Exhibit 10.2
Execution Version
March 14, 2006
Cedar Fair, X.X.
Xxxxx'x Xxxxx Farm
Xxx Xxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attn: Corporate Vice President - Finance
RE: MODIFICATION LETTER TO 1994/2004 SHELF AGREEMENTS OF CEDAR FAIR, L.P.
Ladies and Gentlemen:
Reference is made to (i) that certain Amended and Restated Note Purchase
and Private Shelf Agreement, dated as of April 7, 2004 (as amended, modified and
supplemented prior to the date hereof, the "2004 Shelf Agreement") among Cedar
Fair, L.P., a Delaware limited partnership (the "Company"), and Xxxxx'x Xxxxx
Farm, a California general partnership ("Xxxxx'x Xxxxx Farm"; the Company and
Xxxxx'x Xxxxx Farm are hereinafter collectively referred to as the "Co-Issuers"
and individually referred to as a "Co-Issuer"), on the one hand, and Prudential
Investment Management, Inc., The Prudential Insurance Company of America
("PICA"), Hartford Life Insurance Company, Medica Health Plan and each
Prudential Affiliate which is or which becomes a party to the 2004 Shelf
Agreement, on the other hand and (ii) that certain Private Shelf Agreement,
dated as of August 24, 1994 (as amended, modified and supplemented prior to the
date hereof, the "1994 Shelf Agreement"; and, collectively with the 2004 Shelf
Agreement, the "Shelf Agreements"), between the Company and PICA. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Shelf Agreements (as hereby amended).
Pursuant to the request of the Co-Issuers and in accordance with the
provisions of paragraph 11C of the Shelf Agreements, the parties hereto agree as
follows:
SECTION 1. AMENDMENT. From and after the date this letter becomes effective
in accordance with its terms, each Shelf Agreement is amended as follows:
1.1 Paragraph 5A of each Shelf Agreement is amended by inserting ", 6E"
after the reference to "6C" in the penultimate paragraph of 5A in each Shelf
Agreement.
1.2 Paragraph 5 of each Shelf Agreement is amended by adding a new
Paragraph 5L after Paragraph 5K of each Shelf Agreement to read as follows:
"5L. EXCESS LEVERAGE FEE. In addition to interest accruing on the
Notes, the Co-Issuers hereby agree to pay to the holder of each Note a fee
(the "LEVERAGE FEE") with respect to each fiscal quarter of the Company
(commencing with the fiscal quarter ending June 30, 2006), on the last day
of which the ratio of Consolidated Debt to Consolidated EBITDA exceeds 3.25
to 1.00. The amount of the Leverage Fee, if any, with respect to each Note
shall be a dollar amount equal to the product obtained by multiplying (a)
the Fee Factor as set forth in the table below opposite the applicable
ratio of Consolidated Debt to Consolidated EBITDA as of the last day of
such fiscal quarter by (b) the Weighted Dollar Average (as defined below)
of the outstanding principal balance of such Note during such fiscal
quarter.
CONSOLIDATED DEBT / EBITDA FEE FACTOR
-------------------------- ----------
3.26x - 3.30x 0.000125
3.31x - 3.40x 0.00025
3.41x - 3.50x 0.000375
> 3.50x 0.000625
The Leverage Fee for any fiscal quarter shall otherwise be calculated
on the same basis as interest on the Notes is calculated and shall be
payable in arrears on the 60th day after the end of such fiscal quarter.
The consequences for the failure to pay the Leverage Fee when due shall be
governed by paragraph 7A(ii) of this Agreement treating the Leverage Fee,
solely for such purposes, as interest. The payment of a Leverage Fee shall
not constitute a waiver of any Default or Event of Default. As used in this
paragraph, "Weighted Dollar Average" shall mean, with respect to any Note,
during any fiscal quarter of the Company, a dollar amount determined by
adding together the daily outstanding principal balance of such Note during
such fiscal quarter and dividing the amount thus obtained by the total
number of days during such fiscal quarter."
