Exhibit 10.3
CEDAR FAIR, L.P.
and
KNOTT'S BERRY
FARM
as
Co-Issuers
NOTE PURCHASE AND
PRIVATE SHELF
AGREEMENT
$50,000,000 6.68%
Series B Notes due August 24, 2011
$25,000,000 Private
Shelf Facility
Dated as of January 28,
1998
TABLE OF
CONTENTS
(Not Part of Agreement)
Page
-
AUTHORIZATION OF ISSUE OF NOTES
1
1A.
Authorization of Issue of Series B Notes
1
1B.
Authorization of Issue of Shelf Notes 1
-
PURCHASE AND SALE OF NOTES
2
2A. Purchase
and Sale of Series B Notes 2
2B(1). Facility 2
2B(2). Issuance Period
3
2B(3). Request for
Purchase
3
2B(4). Rate Quotes
3
2B(5). Acceptance
3
2B(6). Market
Disruption
4
2B(7). Closing 4
2B(8). Fees
5
2B(8)(i).
Facility Fee
5
2B(8)(ii).
Delayed Delivery Fee 5
2B(8)(iii).
Cancellation Fee
5
2B(8)(iv).
Structuring Fee 6
-
CONDITIONS OF CLOSING
6
3A. Opinion of
Company's Counsel 6
3B.
Opinion of Purchaser's Special Counsel 6
3C.
Representations and Warranties; No Default 6
3D. Fees
7
3E.
Purchase Permitted By Applicable Laws
7
3F.
Proceedings 7
3G.
Intercreditor Agreement
7
-
PREPAYMENTS
7
4A(1). Required
Prepayments of Series B Notes
7
4A(2). Required
Prepayments of Shelf Notes 7
4B(1). Optional
Prepayment with Yield-Maintenance Amount 7
4B(2). Prepayment with
Yield-Maintenance Amount
Pursuant to Intercreditor Agreement 8
4C. Notice of
Optional Prepayment 8
4D.
Application of Prepayments 8
4E.
Retirement of Notes 8
-
-
AFFIRMATIVE COVENANTS
9
5A. Financial
Statements 9
5B.
Inspection of Property
10
5C. Covenant
to Secure Note Equally
10
5D.
Information Required by Rule 144A 11
5E.
Compliance With Environmental Laws 11
5F.
Maintenance of Insurance
11
5G. Minimum
Assets
11
5H. Most
Favored Covenant Status, etc. 11
5I.
Senior Debt 12
-
NEGATIVE COVENANTS 12
6A. Lien, Debt
and Other Restrictions
12
6A(1). Liens
12
6A(2). Debt
13
6A(3). Loans, Advances,
Investments and Contingent Liabilities
13
6A(4). Sale of Stock
and Debt of Subsidiaries 14
6A(5). Merger and Sale
of Assets
15
6A(6). Transactions
with Related Persons
15
6B.
Issuance of Stock by Subsidiaries
16
6C. Bank
Defined Indebtedness/Consolidated EBITDA Ratio
16
6D. Interest
Coverage Ratio
16
-
EVENTS OF DEFAULT
16
7A.
Acceleration 16
7B.
Notice of Acceleration
19
7C. Other
Remedies
19
-
REPRESENTATIONS, COVENANTS AND WARRANTIES 19
8A(1). Company
Organization and Qualification
19
8A(2). Knott's Berry
Farm Organization and Qualification
19
8B.
Financial Statements 20
8C. Actions
Pending
20
8D.
Outstanding Debt
21
8E.
Title to Properties
21
8F.
Taxes 21
8G.
Conflicting Agreements and Other Matters
21
8H. Offering
of Notes
22
8I.
Regulation G, etc.
22
8J.
ERISA 22
8K.
Governmental Consent
22
8L.
Environmental Compliance
23
8M. Investment
Company Status 23
8N. Disclosure
23
8O. Hostile
Tender Offers
23
-
-
REPRESENTATIONS OF THE PURCHASERS 23
9A. Nature of
Purchase
23
9B.
Source of Funds
24
-
DEFINITIONS
24
10A.
Yield-Maintenance Terms
24
10B.
Other Terms 25
10C.
Accounting Principles, Terms and Determinations
33
-
MISCELLANEOUS
33
11A. Note
Payments 33
11B.
Expenses
33
11C.
Consent to Amendments
34
11D. Form,
Registration, Transfer and Exchange of Notes;
Lost Notes
34
11E.
Persons Deemed Owners; Participations
35
11F.
Survival of Representations and Warranties;
Entire Agreement
35
11G.
Successors and Assigns
35
11H.
Notices
36
11I.
Descriptive Headings 36
11J.
Satisfaction Requirement
36
11K.
Payments Due on Non-Business Days 36
11L.
Limited Liability of Partners
36
11M.
Independence of Covenants 37
11N.
Severability
37
11O.
Governing Law, Jurisdiction; Consent to Service
of Process
37
11P.
Counterparts 37
11Q.
Binding Agreement
38
-
JOINT AND SEVERAL OBLIGATIONS 38
12.1
Nature of Obligations 38
12.2
Failure of any Co-Issuer to Perform 38
12.3
Additional Undertaking 38
12.4
Joint and Several Obligations Unconditional, etc.
38
12.5
Co-Issuer's Obligations to Remain in Effect;
Restoration
39
12.6
Waiver of Acceptance, etc.
39
12.7
Subrogation 40
12.8
Effect of Stay 41
CEDAR FAIR, L.P.
