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxx
----------------------------------------
Xxx Xxxxxxx
-45-