1.3 Paragraph 6A(2) is amended by deleting the existing paragraph 6A(2) in
its entirety and replacing it with a new paragraph 6A(2) to read as follows:
"6A(2). DEBT. Create, incur, assume, guarantee, suffer to exist, or
otherwise be or become directly or indirectly liable for, any Funded or
Current Debt, except
(i) Funded Debt of the Company represented by the Notes,
(ii) Funded or Current Debt of any Subsidiary to the Company,
(iii) Funded or Current Debt of any Subsidiary to any other
Subsidiary, provided that no Subsidiary shall become liable for or suffer
to exist any Debt permitted
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by this clause (iii) unless the Subsidiary to which such Debt is owed shall
be free from any Debt to any Person other than the Company, and
(iv) other Debt of the Company or any Subsidiary; provided that
Priority Debt shall at no time exceed 20% of Consolidated Owners Equity
(notwithstanding the foregoing, the basket in this subclause (iv) shall not
be used to secure the lender(s) under the Credit Agreement (or any credit
facility which replaces the Credit Agreement) and if such other Debt is
Funded Indebtedness, at the time of the creation, issuance, assumption,
guaranty or incurrence thereof and after giving effect thereto and to the
application of the proceeds thereof, (1) the ratio of (a) Consolidated
Funded Indebtedness to (b) Consolidated Operating Cash Flow for the
immediately preceding four fiscal quarter period shall not exceed 3.25 to
1.00 and (2) no Default or Event of Default exists or will exist after
giving effect thereto;
The renewal, extension or refunding of any Funded Indebtedness,
issued, incurred or outstanding pursuant to paragraph 6A(2) shall
constitute the issuance of additional Funded Indebtedness which is, in
turn, subject to the limitations of the applicable provisions of this
paragraph 6A(2).
For purposes of clause (iv) of this paragraph 6A(2), the following
terms shall have the meanings specified with respect thereto below.
"CAPITALIZED LEASE" means any lease the obligation for
Rentals with respect to which is required to be capitalized on a
consolidated balance sheet of the lessee and its subsidiaries in
accordance with GAAP.
"CAPITALIZED RENTALS" of any Person means as of the date of
any determination thereof the amount at which the aggregate Rentals
due and to become due under all Capitalized Leases under which such
Person is a lessee would be reflected as a liability on a consolidated
balance sheet of such Person.
"CONSOLIDATED FUNDED INDEBTEDNESS" means, without
duplication, (a) all Funded Indebtedness of the Company and its
Subsidiaries, determined on a consolidated basis eliminating
intercompany items and (b) all Current Indebtedness of the Company and
its Subsidiaries, determined on a consolidated basis eliminating
intercompany items measured at the lowest aggregate principal amount
of Current Indebtedness outstanding during any period of 10
consecutive days within the 365 days immediately preceding the date of
any determination hereunder.
"CONSOLIDATED INTEREST EXPENSE" means all Interest Expense
of the Company and its Subsidiaries for any period after eliminating
intercompany items.
"CONSOLIDATED NET EARNINGS" means, with reference to any
period and without duplication, the net earnings (or loss) of the
Company and its Subsidiaries for such period (taken as a cumulative
whole), as determined in accordance with GAAP, after eliminating (a)
extraordinary gains and losses and (b) net earnings of any business
entity (other than a Subsidiary) in which the Company or any of its
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Subsidiaries has an ownership interest unless such net earnings shall
have actually been received by the Company or such Subsidiary in the
form of cash distributions.
"CONSOLIDATED OPERATING CASH FLOW" for any period means the
total of (a) (i) Consolidated Net Earnings during such period, plus
(to the extent deducted in determining Consolidated Net Earnings),
(ii) all provisions for any federal, state or local income taxes made
by the Company and its Subsidiaries during such period, plus all
provisions for depreciation and amortization (other than amortization
of debt discount) made by the Company and its Subsidiaries during such
period, plus Consolidated Interest Expense during such period, plus
other non-recurring (with the understanding that unit option expense
shall not constitute a recurring event) non-cash losses and charges
minus (b)(i) gains on sales of assets (excluding sales in the ordinary
course of business) and (ii) other non-recurring (with the
understanding that unit option credits shall not constitute a
recurring event) non-cash gains. For purposes of any determination of
Consolidated Operating Cash Flow pursuant to Section 6A(2)(iv)(1)(a),
the Company may include "consolidated operating cash flow" (determined
in a manner consistent with the definition of "Consolidated Operating
Cash Flow" contained in this Agreement), on a pro forma basis, which
were earned in the immediately preceding four fiscal quarter period by
any business entity actually acquired by the Company or any of its
Subsidiaries during such period, provided that concurrently with such
determination, the Company shall have furnished to the holders of the
Notes audited financial statements (if the Company is required
pursuant to Regulation S-X to prepare audited financial statements in
connection with such acquisition) and other financial information with
respect to such business entity demonstrating to the reasonable
satisfaction of the Required Holders the basis for the inclusion and
computations of such "consolidated operating cash flow".
"CURRENT INDEBTEDNESS" of any Person means as of the date of
any determination thereof (a) all Indebtedness of such Person for
borrowed money other than Funded Indebtedness of such Person,
including all Revolver Debt of such Person, and (b) Guaranties by such
Person of Current Indebtedness of others.