One Causeway Drive
P.O. Box 5006
Sandusky, Ohio 44871
As of January 28, 1998
The Prudential Insurance Company
of America (" Prudential ")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential, the
" Purchasers ")
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Ladies and Gentlemen:
The undersigned, Cedar Fair, L.P., a Delaware limited partnership
(herein called the " Company ") and Knott's Berry Farm, a
California general partnership ("Knott's Berry Farm "; the
Company and Knott's Berry Farm are sometimes hereinafter
collectively referred to as the " Co-Issuers " and
individually referred to as a " Co-Issuer "), hereby jointly
and severally agree with you as set forth below. Reference is made
to paragraph 10 hereof for definitions of capitalized terms used
herein and not otherwise defined herein.
1.
AUTHORIZATION OF ISSUE OF NOTES .
1A.
Authorization of Issue of Series B Notes . The Co-Issuers shall
authorize the issue of the senior promissory notes of the
Co-Issuers (the " Series B Notes ") in the aggregate
principal amount of $50,000,000, to be dated the date of issue
thereof, to mature August 24, 2011, to bear interest on the unpaid
balance thereof from the date thereof until the principal thereof
shall have become due and payable at the rate of 6.68% per annum
and on overdue principal, Yield-Maintenance Amount and interest at
the rate specified therein, to be a joint and several obligation of
the Co-Issuers, and to be substantially in the form of Exhibit
A-1 attached hereto. The terms " Series B Note " and "
Series B Notes " as used herein shall include each Series B
Note delivered pursuant to any provision of this Agreement and each
Series B Note delivered in substitution or exchange for any such
Series B Note pursuant to any such provision.
1B.
Authorization of Issue of Shelf Notes . The Co-Issuers shall
authorize the issue of additional senior promissory notes of the
Co-Issuers (the " Shelf Notes ") in the aggregate principal
amount of $25,000,000, to be a joint and several obligation of the
Co-Issuers, to be dated the date of issue thereof, to mature, in
the case of each Shelf Note so issued, no more than 15 years after
the date of original issuance thereof, to have an average life, in
the case of each Shelf Note so issued, of no more than 12 years
after the date of original issuance thereof, to bear interest on
the unpaid balance thereof from the date thereof at the rate per
annum, and to have such other particular terms, as shall be set
forth, in the case of each Shelf Note so issued, in the
Confirmation of Acceptance with respect to such Shelf Note
delivered pursuant to paragraph 2B(5), and to be substantially in
the form of Exhibit A-2 attached hereto. The terms "
Shelf Note " and " Shelf Notes " as used herein shall
include each Shelf Note delivered pursuant to any provision of this
Agreement and each Shelf Note delivered in substitution or exchange
for any such Shelf Note pursuant to any such provision. The terms "
Note " and " Notes " as used herein shall include
each Series B Note and each Shelf Note delivered pursuant to any
provision of this Agreement and each Note delivered in substitution
or exchange for any such Note pursuant to any such provision. Notes
which have (i) the same final maturity, (ii) the same principal
prepayment dates, (iii) the same principal prepayment amounts (as a
percentage of the original principal amount of each Note), (iv) the
same interest rate, (v) the same interest payment periods and (vi)
the same date of issuance (which, in the case of a Note issued in
exchange for another Note, shall be deemed for these purposes the
date on which such Note's ultimate predecessor Note was issued),
are herein called a " Series " of Notes.
2.
PURCHASE AND SALE OF NOTES .
2A.
Purchase and Sale of Series B Notes . The Co-Issuers hereby
jointly and severally agree to sell to Prudential and, subject to
the terms and conditions herein set forth, Prudential agrees to
purchase from the Co-Issuers $50,000,000 aggregate principal amount
of Series B Notes at 100% of such aggregate principal amount. On
January 28, 1998 (herein called the " Series B Closing Day
"), the Co-Issuers will deliver to Prudential at the offices of
Prudential Capital Group, Two Prudential Plaza, Suite 5600,
Chicago, Illinois 60601, one or more Series B Notes registered in
its name, evidencing the aggregate principal amount of Series B
Notes to be purchased by Prudential and in the denomination or
denominations specified with respect to Prudential in the Purchaser
Schedule attached hereto, against payment of the purchase price
thereof by transfer of immediately available funds for credit to
the Company's account #10015-15467 at Keybank N.A. ,
127 Public Square, Cleveland, Ohio 44114, ABA Routing Number 041
001 039 .
2B(1).
Facility . Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase
by Prudential and Prudential Affiliates from time to
time, the purchase of additional Notes pursuant to this
Agreement. In the event Prudential and the Company agree such
additional Notes may be issued by the Company as the sole obligor
thereunder. The willingness of Prudential to consider such purchase
of additional Notes is herein called the " Facility ". At
any time, the aggregate principal amount of Notes stated in
paragraph 1, minus the aggregate principal amount of Notes
purchased and sold pursuant to this Agreement prior to such time,
minus the aggregate principal amount of Accepted Notes (as
hereinafter defined) which have not yet been purchased and sold
hereunder prior to such time is herein called the " Available
Facility Amount " at such time. NOTWITHSTANDING THE
WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF NOTES, THIS
AGREEMENT IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER
PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE
OR ACCEPT OFFERS TO PURCHASE NOTES, OR TO QUOTE RATES, SPREADS OR
OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF NOTES, AND THE
FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL
OR ANY PRUDENTIAL AFFILIATE.
2B(2).
Issuance Period . Notes may be issued and sold pursuant to
this Agreement until the earlier of (i) the third anniversary of
the date of this Agreement and (ii) the thirtieth day after
Prudential shall have given to the Co-Issuers, or the Co-Issuers
shall have given to Prudential, a notice stating that it elects to
terminate the Facility (or if such thirtieth day is not a Business
Day, the Business Day next preceding such thirtieth day). The
period during which Notes may be issued and sold pursuant to this
Agreement is herein called the " Issuance Period ".
2B(3).
Request for Purchase . The Co-Issuers (or, if Prudential so
agrees, the Company) may from time to time during the Issuance
Period make requests for purchases of additional Notes (each such
request being herein called a " Request for Purchase ").
Each Request for Purchase shall be made to Prudential by telecopier
and confirmed by nationwide overnight delivery service, and shall
(i) specify the aggregate principal amount of Notes covered
thereby, which shall not be less than $10,000,000 and not be
greater than the Available Facility Amount at the time such Request
for Purchase is made, (ii) specify the principal amounts, final
maturities and principal payment dates and amounts, (iii) specify
the use of proceeds of such Notes, (iv) specify the proposed day
for the closing of the purchase and sale of such Notes, which shall
be a Business Day during the Issuance Period not less than 5
Business Days and not more than 25 Business Days after the
Acceptance Day (if any) with respect to such Request for Purchase,
(v) specify the number of the account and the name and address of
the depository institution to which the purchase prices of such
Notes are to be transferred on the Closing Day for such purchase
and sale, (vi) certify that the representations and warranties
contained in paragraph 8 are true on and as of the date of such
Request for Purchase except to the extent of changes caused by the
transactions herein contemplated and that there exists on the date
of such Request for Purchase no Event of Default or Default and
(vii) be substantially in the form of Exhibit B attached hereto.
Each Request for Purchase shall be in writing and shall be deemed
made when received by Prudential.
2B(4).
Rate Quotes . Not later than three Business Days after the
Co-Issuers (or, if Prudential so agrees, the Company) shall have
given Prudential a Request for Purchase pursuant to paragraph
2B(3), Prudential may provide (by telephone promptly thereafter
confirmed by telecopier, in each case no earlier than 9:30 A.M. and
no later than 1:30 P.M. New York City local time) interest rate
quotes for the several principal amounts, maturities, prepayment
schedules and interest payment periods of Notes specified in such
Request for Purchase. Each quote pursuant to this paragraph 2B(4)
shall represent the fixed interest rate per annum payable on the
outstanding principal balance of such Notes until such balance
shall have become due and payable, at which Prudential or a
Prudential Affiliate would be willing to purchase such Notes at
100% of the principal amount thereof.
2B(5).
Acceptance . Within 30 minutes after Prudential shall have
provided any interest rate quotes pursuant to paragraph 2B(4) or
such shorter period as Prudential may specify to the Issuer (such
period herein called the " Acceptance Window "), the Issuer
may, subject to paragraph 2B(6), elect to accept such interest rate
quotes. Such election shall be made by an Authorized Officer of the
Issuer notifying Prudential by telephone or telecopier within the
Acceptance Window (but not earlier than 9:30 A.M. or later than
2:00 P.M., New York City local time) that the Issuer elects to
accept such interest rate quotes, specifying the Note (each such
Note being herein called an " Accepted Note ") as to which
such acceptance (herein called an " Acceptance ") relates.
The day the Issuer notifies Prudential of an Acceptance with
respect to any Accepted Notes is herein called the " Acceptance
Day " for such Accepted Notes. Any interest rate quotes as to
which Prudential does not receive an Acceptance within the
Acceptance Window shall expire, and no purchase or sale of Notes
hereunder shall be made based on such expired interest rate quotes.
Subject to paragraph 2B(6) and the other terms and conditions
hereof, the Issuer agrees to sell to Prudential or a Prudential
Affiliate, and Prudential agrees to purchase, or to cause the
purchase by a Prudential Affiliate of, the Accepted Notes. As soon
as practicable following the Acceptance Day, the Issuer, Prudential
and each Prudential Affiliate which is to purchase any such
Accepted Notes will execute a confirmation of such Acceptance
substantially in the form of Exhibit C attached hereto (herein
called a " Confirmation of Acceptance ").
2B(6).
Market Disruption . Notwithstanding the provisions of
paragraph 2B(5), if Prudential shall have provided interest rate
quotes pursuant to paragraph 2B(5) and thereafter, prior to the
time an Acceptance with respect to such quotes shall have been
notified to Prudential in accordance with paragraph 2B(5), there
shall occur a general suspension, material limitation, or
significant disruption of trading in securities generally on the
New York Stock Exchange or in the market for U.S. Treasury
securities or derivatives, then such interest rate quotes shall
expire, and no purchase or sale of Notes hereunder shall be made
based on such expired interest rate quotes. If the Issuer
thereafter notifies Prudential of the Acceptance of any such
interest rate quotes, such Acceptance shall be ineffective for all
purposes of this Agreement, and Prudential shall promptly notify
the Issuer that the provisions of this paragraph 2B(6) are
applicable with respect to such Acceptance.
2B(7).
Closing . Not later than 11:30 A.M. (New York City local
time) on the Closing Day for any Accepted Notes, the Issuer will
deliver to Prudential or the Prudential Affiliate listed in the
Confirmation of Acceptance relating thereto at the offices of
Prudential Capital Group, Two Prudential Plaza, Suite 5600,
Chicago, Illinois 60601, the Notes to be purchased by such
Purchaser in the form of a single Accepted Note for the Accepted
Notes which have exactly the same terms (or such greater number of
Notes in authorized denominations as such Purchaser may request)
dated the Closing Day and registered in such Purchaser's name,
against payment of the purchase price thereof by transfer of
immediately available funds for credit to the account specified by
the Issuer in the Request for Purchase of such Notes. If the Issuer
fails to tender to any Purchaser the Accepted Notes to be purchased
by such Purchaser on the scheduled Closing Day for such Accepted
Notes as provided above in this paragraph 2B(7), or any of the
conditions specified in paragraph 3 shall not have been fulfilled
by the time required on such scheduled Closing Day, the Issuer
shall, prior to 1:00 P.M., New York City local time, on such
scheduled Closing Day notify such Purchaser in writing whether (x)
such closing is to be rescheduled (such rescheduled date to be a
Business Day during the Issuance Period not less than one Business
Day and not more than 10 Business Days after such scheduled Closing
Day (the " Rescheduled Closing Day ") and certify to such
Purchaser that the Issuer reasonably believes that it will be able
to comply with the conditions set forth in paragraph 3 on such
Rescheduled Closing Day and that the Issuer will pay the Delayed
Delivery Fee in accordance with paragraph 2B(8)(ii) or (y) such
closing is to be canceled as provided in paragraph 2B(8)(iii). In
the event that the Issuer shall fail to give such notice referred
to in the preceding sentence, Prudential (on behalf of each
Purchaser) may at its election, at any time after 1:00 P.M., New
York City local time, on such scheduled Closing Day, notify the
Company in writing that such closing is to be canceled as provided
in paragraph 2B(8)(iii).