"FUNDED INDEBTEDNESS" of any Person means, without
limitation, (a) all Indebtedness of such Person for borrowed money or
which has been incurred in connection with the acquisition of assets
in each case having a final maturity of one or more than one year from
the date of origin thereof (or which is renewable or extendible at the
option of the obligor for a period or periods more than one year from
the date of origin), including all payments in respect thereof that
are required to be made within one year from the date of any
determination of Funded Indebtedness, whether or not the obligation to
make such payments shall constitute a current liability of the obligor
under GAAP, (b) all Capitalized Rentals of such Person, and (c) all
Guaranties by such Person of Funded Indebtedness of others; provided
that, notwithstanding the maturity of such Indebtedness, "Funded
Indebtedness" shall not include Revolver Debt of such Person but shall
include any term debt having a final
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maturity of one or more than one year regardless of whether such term
debt originally constituted, or was converted from, Revolver Debt.
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or
other obligation of any other Person in any manner, whether directly
or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:
(a) to purchase such Indebtedness or obligation or any
property constituting security therefore;
(b) to advance or supply funds (i) for the purchase or
payment of such Indebtedness or obligation, or (ii) to maintain
any working capital or other balance sheet condition or any
income statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of
such Indebtedness or obligations;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of any other Person to
make payment of the Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness
or obligation against loss in respect thereof.
In any computation of Indebtedness or other liabilities of the obligor
under any Guaranty, the Indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of
such obligor.
"INTEREST EXPENSE" of the Company and its Subsidiaries for
any period means all interest (including the interest component on
Rentals on Capitalized Leases) and all amortization of debt discount
and expense on any particular Indebtedness (including, without
limitation, payment-in-kind, zero coupon and other like Securities)
for which such calculations are being made. Computations of Interest
Expense on a pro forma basis for Indebtedness having a variable
interest rate shall be calculated at the rate in effect on the date of
any determination.
"RENTALS" means and include as of the date of any
determination thereof all fixed payments (including as such all
payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by any
the Company or a Subsidiary, as lessee or sublessee under a lease of
real or personal property, but shall be exclusive of any amounts
required to be paid by the Company or a Subsidiary (whether or not
designated as rents or additional rents) on account of maintenance,
repairs, insurance, taxes and similar charges. Fixed rents
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under any so-called "percentage leases" shall be computed solely on
the basis of the minimum rents, if any, required to be paid by the
lessee regardless of sales volume or gross revenues.
"REVOLVER DEBT" means as of the date of any determination
thereof all Indebtedness of a Person under a revolving credit
agreement which, by its terms, permits the re-borrowing of amounts
re-paid under such agreement, subject to customary requirements.
"SECURITY" has the meaning set forth in Section 2(1) of the
Securities Act of 1933."
1.4 Xxxxxxxxx 0X of each Shelf Agreement is amended by deleting such
paragraph 6C and replacing it with a new paragraph 6C to read as follows:
"6C. CONSOLIDATED EBITDA RATIO. The Company will not at any time
permit the ratio of (i) the amount of its Average Consolidated Debt at such
time to (ii) its Consolidated EBITDA for the Testing Period most recently
ended, to exceed 3.50 to 1.00."
1.5 Paragraph 6D in each Shelf Agreement is amended by deleting the
reference to "$270,000,000" in clause (a) thereof and replacing it with
"$350,000,000".
1.6 Paragraph 6 in each Shelf Agreement is amended by adding a new
Paragraph 6E after Paragraph 6D in each Shelf Agreement to read as follows:
"6E. INTEREST COVERAGE RATIO. The Company will not suffer or permit at
any time the Interest Coverage Ratio to be less than 3.50 to 1.00."
1.7 Paragraph 7A of each Shelf Agreement is amended by inserting ", 5.14,
5.25" after the reference to "5.12" in subclause (xv)(1) of paragraph 7A in each
Shelf Agreement.
1.8 The definitions of "Credit Agreement" and "Intercreditor Agreement" in
Paragraph 10B of each Shelf Agreement are amended and restated in their entirety
to read as follows:
"CREDIT AGREEMENT" shall mean that certain Credit Agreement,
dated as of March 14, 2006 among the Co-Issuers, Cedar Fair and Magnum
Management Corporation, as borrowers, the financial institutions named
therein as Banks and KeyBank National Association, as lead arranger
and administrative agent, as amended, restated or otherwise modified
from time to time.
"INTERCREDITOR AGREEMENT" shall mean that certain Intercreditor
Agreement, dated as of March 14, 2006, among the agent and the banks
party to the Credit Agreement, the purchasers under the 2002 Note
Purchase Agreement, the purchasers under the 2003 Note Purchase
Agreement and the holders of the Notes, as amended, restated or
otherwise modified from time to time.
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1.9 The following new definition(s) are added to Paragraph 10B of each
Shelf Agreement in alphabetical order:
"AVERAGE CONSOLIDATED DEBT" shall mean, on any date of
determination, the average of the aggregate amount of Consolidated
Debt outstanding as of the last day of each of the most recently
completed four fiscal quarters.