2B(8).
Fees .
2B(8)(i).
Facility Fee . The Issuer will pay to Prudential in
immediately available funds a fee (herein called the " Facility
Fee ") on each Closing Day (other than the closing of the
purchase and sale of the Series B Notes) in an aggregate amount
equal to 0.15% of the aggregate principal amount of Notes sold on
such Closing Day.
2B(8)(ii).
Delayed Delivery Fee . If the closing of the purchase and
sale of any Accepted Note is delayed for any reason beyond the
original Closing Day for such Accepted Note (other than the failure
of a Purchaser to fund the purchase of an Accepted Note after all
conditions to closing specified in paragraph 3 have been timely
satisfied), the Issuer will pay to Prudential (for the benefit of
the Purchasers) on the last Business Day of each calendar month,
commencing with the first such day to occur more than 30 days after
the Acceptance Day for such Accepted Note and ending with the last
such day to occur prior to the Cancellation Date or the actual
closing date of such purchase and sale, and on the Cancellation
Date or actual closing date of such purchase and sale, a fee
(herein called the " Delayed Delivery Fee ") calculated as
follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond
equivalent yield per annum of such Accepted Note; "MMY" means Money
Market Yield, i.e., the yield per annum on a commercial paper
investment of the highest quality selected by Prudential on the
date Prudential receives notice of the delay in the closing for
such Accepted Notes having a maturity date or dates the same as, or
closest to, the Rescheduled Closing Day or Rescheduled Closing Days
(a new alternative investment being selected by Prudential each
time such closing is delayed); "DTS" means Days to Settlement,
i.e., the number of actual days elapsed from and including the
originally scheduled Closing Day with respect to such Accepted Note
(in the case of the first such payment with respect to such
Accepted Note) or from and including the date of the next preceding
payment (in the case of any subsequent delayed delivery fee payment
with respect to such Accepted Note) to but excluding the date of
such payment; and "PA" means Principal Amount, i.e., the principal
amount of the Accepted Note for which such calculation is being
made. In no case shall the Delayed Delivery Fee be less than zero.
Nothing contained herein shall obligate any Purchaser to purchase
any Accepted Note on any day other than the Closing Day for such
Accepted Note, as the same may be rescheduled from time to time in
compliance with paragraph 2B(7).
2B(8)(iii).
Cancellation Fee . If the Issuer at any time notifies
Prudential in writing that the Issuer is canceling the closing of
the purchase and sale of any Accepted Note, or if Prudential
notifies the Issuer in writing under the circumstances set forth in
the last sentence of paragraph 2B(7) that the closing of the
purchase and sale of any Accepted Note is to be canceled, or if the
closing of the purchase and sale of any Accepted Note is not
consummated on or prior to the last day of the Issuance Period (the
date of any such notification, or the last day of the Issuance
Period, as the case may be, being herein called the "
Cancellation Date "), the Issuer will pay to Prudential (for
the benefit of the Purchasers) in immediately available funds an
amount (the " Cancellation Fee ") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed
in decimals) obtained by dividing (a) the excess of the ask price
(as determined by Prudential) of the Hedge Treasury Note(s) on the
Cancellation Date over the bid price (as determined by Prudential)
of the Hedge Treasury Note(s) on the Acceptance Day for such
Accepted Note by (b) such bid price; and "PA" has the meaning
ascribed to it in paragraph 2B(8)(ii). The foregoing bid and ask
prices shall be as reported by Dow Jones Markets, Inc. services
(Telerate) (or, if such data for any reason ceases to be available
through Dow Jones Markets, Inc. services (Telerate), any publicly
available source of similar market data). Each price shall be based
on a U.S. Treasury security having a par value of $100.00 and shall
be rounded to the second decimal place. In no case shall the
Cancellation Fee be less than zero.
2B(8)(iv).
Structuring Fee . On the date of the execution and delivery
of this Agreement by the Co-Issuers and Prudential, the Co-Issuers
will pay to Prudential in immediately available funds a
non-refundable fee (herein called the " Structuring Fee ")
in the amount of $40,000.
3.
CONDITIONS OF CLOSING . The obligation of any Purchaser to
purchase any Accepted Notes is subject to the satisfaction, on or
before the applicable Closing Day for such Accepted Notes, of the
following conditions:
3A.
Opinion of Company's Counsel . On each Closing Day, such
Purchaser shall have received from Squire, Sanders & Dempsey,
special counsel to the Issuer, or other counsel designated by the
Company and acceptable to such Purchaser, a favorable opinion
satisfactory to the Purchaser and substantially in the form of
Exhibit D attached hereto and as to such other matters as such
Purchaser may reasonably request. The Issuer hereby directs such
counsel to deliver such opinion, and agrees that the issuance and
sale of any Notes will constitute a reconfirmation of such
direction.
3B.
Opinion of Purchaser's Special Counsel . Such Purchaser
shall have received from Wiley S. Adams, Assistant General Counsel
of Prudential, or such other counsel who is acting as counsel for
it in connection with this transaction, a favorable opinion
satisfactory to such Purchaser as to such matters incident to the
matters herein contemplated as it may reasonably request.
3C.
Representations and Warranties; No Default
. The representations and warranties contained in paragraph 8 shall
be true on and as of the applicable Closing Day, except to the
extent of changes caused by the transactions herein contemplated;
there shall exist on the applicable Closing Day no Default or Event
of Default (assuming, if no Note is outstanding on such Closing
Day, that paragraph 6 hereof is then in effect); and the Issuer
shall have delivered to each Purchaser an Officer's Certificate,
dated the applicable Closing Day, to both such effects.
3D.
Fees . On or before each Closing Day, the Issuer shall have
paid to Prudential the fee, if any, required by paragraphs
2B(8)(i), 2B(8)(ii) and 2B(8)(iv).
3E.
Purchase Permitted By Applicable Laws .
The purchase of and payment for the Notes to be purchased on the
applicable Closing Day on the terms and conditions herein provided
(including the use of the proceeds of such Notes by the Issuer)
shall not violate any applicable law or governmental regulation
(including, without limitation, section 5 of the Securities Act or
Regulation G, T or X of the Board of Governors of the Federal
Reserve System) and shall not subject any Purchaser to any tax,
penalty, liability or other onerous condition under or pursuant to
any applicable law or governmental regulation, and such Purchaser
shall have received such certificates or other evidence as such
Purchaser may reasonably request to establish compliance with this
condition.
3F.
Proceedings . All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby
and all documents incident thereto shall be satisfactory in
substance and form to each Purchaser, and each Purchaser shall have
received all such counterpart originals or certified or other
copies of such documents as it may reasonably request.
3G.
Intercreditor Agreement . On or before the Series B Notes
Closing Day, Prudential and the lenders parties to the Credit
Agreement shall have entered into an Intercreditor Agreement in the
form of Exhibit E hereto (the " Intercreditor
Agreement ") and such agreement shall be in full force and
effect.
4.
PREPAYMENTS . The Series B Notes and any Shelf Notes shall
be subject to required prepayment as and to the extent provided in
paragraphs 4A and 4B, respectively. The Series B Notes and any
Shelf Notes shall also be subject to prepayment under the
circumstances set forth in paragraph 4C. Any prepayment made by the
Issuer pursuant to any other provision of this paragraph 4 shall
not reduce or otherwise affect its obligation to make any required
prepayment as specified in paragraph 4A or 4B.
4A(1).
Required Prepayments of Series B Notes . Until the Series B
Notes shall be paid in full, the Co-Issuers jointly and severally
agree to apply to the prepayment of the Series B Notes, without
Yield-Maintenance Amount, the sum of $10,000,000 on August 24 of
each year commencing on August 24, 2007 and continuing through and
including August 24, 2010 and such principal amounts of the Series
B Notes, together with interest thereon to the payment dates, shall
become due on such payment dates. The remaining unpaid principal
amount of the Series B Notes together with any accrued and unpaid
interest, shall become due on the maturity date of the Series B
Notes on August 24, 2011.
4A(2).
Required Prepayments of Shelf Notes . Each Series of Shelf
Notes shall be subject to required prepayments, if any, set forth
in the Notes of such Series.
4B(1).
Optional Prepayment with Yield-Maintenance Amount
. The Notes of each Series shall be subject to optional prepayment,
in whole or in part, in increments of $100,000, and in a minimum
amount of $1,000,000, at the option of the Company, at 100% of the
principal amount so prepaid plus interest thereon to the prepayment
date and the Yield-Maintenance Amount, if any, with respect to each
such Note. Any partial prepayment of a Series of Notes pursuant to
this paragraph 4B shall be applied in satisfaction of required
payments of principal in inverse order of their scheduled due
dates.
4B(2).
Prepayment with Yield-Maintenance Amount Pursuant to
Intercreditor Agreement . If amounts are to be applied to the
principal of the Notes pursuant to the terms of the Intercreditor
Agreement, interest owing thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect to each Note shall
be due and payable on such date. Any partial prepayment on the
Notes pursuant to this paragraph 4B(2) shall be applied in
satisfaction of required payments of principal in inverse order of
their scheduled due dates.
4C.
Notice of Optional Prepayment . The Issuer
shall give notice to the holder of each Note of a Series
irrevocable written notice of any optional prepayment to be made
pursuant to paragraph 4B(1) with respect to such Series not less
than 10 Business Days prior to the prepayment date, specifying (i)
such prepayment date, (ii) the aggregate principal amount of the
Notes of such Series to be prepaid on such date, (iii) the
principal amount of the Notes of such holder to be prepaid on that
date, and (iv) stating that such optional prepayment is to be made
pursuant to paragraph 4B(1). Notice of optional prepayment having
been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the
prepayment date and together with the Yield-Maintenance Amount, if
any, herein provided, shall become due and payable on such
prepayment date. The Issuer shall, on or before the day on which it
gives written notice of any prepayment pursuant to paragraph 4B(1),
give telephonic notice of the principal amount of the Notes to be
prepaid and the prepayment date to each Significant Holder which
shall have designated a recipient for such notices in the purchaser
schedule attached to the applicable Confirmation of Acceptance or
by notice in writing to the Issuer.
4D.
Application of Prepayments . In the case of each prepayment
pursuant to paragraphs 4A or 4B of less than the entire unpaid
principal amount of all outstanding Notes of any Series, the amount
to be prepaid shall be applied pro rata to all outstanding Notes of
such Series (including, for the purpose of this paragraph 4D only,
all Notes of such Series prepaid or otherwise retired or purchased
or otherwise acquired by the Issuer or any of its Subsidiaries or
Affiliates other than by prepayment pursuant to paragraphs 4A or
4B) according to the respective unpaid principal amounts
thereof.
4E.