"INTEREST COVERAGE RATIO" shall mean "Interest Coverage Ratio" as
defined in the Credit Agreement as in effect on the date hereof and
with such modifications to such definition as the Required Holder(s)
may consent to in writing. No modification or termination of the
Credit Agreement shall affect the continued applicability of the
foregoing reference thereto.
"LEVERAGE FEE" shall have the meaning provided in paragraph 5L.
SECTION 2. CONDITIONS PRECEDENT. This letter shall become effective as of
the date first written above upon (a) the return by the Co-Issuers to Prudential
of a counterpart hereof duly executed by the Co-Issuers and the holders of the
Notes and consented to by the subsidiaries of the Company listed below and (b)
delivery of a fully executed copy of the Credit Agreement in form and substance
satisfactory to the Required Holders. The foregoing documentation should be
returned to Prudential Capital Group, Xxx Xxxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, Attn: Xxxxx X. Xxxxxxx.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Each Co-Issuer represents and
warrants that: (a) each Shelf Agreement, as amended, is the legal, valid and
binding obligations of each Co-Issuer, enforceable against each Co-Issuer in
accordance with its terms, except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by the availability
of the remedy of specific performance, (b) each representation and warranty set
forth in paragraph 8 of the Shelf Agreements is true and correct as of the date
of execution and delivery of this letter by the Co-Issuers with the same effect
as if made on such date (except to the extent such representations and
warranties expressly refer to an earlier date, in which case they were true and
correct as of such earlier date) and (c) after giving effect to this letter, no
Event of Default or Default exists on the date hereof.
SECTION 4. REFERENCE TO AND EFFECT ON SHELF AGREEMENTS. Upon the
effectiveness of this letter, each reference to either Shelf Agreement in any
other document, instrument or agreement shall mean and be a reference to such
Shelf Agreement, as modified by this letter. Except as specifically set forth in
Section 1 hereof, each Shelf Agreement shall remain in full force and effect and
is hereby ratified and confirmed in all respects.
SECTION 5. GOVERNING LAW. THIS LETTER SHALL BE CONSTURED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD
OTHERWISE CAUSE THIS AGREEMENT TO BE CONSTRUED OR ENFORCED IN ACCORDANCE WITH,
OR
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THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER
JURISDICTION).
SECTION 6. COUNTERPARTS; SECTION TITLES. This letter may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which when taken together shall constitute but one and the same
instrument. The section titles contained in this letter are and shall be without
substance, meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.
The remainder of this page is intentionally left blank.
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SECTION 7. CONFIRMATION OF GUARANTEES. By its signature below, each
Subsidiary party to a Guaranty Agreement agrees and consents to the terms and
provisions of this letter and agrees that its Guaranty Agreement shall remain in
full force and effect after giving effect to this letter.
Very truly yours,
PRUDENTIAL INVESTMENT MANAGEMENT, INC.
By:
------------------------------------
Vice President
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
------------------------------------
Vice President
HARTFORD LIFE INSURANCE COMPANY
By: Prudential Private Placement
Investors, L.P.
(as Investment Advisor)
By: Prudential Private Placement
Investors, Inc.
(as its General Partner)
By:
------------------------------------
Vice President
MEDICA HEALTH PLAN
By: Prudential Private Placement
Investors, L.P.
(as Investment Advisor)
By: Prudential Private Placement
Investors, Inc.
(as its General Partner)
By:
------------------------------------
Vice President
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BAYSTATE INVESTMENTS, LLC
By: Prudential Private Placement
Investors, L.P.
(as Investment Advisor)
By: Prudential Private Placement
Investors, Inc.
(as its General Partner)
By:
------------------------------------
Vice President
SECURITY BENEFIT LIFE INSURANCE
COMPANY, INC.
By: Prudential Private Placement
Investors, L.P.
(as Investment Advisor)
By: Prudential Private Placement
Investors, Inc.
(as its General Partner)
By:
------------------------------------
Vice President
ING LIFE INSURANCE AND ANNUITY COMPANY
By: Prudential Private Placement
Investors, L.P.
(as Investment Advisor)
By: Prudential Private Placement
Investors, Inc.
(as its General Partner)
By:
---------------------------------
Vice President
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Agreed and accepted this
14th day of March, 2006
CEDAR FAIR, L.P.
By: Cedar Fair Management Company,
General Partner
By:
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Corporate Vice President,
Finance
XXXXX'X XXXXX FARM
By: Magnum Management Corporation,
one of its general partners
By:
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Corporate Vice President,
Finance
Consented:
CEDAR FAIR
By: Magnum Management Corporation,
the Managing General Partner
By:
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Corporate Vice President,
Finance
MAGNUM MANAGEMENT CORPORATION
By:
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Corporate Vice President,
Finance
MICHIGAN'S ADVENTURE, INC.
By:
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Corporate Vice President,
Finance
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