Retirement of Notes . The Issuer shall not, and
shall not permit any of its Subsidiaries or Affiliates to, prepay
or otherwise retire in whole or in part prior to their stated final
maturity (other than by prepayment pursuant to paragraphs 4A or 4B
or upon acceleration of such final maturity pursuant to paragraph
7A), or purchase or otherwise acquire, directly or indirectly, any
Notes of any Series unless the Issuer or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or
purchase or otherwise acquire, as the case may be, the same
proportion of the aggregate principal amount of the Notes of such
Series held by each holder of Notes of such Series at the time
outstanding upon the same terms and conditions. Any Notes prepaid
or otherwise retired or purchased or otherwise acquired by the
Issuer or any of its Subsidiaries or Affiliates shall not be deemed
to be outstanding for any purpose under this Agreement, except as
provided in paragraph 4D.
5.
AFFIRMATIVE COVENANTS .
5A.
Financial Statements . The Company covenants that it will
deliver to each Significant Holder in triplicate:
(i)
as soon as practicable and in any event within 60 days after the
end of each quarterly period (other than the last quarterly period)
in each fiscal year, consolidated statements of income, partners'
equity or shareholders' equity (as the case may be) and cash flows
of the Company and its Subsidiaries for (a) such quarterly period
and (b) the period of four consecutive fiscal quarters ended on the
last day of such quarterly period, and a consolidated balance sheet
of the Company and its Subsidiaries as at the end of such quarterly
period, setting forth in each case in comparative form figures for
the corresponding period in the preceding fiscal year or years, all
in reasonable detail and certified by an authorized financial
officer of the Company, subject to changes resulting from year-end
adjustments; provided, however, that delivery pursuant to clause
(iii) below of copies of the Quarterly Report on Form 10-Q of the
Company for such quarterly period filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of
this clause (i);
(ii)
as soon as practicable and in any event within 120 days after the
end of each fiscal year, consolidated statements of income,
partners' equity and cash flows of the Company and its Subsidiaries
for such year, and a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such year, setting forth in each
case in comparative form corresponding consolidated figures from
the preceding annual audit, all in reasonable detail and
satisfactory in form to the Required Holder(s), and reported on by
independent public accountants of recognized national standing
selected by the Company whose report shall be without limitation as
to scope of the audit and satisfactory in substance to the Required
Holder(s); provided, however, that delivery pursuant to clause
(iii) below of copies of the Annual Report on Form 10-K of the
Company for such fiscal year filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this
clause (ii);
(iii)
promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as the Company
shall send to its Limited Partners generally and copies of all
registration statements (without exhibits), other than registration
statements on Form S-8 or any successor form, and all reports which
it files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the
Securities and Exchange Commission); and
(iv) with
reasonable promptness, such other financial data (including,
without limitation, consolidating financial statements and a copy
of each other report submitted to the Company or any Subsidiary by
independent accountants in connection with any annual, interim or
special audit made by them of the books of the Company or any
Subsidiary) as such Significant Holder may reasonably request.
Together with each delivery of financial statements required by
clauses (i) and (ii) above, the Company will deliver to each
Significant Holder an Officer's Certificate (a) setting forth
(except to the extent specifically set forth in such financial
statements) the aggregate amounts of interest accrued on Funded
Debt and Current Debt of the Company and Subsidiaries during the
fiscal period covered by such financial statements, and the
aggregate amounts of depreciation on physical property charged on
the books of the Company and Subsidiaries (if any) during such
fiscal period, (b) demonstrating (with computations in reasonable
detail) compliance by the Company and its Subsidiaries with
paragraph 6A(2), 6C and 6D (including, without limitation,
identification of the most recent forty-five consecutive day period
at all times during which Consolidated Debt did not exceed 60% of
Gross Worth) and, to the extent Debt secured by Liens described in
clauses (v) and (vi) of paragraph 6A(1) exceeds $5,000,000,
demonstrating compliance with clauses (v) and (vi) of paragraph
6A(1), in each case during and at the end of such fiscal period and
(c) stating that there exists no Event of Default or Default or, if
any Event of Default or Default exists, specifying the nature
thereof, the period of existence thereof and what action the
Company proposes to take with respect thereto. Together with each
delivery of financial statements required by clause (ii) above, the
Company will deliver to each Significant Holder a certificate of
such accountants stating that, in making the audit necessary to the
certification of such financial statements, they have obtained no
knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying
the nature and period of existence thereof ( provided that
such accountants shall not be liable to anyone by reason of their
failure to obtain knowledge of any such Event of Default or Default
which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards).
The Company also covenants that forthwith upon any Responsible
Officer obtaining knowledge of an Event of Default or Default, it
will deliver to each Significant Holder an Officer's Certificate
specifying the nature and period of existence thereof and what
action the Company proposes to take with respect thereto.
5B.
Inspection of Property . The Company covenants that it will
permit any Person designated by any Significant Holder in writing,
at such Significant Holder's expense, to visit and inspect any of
the properties of the Company and its Subsidiaries, to examine the
corporate books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to
discuss the affairs, finances and accounts of any of such entities
with the officers and directors of the Managing General Partner and
the directors, officers and independent accountants of the
Co-Issuers, all at such reasonable times and as often as such
Significant Holder may reasonably request.
5C.
Covenant to Secure Note Equally . The Company covenants
that, if it or any Subsidiary shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of paragraph
6A(1) (unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to paragraph 11C), it
will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all
other Debt thereby secured so long as any such other Debt shall be
so secured.
5D.
Information Required by Rule 144A . The Company covenants
that it will, upon the request of the holder of any Note, provide
such holder, and any qualified institutional buyer designated by
such holder, such financial and other information as such holder
may reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at
such times as the Company is subject to the reporting requirements
of section 13 or 15(d) of the Exchange Act. For the purpose of this
paragraph 5D, the term " qualified institutional buyer "
shall have the meaning specified in Rule 144A under the Securities
Act.
5E.
Compliance With Environmental Laws . The Company will, and
will cause each of its Subsidiaries to, comply in a timely fashion
with, or operate pursuant to valid waivers of the provisions of,
all Environmental Laws, except where noncompliance would not
materially adversely affect the business, condition (financial or
other) or operations of the Company and its Subsidiaries taken as a
whole.
5F.
Maintenance of Insurance . The Company covenants that it and
each of its Subsidiaries will maintain insurance in such amounts
and against such casualties, liabilities, risks, contingencies and
hazards as is customarily maintained by other similarly situated
companies operating similar businesses and, upon request of a
Significant Holder, it will deliver an Officers' Certificate
specifying the details of such insurance then in effect.
5G.
Minimum Assets . The Co-Issuers covenant and agree that (i)
the unconsolidated total assets of the Co-Issuers shall at all
times constitute at least 70% of the consolidated total assets of
the Company and its Subsidiaries and (ii) the unconsolidated assets
of the Company shall at all times constitute at least 40% of the
consolidated total assets of the Company and its Subsidiaries.
5H.
Most Favored Covenant Status, etc. Should the Company or its
Subsidiaries at any time after the date hereof, issue or guarantee
any unsecured indebtedness denominated in U.S. dollars for money
borrowed or represented by bonds, notes, debentures or similar
securities in an aggregate amount exceeding $5,000,000 to any
lender or group of lenders acting in concert with one another or
one or more institutional investors, pursuant to a loan agreement,
credit agreement, note purchase agreement, indenture, guaranty or
other similar instrument, which agreement, indenture, guaranty or
instrument, includes affirmative or negative business or financial
covenants (or any events of default or other type of restriction
which would have the practical effect of any affirmative or
negative business or financial covenant, including, without
limitation, any "put" or mandatory prepayment or redemption of any
such indebtedness upon the occurrence of a designated event) which
are applicable to the Company or any Significant Subsidiary, other
than those set forth herein, the Company shall promptly so notify
the holders of the Notes and, if the Required Holder(s) shall so
request by written notice to the Company (after a determination has
been made by the Required Holder(s) that any of the
above-referenced documents or instruments contain any such
provisions, which either individually or in the aggregate, are more
favorable to the holders of such unsecured Indebtedness than any of
the provisions set forth herein), the Co-Issuers and the Required
Holder(s) shall promptly amend this Agreement to incorporate some
or all of such provisions, in the discretion of the Required
Holder(s), into this Agreement and, to the extent necessary and
reasonably desirable to the Required Holder(s), all at the election
of the Required Holder(s).
5I.
Senior Debt . The Co-Issuers will at all times ensure that
(a) the claims of the holders of the Notes under this Agreement and
the Notes will not be subordinate to, and will in all respects at
least rank pari passu with, the claims of every other senior
unsecured creditor of such Co-Issuer and (b) any Indebtedness
subordinated in any manner to the claims of any other senior
unsecured creditor of either Co-Issuer will be subordinated in like
manner to such claims of the holders of the Notes.
6.
NEGATIVE COVENANTS . The provisions of this paragraph 6
shall remain in effect so long as any Note shall remain outstanding
or any other amount shall be owing hereunder.
6A.
Lien, Debt and Other Restrictions . The Company covenants
that it will not and will not permit any Subsidiary to (and Knott's
Berry Farm covenants that it will not take any action that will
cause non-compliance with any of the following):
6A(1).
Liens . Create, assume or suffer to exist any Lien upon any
of its property or assets, whether now owned or hereafter acquired
(whether or not provision is made for the equal and ratable
securing of the Notes in accordance with the provisions of
paragraph 5C), except
(i)
Liens for taxes not yet due or which are being actively contested
in good faith by appropriate proceedings,
(ii)
other Liens incidental to the conduct of its business or the
ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances
or credit, and which do not in the aggregate materially detract
from the value of its property or assets or materially impair the
use thereof in the operation of its business,
(iii)
subject to the limitation set forth in clause (iii) of paragraph
6A(2), Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or another
Subsidiary,
(iv) Liens
consisting of Capitalized Leases if the Funded Debt represented by
the related Capitalized Lease Obligations is permitted by paragraph
6A(2),
(v)
any Lien existing on any property of any corporation at the time it
becomes a Subsidiary, or existing prior to the time of acquisition
upon any property acquired by the Company or any Subsidiary through
purchase, merger or consolidation or otherwise, whether or not
assumed by the Company or such Subsidiary, or placed upon property
at the time of acquisition by the Company or any Subsidiary to
secure all or a portion of (or to secure Debt incurred to pay all
or a portion of) the purchase price thereof, provided that
(a) such property is not and shall not thereby become encumbered in
an amount in excess of 80% of the lesser of the cost thereof or the
fair value (as determined in good faith by the board of directors
of the Managing General Partner or the Company, as the case may be)
thereof at the time such corporation becomes a Subsidiary or at the
time of acquisition of such property by the Company or a
Subsidiary, as the case may be, (b) any such Lien shall not
encumber any other property (except related replacement parts) of
the Company or such Subsidiary, and (c) the aggregate amount of
Debt secured by all such Liens and any Liens permitted by clause
(iv) above and clause (vi) below at any one time outstanding shall
be permitted by paragraph 6A(2), and
(vi) any
Lien renewing, extending or refunding any Lien permitted by clause
(v) above if the aggregate amount of Debt secured by all such Liens
and any Lien permitted by clauses (iv) and (v) above at any one
time outstanding shall be permitted by paragraph 6A(2),
provided that the principal amount secured is not increased,
and the Lien is not extended to other property;
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 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 (a)
Consolidated Debt shall at no time exceed 70% of Gross Worth, (b)
at all times during a period of at least forty-five consecutive
days in each rolling twelve month period, Consolidated Debt shall
not exceed 60% of Gross Worth and (c) Priority Debt shall at no
time exceed 20% of Owners' Equity;
6A(3).
Loans, Advances, Investments and Contingent Liabilities .
Make or permit to remain outstanding any loan or advance to, or
guarantee, endorse or otherwise be or become contingently liable,
directly or indirectly, in connection with the obligations, stock,
or dividends of, or own, purchase or acquire any stock, obligations
or securities of, or any other interest in, or make or maintain any
capital contribution to, any Person, except that the Company and
its Subsidiaries may
(i)
subject to paragraph 6A(2), make or permit to remain outstanding
loans or advances to the Company or any Subsidiary,
(ii)
subject to paragraph 6A(2), own, purchase or acquire stock,
obligations or securities of a Subsidiary or of a corporation which
immediately after such purchase or acquisition will be a
Subsidiary,
(iii)
acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business)
owing to the Company or any Subsidiary,
(iv) own,
purchase or acquire commercial paper rated Prime-1 by Moody's
Investors Service, Inc. or A-1 or better by Standard & Poor's
Corporation on the date of acquisition and certificates of deposit
of, bankers' acceptances issued by, and eurodollar deposits with
United States commercial banks (having capital resources in excess
of $100,000,000, and, in the case of eurodollar deposits, issued by
such bank through its head office or a branch office in London or
Tokyo), in each case due within one year from the date of
acquisition and payable in the United States in United States
dollars, obligations of the United States Government or any agency
thereof backed by the full faith and credit of the United States
Government, obligations guaranteed by the United States Government,
and repurchase agreements of such banks for terms of less than one
year in respect of the foregoing certificates and obligations,
(v)
endorse negotiable instruments for collection in the ordinary
course of business,
(vi)
guarantee or otherwise become directly or indirectly liable for
Debt to the extent the Debt is permitted by paragraph 6A(2)
(including, without limitation, the limitation on Priority Debt set
forth therein),
(vii) make or
permit to remain outstanding travel, relocation and other like
advances to officers and employees in the ordinary course of
business, and
(viii) make or
permit to remain outstanding any loans or advances to, any
guarantees for the benefit of, or any investments in, any Person
not otherwise permitted by this paragraph 6A(3) up to an aggregate
amount outstanding which shall not exceed an amount equal to 15% of
Owners' Equity at any time;
6A(4).
Sale of Stock and Debt of Subsidiaries . Except to the
Company or a 75%-owned Subsidiary, sell or otherwise dispose of, or
part with control of, any shares of stock or Debt of any (i)
Significant Subsidiary, or (ii) other Subsidiary, if at the time of
such sale or other disposition, such other Subsidiary owns,
directly or indirectly, any shares of stock or Debt of any
Significant Subsidiary or any Debt of the Company;
6A(5).
Merger and Sale of Assets . Merge or consolidate with any
corporation or sell, lease, transfer or otherwise dispose, in any
single transaction or series of related transactions, of assets
which shall have contributed 10% or more to Consolidated Pre-Tax
Income for any of the three fiscal years then most recently ended,
or assets whose aggregate fair value (as determined in good faith
by the board of directors of the Managing General Partner or the
Company, as the case may be) shall exceed 10% of Consolidated Net
Assets, to any Person, except that
(i)
any 75%-owned Subsidiary which is free from any Debt to any Person
other than the Company may merge with any one or more other
75%-owned Subsidiaries which are free from any Debt to any Person
other than the Company,
(ii)
any Subsidiary may sell, lease, transfer or otherwise dispose of
any of its assets to the Company or a 75%-owned Subsidiary,
(iii) any
Subsidiary may sell or otherwise dispose of all or substantially
all of its assets subject to the conditions specified in paragraph
6A(4) with respect to a sale of the stock of such Subsidiary,
(iv) the
Company may enter into any merger in which it is the surviving
entity, provided that no Default or Event of Default would exist
immediately after giving effect thereto,
(v)
the Company may, in the ordinary course of business, sell or
otherwise dispose of (a) buildings and parcels of land not used in
connection with the business of the Company or any Subsidiary and
(b) vehicles,
(vi) any
Subsidiary (other than Knott's Berry Farm) may merge or consolidate
with any other corporation, provided that, immediately after
giving effect to such merger or consolidation, the continuing or
surviving corporation of such merger or consolidation shall
constitute a Subsidiary and no Default or Event of Default would
exist, and
(vii) Knott's
Berry Farm may merge or consolidate with any other corporation,
provided that, (a) it is the continuing and surviving entity in the
case of any merger or consolidation with any Person other than the
Company and (b) immediately after giving effect to such merger or
consolidation no Default or Event of Default would exist;
6A(6).
Transactions with Related Persons . Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or otherwise deal with, in the ordinary
course of business or otherwise, any Related Person, except (i)
pursuant to the terms of the Partnership Agreement or (ii) on an
arm's-length basis and on terms no less favorable to the Company
and its Subsidiaries (as determined in good faith by the board of
directors of the Managing General Partner or the Company, as the
case may be) than terms which would have been obtainable from a
Person other than a Related Person.
6B.
Issuance of Stock by Subsidiaries . The Company covenants
that it will not permit any Subsidiary (either directly, or
indirectly by the issuance of rights or options for, or securities
convertible into, such shares or other equity interest) to issue,
sell or otherwise dispose of any shares of any class of its stock
or other equity interest (other than directors' qualifying shares)
except to the Company or a 75%-owned Subsidiary.
6C.
Bank Defined Indebtedness/Consolidated EBITDA Ratio . The
Company will not at any time permit the ratio of (i) the amount of
its Consolidated Debt at such time to (ii) its Consolidated
